/raid1/www/Hosts/bankrupt/TCR_Public/170201.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Wednesday, February 1, 2017, Vol. 21, No. 31
Headlines
1619 PROPERTY: Stake in Brill Building Up for Auction March 14
220 ADAMS: Val Alahan to Get $85,000 by April 15
99 CENTS: Moody's Changes Outlook to Stable & Affirms Caa1 CFR
ALACHUA COUNTY: Fitch Affirms 'BB' Rating on $68.2MM Revenue Bonds
AMERICAN GREETINGS: Moody's Rates New $575MM Secured Loans 'Ba2'
AMERICAN GREETINGS: S&P Affirms 'BB-' CCR; Outlook Stable
AMERICAN SAMOA: Moody's Affirms Ba3 Rating on Revenue Bonds
B.C. GRAND: Seeks Court Approval for Cash Collateral Use
BECKFORD GROUP: Disclosure Statement Hearing Set for March 9
BERNARD L. MADOFF: Goldman Loses Appeal to Unblock $11-Bil. Suit
BERNARD L. MADOFF: Victims Cannot Sidestep $7.2-Billion Settlement
BRADLEY REIFLER: Files for Bankruptcy, Faces Jail for Contempt
BURGI ENGINEERS: Wants Exclusivity Period Extended by 60 Days
C.H.I.R. CORP: Solicitation Period Extended Through March 9
CAESARS ENTERTAINMENT: Moody's Hikes Corp. Family Rating to B3
CAMBER ENERGY: Agrees to Revise Post-Closing Covenant Under APA
CAMBER ENERGY: Annual Meeting of Stockholders Set for March 22
CBAC GAMING: Moody's Hikes Corporate Family Rating to B3
CHANNEL TECHNOLOGIES: BAE Systems Buying Property for $800K
CHAPARRAL ENERGY: Court Extends Plan Filing Period to April 3
CHARLES WALKER: Trustee Selling 6 Nashville Properties by Auction
CLARK-CUTLER-MCDERMOTT: Jan. 31 Cash Collateral Hearing Set
COMSTOCK RESOURCES: Announces 47% Hike in Oil & Gas Reserves
COMSTOCK RESOURCES: Carl Westcott Reports 6.1% Stake as of Jan. 26
COMSTOCK RESOURCES: Galatyn et al. No Longer Shareholders at Dec.31
CORALVILLE, IA: Moody's Affirms Ba2 on GO Annual Appropriation Debt
CYRIL GORDON LUNN: Pleads Guilty to Bankruptcy Fraud
DAP VENTURES: Disclosures Okayed, Plan Hearing on March 8
DAVID'S BRIDAL: Bank Debt Trades at 15% Off
DEER MEADOWS: Plan Filing Exclusivity Extended on Interim Basis
DEPENDABLE AUTO: Unsecureds to Recoup 1% Under Liquidation Plan
DIAMOND OFFSHORE: S&P Lowers CCR to 'BB-' on Industry Weakness
EARL GAUDIO: Business Income Tax Entitled to Admin Expense Priority
EDGE FINANCIAL: 28101 Ecorse Buying All Assets for $2.3 Million
ETERNAL ENTERPRISES: Taps Lakeshore Realty as Broker
EXTREME PLASTICS: Intends to File Chapter 11 Plan By April 28
FIAC CORP: Seeks April 10 Exclusive Plan Filing Period Extension
FINJAN HOLDINGS: Attends Cybertech Israel & Meet With Shareholders
FLORA, IL: Moody's Lowers Rating on $17.8MM GOULT Debt to Ba1
FLOUR CITY BAGELS: Hearing on Disclosure Statements Moved to Feb. 7
FREEDOM COMMUNICATIONS: Former Owners Sued Over Pension Plan
FREEDOM MORTGAGE: Moody's Assigns B1 Corporate Family Rating
FREEDOM MORTGAGE: S&P Assigns 'BB-' Rating on $350MM Term Loan
FREEPORT-MCMORAN INC: New Mining Policy Credit Neg., Moody's Says
FRESH & EASY: Kaykel Buying Liquor License (No. 539693) for $25K
GERARD BOEH: Seeks April 28 Exclusive Plan Filing Period Extension
GIVE AND GO: Uncle Wally's Acquisition No Impact on Moody's B2 CFR
GM FINANCIAL: Moody's Hikes Corporate Family Rating From Ba1
GREAT BASIN: Has 400.8-Mil. Outstanding Common Stock as of Jan. 25
GREYSTONE LOGISTICS: Reports Second Quarter Results of Operations
GUIDED THERAPEUTICS: Grants SMI License to Manufacture LuViva
GYMBOREE CORP: Bank Debt Trades at 50% Off
HANJIN SHIPPING: Parent Targeted for $31M Pension Bill
HCSB FINANCIAL: Announces Fourth Quarter 2016 Financial Results
HEALTH DIAGNOSTIC: Trustee Goes After Charitable Contributions
HEXION INC: Offering $485M First-Priority Senior Secured Notes
HTY INC: Seeks Additional 20 Days to File Reorganization Plan
IHS MARKIT: Modified Share Buyback Plans No Impact on Moody's CFR
IMMUCOR INC: Bank Debt Trades at 4% Off
J. CREW: Bank Debt Trades at 45% Off
JARRET CORN: Disclosures Okayed, Plan Hearing on March 2
JBS USA: Moody's Assigns Ba1 Rating to $2.8BB Secured Term Loan
LANDMARK HOSPITALITY: Unsecureds to Get 15% at 2.5% in 72 Mos
LESLIE'S POOLMART: Moody's Assigns B2 CFR; Outlook Stable
LINN ENERGY: Bankruptcy Judge to Confirm Chapter 11 Plan
LONG BROOK: Unsecureds to Recoup 6% Over 60 Months
MADDD WEST: Combined Plan, Disclosures Hearing on Feb. 15
MEMORIAL HEALTH: Fitch Affirms 'BB' Rating on $60MM 2015 Rev Bonds
MERCER INT'L: Moody's Rates $225MM Senior Unsecured Notes 'B1'
MERCER INT'L: S&P Rates New US$225MM Sr. Unsecured Notes 'BB-'
MONEYGRAM INT'L: S&P Puts 'B+' ICR on CreditWatch Positive
MOTORS LIQUIDATION: Files GUC Trust Report as of Dec. 31
NAVISTAR INTERNATIONAL: Unit Inks 5th Amendment to BofA Credit Pact
NCI BUILDING: S&P Raises CCR to 'BB'; Outlook Stable
NEIMAN MARCUS: Bank Debt Trades at 16% Off
OFFSHORE DRILLING: S&P Lowers CCR to 'CCC' on Weak Cash Flow
ON CALL FLAGGING: Retention of Fred Fall as Auctioneer Denied
PACIFIC IMPERIAL: Seeks June 12 Plan Filing Period Extension
PALMER FARMS: Disclosure Statement Hearing Set for March 8
PANDA STONEWALL: S&P Affirms 'BB-' Rating on $300MM Term Loan
PARADIGM EVERGREEN: Disclosures Okayed, Plan Hearing on Feb. 23
PEABODY ENERGY: Begins Road Show to Solicit Exit Lenders
PEABODY ENERGY: Court Approves Disclosures, March 16 Plan Hearing
PEABODY ENERGY: Seeks Approval of PNC Bank Commitment Letter
PFS HOLDING: S&P Affirms 'B-' CCR & Revises Outlook to Positive
PRESTIGE INDUSTRIES: Case Summary & 20 Top Unsecured Creditors
PRESTIGE INDUSTRIES: Files for Chapter 11 Bankruptcy Protection
PROJECT RUBY: Moody's Assigns B3 Corporate Family Rating
PROJECT RUBY: S&P Lowers CCR to 'B-' on Leveraged Buyout
RAMON AGUIRRE: Judge Vacates Order Granting Wheeler Stay Relief
REPUBLIC AIRWAYS: Court Extends Plan Filing Period Until March 31
RHODE ISLAND: S&P Lowers Rating on $375MM Loans to 'B+'
RITA RESTAURANT: Sale of Beer Brewing System to Ager for $53K OK'd
ROOT9B HOLDINGS: Extends Securities Purchase Pact Until March 31
ROOT9B HOLDINGS: Gregory Morris to Resign as Director
ROYAL ONE: Gets Approval of Plan to Exit Bankruptcy
RUE21 INC: S&P Lowers CCR to 'CCC-' on Weak Liquidity Expectations
SALTY DOG: Disclosures Okayed, Plan Hearing on Feb. 27
SAM BASS: Iron Horse to Auction Personal Property
SCIENTIFIC GAMES: BlackRock Reports 6.6% Stake as of Dec. 31
SEARS HOLDINGS: Saving Plans Ceasing Reports With SEC
SEAWAY BANK: FDIC Named as Receiver, Texas Bank Assumes Deposits
SELECT MEDICAL: Moody's Rates New $1.55BB Secured Loans 'Ba2'
SESAC HOLDCO II: Moody's Assigns B3 CFR; Outlook Stable
SINGLETON CREEK: Taps Gilbert Harrell To Resolve Army Corps Issue
SMS SYSTEMS: Moody's Affirms B3 Corporate Family Rating
SOTERA WIRELESS: Proposes Dual Track Ch. 11 Plan
SPANISH BROADCASTING: BlackRock Owns 5.2% of Class A Shares
SPORTS AUTHORITY: Sues 2 Former Execs Over Unpaid Loans
SPRINT CORP: Moody's Keeps Ba2 Ratings Over Loan Size Increase
STENA AB: Bank Debt Trades at 8% Off
SUNEDISON INC: Brookfield in Exclusive Talks to Buy TerraForms
TARGA RESOURCES: S&P Revises Outlook to Stable & Affirms 'BB-' CCR
TEXAS PELLETS: Seek March 1 Plan Filing Period Extension
TODD GRINDING: Court Awards Over $100K to Auctioneer
TRANS-LUX CORP: Gabelli Equity Reports 23.5% Stake as of Dec. 31
TRINITY RIVER: Needs Until May 1 to File Plan of Reorganization
TUSCANY ENERGY: Has Until Feb. 28 to Solicit Acceptances to Plan
UP DEVELOPMENT: Taps Broad & Cassel as Special Litigation Counsel
UP FIELDGATE: Taps Broad & Cassel as Special Litigation Counsel
VANGUARD HEALTHCARE: Seeks March 30 Solicitation Period Extension
VELOCITY POOLING: S&P Lowers CCR to 'CCC' on Operating Weakness
VERTIV INTERMEDIATE: Moody's Rates $600MM Unsec. PIK Notes 'Caa1'
VERTIV INTERMEDIATE: S&P Rates New $600MM Unsec. Notes 'B-'
WALTER INVESTMENT: Bank Debt Trades at 4% Off
WELLDYNERX: Internal Control Errors Ups Uncertainty, Moody's Says
WEST CORP: QCP GP Investors Reports 4.5% Stake as of Dec. 31
WESTMORELAND COAL: BlackRock Holds 6.7% Equity Stake as of Dec. 31
YIELD10 BIOSCIENCE: Reports Preliminary 2016 Camelina Test Results
YORK RISK: Bank Debt Trades at 3% Off
YORK, PA: Moody's Affirms Ba1 Rating on $62MM Gen. Obligation Debt
YRC WORLDWIDE: BlackRock Reports 7.1% Equity Stake as of Dec. 31
*********
1619 PROPERTY: Stake in Brill Building Up for Auction March 14
--------------------------------------------------------------
Jones Lang LaSalle, on behalf of Brill Holdco LLC ("secured
party"), the assignee of BRE IV Series ("Original secured party"),
offers for sale at public auction of March 14, 2017, at 3:00 p.m.,
in the offices of Stroock & Stroock & Lavan LLP, 180 Maiden Lane,
New York, New York, in connection with a Uniform Commercial Code
sale, 100% of the limited liability company membership interest in
1619 Property Mezz LLC, which is the sole owner of 100% of the
limited liability company interests in 1619 Broadway Realty LLC
("senior borrower"), which is the sole owner of the property
commonly known as the "Brill Building" located at 1619 Broadway,
New York, New York.
The interests are owned by 1619 Property Mezz lLC, having its
principal place of business at c/o Brickman Fund V LP, 712 Fifth
Avenue, 6th Floor, New York, New York ("junior mezzanine
borrower").
The original secured party, as lender, made a lone to the junior
mezzanine borrower. In connection with the junior mezzanine loan,
the junior mezzanine borrower has granted to the original secured
party a first priority lien on the interests pursuant to that
certain junior mezzanine pledge and security agreement. Prior to
the sale, the original secured party will assign the junior
mezzanine loan and related documents to the secured party. The
secured party is offering the interests for sale in connection with
the foreclosure on the pledge of the interests. The junior
mezzanine loan is subordinate to (i) a mortgage loan and other
obligations and liabilities of the senior borrower of otherwise
affecting the property and (ii) a senior mezzanine loan and other
obligations and liabilities of the senior mezzanine borrower. The
senior mezzanine loan is secured by the limited liability company
membership interests owned by the senior mezzanine borrower in the
senior borrower.
The sale of the interest will be subject to all applicable third
party consents and regulatory approvals, if any.
All bids (other than credit bids of the secured party) must be for
cash, and the successful bidder must be prepared to deliver
immediately available good funds within 24 hours after the sale and
otherwise comply with the bidding requirements. Further
information concerning the interests, the requirements for
obtaining information and bidding on the interests and the terms of
sale can be found at:
http://www.1619-broadway-ucc-foreclosure.com/
Kelly Gaines
Tel: +1 212-812-5907
Email: kellog.gaines@am.jll.com
Brett Rosenberg
Tel: +1 212-812-5926
Email: brett.rosenberg@am.jll.com
220 ADAMS: Val Alahan to Get $85,000 by April 15
------------------------------------------------
220 Adams Ranch Road, LLC, filed with the U.S. Bankruptcy Court for
the Central District of California a third amended disclosure
statement in support of the Debtor's Chapter 11 plan.
The claim of Val Alahan, a junior secured creditor with a lien in
amount of approximately $120,000 secured to the Debtor's single
family residence in Colorado, is classified as Class 2 under the
Plan. The lien was consensual and produced as a result of a
settlement agreement between Mr. Alahan and John David Thomas.
This lien secured and guaranteed payment for Mr. Alahan. This lien
will be avoided as a term of the Plan and paid by Mr. Thomas
directly in conformity with with a payment schedule by and between
Mr. Alahan and Mr. Thomas already in force. The last remaining
payment on this schedule is slated to consist of one payment of
$85,000 to be paid on or before April 15, 2017.
Funds will be contributed by Mr. Thomas, or a business entity
designated by Mr. Thomas, to the Debtor. The Debtor has received
$120,000 by this method prior to the Effective Date, and ongoing
distributions will be made as necessary.
The Third Amended Disclosure Statement is available at:
http://bankrupt.com/misc/cacb15-22727-100.pdf
As reported by the Troubled Company Reporter on Dec. 13, 2016, the
Debtor filed with the Court a second amended disclosure statement
describing the Debtor's plan of reorganization. Priority unsecured
claims are impaired and entitled to vote under that Plan. These
creditors would be paid monthly in full over five years with 0%
interest. Payments would be made in equal monthly amortizing
installments starting on the first day of each calendar month after
the Effective Date.
Headquartered in Los Angeles, California, 220 Adams Ranch Road,
LLC, filed for Chapter 11 bankruptcy protection (Bankr. C.D. Calif.
Case No. 15-22727) on Aug. 13, 2015. The petition was signed by
John D. Thomas, manager.
Judge Ernest M. Robles presides over the case.
David G. Epstein, Esq., at The David Epstein Law Firm serves as the
Debtor's bankruptcy counsel. The Debtor also hired Anerio V.
Altman, Esq., at Lake Forest Bankruptcy as bankruptcy counsel.
99 CENTS: Moody's Changes Outlook to Stable & Affirms Caa1 CFR
--------------------------------------------------------------
Moody's Investors Service changed the ratings outlook for 99 Cents
Only Stores LLC to stable from Negative and affirmed the company's
Caa1 Corporate Family Rating and Caa1-PD Probability of Default
Rating. Moody's also affirmed the Caa1 rating of the company's
senior secured term loan and the Caa3 rating of its senior
unsecured notes. In addition, the company's Speculative Grade
Liquidity Rating is upgraded to SGL-3 from SGL-4.
"We are stabilizing the ratings outlook as 99¢ Only Stores'
operating performance has demonstrated improvement under the new
management with year to date positive same store sales growth,
improved profitability and stabilized margins", Moody's Senior
Credit Officer Mickey Chadha stated. "The company's liquidity
profile has also improved as the company refinanced its ABL and
continues to better manage its working capital requirements.
Although operating results have stabilized, Moody's expects credit
metrics to still remain weak for the next 12 months", Chadha
further stated.
The following ratings are affirmed:
Corporate Family Rating at Caa1
Probability of Default Rating at Caa1-PD
Senior Secured term loan maturing January 2019 at Caa1 (LGD3)
Senior Unsecured notes maturing December 2019 at Caa3(LGD5)
Following ratings are upgraded:
Speculative Grade Liquidity Rating, to SGL- 3 from SGL-4
Outlook action:
Outlook Changed To Stable From Negative
RATINGS RATIONALE
The Caa1 Corporate Family Rating reflects 99¢ Only Stores' weak
credit metrics, geographic concentration in California and the
intense competitive business environment in its core markets.
Despite Moody's expectation of improvement in credit metrics from
current levels, leverage will still be high with debt/EBITDA
(including lease adjustments) expected to be around 8.5 times and
EBIT/interest expected to be below 1.0 time in the next 12 months.
The company's new management team has seen some success in
implementing a turnaround strategy which includes improved
inventory and shrink management, more effective promotional
strategies, and improved efficiencies including new third party
distributor relationships. Management has also started to upgrade
the company's store base to enhance the customer experience and has
already installed a perpetual inventory system to better manage
inventory levels in over 100 stores with plans to have the system
in place in all its stores in the next couple of quarters. The
improvement in operations has been evident in the positive same
store sales growth for the last three quarters and improved
profitability. The improvements in working capital and top line
growth will also result in modest positive free cash flow in the
next 12 months. Other rating factors include the company's adequate
liquidity and the positive growth prospects for the dollar store
sector which benefits from affordable, low price points and
relative resistance to economic cycles.
The stable outlook reflects Moody's expectation for further
earnings improvements given the positive results of managements
strategic initiatives.
Ratings could be downgraded if the company does not refinance its
debt maturing in 2019 well in advance of its maturity or credit
metrics do not continue to improve from current levels. Any change
in the company's financial policies, including a higher risk of a
distressed exchange, could also result in a downgrade.
Given the weak credit metrics a ratings upgrade is unlikely in the
near-term. Ratings could be upgraded should 99¢ Only Stores'
earnings grow such that debt to EBITDA approaches 7.0 times and
free cash flow is positive, and the company refinances its debt
maturing in 2019 well in advance of its maturity. A ratings upgrade
would also require adequate liquidity and financial policies which
would support leverage remaining at its improved levels.
99¢ Only Stores LLC is controlled by affiliates of Ares Management
and Canada Pension Plan Investment Board. As of October 28, 2016,
the Company operated 394 retail stores with 287 in California, 48
in Texas, 38 in Arizona, and 21 in Nevada. Revenues are about $2.0
billion.
The principal methodology used in these ratings was "Retail
Industry" published in October 2015.
ALACHUA COUNTY: Fitch Affirms 'BB' Rating on $68.2MM Revenue Bonds
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Fitch Ratings has affirmed the 'BB' rating on the following Alachua
County Health Facilities Authority, FL bonds issued on behalf of
East Ridge Retirement Village (ERRV):
-- $68.2 million health facilities revenue bonds, series 2014.
The Rating Outlook is revised to Negative from Stable.
SECURITY
The bonds are secured by a pledge of gross revenues and receivables
of the obligated group (OG), a first mortgage lien on all current
and future property of the OG, and a fully-funded debt service
reserve.
KEY RATING DRIVERS
PROJECT STABILIZATION LAGGING: The outlook revision to negative
reflects concern from the slow fill-up of ERRV's new units below
covenant requirements. Through Sept. 30, 2016 ERRV's occupancy was
62% in its 90 new assisted living units (ALUs), and 29% in its 31
new memory support units (MSUs), and 63.5% in its 74 new skilled
nursing facility (SNF) beds. While below covenant requirements ERRV
remains in compliance with a consultant retained and has
dramatically shifted its marketing strategy, expected to bear
results by 2017.
STEADY ILU OPCCUPANCY: Independent living unit (ILU) occupancy
remained steady at 79.6% through Sept. 30, 2016, generating $1.6
million in net turnover entrance fees. This follows a more robust
2015 at 83.3% occupancy and $4.6 million in net entrance fees but
remains consistent with historical levels. Incremental improvement
is expected as ERRV continues the ongoing renovation of its villa
units.
PRESSURED LIQUIDITY: As expected, ERRV's balance sheet was impacted
by heightened capital expenditures and increased expenses in
interim 2016, with $17 million and 271 days of cash on hand at
Sept. 30 2016. Incremental improvement is expected going forward
with improved occupancy and expense controls post-expansion.
ELEVATED DEBT LEVEL: ERRV's leverage metrics reflect a sizeable
debt burden against its current financial profile, affording only
limited financial flexibility against sustained operating
challenges. No additional debt is currently planned, though capital
expenditures are expected to remain healthy near $2 million in
2017.
RATING SENSITIVITIES
STABILIZED OCCUPANCY: East Ridge Retirement Village's (ERRVs) 'BB'
rating is contingent upon its ability to attain sufficient fill of
its new units, at or above covenant levels in 2017. Achieving or
surpassing occupancy targets would bring stability and liquidity
growth, leading to an outlook revision back to Stable. Conversely,
continued failure to achieve covenant required occupancy levels
beyond 2017 would further pressure the rating.
FUTURE CAPITAL PLANS: While outside the 12 to 24 month rating
review period, ERRV is contemplating its second campus expansion
phase which would likely include an independent living unit (ILU)
expansion with possible debt financing. Fitch anticipates reviewing
these plans as they are formed and approved, and will take rating
action as necessary.
CREDIT PROFILE
East Ridge Retirement Village (ERRV) is a Type A lifecare
continuing care retirement community (CCRC) located on 76 acres in
the town of Cutler Bay, Florida, approximately 20 miles south of
Miami. The community currently includes 221 Independent Living
Units (ILUs), 90 Assisted Living Units (ALUs), 31 Memory Care Units
(MCUs) and 74 Skilled Nursing Facility (SNF) units. ERRV reported
total revenues of $20.2 million in fiscal 2015 (year ended Dec.
31).
PROJECT FILL BEHIND SCHEDULE
Fitch's primary credit concern is the lagging fill-up of ERRV's
project units, which include 90 new ALUs, 31 new MSUs, and 74 SNF
beds. ERRV was compliant with its occupancy covenant requirements
through the March 31 2016 test date, but has generally lagged from
then through the most recent test date. For its new units ERRV
reported 59.5% ALU occupancy (below the 77.2% covenant) and 87.8%
SNF occupancy (just ahead of the 85% covenant) at Nov. 30, 2016,
though SNF occupancy has been somewhat volatile.
As a result, a consultant was retained in early 2016 (satisfying
the covenant call-in requirement) and ERRV has been working to
implement significant changes across its marketing, sales, and
product functions. Notable changes in staff, leadership, and
processes are expected to produce better results in 2017. Should
ERRV achieve its targeted sales and occupancy, it should generate
incremental cash flow and balance sheet growth as a result.
OUTLAYS IMPACTING LIQUIDITY
In an effort to maintain a competitive ILU product, ERRV's capital
spend near $2 million in 2016 and similar spend in 2017 is being
used in part to renovate its villas. ILU occupancy has remained
steady near 80% through the nine-month interim ended Sept. 30, 2016
with $1.6 million in net entrance fees. This follows a solid 2015
which ended with 83% occupancy and over $4.6 million in net
entrance fees. ERRV is expected to continue to aggressively manage
its expenses and improve its occupancy, which should support
incremental balance sheet growth going forward. ERRV reported 391
DCOH at Nov. 30 2016, ahead of its low 361 reported at the Sept.
30, 2016 test date and well ahead of the 180 DCOH requirement.
DEBT PROFILE
ERRV remains highly leveraged, as indicated by a high 23.4% MADS as
a percent of revenue and 0.6x coverage of MADS through
Sept. 30, 2016. Still, ERRV's first debt service coverage covenant
test won't occur until the earliest of a) 2017 after stabilized
occupancy, or b) in 2019.
ERRV has $68.2 million in series 2014 fixed-rate term bonds
outstanding, with maturity in 2049. Debt service is not level, with
25 months of capitalized interest and amortization through 2019.
MADS is equal to $5.1 million, and debt service is level from 2020
through maturity. ERRV has no swaps.
DISCLOSURE
ERRV covenants to provide annual disclosure within 150 days of
fiscal year end and quarterly disclosure within 45 days of each
quarter end. Disclosure will include balance sheet, statement of
revenues/expenses, statement of cash flows, calculation of days of
cash on hand, debt service coverage, and occupancy. Disclosure is
made through the Municipal Securities Rulemaking Board's EMMA
system, and has been timely and thorough.
AMERICAN GREETINGS: Moody's Rates New $575MM Secured Loans 'Ba2'
----------------------------------------------------------------
Moody's Investors Service assigned American Greetings Corporation a
Corporate Family Rating (CFR) and Probability of Default Rating
(PDR) of B1 and B1-PD, respectively. At the same time, Moody's
assigned a B3 rating to the company's $375 million of newly
proposed 8-year senior unsecured notes, and a Ba2 rating to the
company's newly proposed 5-year senior secured credit facilities,
which will consist of a $300 million term loan A and $275 million
revolving credit facility. The outlook for the company is
maintained at stable.
Proceeds from the new notes and term loan A together with roughly
$98 million of borrowings on the new revolving credit facility (pro
forma for November 30, 2016) will be used to repay $225 million of
7.375% senior unsecured notes due 2021, $185 million of outstanding
borrowings on its existing term loan A, $56 million of existing
revolver borrowings, $285 million of Holdco PIK notes at OpCo's
indirect parent, Century Intermediate Holding Company 2
("Century"), and pay estimated fees and breakage costs associated
with early repayment of the debt of nearly $22 million. As a result
of the expected repayment of debt at Century, the existing ratings
and outlook at Century will be withdrawn upon the close of the
transaction.
According to Moody's AVP - Analyst Brian Silver, "The proposed
transaction is slightly leveraging but Moody's anticipates the
company will deleverage at a moderate pace over time, primarily
driven by solid cash flow generation that can be used for debt
repayment."
The following ratings were assigned at American Greetings
Corporation (subject to final documentation):
Corporate Family Rating at B1;
Probability of Default Rating at B1-PD;
$275 million senior secured revolving credit facility due 2022 at
Ba2 (LGD2);
$300 million senior secured term loan A due 2022 at Ba2 (LGD2);
$375 million senior unsecured notes due 2025 at B3 (LGD5);
The outlook is maintained at stable.
The following ratings will be withdrawn from American Greetings
Corporation following the close of this transaction (subject to
final documentation):
$250 million senior secured revolving credit facility due 2018
rated Ba2 (LGD2);
$350 million principal ($185 million outstanding) senior secured
term loan due 2019 rated Ba2 (LGD2);
$225 million senior unsecured notes due 2021 rated B2 (LGD4).
The following ratings will be withdrawn at Century Intermediate
Holding Company 2 following the close of the transaction (subject
to final documentation):
Corporate Family Rating of B1;
Probability of Default Rating of B1-PD;
Speculative Grade Liquidity Rating of SGL-2;
$285 million senior unsecured PIK toggle notes due 2019 rated B3
(LGD6);
The outlook will be withdrawn.
RATINGS RATIONALE
American Greetings Corporation's B1 Corporate Family Rating is
largely reflective of its elevated leverage profile. It also
reflects the business risks inherent to the greeting card industry,
a mature industry characterized by low or in some cases declining
growth rates, weak customer loyalty from a branding perspective and
heavy competition. The ratings are supported by the company's
success in maintaining its solid position in the US and UK greeting
card industries, where the company is one of two leading players,
its relatively conservative financial policy, long operating
history of over 100 years, and important longstanding relationships
with retail customers. Demand for the company's products is
relatively predictable, primarily driven by everyday life events
and holidays, but slowing traffic at retail in both the US and UK
has pressured the top-line and weakened profitability. Top-line
pressure is expected to remain a challenge given the difficult
retail environment, but Moody's expects the company to remain
vigilant with respect to controlling expenses, and cash flows are
expected to benefit from easing capital expenditures related to a
slower pace of ERP investment going forward. American Greetings is
expected to maintain a good liquidity profile based on Moody's
expectations for increasing free cash flow generation and
availability under its revolver. Also, while dividends are unlikely
in the near term, the rating anticipates that the company will make
dividend payments to its owners over time.
American Greetings will have a good liquidity profile, with total
liquidity of roughly $208 million at the close of the transaction,
consisting of approximately $151 million of revolver availability
(subject to TBD covenant limitations and after taking into account
expected out-of-the-box borrowings of roughly $98 million and
approximately $26 million of existing L/C's pro forma for November
30, 2016), roughly $7 million of cash on hand and $50 million of
availability on its AR facility. The company is expected to remain
compliant under its covenants over the next twelve months and there
are no near-term debt maturities.
The stable outlook reflects Moody's expectation that American
Greetings' top-line will continue to face pressure as a result of a
sluggish retail environment, but profitability and leverage are
expected to remain relatively stable over the next 12 to 18 months
as the company controls expenses and uses free cash flow for debt
repayment.
The ratings could be upgraded if revenues increase on a sustained
basis and credit metrics improve from current levels. Specifically,
if debt-to-EBITDA is sustained below 4.0 times and retained cash
flow-to-net debt approaches 20%. Alternatively, the ratings could
be downgraded if operating performance weakens considerably or if
the company increases leverage to fund shareholder returns or
acquisitions such that debt-to-EBITDA is sustained above 5.0 times
or retained cash flow-to-net debt falls below 10% for a prolonged
period.
The principal methodology used in these ratings was Global Packaged
Goods published in January 2017.
American Greetings Corporation ("American Greetings") is a leading
designer, manufacturer and distributor of both everyday and
seasonal greeting cards and other social expression products. The
company also owns retail outlets in the UK through its Clinton
Cards segment. American Greetings was acquired by indirect parent
Century Intermediate Holding Company 2 via a management buyout
completed in August 2013 and is now controlled and indirectly owned
and by the Weiss family (descendants of the founders). Sales were
approximately $1.8 billion for the twelve month period ended Aug.
26, 2016.
AMERICAN GREETINGS: S&P Affirms 'BB-' CCR; Outlook Stable
---------------------------------------------------------
S&P Global Ratings affirmed its 'BB-' corporate credit rating on
Cleveland, Ohio-based American Greetings Corp. The outlook is
stable.
American Greetings is refinancing $285 million HoldCo PIK Toggle
Notes due 2019 and $225 million OpCo notes due 2021, with a new
$575 million credit facility and $375 million in new OpCo notes.
S&P also assigned its 'BB+' issue-level rating to the company's new
$275 million revolving credit facility due 2021 and
$300 million Term Loan A with a recovery rating of '1'. S&P also
assigned a 'BB-' rating to the new senior unsecured notes due 2025,
with a recovery rating of '4', indicating S&P's expectation average
recovery (30%-50%, at the low end of the range) in the event of a
payment default.
The 'BB+' rating on the existing term loan, the 'B' rating on the
HoldCo notes, and the 'BB-' rating on the senior unsecured notes
due 2021 are affirmed, and the respective '1', '6', and '3'
recovery ratings are unchanged. The '1' recovery rating indicates
S&P's expectation of very high (90%-100%) recovery in the event of
a payment default. The '3' recovery rating indicates S&P's
expectation of meaningful recovery (50%-70%, at the high end of the
range). The '6' recovery rating indicates S&P's expectation of
negligible recovery (0%-10%). The ratings on the existing term
loan, HoldCo notes, and the senior unsecured notes due 2021 will be
withdrawn at the close of the transaction.
The rating affirmation incorporates American Greetings' recent
refinancing transaction that is effectively leverage neutral. This
leads S&P to continue to expect that American Greetings' adjusted
leverage will remain below 4x over the next year from steady
adjusted EBITDA margins and excess cash flow directed toward
gradual debt reduction.
American Greetings is narrowly focused in the mature and low-growth
U.S. greeting card industry, with its core greeting card business
accounting for about 70% of fiscal 2016 sales. However, the
company commands a strong market position as a leading manufacturer
and distributor of greeting cards and other social expression
products in the U.S., with market share similar to Hallmark Cards
Inc. The company also has good sales channel penetration and
customer diversity across big box retailers, dollar stores, and
groceries, with moderate geographic diversification in the U.S.,
U.K., and Australia (although only about one-third of sales are
outside of the U.S.). Although S&P believes there is a modest risk
that volumes and pricing could decline periodically from
unfavorable contract renewals, market share is largely stable given
the greeting cards dominance by American Greetings and Hallmark.
In addition, S&P believes any lost business could be managed with
cost cutting, product innovation, and mix improvement. S&P's
ratings also consider the company's 100% ownership structure by the
Weiss Family and the possibility that the interests of majority
shareholders will not be aligned with the interests of creditors.
The rating outlook is stable. S&P expects the company's debt to
EBITDA to remain well below 4x, FFO-to-adjusted debt between
15%-20%, and that the company will continue to apply free cash flow
for debt repayment. Furthermore, S&P expects the company will
continue to cut costs to maintain EBITDA margins in the 17%-18%
range and that product innovation and healthy economic growth will
prevent a significant deterioration of its top line over S&P's
forecast horizon.
S&P could lower the rating if there were any material disruptions
to operations, such as an abrupt shift away from greeting cards or
a loss of a major customer, leading to significantly weakening
revenues and cash flow for America Greetings. Moreover, ratings
pressure could occur if the company adopts more aggressive
financial policies--including any material debt-financed
acquisitions or dividends--causing leverage to increase to well
over 4x on a sustained basis. S&P estimates debt would need to
increase by over $200 million for this to occur, assuming constant
EBITDA levels.
While unlikely within the next 12 months, S&P could raise the
ratings if the company can strengthen its competitive position by
further diversifying its business or improve financial leverage to
below 3x. However, S&P don't believe the company will generate
sufficient cash flow to pay down enough debt to improve leverage to
below 3x over the rating horizon, assuming constant adjusted EBITDA
levels.
AMERICAN SAMOA: Moody's Affirms Ba3 Rating on Revenue Bonds
-----------------------------------------------------------
Moody's Investors Service has affirmed the Ba3 rating on the
Territory of American Samoa's outstanding general revenue bonds and
assigned a negative outlook. The territory has approximately $78
million general revenue bonds outstanding issued in the three
series in 2015 and 2016.
The Ba3 rating reflects American Samoa's status as a US territory
which receives generous operating and capital assistance from the
federal government, as well as its relatively moderate long-term
liabilities. The rating also factors in the territory's small and
volatile economy, low income levels, weak financial position, and
financial management challenges. Additionally, there are risks
associated with changes in American Samoa's banking system,
including the loss of the territory's only US-based retail bank and
its replacement with a government-owned charter bank.
Rating Outlook
The negative outlook reflects the recent closure of one of the
territory's two tuna packing plants and uncertainty about the
future viability of the tuna industry, a focus of the territory's
economy.
Factors that Could Lead to an Upgrade
Diversification and growth of economy.
Sustained improvement in financial management and financial
position.
Factors that Could Lead to a Downgrade
Further weakening of financial position.
Economic deterioration.
Loss of US federal support.
Legal Security
The bonds will be special limited obligations of American Samoa,
secured by a pledge of specific revenues. As defined by the bond
indenture, the revenues are comprised of personal income taxes,
corporate income taxes, and certain excise taxes that include a tax
on imported beer, malt extract, alcoholic beverages, motor
vehicles, and others. The pledge of tax revenues is subject to the
prior deduction of certain legislative earmark deductions. These
pledged taxes are collected by the territory and transferred to the
trustee on the 15th of each month on a one-sixth, one-twelfth
basis. Fiscal 2015 revenues provide over 11 times coverage of peak
debt service, and the territory has a standard debt service reserve
fund. If the territory chooses to issue additional bonds,
historical pledged revenue must be at least 4.0 times average
annual debt service. While these pledged taxes are the main source
of revenue, the bonds are also backed by the full faith and credit
of the territory.
Use of Proceeds
Not applicable.
Obligor Profile
American Samoa is a chain of seven small islands in the Pacific
Ocean about 2,700 miles southwest of Hawaii and 2,300 miles
northeast of New Zealand, that became a US territory in 1900. While
that region is generally not prone to hurricanes, the territory did
experience a major tsunami in 2009.
Methodology
The principal methodology used in this rating was US States Rating
Methodology published in April 2013.
B.C. GRAND: Seeks Court Approval for Cash Collateral Use
--------------------------------------------------------
B.C. Grand, LLC asks the U.S. Bankruptcy Court for the Northern
District of Georgia for authorization to use cash collateral.
The Debtor owns certain real property consisting of a 10-story
office building located at 44 Broad Street, NW, Atlanta, Georgia,
which is commonly known as The Grant Building. The Property is
leased to commercial tenants and is appraised at $15,400,000.
First Citizens Bank & Trust Company claims a first position lien
against the Property, and asserts a claim in the amount of
$2,358,877 as of Jan. 24, 2017.
The United States Small Business Administration claims a second
position lien against the Property. The Debtor's Schedules reflect
that the SBA has a loan balance of approximately $1,400,000,
although the SBA has not filed a claim in the case.
The Atlanta Development Authority, as agent for the City of
Atlanta, Georgia, has claimed a third position lien against the
Property. The Debtor's Schedules reflect that the loan to The
Atlanta Development Authority has a current balance of
approximately $86,000.
The Debtor contends that First Citizens Bank, the SBA, and The
Atlanta Development Authority, may also claim an interest in the
rents generated at the Property.
The Debtor relates that CapitalPlus Equity, LLC, may claim a lien
against the Property, but that their security agreement does not
provide for any interest in rents.
The Debtor tells the Court that unless it is authorized to use cash
collateral in the ordinary course of business, it will be unable to
operate during the pendency of its case.
The Debtor further tells the Court if it is unable to use Cash
Collateral on an interim basis, it will be unable to:
(a) pay for maintenance and repairs;
(b) pay the 24-hour security and concierge personnel, who
control access to the building for tenants and visitors;
(c) pay future insurance premiums as they come due in order to
protect the Property, protect secured creditors, and protect
Debtor’s estate from potential losses;
(d) pay utilities; and
(e) pay other ordinary and necessary expenses associated with
the building in order to generate revenues and maintain value.
Debtor submits that the entities that have an interest in cash
collateral are adequately protected on the basis that the Property
is valued at substantially more than the amounts of debts of the
entities with interests in cash collateral. The Debtor tells the
Court that the appraisal obtained by it with an effective date of
October 17 2016, indicates a fair market value of over
$15,000,000.00. The Debtor further tells the Court that such
valuation exceeds the combined total of all of the debts claimed by
entities with interests in cash collateral, which totals
approximately $3,844,877.31.
The Debtor proposes to make the following adequate protection
payments:
(a) First Citizens Bank: $14,906.24 per month
(b) U.S. Small Business Administration: $8,447 per month
The Debtor further proposes to provide a replacement lien to its
Secured Lenders to the same extent and with the same priority as
its prepetition lien.
A full-text copy of the Debtor's Motion, dated Jan. 25, 2017, is
available at
http://bankrupt.com/misc/BCGrand2017_1750094mgd_22.pdf
About B.C. Grand, LLC
B.C. Grand, LLC, a single asset real estate business based in
Atlanta, Georgia, filed a chapter 11 petition (Bankr. N.D. Ga. Case
No. 17-50094) on January 2, 2017. The petition was signed by
Charles E. Johnson, Sr., authorized representative. The Debtor is
represented by Michael D. Robl, Esq., at Robl Law Group LLC. The
Debtor disclosed total assets of $17.03 million and total debt of
$4.13 million.
The Debtor owns certain real property consisting of a ten story
office building in downtown Atlanta, Georgia, located at 44 Broad
Street, NW, Atlanta, Georgia 30303, which is commonly known as The
Grant Building.
The Grant Building is one of the oldest high-rise buildings in
downtown Atlanta. Its architects were sent to study the styles of
commercial architecture being constructed in Chicago in the late
1800s, and the building is modeled on those styles, with
construction completed in the year 1898. The building has a
historic façade and lobby, and has been utilized recently as a
location for filming television shows.
BECKFORD GROUP: Disclosure Statement Hearing Set for March 9
------------------------------------------------------------
The U.S. Bankruptcy Court for the District of New Jersey is set to
hold a hearing on March 9, at 11:00 a.m., to consider approval of
the disclosure statement, which explains the Chapter 11 plan of The
Beckford Group, LLC.
The hearing will take place at MLK Jr. Federal Building, Courtroom
3B, Third Floor, 50 Walnut Street, Newark, New Jersey. Objections
must be filed no later than 14 days prior to the hearing.
Beckford Group is represented by:
Justin M. Gillman, Esq.
Gillman & Gillman
770 Amboy Avenue
Edison, NJ 08837
Phone: 732-661-1664
Email: abgillman@optonline.net
About The Beckford Group
The Beckford Group, LLC sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. D.N.J. Case No. 15-33248) on December 11,
2015. The petition was signed by Julieann Dennis, managing member.
The case is assigned to Judge Vincent F. Papalia.
At the time of the filing, the Debtor estimated assets of less than
$500,000 and liabilities of less than $100,000.
BERNARD L. MADOFF: Goldman Loses Appeal to Unblock $11-Bil. Suit
----------------------------------------------------------------
Jonathan Stempel at Reuters reports that U.S. District Judge
Gregory Woods in Manhattan has affirmed a decision by U.S.
Bankruptcy Judge Stuart M. Bernstein barring A&G Goldman
Partnership and Pamela Goldman from pursuing a lawsuit in Florida
federal court to recover $11 billion from the estate of former
Bernard Madoff investor Jeffry Picower for his role in the Ponzi
scheme.
A copy of Judge Wood's decision is available at
https://is.gd/AIekdo from Leagle.com.
Reuters relates that the firm of Irving H. Picard, the liquidating
trustee for Bernard L. Madoff Investment Securities LLC, said the
litigation could undermine a $7.2 billion settlement meant to
benefit the Ponzi schemer's former clients.
Martin O'Sullivan, writing for Bankruptcy Law360, recalls that
Judge Bernstein in February 2016 said Ms. Goldman's lawsuit is
barred by a $7.2 billion settlement between Mr. Picower and Mr.
Picard, wherein Mr. Picard recovered $5 billion and the government
got $2.2 billion. The settlement, according to Law360, included a
permanent injunction barring all claims against Mr. Picower that
duplicated Mr. Picard's lawsuit.
Ms. Goldman, Law360 relates, is one of a group of investors who
have been trying to sue Mr. Picower unsuccessfully since 2010 and
had argued that her latest lawsuit brings fresh claims alleging Mr.
Picower, who died in 2009, had direct control of the Ponzi scheme
and should therefore be liable for the entire $18 billion in
investor funds lost to it.
Law360 quoted Judge Woods as saying, "The Goldman . . . complaint
seeks recovery for alleged wrongs that affected all creditors in
the same way and therefore, presses a claim that belongs
exclusively to the trustee."
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 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.).
From recoveries in lawsuits coupled with money advanced by SIPC,
Mr. Picard has commenced distributions to victims. As of Dec. 14,
2016, the SIPA Trustee has recovered more than $11.486 billion and,
following the eight interim distribution in January 2017, will
raise total distributions to approximately $9.72 billion, which
includes more than $839.6 million in advances committed by SIPC.
BERNARD L. MADOFF: Victims Cannot Sidestep $7.2-Billion Settlement
------------------------------------------------------------------
The American Bankruptcy Institute, citing Jonathan Stempel of
Reuters, reported that a federal judge has blocked litigation that
the trustee liquidating Bernard Madoff's firm said could undermine
a $7.2 billion settlement meant to benefit the Ponzi schemer's
former customers.
According to the report, in a decision made public on Jan. 25, U.S.
District Judge Gregory Woods in Manhattan said A&G Goldman
Partnership and Pamela Goldman cannot pursue a Florida lawsuit to
recover $11 billion from the estate of Jeffry Picower, who they say
helped perpetuate Madoff's fraud.
The report related that the decision is a victory for Irving
Picard, the trustee liquidating Bernard L. Madoff Investment
Securities LLC, whose settlement with Picower's estate is the
largest since Madoff's fraud was uncovered in December 2008.
Mr. Picard also won a permanent injunction in 2011 barring
competing claims against the estate, the report further related.
Picower died in October 2009, the report said.
In court papers, Picard said letting the Goldman plaintiffs sue
Picower's estate to recoup some $11 billion of customer losses, on
top of the $7.2 billion, would create a "shadow" bankruptcy estate
and undermine his authority to settle claims, the report added.
The case is In re: Bernard L. Madoff Investment Securities LLC,
U.S. District Court, Southern District of New York, Nos. 16-2058,
16-2065.
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 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.).
From recoveries in lawsuits coupled with money advanced by SIPC,
Mr. Picard has commenced distributions to victims. As of Dec. 14,
2016, the SIPA Trustee has recovered more than $11.486 billion
and,
following the eight interim distribution in January 2017, will
raise total distributions to approximately $9.72 billion, which
includes more than $839.6 million in advances committed by SIPC.
BRADLEY REIFLER: Files for Bankruptcy, Faces Jail for Contempt
--------------------------------------------------------------
Patrick Fitzgerald, writing for The Wall Street Journal, reported
that Bradley Reifler, former star trader at defunct commodities
brokerage Refco Inc. and co-founder of boutique brokerage Pail
Capital, filed for Chapter 7 protection on Jan. 27, 2017, in U.S.
Bankruptcy Court in Poughkeepsie, N.Y., listing assets of less than
$50,000 and debt of more than $50 million, including a $23.3
million federal tax bill.
According to the report, the chapter 7 filing came days before U.S.
District Court Judge Deborah Batts was set to consider whether Mr.
Reifler, 57 years old, should be held in civil contempt for failing
to pay $2 million to J.P. Morgan Chase.
Judge Batts "basically wanted to put me in debtors' prison," Mr.
Reifler said in an email to WSJ Pro Bankruptcy.
Court papers show that J.P. Morgan has been sparring with Mr.
Reifler for more than five years, trying to collect a $6.1 million
judgment against the money manager, the report related. The
judgment stems from a loan the bank made to Pali Capital, the
boutique brokerage he once ran and which shut down in 2010, the
report said. Mr. Reifler personally guaranteed the loan, the
report added.
BURGI ENGINEERS: Wants Exclusivity Period Extended by 60 Days
-------------------------------------------------------------
Burgi Engineers, LLC and Burgi Corporation ask the U.S. Bankruptcy
Court for the District of Montana to extend their exclusive periods
for filing their plans of reorganization and soliciting acceptances
to their plans by 60 days.
The Debtors relate that they filed their individual Chapter 11
Plans of Reorganization, as well as a Joint Disclosure Statement
pursuant to the procedures applicable to small business Chapter 11
cases, whereby the hearings on the Disclosure Statement and
confirmation of the Plan of Reorganization are generally scheduled
for the same date.
The Court entered an Order and Notice of Hearing on Disclosure
Statement setting a hearing on only the Disclosure Statement for
March 9, 2017. The Debtor contends that the Court's Order and
Notice of Hearing on Disclosure Statement reflects the procedure
followed on a Chapter 11 case that is not a small business case.
The Debtors tell the Court that considering the hearings on the
Disclosure Statement and confirmation of the Plans of
Reorganization were scheduled separately, they are requesting for
an extension of 60 days to file their Plans of Reorganization. The
Debtors further tell the Court that such an extension will
accommodate the additional time anticipated for a separate hearing
on confirmation of the Plans of Reorganization and acceptance of
the Plans of Reorganization contemplated by 11 USC Section
1121(c)(3) and will allow the Debtors and other parties in interest
to conform to the deadlines and procedures of a standard Chapter 11
case rather than a small business case.
About Burgi Engineers, LLC.
