/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/190206.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 6, 2019, Vol. 23, No. 36 Headlines 2070 RESTAURANT: Seeks to Hire Bruce J. Duke as Legal Counsel ALLEGHENY TECHNOLOGIES: Egan-Jones Hikes Sr. Unsec. Ratings to BB- APEX XPRESS: Trustee Appointment, Conversion Set for Feb. 26 ARPENI PRATAMA OCEAN: Seeks to Hire Fulcrum as Financial Advisor ARPENI PRATAMA OCEAN: Taps Prime Clerk as Administrative Advisor ARPENI PRATAMA: Case Summary & 5 Unsecured Creditors BARCORD INC: Seeks to Hire CTK Chicago Partners as Broker BARTLETT MANAGEMENT: $4.3M Sale of All Assets to EYM Approved BEARCAT ENERGY: DOJ Watchdog Directed to Appoint Ch. 11 Trustee BERAKAH INVESTMENT: Case Summary & 4 Unsecured Creditors BERRY PETROLEUM: S&P Affirms 'B' ICR, Outlook Stable BIER INTERNATIONAL: Seeks to Hire Morrison-Tenenbaum as Counsel BLUE CHIP CAPITAL: Seeks to Hire Cohen Baldinger as Legal Counsel CABLEVISION SYSTEMS: Moody's Cuts Rating on New $1BB Loan to Ba3 CARROLL PERRY: $280K Sale of Sumrall Property to Lamar Approved CHARLOTTE RUSSE: Files Chapter 11 to Facilitate Orderly Wind-Down CHF COLLEGIATE: S&P Cuts Rating on 2017A/B Bonds to BB+ CLEAR CHANNEL: Moody's Rates New $2.2BB Subordinated Notes 'Caa1' CLOUD PEAK: S&P Cuts ICR to CCC on Potential Restructuring CURAE HEALTH: $2.5M Sale of Panola Hospital to Progressive Approved CURAE HEALTH: Management Services Agreement with Manager Approved DAMODAR LLC: Case Summary & 20 Largest Unsecured Creditors EGALET CORP: Emerges From Bankruptcy With $61M Debt Extinguished ENERGYSOLUTIONS INC: S&P Lowers ICR to 'B-' on Weakened Earnings FALLS EVENT CENTER: Trustee Taps RMA as Accountant FORTRESS TRANSPORTATION: Moody's Affirms B1 CFR, Outlook Positive FULLBEAUTY BRANDS: Written Plan Confirmation Order Entered GABRIEL SAN ROMAN: $530K Sale of Stony Brook Property Approved GETTY IMAGES: Moody's Hikes CFR to B3 & Alters Outlook to Positive GNC HOLDINGS: Fitch Lowers LongTerm IDR to B-, Outlook Negative GYMBOREE GROUP: Seeks to Hire Hilco as Real Estate Advisor GYMBOREE GROUP: Seeks to Hire KPMG LLP as Tax Consultant GYMBOREE GROUP: Taps Miller Buckfire, Stifel as Investment Bankers GYMBOREE GROUP: Taps Prime Clerk as Administrative Advisor HIGHLAND SALONS: Case Summary & 4 Unsecured Creditors HKD TREATMENT: PCO Reports Patients' Access to Medical Records HOPKINS COUNTY HOSPITAL: Moody's Affirms B2 on $21MM Revenue Bonds HUT AIRPORT LIMOUSINE: Kenneth Eiler Named as Chapter 11 Trustee INTEGRATED DYNAMIC: Court Denies Bid to Appoint Examiner JACKIES COOKIE: Seeks to Hire Zolkin Talerico as Legal Counsel JACOBS ENTERTAINMENT: Moody's Affirms B2 Corp. Family Rating LBJ HEALTHCARE: PCO Files 15th Interim Report LEVI STRAUSS: Fitch Raises LongTerm IDR to BB+, Outlook Stable LUBY'S INC: Provides Update Regarding Annual Meeting Results MEEKER NORTH: No Deficiency in the Facility, PCO's 4th Report Says MJW FILMS: Committee Seeks to Hire May Potenza as Counsel MOHEGAN TRIBAL: Moody's Confirms B2 CFR, Outlook Negative NANDINI INC: Seeks to Hire Ure Law Firm as Legal Counsel NAVEGAR NETWORK: Case Summary & 20 Largest Unsecured Creditors NEW YORK IRON GYM: Seeks to Hire John Lehr as Legal Counsel NORTHWEST ACQUISITIONS: Moody's Cuts CFR to B3, Outlook Stable OAKLAND PARK: Broward County Seeks Ch. 11 Trustee Appointment OMA GROUP: Case Summary & 3 Unsecured Creditors OREGON CLEAN: Moody's Rates $550MM in Secured Loans 'Ba3' OSR PATENT: P. Siragusa Seeks Ch. 11 Dismissal, Trustee Appointment PAINTSVILLE INVESTORS: PCO Files 4th Report PANIOLO CABLE: DOJ Watchdog