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/raid1/www/Hosts/bankrupt/TCR_Public/171202.mbx T R O U B L E D C O M P A N Y R E P O R T E R Saturday, December 2, 2017, Vol. 21, No. 335 Headlines AP GAMING: S&P Lowers Senior Secured Debt Rating to 'B' CIBER INC: Incurs $2.57 Million Net Loss in September KII LIQUIDATING: Gains $323,953 Net Income at September 30 ********* AP GAMING: S&P Lowers Senior Secured Debt Rating to 'B' ------------------------------------------------------- S&P Global Ratings lowered its issue-level rating on Las Vegas-based gaming equipment manufacturer AP Gaming Holdings LLC's senior secured credit facility to 'B' from 'B+' following the company's announcement that it intends to issue $65 million of incremental term loan debt to fund an acquisition. S&P also revised the recovery rating on this debt to '3' from '2'. The '3' recovery reflects its forecast for meaningful (50%-70%; rounded estimate: 60%) recovery for lenders in a payment default. The additional enterprise value from the proposed acquisition is insufficient to offset the expected increase in secured debt at default as a result of the proposed $65 million incremental term loan, resulting in lower recovery prospects for secured lenders. The company plans to use proceeds from the incremental term loan to fund the acquisition of certain assets from another gaming equipment supplier, to fund transaction fees and expenses, and to add cash to the balance sheet. S&P said, "Our 'B' corporate credit rating and negative outlook on AP Gaming are unchanged by the planned acquisition and associated debt raise because we expect the acquisition will be financed at a multiple that is lower than our forecast for adjusted leverage in 2017 (low-6x area pro forma for a full year of acquired EBITDA). "Additionally, the acquisition does not change our view of AP Gaming's business risk because the acquired assets are within AP Gaming's existing Class II markets. AP Gaming is planning on acquiring around 1,700 Class II units from another gaming provider, and plans to increase the yield on these units over time. "Further, and notwithstanding our expectation for solid (high-30% area) EBITDA growth in 2017, we continue to expect free operating cash flow to be modestly negative in 2017 due to high levels of capital expenditures related to growth initiatives. We believe these growth investments will translate into greater cash flow generation in 2018 given a full year benefit of these initiatives. Although we expect AP Gaming will begin to generate positive free cash flow in 2018, we believe an inability to internally fund cash needs, resulting in a reliance on excess cash balances and potential revolver availability, raises liquidity risk in a scenario when EBITDA growth slows. We are unlikely to revise the rating outlook to stable until we believe that AP Gaming's cash flow base has increased to a level that will allow it to internally fund capital expenditures and growth investments, such that it is no longer reliant on excess cash and revolver availability to fund fixed charges." Operating performance through the nine months ended Sept. 30, 2017 has outperformed our prior forecast for the full year, due largely to greater demand for AP Gaming's new cabinets, and from modestly lower selling, general, and administrative (SG&A) expenses. S&P said, "We now expect 2017 revenue and EBITDA growth in the low-20% area and high-30% area respectively, compared to our prior forecast for the low-double-digit area and mid-20% area, respectively. We are forecasting 2018 revenue and EBITDA growth in the mid- to high-single-digit percent area driven by continued demand for AP Gaming's new products, supported by increased investments by operators in slot floors given a favorable economic climate." RECOVERY ANALYSIS Key analytical factors S&P said, "Our simulated default scenario contemplates a default in 2020 reflecting a significant decline in cash flow from the loss of market share to either an existing incumbent operator or a new competitor that offers better technology or more desirable games; a significant and prolonged contraction in consumer spending; and/or a significant slowdown in new market opportunities, coupled with one of the other factors. We assume a reorganization following the default, using an emergence EBITDA multiple of 5.5x to value the company, and we assume the revolving credit facility is 85% drawn at the time of default. "We have raised our expectation for emergence EBITDA to $68 million from $63 million, reflecting a modest increase in assumed EBITDA at default from the planned acquisition." Simulated default assumptions: -- Emergence EBITDA: $68 million EBITDA multiple: 5.5x -- Gross recovery value: $370 million -- Net recovery value after administrative expenses (5%): $352 million -- Obligor/nonobligor valuation split: 94%/6% -- Value available for senior secured claims: $344 million -- Total senior secured claims: $548 million --Recovery expectation: 50%-70% (rounded estimate: 60%) Note: All debt amounts include six months of prepetition interest. RATINGS LIST AP Gaming Holdings LLC Corporate Credit Rating B/Negative/-- Downgraded; Recovery Rating Revised AP Gaming Holdings LLC To From Senior Secured B B+ Recovery Rating 3 (60%) 2 (70%) AP Gaming is the legal borrowing entity funding the debt portion