Burgi Corporation, based in Columbia Falls, Montana, filed a
Chapter 11 petition (Bankr. D. Mont. Case No. 16-60771) on July 28,
2016. The Hon. Ralph B. Kirscher presides over the case. Maggie W
Stein, Esq., at Goodrich & Reely, PLLC, serves as bankruptcy
counsel.
In its petition, the Debtor estimated $532,282 in assets and $1.08
million in liabilities. The petition was signed by Robert Burgi,
president.
No official committee of unsecured creditors has been appointed in
the case.
C.H.I.R. CORP: Solicitation Period Extended Through March 9
-----------------------------------------------------------
Judge Laurel M. Isicoff of the U.S. Bankruptcy Court for the
Southern District of Florida extended C.H.I.R. Corporation's
exclusive solicitation period on an interim basis until March 9,
2017.
The Debtor's requested exclusivity extension was continued to be
heard on March 9, 2017 at 1:30 p.m. The deadline for filing of
objections to the Debtor's Disclosure Statement was extended to
March 2, 2017.
The State Court Receiver, Soneet Kapila will continue the
operations of the Debtor on an interim basis and turnover will be
excused pending the hearing date of March 9, 2017.
The Troubled Company Reporter had earlier reported that the Debtor
asked the Court to extend its exclusive solicitation period through
March 20, 2017 as it was still in the process of soliciting
acceptances for its plan. The Debtor contended that it had
conducted extensive negotiations with multiple parties regarding
plan treatment and status of claims. The Debtor also contended that
the negotiations were still ongoing as the Debtor was attempting to
finalize agreements that will provide for an acceptable plan to its
creditors.
About C.H.I.R. Corporation
C.H.I.R. Corporation, a single asset real estate business based in
Miami, Florida, filed a chapter 11 petition (Bankr. S.D. Fla. Case
No. 16-20921) on Aug. 5, 2016. The petition was signed by Caryle
Anthony DeCruise, president and director. The Debtor is
represented by Richard R. Robles, Esq., at the Law Offices of
Richard R. Robles, P.A. The case is assigned to Judge Robert A.
Mark. The Debtor estimated assets at $500,000 to $1 million and
liabilities at $1 million to $10 million at the time of the filing.
CAESARS ENTERTAINMENT: Moody's Hikes Corp. Family Rating to B3
--------------------------------------------------------------
Moody's Investors Service upgraded the Corporate Family ratings to
B3 and Probability of Default ratings to B3-PD for both Caesars
Entertainment Resorts Properties, LLC and Caesars Growth Properties
Holdings, LLC.
The rating upgrade for each company reflects the announcement on
Jan. 17, 2017, by Caesars Entertainment Corporation (CEC), Caesars
Entertainment Operating Company, Inc. (CEOC), and its Chapter 11
debtor subsidiaries that the U.S. Bankruptcy Court for the Northern
District of Illinois had confirmed the debtors Plan of
Reorganization (the Plan). The confirmed Plan does not include any
contribution from the entities subject to these rating actions and
includes provisions to resolve all related litigation among the
major creditor constituencies, CEC and related parties. "The Plan
confirmation alleviates Moody's concerns that CERP or CGPH could be
drawn into the restructuring and the upgrades reflect improving
margins and credit metrics over the past two years at each entity."
said Moody's analyst Peggy Holloway. Additionally, Moody's stable
gaming industry outlook supports modestly higher revenues and
EBITDA over the next year.
Moody's also assigned a Speculative Grade Liquidity rating of SGL-2
to both CERP and CGPH. Moody's estimates that both CERP and CGPH
can cover interest, scheduled debt amortization, and capital
spending largely from cash flow and excess cash balances. However,
modest revolver draws are likely to bridge timing gaps between cash
inflows and outflows.
Upgrades:
Issuer: Caesars Entertainment Resort Properties, LLC
-- Probability of Default Rating, Upgraded to B3-PD from Caa1-PD
-- Corporate Family Rating, Upgraded to B3 from Caa1
-- Senior Secured Bank Credit Facility, Upgraded to B2(LGD3) from
B3(LGD3)
-- Senior Secured second lien Regular Bond/Debenture, Upgraded to
Caa2(LGD5) from Caa3(LGD5)
Issuer: Corner Investment Propco, LLC
-- Senior Secured Bank Credit Facility, Upgraded to B2(LGD3) from
B3(LGD3)
Issuer: Caesars Growth Properties Holdings, LLC
-- Probability of Default Rating, Upgraded to B3-PD from Caa1-PD
-- Corporate Family Rating, Upgraded to B3 from Caa1
-- Senior Secured Bank Credit Facility, Upgraded to B2(LGD3) from
B3(LGD3)
-- Senior Secured second lien Regular Bond/Debenture, Upgraded to
Caa2(LGD5) from Caa3(LGD5)
Outlook Actions:
Issuer: Caesars Entertainment Resort Properties, LLC
-- Outlook, Remains Stable
Issuer: Caesars Growth Properties Holdings, LLC
-- Outlook, Remains Stable
Assignments:
Issuer: Caesars Entertainment Resort Properties, LLC
-- Speculative Grade Liquidity Rating, Assigned SGL-2
Issuer: Caesars Growth Properties Holdings, LLC
-- Speculative Grade Liquidity Rating, Assigned SGL-2
RATINGS RATIONALE
Caesars Entertainment Resort Properties LLC ("CERP")
CERP's B3 Corporate Family Rating reflects above average adjusted
debt/EBITDA (7.1x LTM 9/30/16), and low EBIT/interest (1.0x) for
the rating category and geographic concentration in Las Vegas and
Atlantic City. Ratings consider the prime location of the company's
Las Vegas Strip properties and positive visitation trends in Las
Vegas - CERP's largest market. Despite disruption caused by room
renovations in 2017, Moody's expects CERP can grow EBITDA modestly
given strength in the Las Vegas market. Thus, leverage and coverage
is expected to improve only modestly in 2017.
The stable rating outlook reflects positive visitation trends in
Las Vegas (CERP's largest market), as well as Moody's stable
overall gaming industry outlook. A higher rating would require a
reduction in debt/EBITDA to around 6.0 times, EBIT/interest above
1.0x, and good liquidity. CERP's ratings could be downgraded if
gaming revenues in the company's key Las Vegas and Atlantic City
markets show signs of sustained deterioration, or if debt/EBITDA
increase above 7.25x.
Caesars Growth Properties Holdings, LLC
CGPH's B3 Corporate Family rating reflects adjusted debt/EBITDA
(6.1x LTM 9/30/16) at the high end and EBIT/interest (1.1x) at the
low end of the B3 range and geographic concentration in two
markets, Las Vegas and New Orleans. Ratings consider the favorable
location of it Las Vegas casino properties and positive visitation
trends to Las Vegas - CGPH's largest market. Moody's expects CGPH
can grow EBITDA modestly despite disruption from room renovations
given strength in the Las Vegas market. Thus, leverage and coverage
is expected to improve only modestly in 2017.
The stable rating outlook reflects positive visitation trends in
Las Vegas and Moody's stable gaming industry outlook. A higher
rating would require a debt/EBITDA below 6.0x. EBIT/interest above
1.25x, and good liquidity. CGPH's ratings could be downgraded if
gaming revenues in the company's key Las Vegas market shows
sustained deterioration, or if debt/EBITDA increases above 6.5.
CERP is a wholly owned subsidiary of CEOC and owns 8 properties
that generate approximately $2.2 billion in annual revenues.
CGPH is a wholly owned subsidiary of Caesars Growth Partners, LLC,
a joint venture between CEC and CAC. CGPH owns 5 properties and
generates about $1.3 billion in annual revenues.
The principal methodology used in these ratings was Global Gaming
Industry published in June 2014.
CAMBER ENERGY: Agrees to Revise Post-Closing Covenant Under APA
---------------------------------------------------------------
Effective Jan. 24, 2017, Camber Energy, Inc., formerly known as
Lucas Energy, Inc., entered into a Third Amendment to Asset
Purchase Agreement amending that certain Asset Purchase Agreement
entered into among the Company and twenty-three sellers and Segundo
Resources, LLC, as a Seller and as a representative of the Sellers
named therein, dated Dec. 31, 2015, as previously amended by the
First Amendment to Asset Purchase Agreement effective April 1, 2016
and the Second Amendment to Asset Purchase Agreement effective Aug.
25, 2016.
Pursuant to the Third Amendment, the parties agreed to amend a
post-closing covenant under the Purchase Agreement to remove the
requirement that one of the directors serving on the Company's
board of directors resign within six months of the closing of the
transactions contemplated by the Purchase Agreement.
About Camber Energy, Inc.
Based in Houston, Texas, Camber Energy (NYSE MKT: CEI) is a
growth-oriented, independent oil and gas company engaged in the
development of crude oil and natural gas in the Austin Chalk and
Eagle Ford formations in south Texas, the Permian Basin in west
Texas, and the Hunton formation in central Oklahoma.
Lucas Energy changed its name to Camber Energy, Inc., effective
Jan. 5, 2017, to more accurately reflect the Company's strategic
shift from its Austin Chalk and Eagleford roots to an expanding
addition of shallow oil and gas reserves with longer-lived,
lower-risk production profiles.
Lucas Energy reported a net loss of $25.4 million for the year
ended March 31, 2016, compared to a net loss of $5.12 million for
the year ended March 31, 2015.
As of Sept. 30, 2016, Lucas Energy had $71.32 million in total
assets, $53.58 million in total liabilities and $17.74 million in
total stockholders' equity.
Hein & Associates LLP, in Houston, Texas, issued a "going concern"
qualification on the consolidated financial statements for the year
ended March 31, 2016, citing that the Company has incurred
significant losses from operations and had a working capital
deficit of $9.6 million at March 31, 2015. These factors raise
substantial doubt about the Company's ability to continue as a
going concern.
CAMBER ENERGY: Annual Meeting of Stockholders Set for March 22
--------------------------------------------------------------
The Board of Directors of Camber Energy, Inc. approved March 22,
2017, as the date for the Company's Annual Meeting of Stockholders
for the year ended March 31, 2016, to be held at the Hilton Houston
North, Salon 12, 12400 Greenspoint Drive, Houston, Texas 77060.
The Board also approved Jan. 30, 2017, as the record date for the
Meeting. Only stockholders of record at the close of business on
that date may vote at the meeting or any adjournment thereof.
Because the Meeting will be held more than 30 days from the
anniversary of the Company's Annual Meeting of Stockholders for the
year ended March 31, 2015, the Company has set a new deadline for
the receipt of any stockholder proposals submitted pursuant to Rule
14a-8 under the Securities Exchange Act of 1934, as amended, for
inclusion in the Company's proxy materials for the Meeting. Such
proposals must be delivered to Paul Pinkston, the Company's Chief
Accounting Officer, at Camber Energy, Inc., 450 Gears Road, Suite
860, Houston, Texas 77067 no later than the close of business on
Feb. 6, 2017, to be considered timely, pursuant to the terms of the
Company's Amended and Restated Bylaws, before the Company begins to
print and send proxy materials. The Company recommends that such
proposals be sent by certified mail, return receipt requested.
Those proposals must also comply with the rules of the Securities
and Exchange Commission regarding the inclusion of stockholder
proposals in proxy materials, and may be omitted by the Company if
not in compliance with applicable requirements.
Because the Meeting will be held more than 30 days from the
anniversary of the Prior Meeting, in accordance with the Company's
Amended and Restated Bylaws, proposals of stockholders made outside
of Rule 14a-8 under the Exchange Act must be received not later
than the close of business on Feb. 6, 2017, in order to be
considered at the Meeting. Those proposals must be delivered to
Paul Pinkston, the Company's chief accounting officer, at Camber
Energy, Inc., 450 Gears Road, Suite 860, Houston, Texas 77067 and
must also comply with all other requirements set forth in the
Company's Amended and Restated Bylaws and other applicable laws.
About Camber Energy, Inc.
Based in Houston, Texas, Camber Energy (NYSE MKT: CEI) is a
growth-oriented, independent oil and gas company engaged in the
development of crude oil and natural gas in the Austin Chalk and
Eagle Ford formations in south Texas, the Permian Basin in west
Texas, and the Hunton formation in central Oklahoma.
Lucas Energy changed its name to Camber Energy, Inc., effective
Jan. 5, 2017, to more accurately reflect the Company's strategic
shift from its Austin Chalk and Eagleford roots to an expanding
addition of shallow oil and gas reserves with longer-lived,
lower-risk production profiles.
Lucas Energy reported a net loss of $25.4 million for the year
ended March 31, 2016, compared to a net loss of $5.12 million for
the year ended March 31, 2015.
As of Sept. 30, 2016, Lucas Energy had $71.32 million in total
assets, $53.58 million in total liabilities and $17.74 million in
total stockholders' equity.
Hein & Associates LLP, in Houston, Texas, issued a "going concern"
qualification on the consolidated financial statements for the year
ended March 31, 2016, citing that the Company has incurred
significant losses from operations and had a working capital
deficit of $9.6 million at March 31, 2015. These factors raise
substantial doubt about the Company's ability to continue as a
going concern.
CBAC GAMING: Moody's Hikes Corporate Family Rating to B3
--------------------------------------------------------
Moody's Investors Service upgraded CBAC Gaming, LLC's Corporate
Family rating to B3 and Probability of Default rating to Caa1-PD.
Moody's also upgraded the company's first lien bank credit
facilities to B3.
The rating upgrade reflects the announcement on Jan. 17, 2017, by
Caesars Entertainment Corporation (CEC), Caesars Entertainment
Operating Company, Inc. (CEOC), and its Chapter 11 debtor
subsidiaries that the U.S. Bankruptcy Court for the Northern
District of Illinois had confirmed the debtors Plan of
Reorganization (the Plan). The confirmed Plan does not include any
contribution from CBAC and includes provisions to resolve all
related litigation among the major creditor constituencies, CEC and
related parties. The Plan confirmation alleviates Moody's concerns
that CBAC could be drawn into the restructuring.
According to Moody's analyst, Peggy Holloway, "the upgrade reflects
the positive ramp up of operations since CBAC opened Horseshoe
Baltimore in August 2014 evidenced by improvement in adjusted
debt/EBITDA, and EBIT/interest to 5.8x and 1.1x as of the last
twelve months ended September 30, 2016, from 8.2x and 0.3x at year
end 2015." However, the opening of MGM National Harbor in December
2016 is expected to put pressure on CBAC's net revenues and EBITDA
over the next twelve months. Moody's estimates the company's EBITDA
may decline by up to 20% in 2017 resulting in an uptick in
debt/EBITDA (to around 6.3 times) until the new supply is absorbed.
Nevertheless, Moody's expects CBAC can cover its interest,
mandatory debt amortization, and capital spending from cash flow
and excess cash balances over the next twelve months. CBAC's $10
million revolver expires in July 2018.
Upgrades:
Issuer: CBAC Gaming, LLC
-- Probability of Default Rating, Upgraded to Caa1-PD from
Caa2-PD
-- Corporate Family Rating, Upgraded to B3 from Caa1
-- Senior Secured Bank Credit Facility, Upgraded to B3(LGD3) from
Caa1(LGD3)
Outlook Actions:
Issuer: CBAC Gaming, LLC
-- Outlook, Remains Stable
RATINGS RATIONALE
CBAC's B3 Corporate Family Rating (CFR) reflects the company's
small, geographically concentrated gaming operations, high
debt/EBITDA (5.8x) relative to its scale and the new supply that
opened in late 2016. Positive rating consideration is given to the
population density of the Baltimore area that should enable the
market to eventually absorb new supply, and the company's good
liquidity.
The stable rating outlook reflects Moody's view that CBAC can
absorb the earnings hit from new supply and begin to grow EBITDA
beginning in 2018. The rating could be upgraded if CBAC can reduce
and maintain debt/EBITDA below 5.25x and improve EBIT/Interest
above 1.1x. CBAC's ratings could be downgraded if same store gaming
revenues in the Maryland market shows sustained deterioration, if
debt/EBITDA increases above 6.5x or if liquidity weakens.
CBAC is a joint venture between Caesars Growth Partners, LLC (41%)
and several other third parties. CBAC owns a casino in Baltimore,
MD that generates about $300 million in annual revenues. The
property is managed by CEOC.
The principal methodology used in these ratings was Global Gaming
Industry published in June 2014.
CHANNEL TECHNOLOGIES: BAE Systems Buying Property for $800K
-----------------------------------------------------------
Channel Technologies Group, LLC, asks the U.S. Bankruptcy Court for
the Central District of California to authorize it to enter into
Bill of Sale and Purchase Agreement, dated Jan. 25, 2017, with BAE
Systems Information and Electronic Systems Integration, Inc., in
connection with the private sale of property for $800,000.
The Debtor has requested that a hearing on the Motion be held on
Feb. 15, 2017 at 10:00 a.m.
The Debtor designs and manufactures piezoelectric ceramics,
transducers, sonar equipment and other related products sold
primarily to military, commercial, and industrial customers in the
United States and internationally. Founded in 1959, the Debtor is
based in Santa Barbara, California and previously operated a second
manufacturing site with respect to its MSI subdivision (the assets
of which were previously sold in the case) in Littleton,
Massachusetts. The Debtor supplies its products to a variety of
end-users, including the U.S. Navy and energy services companies.
Among the Debtor's customers are some of the largest United States
defense contractors, including Northrop Grumman, Lockheed Martin
and Raytheon.
Certain long-term supply contracts are onerous to the Debtor and
have negatively impacted and continue to negatively impact the
Debtor's cash flow. Despite efforts to consensually address the
problematic aspects of certain of its contracts with the
counterparties through negotiations, prior to the Petition Date,
with some minor exceptions, the Debtor was unable to stop the
significant negative impact of such contracts on the Debtor's
business. Although customer demand for its products and services
remains substantial, the Debtor has been unable to obtain necessary
further outside funding to complete certain long-term contracts (as
they currently exist) and invest in new equipment and research and
development.
The Debtor commenced the Case to expeditiously pursue a potential
sale of some or all of the Debtor's business to one or more third
parties and an orderly wind down of the remaining business.
The Buyer is one of the Debtor's customers. Its program was
vertically integrated within the Debtor's business and involved the
manufacture of both ceramics and transducers. The Property
consists of inventory, supplies, work in process, documentation,
tooling and equipment and other personal property, files, drawings,
and other intellectual property. The Debtor has conducted a UCC
search of purported lienholders of the Property in conjunction with
the proposed sale of the Property. The only party asserting a lien
on the Property of which the Debtor is aware is Blue Wolf Capital
Fund II, L.P.
The salient terms of the APA are:
a. Purchase Price: $800,000
b. Deposit: $$100,000
c. Free and Clear: The Property will be transferred to
Buyer free and clear of all liens, security interests, claims and
encumbrances (other than the lien of current taxes not yet payable
with respect to any Property).
d. "As Is" Transaction: The Buyer acknowledges and agrees
that, except only as set forth in the APA, the Buyer makes no
representations or warranties whatsoever, express or implied, with
respect to the Property being purchased by the Buyer.
e. Deadlines: The APA provides that the deadline to
obtain approval of the sale and APA is Feb. 17, 2017 and that the
deadline to close the sale is Feb. 28, 2017.
A copy of the APA attached to the Motion is available for free at:
http://bankrupt.com/misc/Channel_Technologies_189_Sales.pdf
As part of the parties' agreements under the APA, the Debtor
proposes to release the Buyer of any liability related to the
parties' dealings in exchange for the Buyer's agreement to limit
its right to seek a distribution in the case to filing a proof of
claim for a general unsecured claim no greater than $500,000.
After due diligence, the Debtor is unaware of any claims against
the Buyer. It is in the best interests of the estate, therefore,
to give the proposed release to the Buyer in exchange for the
Buyer's agreement to cap its claim.
The circumstances of the case justify sale of the Property through
a private sale to the Buyer. The Property is specialized for
relatively narrow applications that are mission critical for the
Buyer. The Debtor believes the Buyer will pay the highest and best
consideration for the Property and the offer by Buyer as set forth
in the APA is the best offer received, or expected by the Debtor to
be received, for such assets.
The Debtor believes that, as a result of the marketing efforts that
have been undertaken, and particularly given the circumstances, the
sale will provide maximum value to the Debtor under the current
circumstances. The fairness and reasonableness of the
consideration to be paid by the Buyer is demonstrated by the
marketing efforts that the Debtor has undertaken, followed by a
fair and reasonable sale process. The sale of the Property is
supported by sound business reasons and is in the best interests of
the Debtor and its estate. Accordingly, the Debtor asks the Court
to approve the sale to the Buyer free and clear of all liens,
claims, rights, encumbrances, and other interests.
The Buyer's obligation to perform under the APA is conditioned upon
entry of an order approving the transaction by Feb. 17, 2017 and
the closing taking place by Feb. 28, 2017, to ensure that the Buyer
can timely perform obligations to its customers. Accordingly, the
Debtor asks that Rule 6004(h) be waived so the sale may be closed
by the drop-dead date in the APA of Feb. 28, 2017.
The Purchaser can be reached at:
BAE SYSTEMS, INFORMATION AND ELECTRONIC
SYSTEMS INTEGRATION, INC.
65 Spit Brook Road
Nashua, NH 03060
Attn: John C. Jameson
E-mail: john.c.jameson@baesystems.com
About Channel Technologies Group
Headquartered in Santa Barbara, California, Channel Technologies
Group, LLC, designs and manufactures piezoelectric ceramics,
transducers, sonar equipment and other related products sold
primarily to military, commercial, and industrial customers in the
United States and internationally.
CTG is a privately owned California limited liability company
founded in 1959. In 2011, CTG was acquired by BW Piezo Holdings,
LLC, a Delaware limited liability company, from Alta Properties,
Inc., f.k.a. Channel Technologies, Inc. BWP now owns 100% of CTG's
member interests. BWP is majority-owned by Blue Wolf Capital Fund
II, L.P. (the Company's pre-petition lender), which is an
investment fund managed by Blue Wolf Capital Advisors, L.P. CTG is
a member-managed LLC. Charles Miller is the manager.
CTG filed a Chapter 11 petition (Bankr. C.D. Cal. Case No.
16-11912) on Oct. 14, 2016. The case is assigned to Judge Peter
Carroll.
The Debtor estimated $10 million to $50 million in assets and
debt.
The Debtor has engaged Jeffrey W. Dulberg, Esq., at Pachulski
Stang Ziehl & Jones LLP as bankruptcy counsel, CR3 Partners, LLC
as restructuring advisor, and Prime Clerk LLC as noticing, claims
and
balloting agent.
CHAPARRAL ENERGY: Court Extends Plan Filing Period to April 3
-------------------------------------------------------------
Judge Laurie Selber Silverstein of the U.S. Bankruptcy Court for
the District of Delaware extended Chaparral Energy, Inc., et al.'s
exclusive periods for filing a chapter 11 plan and soliciting
acceptances to the plan through April 3, 2017 and June 2, 2017,
respectively.
The Debtors previously sought the extension of their exclusivity
periods contending that although the Plan and Disclosure Statement
have been filed, the Disclosure Statement Motion has not yet been
approved, the Plan has not yet been confirmed, and the Effective
Date of the Plan has not yet occurred and will not occur prior to
the end of the current Exclusive Filing Period.
The Debtors related that they had devoted substantial time and
effort to reorganizing their businesses and sought an additional
extension of the Exclusive Periods out of an abundance of caution,
telling the Court that they will use the extended Exclusive Periods
to continue to work cooperatively with all interested parties on
the terms of a global settlement, to finalize the restructuring
support agreement and ancillary documents, and to prepare and
propose in good faith a chapter 11 plan that maximizes value for
all stakeholders.
About Chaparral Energy, Inc.
Founded in 1988, Chaparral Energy, Inc., is a Delaware corporation
headquartered in Oklahoma City and a pure play Mid-Continent
independent oil and natural gas exploration and production
company.
At March 31, 2016, the Company had total assets of $1,229,373,000,
total current liabilities of $1,940,742,000 and total stockholders'
deficit of $759,546,000.
Chaparral Energy, Inc., and its 10 affiliates sought protection
under Chapter 11 of the Bankruptcy Code (Bankr. D. Del. Lead Case
No. 16-11144) on May 9, 2016. The petitions were signed by Mark A.
Fischer, chief executive officer.
The Debtors are represented by Richard Levy, Esq., Keith Simon,
Esq., David McElhoe, Esq., and Marc Zelina, Esq., at Latham &
Watkins LLP; and Mark D. Collins, Esq., at Richards, Layton &
Finger, P.A., as counsel. Kurtzman Carson Consultants LLC serves
as administrative advisor.
The Debtors continue to manage and operate their businesses as
debtors in possession pursuant to Sections 1107 and 1108 of the
Bankruptcy Code. No trustee or examiner has been requested in the
Chapter 11 cases.
The Office of the U.S. Trustee on May 18, 2016, disclosed that no
official committee of unsecured creditors has been appointed in the
cases.
Milbank, Tweed, Hadley & McCloy LLP and Drinker Biddle & Reath LLP
represent an ad hoc committee of holders of (i) 9.875% Senior Notes
due 2020, (ii) 8.25% Senior Notes, and (iii) 7.625% Senior Notes
due 2022 issued by the Debtors.
CHARLES WALKER: Trustee Selling 6 Nashville Properties by Auction
-----------------------------------------------------------------
John C. McLemore, Trustee for Charles E. Walker, files with the
U.S. Bankruptcy Court for the Middle District of Tennessee a notice
that he is selling by auction Debtor's 6 properties in Nashville,
Tennessee, to be conducted by Bill Colson Auction & Realty Co.
A hearing on the Motion is set for Feb. 24, 2017 at 9:00 a.m.
Objection deadline is Feb. 17, 2017.
The properties are:
a. Sale No. 1:
(i) Property Description: House and lot at 2831
Colonial Circle, Nashville, Tennessee.
(ii) Date: March 22, 2017 at 10:30 a.m.
(iii) Location: On Site
(iv) Terms of real Estate Sale: 20% earnest money to
be paid at the auction; balance at closing to be held within 30
days of the auction.
(v) 1st Lienholder: On July 12, 2016, First Freedom
Bank filed claims for $847,825 cross collateralized with other
properties. After the payment of the costs of sale, the net
proceeds will be paid to First Freedom Bank up to balance on note.
The Trustee paid January monthly adequate protection payments to
First Freedom Bank which will reduce the amount of the payoff. The
Trustee has requested an itemized payoff from the lender.
(vi) Debtor(s) Statutory Exemption: None
b. Sale No. 2:
(i) Property Description: House and lot at 1023
Sharpe Avenue, Nashville, Tennessee.
(ii) Date: March 22, 2017 at 1:30 p.m.
(iii) Location: On Site
(iv) Terms of real Estate Sale: 20% earnest money to
be paid at the auction; balance at closing to be held within 30
days of the auction.
(v) 1st Lienholder: On Aug. 12, 2016, Pinnacle
National Bank filed claims for $602,839 cross collateralized with
other properties. After the payment of the costs of sale, the net
proceeds will be paid to Pinnacle National Bank up to balance on
note. The Trustee paid January monthly adequate protection
payments to Pinnacle National Bank which will reduce the amount of
the payoff. The Trustee has requested an itemized payoff from the
lender.
(vi) Debtor(s) Statutory Exemption: None
c. Sale No. 3:
(i) Property Description: House and lot at 2707 Live
Oak Rd., Nashville, Tennessee.
(ii) Date: March 23, 2017 at 10:30 a.m.
(iii) Location: On Site
(iv) 1st Lienholder: On July 12, 2016, First Freedom
Bank filed claims for $847,825 cross collateralized with other
properties. After the payment of the costs of sale, the net
proceeds will be paid to First Freedom Bank up to balance on note.
The Trustee paid January monthly adequate protection payments to
First Freedom Bank which will reduce the amount of the payoff. The
Trustee has requested an itemized payoff from the lender.
(v) The property will be sold subject to a
residential lease. The monthly rental payment of $1,095 is
current. The lease expires May 21, 2017.
(vi) Debtor(s) Statutory Exemption: None
d. Sale No. 4:
(i) Property Description: House and lot at 3133 Lake
Park Dr. Nashville, Tennessee.
(ii) Date: March 23, 2017 at 1:00 p.m.
(iii) Location: On Site
(iv) Terms of real Estate Sale: 20% earnest money to
be paid at the auction; balance at closing to be held within 30
days of the auction.
(v) 1st Lienholder: On Aug. 12, 2016, Pinnacle
National Bank filed claims for $602,839 cross collateralized with
other properties. After the payment of the costs of sale, the net
proceeds will be paid to Pinnacle National Bank up to balance on
note. The Trustee paid January monthly adequate protection
payments to Pinnacle National Bank which will reduce the amount of
the payoff. The Trustee has requested an itemized payoff from the
lender.
(vi) Debtor(s) Statutory Exemption: None
e. Sale No. 5:
(i) Property Description: House and lot at 3332
Goodland Rd., Nashville, Tennessee.
(ii) Date: March 24, 2017 at 10:30 a.m.
(iii) Location: On Site
(iv) Terms of real Estate Sale: 20% earnest money to
be paid at the auction; balance at closing to be held within 30
days of the auction.
(v) 1st Lienholder: On July 12, 2016, First Freedom
Bank filed claims for $847,825 cross collateralized with other
properties. After the payment of the costs of sale, the net
proceeds will be paid to First Freedom Bank up to balance on note.
The Trustee paid January monthly adequate protection payments to
First Freedom Bank which will reduce the amount of the payoff. The
Trustee has requested an itemized payoff from the lender.
(vi) Debtor(s) Statutory Exemption: None
f. Sale No. 6:
(i) Property Description: House and lot at 3370
Mimosa Drive, Nashville, Tennessee.
(ii) Date: March 24, 2017 at 1:00 p.m.
(iii) Location: On Site
(iv) Terms of real Estate Sale: 20% earnest money to
be paid at the auction; balance at closing to be held within 30
days of the auction.
(v) 1st Lienholder: None
(vi) Debtor(s) Statutory Exemption: None
The 6 properties are to be sold "as is, where is," free and clear
of any liens, with any valid and proper lien to attach to the
proceeds of the sale.
Proceeds of the sale will be subject to auctioneer's fees and
expenses, all real estate taxes due will be paid from the proceeds
of the sale at closing. Current years taxes will be prorated to
fate of deed.
The law office of Mudter & Patterson conducted title searches. The
searches show no liens filed by Tennessee Department of Revenue or
the Internal Revenue Service on these properties.
The sale does not include Personal Identifiable Information (PII).
It is anticipated that there is sufficient equity in the properties
to pay all 506(c) expenses and that the sale will result in a
distribution being made to unsecured creditors.
The sale is an "arm's length" transaction. The Trustee, his
employees and Bankruptcy court officials are prohibited from
bidding.
Simultaneous with the publication of the Notice, the Trustee has
made application to the Court for the appointment of Bill Colson
Auction as auctioneer for the sale. The auctioneer will be paid in
accordance with Local Rule 6005-1 which provides as follows:
a. 10% of gross proceeds for real property and
vehicles−including cars, trucks, trailers, all-terrain vehicles,
boats, aircraft, farm machinery and implements, and earth moving
equipment; or
b. 25% of the first $40,000 of gross proceeds for other
personal property and 15% thereafter.
No expenses will be reimbursed. Upon receipt of the auctioneer's
report of sale, payment of Bill Colson Auction's commission will be
paid. If the sale includes personal property, pursuant to Local
Rule 6005-1(e), the auctioneer may charge a buyers' premium of 2.5%
to offset credit card processing fees.
The Trustee asks that the Court authorize him to proceed with the
sale of these properties free and clear of all liens with the liens
that may exist attaching to the proceeds of the sale.
The Trustee further prays that the 14-day stay of the sale of these
properties following the entry of the Order as provided for in FRBP
6004(h) be waived.
The Trustee can be reached at:
John C. McLemore, Trustee
2000 Richard Jones Rd., Suite 250
Nashville, TN 37215
Telephone: (615) 383-9495
Facsimile: (615) 292-9848
E-mail: jmclemore@gmylaw.com
Charles E. Walker sought Chapter 11 protection (Bankr. W.D. Tenn.
Case No. 16-10413) on Feb. 29, 2016.
CLARK-CUTLER-MCDERMOTT: Jan. 31 Cash Collateral Hearing Set
-----------------------------------------------------------
Judge Christopher J. Panos of the U.S. Bankruptcy Court for the
District of Massachusetts continued the hearing on
Clark-Cutler-McDermott Company's Cash Collateral Motion to January
31, 2017 at 10:00 a.m.
A full-text copy of the Order, dated January 25, 2017, is available
at
http://bankrupt.com/misc/ClarkCulterMcDermott2016_1641188_490.pdf
About Clark-Cutler-McDermott Company
Automobile parts manufacturer Clark-Cutler-McDermott Company and
its subsidiary CCM Automotive Lafayette LLC filed Chapter 11
petitions (Bankr. D. Mass. Case Nos. 16-41188 and 16-41189) on July
7, 2016. The petitions were signed by James T. McDermott, CEO.
Judge Christopher J. Panos presides over the case.
The Debtors are represented by Charles A. Dale, III, Esq., David
Mawhinney, Esq., and Mackenzie Shea, Esq., at K&L Gates LLP. The
Debtors tapped Conway MacKenzie Capital Advisors LLC as investment
banker; Sansiveri, Kimball & Co., LLP, as Tax Services Provider.
The Debtors each estimated assets of $10 million to $50 million and
debt of $10 million to $50 million at the time of the chapter 11
filings.
The Official Committee of Unsecured Creditors retained Mintz Levin
Cohn Ferris Glovsky and Popeo, P.C. as counsel to the Committee.
COMSTOCK RESOURCES: Announces 47% Hike in Oil & Gas Reserves
------------------------------------------------------------
Comstock Resources, Inc. announced that its proved oil and natural
gas reserves as of Dec. 31, 2016, were estimated at 7.3 million
barrels of crude oil and 872 billion cubic feet of natural gas or
916 billion cubic feet of natural gas equivalent as compared to
total proved reserves of 365 Bcfe as of Dec. 31, 2015. In 2016
Comstock was able to replace its production by 667% and grow its
proved reserves by 47%.
Of the proved reserves at Dec. 31, 2016, 40% are classified as
proved developed and 98% are operated by Comstock. The present
value, using a 10% discount rate, of the future net cash flows
before income taxes of the proved reserves was approximately $431
million, using average first of the month 2016 prices of $2.29 per
Mcf for natural gas and $37.62 per barrel for oil. The oil and
natural gas prices used in determining the 2016 year-end proved
reserve estimates were 20% lower for oil and 2% lower for natural
gas as compared to 2015 average prices. Utilizing NYMEX prices of
$55 per barrel of oil and $3.50 per Mcf of natural gas, held
constant over time and adjusted for the Company's differentials,
the PV-10 Value of Comstock's proved oil and gas reserves would
approximate $886 million.
Comstock produced 62 Bcfe or 169 million cubic feet equivalent
("MMcfe") per day during 2016. Natural gas production in 2016 grew
13% to 53.7 Bcf while oil production decreased by 55% to 1.4
million barrels. Natural gas comprised 87% of Comstock's 2016's
total production as compared to 72% in 2015. Production in the
fourth quarter of 2016 was 14 Bcfe or 153 MMcfe per day which was
comprised of 3,217 barrels of oil and 133 MMcf of natural gas. The
production decline in the fourth quarter was primarily attributable
to the suspension of the drilling program in June 2016 which was
later restarted in the fourth quarter, the Company's divestiture of
certain natural gas properties in the fourth quarter, and the
shut-in of certain of the Company's Haynesville shale production
for offset completion activity.
The significant growth in proved reserves was attributable to the
Company's successful Haynesville shale drilling program and the
improvement in the Company's financial condition resulting from the
debt exchange offer it completed in September 2016. Despite a
limited drilling budget in 2016, Comstock added 285.5 Bcfe of new
reserves primarily related to its Haynesville shale properties. In
addition, the Company experienced 143.6 Bcfe in upward revisions
primarily related to the Haynesville shale properties included in
proved reserves at the end of 2015. The strong performance of the
Haynesville shale wells drilled in 2015 and 2016 supported the
increase in proved reserves. At the end of 2015, the Company's
proved reserves only included 30.3 net proved undeveloped locations
related to its Haynesville shale properties. The 2016 proved
reserves include 51.9 net proved undeveloped locations reflecting
the Company's increased drilling budget for 2017 and future years.
Comstock spent $59.5 million for its drilling activities in 2016.
Comstock drilled 13 wells (7.9 net) in 2016; 11 (7.8 net) of the
wells were Haynesville shale wells drilled in North Louisiana with
the remaining two (0.1 net) non-operated Eagleford shale wells.
Six (5.8 net) of the wells drilled in 2016 were also completed.
The remaining seven (2.1 net) wells will be completed in 2017.
Comstock's 2016 "all-in" finding costs came in at approximately
$0.14 per Mcfe.
Comstock plans to drill 20 (15.5 net) additional Haynesville shale
wells in 2017 and complete the 2016 wells at an estimated capital
outlay of $142.9 million. Comstock has budgeted an additional $7.0
million for other non-drilling expenditures. Comstock also has
tentatively budgeted an additional $17.6 million for two (1.7 net)
Bossier shale wells that may be drilled in late 2017 depending on
natural gas prices. These wells would further prove up the Bossier
shale potential of its properties demonstrated by the successful
Jordan well drilled in 2015.
A full-text copy of the press release is available for free at:
https://is.gd/zmuWYJ
About Comstock Resources
Comstock Resources, Inc. is an independent energy company based in
Frisco, Texas and is engaged in oil and gas acquisitions,
exploration and development primarily in Texas and Louisiana. The
Company's stock is traded on the New York Stock Exchange under the
symbol CRK.
The Company reported a net loss of $1.04 billion for the year ended
Dec. 31, 2015, compared to a net loss of $57.11 million for the
year ended Dec. 31, 2014.
As of Sept. 30, 2016, Comstock had $885.5 million in total assets,
$1.10 billion in total liabilities and a total stockholders'
deficit of $220 million.
* * *
As reported by the TCR on Sept. 23, 2016, S&P Global Ratings raised
its corporate credit rating on Comstock Resources Inc. to 'CCC+'
from 'SD' (selective default). The outlook is negative. "The
rating actions on Comstock are in conjunction with the
Sept. 6, 2016, close of their comprehensive debt exchange and our
assessment of the company's revised capital structure and credit
profile," said S&P Global Ratings credit analyst Aaron McLean.
Comstock Resources carries a 'Caa2' corporate family rating from
Moody's Investors Service.
COMSTOCK RESOURCES: Carl Westcott Reports 6.1% Stake as of Jan. 26
------------------------------------------------------------------
In an amended Schedule 13D filed with the Securities and Exchange
Commission, Carl H. Westcott disclosed that as of Jan. 26, 2017, he
beneficially owns 824,800 shares of common stock of Comstock
Resources, Inc. representing 6.13 percent of the shares
outstanding.
Carl Westcott directly holds 600,000 shares of common stock, par
value $0.50 per share, of Comstock Resources. Additionally, Mr.
Westcott exercises shared voting and disposition power over 216,500
shares of Common Stock with Court H. Westcott as managers of Carl
Westcott, LLC, the general partner of each of Commodore Partners,
Ltd., which directly owns 200,000 shares of Common Stock, and G.K.
Westcott LP, which directly owns 16,500 shares of Common Stock.
Carl Westcott has shared discretionary authority to purchase and
dispose of shares of Common Stock under various accounts for the
benefit of the following persons, who directly hold the following
amounts of shares of Common Stock: Peter Underwood, 5,250 shares;
Francisco Trejo, Jr., 2,050 shares; and Rosie Greene, 1,000 shares.
Carl H. Westcott does not exercise any voting power over any such
shares of Common Stock owned by the aforementioned individuals and
expressly disclaims beneficial ownership of those shares.
The percentage ownership is based on 13,455,559 shares of Common
Stock outstanding, as reported by the Issuer in its quarterly
report on Form 10-Q filed on Nov. 9, 2016. The number of shares
beneficially owned also reflects a 1-for-5 reverse stock split
effected by the Issuer on Aug. 1, 2016.
A full-text copy of the regulatory filing is available at:
https://is.gd/k9jxqL
About Comstock Resources
Comstock Resources, Inc. is an independent energy company based in
Frisco, Texas and is engaged in oil and gas acquisitions,
exploration and development primarily in Texas and Louisiana. The
Company's stock is traded on the New York Stock Exchange under the
symbol CRK.
The Company reported a net loss of $1.04 billion for the year ended
Dec. 31, 2015, compared to a net loss of $57.11 million for the
year ended Dec. 31, 2014.
As of Sept. 30, 2016, Comstock had $885.5 million in total assets,
$1.10 billion in total liabilities and a total stockholders'
deficit of $220 million.
* * *
As reported by the TCR on Sept. 23, 2016, S&P Global Ratings raised
its corporate credit rating on Comstock Resources Inc. to 'CCC+'
from 'SD' (selective default). The outlook is negative. "The
rating actions on Comstock are in conjunction with the
Sept. 6, 2016, close of their comprehensive debt exchange and our
assessment of the company's revised capital structure and credit
profile," said S&P Global Ratings credit analyst Aaron McLean.
Comstock Resources carries a 'Caa2' corporate family rating from
Moody's Investors Service.
COMSTOCK RESOURCES: Galatyn et al. No Longer Shareholders at Dec.31
-------------------------------------------------------------------
In an amended Schedule 13G filed with the Securities and Exchange
Commission, Galatyn Equity Holdings LP, Trinity Peak Investments
LP, Trinity Pointe Investments LP, Albert Hill Trust, Al G. Hill,
Jr., Lyda Hunt-Margaret Trusts-Al G. Hill, Jr., Galatyn Asset
Management LLC, A.G. Hill Partners, LLC, David E. Pickett, Trinity
LLC, Stephen Summers and Ray Washburne disclosed that as of
Dec. 31, 2016, they have ceased to beneficially owners of shares of
common stock of Comstock Resources Inc. A full-text copy of the
regulatory filing is available for free at:
https://is.gd/GQFKd1
About Comstock Resources
Comstock Resources, Inc. is an independent energy company based in
Frisco, Texas and is engaged in oil and gas acquisitions,
exploration and development primarily in Texas and Louisiana. The
Company's stock is traded on the New York Stock Exchange under the
symbol CRK.
The Company reported a net loss of $1.04 billion for the year ended
Dec. 31, 2015, compared to a net loss of $57.11 million for the
year ended Dec. 31, 2014.
As of Sept. 30, 2016, Comstock had $885.5 million in total assets,
$1.10 billion in total liabilities and a total stockholders'
deficit of $220 million.
* * *
As reported by the TCR on Sept. 23, 2016, S&P Global Ratings raised
its corporate credit rating on Comstock Resources Inc. to 'CCC+'
from 'SD' (selective default). The outlook is negative. "The
rating actions on Comstock are in conjunction with the
Sept. 6, 2016, close of their comprehensive debt exchange and our
assessment of the company's revised capital structure and credit
profile," said S&P Global Ratings credit analyst Aaron McLean.
Comstock Resources carries a 'Caa2' corporate family rating from
Moody's Investors Service.
CORALVILLE, IA: Moody's Affirms Ba2 on GO Annual Appropriation Debt
-------------------------------------------------------------------
Moody's Investors Service has affirmed the Baa3 rating on
Coralville IA's general obligation unlimited tax (GOULT) bonds.
Concurrently, Moody's has affirmed the Ba2 rating on the city's
annual appropriation certificates of participation (COPs), annual
appropriation tax increment financing (TIF) debt, and general
obligation annual appropriation debt. The outlook has been revised
to stable.
The Baa3 rating reflects the city's significant debt burden and
high fixed costs, as well as enterprise risk and heavy reliance on
revenues other than property taxes to pay debt service. The rating
also considers the city's improved liquidity and vibrant local
economy that benefits from continued tax base growth and close ties
to adjacent Iowa City (Aaa stable).
The Ba2 rating on the city's outstanding annual appropriation debt
is notched twice off the city's Baa3 GO rating. The two notch
distinction between the GO rating and all annual appropriation debt
reflects the risk of non-appropration and the less essential nature
of the projects financed with debt proceeds.
Rating Outlook
The stable outlook reflects Moody's expectations that tax base and
economic growth combined with improved liquidity mitigate
short-term challenges associated with very high leverage and
enterprise risk at the current rating.
Factors that Could Lead to an Upgrade
Material reduction in the city's debt and fixed cost burdens
Reduction in exposure to enterprise risk coupled with continued
improvement in liquidity
Factors that Could Lead to a Downgrade
Narrowed liquidity or expansion of non-essential enterprise
ownership
Further leveraging of the city's tax base and TIF districts
Legal Security
The city's GOULT debt is secured by the pledge and authorization to
levy a dedicated property tax unlimited as to rate and amount.
The city's rated annual appropriation GOULT debt is secured by a
dedicated property tax levy unlimited as to rate and amount,
subject to annual appropriation.
The city's Moody's rated annual appropriation tax increment revenue
debt is secured by tax increment revenues, subject to annual
appropriation.
The city's outstanding rated COPs, are secured by lease payments
made by the city, subject to annual appropriation. The city's
Series 2014A and 2016C COPs (which Moody's do not rate), are not
subject to annual appropriation.
Use of Proceeds
Not applicable.
Obligor Profile
Located in Johnson County, five miles from Iowa City, Coralville
provides a variety of services to a population of 18,907
residents.
Methodology
The principal methodology used in the general obligation rating was
US Local Government General Obligation Debt published in December
2016. The principal methodology used in the lease rating was Lease,
Appropriation, Moral Obligation and Comparable Debt of US State and
Local Governments published in July 2016.
CYRIL GORDON LUNN: Pleads Guilty to Bankruptcy Fraud
----------------------------------------------------
Self-made millionaire Cyril Gordon Lunn has reportedly pleaded
guilty in U.S. District Court to bankruptcy fraud.
Mr. Lunn, according to The Telegram, pleaded guilty to concealing
assets from his creditors and making a false statement in his
bankruptcy filings.
Mr. Lunn, formerly of Pepperell, Mass., was charged in an
indictment with concealing assets from his bankruptcy creditors and
making a false statement in one of his bankruptcy schedules.
The case was originally indicted in September 2006, but it was
unsealed August 2014 after Lunn was arrested by Canadian
authorities.
According to the indictment, Lunn filed a bankruptcy petition in
October 2001 in which he failed to disclose that he owned
approximately $3 million to $4 million in cash. From 1998 through
September 2001, Lunn transferred the cash from the United States to
Canada, and deposited some or all of the funds in safe deposit
boxes in Canada. In May 2004, Lunn filed a civil suit in Canada in
which he submitted affidavits and testified under oath concerning
his ownership of approximately $3 million to $4 million and the
transfer of those funds from the United States to Canada in the
years prior to 2002.
Lunn, according to prosecutors, is also charged with making a false
statement in one of his bankruptcy filings by falsely stating he
had closed all safe deposit boxes by September 2001, when in fact
Lunn had failed to disclose a safe deposit box he had opened at the
Granite Bank in New Hampshire, and which Lunn continued to access
after the bankruptcy filing.
Mr. Lunn filed under Chapter 7 of the Bankruptcy Code (Bankr. D.
Mass. Case No. 01-46312) in 2001. He also sent his company, CY
Realty Corporation (Bankr. D. Mass. Case No. 01-45240) into Chapter
7 bankruptcy. Mr. Lunn's attorney:
CHARLES E. GILBERT, III
GILBERT & GREIF, P.A.
82 COLUM
BIA STREET
P.O. BOX 2339
BANGOR, ME 04402-2339
947-2223
E-mail: ceg@yourlawpartner.com
Mr. Lunn is a Canadian citizen, but lived in the United States
where he owned a construction business. He declared bankruptcy in
2001 in the U.S. after a dispute with his common-law partner.
In 2002 he returned to Canada.
In 2004 a criminal investigation was conducted into his financial
dealings.
In 2005, he fled to Canada despite bail conditions barring him from
leaving the U.S. He was extradited to the United States in 2016.
DAP VENTURES: Disclosures Okayed, Plan Hearing on March 8
---------------------------------------------------------
The U.S. Bankruptcy Court for the Eastern District of Texas will
consider approval of the Chapter 11 plan of reorganization of DAP
Ventures, LLC at a hearing on March 8.
The hearing will be held at 10:30 a.m., at the U.S. Bankruptcy
Court, Ninth Floor, Plaza Tower, 110 North College Avenue, Tyler,
Texas.