Directed to Appoint Ch. 11 Trustee PC USA RE: $1.5M Sale of Hallandale Property to Elana Approved PERTL RANCH: Seeks Ch. 11 Trustee Appointment PLAINS END: Fitch Affirms BB on Sec. Bonds & Alters Outlook to Pos. POWERMAX INC: Trustee's $5K Sale of Remnant Assets to Oak Point OKd QUANTUM CORP: Appoints New Chief Accounting Officer QUANTUM CORP: TCW Group Has 10.9% Stake as of Dec. 31 RAYCO MACHINE: Seeks to Hire Hester Baker as Legal Counsel RCR HEALTHCARE: Feb. 25 Determination for PCO Appointment Set RITE AID: Fitch Rates $450MM FILO Term Loan 'BB', Outlook Neg. ROBERTSHAW US: Moody's Cuts CFR to B3, Outlook Stable RONALD GOODWIN: $103K Sale of Three El Dorado Parcels Approved RONALD GOODWIN: $143K Sale of Wichita Property to Wyatt Approved RONALD GOODWIN: $32K Sale of Two Sedgwick Parcels to GBRB Approved RONALD GOODWIN: $33K Sale of Arkansas Property to Nelson Approved RONALD GOODWIN: $74K Sale of Wichita Property to Larry Cook Okayed SAS HEALTHCARE: Feb. 25 Determination for PCO Appointment Set SHOE SHIELDS: P. Siragusa Seeks Ch. 11 Dismissal, Trustee SHORT ENVIRONMENTAL: Seeks to Extend Exclusive Period to April 1 STONEMOR PARTNERS: Secures Bank Waiver, $35MM Financing Facility SUNDANCE BEHAVIORAL: Feb. 25 Determination for PCO Appointment Set TILLMAN PARK: $170K Sale of Condo Unit 901 to Sanders Approved TRANSDIGM GROUP: Fitch Affirms B Issuer Default Rating TWISTLEAF HOLDINGS: Voluntary Chapter 11 Case Summary UNITI GROUP: Fitch Affirms BB- LongTerm IDR, Outlook Stable WEATHERFORD INT'L: Egan-Jones Lowers Sr. Unsecured Ratings to CCC+ WINDSTREAM SERVICES: Fitch Maintains B IDR on Rating Watch Neg. WOODBRIDGE GROUP: Seeks to Extend Exclusive Period to April 29 YAKIMA VALLEY HOSPITAL: Moody's Cuts $32MM Revenue Bonds to Ba1 ********* 2070 RESTAURANT: Seeks to Hire Bruce J. Duke as Legal Counsel ------------------------------------------------------------- 2070 Restaurant Group LLC seeks approval from the U.S. Bankruptcy Court for the Southern District of New York to hire legal counsel in connection with its Chapter 11 case. The Debtor proposes to employ Bruce J. Duke, LLC, also known as Tabernacle Legal Group, to give advice regarding its duties under the Bankruptcy Code; participate in negotiations with its creditors; assist in any potential sale of its assets; prepare its bankruptcy plan; and provide other legal services related to its Chapter 11 case. Bruce Duke, Esq., the attorney who will be handling the case, charges an hourly fee of $275. Mr. Duke disclosed in a court filing that his firm is "disinterested" as defined in Section 101(14) of the Bankruptcy Code. The firm can be reached through: Bruce J. Duke, Esq. Tabernacle Legal Group P.O. Box 1418 648 Tabernacle Road Medford, NJ 08055 Phone: (856) 701-0555 Fax: 856-282-1079 E-mail: brucedukeesq@gmail.com About 2070 Restaurant Group 2070 Restaurant Group LLC sought protection under Chapter 11 of the Bankruptcy Code (Bankr. S.D. N.Y. Case No. 18-12323) on July 30, 2018. At the time of the filing, the Debtor estimated assets of less than $50,000 and liabilities of less than $500,000. The case is assigned to Judge James L. Garrity Jr. ALLEGHENY TECHNOLOGIES: Egan-Jones Hikes Sr. Unsec. Ratings to BB- ------------------------------------------------------------------ Egan-Jones Ratings Company, on January 29, 2019, upgraded the foreign currency and local currency senior unsecured ratings on debt issued by Allegheny Technologies Incorporated to BB- from B+. Allegheny Technologies Incorporated is a specialty Metals Company headquartered at Six PPG Place in Pittsburgh, Pennsylvania. APEX