of Apollo Global Management's acquisition of American Gaming Systems. American Gaming Systems is a designer and manufacturer of gaming systems. American Gaming Systems entered into an agreement to be acquired by an affiliate of Apollo Global Management on September 16, 2013. CIBER INC: Incurs $2.57 Million Net Loss in September ----------------------------------------------------- CIBER Inc., et. al., filed with the U.S. Securities and Exchange Commission their monthly operating report for September 2017. CIBER Inc. posted a net loss of $2.57 million on $nil of revenue in September. As of September 30, 2017, CIBER Inc. posted $39.33 million in total assets, $13.52 million in total liabilities, and $25.81 million in total shareholders' equity. The Debtors started the month with $43.23 million cash. They listed $8.25 million in total receipts and $4.78 million in total disbursements. Taking into consideration other accounts, theDebtors had $38.22 million cash at September 30. A copy of the monthly operating report is available for free at the SEC at https://is.gd/HlRJtk About CIBER Inc. CIBER, Inc. -- http://www.ciber.com/-- is a global information technology consulting, services and outsourcing company. CIBER, Inc., and two other affiliates sought bankruptcy protection on April 9, 2017 (Bankr. D. Del. Lead Case No. 17-10772). Christian Mezger, its chief financial officer, signed the petition. The Debtors disclosed total assets of $334.2 million and total liabilities of $171.9 million as of Sept. 30, 2016. The Hon. Brendan Linehan Shannon presides over the case. Morrison & Foerster LLP is the Debtors' lead bankruptcy counsel. Polsinelli, PC, serves as co-counsel while Saul Ewing LLP serves as local counsel. The Debtors also hired Houlihan Lokey as investment banker and financial advisor; Alvarez & Marsal North America, LLC, as restructuring advisor; and Prime Clerk LLC as noticing and claims agent. An official committee of unsecured creditors has been appointed in the Chapter 11 case. The committee retained Perkins Coie, LLP, as bankruptcy counsel; Shaw Fishman Glantz & Towbin LLC as co-counsel; and BDO Consulting as financial advisor. Since the closing of the Sale, the Debtors have taken steps to change their corporate names from CIBER, Inc., to CMTSU Liquidation, Inc., CIBER Consulting, Incorporated, to CMTSU Liquidation 2, Inc., and CIBER International LLC, to CMTSU Liquidation 3, LLC. KII LIQUIDATING: Gains $323,953 Net Income at September 30 ---------------------------------------------------------- KII Liquidating Inc. formerly known as Katy Industries, Inc., et al., filed with the U.S. Securities and Exchange Commission their monthly operating report for the period from August 27, 2017 through September 30, 2017. The Debtors' consolidated statement of operations reflected a net income of $323,953 on $nil of revenue for September. At September 30, 2017, the Debtors had $7.51 million in total assets, $21.45 million in total liabilities, and -$13.94 million in total shareholders equity. At August 27, 2017, the Debtors had a $3.85 million beginning cash balance. They listed total receipts of $105,480 and total disbursements of $219,093. Disbursements include $180,221 in professional fees. Thus, the Debtors had $3.74 million ending cash balance at September 30. A copy of the monthly operating report is available at the SEC at: https://is.gd/yujmMv About Katy Industries Katy Industries, Inc. -- http://www.katyindustries.com/-- a publicly traded Delaware corporation, and its wholly-owned direct and indirect subsidiaries were organized as a Delaware corporation in 1967. The Company is a well-known manufacturer, importer, and distributor of commercial cleaning and consumer storage products as well as a contract manufacturer of structural foam products. It distributes its products across the United States and Canada. It is best known for such brands as Continental, Huskee, Color Guard, Wilen, Muscle Mop, Contico, Tuffbin, and SilverWolf, among many others. The Company operates three manufacturing facilities located in Jefferson City, Missouri, Tiffin, Ohio, and Fort Wayne, Indiana, with its corporate headquarters located in St. Louis, Missouri. Katy Industries, Inc., and its affiliates filed a voluntary petition for relief under the Bankruptcy Code (Bankr. D. Del. Lead Case No. 17-11101) on May 14, 2017. Lawrence Perkins, its chief restructuring officer, signed the petitions. Katy Industries disclosed $821,321 in assets and $58,421,346 in liabilities. Stuart M. Brown, Esq., at DLA Piper LLP (US), represent the Debtors as bankruptcy counsel. The Debtors hired JND Corporate Restructuring as their claims and noticing agent. On July 31, 2017, the Office of the U.S. Trustee formed a committee of retirees. The Retirees' Committee hired Womble Carlyle Sandridge & Rice, LLP as legal counsel. ********* 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. 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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, Meriam Fernandez, Joel Anthony G. Lopez, Cecil R. Villacampa, 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. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $975 for 6 months delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Peter A. Chapman at 215-945-7000 or Nina Novak at 202-362-8552. *** End of Transmission ***