The court will also consider at the hearing the final approval of
DAP Ventures' disclosure statement, which it conditionally approved
on Jan. 26.
The order set a March 1 deadline for creditors to file their
objections and cast their votes accepting or rejecting the plan.
About DAP Ventures
DAP Ventures LLC is a Texas limited liability company formed in
October 2010. The sole member and manager of the Debtor is Debra
A. Parker. The business of the Debtor is pet grooming and
boarding.
The Debtor owns the real estate on which it does business and holds
equipment, tools, supplies used in its business, and cash in its
debtor-in-possession account. It owns real property at 606 North
Fredonia, Longview, Texas. The Debtor has 10 part-time employees
other than Debra A. Parker, who devotes her full time to the
business.
The Debtor filed a Chapter 11 bankruptcy petition (Bankr. E.D. Tex.
Case No. 16-60451) on July 27, 2016. Michael Gazette, Esq., at the
Law Offices of Michael E. Gazette serves as the Debtor's bankruptcy
counsel.
On January 25, 2017, the Debtor filed its Chapter 11 plan of
reorganization and disclosure statement.
DAVID'S BRIDAL: Bank Debt Trades at 15% Off
-------------------------------------------
Participations in a syndicated loan under David's Bridal Inc. is a
borrower traded in the secondary market at 84.50
cents-on-the-dollar during the week ended Friday, January 20, 2017,
according to data compiled by LSTA/Thomson Reuters MTM Pricing.
This represents a decrease of 1.83 percentage points from the
previous week. David's Bridal pays 375 basis points above LIBOR to
borrow under the $0.52 billion facility. The bank loan matures on
Oct. 11, 2019 and carries Moody's B3 rating and Standard & Poor's
B- rating. The loan is one of the biggest gainers and losers among
247 widely quoted syndicated loans with five or more bids in
secondary trading for the week ended January 20.
DEER MEADOWS: Plan Filing Exclusivity Extended on Interim Basis
---------------------------------------------------------------
Judge Peter C. McKittrick of the U.S. Bankruptcy Court for the
District of Oregon extended on an interim basis the deadline for
Deer Meadows, LLC to file its plan of reorganization and disclosure
statement through and including the date of entry of an order
resulting from the forthcoming hearing on January 31, 2017.
The Troubled Company Reporter had earlier reported that the Debtor
sought for extend the deadline to file a disclosure statement and a
plan of reorganization to a date no earlier than April 17, 2017,
contending that at the case management conference, it had informed
the Court that it was in negotiations with a prospective purchaser
of its real property and business assets. That sale will likely
occur with an anticipated closing of April 1, 2017. The Debtor
further contended that once the sale is consummated, the Debtor
will either (a) file a liquidated plan, (b) seek to convert its
case to a chapter 7 case or seek to dismiss this case.
Accordingly, the Debtor believed it can propose a viable plan of
reorganization. Such that, if a liquidating plan is the chosen
path, the Debtor needs sufficient time to draft these documents,
circulate them to key creditors and parties in interest,
incorporate their input and finalize the documents before filing
them. But, if either conversion or dismissal is the chosen path, a
plan of reorganization will not be needed.
About Deer Meadows
Deer Meadows filed a Chapter 11 petition (Bankr. D. Ore. Case No.
16-33768) on Sept. 30, 2016. The petition was signed by Kristin
Harder, manager. The case is assigned to Judge Peter C.
McKittrick. The Debtor estimated assets and liabilities at $1
million to $10 million at the time of the filing.
The Debtor is represented by Stephen T. Boyke, Esq., at the Law
Office of Stephen T. Boyke. The Debtor hires JCH Consulting Group,
Inc. as real estate broker; and Ogden Murphy Wallace PLLC as
special counsel.
Gail Brehm Geiger, the Acting United States Trustee for the
District of Oregon, appointed Suzanne Koenig, as the Patient Care
Ombudsman for Deer Meadows, LLC.
DEPENDABLE AUTO: Unsecureds to Recoup 1% Under Liquidation Plan
---------------------------------------------------------------
Dependable Auto Shippers, Inc., and affiliates filed with the U.S.
Bankruptcy Court for the Northern District of Texas a disclosure
statement in support of their plan of liquidation, which estimates
a 1% recovery for unsecured creditors.
The Debtors have approximately 3,000 general unsecured creditors
with unsecured claims totaling approximately $13 million. All
assets are held by DAS. DAS Government Services, LLC, has no debt
but DAS Global Services, Inc., is burdened by some unsecured debt.
For purposes of the analysis for the Plan, the DAS Gov't debt and
Claims are consolidated with the DAS debt and Claims. Nearly $6
million of the general unsecured claims are held by two creditors,
Carsarrive and Drive America.
There are a handful of secured creditors remaining in the
bankruptcy case. The largest of the secured creditors is ADESA,
Inc. ADESA holds a secured claim totaling approximately
$7,573,000.00 which accrued prepetition and a secured claim
totaling not less than $2,600,00 which arose post-petition through
the proposed debtor in possession financing.
On the first day of filing bankruptcy, approximately $780,000 in
critical vendor payments to general unsecured creditors were
approved and paid. These payments reduce the pool of general
unsecured creditors.
The Plan calls for the creation of and funding of a Liquidating
Trust. The Liquidating Trust will be funded with $50,000 and all
Causes of Action.
It is estimated that the return to general unsecured creditors will
be approximately 1%, not including any recoveries from the Causes
of Action or accounting for the reduction of pre-Petition claims
either due to Court approved payments or objecting to claims. If
the Plan is not confirmed, there will be no possibility of recovery
to unsecured creditors.
A sale free and clear of all liens, claims, interests, and
encumbrances of substantially all of the Debtors' Assets to ADESA
shall be approved by the Court at Confirmation and shall be
consummated at Closing. If ADESA remains the Buyer, the
consideration for the Assets shall be the satisfaction of the ADESA
Claim and ADESA's payment of the Contribution to the Liquidating
Trust. Otherwise, the Buyer shall pay cash to ADESA equal to the
ADESA Claim and will pay the Contribution to the Liquidating Trust
in consideration of the Assets.
A full-text copy of the Disclosure Statement is available at:
http://bankrupt.com/misc/txnb16-34855-11-100.pdf
About Dependable Auto Shippers
Dependable Auto Shippers, Inc.'s history dates back to 1954 when
Sam London formed Dependable Car Travel Services in the heart of
New York City. In 1990, DAS became a full-service vehicle
transportation carrier, and over the years, grew into a fleet of
auto carriers, created a network of more than 97 storage
facilities
and created a proprietary web presence. In 2004, DAS' transport
fleet peaked at 122 trucks.
Dependable Auto Shippers, Inc., and related entities DAS Global
Services, Inc., and DAS Government Services, LLC filed chapter 11
petitions (Bankr. N.D. Tex. Case Nos. 16-34855-11, 16-34857-11,
and
16-34858-11) on Dec. 21, 2016.
The Debtors are represented by D. Michael Lynn, Esq., John Y.
Bonds, III, Esq., and Joshua N. Eppich, Esq., at Bonds Ellis
Eppich
Schafer Jones LLP.
DIAMOND OFFSHORE: S&P Lowers CCR to 'BB-' on Industry Weakness
--------------------------------------------------------------
S&P Global Ratings lowered its corporate credit rating on
Houston-based offshore drilling company Diamond Offshore Drilling
Inc. to 'BB-' from 'BB+'. The rating outlook is negative.
Conditions in the global offshore contract drilling industry remain
weak due to limited demand and rising rig supply. S&P believes
companies with cold-stacked rigs will find it increasingly
difficult to recontract them when the market begins to recover.
S&P has pushed out its expectations for a recovery in offshore
drilling to late 2019 from late 2018.
S&P also lowered its issue-level rating on the company's unsecured
debt to 'BB-' from 'BB+'. The recovery rating remains '3',
indicating S&P's expectation for meaningful (50%-70%; lower half of
the range) recovery in the event of a payment default.
"The downgrade reflects our revised assessment of Diamond's
business risk profile and our revised assumptions for utilization
of the company's uncontracted fleet, in light of continued weak
market conditions," said S&P Global Ratings credit analyst Carin
Dehne-Kiley. "As a result, we have increased our expectations for
the company's leverage in 2018 and 2019," she added.
The outlook is negative, reflecting the potential that Diamond's
leverage could increase for a sustained period or liquidity could
deteriorate, which would most likely occur if industry conditions
remain weak or if a meaningful portion of the company's rig
contracts are cancelled.
S&P could lower the rating if Diamond's FFO to debt fell and
remained below 12% without a path to improvement, which could occur
if market conditions remain weak or a significant portion of the
company's existing contracts are cancelled. S&P could also lower
the rating if liquidity deteriorated.
S&P could revise the outlook to stable if it expects FFO to debt to
remain close to 12% for a sustained period, which would most likely
occur in conjunction with an industry recovery.
EARL GAUDIO: Business Income Tax Entitled to Admin Expense Priority
-------------------------------------------------------------------
Judge Mary P. Gorman of the United States Bankruptcy Court for the
Central District of Illinois concluded that Earl Gaudio & Son,
Inc.'s 2013 Illinois business income tax debt is entitled to
administrative expense priority.
On June 16, 2015, the Illinois Department of Revenue (IDOR) filed a
claim for Illinois business income tax for the 2013 taxable year in
the amount of $689,376.27, asserting it was entitled to priority
treatment in the amount of $389,376.27. The same day, the IDOR
also filed a claim for postpetition 2013 liquor taxes in the amount
of $84,107.62, asserting the entire claim was entitled to priority.
Both claims were filed only on the claims docket using standard
claim forms, although each was labeled "Administrative Expense
Claim."
The IDOR argued that it is entitled to an allowed administrative
expense claim for the 2013 business income taxes due to it under
the Illinois Income Tax Act in the amount of $796,659.42. The IDOR
also asserted that it is entitled to an allowed administrative
expense claim for taxes imposed on the debtor under the Illinois
Liquor Control Act of 1934 after the petition date in the amount of
$124,446.15. The IDOR argued that it is entitled to administrative
expense treatment on its claims pursuant to 11 U.S.C. section
503(b)(1)(B)(i) because the debts were incurred by the estate after
the petition date and because they are otherwise ineligible for
priority treatment under 11 U.S.C. section 507(a)(8).
There was no dispute that the 2013 liquor taxes were incurred by
the estate. The parties, however, disagreed as to whether and to
what extent the business income taxes were entitled to
administrative priority, with the key area of dispute being whether
those taxes were incurred by the estate.
Judge Gorman noted that the debtor filed its Chapter 11 petition on
July 19, 2013, and the taxes at issue are for the 2013 taxable
year. It is also not disputed that the debtor was operating on a
calendar-year accounting period that ended on December 31, 2013.
The judge pointed out that Illinois business income tax is incurred
at the end of the taxpayer's taxable year. The judge then
explained that where a Chapter 11 petition is filed during a
taxable year, the tax on all income for that taxable year --
without regard to whether the income was earned before or after the
petition date -- is considered a post-petition tax debt that is
incurred by the estate. Because the debtor's 2013 Illinois
business income tax debt owed to the IDOR for the 2013 taxable year
was incurred after the petition date, Judge Gorman concluded that
it is entitled to administrative expense priority.
A full-text copy of Judge Gorman's January 25, 2017 opinion is
available at:
http://bankrupt.com/misc/ilcb13-90942-5788.pdf
About Earl Gaudio & Son, Inc.
Earl Gaudio & Son, Inc., filed a Chapter 11 petition (Bankr. C.D.
Ill. Case No. 13-90942) on July 19, 2013. The petition was signed
by Angela E. Major Hart, as authorized signer of First Midwest
Bank, custodian. Judge Gerald D. Fines presides over the case.
The Debtor disclosed $11,849,187 in assets and $8,489,291 in
liabilities as of the Chapter 11 filing. John David Burke, Esq.,
and Ben T. Caughey, Esq., at Ice Miller, LLP, serve as the Debtor's
counsel.
The U.S. Trustee appointed five creditors to serve in the Official
Committee of Unsecured Creditors. The Committee retained Evans,
Forehlich, Beth & Chamley as its local counsel, and Rubin & Levin,
P.C., as its counsel.
EDGE FINANCIAL: 28101 Ecorse Buying All Assets for $2.3 Million
---------------------------------------------------------------
Edge Financial Group, Inc., asks the U.S. Bankruptcy Court for the
Eastern District of Michigan to authorize the sale of substantially
all assets to 28101 Ecorse Rd, LLC for $2,300,000, less any
discount that The Huntington National Bank agrees to accept with
respect to its secured claims against Debtor.
In order to maximize the value of the Debtor's assets, the Debtor
has been marketing its assets to third parties. The purchase price
is the highest offer for the assets of Debtor that has been
received by Debtor. The Debtor and the Buyer entered into Purchase
Agreement dated Jan. 20, 2017.
The salient terms of the Agreement are:
a. Property: Located at and is commonly known as 28101
Ecorse Road, Romulus, Michigan, with a size of approximately 2.3
acres, Tax Parcel No. 80045990008007. It includes all buildings,
improvements and fixtures; all privileges, easements ,
appurtenances, and land division rights along with any right, title
and interest of the Seller in and to adjacent streets, alleys,
rights-of-way, leases, rents, security deposits, licenses and
permits with respect to the Property; and further including the
Seller's interest in all air, oil, gas and mineral, subsurface, and
riparian rights, as well as all trade name, and warranties or
guaranties relating to the property being sold, and any property
specified. The Assets do not include cash, accounts or inventory.
b. Purchase Price: $2,300,000, less any discount that The
Huntington National Bank agrees to accept with respect to its
secured claims against the Seller.
c. Closing: The closing of the transaction is conditioned
upon M & K Truck Center of Detroit, LLC's purchase of the equipment
from Lindi Transport, LLC and Lindi Truck Center, Inc. pursuant to
the Equipment Lease of the date between such parties. The closing
will take place at the offices of Chirco Title, St. Clair Shores,
Michigan, and will occur within 10 days of the entry of Court Order
of the Agreement, or within 10 days after the end of the Condition
Period, whichever is later.
d. "As Is" Sale of Property: The Seller has made no
representations or warranties whatsoever with respect to the
property.
e. Sale Expenses: All sales expenses are to be paid in
cash prior to or at the closing.
f. Earnest Money Deposit: $50,000
g. Expiration of Offer: Unless accepted by the Seller and
delivered to the Buyer by 9:00 p.m. on Jan. 20, 2017, the Agreement
will be null and void and all parties will be released of any and
all liability of obligations.
A copy of the Agreement and the Equipment Lease attached to the
Motion is available for free at:
http://bankrupt.com/misc/Edge_Financial_59_Sales.pdf
The Debtor has proposed the sale of the assets after thorough
consideration of all viable alternatives and has concluded that
such sale is supported by a number of sound business reasons,
including that a sale of the Debtor's assets will maximize value.
The Debtor also believes that the value of the consideration to be
received for the assets is fair and reasonable. The Debtor submits
that the sale constitutes the highest and best offer for the Assets
and will provide a greater recovery for the Debtor's estate than
would be provided by any other available alternative. It appears
that there will be sufficient funds to pay all creditors in full.
Accordingly, the Debtor's determination to enter into the
transaction is a valid and sound exercise of its business
judgment.
The Debtor asks the Court to approve the proposed sale to the
Purchaser free and clear of liens, claims, encumbrances and other
interests with liens to attach to proceeds.
The Debtor further asks that the Court waive the 14-day automatic
stay of the sale, imposed under Bankruptcy Rule 6004(h).
The Purchaser can be reached at:
Ronald Meyering, Manager
28101 ECORSE RD, LLC
8800 Byron Commercial Drive
Byron Center, MI 49315
Telephone: (616) 583-2100
About Edge Financial Group
Edge Financial Group, Inc. sought Chapter 11 protection (Bankr.
E.D. Mich. Case No. 16-55249) on Nov. 10, 2016. Judge Phillip J
Shefferly is assigned to the case.
The Debtor estimated assets at $100,000 to $500,000 and liabilities
at $1 million to $10 million.
The Debtor tapped Robert N. Bassel, Esq., as counsel.
The petition was signed by Ibri Shehu, sole shareholder.
ETERNAL ENTERPRISES: Taps Lakeshore Realty as Broker
----------------------------------------------------
Eternal Enterprises, Inc. seeks approval from the United States
Bankruptcy Court for the District of Connecticut to employ
Lakeshore Realty to assist in the sale of the Debtor's properties,
so that the Debtor may propose an accurate plan of reorganization.
The properties are currently secured by various loans, which
originated from Astoria Federal Mortgage Corporation, and are
currently held by Hartford Holdings, LLC.
The Debtor and Hartford Holdings LLC each have competing plans of
reorganization before the Court.
The rate of commission for selling the property will be 3% subject
to the sale being made within six months, and Court approval.
Vasel Dedvukaj, a real estate broker at Lakeshore Realty, attests
that he represent no interest adverse to the Debtors or the Estate
in the matters upon which he is engaged and is a disinterested
person within the meaning of Section 101(14) of the Bankruptcy
Code.
The Firm can be reached through:
Vasel Dedvukaj
LAKESHORE REALTY
371 Candlewood Lake Rd.
Brookfield, CT 06804
Tel: 203-546-8536
About Eternal Enterprise, Inc.
Eternal Enterprises Inc. -- http://www.eternalenterprises.net/--
filed a Chapter 11 bankruptcy petition (Bankr. D. Conn. Case No.
14-20292) on Feb. 19, 2014. The petition was signed by Vera Mladen,
president. The Debtor owns and manages eight properties located in
Hartford, Conn. Judge Ann M. Nevins presides over the case. The
Debtor is represented by Irene Costello, Esq., at Shipkevich, PLLC.
The Debtor estimated assets at $50,000 to $100,000 and debt at $1
million to $10 million at the time of the
chapter 11 filing.
The Debtor employs Vincent Vizzo of Vin Vizzo Adjusters LLC as
public adjuster.
EXTREME PLASTICS: Intends to File Chapter 11 Plan By April 28
-------------------------------------------------------------
Old EPP, Inc. f/k/a Extreme Plastics Plus, Inc. and Old EPP
Intermediate, Inc. f/k/a EPP Intermediate Holdings, Inc. request
the U.S. Bankruptcy Court for the District of Delaware to extend
their exclusive periods to file a Chapter 11 Plan and solicit
acceptances thereof, through April 28, 2017 and June 27, 2017,
respectively.
Under the Third Exclusivity Extension, the Debtors' exclusive right
to file a Chapter 11 plan and solicit votes on a chapter 11 plan
was extended through and including January 28, 2017 and March 29,
2017, respectively.
The Debtors relate that following the Third Exclusivity Extension,
they have achieved a key milestone in its Chapter 11 cases by
getting the Court's approval to sell substantially all of their
assets on November 22, 2016 and closing on that sale on December 9,
2016. The Debtors also relate that they have reached an agreement
that further extends the use of cash collateral through March 31,
2017, and negotiated a wind down budget with their Lenders.
In addition, the Debtors relate that shortly following the closing
of the sale, they have filed a notice of abandonment of financed
vehicles not sold to the Purchaser, and have obtained the Court's
authorization to reject all of their executory contracts and
unexpired leases not assumed and assigned to the Purchaser.
However, the Debtors contend that there is still considerable work
to be done in order for them to complete the wind down of their
estates, which includes: (a) resolution of all of their tax issues
and payment of all post-petition tax obligations, (b) termination
of their 401k plan and completion of audit of the plan, (c)
liquidation of their remaining assets consisting primarily of
refunds due, and (d) working with the Purchaser to address
post-closing issues.
About Extreme Plastics Plus
Founded in 2007, privately-held Extreme Plastics Plus, Inc.,
operates an environmental containment business specializing in
providing environmental lining, above ground storage tanks,
composite rig mats, secondary steel wall containment systems, and
closed loop solids control services, primarily for the oil and gas
industry. Extreme Plastics has six facilities in Fairmont, West
Virginia, Tunkhannock, Pennsylvania, St. Clairsville, Ohio, Moore,
Texas, Odessa, Texas, and Oklahoma City, Oklahoma.
The stock of Extreme Plastics is held entirely by EPP Intermediate
Holdings, Inc. The stock of EPP Intermediate is held entirely by
EPP Holding Company, LLC, a non-debtor.
Extreme Plastics, and affiliate EPP Intermediate Holdings, Inc.,
sought Chapter 11 protection (Bankr. D. Del. Lead Case No.
16-10221) on Jan. 31, 2016, as the ongoing decline in the price of
oil and natural gas negatively impacted demand of the Debtors'
services.
Extreme Plastics estimated $10 million to $50 million in assets and
$50 million to $100 million in debt. EPP Intermediate estimated $1
million to $10 million in assets and $50 million to $100 million in
debt.
As of the Petition Date, Extreme Plastics owes $49.5 million under
a secured facility provided by lenders led by Citizens Bank of
Pennsylvania, as agent. The facility is secured by a lien in
substantially all of the Debtors' assets, as well as a pledge of
100% of the equity in Extreme Plastics and EPP Intermediate.
The Debtors are represented by William D. Sullivan, Esq., at
Sullivan Hazeltine Allinson LLC, and have retained Epiq Bankruptcy
Solutions, LLC, as claims and noticing agent.
The U.S. Trustee has appointed five members to the Official
Committee of Unsecured Creditors. The Committee selected Reed
Smith LLP as counsel.
FIAC CORP: Seeks April 10 Exclusive Plan Filing Period Extension
----------------------------------------------------------------
FIAC Corp. and its affiliated Debtors ask the U.S. Bankruptcy Court
for the District of Delaware to extend their exclusive periods for
filing a chapter 11 plan and soliciting acceptances to the plan
through April 10, 2017 and June 9, 2017, respectively.
The Debtors' exclusive plan filing period is currently set to
expire on February 7, 2017, while their exclusive solicitation
period will expire on April 7, 2017.
The Debtors relate that since the Petition Date, the Debtors and
their professionals have focused much of their time, energy and
resources on smoothly transitioning into chapter 11 and stabilizing
their business operations. The Debtors further relate that they
have prepared and prosecuted numerous motions for first and second
day relief, as well as prepared and filed their Schedules and
Statements and required operating reports.
The Debtors contend that they and their professionals also focused
substantial time and resources on obtaining approval of and
consummating the sale of substantially all of their assets,
procuring debtor-in-possession financing, gaining the use of cash
collateral, and timely complying with the Equity Committee's formal
and informal discovery requests. The Debtors believe that, in
light of the progress that they have made in their Chapter 11 Cases
over the past four months, it is reasonable to request additional
time to negotiate and finalize a plan of reorganization.
The Debtors' Motion is scheduled for hearing on March 21, 2017 at
1:30 p.m. The deadline for the filing of objections to the
Debtors' Motion is set on February 9, 2017.
FIAC Corp. and its affiliated Debtors are represented by:
Matthew B. Lunn, Esq.
Donald J. Bowman, Jr., Esq.
Shane M. Reil, Esq.
YOUNG CONAWAY STARGATT & TAYLOR, LLP
Rodney Square, 1000 North King Street
Wilmington, DE 19801
Telephone: (302) 571-6600
- and -
Paul V. Shalhoub, Esq.
Jennifer J. Hardy, Esq.
Debra C. McElligott, Esq.
WILLKIE FARR & GALLAGHER LLP
787 Seventh Avenue
New York, NY 10019
Telephone: (212) 728-8000
About FIAC Corp.
FIAC Corp. and its affiliated Debtors filed chapter 11 petitions
(Bankr. D. Del. Lead Case No. 16-12238) on October 10, 2016. The
Debtors are represented by Matthew B. Lunn, Esq., Donald J. Bowman,
Jr., and Shane M. Reil, Esq., at Young Conaway Stargatt & Taylor,
LLP, and Paul V. Shalhoub, Esq., Jennifer J. Hardy, Esq., and Debra
C. McElligott, at Willkie Farr & Gallagher LLP.
FINJAN HOLDINGS: Attends Cybertech Israel & Meet With Shareholders
------------------------------------------------------------------
Finjan Holdings, Inc. announced that Phil Hartstein, CEO, and
Michael Noonan, CFO, will be in Israel the week of January 30th.
During their trip, management will attend Cybertech Israel, visit
with key shareholders, connect with the CybeRisk team and meet with
their investment partner Jerusalem Venture Partners. The company
will also continue to explore future growth opportunities
specifically for its Finjan Mobile business.
The Company also announced that its Director of Investor Relations,
Vanessa Winter, will present at the NobleCon13 - Noble Capital
Markets' Thirteenth Annual Investor Conference at the Boca Raton
Resort & Club in Boca Raton, Florida, on Monday, January 30, at 4
PM Eastern Standard Time.
A high-definition, video webcast of Finjan's presentation and a
copy of the presentation materials will be available on Finjan's
Investor Relations web site: https://ir.finjan.com, and as part of
a complete catalog of presentations available at Noble Financial
websites: www.noblecapitalmarkets.com, or www.nobleconference.com.
You will require a Microsoft Silverlight viewer (a free download
from the presentation link) to participate. The webcast and
presentation will be archived on the company's website and on the
Noble websites for 90 days following the event.
About Finjan
Finjan, formerly known as Converted Organics, is a leading online
security and technology company which owns a portfolio of patents,
related to software that proactively detects malicious code and
thereby protects end-users from identity and data theft, spyware,
malware, phishing, trojans and other online threats. Founded in
1997, Finjan is one of the first companies to develop and patent
technology and software that is capable of detecting previously
unknown and emerging threats on a real-time, behavior-based basis,
in contrast to signature-based methods of intercepting only known
threats to computers, which were previously standard in the online
security industry.
Finjan Holdings reported a net loss of $12.6 million in 2015, a
net loss of $10.5 million in 2014 and a net loss of $6.07 million
in 2013.
As of Sept. 30, 2016, Finjan had $15.04 million in total assets,
$4.57 million in total liabilities, $13.68 million in redeemable
preferred stock and $3.22 million in stockholders' deficit.
FLORA, IL: Moody's Lowers Rating on $17.8MM GOULT Debt to Ba1
-------------------------------------------------------------
Moody's Investors Service has downgraded to Ba1 from Baa2 the
rating on the City of Flora, IL's general obligation unlimited tax
(GOULT) debt. The outlook is stable. The city has $17.8 million of
GOULT debt outstanding.
The Ba1 rating reflects the city's small and rural tax base with
significant economic concentration and weak demographic profile.
The rating also reflects refinancing risk associated with a
sizeable bank loan relative to the city's liquidity. Additionally
incorporated into the rating is the city's practice of relying on
its enterprise funds to support governmental operations and
liquidity, as well as the challenges associated with comparatively
high utility rates. Finally, the rating acknowledges likely growth
in the city's above average debt and pension burdens.
Rating Outlook
The stable outlook reflects the currently healthy state of the
city's utilities, Flora's primary source of liquidity. While an
outstanding loan maturing in full in December 2020 presents the
city with notable liquidity risk, the city currently has time to
develop a plan to retire or refinance the obligation.
Factors that Could Lead to an Upgrade
Substantial expansion of the city's tax base and diversification
of top taxpayers
Significant moderation in the city's debt burden and unfunded
pension liabilities
Improvement in liquidity across governmental funds
Factors that Could Lead to a Downgrade
Continued growth in the city's debt burden or unfunded pension
liabilities
Weakening of the city's tax base or socioeconomic profile
Reduction in fund balance or liquidity, either in governmental
funds or enterprise funds
Legal Security
The city's outstanding GOULT debt is secured by a dedicated
property tax levy, unlimited as to rate or amount.
Use of Proceeds
Not applicable.
Obligor Profile
The City of Flora is located in Clay County, approximately 100
miles east of St. Louis, MO. As of 2015, the city had an estimated
resident population of 4,944.
Methodology
The principal methodology used in this rating was US Local
Government General Obligation Debt published in December 2016.
FLOUR CITY BAGELS: Hearing on Disclosure Statements Moved to Feb. 7
-------------------------------------------------------------------
Judge Paul R. Warren of the United States Bankruptcy Court for the
Western District of New York rescheduled the hearing on the motion
seeking approval of the competing Disclosure Statements in the
bankruptcy case of Flour City Bagels, LLC, to February 7, 2017 at
11:00 a.m., subject to further adjournment as may be necessary to
allow consideration of any further filings by the parties.
Competing Disclosure Statements and Chapter 11 Plans had been filed
on December 20, 2016 by United Capital Business Lending, Inc. and
Bruegger's Franchise Corporation -- on the one hand -- and Canal
Mezzanine Partners II, LP and MRM Real Estate Fund I, LLC -- on the
other hand. United and Bruegger's had filed a motion seeking
approval of their Disclosure Statement. Canal and MRM filed their
motion seeking approval of their Disclosure Statement shortly
thereafter.
The Court set January 27, 2017 at 11:00 a.m. as the hearing date
for a hearing to consider approval of the competing Disclosure
Statements. The Court expected that objections to the competing
Disclosure Statements would be largely pro forma and easily
addressed. As a result, the Court approved the parties' proposed
hearing schedule, by Order entered on December 22, 2016. The Order
set January 23, 2017 at 4:00 p.m. as the last day for filing
objections to the competing Disclosure Statements.
On the last day set by the Court for objections to the Disclosure
Statements -- in fact, just minutes before the 4:00 p.m. deadline
-- United and Bruegger's filed their objection to the Canal/MRM
Disclosure Statement, followed by an objection by Canal and MRM to
the United/Bruegger's Disclosure Statement. Prior to those
objections, United and Bruegger's filed their First Amended
Disclosure Statement on January 20, 2017. On January 25, 2017,
Canal and MRM filed a lengthy "response" to the objections of
United/Bruegger's to the Canal/MRM Disclosure Statement. Late in
the afternoon that same day, Canal filed a First Amended Chapter 11
Disclosure Statement.
Judge Warren held that the Court will afford itself -- and the UST
and Unsecured Creditors' Committee counsel -- the time necessary to
adequately review the voluminous submissions, as well as the
complex plan confirmation issues raised by the parties in
connection with the hearing on the competing Disclosure Statements.
As a result, the timeline proposed by the parties will necessarily
be significantly revised by the Court until after all issues
related to approval of the competing -- now amended -- Disclosure
Statements have been resolved.
Thus, Judge Warren rescheduled the hearing on the motions seeking
approval of the competing Disclosure Statements to February 7, 2017
at 11:00 a.m., subject to further adjournment as may be necessary
to allow consideration of any further filings by the parties.
Additionally, if the Court determines that the amendments to the
Disclosure Statements are sufficiently material, compliance with
the 28-day notice period under Rule 3017(a) FRBP will be required.
The UST and the Unsecured Creditors' Committee were also invited to
weigh in on the notice issue under Rule 3017(a) FRBP, in advance of
the rescheduled hearing date.
A full-text copy of Judge Warren's January 25, 2017 decision and
order is available at:
http://bankrupt.com/misc/nywb2-16-20213-783.pdf
About Flour City Bagels
Headquartered in Fairport, New York, Flour City Bagels, LLC,
operates 32 bakeries that serve "New York Style" bagels, coffee,
drinks, soups, salads, sandwiches, fresh fruit, and a variety of
other related items. In 1993, it opened its commissary in
Rochester, at which it produces bagels for sale at all of its 32
bakeries. It employs 425 people.
Flour City Bagels sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. W.D.N.Y. Case No. 16-20213) on March 2,
2016, estimating both assets and debt in the range of $10 million
to $50 million. Kevin Coyne, the manager, signed the petition.
Judge Paul R. Warren is assigned to the case.
The Debtor is represented by Stephen A. Donato, Esq., and Camille
W. Hill, Esq., at Bond, Schoeneck & King, PLLC, and Harry W.
Greenfield, Esq., Jeffrey Toole, Esq., and Heather E. Heberlein,
Esq., at Buckley King.
The Debtor retained Phoenix Management Services, LLC as financial
advisor; Phoenix Capital Resources as investment banker; Insero &
Co. CPAs, LLP as accounting services provider; and Kittel Branagan
& Sargent as tax consultant.
The official committee of unsecured creditors of Flour City Bagels,
LLC, retained Gordorn & Schaal, LLP as local counsel, and Corporate
Recovery Associates, LLC, as business and financial advisor.
No trustee or examiner has been appointed in the case.
On December 20, 2016, a group of creditors led by United Capital
Business Lending Inc. filed their proposed plan of reorganization
for the Debtor. On the same date, Canal Mezzanine Partners II, LP
and MRM Real Estate Fund I, LLC, proposed their plan of sale and
subsequent liquidation for the company.
FREEDOM COMMUNICATIONS: Former Owners Sued Over Pension Plan
------------------------------------------------------------
Peg Brickley, writing for The Wall Street Journal Pro Bankruptcy,
reported that a lawsuit was filed against Aaron Kushner and Eric
Spitz, former owners of Freedom Communications Inc., alleging that
their involvement in investment decisions rendered the publisher's
pension plan too toxic to sell.
According to the report, Mr. Spitz called the suit "frivolous,"
saying the lawyers who brought it "know full well that as
fiduciaries of Freedom's pension fund, Aaron and I did everything
by the book, hand-in-hand with our third-party advisers."
The report related that in the 2012 purchase, Mr. Kushner paid $50
million and agreed to take on a pension plan that was underfunded
by about $100 million. By April 2016, Freedom's pension plan was
$150 million in the hole, the result of heavy investment losses,
the creditors say, the report related.
Lawyers for Freedom's creditors who filed the lawsuit blame the
decision by the company's owners to invest pension plan funds in
life insurance products for depleting the assets, a decision that
had a "devastating impact" on the pension funds, court papers say,
the report further related.
Ultimately, Freedom was forced to drop the troubled retirement
funds in the lap of the Pension Benefit Guaranty Corp., a federal
safety net for retirement savings, according to the suit, the
report said.
About Freedom Communications, Inc.
Headquartered in Santa Ana, California, Freedom Communications,
Inc., owns two daily newspapers -- The Press-Enterprise in
Riverside, California and The Orange County Register in Santa Ana,
California.
Freedom Communications and 24 of its affiliates sought Chapter 11
bankruptcy protection in California with the intention of selling
their assets to a group of local investors led by Rich Mirman,
Freedom's chief executive officer and publisher.
Headquartered in Santa Ana, California, Freedom owns two daily
newspapers -- The Press-Enterprise in Riverside, Calif. and The
Orange County Register in Santa Ana, Calif.
Freedom Communications, Inc., et al., filed Chapter 11 bankruptcy
petitions (Bankr. C.D. Cal. Proposed Lead Case No. 15-15311) on
Nov. 1, 2015. Richard E. Mirman signed the petition as chief
executive officer. Freedom Communications Holdings estimated both
assets and liabilities in the range of $10 million to $50 million.
The Debtors are represented by William N. Lobel, Esq., Alan J.
Friedman, Esq., Beth E. Gaschen, Esq., and Christopher J. Green,
Esq., at Lobel Weiland Golden Friedman LLP serves as the Debtors'
counsel.
The Debtors employed GlassRatner Advisory & Capital Group LLC as
their financial advisor and consultant. The Debtors retained
Donlin, Recano & Company, Inc., as the noticing, claims and
balloting/solicitation agent.
The Official Committee of Unsecured Creditors is represented in
the
case by Robert J. Feinstein, Esq. and Jeffrey W. Dulberg, Esq., at
Pachulski Stang Ziehl & Jones LLP.
FREEDOM MORTGAGE: Moody's Assigns B1 Corporate Family Rating
------------------------------------------------------------
Moody's Investors Service assigned a B1 Corporate Family Rating
(CFR) and a B1 rating to the planned $350 million MSR senior
secured term loan facility of Freedom Mortgage Corp. The outlook is
stable.
Issuer: Freedom Mortgage Corporation
Assignments:
-- Corporate Family Rating, at B1 Stable
-- Long Term Domestic Secured Term Loan, at B1, Stable
RATINGS RATIONALE
The ratings reflect the company's strong profitability and solid
capital level. Risk factors offsetting these positive attributes
include Freedom's reliance on short-term secured funding, its
limited franchise position as a financial services company in the
residential mortgage market, the risks embedded in its rapid
growth, and key man risk with respect to its President and CEO
Stanley Middleman.
Freedom's tangible common equity (TCE) to total tangible assets
(TMA) of more than 15%, and net income to assets above 4% per annum
over the last several years compares favorably to its B-rated
peers. Moody's expects the company to maintain solid capital and
profitability as the company continues to grow its loan production
and servicing operations. In addition, despite the staggered
maturities of its warehouse facilities, the short-term funding
structure severely limits the company's financial flexibility to
deal with unexpected events.
The stable rating outlook reflects Moody's expectation that Freedom
will be able to maintain its strong financial performance, minimize
operational risk and maintain solid capital.
The ratings could be upgraded if Freedom can further diversify its
funding structure, reducing its reliance on secured short-term
financing and if the company demonstrates resilience in its market
position as a top 10 mortgage originator and maintains strong
profitability and capital level with net income to managed assets
above 5% and tangible common equity to assets above 17.5%.
The ratings could be downgraded if financial performance
deteriorates - for example, if net income to managed assets falls
consistently below 3.5% or if leverage increases such that the
company's tangible common equity to managed assets falls below
14%.
The principal methodology used in these ratings was Finance
Companies published in December 2016.
FREEDOM MORTGAGE: S&P Assigns 'BB-' Rating on $350MM Term Loan
--------------------------------------------------------------
S&P Global Ratings said that it assigned a 'BB-' rating to Freedom
Mortgage Corp.'s $350 million senior secured term loan (SSTL) due
2022. S&P is assigning a recovery rating of '1' to the SSTL,
indicating its expectation of very high recovery in the 90%-100%
range in the event of default.
S&P Global Ratings has a 'B' issuer credit rating (ICR) on Freedom
Mortgage Corp. and a stable outlook. The SSTL is rated two notches
above the company's ICR because S&P believes the maximum
loan-to-value (LTV) ratio covenants, which step down to 45% in
2020, would likely provide substantial downside protection under a
hypothetical default scenario.
Key analytical factors
-- S&P's simulated default scenario contemplates a hypothetical
default occurring in 2020, in the face of substantial
curtailments of business practices due to regulatory and
compliance deficiencies in servicing practices. Eventually,
the company's liquidity and capital resources become
strained to the point where the company breaches its senior
secured term loan covenant of a maximum 45% LTV ratio.
Based on scheduled amortizations of 2.5% a year, this would
lead to an outstanding loan amount of $324 million and
collateral value of $720 million.
-- As a result, the company may find itself in the position of
having to liquidate its assets. S&P has therefore valued
the company through a discrete asset valuation of its Ginnie
Mae MSRs and advances, the collateral secured by the term
loan. S&P then applies a 30% haircut to the collateral
value at the point of the maximum 45% LTV covenant breach to
reflect the assumed decline in value because of the
challenge of valuing and selling an asset when a company is
distressed.
Simulated default assumptions
-- A low-interest-rate environment leading to depressed MSR
valuations
-- A sustained period of rapid amortization of MSRs with
limited ability to refinance the repayments
-- Reduced new origination activity
-- An increase in borrower delinquencies
-- An increase in the discount rate to value MSRs
Simplified waterfall
-- Discrete asset value (after 5% administrative costs):
$478 million
-- Collateral value available to senior secured creditors:
$478 million
-- Senior secured notes: $338 million
-- Recovery expectations: Over 90%
Note: All debt amounts include six months of prepetition interest
Ratings Score Snapshot
Issuer Credit Rating: B/Stable/--
Business Risk: Weak
-- Country Risk: Very Low
-- Industry Risk: Moderately High
-- Competitive Position: Weak
Financial Risk: Intermediate
Anchor: bb
Modifiers:
-- Diversification/Portfolio Effect: Neutral (no impact)
-- Capital Structure: Negative (-1 notch)
-- Financial Policy: Negative (-1 notch)
-- Liquidity: Adequate (no impact)
-- Management and Governance: Weak (-1 notch)
-- Comparable Ratings Analysis: Neutral (no impact)
Stand-alone credit profile: b
Group credit profile: b
Related Criteria And Research
RATINGS LIST
Freedom Mortgage Corp.
Issuer Credit ratings B/Stable/--
New Rating
Freedom Mortgage Corp.
Senior Secured Term Loan Due 2022 BB-
Recovery Rating 1
FREEPORT-MCMORAN INC: New Mining Policy Credit Neg., Moody's Says
-----------------------------------------------------------------
Moody's Investors Service views the new mining regulations in
Indonesia, issued January 12, 2017, as they relate to the export of
mineral ores and other matters, as credit negative for
Freeport-McMoRan Inc. (FCX -- B1 CFR, positive outlook). The new
regulations are credit negative for FCX as the ability to achieve
an upgrade could be of a longer duration than as denoted by the
positive outlook.
FCX, a Phoenix based mining company, ranks among the top copper and
molybdenum producers globally and is a leading gold producer. With
the completion of the sales of its Deepwater Gulf of Mexico oil and
gas properties and its onshore California oil and gas properties,
FCX's business will be comprised predominately of its copper mining
operations and their related by-products. The company's global
footprint includes copper mining operations in Indonesia through
its 90.64% owned subsidiary PT-FI, the United States, Chile and
Peru. Revenues for the 12 months ended December 31, 2016 were $14.8
billion.
FRESH & EASY: Kaykel Buying Liquor License (No. 539693) for $25K
----------------------------------------------------------------
Fresh & Easy, LLC, filed with the U.S. Bankruptcy Court for the
District of Delaware a notice that it will sell its Liquor License
(No. 539693) to Kaykel Investment Properties, Inc. for $25,000.
The objection deadline is Jan. 31, 2017 at 5:00 p.m. (ET).
On Dec. 3, 2015, the Court entered a Miscellaneous Asset Sale
Order, authorizing the Debtor to sell or transfer certain
miscellaneous assets pursuant to the procedures set forth in the
Miscellaneous Asset Sale Order. Pursuant to the Miscellaneous
Asset Sale Order, the Debtor proposes to sell the Liquor License to
the Buyer pursuant to the Purchase Agreement.
The Debtor proposes to sell the Liquor License to the Buyer on an
"as is, where is" basis, free and clear of all liens, claims,
interests, and encumbrances.
A copy of the Purchase Agreement and Miscellaneous Asset Sale Order
attached to the Notice is available for free at:
http://bankrupt.com/misc/Fresh_&_Easy_1821_Sales.pdf
The known parties holding liens or other interest in the Liquor
License are: (i) Wells Fargo Bank, National Association; (ii)
California Department of Alcoholic Beverage Control Headquarters;
(iii) California State Board of Equalization; (iv) State of
California Franchise Tax Board; (v) Gordan Ranch Market Place, LLC;
and Dean Vasquez.
If no objections are received by the Debtor by the Objection
Deadline, then the Debtor may proceed with the proposed sale in
accordance with the terms of the Miscellaneous Asset Sale Order.
About Fresh & Easy, LLC
Fresh & Easy, LLC, a chain of grocery stores in the Southwest
United States, filed a Chapter 11 bankruptcy petition (Bankr. D.
Del. Case No. 15-12220) on Oct. 30, 2015. The petition was signed
by Peter McPhee, the CFO. The Debtor estimated assets of $10
million to $50 million and liabilities of at least $100 million.
Judge Christopher S. Sontchi is assigned to the case.
The Debtor has engaged Norman L. Pernick, Esq., Kate J. Stickles,
Esq., and David W. Giattino, Esq., at Cole Schotz P.C. as counsel;
Epiq Bankruptcy Solutions, LLC, as claims and noticing agent; DJM
Realty Services, LLC; and CBRE Group, Inc., as real estate
consultants; and FTI Consulting, Inc., as restructuring advisors.
The Official Committee of Unsecured Creditors hired Fox Rothschild
LLP and ASK LLP as counsel.
* * *
The Debtor has undertaken the process of liquidating the estate's
assets located at its retail locations and distribution center
with the assistance of Hilco Merchant Resources, LLC, and
Industrial
Assets Corp., respectively, has engaged DJM Realty Services, LLC,
and CBRE, Inc., to market its leasehold interests, and has
recently engaged Hilco Streambank to assist with the disposition of
its
intellectual property.
As part of the claims process, a bar date of Feb. 19, 2016, was
established by the Court for creditor claims.
GERARD BOEH: Seeks April 28 Exclusive Plan Filing Period Extension
------------------------------------------------------------------
Gerard Boeh Flowers, Inc. asks the U.S. Bankruptcy Court for the
Western District of Pennsylvania to extend its exclusive period for
filing a plan of reorganization and disclosures statement, through
April 28, 2017.
Absent an extension, the Debtor's exclusive plan filing period
would have expired on January 28, 2017.
The Debtor tells the Court that it was unable to file the plan and
disclosure statement for the following reasons:
(1) The Debtor just completed its busy season. During that
time the Debtor's principal had hoped to be able to work with
counsel on the Plan of Reorganization, but was unable to do so
because of the seasonal demands of the business.
(2) The Debtor will require the assistance of an accountant to
prepare the financial projections for the Disclosure Statement, but
has so far been unable to hire an accountant. The Debtor's
existing accountant has a sizeable pre-petition claim against the
Debtor and is therefore proscribed from working for the Debtor.
(3) The Debtor's principal was expecting the assistance of the
principal's family members with certain tasks related to the
reorganization. Such assistance is now unavailable due to family
matters.
The Debtor contends that its business has remained stable and that
it is meeting its post-petition obligations. The Debtor is
confident that it can file a confirmable plan when an extension is
granted.
About Gerard Boeh Flowers, Inc.
Gerard Boeh Flowers, Inc., filed a Chapter 11 bankruptcy petition
(Bankr. W.D. Pa. Case No. 16-22840) on August 1, 2016. The
Petition was signed by Gerard E. Boeh. The Debtor is represented
by Stanley A. Kirshenbaum, Esq. At the time of filing, the Debtor
had estimated assets at $0 to $50,000 and liabilities at $100,000
to $500,000.
The Office of the U.S. Trustee disclosed in a court filing that no
official committee of unsecured creditors has been appointed in the
Chapter 11 case of Gerard Boeh Flowers, Inc.
GIVE AND GO: Uncle Wally's Acquisition No Impact on Moody's B2 CFR
------------------------------------------------------------------
Moody's Investors Service commented that Give and Go Prepared Foods
Corp.'s acquisition of Uncle Wally's Bake Shoppe is credit positive
but has no impact on the company's B2 corporate family rating and
stable outlook.
Give & Go, headquartered in Toronto, Ontario, is a manufacturer and
distributor of mostly mini baked goods (brownies, cinnamon rolls,
croissants, danishes, scones, tarts, macaroons etc.), to retailers
and foodservice operators in North America. Pro forma for Uncle
Wally's, annual revenue exceeds US$380 million.
GM FINANCIAL: Moody's Hikes Corporate Family Rating From Ba1
------------------------------------------------------------
Moody's Investors Service has upgraded the ratings of General
Motors Financial. GMF's senior unsecured rating was upgraded to
Baa3 from Ba1. The ratings outlook is stable.
Issuer: General Motors Financial Company, Inc.
Upgrades:
-- Corporate Family Rating, Upgraded to Baa3, Stable from Ba1,
Positive
-- Senior Unsecured Regular Bond/Debenture, Upgraded to Baa3,
Stable from Ba1, Positive
-- Backed Senior Unsecured Domestic and Foreign Currency Regular
Bond/Debenture, Upgraded to Baa3, Stable from Ba1, Positive
-- Backed Senior Unsecured Shelf, Upgraded to (P)Baa3 from (P)Ba1
-- Backed Senior Unsecured Foreign Currency Medium-Term Note
Program, Upgraded to (P)Baa3 from (P)Ba1
-- Backed Subordinate Shelf, Upgraded to (P)Ba1 from (P)Ba2
Outlook Actions:
-- Outlook, Changed To Stable From Positive
Issuer: General Motors Financial of Canada, Ltd.
Upgrades:
-- Backed Senior Unsecured Regular Bond/Debenture, Upgraded to
Baa3, Stable from Ba1, Positive
Outlook Actions:
-- Outlook, Changed To Stable From Positive
Issuer: General Motors Financial International BV
Upgrades:
-- Backed Senior Unsecured Regular Bond/Debenture, Upgraded to
Baa3, Stable from Ba1, Positive
-- Backed Senior Unsecured Medium-Term Note Program, Upgraded to
(P)Baa3 from (P)Ba1
Outlook Actions:
-- Outlook, Changed To Stable From Positive
RATINGS RATIONALE
The upgrade of GMF follows Moody's 30 January 2017 upgrade of
General Motor's ("GM") debt ratings, including the revolving credit
facility rating to Baa2 from Baa3, and its senior unsecured notes
rating to Baa3 from Ba1 with a stable outlook.