XPRESS: Trustee Appointment, Conversion Set for Feb. 26 ------------------------------------------------------------ Local 807 Pension and Benefit Fund filed a Notice with the U.S. Bankruptcy Court for the District of New Jersey regarding the appointment of a Chapter 11 trustee for Apex Xpress, Inc., or alternatively, the conversion of the Debtor's Chapter 11 case to Chapter 7. The notice of appointment of a Chapter 11 trustee or the conversion of the case is set for February 26, 2019. Local 807 is represented by: Leonard C. Walczyk, Esq. WASSERMAN, JURISTA & STOLZ, P.C. 110 Allen Road, Suite 304 Basking Ridge, NJ 07920 Tel.: (973) 467-2700 Fax: (973) 467-8126 About Apex Xpress, Inc. Apex Xpress, Inc., formerly known as Apex Trucking, provides transportation services. The Company offers copier, car, and motorcycle transportation services, as well as warehousing, copier installation, prepping, flatbed and building services. The Company has locations in Secaucus, New Jersey, Brooklyn, Maryland and Brockton, Massachusetts. Apex Xpress filed for bankruptcy protection (Bankr. D.N.J. Case No. 18-13134) on Feb. 16, 2018. In the petition signed by Robert M. Cerchione, president, the Debtor estimated assets of $1 million to $10 million, and liabilities of $10 million to $50 million. The Hon. Stacey L. Meisel presides over the case. The Debtor tapped Saul Ewing Arnstein & Lehr LLP as its legal counsel, and Argus Management Corporation as its financial advisor.. On May 19, 2018, an order was entered approving the appointment of Kenneth J. DeGraw, as the examiner of Apex Xpress. The Examiner hired Mellinger Sanders & Sanders, LLC, as his legal counsel, and Withum Smith & Brown, PC, as his accountant. ARPENI PRATAMA OCEAN: Seeks to Hire Fulcrum as Financial Advisor ---------------------------------------------------------------- Arpeni Pratama Ocean Line Investment B.V. seeks authority from the U.S. Bankruptcy Court for the Southern District of New York to hire Fulcrum Partners Asia Pte Ltd as its financial advisor. The services to be provided by the firm include: (a) assessment of the liquidation value of the Debtor in the event that the Debtor were liquidated in a hypothetical Chapter 7 proceeding in the United States or its equivalent in The Netherlands; (b) analysis of potential restructuring alternatives for the Debtor, including options to restructure its floating rate senior secured notes due 2021; (c) live or written testimony required to present and defend the Debtor's liquidation analysis; and (d) additional financial advisory services related to the Debtor's Chapter 11 case. Fulcrum Partners will be paid a flat fee of $30,000 for preparing the liquidation analysis, and an hourly fee of $300 for additional services. Robert Schmitz, principal of Fulcrum Partners, attests that his firm is a "disinterested person" as that term is defined in section 101(14) of the Bankruptcy Code. The firm can be reached through: Robert Schmitz Fulcrum Partners Asia Pte Ltd. 19 St Thomas Walk #26-21 Grange Heights Singapore 238144 About Arpeni Pratama Ocean Line Investment B.V. Arpeni Pratama Ocean Line Investment B.V. is a wholly-owned subsidiary of PT Arpeni Pratama Ocean Line Tbk, which owns and operates a fleet of Indonesian flagged dry bulk vessels. Arpeni Pratama Ocean Line Investment sought protection under Chapter 11 of the Bankruptcy Code (Bankr. S.D. N.Y. Case No. 19-10302) on February 1, 2019. At the time of the filing, the Debtor had estimated assets of less than $50,000 and liabilities of $100,000,001 to $500 million. The case has