Moody's ratings of GMF reflect the explicit and implicit support
provided by GM. Moody's believes that GMF plays an important role
in helping GM achieve its sales objectives across the globe.
Moody's expectation of support is explicitly demonstrated by a
credit support agreement from GM. Though not a guarantee, the
credit support agreement includes quantifiable measures of
maintenance, including the requirement that GM maintains 100%
ownership, as well as limits GMF's leverage. GMF's senior unsecured
ratings and ratings outlook are equivalent to GM's senior unsecured
notes rating due to GM's support. GMF's stand-alone credit profile
remains unchanged at a low-Ba level.
GMF has demonstrated solid performance while in the midst of a
meaningful transformation into GM's captive finance company. Since
its acquisition by GM in 2010 (when it was known as AmeriCredit),
GMF has become increasingly integrated with its parent, growing its
share of related vehicle sales financing. Growth within GMF is
significant, primarily from new leasing volumes in addition to
loans across the credit spectrum. GMF has improved its funding
capabilities in new geographic markets to match the geographic
profile of its business. It has also lowered its use of
securitization as a percentage of its total funding. These positive
actions are helping the company to diversify its funding sources.
GMF's challenges continue to be managing significant portfolio
growth and asset performance during a softening used car market and
increasing its penetration in commercial lending with GM
dealerships.
General Motors Financial could be upgraded if General Motors
ratings are upgraded.
A downgrade of General Motors or deterioration of parental support
could result in a downgrade of General Motors Financial's ratings.
The principal methodology used in these ratings was Finance
Companies published in December 2016.
GREAT BASIN: Has 400.8-Mil. Outstanding Common Stock as of Jan. 25
------------------------------------------------------------------
On Jan. 24 and Jan. 25, 2017, certain holders of the 2016 Notes
were issued shares of the Company's common stock pursuant to
Section 3(a)(9) of the United States Securities Act of 1933, (as
amended) in connection with conversions at the election of the
holder pursuant to the terms of the 2016 Notes, as amended. In
connection with the conversions, the Company issued 240,136,753
shares of common stock. As per the terms of the 2016 Notes, as
amended, these pre-installment shares immediately reduced the
principal amount outstanding of the 2016 Notes by $1,503,109 at a
conversion price between $0.00468 and $0.00666 per share.
As of Jan. 25, 2017, a total principal amount of $2.1 million of
the 2016 Notes has been converted into shares of common stock.
Approximately $72.9 million in note principal remains to be
converted. Restrictions on a total of $9.8 million in the
Company's restricted cash accounts has been released including $6.0
million at closing and $3.8 million in early release from the
restricted cash accounts. $58.2 million remains in the restricted
cash accounts to have the restrictions removed and become available
to the Company at future dates pursuant to terms of the 2016
Notes.
As of Jan. 25, 2017, there are 400,846,774 shares of common stock
issued and outstanding.
In connection with the conversions of the 2016 Notes, the exercise
prices of certain of the Company's issued and outstanding
securities were automatically adjusted to take into account the
conversion price of the 2016 Notes. The exercise price of the
following security was adjusted as follows.
As of Jan. 25, 2017, the Company has outstanding Series B Warrants
to purchase 36 shares of common stock of the Company. The Series
B Warrants include a provision which provides that the exercise
prices of the Series B Warrants will be adjusted in connection with
certain equity issuances by the Company. As a result of the
Conversions, as of Jan. 25, 2017, the exercise price for certain
Common Warrants was adjusted from $645,355 to $46,310 per share of
common stock.
About Great Basin
Great Basin Scientific is a molecular diagnostic testing company
focused on the development and commercialization of its patented,
molecular diagnostic platform designed to test for infectious
disease, especially hospital-acquired infections. The Company
believes that small to medium sized hospital laboratories, those
under 400 beds, are in need of simpler and more affordable
molecular diagnostic testing methods. The Company markets a system
that combines both affordability and ease-of-use, when compared to
other commercially available molecular testing methods, which the
Company believes will accelerate the adoption of molecular testing
in small to medium sized hospitals. The Company's system includes
an analyzer, which it provides for its customers' use without
charge in the United States, and a diagnostic cartridge, which the
Company sells to its customers.
Great Basin reported a net loss of $57.9 million in 2015 following
a net loss of $21.7 million in 2014.
As of Sept. 30, 2016, Great Basin had $83.40 million in total
assets, $144.9 million in total liabilities, and a total
stockholders' deficit of $61.47 million.
Mantyla McReynolds, LLC, in Salt Lake City, Utah, issued a "going
concern" opinion in its report on the consolidated financial
statements for the year ended Dec. 31, 2015, citing that the
Company has incurred substantial losses from operations causing
negative working capital and negative operating cash flows. These
issues raise substantial doubt about its ability to continue as a
going concern, the auditors said.
GREYSTONE LOGISTICS: Reports Second Quarter Results of Operations
-----------------------------------------------------------------
Tulsa-based Greystone Logistics, Inc., reported sales for the three
months ended Nov. 30, 2016, totaled $9,221,711 compared to
$4,420,210 for the prior period for an increase of $4,801,501, or
108%. Sales for the six months ended Nov. 30, 2016, of $17,065,972
compared to $9,990,191 for the prior period for an increase of
$7,075,781, or 71%.
Net income before preferred dividends for the three months and six
months ended Nov. 30, 2016, were $258,826 and $212,434, and,
respectively, compared to $115,151 and $165,547, respectively, for
the prior periods. Greystone recorded net income for the three
months ended Nov. 30, 2016, available to common shareholders after
preferred dividends of $41,109 compared to a net loss available to
common shareholders of $(22,420) for the prior period. Greystone
recorded a net loss available to common stockholders after
preferred dividends of $(76,330), compared to $(113,735) for the
six months ended Nov. 30, 2016.
Greystone's EBITDA (net income before stock compensation costs,
interest expense, income taxes, depreciation and amortization) for
the six months ended Nov. 30, 2016, was $2,004,389 compared to
$1,294,750 for the prior period.
"The addition of the previously announced pallet leasing customer
continues to have a significant impact on Greystone's sales and
operations," stated Warren Kruger, president and CEO. "The second
quarter of our fiscal year 2017 began to show a turnaround in
earnings and this trend is expected to continue throughout the
remaining part of this year. Unfortunately, our two newest
machines were not operating at full capacity and our two oldest
injection machines were down awaiting parts during this quarter.
These unexpected delays affected our efficiency and margin goals
for the quarter. To meet the increasing demand for our pallets, we
have ordered a Milacron injection-molding machine to add to the
three similar machines acquired during the past year. We
anticipate this machine will become operational during the latter
part of this year. Improving the returns for our shareholders is a
continuing major goal for Greystone as we review operations for
improvements in operating efficiencies and cost containment to
achieve better margins."
Greystone Logistics is a "Green" manufacturing and leasing company
that reprocesses and sells recycled plastic and designs,
manufactures, sells high quality 100% recycled plastic pallets that
provide logistical solutions needed by a wide range of industries
such as the food and beverage, automotive, chemical, pharmaceutical
and consumer products. The Company's technology, including that
used in its injection molding equipment, proprietary blend of
recycled plastic resins and patented pallet designs, allows
production of high quality pallets quickly and at lower costs than
many processes. The recycled plastic for its pallets helps control
material costs while reducing environmental waste and provides cost
advantages over users of virgin resin. Excess plastic not used in
production of pallets may be reprocessed for resale.
About Greystone Logistics
Tulsa, Okla.-based Greystone Logistics, Inc. (OTC BB: GLGI.OB -
News) -- http://www.greystonelogistics.com/-- manufactures and
sells plastic pallets through its wholly owned subsidiary,
Greystone Manufacturing, LLC. Greystone sells its pallets through
direct sales and a network of independent contractor distributors.
Greystone also sells its pallets and pallet leasing services to
certain large customers direct through its President, Senior Vice
President of Sales and Marketing and other employees.
Greystone reported net income attributable to common stockholders
of $271,726 on $26.34 million of sales for the year ended May 31,
2016, compared to net income attributable to common stockholders of
$57,565 on $22.3 million of sales for the year ended May 31, 2015.
As of Nov. 30, 2016, the Company had $23.58 million in total
assets, $24.19 million in total liabilities and a total deficit of
$606,125.
GUIDED THERAPEUTICS: Grants SMI License to Manufacture LuViva
-------------------------------------------------------------
Guided Therapeutics, Inc., has reached agreement with Shandong
Yaohua Medical Instrument Corporation in China for exclusive
distribution, sales and manufacturing rights of the LuViva Advanced
Cervical Scan for China, Taiwan, Hong Kong and Macau.
In addition to a previous payment of $50,000 made by Shandong
Yaohua, the terms of the license agreement include a licensing fee
by Shandong Yaohua of $1,000,000, the purchase of a minimum of ten
LuViva Advance Cervical Scan devices in 2017 and royalties for
disposables based on minimum orders once Chinese Food and Drug
Administration (CFDA) approval is obtained. To further align the
strategic interests of the parties, Guided Therapeutics has agreed
to issue $1,000,000 in shares of its common stock to Shandong
Yaohua.
Shandong Yaohua will conduct the necessary clinical trials and
apply to the CFDA for approval to market LuViva in China. Once
approved, Shandong Yaohua will provide for the distribution and
sale of LuViva within China with its established distribution and
sales network.
China is potentially the world's largest market for cervical cancer
screening with over 390 million women in the recommended ages for
screening. The incidence of cervical cancer in China is currently
the highest in the world and increasing. Increased screening for
cervical cancer is key to mitigating the losses associated with
this disease.
Under the terms of the agreement, Shandong Yaohua will establish
manufacturing lines for LuViva within its existing medical device
manufacturing facilities, which will enable Shandong Yaohua to
supply Guided Therapeutics with LuViva products. With increased
volume of production, advanced manufacturing processes and
competitive labor rates, the Company expects that Shandong Yaohua
will be able to lower the costs for the LuViva device and
disposables for the global market. Worldwide, the market for
cervical cancer screening and diagnostics, as currently practiced
using cytology (Pap test) for primary screening, is estimated at $6
billion and is projected to grow to almost $9 billion by 2020.
There are about 2.6 billion women aged 15 years and older who are
at risk of developing cervical cancer worldwide.
"We are pleased to be partnering with Shandong Yaohua to bring
LuViva to China and improve early detection in a market where
cervical cancer, often found too late, is the second leading killer
among women's cancers," said Gene Cartwright, CEO and President of
Guided Therapeutics. "The agreement also opens up the possibility
to bring efficiencies to our manufacturing processes as well as
opening up additional markets in East Asia."
"LuViva is the ideal product to address this critical women's
health concern, which is a national priority for eradication in
China," said Li Yaohua, Chairman of Shandong Yaohua. "The
combination of early detection and immediate results makes the
LuViva appealing to the healthcare professional as well as the
patient and her family."
The Company currently anticipates interim device and disposable
sales for clinical study and demonstration purposes. In Hong Kong,
the Company believes the time to commercial sales is quicker, with
device registration, rather than approval required.
In order to facilitate the SMI agreement, immediately prior to its
execution the Company entered into an agreement with Shenghuo
Medical, LLC, regarding the Company's previous license to Shenghuo,
originally granted in June 2016, to manufacture, sell and
distribute the LuViva in Asia. Under the terms of the new
agreement, Shenghuo agreed to relinquish its manufacturing license
and its distribution rights in SMI's territories, and to waive its
rights under the original Shenghuo agreement, all for as long as
SMI performs under the SMI agreement. As consideration, the
Company has agreed to split with Shenghuo the licensing fees and
net royalties from SMI that the Company will receive under the SMI
agreement. Should the SMI agreement be terminated, the Company has
agreed to re-issue the original license to Shenghuo under the
original terms. Two of the Company's directors, Mark Faupel and
Richard Blumberg, are managing members of Shenghuo.
About Shandong Yaohua
Shandong Yaohua Medical Instrument Corporation, traded on the
Chinese National Equities Exchange and Quotations as 833141, is the
maker and distributor of medical devices and disposables for urine
analysis, urine test strips, vacuum blood collection tubes and
other medical products. They manufacture, distribute and sell to
the domestic market in China, the Middle East and Eastern Asia.
Shandong Yaohua Medical Instrument Corporation is located in the
high-tech development zone of Shandong Province, Laiwu City.
Shandong Yaohua owns 86,600 square meters facilities (including
building and yard). The building area is approximately 20,000
square meters.
About Guided Therapeutics
Guided Therapeutics, Inc. (OTC BB and OTC QB: GTHP)
-- http://www.guidedinc.com/-- is developing a rapid and painless
test for the early detection of disease that leads to cervical
cancer. The technology is designed to provide an objective result
at the point of care, thereby improving the management of cervical
disease. Unlike Pap and HPV tests, the device does not require a
painful tissue sample and results are known immediately. GT has
also entered into a partnership with Konica Minolta Opto to
develop a non-invasive test for Barrett's Esophagus using the
LightTouch technology platform.
Guided Therapeutics reported a net loss attributable to common
stockholders of $9.50 million on $42,000 of contract and grant
revenue for the year ended Dec. 31, 2015, compared to a net loss
attributable to common stockholders of $10.03 million on $65,000
of contract and grant revenue for the year ended Dec. 31, 2014.
As of Sept. 30, 2016, Guided Therapeutics had $2.06 million in
total assets, $9.37 million in total liabilities and a total
stockholders' deficit of $7.31 million.
GYMBOREE CORP: Bank Debt Trades at 50% Off
------------------------------------------
Participations in a syndicated loan under Gymboree Corp is a
borrower traded in the secondary market at 50.30
cents-on-the-dollar during the week ended Friday, January 20, 2017,
according to data compiled by LSTA/Thomson Reuters MTM Pricing.
This represents a decrease of 0.70 percentage points from the
previous week. Gymboree Corp pays 350 basis points above LIBOR to
borrow under the $0.82 billion facility. The bank loan matures on
Feb. 23, 2018 and carries Moody's Caa3 rating and Standard & Poor's
CC rating. The loan is one of the biggest gainers and losers among
247 widely quoted syndicated loans with five or more bids in
secondary trading for the week ended January 20.
HANJIN SHIPPING: Parent Targeted for $31M Pension Bill
------------------------------------------------------
Andrew Scurria, writing for The Wall Street Journal Pro Bankruptcy,
reported that a New York pension fund seeking $31 million from
Hanjin Shipping Co. asked court permission to investigate ties
between the South Korean carrier and its parent entity, one of the
so-called chaebol that dominate the nation's economy.
According to the filing in U.S Bankruptcy Court in New Jersey marks
an attempt to draw the Hanjin Group conglomerate into the U.S.
bankruptcy of Hanjin Shipping, which filed in August for
receivership proceedings in Korea.
A longshoremen's pension fund is pursuing a $31 million "withdrawal
liability" from Hanjin Shipping in the courts of both countries,
according to filing, the report related. That represents the
amount the New York Shipping Association-International
Longshoremen's Association Pension Trust Fund says the carrier owes
for pension benefits that will be paid out in the future, the
report further related.
The pension fund says it wants to know whether the Hanjin Group
conglomerate's other businesses, including the world's
third-largest cargo airline, Korean Air, may be a close enough
relative of the shipping unit that they, too, are liable for the
$31 million tab, the report said.
But Hanjin Shipping has refused to disclose details on the business
lines the make up the chaebol, or their corporate relationship with
each other, the report added, citing the court filing.
About Hanjin Shipping
Hanjin Shipping Co., Ltd., is mainly engaged in the transportation
business through containerships, transportation business through
bulk carriers and terminal operation business. The Debtor is a
stock-listed corporation with a total of 245,269,947 issued shares
(common shares, KRW 5000 per share) and paid-in capital totaling
KRW 1,226,349,735,000. Of these shares 33.23% is owned by Korean
Air Lines Co., Ltd., 3.08% by Debtor and 0.34% by employee
shareholders' association.
The Company operates approximately 60 regular lines worldwide,
with 140 container or bulk vessels transporting over 100
million tons of cargo per year. It also operates 13 terminals
specialized for containers, two distribution centers and
six Off Dock Container Yards in major ports and inland areas
around the world. The Company is a member of "CKYHE," a
global shipping conference and also a partner of "The
Alliance," another global shipping conference to be
launched in April 2017.
Hanjin Shipping listed total current liabilities of KRW 6,028,543
million and total current assets of KRW 6,624,326 million as of
June 30, 2016.
As a result of the severe lack of liquidity, Hanjin applied to the
Seoul Central District Court 6th Bench of Bankruptcy Division for
the commencement of rehabilitation under the Debtor Rehabilitation
and Bankruptcy Act on Aug. 31, 2016. On the same day, it requested
and was granted a general injunction and the preservation of
disposition of the Company's assets. The Korean Court's decision
to commence the rehabilitation was made on Sept. 1, 2016. Tai-Soo
Suk was appointed as the Debtor's custodian.
On Sept. 2, 2016, Hanjin Shipping Co. filed in the U.S. a
voluntary
petition under Chapter 15 of the Bankruptcy Code. The Chapter 15
case is pending in New Jersey (Bankr. D.N.J. Case No. 16-27041)
before Judge John K. Sherwood. Cole Schotz P.C. serves as counsel
to Tai-Soo Suk, the Chapter 15 petitioner and the duly appointed
foreign representative of Hanjin Shipping.
HCSB FINANCIAL: Announces Fourth Quarter 2016 Financial Results
---------------------------------------------------------------
HCSB Financial Corporation, the holding company for Horry County
State Bank, announced financial results for the fourth quarter
ended Dec. 31, 2016. The Company announced net income of $1.4
million, or $0.00 per common share, for the fourth quarter of 2016,
an increase from a net loss of $1.8 million, or $0.00 per common
share at the end of the third quarter of 2016.
"We have wrapped up 2016 on a very positive note, with net income
of $1.4 million for the fourth quarter. We believe this gives us
great momentum going into 2017 as our focus remains on delivering
profitability for our shareholders and valuable financial services
to our communities. Our loan production exceeded our internal
expectations, and we believe that is poised to continue as our
bankers are providing exceptional customer service in each of our
markets. In the fourth quarter, we were able to release $1.1
million in loan loss reserves, as the quality of our portfolio has
improved significantly with the completion of our asset disposition
plan in the second half of the year and the management team gained
further understanding about the risk remaining in the loan
portfolio. In addition, we have migrated to an independent third
party model for calculating our loan loss reserves which gives us
great confidence in our estimates and allows us to account for
market fluctuations that may occur," remarked Jan Hollar, chief
executive officer of the Company and the Bank.
Financial Highlights
During the fourth quarter, the Company reported net income of $1.4
million, as the Company released $1.1 million in loan loss reserves
due to the significant reduction in nonperforming assets,
continuing positive trends in past dues, the completion of the
accelerated asset disposition plan and management gained an
improved understanding of the risk within the loan portfolio.
Excluding the reversal of provision, pre-tax net income for the
fourth quarter was $29,000, a $1.8 million increase over a net loss
of $1.8 million for the third quarter of 2016. Noninterest expense
was down $1.7 million quarter-over-quarter as the net cost of
operation of other real estate owned ("OREO") decreased $1.4
million and FDIC insurance expense decreased $183,000.
The Company saw loan growth of $5.9 million, or 3%, for the fourth
quarter of 2016 as loan production continues to be a key management
focus. Total deposits decreased $10.1 million and totaled $313.3
million at Dec. 31, 2016, compared to $323.4 million at Sept. 30,
2016, as non-interest bearing demand accounts decreased $5.7
million due to seasonality of deposits in the Company's market
area, and time deposits decreased $4.3 million primarily due to the
maturity of internet-based time deposits which were not renewed.
Interest Income and Net Interest Margin
Net interest income remained flat quarter over quarter, totaling
$2.5 million for the fourth and third quarters of 2016. Net
interest margin increased 6 basis points to 2.86% for the quarter
ended Dec. 31, 2016, from 2.80% for the quarter ended Sept. 30,
2016. The increase in net interest margin is primarily the result
of a 5 basis point increase in yields on interest earning assets,
and the cost of borrowings remains stable. This increase in yields
was due to an increase in yield on other interest-earning assets
and a decrease in interest-bearing cash for the quarter.
For the year ended Dec. 31, 2016, net interest income increased
$124,000, or 1.3%, as compared to the year ended Dec. 31, 2015.
This increase in net interest income was primarily the result of a
significant decrease in cost of liabilities, partially offset by a
decrease in yields on interest earning assets. The decrease in
cost of liabilities was primarily due to the payoff of subordinated
debt, while the decrease in yields on interest earning assets was
the result of lower yields on securities.
Non-Interest Income
Non-interest income was $412,000 in the fourth quarter of 2016
compared to $334,000 in the third quarter of 2016. The third
quarter included a $222,000 loss on sale of assets recorded in the
third quarter related to the bulk sale of nonperforming loans
announced in the second quarter. Also included in non-interest
income for the third quarter was a $153,000 gain on sale of
securities. There were no gains or losses on the sale of assets or
securities in the fourth quarter of 2016.
Non-interest income for the year ended Dec. 31, 2016, was $20.6
million, which included a $19.1 million gain on the extinguishment
of debt, as compared to non-interest income of $3.1 million for the
year ended Dec. 31, 2015. Non-interest income for 2016 also
included $222,000 of losses on the sale of assets as compared to a
gain on sale of assets of $717,000 in 2015. Gain on sale of
securities for the year ended Dec. 31, 2016, was $68,000 as
compared to a gain on sale of securities of $232,000 for the year
ended Dec. 31, 2015.
Asset Quality
Overall asset quality continued to improve in the fourth quarter of
2016, as the Bank's classified assets to Tier 1 capital ratio
decreased to 46.4% at Dec. 31, 2016. This compares to a classified
asset to Tier 1 capital ratio of 55.3% and 287.2% at Sept. 30, 2016
and Dec. 31, 2015, respectively. OREO decreased by $1.1 million
during the quarter to $2.9 million at Dec. 31, 2016, due to the
sale of several properties. Nonperforming loans increased by $1.1
million to $2.0 million at Dec. 31, 2016, due to the repurchase of
two loans from the asset disposition. Both loans repurchased are
SBA guaranteed loans and no additional losses are anticipated. The
ratio of nonperforming assets to total assets was 1.31% at Dec. 31,
2016, as compared to 1.30% at Sept. 30, 2016, and the ratio of
nonperforming loans to total loans was 0.94% at the end of the
fourth quarter of 2016 as compared to 0.45% at the end of the third
quarter of 2016.
Allowance for Loan Losses
At Dec. 31, 2016, the allowance for loan losses was $3.8 million,
compared to $4.7 million at Sept. 30, 2016. As a percentage of
total loans held-for-investment, the allowance for loan losses was
1.74% in the fourth quarter of 2016, down from 2.24% in the third
quarter of 2016 and 2.20% at Dec. 31, 2015. In the fourth quarter
of 2016, the Company implemented a new third party software for the
calculation of the allowance for loan losses. The new model
allowed management to perform further analysis of the portfolio and
better identify improving credit trends. Overall, the decrease in
the allowance for loan losses as a percentage of total loans was a
reflection of improved trends in past dues and significant
reductions in nonperforming loans in 2016. Out of the $3.8 million
in total allowance for loan losses at Dec. 31, 2016, specific
allowances for impaired loans accounted for $643,000 as compared to
$788,000 in the third quarter of 2016.
Balance Sheet and Capital
Total assets decreased $5.2 million during the fourth quarter of
2016, while gross loans (including loans held-for-sale) increased
$5.9 million compared to the third quarter of 2016 as the Company
continued to see solid loan production during the quarter. As
discussed earlier, total deposits decreased $10.1 million and
totaled $313.3 million at Dec. 31, 2016, compared to $323.4 million
at Sept. 30, 2016.
As of Dec. 31, 2016 the Bank's leverage ratio, Common Equity Tier 1
ratio (CET1), Tier 1 risk-based capital ratio, and total risk-based
capital ratio were 9.95%, 15.14%, 15.14% and 16.39%, respectively.
A full-text copy of the press release is available for free at:
https://is.gd/PJAqTx
About HCSB Financial
Loris, South Carolina-based HCSB Financial Corporation was
incorporated on June 10, 1999, to become a holding company for
Horry County State Bank. The Bank is a state chartered bank which
commenced operations on Jan. 4, 1988. From its 13 branch
locations, the Bank offers a full range of deposit services,
including checking accounts, savings accounts, certificates of
deposit, money market accounts, and IRAs, as well as a broad range
of non-deposit investment services. During the third quarter of
2011, the Bank closed its Covenant Towers branch located at Myrtle
Beach. All deposits were transferred to the Bank's Myrtle Beach
branch and the Bank does not expect any disruption of service in
that market for its customers.
HCSB Financial reported a net loss available to common
shareholders of $1.75 million on $13.7 million of total interest
income for the year ended Dec. 31, 2015, compared to a net loss
available to common shareholders of $1.40 million on $16.09 million
of total interest income for the year ended Dec. 31, 2014.
As of Sept. 30, 2016, the Company had $381.1 million in total
assets, $344.5 million in total liabilities and $36.59 million in
total shareholders' equity.
Elliott Davis Decosimo, LLC, in Columbia, South Carolina, issued a
"going concern" qualification on the consolidated financial
statements for the year ended Dec. 31, 2015, citing that the
Company has suffered recurring losses that have eroded regulatory
capital ratios and the Company's wholly owned subsidiary, Horry
County State Bank, is under a regulatory Consent Order with the
Federal Deposit Insurance Corporation (FDIC) that requires, among
other provisions, capital ratios to be maintained at certain
levels. As of Dec. 31, 2015, the Company's subsidiary is
considered significantly undercapitalized based on its regulatory
capital levels. These considerations raise substantial doubt about
the Company's ability to continue as a going concern. The Company
also has deferred interest payments on its junior subordinated
debentures for 20 consecutive quarters as of
December 31, 2015. Under the terms of the debentures, the Company
may defer payments for up to 20 consecutive quarters without
creating a default. Payment for the 20th quarterly interest
deferral period was due in March 2016. The Company failed to pay
the deferred and compounded interest at the end of the deferral
period, and the trustees of the corresponding trusts, have the
right, after any applicable grace period, to exercise various
remedies, including demanding immediate payment in full of the
entire outstanding principal amount of the debentures. The balance
of the debentures and accrued interest as of December 31, 2015 were
$6,186,000 and $901,000, respectively. These events also raise
substantial doubt about the Company's ability to continue as a
going concern as of Dec. 31, 2015, the auditors said.
HEALTH DIAGNOSTIC: Trustee Goes After Charitable Contributions
--------------------------------------------------------------
Katie Demeria, writing for Richmond Times-Dispatch, reported that
the dismantled remains of Health Diagnostic Laboratory, one of
Richmond's most charitable companies has started demanding the
return of some of its gifts.
According to the report, in a complaint that Richard Arrowsmith,
HDL's liquidating trustee, filed in September against co-founder
and former CEO Tonya Mallory and dozens of other former HDL
executives and employees, he claims that HDL "squandered millions
of dollars through inappropriate corporate sponsorship and large
charitable gifts."
The report related that while the now-bankrupt blood-testing firm
enjoyed years from 2008 through 2015 as one of Richmond's
fastest-growing companies, it simultaneously earned a reputation
for philanthropy. The report noted that millions were given for
the Science Museum of Virginia, while a multimillion-dollar
agreement was entered to sponsor Virginia Commonwealth University's
athletics program.
The trustee's complaint states that these "and other wasteful
donations and sponsorships ... intended to raise Mallory's personal
profile in the Richmond-area community at HDL's expense, cost HDL
and its creditors more than $3.1 million," the report related.
The trustee's legal counsel has sent demand letters to various area
organizations, including VCU, in which it calls the donations
"fraudulent transfers," the report further related.
About Health Diagnostic
Health Diagnostic Laboratory, Inc., Central Medical Laboratory,
LLC, and Integrated Health Leaders, LLC, are health care
businesses based in Richmond, Virginia. HDL is a blood testing
company.
Health Diagnostic Laboratory, Inc. (Bankr. E.D. Va. Case No.
15-32919) and affiliates Central Medical Laboratory, LLC (Bankr.
E.D. Va. Case No. 15-32920) and Integrated Health Leaders, LLC
(Bankr. E.D. Va. Case No. 15-32921) filed separate Chapter 11
bankruptcy petitions on June 7, 2015. The petitions were signed
by Martin McGahan, chief restructuring officer.
HDL disclosed $96,130,468 in assets and $108,328,110 in
liabilities as of the Chapter 11 filing.
Justin F. Paget, Esq., Tyler P. Brown, Esq., Jason W. Harbour,
Esq., and Henry P. (Toby) Long, III, Esq. at Hunton & Williams LLP
serve as the Debtors' bankruptcy counsel.
Alvarez & Marsal is the Debtors' financial advisor. Robert S.
Westermann, Esq., at Hirshler Fleisher, P.C., serve as the
Debtors' conflicts counsel. American Legal Claims Services, LLC,
is the Debtors' claims, noticing and balloting agent. Ettin
Group,
LLC, will market and sell the miscellaneous equipment and other
assets.
MTS Health Partners, L.P., serves as investment banker.
To assist them with their restructuring efforts and to help
maximize the value of their estates, the Debtors filed with the
Court an application seeking entry of an order authorizing the
Debtors to retain Alvarez & Marsal Healthcare Industry Group, LLC
("A&M") to provide the Debtors with a Chief Restructuring Officer
and certain additional personnel. Richard Arrowsmith is presently
the CRO.
On June 16, 2015, the Office of the United States Trustee for the
Eastern District of Virginia appointed the Committee, consisting
of
the following seven members: (i) Oncimmune (USA) LLC; (ii) Aetna,
Inc.; (iii) Pietragallo Gordon Alfano Bosick & Raspanti, LLP; (iv)
Mercodia, Inc.; (v) Numares GROUP Corporation; (vi) Kansas
Bioscience Authority; and (vii) Diadexus, Inc. On Sept. 23, 2015,
Oncimmune (USA) LLC resigned from the Committee and, on Nov. 3,
2015, the U.S. Trustee appointed Cleveland Heart Lab, Inc. to the
Committee.
The Creditors Committee retained Cooley LLP as its counsel and
Protiviti Inc. as its financial advisor.
* * *
On Nov. 5, 2015, the Court entered an order setting Dec. 22, 2015,
as the Bar Date for the filing of all proofs of claim.
The Debtors have sold substantially all of their operating assets
pursuant to two separate sales approved by the Court.
On Jan. 4, 2016, the Debtors filed a proposed Plan of Liquidation
and Disclosure Statement.
The Troubled Company Reporter on May 20, 2016, reported that Judge
Kevin R. Huennekens of the U.S. Bankruptcy Court for the Eastern
District of Virginia, Richmond Division, overruled the objections
to Health Diagnostic Laboratory, Inc., et al.'s Modified Second
Amended Plan of Liquidation and approved the Liquidating Plan and
approved the Plan.
HEXION INC: Offering $485M First-Priority Senior Secured Notes
--------------------------------------------------------------
Hexion Inc. issued a news release on Jan. 19, 2017, announcing the
intent of its wholly owned subsidiary, Hexion 2 U.S. Finance Corp.,
to offer first-priority senior secured notes due 2022.
On Jan. 25, 2017, the Company priced $485,000,000 aggregate
principal amount of 10.375% First-Priority Senior Secured Notes due
2022 at an issue price of 100.000%, which includes an increase in
total size of the offering of the notes of $25,000,000 from
$460,000,000. The closing of the offering is expected to occur on
Feb. 8, 2017, and is subject to customary conditions. In addition,
the release of the proceeds from the offering is subject to the
satisfaction of certain conditions, which are expected to be
satisfied on or prior to the closing date, upon which the
Registrant will assume the Escrow Issuer's obligations under the
notes.
About Hexion Inc.
Hexion Inc., formerly known as Momentive Specialty Chemicals, Inc.,
headquartered in Columbus, Ohio, is a producer of thermoset resins
(epoxy, formaldehyde and acrylic). The Company is also a supplier
of specialty resins for inks and specialty coatings sold to a
diverse customer base as well as a producer of commodities such as
formaldehyde, bisphenol A, epichlorohydrin, versatic acid and
related derivatives.
Hexion reported a net loss attributable to the Company of $40
million on $4.14 billion of net sales for the year ended Dec. 31,
2015, compared to a net loss attributable to the Company of $223
million on $5.13 billion of net sales for the year ended Dec. 31,
2014. As of Sept. 30, 2016, Hexion had $2.18 billion in total
assets, $4.59 billion in total liabilities and a total deficit of
$2.41 billion.
* * *
The TCR reported on Oct. 3, 2014, that Standard & Poor's Ratings
Services lowered its corporate credit rating on Momentive Specialty
by one notch to 'CCC+' from 'B-'. "The downgrade follows MSC's
significant use of cash in the first half of 2014 and our
expectation that lackluster cash flow from operations and elevated
capital spending will cause free operating cash flow to be
significantly negative in 2014 and 2015," said Standard & Poor's
credit analyst Cynthia Werneth.
As reported by the TCR on Jan. 24, 2017, Moody's Investors Service
lowered the Corporate Family Rating (CFR) of Hexion Inc. to Caa2.
Hexion's Caa2 CFR reflects its elevated leverage of over 9 times,
weak cash flow from operations and negative free cash flow.
HTY INC: Seeks Additional 20 Days to File Reorganization Plan
-------------------------------------------------------------
HTY, Inc. asks the U.S. Bankruptcy Court for the Northern District
of Mississippi to extend its exclusive period for filing a plan of
reorganization and disclosure statement for an additional 20 days,
or until February 16, 2017.
Absent an extension, the Debtor's exclusive plan filing period
would have expired on January 26, 2017.
The Debtor contends that it has diligently attempted to gather the
information necessary to complete the documents and file them in a
timely manner. The Debtor further contends that because of the
extent of the information involved, it has not been able to do so.
The Debtor adds that it is continuing its efforts to secure a
purchaser for the assets of the estate.
The Debtor tells the Court that it has preliminarily formulated a
plan of reorganization and disclosure statement, but they are not
currently in final form.
About HTY, INC.
HTY, Inc. sought protection under Chapter 11 of the Bankruptcy Code
(Bankr. N. D. Miss. Case No. 16-13370) on September 28, 2016. The
petition was signed by Nathan Yow, president. The Debtor is
represented by Craig M. Geno, Esq., at the Law Office of Craig M.
Geno, PLLC.
At the time of the filing, the Debtor estimated assets at $1
million to $10 million and liabilities at $500,001 to $1 million.
IHS MARKIT: Modified Share Buyback Plans No Impact on Moody's CFR
-----------------------------------------------------------------
Moody's Investors Service said IHS Markit Ltd.'s Ba1 Corporate
Family Rating (CFR) and senior unsecured debt rating, its SGL-1
Speculative Grade Liquidity Rating and stable rating outlook are
not affected by the company's modified share repurchase plans that
allows for accelerated share repurchases than previously expected.
However, the accelerated share repurchases will lead to an increase
in debt and are credit negative.
IMMUCOR INC: Bank Debt Trades at 4% Off
---------------------------------------
Participations in a syndicated loan under Immucor Inc is a borrower
traded in the secondary market at 96.38 cents-on-the-dollar during
the week ended Friday, January 20, 2017, according to data compiled
by LSTA/Thomson Reuters MTM Pricing. This represents a decrease of
0.17 percentage points from the previous week. Immucor Inc pays
375 basis points above LIBOR to borrow under the $0.665 billion
facility. The bank loan matures on Aug. 19, 2018 and carries
Moody's B2 rating and Standard & Poor's B- rating. The loan is one
of the biggest gainers and losers among 247 widely quoted
syndicated loans with five or more bids in secondary trading for
the week ended January 20.
J. CREW: Bank Debt Trades at 45% Off
------------------------------------
Participations in a syndicated loan under J. Crew is a borrower
traded in the secondary market at 54.77 cents-on-the-dollar during
the week ended Friday, January 20, 2017, according to data compiled
by LSTA/Thomson Reuters MTM Pricing. This represents an increase
of 0.37 percentage points from the previous week. J. Crew pays 300
basis points above LIBOR to borrow under the $1.56 billion
facility. The bank loan matures on Feb. 27, 2021 and carries
Moody's Caa1 rating and Standard & Poor's CCC- rating. The loan is
one of the biggest gainers and losers among 247 widely quoted
syndicated loans with five or more bids in secondary trading for
the week ended January 20.
JARRET CORN: Disclosures Okayed, Plan Hearing on March 2
--------------------------------------------------------
Jarret Corn Cattle Co., Inc., is now a step closer to emerging from
Chapter 11 protection after a bankruptcy court approved the outline
of its plan of reorganization.
The U.S. Bankruptcy Court for the Northern District of Texas gave
the thumbs-up to the company's amended disclosure statement after
finding that it contains "adequate information."
The order set a Feb. 27 deadline for creditors to file their
objections and cast their votes accepting or rejecting the plan.
A court hearing to consider confirmation of the plan is scheduled
for March 2, at 1:30 p.m. The hearing will take place at the U.S.
Bankruptcy Courtroom, Third Floor, 1205 Texas Avenue, Lubbock,
Texas.
On Dec. 2 last year, Jarret Corn Cattle and its owners filed a
disclosure statement, which explains their proposed restructuring
plan.
According to the initial disclosure statement, the company will
liquidate its interest in approximately 7,128 head of cattle and,
if determined by the court to be property of the bankruptcy estate,
will be used to make the payments under the plan. Meanwhile, the
company owners will use their remaining net disposable income to
pay creditors.
On Jan. 25, Jarret Corn Cattle filed an amended disclosure
statement. According to the filing, TD Auto Finance LLC's secured
claim estimated at $73,531.36 is unimpaired under the plan and the
creditor will recover 100% of its claim.
About Jarret Corn Cattle Company
Jarret Corn Cattle Co., Inc. is a New Mexico corporation registered
to do business in Texas. Established in 2006, Jarret Corn Cattle
Co. owns and operates a grow yard on approximately 1,054 acres of
real property in and around Yoakum County, Texas.
Jarret Corn Cattle Co. and its owners filed Chapter 11 petitions
(Bankr. N.D. Tex. Lead Case No. 16-50181) on Aug. 25, 2016. The
petition was signed by Jarret Corn, president.
The Debtors are represented by David R. Langston, Esq., at Mullin,
Hoard & Brown, L.L.P. The cases are assigned to Judge Robert L.
Jones.
At the time of the filing, Jarret Corn Cattle Co. disclosed total
assets at $5.44 million and total liabilities at $7.86 million.
JBS USA: Moody's Assigns Ba1 Rating to $2.8BB Secured Term Loan
---------------------------------------------------------------
Moody's Investors Service has assigned a Ba1 rating to a new $2.8
billion 5-year parent-guaranteed senior secured term loan being
arranged by JBS USA Lux S.A. Net proceeds from the new term loan
will be used to consolidate existing senior secured term loans and
to repay other debt at parent guarantor JBS S.A. (Ba2 stable) and
subsidiaries. The assigned rating is subject to completion and
final documentation of the offering. The rating outlook is stable.
JBS USA's three existing senior secured term loans totaling $2.09
billion will be refinanced into the new $2.8 billion term loan with
the incremental $710 million to be used to retire more costly debt
at JBS USA or JBS S.A. and subsidiaries. The new term loan is
expected to be priced at least 25 basis points lower than the debt
to be retired, which could generate over $40 million of annual cash
interest cost savings.
JBS USA plans to complete the transaction and the refinancings in
February 2017 after which time Moody's will withdraw the ratings of
the existing term loans and other rated debt instruments that are
repaid.
RATINGS RATIONALE
JBS USA's direct debt instruments are guaranteed by parent company
JBS S.A, which controls JBS USA in all material respects. Thus, JBS
USA's instrument ratings are driven primarily by the JBS S.A.
Corporate Family Rating. Moody's expects any future changes to the
JBS USA debt instrument ratings to mirror changes to the JBS S.A.
Corporate Family Rating.
Moody's has taken the following actions on JBS USA Lux, LLC:
Rating assigned:
Proposed $2.8 billion guaranteed senior secured term loan due
September 2022 at Ba1.
Ratings to be withdrawn at closing:
$408 million guaranteed senior secured term loan due May 2018 at
Ba1;
$486 million guaranteed senior secured term loan due September 2020
at Ba1;
$1.2 billion guaranteed senior secured term loan due September 2022
at Ba1.
The rating outlook is stable.
The security package, parent guarantee and right of payment of the
new $2.8 billion term loan will be identical to those of the
existing term loans.
JBS USA currently has three senior secured term loans outstanding
under a master term loan agreement: $408 million due 2018, $486
million due 2020 and $1.2 billion due 2022, all rated Ba1, or one
notch above the Ba2 Corporate Family Rating of JBS S.A. The higher
notching reflects the significant value of assets (over $3 billion)
pledged directly to the term loan lenders and the senior position
of the term loans relative to $3.5 billion of JBS USA senior
unsecured debt. The term loans are effectively subordinate to a
$900 million asset-based revolving line that is secured by JBS
USA's most liquid assets -- accounts receivable, finished goods and
supply inventories. The asset-based revolver, the secured term
loans and nearly all of the unsecured notes have downstream
guarantees from the ultimate parent JBS S.A., as well as from
intermediate holding company, JBS Holdings.
JBS USA operates the US beef and pork segments and the Australian
beef and lamb operations of Brazil-based JBS S.A., the largest
protein processor in the world. JBS USA also owns a controlling
indirect 76.7% equity interest in US-based Pilgrim's Pride
Corporation (Ba3 stable), the second largest poultry processor in
the world. Reported net sales for JBS S.A. and JBS USA . for the
twelve months ended September 2016 were approximately BRL 175.9
billion (USD 56.4 billion) and $32.8 billion, respectively.
The principal methodology used in this rating was "Global Protein
and Agriculture Industry" published in May 2013.
LANDMARK HOSPITALITY: Unsecureds to Get 15% at 2.5% in 72 Mos
-------------------------------------------------------------
Landmark Hospitality, LLC, filed with the U.S. Bankruptcy Court for
the District of Arizona a second amended disclosure statement for
its second amended plan of reorganization, dated Jan. 27, 2017,
which would pay unsecured creditors 15% of their allowed claims.
Under the plan, Class 19 consists of the claim of HLT Existing
Franchise Holding, LLC to the extent of the Franchise License
Agreement. HLT has filed a claim in the amount of $31,058.26. The
claimant will be paid the amount of its allowed claim 30 days after
the Effective Date. This class is impaired.
Under the first amended plan, the Class 19 creditor will be paid
the amount of its allowed claim in 36 equal monthly installments at
4.5% interest beginning 30 days after the Effective Date.
Class 20 consists of all unsecured deficiency claims and unsecured
claims against the debtor including trade creditors, lease
rejection claims and other unsecured claims. Debtor estimates
claims in this class in the amount of $153,498.54 and $1,333,777.49
for deficiency amounts for secured creditors.
The plan provides that each and every holder of a Class 20 Allowed
Claim shall be paid 15% of the allowed amount of their claims at
2.5% interest on the unpaid balance in equal monthly installments
in 72 equal monthly installments with the first payment due 30 days
from the Effective Date. Any liens held by the Class 20 creditors
shall be null and void and removed as of the Effective Date. This
class is impaired.
The previous plan did not include any deficiency amounts for
secured creditors.
Based on the cash flow projections prepared by the debtor, the
debtor believes that the plan satisfies the feasibility
requirements of the Bankruptcy Code.
A full-text copy of the Second Amended Disclosure Statement is
available at:
http://bankrupt.com/misc/azb4-16-02826-136.pdf
About Landmark Hospitality
Landmark Hospitality, LLC sought protection under Chapter 11 of
the
Bankruptcy Code in the U.S. Bankruptcy Court for the District of
Arizona (Tucson) (Case No. 16-02826) on March 21, 2016.
The petition was signed by Jyotindra Patel, member. The case is
assigned to Judge Brenda Moody Whinery.
The Debtor is represented by Eric Slocum Sparks, Esq., at Eric
Slocum Sparks PC.
The Debtor disclosed total assets of $2.78 million and total debts
of $3.75 million.
LESLIE'S POOLMART: Moody's Assigns B2 CFR; Outlook Stable
---------------------------------------------------------
Moody's Investors Service assigned a B2 Corporate Family Rating
("CFR") and a B2-PD Probability of Default Rating ("PDR") to
Leslie's Poolmart, Inc. (New). Concurrently, Moody's affirmed the
B1 rating on Leslie's Poolmart, Inc.'s $860 million senior secured
term loan (including the proposed $50 million add-on amount). The
rating outlook is stable.
The proposed $50 million incremental term loan, together with the
company's existing term loan, senior unsecured notes and new
sponsors' equity contribution will be used to finance the buyout by
L Catterton and an affiliate of GIC.
"While Leslie's high debt levels position the rating weakly in the
B2 category, Moody's expect the company to maintain healthy free
cash flow and to de-lever to mid-6 times over the next 18-24 months
through steady earnings growth," said Moody's analyst Raya
Sokolyanska. The add-on term loan will increase leverage by about
0.2 times to just under 7 times (Moody's-adjusted, as of October
2016, including the run-rate impact of In The Swim) and follows the
previous sponsors' $225 million dividend distribution in August
2016, which added approximately one turn of leverage. Nevertheless,
the B2 rating is supported by Leslie's solid market position,
steady earnings performance (outside weather-related volatility),
and the recession-resistant nature of demand for pool supplies.
Moody's took the following rating actions on Leslie's Poolmart,
Inc. (New):
-- Corporate Family Rating, assigned B2
-- Probability of Default Rating, assigned B2-PD
-- Stable outlook
The ratings are subject to the completion of the transaction and
Moody's review of final documentation.
The following ratings for the current entity Leslie's Poolmart,
Inc. were affirmed. The CFR, PDR and outlook will be withdrawn and
the term loan rating will be transferred to Leslie's Poolmart, Inc.
(New) upon consummation of the LBO:
-- Corporate Family Rating, affirmed at B2
-- Probability of Default Rating, affirmed at B2-PD
-- $860 million (including the proposed $50 million incremental
amount) first lien senior secured term loan due 2023, affirmed at
B1 (LGD3)
-- Stable outlook
RATINGS RATIONALE
The B2 CFR reflects Leslie's small scale, narrow product focus, and
high vulnerability to weather patterns. The rating is weakly
positioned in the B2 category and the company's financial policies
are aggressive, but Moody's projects modest deleveraging towards
mid-6 times Moody's-adjusted debt/EBITDA by FYE October 2018 driven
mainly by low-single-digit earnings growth. Moody's anticipates
that the company will continue to adapt to e-commerce competition
by leveraging its differentiated service, brand name and recent
acquisitions, but expects future earnings growth to be muted due to
increased price transparency and mix shift to e-commerce. The
rating is supported by the recession-resistant nature of demand for
pool supplies, a solid market position, the company's track record
of consistent revenue and earnings performance (outside
weather-related volatility), and solid EBIT margins. Leslie's good
liquidity despite highly seasonal operations provides key support
to the rating, including a track record of positive free cash flow
generation, sufficient availability under the asset-based revolver
and a covenant-lite capital structure.
The stable rating outlook reflects Moody's expectation for
low-single-digit earnings growth from new store openings, as well
as expansion in the commercial and e-commerce businesses. The
outlook also reflects Moody's view that the company will maintain
good liquidity, including positive free cash flow generation, but
will continue to prioritize the use of cash towards bolt-on
acquisitions and new store openings rather than debt reduction.
The ratings could be downgraded if operating performance
deteriorates such that the company is unable to reduce its high
financial leverage or liquidity weakens. Quantitatively, the
ratings could be downgraded if debt/EBITDA is sustained above 6.5
times or EBIT/interest expense approaches 1.25 times.
An upgrade would require profitable growth and a commitment to more
conservative financial policies, including the use of free cash
flow for debt repayment. Quantitatively, the ratings could be
upgraded if debt/EBITDA is sustained below 5 times and
EBIT/interest expense is sustained above 2 times.
Leslie's Poolmart, Inc. ("Leslie's") is a specialty pool supplies
retailer that operated 894 stores and commercial centers as well as
several websites as of October 2016. Net sales for year ended
October 2016 were approximately $798 million.
The principal methodology used in these ratings was Retail Industry
published in October 2015.
LINN ENERGY: Bankruptcy Judge to Confirm Chapter 11 Plan
--------------------------------------------------------
The American Bankruptcy Institute, citing Jim Christie of Reuters,
reported that a U.S. judge overseeing the bankruptcy of Linn Energy
LLC (LINEQ.PK) said he is prepared to confirm its restructuring
plan with slight tweaks, backing the oil-and-gas producer's goal of
shedding $5.5 billion in debt and splitting into two companies.
According to the report, U.S. Bankruptcy Judge David Jones at the
end of a hearing in Houston congratulated Linn's legal team and
lawyers for working with its key stakeholders, noting the company
would have faced a hard time trying to restructure had they not
agreed on the plan.
Judge Jones added that he expects a final version of the plan to be
filed with him, the report related.
About Linn Energy, LLC
Headquartered in Houston, Texas, Linn Energy, LLC, and its
affiliates are independent oil and natural gas companies. Each of
Linn Energy, LLC, and 14 of its subsidiaries filed a voluntary
petition under Chapter 11 of the Bankruptcy Code (Bankr. S.D. Tex.
Lead Case No. 16-60040) on May 11, 2016. The petitions were signed
by Arden L. Walker, Jr., chief operating officer of LINN Energy.
The Debtors have hired Paul M. Basta, Esq., Stephen E. Hessler,
Esq., Brian S. Lennon, Esq., James H.M. Sprayregen, Esq., and
Joseph M. Graham, Esq., at Kirkland & Ellis LLP and Kirkland &
Ellis International LLP as general bankruptcy counsel, Jackson
Walker L.L.P. as co-counsel, Lazard Freres & Co. LLC as financial
advisor, AlixPartners as restructuring advisor and Prime Clerk LLC
as claims, notice and balloting agent.
Judge David R. Jones presides over the cases.
The Office of the U.S. Trustee has appointed five creditors of
Linn
Energy LLC to serve on the official committee of unsecured
creditors. The Committee tapped Mark I. Bane, Esq., and Keith H.
Wofford, Esq., at Ropes & Gray LLP; and Moelis & Company LLC as
investment banker. It also retained as Texas Oil & Gas Counsel,
John P. Melko, Esq., David S. Elder, Esq., and Michael K. Riordan,
Esq., at Gardere Wynne Sewell LLP.
LONG BROOK: Unsecureds to Recoup 6% Over 60 Months
--------------------------------------------------
Long Brook Station, LLC filed with the U.S. Bankruptcy Court for
the District of Connecticut its sixth amended disclosure statement
for its sixth amended plan of reorganization, a full-text copy of
which is available at:
http://bankrupt.com/misc/ctb14-31095-190.pdf
Class 4, unsecured creditors, is impaired under the plan. The
unsecured creditors will be paid 6% of their allowed unsecured
claims over a period of 60 months in payments made annually
commencing the later of 30 days after the Effective Date of the
Plan or upon allowance of a creditor's particular claim.
The Debtor will seek, in the order confirming the plan, a finding
that the transfer of the property -- a lot located at 3044 Main
Street in Stratford, Connecticut -- pursuant to the plan will be
exempt from taxation. The Debtor shall continue to pay its ongoing
tax obligations and plan payments during the marketing of the
property.
500 North Avenue, LLC and Long Brook Station, LLC filed chapter 11
petitions (Bankr. D. Conn. Case Nos. 14-31094 and 14-31095) on
June
6, 2014. The petitions were signed by Joseph Regensburger,
member.
The Debtors are represented by Douglas S. Skalka, Esq., at
Neubert,
Pepe, and Monteith, P.C. The case is assigned to Judge Julie A.
Manning.
500 North Avenue, LLC estimated assets at $1 million to $10
million
and liabilities at $10 million to $50 million at the time of the
filing. Long Brook Station, LLC estimated assets at $500,000 to
$1
million and liabilities at $1 million to $10 million at the time
of
the filing.
MADDD WEST: Combined Plan, Disclosures Hearing on Feb. 15
---------------------------------------------------------
Judge Carla E. Craig of the U.S. Bankruptcy Court for the Eastern
District of New York conditionally approved the amended disclosure
statement and plan of reorganization filed by MADDD West 38 LLC.
The combined hearing to consider final approval of the adequacy of
the disclosure statement and confirmation of the plan shall be held
before the Hon. Carla E. Craig, U.S. Bankruptcy Court, 271-C Cadman
Plaza East, Courtroom 3529, Brooklyn, NY 11201 on Feb. 15, 2017 at
3:00 p.m.
Objections to the final approval of the adequacy of the disclosure
statement and/or confirmation of the plan shall be in writing and
served on Feb. 13, 2017 on or before 5:00 p.m., prevailing Eastern
time.
Class 1, Administration Claims, is unimpaired under the plan. The
amounts awarded to Professionals for Professional Fees shall be
paid in full on the Effective Date, or, such later time as a
particular fee application(s) is heard and ruled upon the
Bankruptcy Court. It is anticipated that Debtor's counsel will be
the only professional fees incurred, and likely will total
approximately $300,000 to cover all bankruptcy related and
transactional services.
The holders of any other Administration Claims, including
reasonable fees and expenses of the Take-Out Lender, anticipated to
be approximately $150,000, shall be paid on the Effective Date of
the Plan.
The initial plan did not specify the approximate amount of the
professional fees incurred. It also asserted that holders of any
other Administration Claims, including reasonable fees and expenses
of the Take-Out Lender as and to the extent identified in the Loan
Documents, shall be paid in the ordinary course of business or on
the Effective Date hereof.
Class 4, Allowed Unsecured Claims, is unimpaired under the Plan.
All Allowed Class 4 General Unsecured Claims will be paid in full
on the Effective Date from the proceeds of an exit facility.
A full-text copy of the Amended Plan is available at:
http://bankrupt.com/misc/nyeb1-16-45836-18.pdf
Headquartered in Flushing, New York, MADDD West 38 LLC is the
purchaser under a certain contract of sale, as amended, with 402
West 38th Street Corp, to acquire the real property at 402 West
38th Street, New York, New York, for a total purchase price of
$33.45 million including prior deposits of $9.5 million.
The Debtor filed for Chapter 11 bankruptcy protection (Bankr. Case
No. 16-45836) on Dec. 28, 2016, listing $42.95 million in total
assets and $27.57 million in total debts. The petition was
signed
by Joseph Noormand, manager.
Judge Carla E. Craig presides over the case.
Ted J. Donovan, Esq., at Goldberg Weprin Finkel Goldstein LLP
serves as the Debtor's bankruptcy counsel.
MEMORIAL HEALTH: Fitch Affirms 'BB' Rating on $60MM 2015 Rev Bonds
------------------------------------------------------------------
Fitch Ratings has affirmed the 'BB' rating on the following revenue
bonds issued on behalf of Marietta Area Health Care d/b/a Memorial
Health System, Ohio bonds:
-- $60 million Southeastern Ohio Port Authority Hospital revenue
bonds, series 2015;
-- $136.8 million Southeastern Ohio Port Authority Hospital
refunding and improvement bonds, series 2012.
The Rating Outlook is Stable.
SECURITY
The series 2012 and series 2015 bonds are secured by general
revenues of the obligated group, a mortgage on certain system
facilities and debt service reserve funds.
KEY RATING DRIVERS
SUSTAINED VOLUME GROWTH: Memorial Health System (MHS) is
successfully retaining and building on the significant volume
growth it gained in fiscal 2015 (Sept. 30 fiscal year-end). MHS
continues to capture new business from the West Virginia market at
its emergency department(ED) in Belpre and from a large orthopedic
surgery and rehabilitation presence at Selby General Hospital. In
2016, consolidated admissions were 27.8%, ED visits were 43.9%, and
outpatient surgeries were 26.6% higher than in fiscal 2014.
SOLID OPERATING PROFITABILITY: MHS' growing volumes and revenue
base has driven a second consecutive year of sharply improved
profitability. Revenue growth of 15.1% in 2016, following growth of
21.8% in 2015, has resulted in operating EBITDA margins of 11.2%
and 10.8% in fiscal years 2016 and 2015, respectively; metrics that
are typically associated with investment grade borrowers.
THIN LIQUIDITY PARTLY FROM VOLATILE REVENUE CYCLE: Despite cash
flow improvement for a second consecutive year, liquidity reserves
remain modest primarily due to capital and programmatic investments
as well as inefficiencies in revenue cycle management. MHS did grow
its reserves to $94.6 million at fiscal year-end, equating to 83.9
days cash on hand (DCOH), from $90.7 million at fiscal year-end
2015 without drawing on a line of credit as it had done in prior
years. However, the system borrowed on its line of credit in the
first quarter of 2017 (ended Dec. 31) to address an uptick in
accounts receivables that resulted from slower billing during an IT
conversion that began in November.
RATING SENSITIVITIES
PENDING DEBT ISSUANCE: Marietta Area Health Care d/b/a Memorial
Health System (MHS) is contemplating issuing additional debt in
late 2017 to fund possible clinical expansions and redesigns. Fitch
believes MHS has adequate debt capacity at the current rating
level. Moreover, positive rating movement may be warranted if the
size of a new debt issuance is manageable versus MHS' strong
profitability and revenue cycle improvement.
REVENUE CYCLE IMPROVEMENT: MHS' consistently high level of account
receivables has limited the expected improvement in liquidity.
Evidence of improvement in revenue cycle leading to growth in
balance sheet liquidity would be viewed favorably and could allow
for positive rating action. Management expects to resolve any
short-term revenue cycle disruptions by March and thereby improve
its liquidity by year end.
CREDIT PROFILE
MHS operates the 199-bed Marietta Memorial Hospital (MMH) and a
25-bed critical access hospital, Selby General Hospital (SGH), as
well as nine outpatient care centers and 26 medical staff offices
and clinical care delivery locations in southeast, OH.
Located in Marietta, OH, the system delivers services primarily in
Washington County (OH) and Wood County (WV). The obligated group
includes employed physicians and the foundation and accounted for
approximately 99% of the total net revenues and assets of the
system in fiscal 2016.
GROWTH STRATEGIES
MHS reports a significant increase in market share in its primary
service area to 44.1% in 2015 from 35.4% in 2013. The system
attributes much of its medical and surgical growth to its three EDs
at MMH, SGH and the free-standing department at Belpre, which are
all bolstered by its ED residency program. Since opening this site
across the Ohio River from Parkersburg, WV, in August 2014, MHS has
been significantly growing its inpatient and outpatient business by
capturing new market share from the West Virginia market.
The 2014 opening of the Belpre campus coincided with the 2014
closing of the ED at St. Joseph's in Parkersburg, when that
emergency department was consolidated into the ED of West Virginia
University Medicine's Camden Clark Medical Center in Parkersburg.
For two years, MHS was able to benefit from the market dislocation
that resulted from the consolidation. Camden Clark Medical has
since completed its own ED expansion, which opened on schedule in
November 2016. While Fitch expects volume to stabilize at MHS now
that Camden Clark's expanded ED is open, MHS should be able to
retain a sizable portion of the patient volume that it garnered
over the past two years. Furthermore, MHS' ED volume did not
decrease in the first couple of months since the opening of Camden
Clark's ED.
The significant growth in ED visits had begun to produce capacity
constraints at MHS leading the hospital to invest in a new 24-bed
observation unit that opened in November 2016. The unit allows the
hospital to more efficiently manage length of stay for these
patients and also reduces the number of holds at the ED. The unit
was constructed with a portion of the proceeds from a $20 million
note with Peoples Bank that MHS incurred in fiscal 2016.
MHS' strategic expansion of its employed physician (which now
number 176 physicians) and clinical staff (including 110 employed
physician extenders) has also contributed to its patient growth and
service expansion, particularly in orthopedics. Since 2016, an
orthopedic practice from the Parkersburg area has been performing
almost all of its surgeries at SGH. Management believes that MHS is
currently performing almost all the non-elective orthopedic
surgeries in its primary service area and now the system is looking
to expand its surgical growth to other key clinical lines.
HEIGHTENED PROFITABILITY
MHS posted a second year of strong profitability in fiscal 2016
propelled by utilization growth, adequate payer rate increases, and
$6.1 million in newly approved revenue from the 340B drug program.
This revenue stream is expected to increase to approximately $10
million-$12 million in fiscal 2017.
Operating margin of 4.2% in 2016 is comparable to the 3.9% margin
achieved in 2015, and management is projecting a 4% operating
margin for a third consecutive year. These margins are remarkable
given the increased expense from start-up costs for new physician
practices and an elevated agency nurse expense of $11 million as
the hospital's rapid growth has outpaced its ability to recruit
full-time nurses.
WEAK AND FLUCTUATING LIQUIDITY
MHS once again fell short of its unrestricted cash goals for fiscal
2016, although liquidity increased to $94.6 million (83.9 DCOH)
from $90.7 million (92.5 DCOH) in 2015. However, the 2015 cash
levels included the funds from a $5 million short line of credit
that the system typically drew down at the end of the year. The
hospital did not borrow against this line at the end of fiscal
2016; therefore, cash reserves grew by approximately $9 million for
the year.
In prior reviews, Fitch noted the unfavorable volatility in MHS'
accounts receivable and its consequence on cash levels. Days in
accounts receivable continue to be high at 74.2 days as of Sept.
30, 2016, although consistent with MHS' historical levels. This is
improved from the 96.2 days as of Dec. 31, 2015, after management
changed revenue cycle vendors creating revenue cycle disruptions
that took months to resolve.
MHS is targeting an account receivable level of 65-68 days for
fiscal 2018, which it believes is the adequate level given the
complexities of billing for its large ambulatory network. MHS does
not expect to reach this goal in fiscal 2017, however, due to a
system-wide information system upgrade that will integrate its
ambulatory physician component and has delayed timely billing in
the first quarter of 2017. Management reports that it drew on the
$5 million line of credit in the first quarter so as to minimize
the impact on cash. MHS expects to be caught up on the billing
back-log by March 31, but Fitch continues to view the ongoing
revenue cycle issues and consequent volatility on an already thin
liquidity level as a key credit concern.
DEBT PROFILE
All of MHS' long-term debt is fixed rate and MHS is not a party to
any derivative agreements. The hospital increased its debt in 2016
to $209.6 million with the $20 million note payable to Peoples Bank
that matures on June 30, 2018, $10.2 million of which had been
drawn by fiscal year-end 2016. The note is expected to be fully
drawn in fiscal 2017. MHS also increased its operating lease
obligation ($12.4 million in 2016 as opposed to $10.4 million in
2015) and its pension obligation to $55.7 million (45% funded
level) from 44.3 million in 2015. The latter is partly due to a
decrease in the discount rate to 3.8%.
With improved EBITDA generation in 2016, MHS comfortably covered
maximum annual debt service (MADS) of $16.8 million by 3.2x, above
the metrics for the non-investment grade and the 'BBB' rating
categories. The credit's high debt burden had begun to moderate
recently with improved cash flow, but Fitch believes the metrics
may be challenged if the system opts to issue a significant amount
of additional debt in late 2017. There is, however, a certain
amount of debt capacity at the current rating given the improved
operations. The amount of debt and timing of a possible issuance
has not yet been determined and is not directly incorporated into
the current rating review.
MERCER INT'L: Moody's Rates $225MM Senior Unsecured Notes 'B1'
--------------------------------------------------------------
Moody's Investors Service assigned a B1 rating to Mercer
International Inc.'s new $225 million senior unsecured notes
offering. The net proceeds, along with cash on hand, will be used
to repurchase the company's existing $227 million 7.0% senior
unsecured notes due 2019. The company's Ba3 corporate family
rating, Ba3-PD probability of default rating and SGL-1 liquidity
rating are unchanged. The outlook is stable.
"Mercer's existing ratings are unchanged as the transaction is
leverage neutral and extends out maturities while lowering the
company's cost of capital", said Ed Sustar, Moody's Senior Vice
President.
Assignments:
Issuer: Mercer International Inc.
-- Senior Unsecured Regular Bond/Debenture, Assigned B1 (LGD4)
RATINGS RATIONALE
Mercer's Ba3 CFR is primarily driven by its leading global market
position in northern bleached softwood kraft (NBSK) pulp, the
stability provided by material energy and chemical earnings, the
diversity of three mills, the volatility of pulp prices and
expected mid-cycle leverage under 4x times. Mercer's financial
performance is significantly influenced by the volatile demand and
pricing for market pulp, which is strongly impacted by demand from
China and new global supply. Operating margins have fluctuated
significantly over the past several years due to the cyclical
nature of the fragmented pulp industry, as well as foreign exchange
fluctuations (with pulp sales denominated in US$ and with assets
located in Canada and Germany). Mercer's sale of the excess energy
it generates represents about 40% of EBITDA and mitigates pulp
price volatility. Mercer's financial leverage is expected to be
about 3.5x over the next 12 to 18 months as pulp prices decline
towards long term averages.
Mercer's has strong liquidity (SGL-1), supported by US$141 million
in cash (September 2016) and about US$150 million of fully unused
availability under three credit facilities (one for each of its
mills) totaling about US$150 million (one maturing 2018 and the
rest maturing in 2019). Moody's expects free cash flow of about
US$50 million over the next 12 months. Mercer does not have any
debt maturities over the next several years and Moody's expect the
company to remain well within its covenants. The company's fixed
assets are unencumbered, which might provide alternate liquidity if
needed.
The stable rating outlook reflects Moody's expectations that Mercer
will be able to maintain good operating performance and liquidity
through volatile industry conditions. Mercer's credit protection
measures are expected to weaken slightly over the next 12 to 18
months as NBSK prices decline, as the pace of new pulp capacity
ramping up over the next several years, especially in Scandinavia,
exceeds demand growth.
The ratings may be upgraded if the company is expected to maintain
strong liquidity and mid-cycle leverage around 3.0x (3.6X LTM
September 2016).
The ratings may be downgraded if liquidity is expected to weaken
materially and mid-cycle leverage is expected to exceed 4.0X (3.6X
LTM September 2016).
The principal methodology used in these ratings was Global Paper
and Forest Products Industry published in October 2013.
Mercer International, Inc. is a leading producer of northern
bleached softwood kraft (NBSK) pulp through two mills in Germany
and one in British Columbia, Canada. Incorporated in the State of
Washington and headquartered in Vancouver, B.C., Mercer generated
approximately US$950 million of revenue for the twelve months ended
September 2016.
MERCER INT'L: S&P Rates New US$225MM Sr. Unsecured Notes 'BB-'
--------------------------------------------------------------
S&P Global Ratings said it assigned its 'BB-' issue-level rating
and '3' recovery rating to Mercer International Inc.'s proposed
US$225 million senior unsecured notes due 2024. The '3' recovery
rating reflects S&P's expectation for meaningful (50%-70%; low end
of range) recovery in the event of default.
S&P assumes the company will use the proceeds from the proposed
notes issuance along with a modest amount of cash on hand to redeem
its US$227 million of senior unsecured notes outstanding, due 2019,
and to pay related call premium, fees, and expenses. S&P expects
the proposed transaction to improve Mercer's debt maturity profile
further supporting our strong liquidity profile on the company.
S&P's ratings on Mercer, including its 'BB-' long-term corporate
credit rating are unchanged.
RATINGS LIST
Mercer International Inc.
Corporate credit rating BB-/Stable/--
Rating Assigned
US$225 million senior unsecured
notes due 2024 BB-
Recovery rating 3L
MONEYGRAM INT'L: S&P Puts 'B+' ICR on CreditWatch Positive
----------------------------------------------------------
S&P Global Ratings said it has placed all of its ratings on
Dallas-based MoneyGram International including the 'B+' issuer
credit rating, on CreditWatch with positive implications.
"MGI and Ant Financial entered into a definitive all-cash merger
agreement with stockholders of MGI being offered $13.25 per share
for a total transaction value of about $880 million," said S&P
Global Ratings credit analyst Chris Cary. Upon the close of the
transaction S&P expects that all of MGI's outstanding corporate
debt will be retired. The deal is subject to approval of MGI
shareholders, regulatory approvals and other customary conditions,
and MGI has indicated it expects the transaction to close in the
second half of 2017.
S&P believes that in addition to eliminating all leverage at MGI,
the transaction may benefit MGI's market position. For example,
MGI will gain access to all of Ant Financial subsidiary Alipay's
approximately 630 million users across the Chinese and Indian
markets, as well as access its technology platform.
Ant Financial Services Group is majority owned by Jack Ma, the
founder and executive Chairman of Alibaba Group (A+/Stable/--), a
Chinese internet firm. Businesses operated by Ant Financial
include Alipay, Ant Fortune, Zhima Credit, MYbank and Ant Financial
Cloud.
S&P expects to resolve the CreditWatch by raising the ratings on
MGI by one or more notches at the close of the transaction with Ant
Financial, which is expected to occur during the second half of
2017. If the transaction is not consummated, whether because of
objections by shareholders or regulators, S&P would expect to
affirm the ratings and review the negative outlook that was
assigned before the transaction announcement.
MOTORS LIQUIDATION: Files GUC Trust Report as of Dec. 31
--------------------------------------------------------
Pursuant to the Second Amended and Restated Motors Liquidation
Company GUC Trust Agreement dated as of July 30, 2015, and between
the parties thereto, Wilmington Trust Company, acting solely in its
capacity as trust administrator and trustee of the Motors
Liquidation Company GUC Trust, is required to file certain GUC
Trust Reports (as such term is defined in the GUC Trust Agreement)
with the Bankruptcy Court for the Southern District of New York. In
addition, pursuant to that certain Bankruptcy Court Order
Authorizing the GUC Trust Administrator to Liquidate New GM
Securities for the Purpose of Funding Fees, Costs and Expenses of
the GUC Trust and the Avoidance Action Trust, dated March 8, 2012,
the GUC Trust Administrator is required to file certain quarterly
variance reports as described in the third sentence of Section 6.4
of the GUC Trust Agreement with the Bankruptcy Court.
On Jan. 27, 2017, the GUC Trust Administrator filed the GUC Trust
Report required by Section 6.2(c) of the GUC Trust Agreement
together with the Budget Variance Report, each for the fiscal
quarter ended Dec. 31, 2016. In addition, the Motors Liquidation
Company GUC Trust announced that no distribution in respect of its
Units (as such term is defined in the GUC Trust Agreement) is
anticipated for the fiscal quarter ended Dec. 31, 2016.
A copy of the Bankruptcy Court filing is available for free at:
https://is.gd/USi172
About Motors Liquidation
General Motors Corporation and three of its affiliates filed for
Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 09-50026) on
June 1, 2009. The Honorable Robert E. Gerber presides over the
Chapter 11 cases. Harvey R. Miller, Esq., Stephen Karotkin,
Esq., and Joseph H. Smolinsky, Esq., at Weil, Gotshal & Manges
LLP, assist the Debtors in their restructuring efforts. Al Koch
at AP Services, LLC, an affiliate of AlixPartners, LLP, serves as
the Chief Executive Officer for Motors Liquidation Company. GM
is also represented by Jenner & Block LLP and Honigman Miller
Schwartz and Cohn LLP as counsel. Cravath, Swaine, & Moore LLP
is providing legal advice to the GM Board of Directors. GM's
financial advisors are Morgan Stanley, Evercore Partners and the
Blackstone Group LLP. Garden City Group is the claims and notice
agent of the Debtors.
The U.S. Trustee appointed an Official Committee of Unsecured
Creditors and a separate Official Committee of Unsecured
Creditors Holding Asbestos-Related Claims. Lawyers at Kramer
Levin Naftalis & Frankel LLP served as bankruptcy counsel to the
Creditors Committee. Attorneys at Butzel Long served as counsel
on supplier contract matters. FTI Consulting Inc. served as
financial advisors to the Creditors Committee. Elihu Inselbuch,
Esq., at Caplin & Drysdale, Chartered, represented the Asbestos
Committee. Legal Analysis Systems, Inc., served as asbestos
valuation analyst.
The Bankruptcy Court entered an order confirming the Debtors'
Second Amended Joint Chapter 11 Plan on March 29, 2011. The Plan
was declared effect on March 31.
On Dec. 15, 2011, Motors Liquidation Company was dissolved. On
the Dissolution Date, pursuant to the Plan and the Motors
Liquidation Company GUC Trust Agreement, dated March 30, 2011,
between the parties thereto, the trust administrator and trustee
-- GUC Trust Administrator -- of the Motors Liquidation Company
GUC Trust, assumed responsibility for the affairs of and certain
claims against MLC and its debtor subsidiaries that were not
concluded prior to the Dissolution Date.
NAVISTAR INTERNATIONAL: Unit Inks 5th Amendment to BofA Credit Pact
-------------------------------------------------------------------
Navistar, Inc. entered into an Amendment No. 5 to the Amended and
Restated ABL Credit Agreement, dated as of Aug. 17, 2012, among
Navistar, as borrower, the Lenders from time to time party thereto,
and Bank of America, N.A., as Administrative Agent, pursuant to
which certain provisions were modified to increase by $50,000,000
the total amount of senior notes issued by Navistar International
Corporation that the Borrower is permitted to guarantee. The ABL
Amendment had no impact on the aggregate commitment level under the
ABL Credit Agreement, which remains at $175,000,000.
A full-text copy of the Amendment No. 5 to the Amended and Restated
ABL Credit Agreement is available for free at:
https://is.gd/Fp4LlT
About Navistar International
Navistar International Corporation (NYSE: NAV) --
http://www.navistar.com/-- is a holding company whose subsidiaries
and affiliates subsidiaries produce International(R) brand
commercial and military trucks, MaxxForce(R) brand diesel
engines, IC Bus(TM) brand school and commercial buses, Monaco RV
brands of recreational vehicles, and Workhorse(R) brand chassis
for motor homes and step vans. It also is a private-label designer
and manufacturer of diesel engines for the pickup truck,
van and SUV markets. The Company also provides truck and diesel
engine parts and service. Another affiliate offers financing
services.
Navistar reported a net loss attributable to the Company of $97
million on $8.11 billion of net sales and revenues for the year
ended Oct. 31, 2016, compared with a net loss attributable to the
Company of $184 million on $10.14 billion of net sales and revenues
for the year ended Oct. 31, 2015.
As of Oct. 31, 2016, Navistar had $5.65 billion in total assets,
$10.94 billion in total liabilities and a total stockholders'
deficit of $5.29 billion.
* * *
In September 2016, S&P Global Ratings placed its ratings, including
the 'CCC+' corporate credit ratings, on Navistar International
Corp. and its subsidiary Navistar Financial Corp. on CreditWatch
with positive implications.
S&P's CreditWatch action follows Navistar's announcement that it
has formed a strategic alliance with Volkswagen Truck & Bus, which
includes a proposed equity investment in Navistar by Volkswagen
Truck & Bus, as well as technology and proposed framework
agreements for strategic technology and supply collaboration, and a
procurement joint venture. As part of the alliance, Volkswagen
Truck & Bus plans to acquire 16.2 million newly issued shares in
Navistar, and Navistar expects to receive $256 million from the
equity investment, which the company intends to use for general
corporate purposes.
Navistar carries as 'B3 'Corporate Family Rating (CFR) and stable
outlook from Moody's. Moody's said in January 2017 that Navistar's
ratings reflects the continuing challenges the company faces in
re-establishing its competitive position and profitability in the
North American medium and heavy truck markets.
Navistar carries a 'CCC' Issuer Default Ratings from Fitch Ratings.
Fitch said in January 2017 that the ratings for NAV, Navistar,
Inc., and NFC remain on Rating Watch Positive pending completion of
a strategic alliance between NAV and Volkswagen Truck & Bus GmbH
(VW T&B). The Positive Rating Watch reflects Fitch's expectation
that under terms contemplated for the alliance, NAV would realize
cost synergies, improved liquidity, and strategic opportunities
over the next several years that would support its competitiveness
and operating performance.
NCI BUILDING: S&P Raises CCR to 'BB'; Outlook Stable
----------------------------------------------------
S&P Global Ratings said it raised its corporate credit rating on
Houston-based NCI Building Systems Inc. to 'BB' from 'BB-'. The
outlook is stable.
At the same time, S&P raised its issue-level rating on NCI's
$238 million term loan due 2019 to 'BBB-' from 'BB+'. The recovery
rating is unchanged at '1', which indicates S&P's expectation of
very high (90% to 100%) recovery for lenders in the event of a
default.
S&P also raised its issue-level rating on NCI's $250 million
unsecured notes due 2023 to 'BB' from 'BB-'. In addition, S&P
revised the recovery rating on the notes to '3' from '4', which
indicates its expectation of meaningful (50% to 70%, lower half of
the range) recovery in the event of a default.
"The stable outlook reflects S&P Global Ratings' expectation that
while growth rates in NCI's markets may decline marginally in 2017,
they will remain positive and continue to outpace broader GDP
growth rates," said S&P Global Ratings credit analyst Chiza Vitta.
"We expect the company's leverage will remain below 3x over the
next 12 months due to actions, including debt prepayments, taken
over the past year, and sustained relatively elevated EBITDA
margins. We also expect the company to continue to maintain strong
liquidity based on its ABL revolving credit borrowing capacity,
substantial cash on hand, and modest capital spending."
S&P could lower its rating on NCI if we expected leverage to
approach 4x. This could happen if NCI decided to pursue a
debt-financed acquisition or a more aggressive debt-financed stock
repurchase program or if a moderate recession caused a reversal in
nonresidential construction trends.
S&P could raise its corporate credit rating if CD&R further
divested its ownership in NCI to below 40%, in accordance with
S&P's criteria regarding companies owned by financial sponsors, and
maintained credit measures in the intermediate range, including
adjusted leverage below 3x and FFO to debt above 30%, and if S&P
began to see increased stability in operating results.
NEIMAN MARCUS: Bank Debt Trades at 16% Off
------------------------------------------
Participations in a syndicated loan under Neiman Marcus Group Inc.
is a borrower traded in the secondary market at 83.93
cents-on-the-dollar during the week ended Friday, January 20, 2017,
according to data compiled by LSTA/Thomson Reuters MTM Pricing.
This represents a decrease of 1.72 percentage points from the
previous week. Neiman Marcus pays 300 basis points above LIBOR to
borrow under the $2.9 billion facility. The bank loan matures on
Oct. 16, 2020 and carries Moody's B2 rating and Standard & Poor's
B- rating. The loan is one of the biggest gainers and losers among
247 widely quoted syndicated loans with five or more bids in
secondary trading for the week ended January 20.
OFFSHORE DRILLING: S&P Lowers CCR to 'CCC' on Weak Cash Flow
------------------------------------------------------------
S&P Global Ratings lowered its corporate credit and secured debt
ratings on Offshore Drilling Holding S.A. (ODH) to 'CCC' from 'B+'.
The outlook is now negative. In addition, S&P revised the
recovery rating on the issue-level rating to '4' from '3',
indicating its expectation of average recovery (30%-50% in the
lower range of the band) of the notes under a default scenario.
The rating action reflects S&P's belief that ODH will likely
default in the next 12 months, without an unforeseen positive
development. In S&P's view, ODH would be unable to service the
interest payments on its $950 million 2020 bullet bond, while
maintaining the bond's reserve account fully funded for 179
consecutive days, which constitutes an automatic event of default.
In particular, ODH's current fragile financial situation follows
the temporary suspension of operations in the Bicentenario rig and
a reduction of day rates for the Centenario and La Muralla IV rigs
(16% and 37%, respectively). Although the company is making
efforts to resume the Bicentenario contract, either with the
current offtaker--Petroleos Mexicanos (BBB+/Negative/--) or with
other oil and gas players, the success of the negotiations is
highly uncertain given the challenging conditions for the offshore
drilling market in the short to medium term.
S&P believes that ODH will serve the interest payment in March 2017
with the existing cash balance, which as of Dec. 31, 2016, totaled
$42 million (including cash at the level of the holding and of the
guarantors of the bond). However, S&P thinks the company will have
to use the debt reserve account to pay the interests due in
September 2017. Afterwards, ODH will need to keep the account
fully funded for 179 consecutive days in order to avoid incurring
an immediate event of default without further action or notice.
Therefore, in S&P's view, conventional default could occur in the
first quarter of 2018. In addition, S&P is concerned about the
possibility of a distressed exchange or similar de-facto
restructuring in 2017 if ODH is unable to secure new works contract
that improves its cash flow generation.
Considering Bicentenario and Centenario only, which guarantee
severally and jointly ODH's senior secured debt, and excluding cash
flow from the La Muralla and Cantarell projects, because they're
used to serve the projects' own debt, EBITDA generation will likely
be $70 million in 2017 and $90 million in 2018, compared with $107
million in the 12 months ended Sept. 30, 2016. Under that scenario,
S&P views ODH's capital structure as unsustainable, as seen in debt
to EBITDA in the 12x-15x range and negative funds from operations.
S&P's base-case scenario considers the following assumptions in
2017 and 2018:
-- Day rates of $308,000 for Centenario. Although S&P expects
WTI oil prices to recover to $50 per barrel in 2017 and 2018
from $43 per barrel in 2016, S&P don't expect day rates to
immediately reflect the adjustment in oil prices due to weak
il and gas production activities and over-supply of
drilling units. Rigs to maintain efficiency in a range of
95%-100%, except for Bicentenario, which S&P assumes will
resume operations by mid-2018. Capital expenditures at
maintenance level of $10 million - $15 million, mainly
including certain works at the Bicentenario rig.
S&P now assesses ODH's liquidity as weak. Although the ratio of
sources over uses of funds is above 1.5x, S&P's assessment
incorporates the likelihood that ODH could incur an immediate event
of default if it's unable to maintain the reserve account fully
funded for 179 consecutive days. In addition, the liquidity
assessment reflects the company's weak standing in credit markets,
reflected in a sharp drop in the bond's price in the last six
months.
For S&P's liquidity analysis, it only focuses on existing cash
balances and cash flow generation from Centenario and Bicentenario,
the guarantors of ODH's bond.
Principal liquidity sources:
-- Cash balance of $42 million as of Dec. 31, 2016;
-- Debt service reserve account of $80 million as of Dec. 31,
2016; and
-- A $10 million shortfall in FFO.
Principal liquidity uses:
-- Capex and working capital needs in a range of $20 million to
$25 million.
The negative outlook reflects the possibility of a distressed
exchange or similar de-facto restructuring in 2017 or a
conventional default in 2018. S&P don't view an upgrade as likely
in the short term because it would only occur if it is certain
regarding the company's ability to service debt in the next 12
months, while maintaining the debt reserve account fully funded
(which can occur, for instance, if the Bicentenario rig restarts
its operations or in the case of an extraordinary financial event,
such as a capital injection from shareholders).
The recovery rating of '4' on the senior secured bonds indicates
S&P's expectation for average recovery (30%-50%, in the lower range
of the band) in a default scenario. S&P valued the company on a
liquidated value basis, subject to the stresses incorporated in
S&P's simulated default scenario. S&P acknowledges that default
modeling, valuation, and restructuring (whether as part of a formal
bankruptcy proceeding or otherwise) are inherently dynamic and
complex processes that don't lend themselves to precise or certain
predictions. S&P's recovery ratings are intended to provide
educated approximations of post-default recovery rates, rather than
exact forecasts.
Simulated year of default: 2018
In S&P's hypothetical default scenario, the company can't replenish
the debt reserve accounts on its notes by March 2018. S&P assumes
that La Muralla has no value for recovery purposes because it could
have been executed as a guarantee for its related project finance
loan. S&P considers the value of Centenario and Bicentenario
without a contract as S&P assumes the rigs will be liquidated by
bondholders.
ON CALL FLAGGING: Retention of Fred Fall as Auctioneer Denied
-------------------------------------------------------------
Judge Jefferey A. Deller of the U.S. Bankruptcy Court for the
Western District of Pennsylvania denied On Call Flagging, Inc.'s
employment of Fred Fall, an auctioneer employed with Fall
Liquidations.
A hearing on the Motion was held on Jan. 26, 2017 at 10:00 a.m.
The Debtor proposed to hire Fred Fall to conduct an auction of its
assets, which include vehicles, office furniture and equipment.
The Motion was denied due to the pending dismissal of the case.
About On Call Flagging
On Call Flagging, Inc., based in Belsano, PA, filed a Chapter 11
petition (Bankr. M.D. Pa. Case No. 16-70758) on Nov. 2, 2016. The
petition was signed by Kathleen Jennings, president. The Hon.
Jeffery A. Deller presides over the case. In its petition, the
Debtor estimated $1 million to $10 million in both assets and
liabilities. James R. Walsh, at Spence Custer Saylor Wolfe & Rose,
LLC, serves as bankruptcy counsel.
PACIFIC IMPERIAL: Seeks June 12 Plan Filing Period Extension
------------------------------------------------------------
Pacific Imperial Railroad, Inc. asks the U.S. Bankruptcy Court for
the Southern District of California to extend its exclusive periods
for filing a plan of reorganization and confirming a plan of
reorganization through June 12, 2017 and August 9, 2017,
respectively.
The Debtor currently has until Feb 10, 2017 to file a plan of
reorganization, and until April 11, 2017 to confirm a plan of
reorganization.
The Debtor was created for the purpose of rehabilitating and
operating the Desert Line rail line. The Desert Line is the
railroad right of way stretching approximately 70 miles from
Mileposts 59.6 at or near the U.S. Border in Division, California
to Milepost 130.0 at Plaster City, California. The Debtor leases
the Desert Line pursuant to that certain Amended and Restated
Desert Line Lease and Operating Agreement, by and between the
Debtor, San Diego and Arizona Eastern Railway Company, and the San
Diego Metropolitan Transit System, also known as the MTS.
The Debtor subleased a substantial portion of the Desert Line to
Baja California Rail Road, Inc., pursuant to the Cali-Baja Joint
Venture Sublease and Operating Agreement, between the Debtor and
Baja California Rail Road, Inc. Approximately 11 miles of the
Desert Line were not subleased to Baja Rail.
The Debtor owns real property adjacent to the Desert Line which may
be suitable for the development of an intermodal facility.
The Debtor contends that it engaged in serious negotiations with a
prospective buyer for the sale of its assets and received the first
detailed term sheet from International Transportation Association,
LLC, or ITA, an affiliate of Baja Rail. The Debtor further
contends that it reached an understanding with ITA and the parties
signed the final version of the Asset Purchase Agreement on January
11, 2017.
The Debtor relates that the plan of reorganization in which it
intends to file will be a liquidating plan under which the proceeds
of the sale of the Debtor's assets will be paid to creditors. The
Debtor further relates that it is not proposing some
"pie-in-the-sky" reorganization to try to preserve interests for
shareholders at the expense of the creditors. The Debtor says that
it is putting the interests of the creditors first in its case.
The Debtor further says that certain shareholders who previously
operated the company for their personal benefit at the expense of
creditors are fighting the Debtor for control of the company and
its assets. The Debtor asserts that it is determined to get the
greatest value to the creditors and not squandering that value by
trying to hold on to something for the shareholders.
The Debtor's Motion is scheduled for hearing on February 28, 2017
at 2:00 p.m.
About Pacific Imperial Railroad, Inc.
Pacific Imperial Railroad, Inc., based in San Diego, California,
filed a chapter 11 petition (Bankr. S.D. Cal. Case No. 16-06253) on
October 13, 2016. The Debtor was created for the purpose of
rehabilitating and operating the Desert Line rail line. The
petition was signed by Arturo Alemany, president and CEO. The
Debtor is represented by Alan Vanderhoff, Esq., at Vanderhoff Law
Group. The case is assigned to Judge Laura S. Taylor. The Debtor
disclosed total assets at $7.18 million and total liabilities at
$11.43 million.
PALMER FARMS: Disclosure Statement Hearing Set for March 8
----------------------------------------------------------
The U.S. Bankruptcy Court in Arizona is set to hold a hearing on
March 8, at 11:00 a.m., to consider approval of the disclosure
statement, which explains the Chapter 11 plan of reorganization of
Palmer Farms, Incorporated and its affiliates.
The hearing will take place at the U.S. Bankruptcy Court, Courtroom
No. 446, 38 S. Scott Avenue, Tucson, Arizona. Objections are due
by March 1.
Under the proposed restructuring plan, general unsecured creditors
will share pro rata in funds contributed by the companies in the
amount of $10,000. Payments will be funded from Marco and Elena
Palmer's disposable income.
About Palmer Farms, Incorporated
Palmer Farms, Incorporated, Palmer Cattle, LLC, Marco Duane Palmer
and Elena Pavlovna Palmer filed Chapter 11 petitions (Bankr. D.
Ariz. Case Nos. 16-10202, 16-10201, and 16-10206, respectively) on
Sept. 2, 2016. The petition was signed by Marco D. Palmer,
manager.
Palmer Farms and Palmer Cattle are represented by Michael McGrath,
Esq., Isaac D. Rothschild, Esq., and Jeffrey J. Coe, Esq., at Mesch
Clark Rothschild. Marco D. and Elena P. Palmer are represented by
Dennis J. Clancy, Esq., at Raven, Clancy & McDonagh, P.C.
At the time of filing, the Debtors estimated assets at $500,000 to
$1 million and liabilities at $1 million to $10 million. The case
is assigned to Judge Brenda Moody Whinery.
Marco and Elena Palmer are husband and wife and live in Thatcher,
Arizona. Marco is a fifth generation farmer who has farmed in
Thatcher for over 40 years. Marco Palmer is the former
vice-president of the irrigation district in Thatcher, Arizona. In
about 2010, the Palmers expanded into cattle ranching.
On January 9, 2017, the Debtors filed a disclosure statement and
Chapter 11 plan of reorganization.
PANDA STONEWALL: S&P Affirms 'BB-' Rating on $300MM Term Loan
-------------------------------------------------------------
S&P Global Ratings said it affirmed its 'BB-' ratings on Panda
Stonewall LLC's $300 million term loan B-1 due 2021 and $200
million term loan B-2 due 2021 (collectively, TLB) and its $71
million letter of credit (LOC) facility. The outlook on the
ratings remains stable. S&P's '2' recovery rating on the senior
secured debt remains unchanged, indicating a substantial recovery
on the higher end of the 70%-90% range in the event of default.
Stonewall constructed a new 778 megawatt (MW) combined-cycle gas
turbine (CCGT) power plant, is currently in the late stages of
construction. Once operational, the plant will sell capacity,
energy, and ancillary services into the
Pennsylvania-Jersey-Maryland (PJM) Interconnection's Dominion Zone.
The construction of the power plant was about 96% complete by the
end of last year. The engineering, procurement, construction (EPC)
contractor performed a number of critical path activities related
to the steam and combustion turbines.
"The stable outlook reflects our view that construction would be
completed in the middle of this year, as scheduled," said S&P
Global Ratings credit analyst Tony Mok. "Once the project enters
commercial operations, we anticipate a minimum debt service
coverage ratio of about 1.58x in year one of operations. We also
expect that operational performance, such as availability, heat
rate, and capacity factors, will remain in line with our current
forecast level."
S&P could revise the outlook or lower the rating if the project
experienced construction delays from unforeseeable causes that may
potentially lead to cost overruns. S&P also could consider a
downgrade if the project is unable to maintain a minimum debt
service coverage ratio (DSCR) above 1.5x as a result of unfavorable
power and capacity prices due to weaker-than-anticipated market
conditions and/or ongoing operational issues that would lead to
higher operating costs.
S&P could consider an upgrade if the project's minimum DSCR exceeds
2x in S&P's base case even after refinancing when the term loan B
matures in late 2021. Such improvement to the minimum DSCR would
likely arise from positive market conditions that could
substantially influence the power and capacity prices in PJM.
PARADIGM EVERGREEN: Disclosures Okayed, Plan Hearing on Feb. 23
---------------------------------------------------------------
The U.S. Bankruptcy Court for the District of New Jersey will
consider approval of the Chapter 11 plan of Paradigm Evergreen LLC
at a hearing on Feb. 23, at 11:00 a.m.
The court had earlier approved the company's disclosure statement,
allowing it to start soliciting votes from creditors.
The order required creditors to file their objections and cast
their votes accepting or rejecting the plan not less than seven
days before the hearing.
About Paradigm Evergreen
Headquartered in New York, New York, Paradigm Evergreen LLC filed a
Chapter 11 petition (Bankr. D.N.J. Case No. 16-19943) on May 23,
2016. The petition was signed by David Kushner, managing member.
The Debtor is represented by Morris S. Bauer, Esq., at Norris
McLaughlin & Marcus, P.A. The Debtor hired McElroy Deutsch
Mulvaney & Carpenter, LLP, as special counsel.
Honorable Vincent F. Papalia presides over the case.
The Debtor estimated its assets at $1 million to $10 million and
liabilities at $500,000 to $1 million at the time of the filing.
On November 9, 2016, the Debtor filed its Chapter 11 plan and
disclosure statement.
PEABODY ENERGY: Begins Road Show to Solicit Exit Lenders
--------------------------------------------------------
Peabody Energy Corporation disclosed in a regulatory filing with
the Securities and Exchange Commission that beginning on January
30, 2017, members of the Company's management will make
presentations to potential lenders in connection with the Company's
previously announced proposed senior secured term loan financing
transaction.
Peabody is seeking to raise new first lien debt to refinance first
lien pre-bankruptcy claims and pay related transaction fees and
expenses. The exit financing will consist of:
$500 million in first lien exit term loan
$1 billion in first lien exit notes
In addition to new first lien debt, Peabody contemplates this
capital structure:
$450 million in second lien notes from existing
second lien noteholders
$3.1 billion of total equity, including
$1.5 billion of new equity provided by second
lien noteholders and unsecured
noteholders:
-- $750 million mandatorily convertible
preferred stock; and
-- $750 million common equity rights offering
Peabody says existing second lien and unsecured creditors are
anticipated to own a majority slice of the Company post-emergence.
On December 22, 2016, the Debtors filed with the Bankruptcy Court a
Joint Plan of Reorganization under Chapter 11 of the Bankruptcy
Code and a related Disclosure Statement. On January 25, 2017, the
Debtors filed with the Bankruptcy Court the First Amended Joint
Plan of Reorganization and the First Amended Disclosure Statement.
On January 27, the Debtors filed with the Bankruptcy Court the
Second Amended Joint Plan of Reorganization and the Second Amended
Disclosure Statement to address certain modifications resulting
from a hearing before the Bankruptcy Court on January 26.
Thereafter, on January 27, the Bankruptcy Court issued an order
approving the Disclosure Statement.
Also on January 27, the Bankruptcy Court issued an order approving
the exit facility commitment letter, dated as of January 11, from
Goldman Sachs Bank USA, JPMorgan Chase Bank, N.A., Credit Suisse
AG, Credit Suisse Securities (USA) LLC, Macquarie Capital Funding
LLC and Macquarie Capital (USA) Inc.
Peabody's Plan contemplates reducing the debt burden by more than
$5 billion from the balance sheet debt at March 31, 2016.
According to the Company's regulatory filing on Monday, David
Lischer -- david.lischer@gs.com -- of Goldman Sachs will discuss
the transaction details during the presentation. Goldman's Greg
Berube will do the introductions.
Peabody Executive VP and CFO Amy Schwetz will discuss the financial
information while President and CEO Glenn Kellow will provide an
overview of the Company and discuss its core strengths.
The lender presentation slides are available at
https://is.gd/FnDDG8
In connection with the financings contemplated by the Exit Facility
Commitment Letter and the Plan, Peabody on Monday made available
selected preliminary estimated results for the year ended December
31, 2016. The preliminary estimated financial information for the
year ended December 31, 2016 is not final and does not reflect
audit adjustments, if any, for the year ended December 31, 2016.
Peabody anticipates reporting total revenues between $4,710 million
and $4,720 million, with a midpoint estimate of $4,715 million.
A copy of the Preliminary Estimated Results as provided on January
30, 2017, is available at https://is.gd/xKISRe
Peabody said, "Neither our independent registered public accounting
firm nor any other independent registered public accounting firm
has audited or reviewed the preliminary estimated financial
information, nor have they expressed any opinion or any other form
of assurance on the preliminary estimated results presented. As a
result of the foregoing, while this information is presented with
ranges that are considered reasonable by us, it is subject to
change pending finalization. We may identify items or events that
could occur after issuance of these preliminary results but prior
to the issuance of our audited financial statements that would
require us to make material adjustments to the financial
information presented. Therefore, actual results may differ
materially from our current expectations. The items that may change
most significantly include asset impairment and income taxes as
those items are highly judgmental and are still under review by
management or could be impacted by events that occur prior to the
issuance of our audited results."