been assigned to Judge Stuart M. Bernstein. The Debtor tapped Paul Hastings LLP as its bankruptcy counsel. ARPENI PRATAMA OCEAN: Taps Prime Clerk as Administrative Advisor ---------------------------------------------------------------- Arpeni Pratama Ocean Line Investment B.V. seeks authority from the U.S. Bankruptcy Court for the Southern District of New York to hire Prime Clerk, LLC as its administrative advisor. The firm will provide these services: (a) assist in the solicitation, balloting and tabulation of votes, prepare reports in support of a Chapter 11 plan, and process requests for documents; (b) prepare an official ballot certification and, if necessary, testify in support of the ballot tabulation results; (c) provide a confidential data room, if requested; and (d) manage and coordinate distributions pursuant to the plan. Prime Clerk will be paid at these hourly rates: Director of Solicitation $210 Solicitation Consultant $190 COO and Executive VP No charge Director $175 - $195 Consultant/Senior Consultant $65 - $165 Technology Consultant $35 - $95 Analyst $30 - $50 Benjamin Steele, a partner at Prime Clerk, assured the court that his firm is a "disinterested person" as the term is defined in section 101(14) of the Bankruptcy Code. Prime Clerk can be reached through: Benjamin J. Steele Prime Clerk LLC 830 3rd Avenue, 9th Floor New York, NY 10022 Tel: (212) 257-5450 About Arpeni Pratama Ocean Line Investment B.V. Arpeni Pratama Ocean Line Investment B.V. is a wholly-owned subsidiary of PT Arpeni Pratama Ocean Line Tbk, which owns and operates a fleet of Indonesian flagged dry bulk vessels. Arpeni Pratama Ocean Line Investment sought protection under Chapter 11 of the Bankruptcy Code (Bankr. S.D. N.Y. Case No. 19-10302) on February 1, 2019. At the time of the filing, the Debtor had estimated assets of less than $50,000 and liabilities of $100,000,001 to $500 million. The case has been assigned to Judge Stuart M. Bernstein. The Debtor tapped Paul Hastings LLP as its bankruptcy counsel. ARPENI PRATAMA: Case Summary & 5 Unsecured Creditors ---------------------------------------------------- Debtor: Arpeni Pratama Ocean Line Investment B.V. 153 East 53rd Street New York, NY 10043 Business Description: Arpeni Pratama is a wholly-owned subsidiary of PT Arpeni Pratama Ocean Line Tbk, and was established for the sole purpose of issuing certain floating rate guaranteed secured notes due 2021. PT Arpeni is a diversified shipping company that owns and operates a fleet of Indonesian flagged dry bulk vessels. As of Sept. 30, 2018, PT Arpeni operated 14 wholly-owned vessels and two vessels that were long-term chartered- in. The Debtor's corporate headquarters are located at Herikerbergweg 238, Amsterdam, The Netherlands 1101. Chapter 11 Petition Date: February 1, 2019 Court: United States Bankruptcy Court Southern District of New York (Manhattan) Case No.: 19-10302 Judge: Hon. Stuart M. Bernstein Debtor's Counsel: Pedro A. Jimenez, Esq. PAUL HASTINGS LLP 200 Park Avenue New York, NY 10166 Tel: 212-318-6000 Email: pedrojimenez@paulhastings.com Debtor's Financial Advisor: FULCRUM PARTNERS ASIA LTD Debtor's Noticing, Balloting, & Claims Administration Agent: PRIME CLERK LLC 830 Third Avenue, 9th Floor New York, NY 10022 https://cases.primeclerk.com/arpeni Total Assets (book value as of Sep. 30, 2018): $107,043,567 Of this amount, $106,883,911 represents amounts due to the Debtor by Plan Sponsor, PT Arpeni under the unsecured Intercompany Loan. Total Liabilities (book value as of Sep. 30, 2018): $103,529,309 The petition was signed by Mia