* * *
On January 27, 2017, solicitation versions of the Plan and the
Disclosure Statement were filed with the Bankruptcy Court. Peabody
said the Bankruptcy Court approved these items and is expected to
issue orders regarding the following, subject to certain
modifications:
-- authorizing the Debtors to enter into and perform under the
Plan Support Agreement, dated as of December 22, 2016, by and among
the Company and certain of its lenders and noteholders;
-- approving the Private Placement Agreement, dated as of
December 22, 2016, by among the Company and certain of the
Company's creditors, as amended by Amendment No. 1 to Private
Placement Agreement dated as of December 28, 2016;
-- approving the private placement of $750 million in the
aggregate of newly created mandatory convertible preferred stock of
the reorganized company pursuant to the Private Placement Agreement
and in accordance with the Plan;
-- authorizing the $750 million rights offering to eligible
creditors for common stock of Reorganized PEC to be conducted by
the Company in accordance with the order, as contemplated by the
Plan;
-- approving the Backstop Commitment Agreement, dated as of
December 22, 2016, among the Company and certain of its
noteholders, as amended by Amendment No. 1 to Backstop Commitment
Agreement dated as of December 28, 2016; and
-- approving the exit facility commitment letter, dated as of
January 11, 2017, from Goldman Sachs Bank USA, JPMorgan Chase Bank,
N.A., Credit Suisse AG, Credit Suisse Securities (USA) LLC,
Macquarie Capital Funding LLC and Macquarie Capital (USA) Inc.
Update Regarding Support for
Plan and Rights Offering
The deadline for eligible holders of the Company's senior secured
second lien notes and senior unsecured notes to sign joinders to
the Private Placement Agreement and Backstop Commitment Agreement
was 5:00 p.m. New York City time on January 25, 2017. As of that
time, holders of approximately 96.36% of the outstanding principal
amount of the Company's senior secured second lien notes and
approximately 88.72% of the outstanding principal amount of the
Company's senior unsecured notes were parties to each of the Plan
Support Agreement, Private Placement Agreement and Backstop
Commitment Agreement. Holders of approximately 41.65% of the
Company's outstanding first lien debt and approximately 41.18% of
the outstanding principal amount of the Company's unsecured
convertible junior subordinated debentures were parties to the Plan
Support Agreement.
Pursuant to the Plan, the date of issuance by the Bankruptcy Court
of its order approving the Disclosure Statement will be the record
date for determining the eligibility of a holder of an Allowed
Claim in Class 2A, 2B, 2C, 2D or 5B to participate in the Rights
Offering. Pursuant to the Rights Offering, holders of Allowed
Claims in 2A, 2B, 2C, 2D or 5B on the record date will be entitled
to purchase units comprised of shares of new common stock of
reorganized Peabody Corporation and penny warrants exercisable into
additional shares of new common stock. The allocation of
subscription rights available to holders of Allowed Claims in those
classes is set forth in the Plan. Mailing of subscription materials
for the Rights Offering is expected to commence on February 2, 2017
and the Rights Offering is expected to expire on March 2, 2017.
Each holder of the Company's senior secured second lien notes and
senior unsecured notes that is party to the Backstop Commitment
Agreement has agreed to fully exercise all subscription rights
issued to it pursuant to the Rights Offering. The subscription
rights are not transferable other than in connection with the
underlying Allowed Claim. In order to exercise subscription rights,
holders of the Company's senior secured second lien notes and
senior unsecured notes held in book-entry form through the
facilities of the Depository Trust Company must comply with the
practices, processes and procedures of the DTC, including the DTC's
Automated Tender Offer Program. In addition, holders of the
Company's senior unsecured notes electing to receive its pro rata
share of the Class 5B Cash Pool (as defined in the Plan) will not
be entitled to transfer their senior unsecured notes after making
that election or to participate in the Rights Offering.
About Peabody Energy Corporation
Headquartered in St. Louis, Missouri, Peabody Energy Corporation
claims to be the world's largest private-sector coal company. As
of Dec. 31, 2014, the Company owned interests in 26 active coal
mining operations located in the United States (U.S.) and
Australia. The Company has a majority interest in 25 of those
mining operations and a 50% equity interest in the Middlemount
Mine
in Australia. In addition to its mining operations, the Company
markets and brokers coal from other coal producers, both as
principal and agent, and trade coal and freight-related contracts
through trading and business offices in Australia, China, Germany,
India, Indonesia, Singapore, the United Kingdom and the U.S.
Peabody posted a net loss of $1.988 billion for 2015, wider from
the net loss of $777 million in 2014 and the $513 million net loss
in 2013.
At Dec. 31, 2015, the Company had total assets of $11.02 billion
against $10.1 billion in total liabilities, and stockholders'
equity of $919 million.
On April 13, 2016, Peabody Energy Corp. and 153 affiliates filed
voluntary petitions for relief under Chapter 11 of the United
States Bankruptcy Code. The 154 cases are pending joint
administration before the Honorable Judge Barry S. Schermer under
(Bankr. E.D. Mo. Case No. 16-42529).
As of the Petition Date, PEC has approximately $4.3 billion in
outstanding secured debt obligations and $4.5 billion in
outstanding unsecured debt obligations.
The Debtors tapped Jones Day as general counsel; Armstrong,
Teasdale LLP as local counsel; Lazard Freres & Co. LLC and
investment banker Lazard PTY Limited as investment banker; FTI
Consulting, Inc., as financial advisors; and Kurtzman Carson
Consultants, LLC, as claims, ballot and noticing agent.
The Office of the U.S. Trustee on April 29, 2016, appointed seven
creditors of Peabody Energy Corp. to serve on the official
committee of unsecured creditors. The Committee retained Morrison
& Foerster LLP as counsel, Spencer Fane LLP as local counsel,
Curtis, Mallet-Prevost, Colt & Mosle LLP as conflicts counsel,
Blackacre LLC as its independent expert, and Berkeley Research
Group, LLC, as financial advisor.
PEABODY ENERGY: Court Approves Disclosures, March 16 Plan Hearing
-----------------------------------------------------------------
Judge Barry S. Schermer of the U.S. Bankruptcy Court for the
Eastern District of Missouri on January 27, 2017, approved the
second amended disclosure statement explaining Peabody Energy
Corporation, et al.'s joint plan of reorganization and scheduled
the confirmation hearing for March 16, 2017, at 10:00 A.M., Central
Time. Objections to confirmation of the Plan must be filed on or
before March 9.
Under the Second Amended Plan, in full settlement and satisfaction
of the Official Committee of Unsecured Creditors' Alleged Causes of
Action, the Creditors' Committee Settlement provided that holders
of General Unsecured Claims (1) against PEC will have $5 million of
cash available for distribution to Holders of Allowed General
Unsecured Claims in Class 5A that are not Convenience Claims in
Class 6A and (2) against one of the Encumbered Guarantor Debtors
will have an option to elect to receive on account of their Allowed
Claims, a pro rata cash distribution from a pool of $75 million,
with recoveries to be capped at 50% of their Allowed Claims. The
total amount of cash available for holders of Convenience Claims in
Class 6A is $2 million and Class 6B is $18 million.
Class 2A -2D (Second Lien Notes Claims) will recover an estimated
52.4% under the Plan. Class 6A (PEC Convenience Claims) and Class
6B (Encumbered Guarantor Debtors Convenience Claims) will recover
an estimated 72.5%. Class 7A-7E (MEPP Claims) will recover 85% to
90%.
Holders of general unsecured claims will recover:
Class 5A (PEC) 0.1%
Class 5B (Encumbered Guarantor Debtors) 22.1%
Class 5C (Gold Fields Debtors)
PEABODY ENERGY: Seeks Approval of PNC Bank Commitment Letter
------------------------------------------------------------
Peabody Energy Corporation and P&L Receivables Company, LLC
obtained a commitment letter from PNC Bank, National Association,
on January 27, 2017, pursuant to which, in connection with the
consummation of the proposed bankruptcy-exit plan, PNC has agreed
to amend the existing securitization facility evidenced by the
Fifth Amended and Restated Receivables Purchase Agreement, dated as
of March 25, 2016, among P&L Receivables, as the seller, the
Company, as the servicer, the sub-servicers party thereto, the
various purchasers and purchaser agents party thereto and PNC, as
administrator.
Peabody Energy Corporation disclosed in a regulatory filing with
the Securities and Exchange Commission that under the Commitment
Letter, PNC agrees, among other things, to:
(i) increase the purchase limit to an amount not to exceed
$250,000,000,
(ii) extend the facility termination date, and
(iii) consider adding certain Australian subsidiaries of the
Company as originators.
The commitment of PNC to provide 100% of the Purchase Limit under
the Sixth Amended Securitization Facility is subject to certain
conditions set forth in the Commitment Letter, including but not
limited to the occurrence or waiver of all conditions precedent to
the effectiveness of the Plan.
The Commitment Letter will terminate upon the occurrence of certain
events described therein. The outside termination date for the
Commitment Letter is May 1, 2017.
The Debtors have filed a motion with the Bankruptcy Court seeking
authorization to enter into and perform under the Commitment
Letter.
A copy of the letter is available at https://is.gd/g2JeUe
About Peabody Energy Corporation
Headquartered in St. Louis, Missouri, Peabody Energy Corporation
claims to be the world's largest private-sector coal company. As
of Dec. 31, 2014, the Company owned interests in 26 active coal
mining operations located in the United States (U.S.) and
Australia. The Company has a majority interest in 25 of those
mining operations and a 50% equity interest in the Middlemount
Mine
in Australia. In addition to its mining operations, the Company
markets and brokers coal from other coal producers, both as
principal and agent, and trade coal and freight-related contracts
through trading and business offices in Australia, China, Germany,
India, Indonesia, Singapore, the United Kingdom and the U.S.
Peabody posted a net loss of $1.988 billion for 2015, wider from
the net loss of $777 million in 2014 and the $513 million net loss
in 2013.
At Dec. 31, 2015, the Company had total assets of $11.02 billion
against $10.1 billion in total liabilities, and stockholders'
equity of $919 million.
On April 13, 2016, Peabody Energy Corp. and 153 affiliates filed
voluntary petitions for relief under Chapter 11 of the United
States Bankruptcy Code. The 154 cases are pending joint
administration before the Honorable Judge Barry S. Schermer under
(Bankr. E.D. Mo. Case No. 16-42529).
As of the Petition Date, PEC has approximately $4.3 billion in
outstanding secured debt obligations and $4.5 billion in
outstanding unsecured debt obligations.
The Debtors tapped Jones Day as general counsel; Armstrong,
Teasdale LLP as local counsel; Lazard Freres & Co. LLC and
investment banker Lazard PTY Limited as investment banker; FTI
Consulting, Inc., as financial advisors; and Kurtzman Carson
Consultants, LLC, as claims, ballot and noticing agent.
The Office of the U.S. Trustee on April 29, 2016, appointed seven
creditors of Peabody Energy Corp. to serve on the official
committee of unsecured creditors. The Committee retained Morrison
& Foerster LLP as counsel, Spencer Fane LLP as local counsel,
Curtis, Mallet-Prevost, Colt & Mosle LLP as conflicts counsel,
Blackacre LLC as its independent expert, and Berkeley Research
Group, LLC, as financial advisor.
PFS HOLDING: S&P Affirms 'B-' CCR & Revises Outlook to Positive
---------------------------------------------------------------
S&P Global Ratings affirmed its 'B-' corporate credit rating on
Easton, Pa.-based PFS Holding Corp. and revised its rating outlook
to positive from stable.
At the same time, S&P affirmed its 'B-' rating on the company's
$280 million first-lien term loan due 2021 and revised the recovery
rating to '3', indicating S&P's expectation that lenders could
expect meaningful recovery (at the lower end of the 50%-70% range)
in the event of a payment default, from '4'. S&P also affirmed its
'CCC' rating on the $110 million second-lien term loan due 2022
with a recovery rating of '6', indicating that lenders could expect
negligible (0% to 10%) recovery in the event of a payment default.
"The outlook revision to positive from stable reflects our forecast
that PFS will continue to strengthen profitability and credit
metrics," said S&P Global Ratings analyst Jerry Phelan. "It also
reflects PFS' participation in the stable and growing pet segment,
which should support profit growth."
The ratings on PFS reflect its ownership by a financial sponsor
(which exhibits aggressive financial policies), its relatively low
profit margins, and weak credit ratios. The ratings also
incorporate the substantial bargaining power of several large pet
product suppliers to which the company has meaningful
concentration, and the risk that these large vendors could continue
to consolidate the supply chain and further dictate terms. S&P's
ratings assume PFS maintains satisfactory relations with its supply
base, including its largest suppliers. In addition, the increasing
presence of e-commerce retailers and national brick-and-mortar
retailers (including PetSmart Inc. and Petco Holdings Inc., which
have meaningful bargaining power) at the expense of smaller
independent store operators (which is the largest PFS customer
channel) could erode PFS' sales over time. Nevertheless, S&P
believes PFS will grow profits thanks to further channel
penetration and improvements in SKU management. In S&P's opinion,
there's low probability that large suppliers will further expand
direct distribution to regional retailers that are growing their
store bases--although it is a high-impact risk. It's possible this
could occur over time if the retail pet channel becomes more
concentrated, making direct distribution easier for suppliers.
The positive outlook reflects the potential for an upgrade over the
next 12 months due to the company's improved sales and profit
trends, which S&P believes will continue due to planned
efficiencies--including around inventory management--and market
growth. S&P could raise the rating if credit metrics continue to
strengthen with the company's better operating performance, such
that adjusted debt to EBITDA reaches the low-7x area. The company
could reach this level in fiscal 2017 if EBITDA grows by about 10%
to 15% accompanied by modest debt reduction.
S&P could revise its outlook to stable if sales and pricing
momentum slows, and PFS is unable to strengthen credit ratios in
line with S&P's forecast, such that it expects adjusted debt to
EBITDA will be sustained above 7.5x. This scenario may occur if
large suppliers and retailers (which we believe are gaining market
share) further drive down margins due to increased bargaining
power.
PRESTIGE INDUSTRIES: Case Summary & 20 Top Unsecured Creditors
--------------------------------------------------------------
Debtor: Prestige Industries LLC
2101 91st Street
North Bergen, NJ 07047
Case No.: 17-10186
Type of Business: Laundry Services Provider
Chapter 11 Petition Date: January 30, 2017
Court: United States Bankruptcy Court
District of Delaware (Delaware)
Judge: Hon. Kevin Gross
Debtor's Counsel: Peter C. Hughes, Esq.
DILWORTH PAXSON LLP
One Customs House - Suite 500
704 King Street
Wilmington, DE 19801
Tel: 302-571-9800
E-mail: phughes@dilworthlaw.com
Debtor's
Investment
Banker: SSG ADVISORS, LLC
Estimated Assets: $10 million to $50 million
Estimated Debts: $10 million to $50 million
The petition was signed by Jonathan Fung, CEO/CFO.
Debtor's List of 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Ecolab Inc. $249,429
6634 Rocky Falls Road
Charlotte, NC 28211
Email: Jim.reiser@ecolab.com
U.S. Dept. of Labor $221,950
299 Cherry Hill Road, Suite 103
Parsippany, NJ 07054
ConEdison Solutions $179,809
100 Summit Lake Drive
Valhalla, NY 11801
Email: harmonh@conedsolutions.com
2101 91 st Street, LLC $149,649
PO Box 35251
Newark, NJ 07193-5251
Email: Pat.leary@hartzmountain.com
Ryder $134,760
119 Moonachie Avenue
Moonachie, NJ 07074
Email: Gina_maia@ryder.com
Tingue $106,426
7009 Cessna Drive
Greensboro, NC 27409
Email: mstrauss@tingue.com
Constellation $101,441
PO Box 5472
Carol Stream, IL 60197-5472
Email: questions@constellation.com
PSEG $81,667
PO Box 14444
New Brunswick, NJ
Email: Pseg-baandr@pseg.com
Jackson Lewis P.C. $70,943
58 S. Service Road, Suite 250
Melville, NY 11747
Email: trippn@jacksonlewis.com
Direct Machinery $64,271
50 Commerce Place
Hicksville, NY 11801
Email: rhirsch@directmachinery.com
Minda Supply Co. $59,873
380 Franklin Turnpike
Mahwah, NJ 07430
Email: scott@mindasupply.com
Truck Body East $43,321
50 Main Street
Orange, NJ 07050
Email: nick@truckbodyeast.com
Prestige Poly LLC $37,850
121-15 th Street
Brooklyn, NY 11215
Email: sam@prestigepolybags.com
Nationalgrid $30,259
2400 Sunrise Highway
Bellmore, NY 11215
Pedowitz Machinery Movers of CT $30,000
571 Plains Road
Milford, CT 06461
Email: Leanne@pedowitz.com
Larry J. Lichtenegger, Esq. $26,966
3850 Rio Road, Box 58
Carmel, CA 93923
Email: lawyer@mbay.net
Rosenthal & Rosenthal, Inc. $25,000
1370 Broadway
New York, NY 10018
American Packaging Dist. Corp. $23,412
831 Lincoln Ave., Unit 7
West Chester, PA 19380
Email: webinfo@keypackaging.com
St. Cloud Capital LLC $20,030
10866 Wilshire Boulevard, Suite 1450
Los Angeles, CA 90024
Email: jmay@stcloudcapital.com
ktom@stcloudcapital.com
Bryson Casualty Insurance Services, Inc. $20,000
3777 Long Beach Blvd, Suite 500
Long Beach, CA 90807
PRESTIGE INDUSTRIES: Files for Chapter 11 Bankruptcy Protection
---------------------------------------------------------------
Faced with challenges brought by business expansion, Prestige
Industries LLC, a provider of commercial laundry services, sought
bankruptcy protection with the goal of effectuating an orderly sale
of its business and making distributions to creditors.
Headquartered in Lyndhurst, New Jersey, Prestige currently operates
two laundry facilities located in Paterson and North Bergen. The
Debtor also operated a plant in Bay Shore, New York, which has
since been shuttered effective Jan. 15, 2017.
As disclosed in the bankruptcy filing, Prestige incurred
operational losses caused by the delays and other challenges
encountered in connection with the build-out of its first
greenfield facility in North Bergen, New Jersey in 2012. According
to the Company, although the plant was operational in 2013, it was
not generating enough incremental revenue to fully offset the added
costs for the first two years following its completion.
In addition, the Company also experienced challenges at its
Paterson facility due to staffing constraints and a lack of
adequate operational management which resulted in a high rate of
employee turnover, excess temporary labor costs and delays in
service turnaround time.
In order to improve profitability, cash flow and stability, the
Debtor said it has taken steps towards rectifying the recent
operational and liquidity issues. These include improving the
management of the Paterson facility, rationalizing headcount and
engaging the assistance of a turnaround consultant. The Debtor
also made the decision to shut down the Bay Shore facility after a
sudden and complete failure of its primary tunnel washer system.
"Despite these steps, the Debtor's debt burden remains
unsustainable," according to Jonathan Fung, chief executive officer
of Prestige. "As such, the Debtor has made the difficult but
necessary decision to seek the protections of Chapter 11," he
added.
The Debtor intends to pursue the sale of its assets as a going
concern, to be followed by the filing of a liquidating Chapter 11
Plan.
Prestige was founded by Joe Cho with the purchase of a retail
laundry and dry cleaning facility in Manhattan in 1995. The Debtor
acquired its first linen cleaning facility in Bay Shore, New York
in 2005, however, Prestige remained a predominantly retail
operation through 2006.
As of the Petition Date, the Debtor employs approximately 582
individuals. The Debtor serves over 90 customers ranging from
premium hotel chains to signature boutique hotels.
To enable the Debtor to reduce the adverse effects of the
commencement of this Chapter 11 case on its organization, the
Debtor has requested various types of relief in its "first day"
motions and applications. The Debtor is seeking court permission
to, among other things, pay employee obligations, use existing bank
accounts, obtain post-petition financing, and prohibit utility
companies from discontinuing services.
"The First Day Motions seek relief intended to allow the Debtor to
effectively transition into Chapter 11 and minimize disruption,
thereby preserving and maximizing the value of the Debtor's
estate," Mr. Fung maintained.
The Debtor has hired Dilworth Paxson LLP as bankruptcy counsel and
SSG Advisors, LLC as investment banker.
The Chapter 11 case (Bankr. D. Del. Case No. 17-10186) was filed
on Jan. 30, 2017. Judge Kevin Gross is assigned to the case.
The Debtor estimated assets and liabilities in the range of $10
million to $50 million each.
PROJECT RUBY: Moody's Assigns B3 Corporate Family Rating
--------------------------------------------------------
Moody's Investors Service assigned a B3 corporate family rating and
B3-PD probability of default rating to Project Ruby Ultimate Parent
Corp. (an entity set up to acquire Mediware Information Systems,
Inc.), a provider of software solutions to the healthcare industry.
Moody's also assigned B2 ratings to the company's proposed senior
secured first lien term loan and revolving credit facility.
Proceeds from the debt issuance along with unrated second lien
notes and new equity will be used to fund TPG Capital's acquisition
of the business. The ratings outlook is stable.
RATINGS RATIONALE
The B3 corporate family rating reflects Mediware's high leverage
levels, small scale, and acquisition appetite, offset to some
degree by the company's a stable and predictable base of software
maintenance and subscription revenues. Pro forma debt to EBITDA is
estimated at approximately 7x (including adjustments for certain
one-time costs) for the LTM period ended December 31, 2016. Due to
temporary increases in R&D expenditures, leverage is expected to
exceed 8.5x for the fiscal year ended June 30, 2017, but is
expected to decline to about 7x over the next 12 to 18 months
driven by EBITDA growth and debt repayment, as well as the runoff
of extraordinary R&D expenditures.
Mediware provides critical enterprise resource planning and
electronic health record systems to the non-acute healthcare
market. Mediware's products are "sticky" as the software can be
difficult to remove once fully integrated into a care provider's
operations. As a result, Mediware has exhibited maintenance
retention rates in excess of 90%, leading to stable free cash flow
generation. Moody's expects free cash flow to debt will approach 4%
over the next 12 to 18 months which is in-line with other levered
B3 rated software companies. The non-acute care software market is
fragmented, and it is expected to grow over the medium-term due to
increasing adoption of IT systems by non-acute healthcare
providers. Mediware's EBITDA growth is expected to be driven by low
to mid-single digit organic revenue growth, supplemented by
occasional acquisition activity which could delay de-leveraging if
large enough that additional debt financing is needed.
Liquidity is expected to be good based on an estimated $10 million
of cash on hand at closing, an undrawn $60 million revolver and an
expectation of annualized free cash flow in excess of $15 million
over the next 12 to 18 months.
The stable outlook reflects Moody's expectation of revenue growth
in the low to mid-single digits and the expectation of free cash
flow to debt approaching 4% over the next 12 to 18 months. Given
the company's acquisition strategy, an upgrade is unlikely in the
near term. The company could be upgraded if leverage is expected to
be sustained below 6.5x and free cash flow to debt is on track to
be sustained above 5%. Mediware could be downgraded if performance
deteriorates materially or leverage is sustained over 8x, liquidity
weakens or free cash flow is expected to be negative on other than
a temporary basis.
Assignments:
Issuer: Project Ruby Ultimate Parent Corp.
-- Probability of Default Rating, Assigned B3-PD
-- Corporate Family Rating, Assigned B3
-- Senior Secured Bank Credit Facility, Assigned B2 (LGD3)
Outlook Actions:
Issuer: Project Ruby Ultimate Parent Corp.
-- Outlook, Assigned Stable
The principal methodology used in these ratings was Software
Industry published in December 2015.
Mediware Information Systems, Inc. is a provider of healthcare
enterprise software. The company, headquartered in Lenexa, Kansas,
had revenues of approximately $150 million for the fiscal year
ended June 30, 2016.
PROJECT RUBY: S&P Lowers CCR to 'B-' on Leveraged Buyout
--------------------------------------------------------
S&P Global Ratings said it lowered its corporate credit rating on
Lenexa, Kan.-based Project Ruby Parent Corp. to 'B-' from 'B'. The
outlook is stable.
At the same time, S&P assigned its 'B-' issue-level rating and '3'
recovery rating to the company's proposed $380 million first-lien
credit facility, comprising a $320 million term loan due 2024 and a
$60 million revolving credit facility 2022. The '3' recovery
rating indicates S&P's expectation for meaningful (50% to 70%;
upper half of range) recovery in the event of default. S&P also
assigned a 'CCC' issue-level rating and '6' recovery rating to the
company's proposed $115 million second-lien term loan due 2025. The
'6' recovery rating indicates S&P's expectation for negligible (0%
to 10%) recovery in the event of default.
The company will use the proceeds of the proposed term loans to
repay its existing term loans. S&P will withdraw its ratings on
these term loans when the transaction is complete.
"The rating action reflects our adjusted leverage near 8x at close
of the sale to TPG, due to the increased debt from the second-lien
term loan added to fund the acquisition of the company from Thoma
Bravo," said S&P Global Ratings credit analyst Geoffrey Wilson.
Although S&P expects leverage to decline to the mid-7x area in
fiscal 2017, increased research-and-development spending will
offset incremental EBITDA growth in fiscal 2018, with the company
investing into its CareTend platform, keeping leverage in the
mid-7x level through fiscal 2018 and above S&P's previously stated
downside threshold of sustained leverage above 7x.
The stable outlook reflects S&P's view of Mediware's highly
recurring revenue base and S&P's expectation that the company will
continue to generate positive revenue growth and FOCF, and maintain
adequate liquidity over the next 12 months.
RAMON AGUIRRE: Judge Vacates Order Granting Wheeler Stay Relief
----------------------------------------------------------------
The Hon. Charles Ronald Norgle, Sr., of the U.S. District Court for
the Northern District of Illinois has ruled that the U.S.
Bankruptcy Court for the Northern District of Illinois' memorandum
decision granting Wheeler Financial, Inc., relief from the
automatic stay in the Chapter 11 case of Ramon and Bertha Aguirre
must be vacated.
The Debtors failed to pay their 2010 property taxes on the
commercial property they owned. Prior to that, JP Morgan Bank,
N.A., loaned them approximately $1.3 million and held a perfected
first priority security interest in the commercial property. In
2012, Foster Wheeler acquired a tax lien on the property. Before
the redemption period on the tax lien expired, the Debtors filed
for Chapter 11 bankruptcy protection and confirmed a reorganization
plan. The Debtors then failed to pay the amount due to Wheeler
Financial under the Plan by the designated date. After the Debtors
missed the payment deadline, Wheeler Financial moved to lift the
automatic stay, and the Debtors moved to modify the Plan. The
Bankruptcy Court granted Wheeler Financial relief from the
automatic stay and denied the Debtors' modification of the Plan.
On June 27, 2016, the District Court granted JP Morgan's motion to
stay the Bankruptcy Court's April 18, 2016 order that granted
Wheeler Financial relief from the automatic stay. By that time,
Wheeler Financial had already applied for issuance of a tax deed in
state court, received a tax deed on the restaurant property, and
recorded the tax deed. Neither the Debtors nor JP Morgan were
present or contested the issuance of the tax deed at the state
court hearings. The District Court ordered Wheeler Financial on
June 27, 2016, to "take no further action with the tax deed."
JP Morgan argued that the Bankruptcy Court abused its discretion
when: (a) it lifted the stay and allowed Wheeler Financial to
pursue a tax deed in state court because the Bankruptcy Court
erroneously applied the three-step analysis adopted by the Seventh
Circuit in the Matter of Fernstrom Storage and Van Co., 938 F.2d
731, 735 (7th Cir. 1991); and (b) it denied the Debtors' motion to
modify the confirmed Plan.
The Debtors have adopted JP Morgan Chase's arguments in full.
Wheeler Financial defended the Bankruptcy Court's April 18, 2016
memorandum decision as an appropriate exercise of discretion given
the circumstances of the case.
Chuck Stanley, writing for Bankruptcy Law360, reports that the
District Court ruled that the Bankruptcy Court erred in awarding
Wheeler Financial the deed to a bankrupt restaurant because the
company's tax lien on the property gave it a claim to a financial
remedy, not a right to the deed. Under an amended agreement
between JP Morgan and Wheeler Financial, the Bankruptcy Court
should have compelled the Debtors to make good in their offer of a
$50,000 payment to clear a tax lien, Law360 relates.
Because reversible error occurred in the Bankruptcy Court's
decision regarding the automatic stay, the District Court also
vacated the court order denying the motion to modify the Chapter 11
plan without discussing the merits of the Bankruptcy Court's denial
of the Debtors' motion to modify the stay.
About Ramon and Bertha Aguirre
Ramon and Bertha Aguirre own three real estate properties and
operate an Italian restaurant out of one of them: the first a
single family residence at 4599 Hatch Lane in Lisle, Illinois --
their home; the second a three-story commercial property located at
1374 Grand Avenue in Chicago, Illinois -- the Debtors' restaurant;
and the third another single family residence -- a rental unit
located at 1307 Burlington Avenue in Lisle, Illinois, that
generates about $1,100 in gross income per month.
The Debtors filed for Chapter 11 bankruptcy protection (Bankr. N.D.
Ill. Case No. 14-24420) on June 30, 2014.
Judge Timothy A. Barnes presides over the case.
The Debtors' Chapter 11 plan was confirmed on April 15, 2015.
Paul M. Bach, Esq., at Sulaiman Law Group, Ltd., serves as the
Debtors' counsel.
Wheeler Financial, Inc., is represented by Robert M. Fishman, Esq.
-- rfishman@shawfishman.com -- at Shaw Fishman Glantz & Towbin LLC,
Chicago, Illinois.
JPMorgan Chase Bank is represented by Lauren Newman, Esq. --
lnewman@thompsoncoburn.com -- at Thompson Coburn LLP, Chicago,
Illinois.
REPUBLIC AIRWAYS: Court Extends Plan Filing Period Until March 31
-----------------------------------------------------------------
Judge Sean H. Lane of the U.S. Bankruptcy Court for the Southern
District of New York extended the exclusive periods during which
Republic Airways Holdings Inc. and certain of its subsidiaries may
file their plan of reorganization and solicit acceptances of a
plan, through and including March 31, 2017 and June 1, 2017,
respectively.
The Troubled Company Reporter had earlier reported that out of an
abundance of caution, the Debtors requested exclusivity extensions
to ensure that they will have an opportunity to confirm and
consummate the Plan, or if need be, file a new or amended plan,
before the Exclusive Periods expire.
The Debtors related that they had filed their Joint Plan of
Reorganization and their related proposed Disclosure Statement on
November 16, 2016, which was supported by the Creditors Committee.
Subsequently, the Debtors had filed amended versions of the Plan
and Disclosure Statement, and on December 21 the Court approved the
Disclosure Statement and the Debtors' proposed procedures for the
solicitation and tabulation of votes on the Plan. Accordingly, the
Debtors would have commenced the solicitation on or before December
29, 2016.
The Debtors told the Court that they were seeking these extensions
solely because they needed a rational timetable and circumstances
for the solicitation and confirmation process to unfold since they
had spent significant time over several months negotiating with its
constituents and working to resolve critical issues in a manner
that maximizes value for all stakeholders.
Particularly, the Debtors noted they had made extraordinary
progress in achieving the objectives of chapter 11 in the initial
ten months of these cases, including:
(a) Stabilizing its business,
(b) Resolving complex claims and assuming its contracts
with its codeshare partners to ensure continuation of its
business,
(c) Reaffirming relationships with key business partners,
(d) Implementing cost-reduction measures,
(e) Restructuring its aircraft fleet and streamlining
operations by moving to a single aircraft type (E170/E175) to be
operated under a single air carrier certificate,
(f) Restructuring the debt on more than half its EJET
aircraft, securing the additional liquidity to fund future
operational stability and growth, and
(g) Generally administering the chapter 11 case
efficiently.
In addition, the Debtors told the Court that the culmination of all
their reorganization efforts had been the filing of a consensual
Plan that was supported by the Creditors' Committee.
About Republic Airways
Based in Indianapolis, Indiana, Republic Airways Holdings Inc.,
(OTCMKTS:RJETQ) owns Republic Airline and Shuttle America
Corporation. Republic Airline and Shuttle America --
http://www.rjet.com/-- offer approximately 1,000 flights daily to
105 cities in 38 states, Canada, the Caribbean and the Bahamas
through Republic's fixed-fee codeshare agreements under major
airline partner brands of American Eagle, Delta Connection and
United Express.
Republic Airways Holdings Inc. and six affiliated debtors each
filed a voluntary petition for relief under Chapter 11 of the
United States Bankruptcy Code (Bankr. S.D.N.Y. Lead Case No.
16-10429) on Feb. 25, 2016. The petitions were signed by Joseph P.
Allman as senior vice president and chief financial officer. Judge
Sean H. Lane has been assigned the cases.
As of Jan. 31, 2016, on a consolidated basis, Republic had assets
and liabilities of $3,561,000,000 and $2,971,000,000 (unaudited),
respectively.
Zirinsky Law Partners PLLC and Hughes Hubbard & Reed LLP are
serving as Republic's legal advisors in the restructuring. Seabury
Group LLC is serving as financial advisor. Deloitte & Touche LLP is
the independent auditor. Prime Clerk is the claims and noticing
agent.
The U.S. Trustee for Region 2 appointed seven creditors of Republic
Airways Holdings Inc. to serve on the official committee of
unsecured creditors. The Committee retained Morrison & Foerster LLP
as attorneys and Imperial Capital, LLC, as investment banker and
co-financial advisor.
RHODE ISLAND: S&P Lowers Rating on $375MM Loans to 'B+'
-------------------------------------------------------
S&P Global Ratings said it lowered its rating on Rhode Island State
Energy Center L.P.'s $325 million senior secured term loan B due
2022 and $50 million senior secured revolving credit facility due
2020 to 'B+' from 'BB'. The outlook is stable. The '1' recovery
rating is unchanged, reflecting S&P's expectation of very high (90%
to 100%) recovery of principal if a payment default occurs.
Energy revenue prospects for U.S. merchant power project Rhode
Island State Energy Center L.P. (RISEC) have declined from S&P's
previous expectations, mainly due to milder-than-expected weather
conditions, lackluster demand in New England, and persistently low
natural gas prices.
"The stable outlook reflects our expectation that RISEC will not
materially underperform our revised expectations and will maintain
DSCRs of at least 1.2x in our calculations throughout the useful
life of the asset," said S&P Global Ratings credit analyst Kimberly
Yarborough.
S&P would lower the rating if financial performance falls below its
base case expectations, such that DSCRs fall below 1.2x. This
could be the result of operational issues at the plant or an
unexpected downturn in the Southeastern Massachusetts (SEMA)/Rhode
Island capacity and energy markets.
An upgrade would likely require minimum DSCRs above 1.5x on a
sustained basis and less than $125 million outstanding at
refinancing. This would require sound operational performance
along with greater-than-expected energy margins and capacity
revenue.
RITA RESTAURANT: Sale of Beer Brewing System to Ager for $53K OK'd
------------------------------------------------------------------
Judge Ronald B. King of the U.S. Bankruptcy Court for the Western
District of Texas authorized the sale by Rita Restaurant Corp. and
its affiliates of beer brewing system at 3625 Jefferson Davis
Highway, Alexandria, Virginia ("Premises") to Ager Tank & Equipment
Co., Inc., for $53,000.
A hearing was conducted on Jan. 10, 2017.
The sale is free and clear of any and all liens, claims, and
encumbrances, except the taxes, if any, which will remain attached
to the beer brewing system.
The objection filed by CPYR Shopping Center, LLC ("Landlord") is
overruled.
The Debtors will submit to the Landlord any remodeling plans for
the demolition and repair to the Premises, and removal of the beer
brewing system within 5 days of the Order becoming final and
non-appealable.
The Debtor and any contractors or other parties involved in the
removal of the beer brewing system will have (i) all applicable
licenses, and (ii) proper liability and casualty insurance.
Subject to appropriate proof of the same, and following notice and
a hearing, the Landlord will have an administrative claim pursuant
to section 503 of the Bankruptcy Code for any and all damage to the
Premises sustained as a result of the removal of the beer brewing
system, including any damage that the Debtors fail to remediate
following the removal of the beer brewing system and within 30 days
of the date of written notice from the Landlord with respect to the
need for such remediation.
Notwithstanding the possible applicability of Bankruptcy Rule
6004(h), the Order will be immediately effective and enforceable
upon its entry.
About Rita Restaurant Corp.
Rita Restaurant Corp. and its affiliates operate full service,
casual dining restaurants, consisting of 16 Don Pablo's Mexican
Kitchen restaurants ("Don Pablo's") and 1 Hops Grill and Brewery
restaurant, located in 10 states in the United States.
Don Pablo's is a chain of Tex-Mex restaurants founded in Lubbock,
Texas in 1985. The menu features Tex-Mex items, salsa, tortillas
and sauces and a range of other Mexican specialties. At one time,
the chain had as many as 120 location throughout the United States
making it the second largest full service Mexican restaurant chain
in the United States during the late 1990s.
Hops is a casual dining restaurant that offers fresh, made from
scratch menu items in a relaxed atmosphere featuring signature
dishes that are created from high-quality, fresh ingredients,
prepared in a display style kitchen that allows the customer to
view the cooking process.
Rita Restaurant Corp., Don Pablo's Operating, LLC, and Hops
Operating, LLC sought Chapter 11 protection (Bankr. W.D. Tex. Case
Nos. 16-52272, 16-52274, and 16-52275, respectively) on Oct. 4,
2016. The petitions were signed by Peter Donbavand,
vice-president. The cases are assigned to Judge Ronald B. King.
The Debtors are represented by John E. Mitchell, Esq. and David W.
Parham, Esq.
At the time of the filing, Rita Restaurant and Don Pablo's
estimated assets and liabilities at $1 million to $10 million,
while Hops Operating estimated assets at $500,000 to $1 million
and
liabilities at $1 million to $10 million.
ROOT9B HOLDINGS: Extends Securities Purchase Pact Until March 31
----------------------------------------------------------------
root9B Holdings, Inc., entered into an amendment, pursuant to which
the Company and certain majority note holders agreed to amend the
Securities Purchase Agreement, dated Sept. 6, 2016, by and between
the Company and certain accredited investors, as amended by an
amendment dated Dec. 22, 2016. The Second Amendment extends the
date by which the last closing under the Agreement must occur from
Dec. 31, 2016, until March 31, 2017.
Fifth Closing
As previously disclosed, the Company is offering secured
convertible promissory notes with an aggregate principal amount of
up to $10,000,000, along with warrants to purchase shares of the
Company's common stock, par value $0.001 per share, representing
50% warrant coverage, to the Investors in a private placement,
pursuant the Agreement. The following description of Notes and
Warrants is presented with adjustment for the Company's reverse
split of its Common Stock at a ratio of one-for-fifteen, which was
effective on Dec. 5, 2016.
On Jan. 25, 2017, the Company held a fifth closing of such private
placement, at which the Company sold Notes with an aggregate
principal amount equal to $750,000, along with Warrants to purchase
approximately 31,250 shares of Common Stock. Following the
Closing, the Company has sold Notes with an aggregate principal
amount of $6,521,000, along with Warrants to purchase approximately
271,708 shares of Common Stock and may sell additional Notes with
an aggregate principal amount of up to $3,479,000, along with
Warrants to purchase approximately 144,958 shares of Common Stock,
at additional closings, which may be conducted on a rolling basis
until March 31, 2017.
The term of each Note is three years after issuance. Each Note
accrues interest at a rate of 10% per annum, payable on each March
31, June 30, September 30 and December 31, commencing December 31,
2016 until the earlier of (i) the entire principal amount being
converted, or (ii) the Maturity Date. The interest payments will
be made in either cash or, at the holder's option, in shares of
Common Stock at a per share price equal to 85% of the average daily
volume weighted average price of the Common Stock during the five
consecutive trading day period immediately prior to the interest
payment date, but in no event less than $12.00 per share. Following
the date which is six months after the date of issuance, at the
election of the holder, all principal and interest due and owing
under each Note is convertible into shares of Common Stock at a
conversion price equal to $12.00. The conversion price is subject
to adjustment for stock splits, stock dividends, combinations, or
similar events. Pursuant to a security agreement entered into
concurrently with the Investors, the Notes are secured by
substantially all of the Company's assets, subject to certain
exceptions including the assets related to and held by IPSA
International, Inc., a wholly-owned subsidiary of the Company.
The Company may prepay any portion of the outstanding principal
amount of any Note and any accrued and unpaid interest, with the
prior written consent of the holder, by paying to the holder an
amount equal to (i) if the prepayment date is prior to the first
anniversary of the date of issuance, (1) the unpaid principal to be
repaid plus (2) any accrued but unpaid interest plus (3) an amount
equal to the interest which has not accrued as of the prepayment
date but would accrue on the principal to be repaid during the
period beginning on the prepayment date and ending on the
Anniversary Date of the then-outstanding principal amount of that
Note or (ii) if the prepayment date is after the Anniversary Date,
(1) the unpaid principal to be repaid plus (2) any accrued but
unpaid interest plus (3) an amount equal to one-half of the
interest which has not accrued as of the prepayment date but would
accrue on the principal to be repaid during the period beginning on
the prepayment date and ending on the Maturity Date. Additionally,
each holder may exercise a one-time option to partially redeem up
to 50% of the Outstanding Amount (as defined therein) if cash
proceeds received by the Company in connection with the sale of
IPSA exceed certain threshold levels.
The Warrants have a term of five years, an exercise price of $12.00
per share (after giving effect to the Reverse Split) and may be
exercised at any time following the date which is six months after
the date of issuance. The number of shares of Common Stock
issuable upon exercise of the Warrants is subject to adjustment for
certain stock dividends or stock splits, or any reclassification of
the outstanding securities of, or reorganization of, the Company.
Pursuant to the terms of both the Notes and the Warrants, a holder
may not be issued Shares if, after giving effect to the conversion
or exercise of the Shares, as applicable, the holder, together with
its affiliates, would beneficially own in excess of 9.99% of the
then outstanding shares of Common Stock. In addition, in the event
the Company consummates a consolidation or merger with or into
another entity or other reorganization event in which the Common
Stock is converted or exchanged for securities, cash or other
property, or the Company sells, assigns, transfers, conveys or
otherwise disposes of all or substantially all of its assets or the
Company (other than the sale, merger or asset sale of IPSA) or
another entity acquires 50% or more of the outstanding Common
Stock, then following such event, (i) at their election within 30
days of consummation of the transaction, the holders of the Notes
will be entitled to receive the Prepayment Amount, and (ii) the
holders of the Warrants will be entitled to receive upon exercise
of such Warrants the same kind and amount of securities, cash or
property which the holders would have received had they exercised
the Warrants immediately prior to such transaction. Any successor
to the Company or surviving entity will assume the Company’s
obligations under the Notes and the Warrants.
Additionally, the Notes will not be convertible into Common Stock
(nor any Interest Payment Shares), and the Warrants will not be
exercisable for Common Stock, until the Company has a sufficient
number of shares of Common Stock available for issuance to permit
full conversion or exercise of the Notes and Warrants,
respectively.
About Root9B
root9B Holdings (OTCQB: RTNB) is a provider of Cybersecurity and
Regulatory Risk Mitigation Services. Through its wholly owned
subsidiaries root9B and IPSA International, the Company delivers
results that improve productivity, mitigate risk and maximize
profits. Its clients range in size from Fortune 100 companies to
mid-sized and owner-managed businesses across a broad range of
industries including local, state and government agencies. For
more information, visit www.root9bholdings.com
Root9B Technologies, Inc., changed its name to root9B Holdings,
Inc. effective Dec. 5, 2016, and relocated its corporate
headquarters from Charlotte, NC to the current headquarters of
root9B, its wholly owned cybersecurity subsidiary, in Colorado
Springs, CO.
Root9B reported a net loss of $8.33 million in 2015 following a net
loss of $24.43 million in 2014.
As of Sept. 30, 2016, Root9B had $31.05 million in total assets,
$13.82 million in total liabilities, and $17.22 million in total
stockholders' equity.
"The Company will need to raise additional funds in order to fund
operations. Financing transactions, may include the issuance of
equity or debt securities, and obtaining credit facilities, or
other financing mechanisms. However, if the trading price of our
common stock declines, or if the Company continues to incur losses,
this could make it more difficult to obtain financing through the
issuance of equity or debt securities. Furthermore, if we issue
additional equity or debt securities, stockholders will likely
experience additional dilution or the new equity securities may
have rights, preferences or privileges senior to those of existing
holders of our common stock. The inability to obtain additional
financing may restrict our ability to grow and may affect
operations of the Company, its ability to retain and hire critical
staff and revenue producing sub-contractors, and will raise
substantial doubt about our ability to continue as a going
concern," the Company said in its quarterly report for the period
ended Sept. 30, 2016.
ROOT9B HOLDINGS: Gregory Morris to Resign as Director
-----------------------------------------------------
Gregory Morris announced his intention to resign from Root9b
Holdings, Inc.'s Board of Directors and all committees thereof,
effective April 1, 2017. Mr. Morris is a member of the Company's
Audit Committee and is the chair of the Compensation Committee.
As disclosed in a Form 8-K report filed with the Securities and
Exchange Commission, Mr. Morris's decision to resign was not the
result of any disagreement with the Company on any matter relating
to the Company's operations, policies, or practices during his
period of service as a director. Mr. Morris is resigning in order
to focus his efforts on several new and existing opportunities.
About Root9B
root9B Holdings (OTCQB: RTNB) is a provider of Cybersecurity and
Regulatory Risk Mitigation Services. Through its wholly owned
subsidiaries root9B and IPSA International, the Company delivers
results that improve productivity, mitigate risk and maximize
profits. Its clients range in size from Fortune 100 companies to
mid-sized and owner-managed businesses across a broad range of
industries including local, state and government agencies. For
more information, visit www.root9bholdings.com
Root9B Technologies, Inc., changed its name to root9B Holdings,
Inc. effective Dec. 5, 2016, and relocated its corporate
headquarters from Charlotte, NC to the current headquarters of
root9B, its wholly owned cybersecurity subsidiary, in Colorado
Springs, CO.
Root9B reported a net loss of $8.33 million in 2015 following a net
loss of $24.43 million in 2014.
As of Sept. 30, 2016, Root9B had $31.05 million in total assets,
$13.82 million in total liabilities, and $17.22 million in total
stockholders' equity.
"The Company will need to raise additional funds in order to fund
operations. Financing transactions, may include the issuance of
equity or debt securities, and obtaining credit facilities, or
other financing mechanisms. However, if the trading price of our
common stock declines, or if the Company continues to incur losses,
this could make it more difficult to obtain financing through the
issuance of equity or debt securities. Furthermore, if we issue
additional equity or debt securities, stockholders will likely
experience additional dilution or the new equity securities may
have rights, preferences or privileges senior to those of existing
holders of our common stock. The inability to obtain additional
financing may restrict our ability to grow and may affect
operations of the Company, its ability to retain and hire critical
staff and revenue producing sub-contractors, and will raise
substantial doubt about our ability to continue as a going
concern," the Company said in its quarterly report for the period
ended Sept. 30, 2016.
ROYAL ONE: Gets Approval of Plan to Exit Bankruptcy
---------------------------------------------------
The U.S. Bankruptcy Court for the Western District of Pennsylvania
on Jan. 26 confirmed the plan proposed by Royal One, Inc. to exit
Chapter 11 protection.
The court gave the thumbs-up to the plan after finding that it
satisfies the requirements for confirmation under the Bankruptcy
Code.
In the same filing, the court also gave final approval to the
disclosure statement, which explains the company's plan of
reorganization.
The plan proposes to pay in full holders of secured claims totaling
$21,977, priority claims totaling $3,810, and administrative
expenses totaling $5,325.
Royal One, which has $111,800 in assets, believes that there will
be no unsecured creditors with allowed claims.
The restructuring plan will be funded by continuing operations and
the sale of unrelated assets by the principal of the company.
About Royal One
Royal One, Inc. sought protection under Chapter 11 of the
Bankruptcy Code in Pittsburgh, Pennsylvania (Bankr. W.D. Pa. Case
No. 16-20630) on Feb. 25, 2016.
The case is assigned to Judge Gregory L. Taddonio. The Debtor is
represented by Francis E. Corbett, Esq.
On August 23, 2016, the Debtor filed its Chapter 11 plan of
reorganization and disclosure statement.
RUE21 INC: S&P Lowers CCR to 'CCC-' on Weak Liquidity Expectations
------------------------------------------------------------------
S&P Global Ratings lowered its corporate credit rating on the
Warrendale, Pa.-based specialty retailer rue21 inc. to 'CCC-' from
'CCC'. The outlook is negative.
At the same time, S&P lowered the issue-level rating on the
company's secured term-loan facility to 'CCC-' from 'CCC' and the
issue-level rating on the senior unsecured notes to 'C' from 'CC'.
S&P's '4' recovery rating on the term loan reflects S&P's
expectation for average recovery in the event of default, at the
low end of the 30% to 50% range. S&P's '6' recovery rating on the
unsecured notes reflects its expectation for negligible recovery in
the event of default or bankruptcy.
"The downgrade reflects our expectation that the company's weakened
liquidity and low debt trading prices could culminate in a debt
buyback or other restructuring action, which we would deem
distressed and, therefore, akin to default," said credit analyst
Mathew Christy. "We believe the existing capital structure is
unsustainable and the company will likely pursue options to address
the capital structure in the next six months."
The outlook is negative. S&P believes there is an increasing
likelihood that the company will pursue a distressed debt exchange
or other type of restructuring within the next six months to
address its unsustainable capital structure.
S&P could lower the ratings, including the corporate credit rating,
to 'CC' if the company publicly announces a restructuring or
distressed debt exchange or buyback. S&P could also lower the
corporate credit rating to 'SD' if a restructuring or distressed
debt exchange occurs without a pre-announcement.
S&P could raise the ratings if the company meaningfully strengthens
performance and S&P's view of its standing in credit market
improves. S&P would also need to believe that the prospects for a
distressed exchange were unlikely.
SALTY DOG: Disclosures Okayed, Plan Hearing on Feb. 27
------------------------------------------------------
Salty Dog Rest., Ltd. is now a step closer to emerging from Chapter
11 protection after a bankruptcy judge approved the outline of its
plan of reorganization.
Judge Elizabeth Stong of the U.S. Bankruptcy Court for the Eastern
District of New York on Jan. 21 gave the thumbs-up to the
disclosure statement after finding that it contains "adequate
information."
The order set a Feb. 21 deadline for creditors to cast their votes
and file their objections.
A court hearing to consider confirmation of the plan is scheduled
for Feb. 27, at 9:30 a.m. (Prevailing Eastern Time).
About Salty Dog Rest
Salty Dog Rest, Ltd. has been engaged in business as a sports Bar
and restaurant located at its premises at 7509 Third Avenue,
Brooklyn, New York 11209 since approximately 1997.
The Debtor sought protection under Chapter 11 of the Bankruptcy
Code (Bankr. E.D.N.Y. Case No. 16-40679) on Feb. 24, 2016. The
petition was signed by Robert P. Fadel, president. The case is
assigned to Judge Elizabeth S. Stong. On the Petition Date, the
Debtor listed $15,000 in assets and $128,000 in liabilities on its
schedules.
The Debtor is represented by Randall S. D. Jacobs, PLLC.
SAM BASS: Iron Horse to Auction Personal Property
-------------------------------------------------
Sam Bass Illustration & Design, Inc., asks the U.S. Bankruptcy
Court for the Middle District of North Carolina to authorize the
sale by auction of personal property located at 4030 Concord Pkwy.
S., Concord, North Carolina, to be conducted by Iron Horse Auction
Co., Inc.
Specifically, the property consists of approximately 50 pieces of
original Sam Bass art, 70 collector guitars, and 20 guitar
amplifiers. It may also include some miscellaneous NASCAR and/or
rock and roll memorabilia.
On Oct. 3, 2016, the Debtor filed a petition under Chapter 11 of
the Bankruptcy Code. The Chapter 11 Plan has not yet been
proposed, and the exclusivity period for the Debtor's proposal of
the Plan has not expired.
As is evident from a review of the Schedules filed in the case, the
Debtor is currently asset rich and cash poor. The Debtor, through
Iron Horse, wishes to hold an auction to sell the property in order
to liquidate some of its assets and turn the same into cash. The
goal of the auction is to generate enough money to pay all
creditors in the case in full, or, alternatively, pay as much
toward its debts as possible.
Iron Horse has prepared an Auction Marketing Proposal setting forth
its plan for liquidating the property in the most efficient and
profitable manner.
While a monetary goal is not set forth in the Auction Marketing
Proposal, the goal of the auction is to gross $300,000 and net
$200,000.
The secured claims against the Property are: (i) NC Department of
Revenue's Tax lien: $15,254; and (ii) Internal Revenue Service's
Tax lien: $16,617.
The sale of the property is free and clear of the liens, with the
liens to attach to the proceeds.
The Debtor asks the Court to approve the payment of sale proceeds
to (i) the costs of sale to Iron Horse; (ii) the satisfaction of
liens on the property in order of priority; (iii) any sales taxes
and/or property taxes that would result from the sale of the
property; and (iv) to the Debtor for payment of allowed
administrative expenses and claims filed in the Debtor's bankruptcy
proceeding.
All proceeds of the auction, less specific fees that are paid to
Iron Horse, should either be held by the Debtor's attorney in her
trust account or in a similar type of account by Iron Horse until
the Court can determine the proper distribution of the proceeds.
The Debtor asks the Court to approve the proposed sale to the
Buyer.
The Debtor asks that the Court waive the 14-day stay of the Order
approving the sale under F.R.C.P. 6004(h).
The Auctioneer can be reached at:
Thomas S. McInnis
Vice President/COO
IRON HORSE AUCTION CO., INC.
P.O. Box 1267
Rockingham, NC 28380
Telephone: (910) 997-2248
Facsimile: (910) 895-1530
About Sam Bass Illustration & Design
Sam Bass Illustration & Design, Inc., filed a chapter 11 petition
(Bankr. M.D.N.C. Case No. 16-51021) on Oct. 3, 2016. The petition
was signed by Denise W. Bass, co-owner and secretary/treasurer.
The Debtor estimated assets at $0 to $50,000 and liabilities at
$100,001 to $500,000 at the time of the filing.
No Official Committee of Unsecured Creditors has been appointed in
the Chapter 11 case.
The Debtor is represented by attorney Kristen Scott Nardone, Esq.,
at Davis Nardone, PC. The Debtor engaged Gordon, Keeter & Co. as
accountant.
SCIENTIFIC GAMES: BlackRock Reports 6.6% Stake as of Dec. 31
------------------------------------------------------------
In an amended Schedule 13G filed with the Securities and Exchange
Commission, BlackRock, Inc. disclosed that as of Dec. 31, 2016, it
beneficially owns 5,799,787 shares of common stock of Scientific
Games Corp. representing 6.6 percent of the shares outstanding.
A full-text copy of the regulatory filing is available at:
https://is.gd/r9e96F
About Scientific Games
Scientific Games Corporation is a developer of technology-based
products and services and associated content for worldwide gaming
and lottery markets. The Company's portfolio includes instant and
draw-based lottery games; electronic gaming machines and game
content; server-based lottery and gaming systems; sports betting
technology; loyalty and rewards programs; and social, mobile and
interactive content and services. Visit
http://www.scientificgames.com/
Scientific Games reported a net loss of $1.39 billion on $2.75
billion of total revenue for the year ended Dec. 31, 2015, compared
to a net loss of $234.3 million on $1.78 billion of total revenue
for the year ended Dec. 31, 2014.
As of Sept. 30, 2016, Scientific Games had $7.37 billion in total
assets, $9.12 billion in total liabilities and a total
stockholders' deficit of $1.75 billion.
* * *
The TCR reported on May 21, 2014, that Moody's Investors Service
downgraded Scientific Games Corporation's ("SGC") Corporate Family
Rating to 'B1'. The downgrade reflects Moody's view that slower
than expected growth in SGC's Gaming and Instant Products segments
will cause Moody's adjusted leverage to exceed 6.0 times by the
end of 2014.
As reported by the TCR on Aug. 5, 2014, Standard & Poor's Ratings
Services lowered its corporate credit rating to 'B+' from 'BB-' on
Scientific Games Corp.
"The downgrade and CreditWatch placement follow Scientific Games'
announcement that it has agreed to acquire Bally Technologies for
$5.1 billion, including the refinancing of about $1.8 billion in
net debt at Bally," said Standard & Poor's credit analyst Ariel
Silverberg.
SEARS HOLDINGS: Saving Plans Ceasing Reports With SEC
-----------------------------------------------------
Sears Holdings Corporation filed Forms 15 with the Securities and
Exchange Commission notifying the suspension of duties to file
reports under Sections 13 and 15(d) of the Securities Exchange Act
of 1934 with respect to these securities:
-- Plan Interests Under the Sears Holdings Puerto Rico Savings
Plan
-- Plan Interests Under the Sears Holdings Savings Plan
-- Plan Interests Under the Sears Holdings Puerto Rico Savings
Plan
-- Plan Interests Under the Sears Holdings Savings Plan
Although the duty to file reports under Sections 13(a) and 15(d) of
the Securities Exchange Act of 1934, as amended, has been
terminated with respect to the Sears Holdings Puerto Rico Savings
Plan, Sears Holdings Savings Plan, Sears Holdings Puerto Rico
Savings Plan and Sears Holdings Savings Plan, the duty of Sears
Holdings Corporation to file reports under Section 13(a) or 15(d)
remains with respect to the Company's common stock, par value $0.01
per share.
Effective Jan. 1, 2017, the Sears Holdings Corporation Stock Fund
that was part of the Plan was closed to new investments, and no
further offers or sales of the Company's Common Stock are being
made through the Plans.
Removal of Securities from Registration
Sears Holdings and the Sears Holdings Savings Plan and the Sears
Holdings Puerto Rico Savings Plan filed a Registration Statement on
Form S-8 with the Securities and Exchange Commission on March 17,
2015. The Registration Statement covered 1,500,000 shares of
Common Stock, par value $0.01 per share, of the Company to be
issued under the Plans, and an indeterminate amount of plan
interests. The Company filed a post-effective amendment to remove
from registration the Common Stock and plan interests not sold
pursuant to the Registration Statement.
About Sears
Sears Holdings Corporation (NASDAQ: SHLD) --
http://www.searsholdings.com/-- is an integrated retailer focused
on seamlessly connecting the digital and physical shopping
experiences to serve members. Sears Holdings is home to Shop Your
Waytm, a social shopping platform offering members rewards for
shopping at Sears and Kmart as well as with other retail partners
across categories important to them.
The Company operates through its subsidiaries, including Sears,
Roebuck and Co. and Kmart Corporation, with more than 2,000 full-
line and specialty retail stores in the United States and Canada.
Kmart Corporation and 37 of its U.S. subsidiaries filed voluntary
Chapter 11 petitions (Bankr. N.D. Ill. Lead Case No. 02-02474) on
Jan. 22, 2002. Kmart emerged from chapter 11 protection on May 6,
2003, pursuant to the terms of an Amended Joint Plan of
Reorganization. Skadden, Arps, Slate, Meagher & Flom, LLP,
represented Kmart in its restructuring efforts. Its balance sheet
showed $16,287,000,000 in assets and $10,348,000,000 in debts when
it sought chapter 11 protection.
Kmart bought Sears, Roebuck & Co., for $11 billion to create the
third-largest U.S. retailer, behind Wal-Mart and Target, and
generate $55 billion in annual revenues. Kmart completed its
merger with Sears on March 24, 2005.
Sears Holdings reported a net loss of $1.12 billion on $25.14
billion of revenues for the year ended Jan. 30, 2016, compared to a
net loss of $1.81 billion on $31.19 billion of revenues for the
year ended Jan. 31, 2015.
As of July 30, 2016, Holdings had $10.61 billion in total assets,
$13.30 billion in total liabilities and a total deficit of $2.69
billion.
* * *
In March 2016, Fitch Ratings said it will retain Sears' long term
issuer default rating at 'CC'.
The TCR reported on Dec. 19, 2016, that S&P Global Ratings affirmed
its ratings, including the 'CCC+' corporate credit rating, on Sears
Holdings Corp. "We revised our assessment of Sears' liquidity to
less than adequate from adequate based on the impact of continued
and meaningful cash use and constraints on contractually committed
liquidity from cash use and incremental secured funded borrowings,"
said credit analyst Robert Schulz. "We do not incorporate any
significant prospective asset sales or execution of strategic
alternatives for legacy hardline brands into our assessment of
committed liquidity."
As reported by the TCR on Jan. 24, 2017, Moody's Investors Service
downgraded Sears Holdings Corporate Family Rating to Caa2 from
Caa1. Sears' Caa2 rating reflects the company's sizable operating
losses - Domestic Adjusted EBITDA (as defined by Sears) was a loss
of $884 million in the latest 12 month period.
SEAWAY BANK: FDIC Named as Receiver, Texas Bank Assumes Deposits
----------------------------------------------------------------
Seaway Bank and Trust Company, Chicago, was closed on Jan. 27,
2017, Friday, by the Illinois Department of Financial and
Professional Regulation -- Division of Banking, which appointed the
Federal Deposit Insurance Corporation (FDIC) as receiver. To
protect the depositors, the FDIC entered into a purchase and
assumption agreement with State Bank of Texas, Dallas, to assume
all of the deposits of Seaway Bank and Trust Company.
The ten branches of Seaway Bank and Trust Company will reopen as
branches of State Bank of Texas during their normal business hours.
Depositors of Seaway Bank and Trust Company will automatically
become depositors of State Bank of Texas. Deposits will continue to
be insured by the FDIC, so there is no need for customers to change
their banking relationship in order to retain their deposit
insurance coverage up to applicable limits. Customers of Seaway
Bank and Trust Company should continue to use their existing branch
until they receive notice from State Bank of Texas that it has
completed systems changes to allow other State Bank of Texas
branches to process their accounts, as well.
"This evening and over the weekend, depositors of Seaway Bank and
Trust Company can access their money by writing checks or using ATM
or debit cards. Checks drawn on the bank will continue to be
processed. Loan customers should continue to make their payments as
usual," the FDIC said in a statement Friday.
As of September 30, 2016, Seaway Bank and Trust Company had
approximately $361.2 million in total assets and $307.1 million in
total deposits. In addition to assuming all of the deposits of the
failed bank, State Bank of Texas agreed to purchase $309.0 million
of the failed bank's assets. The FDIC will retain the remaining
assets for later disposition.
Customers with questions about the transaction should call the FDIC
toll-free at 1-800-930-5169. The phone number will be operational
this evening until 9 p.m., Central Time (CT); on Saturday from 9
a.m. to 6 p.m., CT; on Sunday from noon to 6 p.m., CT; on Monday
from 8 a.m. to 8 p.m., CT; and thereafter from 9 a.m. to 5 p.m.,
CT. Interested parties also can visit the FDIC's website at
https://www.fdic.gov/bank/individual/failed/seaway.html.
The FDIC estimates that the cost to the Deposit Insurance Fund
(DIF) will be $57.2 million. Compared to other alternatives, State
Bank of Texas's acquisition was the least costly resolution for the
FDIC's DIF. Seaway Bank and Trust Company is the second
FDIC-insured institution to fail in the nation this year, and the
first in Illinois. The last FDIC-insured institution closed in the
state was Edgebrook Bank, Chicago, on May 8, 2015.
SELECT MEDICAL: Moody's Rates New $1.55BB Secured Loans 'Ba2'
-------------------------------------------------------------
Moody's Investors Service assigned a Ba2 rating to Select Medical
Corporation's proposed senior secured credit facility, including a
$450 million revolver due 2022 and $1.15 billion term loan due
2024. Select Medical Corporation is a wholly owned subsidiary of
Select Medical Holdings Corporation (collectively, "Select").
Select's other ratings, including its B1 Corporate Family Rating
and B1-PD Probability of Default rating are unchanged. The
Speculative Grade Liquidity Rating of SGL-3 and stable rating
outlook are also unchanged.
The proceeds from the proposed credit facility will be used to
refinance the company's existing revolver due in 2018, as well as
Series E and F term loans which mature in 2018 and 2021,
respectively. The ratings on the existing revolver and term loans
will be withdrawn upon close of the transaction.
The following ratings have been assigned:
Select Medical Corporation
Senior Secured Revolving Credit Facility due 2022 at Ba2 (LGD 2)
Senior Secured Term Loan B due 2024 at Ba2 (LGD 2)
Ratings to be withdrawn upon repayment:
Senior Secured Revolving Credit Facility due 2018 at Ba2 (LGD 2)
Senior Secured Series E Tranche Term Loan B due 2018 at Ba2 (LGD
2)
Senior Secured Series F Tranche Term Loan B due 2021 at Ba2 (LGD
2)
RATINGS RATIONALE
Select's B1 Corporate Family Rating reflects Moody's expectation
that the company will continue to focus on reducing its
considerable leverage through margin expansion of the recently
acquired Concentra and Physiotherapy businesses and the maturation
of recently opened specialty hospitals. The rating also reflects
risks associated with Select's reliance on the specialty hospital
segment for more than half of its EBITDA. This segment relies
predominantly on the Medicare program as a source of revenue and
has faced reimbursement challenges. Supporting the rating is
Moody's consideration of Select's significant scale and position as
one of the largest operators of specialty hospitals and outpatient
rehabilitation providers in the US.
The stable rating outlook reflects Moody's expectation that
Select's financial leverage will remain high but that it will
decline to below 5.0x over the next year. This will be driven
predominantly by margin improvement in the specialty hospital
segment.
The rating could be upgraded if debt/EBITDA is reduced and
sustained below 4.0 times either through debt repayment or EBITDA
growth. Further, Moody's would have to be comfortable that the
company could absorb negative regulatory developments at the higher
rating level. Finally, Select will need to improve its liquidity
position through repayment of outstanding revolver amounts.
The ratings could be downgraded if adverse developments in Medicare
regulations or reimbursement result in significant deterioration in
margins or cash flow coverage metrics or if the company completes a
material debt financed acquisition or shareholder initiative. More
specifically, the ratings could be downgraded if debt/EBITDA was
expected to be sustained above 5.0 times or if liquidity weakens.
Select Medical Corporation, headquartered in Mechanicsburg, PA,
provides long-term acute care services and inpatient acute
rehabilitative care through its specialty hospital segment. Select
also provides physical, occupational, and speech rehabilitation
services through its outpatient rehabilitation segment. The company
also has a majority interest in a joint venture with Welsh, Carson,
Anderson & Stowe that includes the operations of Concentra Inc.
Concentra is a provider of occupational and consumer healthcare
services, including workers' compensation injury care, physical
exams and drug testing for employers, and wellness and preventative
care. Select Medical Corporation is a wholly owned subsidiary of
Select Medical Holdings Corporation. Consolidated revenue for the
twelve months ended September 30, 2016 approximated $4.2 billion.
The principal methodology used in these ratings was Business and
Consumer Service Industry published in October 2016.
SESAC HOLDCO II: Moody's Assigns B3 CFR; Outlook Stable
-------------------------------------------------------
Moody's Investors Service has assigned a B3 Corporate Family Rating
(CFR) and B3-PD Probability of Default Rating (PDR) to SESAC Holdco
II LLC (New). Moody's also assigned a B2 rating to its proposed
first-lien credit facilities and a Caa2 to its new second-lien
facility. SESAC is being acquired by Blackstone's private equity
group in a leveraged buyout (LBO) from Rizvi Traverse Management.
The rating outlook is stable.
A summary of rating actions:
Assignments:
Issuer: SESAC Holdco II LLC (New)
Corporate Family Rating -- B3
Probability of Default Rating -- B3-PD
$40 Million Senior Secured First-Lien Revolving Credit Facility
due 2022 -- B2 (LGD-3)
$365 Million Senior Secured First-Lien Term Loan due 2024 -- B2
(LGD-3)
$160 Million Senior Secured Second-Lien Term Loan due 2025 --
Caa2 (LGD-5)
Outlook Actions:
Issuer: SESAC Holdco II LLC (New)
-- Outlook, Stable
The assigned ratings are subject to review of final documentation
and no material change in the size, terms and conditions of the
transaction as advised to Moody's. At closing, Moody's will
withdraw SESAC Holdco II LLC's existing ratings.
RATINGS RATIONALE
The B3 CFR reflects SESAC's small scale relative to competitors and
high pro forma financial leverage following the LBO, increasing
from 6.6x to 7.4x total debt to EBITDA (as of September 30, 2016,
incorporating Moody's standard and non-standard adjustments,
including Moody's estimates for cost savings, pro forma earnings
and deferred revenue, and excluding certain non-recurring costs),
and Moody's belief that SESAC will face some challenges in
deleveraging. SESAC is targeting total debt to EBITDA of 5.9x
(Moody's adjusted) at the end of FY19 (ending March). However,
Moody's believe the company will be highly reliant on earnings
improvement due to free cash flow that will be weaker than recent
levels as a result of higher interest expense associated with the
increased debt. While Moody's project future EBITDA growth, Moody's
believe it will be restrained near-term by one-time rate resets for
broadcasting licensees that stem from settlements with the TMLC and
RMLC as well as growing competition for new affiliates. The rating
is further constrained by the company's history of sizable
shareholder distributions, including the 2015 dividend
recapitalization, which led to a one-notch rating downgrade.
SESAC generated LTM net revenue of approximately $229 million
through September 2016, representing a small revenue share
(estimated at roughly 10%) of the Performing Rights Organization
(PRO) market, dominated by much larger non-profit competitors,
ASCAP and BMI. The non-profit PROs, however, are subject to
government consent decrees that require them to go to rate court if
they are unable to reach a license fee agreement with music users
and they must accept all songwriters who wish to become affiliates.
SESAC, on the other hand, can be more selective for its songwriter
affiliates, which gives it more control and pricing flexibility
because it is not governed by consent decrees and has the ability
to freely negotiate licensing rates with users of its rights
holders' music. SESAC is the largest for-profit PRO but also faces
competition from smaller for-profit players, such as fast-growing
newcomer, Global Music Rights, which was formed in 2013 and has
lured artists away from ASCAP and BMI with promises of higher
royalties.
Moody's projects SESAC will de-lever to around 7x by FY18 and 6.3x
by FY19. Deleveraging will be driven primarily by continued growth
and high retention in the affiliate base and licensee network,
which should support EBITDA expansion, and less by the scheduled
debt amortization and mandatory excess cash flow sweep on the
first-lien term loan. Ratings are supported by Moody's expectation
for positive free cash flow generation, stable EBITDA margins and
continued revenue and EBITDA growth. Moody's believe this will be
driven by SESAC's share gains in an underpenetrated PRO market,
growth in higher margin segments and negotiated price escalators in
existing contracts. Ratings also benefit from favorable regulatory
trends, the stable contractual nature and diversification of its
growing licensee contracts, with the five largest licensees
accounting for under 15% of total revenue, largest affiliate
representing less than 4% of royalties paid and relatively high
entry barriers in the PRO space. The contractual nature of the
business and high annual retention rates of 99%+ provide the
company not only with a stable and predictable revenue stream, but
also consistent annual rate increases and automatic renewals, which
help drive year-over-year growth.
SESAC's liquidity is good based on an expected cash balance of
approximately $40 million at closing, an undrawn $40 million
revolver and positive free cash flow projected over the next 12 to
18 months.
Rating Outlook
SESAC's stable rating outlook reflects Moody's expectation of
revenue and EBITDA growth in the low-single digit and mid-single
digit range, respectively, resulting in modest de-leveraging over
the rating horizon. Moody's project free cash flow of roughly $20
million and SESAC will de-lever to the low-6x range (Moody's
adjusted) by FY19 (ending March).
What Could Change the Rating -- Up
Given the high Moody's adjusted pro forma financial leverage of
7.4x, an upgrade is unlikely over the near-term. However, Moody's
would consider a rating upgrade over the long-term if the company
were to demonstrate prudent financial policies and meaningfully
reduce adjusted leverage to the mid-5x range driven by Moody's
expectation of revenue and EBITDA expansion. Moody's would also
expect SESAC to demonstrate consistent positive free cash flow
generation resulting in free cash flow to debt of at least 5%.
What Could Change the Rating -- Down
Ratings could experience downward pressure if financial leverage is
sustained above 8x (Moody's adjusted) or EBITDA growth is
insufficient to maintain positive free cash flow generation.
Additional leveraging transactions or sizable distributions to
shareholders could also result in a downgrade.
The principal methodology used in these ratings was "Business and
Consumer Service Industry" published in October 2016.
Headquartered in Nashville, TN, SESAC Holdco II LLC is a
full-service for-profit Performing Rights Organization (PRO) that
represents nearly 45,000 songwriters, music publishers and other
creators of music. The company is the smallest of the three leading
PROs in the US and generates revenue from the public performances
of its affiliates' music, by collecting licensing income from over
129,000 broadcasters and other music users and distributing
royalties to its affiliate base of songwriters, publishers and
composers.
SINGLETON CREEK: Taps Gilbert Harrell To Resolve Army Corps Issue
-----------------------------------------------------------------
Singleton Creek, Inc., asks the U.S. Bankruptcy Court for the
Northern District of Georgia to approve the employment of Gilbert,
Harrell, Sumerford & Martin, P.C., as special counsel to resolve
the issue with the Army Corps of Engineers and to otherwise
represent the Debtor, including in the conduct of any negotiation,
mediation, settlement, or other activity ordinarily associated with
the resolution of a Notice of Violation filed by the Corps.
The Firm will represent the Debtor in the resolution of a notice of
violation filed by the Corps in the Superior Court of Gwinnett
County. The notice was filed by the Corps pre-petition on Dec. 2,
2016.
The Firm has agreed to represent the Debtor in this matter for a
fee of $30,000, with half due upon the Court's approval and half
upon completion of the resolution of the Notice of Violation. The
Debtor is informed and believes that the payment of the fee is
reasonable in light of the qualifications and expertise of Judson
H. Turner, Esq., a member at the Firm.
Mr. Turner assures the Court that neither he nor the Firm represent
nor hold any interest adverse to the Debtor and this estate with
respect to the special matter upon which the Firm is to be
employed.
The Firm can be reached at:
Judson H. Turner, Esq.
GILBERT, HARRELL, SUMERFORD & MARTIN, P.C.
777 Gloucester Street, Suite 200
P.O. Box 190
Brunswick, GA 31521-0190
Tel: (912) 265-6700
Fax: (912) 264-0244
-- and --
GILBERT, HARRELL, SUMERFORD & MARTIN, P.C.
50 Hurt Plaza SE
Suite 1450-A
Atlanta, GA 30303-2915
Tel: (770) 377-4092
Fax: (912) 264-0244
About Singleton Creek
Singleton Creek, Inc., owns and operates a golf course, driving
range and restaurant located at 2789 Satellite Boulevard, Duluth,
Georgia.
The Debtor sought protection under Chapter 11 of the Bankruptcy
Code (Bankr. N.D. Ga. Case No. 16-71772) on Dec. 5, 2016. The
petition was signed by Hoke S. Randall, III, president. The Law
Offices of Douglas Jacobson, LLC, serves as the Debtor's bankruptcy
counsel.
The Debtor hired NAI Brannen/Goddard, LLC, and Brown Realty
Advisors Inc. as real estate brokers.
At the time of the filing, the Debtor disclosed $5.02 million in
assets and $3.54 million in liabilities.
SMS SYSTEMS: Moody's Affirms B3 Corporate Family Rating
-------------------------------------------------------
Moody's Investors Service affirmed SMS Systems Maintenance
Services, Inc.'s B3 Corporate Family Rating ("CFR"), B3-PD
Probability of Default Rating ("PDR") and B2 first lien credit
facilities ratings. The rating actions follow SMS' announcement
that it is upsizing its term loans to merge with Curvature, LLC.
The rating outlook is stable.
SMS plans to utilize proceeds from increasing i) the first lien
term loan to $530 million from $260 million and ii) the second lien
term loan (not rated by Moody's) to $175 million from $115 million
to i) effectuate a merger with Curvature, ii) increase cash by
about $1.3 million (bringing cash to about $19.1 million at
closing) and iii) pay fees and expenses. Additionally, SMS will
increase the first lien revolver to $55 million from $40 million,
with the revolver expected to be undrawn at closing.
Moody's is affirming SMS' B3 CFR because the company is projected
to generate positive free cash flow and the Curvature merger will
enhance the company's product portfolio for outsourced information
technology ("IT") asset lifecycle services, including expanding the
opportunity to grow the network equipment service operations. The
merger is nevertheless credit negative because it is entirely debt
financed, will involve integration and execution risks to achieve
planned synergies and avoid a negative effect on client spending,
and because Curvature's revenue has recently been under pressure.
Moody's anticipates SMS will be acquisitive, but the purchase is
significant and occurring quickly after Partners Group leveraged
purchase of a majority interest in SMS in October 2016, leading to
much higher debt and cash interest costs than the company has
operated with historically.
RATINGS RATIONALE
The B3 CFR reflects high debt-to-EBITDA leverage of about 8.3x
(Moody's adjusted and before anticipated cost-reductions pro forma
LTM September 30, 2016), and event and integration risks associated
with a very acquisitive company that has made 14 acquisition since
2007, including the planned Curvature merger that more than doubles
SMS's current revenues. The B3 CFR also reflects low single digit
total revenue growth including recently negative secondary IT
hardware sales and a competitive landscape. The ratings are
supported by SMS being a leading-global provider of IT asset
lifecycle services for third party maintenance ("TPM") and
secondary IT hardware sales, expected good EBITDA margins for FY
2017 (about 17%), a favorable trend toward using TPMs and increased
volume, and TPM has strong recurring revenues.
The first lien senior secured revolver and term loan will be
secured by substantially all assets (including capital stock of
subsidiaries and foreign entities). The B2 ratings on the revolver
and term loan are one notch above the B3 CFR, reflecting the loss
absorption cushion provided by the second lien term loan.
Moody's views SMS's liquidity as adequate. In 2017, Moody's expects
SMS to have cash and cash equivalents of at least $8 million and to
generate free cash flow of about $45 million (inclusive of an
approximately $11 million tax refund). Also in 2017 Moody's
anticipates significant availability under SMS's revolver, with
adequate cushion under the springing financial covenant of the
revolver. The cash sources provide adequate coverage of required
debt payments. The first lien term loan amortizes approximately 1%
per annum, with a bullet due at maturity. The second lien term loan
does not amortize and has a bullet due at maturity. The revolver
contains a springing maximum first lien net leverage ratio that is
triggered if more than 35% of the revolver is utilized. Moody's
does not expect revolver borrowings to exceed this level to support
operations unless there are acquisitions. There are no term loan
financial maintenance covenants.
The stable rating outlook reflects Moody's expectation of low
single digit revenue growth, meaningful positive FCF to debt and
rapid de-leveraging to 7x or lower, over the next year.
SMS's rating could be upgraded if:
* Debt-to-EBITDA leverage is sustained below 5.5x;
* the company demonstrates strong and profitable organic revenue
growth;
* FCF to debt is above 5%; and
* the company demonstrates strong liquidity and a commitment to
conservative financial policies.
SMS's rating could be downgraded if:
* Liquidity weakens; or
* Debt-to-EBITDA leverage is not reduced and sustained below 7x;
or
* FCF to debt weakens or turns negative; or
* Revenues weaken due to such factors as competitive pricing
pressures or customer attrition.
Moody's affirmed the following ratings for SMS Systems Maintenance
Services, Inc.:
Corporate Family Rating - B3
Probability of Default Rating - B3-PD
First Lien Revolving Credit Facility (including
proposed $15 million upsize) -- B2 (LGD 3)
First Lien Term Loan Credit Facility (including
proposed $270 million upsize) -- B2 (LGD 3)
Outlook - Stable
The principal methodology used in these ratings was Business and
Consumer Service Industry published in October 2016.
SMS Systems Maintenance Services, Inc., headquartered in North
Carolina, is i) a provider of third-party maintenance ("TPM") and
outsourced IT systems support offerings, delivering services for
servers, storage and networking equipment and ii), with the merger
with Curvature, LLC ("Curvature"), a provider of "pre-owned"/
secondary equipment primarily related to networking infrastructure.
On a pro forma basis, the combined entity (according to SMS) will
be a leading global provider of IT asset lifecycle services for TPM
(about 55% of revenues) and secondary hardware (about 45% of
revenues) to small, mid-sized and large enterprises. At LTM
September 30, 2016 SMS (including Curvature) had revenues of about
$544 million. Partners Group acquired the majority of the equity
interest in SMS in October 2016.
SOTERA WIRELESS: Proposes Dual Track Ch. 11 Plan
------------------------------------------------
Sotera Wireless, Inc. and Sotera Research, Inc. filed with the U.S.
Bankruptcy Court for the Southern District of California a
disclosure statement describing its chapter 11 plan of
reorganization.
The Plan provides for the resolution of the Chapter 11 Case along
one of two possible tracks: (i) reorganization of Sotera or (ii)
liquidation of Sotera's assets pursuant to section 363 of the
Bankruptcy Code. The track along which this Chapter 11 Case will
proceed will be determined by the amount at which claims asserted
by Masimo Corporation against Wireless are estimated or allowed.
These claims are defined in the Plan as the "Masimo Claims."
The Plan provides for determination of the Masimo Claims to occur
by the Bankruptcy Court or other court of competent jurisdiction by
estimation, allowance, or otherwise.
On the Effective Date of the Plan, Wireless and Research will be
substantively consolidated as a single entity referred to in the
Plan as the "Reorganized Debtor."
If the Masimo Claim Order fixes the Masimo Claims at or less than a
pre-determined amount referred to in the Plan as the Masimo Claim
Limit, then the case will proceed by way of reorganization of
Sotera. In that case, Sotera will enter into the Exit Financing
Agreement, all Allowed Claims will be paid in full (subject to some
delay plus interest for holders of Trade and Services Provider
Claims, and Secured Tax Claims), existing holders of common stock
in Wireless will retain their interests in Wireless, and
Convertible Preferred Interests in Wireless will be converted to
New Common Stock, New Junior Preferred Stock, or New Series A
Preferred Stock in accordance with the Exit Financing Agreement.
Wireless is the only holder of common stock of Research, and it
will receive nothing on account of its interest in Research. The
common stock will be cancelled upon substantive consolidation of
Wireless and Research. The DIP Loan Obligation will be converted
into New Series A Preferred Stock as provided in the Exit Financing
Agreement. Holders of the Trade and Service Provider Claims will
be paid on the Effective Date an amount equal to 90% of their
Allowed Claim with the balance of 10% due with interest at 8%, 180
days from the Effective Date.
On the other hand, if the Masimo Claim Order fixes the Masimo
Claims at more than the Masimo Claims Limit, then the Plan will
proceed by way of liquidation. In that case, Sotera's assets will
promptly be sold pursuant to Section 363 of the Bankruptcy Code no
more than 180 days of entry of the Masimo Claim Order fixing the
Masimo Claims in the amount. In that case, all Allowed Claims will
be paid as follows:
* Holders of Priority Claims (Class 1), Secured Tax Claims
(Class 3), and Other Secured Claims (Class 4) will receive the same
treatment as they would under the reorganization track.
* Allowed Secured Pre-Petition Lenders' Claim (Class 2) will be
paid from the proceeds of the sale. In the event that the proceeds
are insufficient for full payment of the Pre-Petition Loan Claim,
the deficiency will be treated as an Other Unsecured Claim (Class
6).
* The DIP Loan Obligation will be paid from the proceeds of the
sale and amounts will be allocated as repayment of Operational
Advances and Litigation Advances as appropriate.
* Holders of allowed Trade and Services Providers Unsecured
Claims (Class 5) and allowed Other Unsecured Claims (Class 6) will
receive their pro rata share of the proceeds of the sale after
payment of all senior classes. Holders of allowed Trade and
Service Providers Unsecured Claims will thereafter receive from the
DIP Lenders their pro rata share of the Litigation Advances. To
the extent the proceeds are insufficient to pay holders of allowed
Trade and Service Provider Unsecured Claims (Class 5) in full,
funds received by the DIP Lenders on account of the Litigation
Advances will be remitted by the DIP Agents to the Class 5
Representative for distribution to holders of allowed Class 5
claims until they are paid in full.
* Holders of Interests in Sotera will retain their Interests. As
Sotera will not enter into the Exit Financing Agreement if the
Liquidation Plan Event occurs, no Interests will be converted.
The Plan will be funded through the Exit Financing Agreement and
the Reorganization Term Loan. The Exit Financing Agreement
provides for the sale and issuance of New Series A Preferred Stock
in the aggregate amount of $30 million to certain existing and new
investors, including conversion of any DIP Loan Obligation held by
such parties. In addition, those holders of Convertible Preferred
Interests of Wireless that purchase a specified percentage of the
total number of shares of New Series A Preferred Stock sold
pursuant to the Exit Financing Agreement, including the shares of
New Series A Preferred Stock issued upon conversion of any DIP Loan
Obligation, will be issued two shares of Junior Preferred Stock for
each share of Common Stock and Convertible Preferred Interests it
formerly held in Wireless.
The Exit Financing Agreement also provides that each DIP Lender
will receive warrants exercisable for that number of shares of New
Series A Preferred Stock equal to 25% of the aggregate amount
invested by the DIP Lender in the New Series A Preferred Stock,
including conversion of any DIP Loan Obligation, divided by the
issuance price of the New Series A Preferred Stock.
Class 6 consists of all other unsecured claims estimated at
$15,500,000 to $31,000,000. This class is impaired.
Allowed other unsecured claims will be paid as follows:
(a) In the event of a Reorganization Plan. The holders of
allowed Class 6 claims will be paid in full upon the Effective Date
or on such later date upon entry of an order by the Bankruptcy
Court holding they are allowed claims. Estimated recovery is
100%.
(b) In the event of a Liquidation Plan. The holders of allowed
Class 6 claims will receive their pro rata share along with the
holders of allowed Class 5 claims of the proceeds of the sale of
Sotera's assets after payment of all senior classes. Estimated
recovery is 0%.
A full-text copy of the Disclosure Statement is available at:
http://bankrupt.com/misc/casb16-05968-11.pdf
About Sotera Wireless
Sotera Wireless, Inc., and Sotera Reseach, Inc., filed chapter 11
petitions (Bankr. S.D. Cal. Case Nos. 16-05968 and 16-05969) on
Sept. 30, 2016. The cases are assigned to Judge Laura S. Taylor.
The Debtors are represented by Victor A. Vilaplana, Esq. and
Marshall J. Hogan, Esq., at Foley & Lardner LLP. Piper Jaffray &
Co. serves as the Debtors' investment banker.
At the time of the filing, Sotera Wireless estimated assets and
liabilities at $10 million to $50 million, while Sotera Research
estimated assets at $1 million to $10 million and liabilities at
$10 million to $50 million.
On October 20, 2016, the Office of the U.S. Trustee appointed an
official committee of unsecured creditors. Sullivan Hill Lewin
Rez
& Engel, APLC serves as the committee's legal counsel.
On October 20, 2016, the Office of the U.S. Trustee appointed an
official committee of unsecured creditors. Sullivan Hill Lewin
Rez
& Engel, APLC serves as the committee's legal counsel.
SPANISH BROADCASTING: BlackRock Owns 5.2% of Class A Shares
-----------------------------------------------------------
In an amended Schedule 13G filed with the Securities and Exchange
Commission, BlackRock, Inc. disclosed that as of Dec. 31, 2016, it
beneficially owns 216,525 shares of Class A common stock of Spanish
Broadcasting System Inc. representing 5.2 percent of the shares
outstanding. A full-text copy of the regulatory filing is
available for free at https://is.gd/zKx64R
About Spanish Broadcasting
Headquartered in Coconut Grove, Florida, Spanish Broadcasting
System, Inc. (OTCQX:SBSAA) -- http://www.spanishbroadcasting.com/
-- owns and operates 21 radio stations targeting the Hispanic
audience. The Company also owns and operates Mega TV, a television
operation with over-the-air, cable and satellite distribution and
affiliates throughout the U.S. and Puerto Rico. Its revenue for
the twelve months ended Sept. 30, 2010, was approximately $140
million.
As of Sept. 30, 2016, Spanish Broadcasting had $451.7 million in
total assets, $569.4 million in total liabilities and a total
stockholders' deficit of $117.7 million.
* * *
As reported by the TCR on Feb. 1, 2016, Moody's Investors Service
downgraded Spanish Broadcasting System's Corporate Family Rating to
'Caa2' from 'Caa1', Probability of Default Rating to 'Caa3-PD' from
'Caa1-PD', and lowered its Speculative Grade Liquidity Rating to
SGL-4 from SGL-3. Spanish Broadcasting's 'Caa2' Corporate Family
Rating and Caa3-PD Probability of Default Rating reflect very high
debt+preferred stock-to-EBITDA of 10.4x estimated for LTM December
2015 (including Moody's standard adjustments, 6.9x excluding
preferred stock and accrued dividends), the need to address the
Voting Rights Triggering Event, and the heightened potential of a
payment default given the near term maturity of the 12.5% senior
secured notes due April 2017.
As reported by the TCR on June 21, 2016, S&P Global Ratings said it
lowered its corporate credit rating on Spanish Broadcasting System
to 'CCC' from 'CCC+'.
SPORTS AUTHORITY: Sues 2 Former Execs Over Unpaid Loans
-------------------------------------------------------
The American Bankruptcy Institute, citing Monica Mendoza of
Bizjournal.com, reported that defunct retail giant Sports Authority
filed a lawsuit on Jan. 17, 2017, against two of its former
executives alleging that they issued unvested shares in Slap Shot
Holdings Corp., a subsidiary of Sports Authority.
According to the report, one suit is against Jeff Schumacher,
formerly Sports Authority's executive vice president and chief
marketing officer, and Simon MacGibbon, also a former senior vice
president at Sports Authority.
Schumacher and MacGibbon had been with the company since 2009, the
report related. Both left in 2011, long before it went bankrupt,
the report said.
The report said TSA WD, the new name of Sports Authority, in the
lawsuit, said they both elected to be taxed on the shares in 2009.
Schumacher's tax bill was $150,846 and MacGibbon's was $64,109. TSA
WD says, in the suit, said that the company gave them loans to pay
their tax bills, the report added.
The company says the pair never paid the company back, and it wants
its money, the report further related.
About Sports Authority Holdings
Sports Authority Holdings, et al., are sporting goods retailers
with roots dating back to 1928. The Debtors currently operate 464
stores and five distribution centers across 40 U.S. states and
Puerto Rico. The Debtors offer a broad selection of goods from a
wide array of household and specialty brands, including Adidas,
Asics, Brooks, Columbia, FitBit, Hanesbrands, Icon Health and
Fitness, Nike, The North Face, and Under Armour, in addition to
their own private label brands. The Debtors employ 13,000 people.
Sports Authority and six of its affiliates filed Chapter 11
bankruptcy petitions (Bankr. D. Del. Case Nos. 16-10527 to
16-10533) on March 2, 2016. The petitions were signed by Michael
E. Foss as chairman & chief executive officer.
The Debtors have engaged Robert A. Klyman, Esq., Matthew J.
Williams, Esq., Jeremy L. Graves, Esq., and Sabina Jacobs, Esq.,
at
Gibson, Dunn & Crutcher LLP as general counsel; Michael R. Nestor,
Esq., Kenneth J. Enos, Esq., and Andrew L. Magaziner, Esq., at
Young Conaway Stargatt & Taylor, LLP as co-counsel; Rothschild
Inc.
as investment banker; FTI Consulting, Inc., as financial advisor;
and Kurtzman Carson Consultants LLC as notice, claims,
solicitation, balloting and tabulation agent.
Andrew Vara, Acting U.S. trustee for Region 3, appointed seven
creditors of Sports Authority Holdings Inc. to serve on the
official committee of unsecured creditors. Lawyers at Pachulski
Stang Ziehl & Jones LLP represent the Official Committee of
Unsecured Creditors.
* * *
In May 2016, the Delaware Court allowed Sports Authority to
proceed
with the liquidation of all of its roughly 450 stores across the
country after the Debtors resolved or beat out about 100
objections
to the sale. Judge Mary F. Walrath approved an agreement for a
joint venture of Gordon Brothers Retail Partners LLC, Hilco
Merchant Resources LLC and Tiger Capital Group LLC to conduct
going
out of business sales. The Joint Venture won an auction for the
Debtors' inventory. The Debtors failed to obtain a winning
going-concern bid at a May 17, 2016 auction.
In July 2016, Judge Walrath approved the sale of the Debtors'
intellectual property and more than two dozens of property leases
to Dick's Sporting Goods Inc. A Wall Street Journal report,
citing
anonymous sources, said Dick's bid was for $15 million.
SPRINT CORP: Moody's Keeps Ba2 Ratings Over Loan Size Increase
--------------------------------------------------------------
Moody's Investors Service said that Sprint Corporation's ratings
will remain unchanged after the company increased the size of its
new senior secured term to $4 billion from $1.5 billion prior. The
new $4 billion senior secured term loan and $2 billion senior
secured revolving credit facility are rated Ba2, unchanged from
Moody's original assignment on January 12, 2017. Moody's believes
that the additional $2.5 billion in cash proceeds from the upsized
term loan will boost near term liquidity and allow Sprint to delay
the issuance of the second $3.5 billion tranche of its Spectrum ABS
notes to mid-year 2017.
The change in Moody's assumption of the timing of the Spectrum ABS
issuance reduces the amount of secured or senior debt in Moody's
forward-looking loss-given-default assessment, which enables the
existing notching to accommodate the $2.5 billion incremental term
loan borrowing announced. Sprint's corporate family rating is
unchanged at B2, probability of default rating is unchanged at
B2-PD, its senior secured rating is unchanged at Ba2, its junior
guaranteed rating is unchanged at B1 and Sprint's unsecured rating
(at each of Sprint Corp., Sprint Communications Inc. and Sprint
Capital Corp.) is unchanged at B3. If the timing of the ABS notes
issuance is different from Moody's assumption or if Sprint incurs a
material amount of incremental senior debt, the notching of some or
all of Sprint's junior instruments could change.
RATINGS RATIONALE
Sprint's B2 corporate family rating reflects its high leverage of
approximately 5.5x (Moody's adjusted) as of September 30, 2016,
intense competitive challenges and Moody's projections for negative
free cash flow (excluding cash realized from securitizations)
through at least FY2017. The rating incorporates a one notch lift
from Moody's expectations that Sprint's parent company and majority
shareholder, SoftBank Group Corp. ("SoftBank", Ba1 CFR, stable
outlook) will seek to retain the viability of Sprint as a going
concern. Moody's views Softbank's implicit support as a key factor
in Sprint's ability to accomplish its improved liquidity profile
and, as such, views these actions as supportive of the one-notch
implicit support uplift to Sprint's rating. The rating also
recognizes Sprint's recent financing transactions to fund its
network modernization plan and address upcoming maturities,
improving operating performance, its ongoing cost reduction
initiatives, and its valuable spectrum assets.
Moody's could upgrade Sprint's ratings if the company is on track
to achieve positive free cash flow and leverage (Moody's adjusted)
approaches 5x. Moody's define free cash flow as cash from
operations less capex and Moody's includes handset financing needs
as an operating cash flow. In addition, an upgrade would be
predicated upon Sprint maintaining committed, general purpose
liquidity sufficient to address at least 18 months of total cash
needs, including capital expenditures and debt maturities.
Moody's could downgrade Sprint's ratings if leverage is sustained
above 5.5x (Moody's adjusted) or if liquidity is not sufficient to
address 18 months of total cash needs. A downgrade could also
result from a deterioration in Sprint's operating performance,
which could include rising churn, weak subscriber trends or if
Sprint introduces irrational price plans. Also, if Moody's believes
that SoftBank's commitment to Sprint deteriorates, a rating
downgrade is likely.
With headquarters in Overland Park, Kansas, Sprint Corporation and
its subsidiaries form one of the largest telecommunications
companies in the United States. It offers digital wireless services
in addition to a broad suite of wireline communications services.
Sprint is the fourth largest wireless carrier in the U.S. with
approximately 60 million subscribers. During the last twelve months
ended September 30, 2016, the company generated $32 billion in
revenue, over 90% from its wireless operations. SoftBank Group
Corp. has an 83% stake in Sprint.