Surya, director. A full-text copy of the petition is available for free at: http://bankrupt.com/misc/nysb19-10302.pdf List of Debtor's Five Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ HSBC Bank USA, N.A. Annual $51,344 Gloria Alli Administrative 452 Fifth Avenue Fees New York, NY 10018 TMF Group Management Fees $18,180 Ilaria de Lucia; Danny Timmers Luna Arena Herikerbergweg 238 1101 CM Amsterdam Netherlands Clifford Chance LLP Legal Fees $11,362 Evert Verwey Droogbak 1A 1013 GE Amsterdam Netherlands Tax Consultant Corporate $4,545 International Income Tax Belastingdienst Centrale Administratle World Trade Center Strawinskylaan 1063 1077xx Amsterdam Netherlands The Hongkong Collateral $25,000 and Shanghai Banking Agent Fee Corporation Limited Corporate Trust and Loan Agency Level 30, HSBC Main Building, 1 Queen's Road Central, Hong Kong Amounts of Claim of Clifford Chance, LLP, TMF Group, and Tax Consultant International are converted from euros to U.S. dollars using the Dec. 21, 2018 currency exchange rate of 0.88 euros per U.S. dollar, as published by the European Central Bank. BARCORD INC: Seeks to Hire CTK Chicago Partners as Broker --------------------------------------------------------- Barcord, Inc. seeks authority from the U.S. Bankruptcy Court for the Northern District of Illinois to employ real estate broker CTK Chicago Partners-City Properties. The firm will assist the Debtor in connection with the sale of its commercial building located at 1648 West Kinzie St., Chicago, Illinois. The Debtor rents the property out to aspiring rock artists. CTK will receive a commission of up to 4% of the total sale price. Dominic Saraceno, executive vice president of CTK, assures the court that his firm is a "disinterested person" as defined in section 101(14) of the Bankruptcy Code. The firm can be reached through: Donimic M. Saraceno CTK Chicago Partners-City Properties 1659 West Hubbard Chicago, IL 60622 Office: (312) 337-1334 Mobile: (847) 331-1339 Email: Nsaraceno@ctkcp.com About Barcord Inc. Barcord, Inc., is a real estate company that has 100% ownership interest in a property located at 1648 West Kinzie St., Chicago, Illinois 60622 valued by the Company at $2.4 million. Barcord sought protection under Chapter 11 of the Bankruptcy Code (Bankr. N.D. Ill. Case No. 18-14974) on May 23, 2018. In the petition signed by its president James Aitcheson, the Debtor disclosed $2.40 million total assets and $2.23 million total debts. Judge Carol A. Doyle presides over the case. Joshua D. Greene, Esq., of Springer Brown, LLC, serves as its counsel. BARTLETT MANAGEMENT: $4.3M Sale of All Assets to EYM Approved ------------------------------------------------------------- Judge Mary P. Gorman of the U.S. Bankruptcy Court for the Central District of Illinois authorized Bartlett Management Services, Inc. and its debtor-affiliates to sell substantially all assets to EYM Foods II, LLC, for $4.3 million. The Auction was conducted on Dec. 20, 2018. EYM was the Successful Bidder and JT Restaurants Group, LLC, was the backup bidder. The sale is free and clear of all Liens, Claims and other interests of any kind or nature whatsoever (other than Assumed Liabilities and as otherwise provided in the Order), with all Liens, including mechanics, materialmen and subcontractor Liens and rights to receive payment of trust funds, Claims and other interests to attach to the proceeds of the Sale. The Sale will close by no later than Jan. 31, 2019, unless the parties agree otherwise in writing, inclusive of email; if the Sale does not close by the Required