STENA AB: Bank Debt Trades at 8% Off
------------------------------------
Participations in a syndicated loan under Stena AB is a borrower
traded in the secondary market at 91.70 cents-on-the-dollar during
the week ended Friday, January 20, 2017, according to data compiled
by LSTA/Thomson Reuters MTM Pricing. This represents an increase
of 0.25 percentage points from the previous week. Stena AB pays
300 basis points above LIBOR to borrow under the $0.65 billion
facility. The bank loan matures on Feb. 20, 2021 and carries
Moody's Ba3 rating and Standard & Poor's BB rating. The loan is
one of the biggest gainers and losers among 247 widely quoted
syndicated loans with five or more bids in secondary trading for
the week ended January 20.
SUNEDISON INC: Brookfield in Exclusive Talks to Buy TerraForms
--------------------------------------------------------------
Scott Deveau and Brian Eckhouse, writing for Bloomberg News,
reported that Brookfield Asset Management Inc., Canada's largest
alternative asset manager, has entered into exclusive talks to buy
bankrupt SunEdison Inc.'s two yieldcos, valuing the power companies
at as much as $2.46 billion.
According to the report, citing to a regulatory filing,
Toronto-based Brookfield offered $12 a share for TerraForm Power
Inc., conditional on acquiring more than half of sister company
TerraForm Global Inc. That's lower than TerraForm Power's closing
price on Jan. 27 of $12.17, the report said.
Brookfield offered as much as $4.35 a share for all of TerraForm
Global, or $4.25 to acquire 50.1 percent of TerraForm Global and
replace SunEdison as its financial sponsor, the report related,
according to a statement.
The yieldcos said the exclusive talks would continue until Feb. 21
for TerraForm Power and March 6 for TerraForm Global, and there are
no assurances a deal would be completed, the report further
related. Brookfield is the largest shareholder of TerraForm Power,
according to data compiled by Bloomberg.
About SunEdison, Inc.
SunEdison, Inc. (OTC PINK: SUNEQ), is a developer and seller of
photovoltaic energy solutions, an owner and operator of clean
power
generation assets, and a global leader in the development,
manufacture and sale of silicon wafers to the semiconductor
industry.
On April 21, 2016, SunEdison, Inc., and 25 of its affiliates each
filed a Chapter 11 bankruptcy petition (Bankr. S.D.N.Y. Case Nos.
16-10991 to 16-11017). Martin H. Truong, the senior vice
president, general counsel and secretary, signed the petitions.
The Debtors disclosed total assets of $20.7 billion and total debt
of $16.1 billion as of Sept. 30, 2015.
The Debtors have hired Skadden, Arps, Slate, Meagher & Flom LLP as
counsel, Togut, Segal & Segal LLP as conflicts counsel, Rothschild
Inc. as investment banker and financial advisor, McKinsey Recovery
& Transformation Services U.S., LLC, as restructuring advisors and
Prime Clerk LLC as claims and noticing agent. The Debtors
employed
PricewaterhouseCoopers LLP as financial advisors; and KPMG LLP as
their auditor and tax consultant.
SunEdison also has tapped Eversheds LLP as its special counsel for
Great Britain and the Middle East. Cohen & Gresser LLP has also
been retained as special counsel.
The Debtors retained Ernst &Young LLP to provide tax-related
services. Keen-Summit Capital Partners LLC has been hired as real
estate advisor. Binswanger of Texas, Inc. also has been retained
as real estate agent.
Sullivan & Cromwell LLP serves as counsel to TerraForm Power,
Inc.,
and TerraForm Global, Inc.
An official committee of unsecured creditors has been appointed in
the case. The Committee tapped Weil, Gotshal & Manges LLP as its
general bankruptcy counsel and Morrison & Foerster LLP as special
counsel. Togut, Segal & Segal LLP and Kobre & Kim LLP serve as
conflicts counsel. Alvarez & Marsal North America, LLC, serves as
the Committee's financial advisors.
Counsel to the administrative agent under the Debtors' prepetition
first lien credit agreement are Richard Levy, Esq., and Brad
Kotler, Esq., at Latham & Watkins.
Counsel to the administrative agent under the postpetition DIP
financing facility are Scott Greissman, Esq., and Elizabeth Feld,
Esq. at White & Case LLP.
Counsel to the Tranche B Lenders (as defined in the DIP credit
agreement) and the steering committee of the second lien creditors
are Arik Preis, Esq., and Naomi Moss, Esq., at Akin Gump Strauss
Hauer & Field, LLP.
Counsel to the administrative agent under the Debtors' prepetition
second lien credit agreement is Daniel S. Brown, Esq., at
Pillsbury
Winthrop Shaw Pittman LLP.
The collateral trustee under the Debtors' prepetition second lien
credit agreement and the indenture trustee under each of the
Debtors' outstanding bond issuances, is represented by Marie C.
Pollio, Esq., at Shipman & Goodwin LLP.
Counsel to the ad hoc group of certain holders of the Debtors'
convertible senior notes is White & Case LLP's Tom Lauria, Esq.
TARGA RESOURCES: S&P Revises Outlook to Stable & Affirms 'BB-' CCR
------------------------------------------------------------------
S&P Global Ratings said it revised its rating outlook on
Houston-based Targa Resources Corp. to stable from negative and
affirmed its 'BB-' corporate credit rating on the company.
S&P also affirmed its 'BB-' issue-level rating on the company's
senior unsecured notes and S&P's 'B' issue-level rating on the
company's structurally subordinated notes. The recovery rating on
the company's senior unsecured notes remains '4', indicating S&P's
expectation of average (30% to 50%) recovery in the event of a
payment default. The recovery rating on the company's structurally
subordinated notes remains '6', indicating S&P's expectation of
negligible (0% to 10%) recovery in the event of a payment default.
"The stable outlook reflects our expectation that Targa will
increase gathering and processing volumes in 2017, which will
modestly drive cash flow growth," said S&P Global Ratings credit
analyst Stephen Scovotti. "For 2017, we expect the company to
maintain adjusted debt to EBITDA of 5x to 5.5x, while maintaining
what we view as adequate liquidity. We expect the company to fund
its discretionary cash flow shortfall with a balanced mix of debt
and equity."
S&P could consider a negative rating action if adjusted debt to
EBITDA approached 6x or distribution coverage was below 1x for an
extended period. This could occur if the company maintained a more
aggressive financial policy, which could include debt-financed
acquisitions.
S&P could consider a positive rating action if the company
maintained debt to EBITDA below 4.5x. This could occur if industry
conditions continued to improve or if the company adopted a more
conservative financial policy.
TEXAS PELLETS: Seek March 1 Plan Filing Period Extension
--------------------------------------------------------
Texas Pellets, Inc. asks the U.S. Bankruptcy Court for the Eastern
District of Texas to extend its exclusive periods for filing a
chapter 11 plan and obtaining acceptances to the plan through March
1, 2017 and May 1, 2017, respectively.
Absent an extension, the Debtors' exclusive plan filing period
would have expired on January 27, 2017.
The Debtors are asking for one, final extension of approximately 30
days to their exclusivity deadline, which will take the extension
through the auction date under the Debtors' sale process. The
Debtors contend that they have made significant progress in their
plan process and anticipate filing a plan as soon as possible
within the 30-day period.
About Texas Pellets, Inc.
Texas Pellets, Inc., based in Woodville, Texas, filed a Chapter 11
petition (Bankr. E.D. Tex. Case No. 16-90126) on April 30, 2016.
The petition was signed by Anna Katherin Leibold, president and
chief executive officer.
German Pellets Texas, LLC, also based in Woodville, Texas, filed a
Chapter 11 petition (Bankr. E.D. Tex. Case No. 16-90127) on April
30, 2016. The petition was signed by Peter H. Leibold, its chief
executive officer.
The cases have been jointly administered under Texas Pellets' case.
Judge Bill Parker presides over the cases.
The Debtors employ William Steven Bryant, Esq., at Locke Lord LLP
as their legal counsel; Searcy & Searcy, P.C. as local/conflicts
co-counsel; and Guggenheim Securities, LLC as investment banker.
Bryan M. Gaston, and the firm Opportune, LLP, serve as the Debtors'
Chief Restructuring Officer.
No trustee or examiner has been appointed in these Bankruptcy
Cases. An official committee of unsecured creditors was appointed
on May 17, 2016.
TODD GRINDING: Court Awards Over $100K to Auctioneer
----------------------------------------------------
Judge Daniel S. Opperman of the United States Bankruptcy Court for
the Eastern District of Michigan, Southern Division - Flint awarded
IAAS Worldwide, LLC, $100,908 for auctioneer fees and expenses.
Todd Grinding Co. originally sought to reorganize and continue
business, but later decided that a sale of all of its assets was
necessary to satisfy its creditors. To that end, Todd Grinding
hired IAAS to sell its assets by auction. At Todd Grinding's
request and with consent of the United States Trustee, the Court
approved this employment.
The sale was held on June 4, 2015. The sale was consistent with
Todd Grinding's proposed Chapter 11 Plan and resulted in sale
proceeds of $329,540.00. On July 7, 2015, the parties agreed that
oversecured creditors could be paid their share of the sale
proceeds and the Court approved the disbursement of monies to
oversecured creditors on July 8, 2015. After disbursement of these
funds, the Court approved Todd Grinding's Disclosure Statement and
confirmed its Chapter 11 Plan on December 16, 2015.
Shortly thereafter, Todd Grinding moved for an order directing the
auctioneer to turnover the auction proceeds to the estate, claiming
that IAAS still held $109,636.06 that constituted estate property.
IAAS responded to the motion and filed an application for
compensation requesting fees of $66,981.54 and expenses of
$35,000.00. Todd Grinding objected to IAAS' fee application,
claiming that IAAS had agreed to modify its terms to match a
potential competitor who offered 0% seller's premium, 10% buyer's
premium, and a cap on expenses of $14,500.00. In support of its
contention, Todd Grinding attached a series of emails dated April
14, 2015, in which Alan Loeser of IAAS agreed to these terms.
Judge Opperman held that the agreement attached to the application
to employ IAAS governs. The judge explained that the Court is
compelled to enforce the terms of agreements made in public and
filed with the Court, as opposed to secret, side deal transactions
that potentially invite mischief. If an error was made in getting
the proper agreement attached to the application consented to by
the United States Trustee and approved by the Court, Judge Opperman
found that the party responsible for this filing was Todd Grinding,
through its counsel, and not IAAS.
Judge Opperman thus held that, per the terms of the employment of
IAAS, as consented to by the United States Trustee and approved by
the Court, IAAS is entitled to a 5% seller's premium and a 15%
buyer's premium. The application of IAAS indicated that the
applicable sale proceeds are $329,540.00, so the seller's premium
of $16,477.00 ($329,540.00 x 5%) and $49,431.00 ($329,540.00 x 15%)
is owed for auctioneer commissions. Additionally, the expenses,
which totaled $43,224.39, are capped at $35,000.00, allowing for a
total award of $100,908.00 ($16,477.00 + $49,431.00 + $35,000.00).
Full-text copies of Judge Opperman's January 23, 2017 opinion and
order are available at
http://bankrupt.com/misc/mieb14-32717-233.pdfand
http://bankrupt.com/misc/mieb14-32717-234.pdf
About Todd Grinding Co.
Todd Grinding Co., based in Dryden, MI, filed a Chapter 11 petition
(Bankr. E.D. Mich. Case No. 14-32717) on October 7, 2014. The Hon.
Daniel S. Opperman presides over the case. Anthony James Miller,
Esq., at Schneider Miller, PC serves as bankruptcy counsel.
In its petition, the Debtor estimated $1 million to $10 million in
assets and $0 to $50,000 in liabilities. The petition was signed
by Elisabeth R. Todd, president.
TRANS-LUX CORP: Gabelli Equity Reports 23.5% Stake as of Dec. 31
----------------------------------------------------------------
In an amended Schedule 13G filed with the Securities and Exchange
Commission, Gabelli Equity Series Funds, Inc. - The Gabelli Small
Cap Growth Fund disclosed that as of Dec. 31, 2016, it beneficially
owns 403,000 shares of common stock of Trans-Lux Corporation
representing 23.56 percent based on the 1,710,671 shares
outstanding as reported in the Issuer's most recently filed Form
10-Q for the quarterly period ended Sept. 30, 2016. A full-text
copy of the regulatory filing is available for free at:
https://is.gd/ZYTwvh
About Trans-Lux Corporation
Norwalk, Conn.-based Trans-Lux Corporation (NYSE Amex: TLX) is a
designer and manufacturer of digital signage display solutions for
the financial, sports and entertainment, gaming and leasing
markets.
Trans-Lux Corporation reported a net loss of $1.74 million on
$23.56 million of total revenues for the year ended Dec. 31, 2015,
compared to a net loss of $4.62 million on $24.35 million of total
revenues for the year ended Dec. 31, 2014.
As of Sept. 30, 2016, Trans-Lux Corp had $13.66 million in total
assets, $14.65 million in total liabilities and a total
stockholders' deficit of $997,000.
Marcum LLP, in Hartford, CT, issued a "going concern" qualification
on the consolidated financial statements for the year ended Dec.
31, 2015, noting that the Company has suffered recurring losses
from operations and has a significant working capital deficiency
that raise substantial doubt about its ability to continue as a
going concern. Further, the Company is in default of the indenture
agreements governing its outstanding 9 1/2% subordinated debentures
which were due in 2012 and its 8 1/4% limited convertible senior
subordinated notes which were due in 2012 so that the trustees or
holders of 25% of the outstanding Debentures and Notes have the
right to demand payment immediately. Additionally, the Company has
a significant amount due to their pension plan over the next 12
months.
TRINITY RIVER: Needs Until May 1 to File Plan of Reorganization
---------------------------------------------------------------
Trinity River Resources, LP, asks the U.S. Bankruptcy Court for the
Western District of Texas to further extend the exclusivity periods
within which the Debtor has the exclusive right to file a plan of
reorganization and solicit acceptances to a plan, to and including
May 1, 2017, and if a plan is timely filed, the exclusive period
will be further extended to July 3, 2017.
The Debtor's Exclusive Filing Period was set to expire on January
31, 2017. However, out of an abundance of caution, the Debtor
requests the Court, to the extent the Court believes a hearing is
required, to schedule a hearing to consider entry of a bridge order
on or before January 31.
The Debtor relates that it continues to make progress on its road
to reorganization. Specifically, the Debtor's independent manager,
John T. Young, Jr. of Conway MacKenzie, with the assistance of
Conway MacKenzie and T2 Land Resources, has spent considerable time
reviewing and evaluating the Debtor's affairs and oil and gas
interest, and preparing for a potential sale of those assets. The
Debtor adds that the Independent Manager has reengaged Scotiabank
to restart the sale process.
Additionally, the Debtor relates that it is continuing to negotiate
with GeoSouthern Energy Corporation to resolve its objections to
the use of seismic data in the Debtor's sale process and post-sale
operations of the Debtor's oil and gas properties. While the Debtor
believes it has made significant progress in its discussions with
GeoSouthern Energy, those negotiations are still ongoing and the
Debtor's Independent Manager will need additional time to resolve
those issues on a consensual basis.
Further, the Debtor tells the Court that Anadarko E&P Onshore LLC
initiated an adversary proceeding to determine the extent, validity
and priority of its disputed interests in Debtor's properties and
its disputed claims against the Debtor. The Debtor also tells the
Court that it have have met in person with Anadarko (and/or their
professionals) on three separate occasions, and have exchanged
information informally. However, the Debtor adds that Anadarko
recently served formal discovery requests on the Debtor.
Accordingly, the Debtor will need additional time to resolve its
dispute with Anadarko.
About Trinity River Resources
Trinity River Resources, LP, filed a Chapter 11 bankruptcy petition
(Bankr. W.D. Tex. Case No. 16-10472) on April 21, 2016. The
petition was signed by Matthew J. Telfer as manager of Trinity
River Resources, GP, LLC. Judge Tony M. Davis is assigned to the
case. The Debtor estimated assets in the range of $50 million to
$100 million and liabilities of up to $500 million.
The Debtor has hired Bracewell LLP as counsel. The Debtor has
employed John T. Young, Jr., a Senior Managing Director with Conway
MacKenzie, as the its independent manager; and has also retained
Conway MacKenzie as its financial advisor. The Debtor has employed
T2 Land Resources, as ordinary course professionals.
TUSCANY ENERGY: Has Until Feb. 28 to Solicit Acceptances to Plan
----------------------------------------------------------------
Judge Erik P. Kimball of the U.S. Bankruptcy Court for the Southern
District of Florida extended Tuscany Energy, LLC's exclusive period
for soliciting acceptances to its plan of reorganization through
February 28, 2017.
Absent the extension, the Debtor's exclusive solicitation period
would have expired on December 30, 2016. The Debtor filed a Plan
of Reorganization and Disclosure Statement on April 25, 2016.
The Debtor previously sought the extension of its exclusive
solicitation period, contending that Armstrong Bank, the Debtor's
largest secured creditor, filed a Motion to Dismiss, or in the
Alternative, for Abstention, and a Motion for Relief from Automatic
Stay, or in the Alternative, for Adequate Protection.
The Debtor further contended that the Court had referred various
matters relating to the Debtor and Armstrong Bank, to judicial
settlement conference before Judge Cornish. The Debtor added that
the parties agreed to continue the judicial settlement conference
to January 26, 2017.
The Debtor related that in order to minimize costs and preserve
judicial resources, the Debtor sought additional time to attempt to
resolve issues with Armstrong Bank prior to pursuing approval of
the Disclosure Statement, and soliciting votes in favor of the
Plan. The Debtor believed that any settlement reached with
Armstrong Bank would likely result in modifications or amendments
to the Plan and Disclosure Statement.
About Tuscany Energy, LLC.
Tuscany Energy, LLC, filed for Chapter 11 bankruptcy protection
(Bankr. S.D. Fla. Case No. 16-10398) on Jan. 11, 2016. The
petition was signed by Donald Sider, manager. The case is assigned
to Judge Erik P. Kimball. At the time of the filing, the Debtor
estimated assets at $100,000 to $500,000 and liabilities at $1
million to $10 million. The Debtor is represented by Bradley S.
Shraiberg, Esq., at Shraiberg, Ferrara, & Landau P.A. No official
committee of unsecured creditors has been appointed in the Chapter
11 case of Tuscany Energy.
UP DEVELOPMENT: Taps Broad & Cassel as Special Litigation Counsel
-----------------------------------------------------------------
UP Development Key West Holdings, LLC seeks permission from the
United States Bankruptcy Court for the Middle District of Florida,
Orlando Division, to employ Nicolette C. Vilmos, Esq. and the firm
Broad and Cassel LLP as its special litigation counsel to assist
the Debtor in pursuing actions against The Bancorp Bank for claims
including fraud, negligent misrepresentation and equitable
subordination of Bancorp's secured claim.
Broad and Casel LLP will be entitled to a fee according to their
standard hourly rates, including $375 per hour for Ms. Vilmos's
legal services. Broad and Cassel LLP holds a retainer in the amount
of $12,827.10 in trust.
Ms. Vilmos attests that Broad and Cassel has represented the
Debtor, its manager, Mr. Scott Fish, and related entities since on
or about 2015. She is not aware of any conflict or potential
conflict relating to the employment of Broad and Cassel LLP as
special litigation counsel for the Debtor and does not hold any
interest adverse to the Debtor's estate.
The Firm can be reached through:
Nicollete Corso Vilmos, P.L.
BROAD AND CASSEL LLP
390 North Orange Avenue, Suite 1400
Orland, FL 32801
Telephone: 407-839-4233
Facsimile: 407-650-0955
Email: nvilmos@broadcandcassel.com
About UP Development Key West Holdings, LLC
UP Development Key West Holdings, LLC filed its voluntary petition
under Chapter 11 of the Bankruptcy Code (Bankr. M. D. Fla. Case No.
17-bk-00090-CCJ) on January 6, 2017. The Debtor owns and operates a
commercial marina located in Key West, Florida, including 25 boat
ships and a 5,000 square foot industrial warehouse occupied by
Fishman Seafood, a seafood processor and distribution company.
The Debtor is represented by R. Scott Shuker, Esq. of Latham,
Shuker, Eden & Beaudine, LLP. The case is assigned to Judge Cynthia
C Jackson.
UP FIELDGATE: Taps Broad & Cassel as Special Litigation Counsel
---------------------------------------------------------------
UP Fieldgate US Investments-Fashion Square, LLC seeks permission
from the U.S. Bankruptcy Court for the Middle District of Florida,
Orlando Division, to employ Nicolette C. Vilmos, Esq. and the firm
Broad and Cassel LLP as its special litigation counsel to assist
the Debtor in pursuing actions against The Bancorp Bank for claims
including fraud, negligent misrepresentation, equitable
subordination of Bancorp's secured claim and fraudalent transfer.
Broad and Casel LLP will be entitled to a fee according to their
standard hourly rates, including $375 per hour for Ms. Vimos's
legal services. Broad and Cassel LLP holds a retainer in the amount
of $12,827.10 in trust.
Ms. Vilmos attests that Broad and Cassel has represented the
Debtor, its manager, Mr. Scott Fish, and related entities since on
or about 2015. She is not aware of any conflict or potential
conflict relating to the employment of Broad and Cassel LLP as
special litigation counsel for the Debtor and does not hold any
interest adverse to the Debtor's estate.
The Firm can be reached through:
Nicollete Corso Vilmos, P.L.
BROAD AND CASSEL LLP
390 North Orange Avenue, Suite 1400
Orland, FL 32801
Telephone: 407-839-4233
Facsimile: 407-650-0955
Email: nvilmos@broadcandcassel.com
About UP Fieldgate US Investments-Fashion Square,
LLC
UP Development Fashion Square, LLC filed its voluntary petition
under Chapter 11 of the Bankruptcy Code (Bankr. M. D. Fla. Case No.
17-bk-00088-CCJ) on January 6, 2017. No trustee has be appointed
and the Debtor is administering this case as debtor-in-possession.
Debtor owns and has been engaged in redeveloping the Orlando
Fashion Square Mall, and 80-acre mixed-use development located near
downtown Orlando.
The Debtor is represented by R. Scott Shuker, Esq. of Latham,
Shuker, Eden & Beaudine, LLP. The case is assigned to Judge Cynthia
C Jackson.
VANGUARD HEALTHCARE: Seeks March 30 Solicitation Period Extension
-----------------------------------------------------------------
Vanguard Healthcare, LLC and its affiliated Debtors ask the U.S.
Bankruptcy Court for the Middle District of Tennessee to extend
their exclusive period for soliciting acceptances to their plan to
March 30, 2017.
The Debtors filed a Joint Plan of Reorganization on November 30,
2017 along with a Disclosure Statement and a hearing on the
approval of the Disclosure Statement is set for January 31, 2017.
The Debtors contend that they have been negotiating with the
Official Committee of Unsecured Creditors and Healthcare Financial
Solutions regarding the Debtors' Plan but need additional time to
complete approval of the Disclosure Statement and balloting.
A hearing on the Debtors' Motion is scheduled on February 28, 2017
at 9:00 a.m. The deadline for the filing of objections to the
Debtors' Motion is set on February 21, 2017.
About Vanguard Healthcare, LLC.
Vanguard is a long-term care provider headquartered in Brentwood,
Tennessee, providing rehabilitation and skilled nursing services at
14 facilities in four states (Florida, Mississippi, Tennessee and
West Virginia).
Vanguard Healthcare, LLC, and 17 of its subsidiaries each filed a
Chapter 11 bankruptcy petition (Bankr. M.D Tenn. Lead Case No.
16-03296) on May 6, 2016. The petitions were signed by William D.
Orand, the CEO. The cases are assigned to Judge Randal S.
Mashburn.
Vanguard estimated assets in the range of $100 million to $500
million and liabilities of up to $100 million.
The Debtors have hired Bradley Arant Boult Cummings LLP as counsel
and BMC Group as noticing agent.
The U.S. Trustee for Region appointed seven creditors of Vanguard
Healthcare, LLC, to serve on the official committee of unsecured
creditors. The committee members are Kindred Nursing Centers East,
L.L.C., Medline Industries, Inc., Healthcare Services Group, Inc.,
Kirk F. Hebert, Signature Healthcare, LLC, et al., Express Courier,
and Rezult Group, Inc.
VELOCITY POOLING: S&P Lowers CCR to 'CCC' on Operating Weakness
---------------------------------------------------------------
S&P Global Ratings lowered its corporate credit rating on
Indianapolis-based Velocity Pooling Vehicle LLC to 'CCC' from
'CCC+'. The outlook is negative.
At the same time, S&P lowered its issue-level rating on the
$295 million first-lien term loan maturing 2021 to 'CCC' from
'CCC+'. The '4' recovery rating remains unchanged, indicating
S&P's expectation for average recovery (at the higher end of the
30% to 50% range, previously at the lower end) in the event of a
payment default.
S&P also lowered the issue-level rating on the $85 million
second-lien term loan maturing 2022 to 'CC' from 'CCC-'. The '6'
recovery rating remains unchanged, indicating S&P's expectation for
negligible (0%-10%) recovery in the event of payment default.
The downgrade reflects the company's unsustainable capital
structure, weak liquidity, break-even forecasted free cash flow
(notwithstanding S&P's belief that the company is forecasting
positive free cash flow in 2017), and lack of meaningful growth
potential. S&P believes the potential exists for a financial
covenant violation and restructuring event in 2017, especially if
Velocity does not maintain sufficient excess availability under its
ABL. S&P believes seasonal working capital needs during the first
half of the year could result in excess availability declining
below the level that would cause the fixed charge coverage ratio to
spring. It's also possible availability could drop below the
minimum level in the second half of the year given Velocity's
limited ability to repay ABL borrowings in excess of seasonal
borrowing base asset liquidation. S&P doubts Velocity would meet
the 1x fixed charge coverage covenant. Regardless, the company's
unsustainably high debt leverage and weak operating performance
leads S&P to believe a restructuring event will be likely at some
time.
Velocity's credit metrics are very weak. Currently, debt to EBITDA
is close to 20x and funds from operations (FFO) to debt is negative
1.2%. S&P believes only modest credit ratio improvement is
possible in 2017 assuming the company is able to realize cost
savings identified in 2016. S&P do not believe these profit
improvement initiatives will be sufficient to fix the unbalanced
capital structure.
S&P's corporate credit rating on Velocity also incorporates its
narrow business focus, product concentration, and limited
geographic diversity. The company operates in the mature, highly
competitive, and fragmented power sports aftermarket parts
manufacturing and distribution services industry, which is
susceptible to economic cycles. It competes with larger
aftermarket manufacturers with greater financial resources,
including Harley-Davidson Inc.
The outlook is negative, reflecting the potential for a lower
rating if S&P believes the company will experience a liquidity
crisis--possibly precipitated by a fixed charge covenant
violation--or if S&P believes a distressed exchanged or redemption
appears to be inevitable within six months.
Although unlikely, S&P could take a positive rating action,
including revising the outlook to stable, if there's a meaningful
turnaround in profitability and sustainable free cash flow
generation. Possible avenues include realizing significant
traction on restructuring initiatives or an unexpected rebound in
demand, including winning back lost business. For a positive
rating action, S&P would also need to believe Velocity will not be
at risk of violating its fixed charge coverage covenant.
VERTIV INTERMEDIATE: Moody's Rates $600MM Unsec. PIK Notes 'Caa1'
-----------------------------------------------------------------
Moody's Investors Service assigned a B2 CFR and B2-PD rating to
Vertiv Intermediate Holding Corporation and a Caa1 rating to its
$600 million senior unsecured PIK notes issue. Vertiv's rating
outlook is stable. In a concurrent action, Moody's affirmed the Ba3
rating on the $2.3 billion senior secure term loan and B3 rating on
its $750 million unsecured notes at Cortes NP Acquisition
Corporation (Cortes), a subsidiary of Vertiv. Further, at closing
Moody's will withdraw the B1 CFR and B1-PD PDR at Cortes reflecting
the issuance of debt at the intermediate holdco but maintained the
stable rating outlook at Cortes.
Proceeds from the new PIK notes are anticipated to fund a $500
million special dividend to equity holders and repay $100 million
of existing term loan debt at Cortes, and to pay for the associated
fees and expenses. The Caa1 rating on the PIK notes at Vertiv (one
notch below the B3 rating of the notes at Cortes) reflects their
structural subordination resulting from Vertiv residing above
Cortes in the capital structure and the absence of upstream
guarantees from the subsidiaries.
Moody's affirmed the following ratings:
Cortes NP Acquisition Corporation:
Senior Secured Bank Credit Facility, at Ba3 (LGD2);
Senior Unsecured Global Notes, at B3 (LGD5).
The ratings outlook is stable.
Moody's assigned the following ratings:
Vertiv Intermediate Holding Corporation:
Corporate Family Rating, at B2;
Probability of Default Rating, at B2-PD;
Proposed Senior Unsecured PIK Notes, assign Caa1 (LGD6).
The ratings outlook is stable.
Moody's will withdraw the following ratings at the close of the
transaction:
Cortes NP Acquisition Corporation:
Corporate Family Rating, B1 to be withdrawn;
Probability of Default Rating, B1-PD to be withdrawn.
RATINGS RATIONALE
The assignment of a B2 CFR to Vertiv versus the B1 CFR previously
at Cortes reflects the higher leverage and lower interest coverage
resulting from the additional debt placed on the company as a
result of the proposed dividend recapitalization. The proposed
transaction would remove equity, increase interest burden, and
introduce PIK debt to the capital structure with the potential to
accrue interest on the principal. As such, this transaction weakens
the company's balance sheet and increases financial risk. On a pro
forma basis, Moody's estimates debt / EBITDA and EBITDA / Interest
to approximate 5.8 times and 2.3 times, respectively, for the last
twelve months ending September 30, 2016.
The downgrade also reflects a more aggressive financial policy
going forward given the large size of the distribution to equity
holders after having only been recently acquired in August 2016.
The B2 CFR is supported by growth that is expected to be flat to
low single digits at best over the next few years. Hence, Moody's
anticipates an emphasis on expense reduction and operating
efficiency for potential margin expansion. Over the intermediate
term, Moody's expects steadily improving leverage to around 5.5
times and free cash flow to debt in the mid-single digit range. It
is noted that the company has various operational savings
initiatives in place that if successfully achieved, could result in
faster deleveraging.
Vertiv's good liquidity profile is supported by its $400 million
asset-based revolving credit facility (unrated), good free cash
flow generation and meaningful foreign assets that could be
monetized, if needed. The ABL facility maintains a springing fixed
charge coverage ratio of 1.0 times when revolver availability falls
below approximately $40 million. The term loan does not have any
financial covenants.
The Ba3 rating on Cortes' approximately $2.3 billion term loan
reflects the security package of assets and the support provided by
unsecured obligations. However, the $400 million ABL revolver has a
superior position in claims on the company's choice assets. Moody's
considers this important as the company's balance sheet is
comprised of a significant amount of goodwill and other
intangibles. There is a considerable amount of unsecured debt that
will take the first loss under a distressed scenario. The B3 senior
unsecured rating reflects its subordinated position to both the ABL
revolver and term loan. The bank credit facilities and note at
Cortes are guaranteed by all of the domestic subsidiaries of the
issuer that are borrowers under or guarantee the term loan and the
senior secured revolver. The proposed senior unsecured PIK toggle
notes are rated Caa1. These notes are anticipated to be issued out
of Vertiv Intermediate Holding Corporation, a legal holding
company. The Caa1 rating on the PIK notes reflects its position as
the most structurally subordinated debt in the capital structure
which would be in a first loss position in the event of a default
scenario.
The stable rating outlook reflects Moody's view that positive free
cash flow and deleveraging will be slow.
The ratings could be downgraded if Moody's expects debt / EBITDA to
be sustained above 6 times, or EBITDA to Interest is below 2 times,
particularly if free cash flow was anticipated to be negative. A
contraction in EBITDA margins of over 100 basis points could lead
to a downgrade.
The ratings could be upgraded if Moody's expects debt / EBITDA
below 5 times on a sustainable basis with improving EBITDA
margins.
The principal methodology used in these ratings was Global
Manufacturing Companies published in July 2014.
Cortes NP Acquisition Corporation, headquartered in Columbus, Ohio,
provides various infrastructure technologies for power and thermal
management and infrastructure monitoring services used in data
centers, communication networks, and commercial and industrial
environments. Vertiv sells into various end markets with data
centers accounting for nearly two-thirds of total net sales. The
company will initially be 85% owned by Platinum Equity. Through the
last twelve months ending September 30, 2016, net sales totaled
approximately $4.4 billion.
VERTIV INTERMEDIATE: S&P Rates New $600MM Unsec. Notes 'B-'
-----------------------------------------------------------
S&P Global Ratings assigned its 'B-' issue-level rating and '6'
recovery rating to Vertiv Intermediate Holding Corp.'s proposed
$600 million senior unsecured notes. Vertiv Intermediate Holding
Corp. is the parent holding company of Columbus, Ohio-based Vertiv
Group Corp. (formerly known as Cortes NP Acquisition Corp.). The
'6' recovery rating indicates S&P's expectation for negligible
(0%-10%) recovery in the event of a payment default. All of S&P's
other ratings on the company remain unchanged.
The company plans to use the proceeds from the unsecured notes to
pay a dividend to its shareholders and prepay $100 million of
Vertiv Group Corp.'s $2.32 billion of senior secured bank debt.
The 'B+' corporate credit rating on data and communication center
equipment provider Vertiv Group Corp. reflects S&P's satisfactory
assessment of the company's business risk profile, given its good
market position, moderate scale, and well-established customer
base. While the proposed transaction will increase Vertiv's debt
leverage, S&P expects that management will use the company's free
cash generation to reduce its debt such that leverage improves to
about 6x over the next 12 months.
RATINGS LIST
Vertiv Group Corp.
Corporate Credit Rating B+/Stable/--
New Ratings
Vertiv Intermediate Holding Corp.
Prpsd $600M Senior Unsecured Notes B-
Recovery Rating 6
WALTER INVESTMENT: Bank Debt Trades at 4% Off
---------------------------------------------
Participations in a syndicated loan under Walter Investment
Management Corp is a borrower traded in the secondary market at
96.13 cents-on-the-dollar during the week ended Friday, January 20,
2017, according to data compiled by LSTA/Thomson Reuters MTM
Pricing. This represents a decrease of 0.25 percentage points from
the previous week. Walter Investment pays 375 basis points above
LIBOR to borrow under the $1.5 billion facility. The bank loan
matures on Dec. 18, 2020 and carries Moody's B3 rating and Standard
& Poor's B rating. The loan is one of the biggest gainers and
losers among 247 widely quoted syndicated loans with five or more
bids in secondary trading for the week ended January 20.
WELLDYNERX: Internal Control Errors Ups Uncertainty, Moody's Says
-----------------------------------------------------------------
Following a lender's meeting on Jan. 30, 2017, Moody's is providing
additional color surrounding its concerns with WellDyneRx's ability
to meet its original projections. WD Wolverine Holdings, LLC is the
borrowing entity for WellDyneRx, a small privately-held pharmacy
benefit manager (PBM). Moody's downgraded the company's ratings
(CFR to Caa1 from B3), citing the rating agency's concern that
WellDyneRx's profitability is not as strong as originally
anticipated when Moody's assigned initial ratings in September
2016. As a result, Moody's said that there is greater uncertainty
associated with the company's ability to achieve its original
forecasts.
WellDyneRx has identified several errors in its estimation and
reporting of rebates and billing, some of which were related to a
new client. These matters came to light when its new rebate
aggregator made its second rebate payment last fall. A more in
depth review of these accounting matters and of the company's
estimated lives resulted in revisions to both its 2016 and
projections of profitability.
This development raises additional concerns regarding the company's
short track record of marketing itself as a traditional
full-service PBM. In addition, Moody's believes the company will
face higher business risks as it relies on new clients for growth.
The company has taken steps to remediate these internal control
issues. For example, Moody's understands that management has
implemented more frequent communication between its financial
reporting and operational segments, as well as with the company's
new aggregator.
Based on these revisions and a revaluation, Carlyle Group, which
intends to purchase WellDyneRx, renegotiated a new purchase price
and is now proposing a new capital structure. Moody's will evaluate
the effects of the new capital structure on the ratings when the
rating agency has further clarity on the terms.
WellDyneRx, is a privately owned independent PBM, headquartered in
Lakeland, Florida. The company operates three main business
segments -- a commercial/consumer PBM, a mail order and specialty
pharmacy, as well as a discount card business.
WEST CORP: QCP GP Investors Reports 4.5% Stake as of Dec. 31
------------------------------------------------------------
QCP GP Investors II LLC and Quadrangle GP Investors II LP reported
that as of Dec. 31, 2016, they beneficially own 3,781,961 shares of
common stock, par value $0.001 per share, of West Corp representing
4.5 percent of the shares outstanding.
In addition, Quadrangle Capital Partners II LP also reported
beneficial ownership of 3,309,900 common shares, Quadrangle Select
Partners II LP holds 88,797 common shares and Quadrangle Capital
Partners II-A LP owns 383,264 common shares as of that date.
A full-text copy of the regulatory filing is available at:
https://is.gd/gFQ3Cl
About West Corporation
Omaha, Neb.-based West Corporation is a global provider of
communication and network infrastructure solutions. West helps
manage or support essential enterprise communications with services
that include conferencing and collaboration, public safety
services, IP communications, interactive services such as automated
notifications, large-scale agent services and telecom services.
West Corporation reported net income of $242 million on $2.28
billion of revenue for the year ended Dec. 31, 2015, compared with
net income of $158 million on $2.21 billion of revenue for the year
ended Dec. 31, 2014.
As of Sept. 30, 2016, West Corporation had $3.47 billion in total
assets, $3.96 billion in total liabilities and a total
stockholders' deficit of $490.95 million.
* * *
As reported by the TCR on June 21, 2013, Standard & Poor's Ratings
Services raised its corporate credit rating on West Corp. to 'BB-'
from 'B+'. The upgrade reflects Standard & Poor's view that lower
debt leverage and a less aggressive financial policy will
strengthen the company's financial profile.
In the April 4, 2013, edition of the TCR, Moody's Investor Service
upgraded West Corporation's Corporate Family Rating to 'B1' from
'B2'. "The CFR upgrade to B1 reflects West's shift to a more
conservative capital structure and financial policies as a publicly
owned company," stated Moody's analyst Suzanne Wingo.
WESTMORELAND COAL: BlackRock Holds 6.7% Equity Stake as of Dec. 31
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BlackRock, Inc. disclosed in an amended Schedule 13G filed with the
Securities and Exchange Commission that as of Dec. 31, 2016, it
beneficially owns 1,240,860 shares of common stock of Westmoreladn
Coal Co. representing 6.7 percent of the shares outstanding. A
full-text copy of the regulatory filing is available for free at
https://is.gd/0I8KYh
About Westmoreland Coal
Colorado Springs, Colo.-based Westmoreland Coal Company (NYSE
AMEX: WLB) -- http://www.westmoreland.com/-- is the oldest
independent coal company in the United States. The Company's coal
operations include coal mining in the Powder River Basin in
Montana and lignite mining operations in Montana, North Dakota and
Texas. Its power operations include ownership of the two-unit
ROVA coal-fired power plant in North Carolina.
Westmoreland reported a net loss applicable to common shareholders
of $203 million on $1.41 billion of revenues for the year ended
Dec. 31, 2015, compared to a net loss applicable to common
shareholders of $173 million on $1.11 billion of revenues for
the year ended Dec. 31, 2014.
As of Sept. 30, 2016, Westmoreland Coal had $1.71 billion in total
assets, $2.30 billion in total liabilities and a total deficit of
$581.2 million.
* * *
Moody's Investors Service at the end of February 2016 downgraded
the ratings of Westmoreland, including its corporate family rating
to 'Caa1' from 'B3'.
Standard & Poor's Ratings Services in March 2016 affirmed its 'B'
corporate credit rating on Westmoreland and revised the rating
outlook to "negative" from "stable". "The negative outlook
reflects weaker-than-expected liquidity as a result of a
combination of exposure to a lower price environment and
difficult-to-secure favorable new volume commitments," said
Standard & Poor's credit analyst Vania Dimova.
YIELD10 BIOSCIENCE: Reports Preliminary 2016 Camelina Test Results
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Yield10 Bioscience, Inc., announced preliminary field test results
in its model Camelina system showing that the novel yield trait
gene C3003 produces significant improvements in seed yield.
Specifically, C3003 produced an increase in seed yield in Camelina
of up to 23% in the best line as measured by average seed weight
(kg/hectare), which was statistically significant as compared to
control plants. The field trials, which were started in May 2016,
were primarily designed to establish Yield10's Fast Field Testing
platform and accelerate the generation of field data for crop trait
discovery and improvement in addition to evaluating changes in seed
yield and composition generated by specific trait leads in
Camelina. The Company has substantially completed the analysis of
data from this field test relating to C3003; however, gene
expression analysis of the plants is ongoing.
"The oilseed yield results for C3003 from this field test represent
an important milestone for Yield10 and indicate that this trait may
provide a novel way to produce, not incremental improvements, but
step-change improvements in yield in oilseeds and other crops,"
said Oliver Peoples, Ph.D., president and chief executive officer
of Yield10. "These results also illustrate that our 'Fast Field
Testing' system in Camelina may be a valuable tool for novel yield
trait discovery facilitating improvements for translation into
commercially important crops such as canola, soybean and rice."
Results
Stable Camelina seed lines expressing the yield trait gene C3003
were studied in this field trial. The highest yielding line
expressing the C3003 gene matured an average of six days earlier
than controls. While expression of C3003 enabled some lines to
produce higher seed yields per acre, up to a 23% increase in the
best line, the individual seed size in these lines was decreased
compared to controls, likely due to a change in carbon partitioning
in the plant. This reduction in seed size was expected based on
data from prior greenhouse trials and Yield10 is currently
addressing this with its second generation C3003 trait. Expression
of C3003 did not change the total amount of oil in the seed.
"The key findings for C3003 in our 2016 field trial in Camelina are
very encouraging and consistent with prior greenhouse and small
field tests conducted by Yield10 and our academic collaborator,"
said Kristi Snell, Ph.D., chief science officer of Yield10.
"Evaluation of the C3003 trait is progressing in parallel in
canola, soybean and rice, key crops where step-change increases in
seed yield would improve the prospects for global food security and
create considerable economic value."
Background on the Novel Yield Trait Gene C3003
Yield10's "Smart Carbon Grid for Plants" technology platform
focuses on identifying gene targets that enhance carbon capture
from photosynthesis and regulate the flow of carbon to seed. C3003
represents the lead trait in this platform. C3003 appears to be a
very unique gene that impacts photorespiration, a biochemical
pathway in C3 plants which is responsible for significant losses in
yield. Yield10 is progressing the introduction of the C3003 gene
trait and improvements to the C3003 trait in Camelina,
canola, soybean and rice, and expects to disclose additional
results from a number of these activities throughout 2017.
About Yield10 Bioscience
Yield10 Bioscience, Inc., formerly known as Metabolix, Inc., is
focused on developing disruptive technologies for producing
step-change improvements in crop yield to enhance global food
security. Yield10 is leveraging an extensive track record of
innovation based around optimizing the flow of carbon intermediates
in living systems. By working on new approaches to improve
fundamental elements of plant photosynthetic efficiency and
optimizing carbon metabolism to direct more carbon to seed
production, Yield10 is advancing several yield traits it has
developed in crops such as Camelina, canola, soybean and corn.
Yield10 is based in Woburn, MA.
Metabolix changed its name to Yield10 Bioscience, Inc., effective
Jan. 9, 2017, to reflect the new mission and strategic direction of
the business.
Metabolix reported a net loss of $23.68 million in 2015, a net loss
of $29.53 million in 2014 and a net loss of $30.50 million in
2013.
As of Sept. 30, 2016, Metabolix had $13.52 million in total assets,
$4.94 million in total liabilities and $8.57 million in total
stockholders' equity.
PricewaterhouseCoopers LLP, in Boston, Massachusetts, issued a
"going concern" qualification on the consolidated financial
statements for the year ended Dec. 31, 2015, citing that the
Company has suffered recurring losses from operations and has
insufficient capital resources, which raises substantial doubt
about its ability to continue as a going concern.
YORK RISK: Bank Debt Trades at 3% Off
-------------------------------------
Participations in a syndicated loan under York Risk Services
Holding is a borrower traded in the secondary market at 97.35
cents-on-the-dollar during the week ended Friday, January 20, 2017,
according to data compiled by LSTA/Thomson Reuters MTM Pricing.
This represents an increase of 0.22 percentage points from the
previous week. York Risk pays 375 basis points above LIBOR to
borrow under the $0.555 billion facility. The bank loan matures on
Sept. 18, 2021 and carries Moody's B3 rating and Standard & Poor's
B- rating. The loan is one of the biggest gainers and losers among
247 widely quoted syndicated loans with five or more bids in
secondary trading for the week ended January 20.
YORK, PA: Moody's Affirms Ba1 Rating on $62MM Gen. Obligation Debt
-------------------------------------------------------------------
Moody's Investors Service has affirmed York (City of) PA's General
Obligation rating of Ba1. The Ba1 rating applies to $62 million of
debt outstanding. The outlook remains negative. The Ba1 rating
reflects the weak fund balance and cash position following years of
structural imbalance, a moderately sized tax base with low wealth
levels, and an above-average debt burden. The rating also
incorporates recently improved operating results following a series
of successful pension negotiations with the city's police and fire
unions.
Rating Outlook
The negative outlook incorporates Moody's expectation that the
city's finances will remain tight in the near term with limited
liquidity and financial flexibility.
Factors that Could Lead to an Upgrade/Removal of Negative Outlook
Trend of structurally balanced operations with growth in reserves
Substantial growth in tax base with improved wealth levels
Material reduction in debt
Factors that Could Lead to a Downgrade
Return to structurally imbalanced operations
Operating results not as anticipated for Fiscal 2016 and beyond
Legal Security
The rated bonds are secured by York city's unlimited general
obligation tax pledge.
Use of Proceeds. Not applicable.
Obligor Profile
The City of York is located in York County, 25 miles south of
Harrisburg. The city has a population of 43,992.
Methodology
The principal methodology used in this rating was US Local
Government General Obligation Debt published in December 2016.
YRC WORLDWIDE: BlackRock Reports 7.1% Equity Stake as of Dec. 31
----------------------------------------------------------------
In an amended Schedule 13G filed with the Securities and Exchange
Commission, BlackRock, Inc. disclosed that as of Dec. 31, 2016, it
beneficially owns 2,376,518 shares of common stock of YRC Worldwide
Inc. representing 7.1 percent of the shares outstanding. A
full-text copy of the regulatory filing is available at:
https://is.gd/kiodyd
About YRC Worldwide
Headquartered in Overland Park, Kan., YRC Worldwide Inc. (NASDAQ:
YRCW) -- http://www.yrcw.com/-- is a holding company that offers
its customers a wide range of transportation services. These
services include global, national and regional transportation as
well as logistics.
YRC Worldwide reported net income attributable to common
shareholders of $700,000 on $4.83 billion of operating revenue for
the year ended Dec. 31, 2015, compared to a net loss attributable
to common shareholders of $85.8 million on $5.06 billion of
operating revenue for the year ended Dec. 31, 2014.
As of Sept. 30, 2016, the Company had $1.87 billion in total
assets, $2.21 billion in total liabilities and a total
shareholders' deficit of $342.2 million.
* * *
As reported by the TCR on Feb. 18, 2014, Moody's Investors Service
had upgraded the Corporate Family Rating for YRC Worldwide from
'Caa3' to 'B3', following the successful closing of its
refinancing transactions.
In the Aug. 11, 2015 TCR report, Standard & Poor's Ratings
Services said that it has raised its corporate credit rating on
YRC Worldwide to 'B-' from 'CCC+'.
"The upgrade reflects YRC's earnings growth and improved liquidity
position, along with our belief that gradual improvement in the
company's operating performance will result in credit measures
that are commensurate with the rating," said Standard & Poor's
credit analyst Michael Durand.
*********
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.
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.
TCR subscribers have free access to our on-line news archive.
Point your Web browser to http://TCRresources.bankrupt.com/and use
the e-mail address to which your TCR is delivered to login.
*********
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, Valerie Udtuhan, Howard C. Tolentino, Carmel Paderog,
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Sheryl Joy P. Olano, Psyche A. Castillon, Ivy B. Magdadaro, Carlo
Fernandez, Christopher G. Patalinghug, and Peter A. Chapman,
Editors.
Copyright 2017. All rights reserved. ISSN: 1520-9474.
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*** End of Transmission ***