Closing Date, or if the Debtors are unable to close by such date due to events outside their control (including without limitation insufficient funds to provide for the distribution of the Sale Proceeds, or the payment of the Cure Amounts, as provided by the Order, or the existence of a Failure Event), then the EYM APA will be null and void. The Debtors will be entitled to an increase in the Purchase Price from EYM for any of the following that arise during the period between the Deemed Closing Date and Closing: (a) the increase in the Debtors' pro rata share of January rent for the Acquired Contracts; (b) the increase in any projected UST fees as a result of increased disbursements that will be required as the result of Debtors' operations during such period; and (c) any non-ordinary course expense that the Debtors incur as the result of their operations during this period. Pursuant to Sections 105(a) and 365 of the Bankruptcy Code, and subject to and conditioned upon the (a) the Final Assignment Information (except for the Micromont Lease), (b) the provisions of this Order with respect to KFC and ARC, and (c) sufficient available funds to satisfy the Required Bank Recovery, the applicable Debtor for each of the Contracts and Leases identified in the Assignment Schedule is authorized to assume and assign to EYM the Contract or Lease identified in such Schedule, as modified as reflected in such Schedule, effective as of the Closing Date, upon (i) the payment of the Cure Amount to the Contract Counterparty of such Contract or Lease as set forth in the Assignment Schedule, (ii) the execution by EYM of all applicable agreements required by KFC to transfer the KFC Franchise Agreements, and (iii) if the Contract Counterparty so requires, the execution of a lease modification agreement reflecting the modified terms set forth in the Assignment Schedule or as otherwise agreed between EYM and the Contract Counterparty. Anything in the Assignment Schedule or this Order to the contrary notwithstanding, subject to the availability of funds to satisfy the Required Bank Recovery, the Debtors will pay to KFC, by no later than the Closing, from the Sale Proceeds or from the Debtors’ cash flow from operations, a total of $565,000 as full payment for the following: (a) all pre-petition amounts due to KFC for the franchise agreement that the Debtors are assuming and assigning to KFC; (b) all unpaid post-petition royalty, advertising and related fees owing from the Debtors to KFC that are unpaid as of the Closing; and (c) all transfer fees and related fees necessary to effect the assignment of the Assigned Franchise Agreements to EYM. The Master Lease dated as of April 1, 2014 by and between ARC, as landlord, and BMSI, as tenant, is a single, unity and indivisible master lease as to all 10 of the demised properties collectively and is not subject to being severed with respect to any individual demised property, and such ARC Master Lease is an Acquired Contract thereunder. Anything in the Order or the Assignment Schedule to the contrary notwithstanding, the Cure Amount to be paid under the ARC Master Lease is $363,452, and the assumption and assignment of the ARC Master Lease is expressly subject to execution of documentation satisfactory to ARC evidencing the modified terms of the ARC Master Lease, including any required guaranty and the availability of sufficient funds to satisfy the Required Bank Recovery. As provided in the Order in the event that a Debtor has paid rent under a Lease for January 2019, then the amount of rent so paid will be prorated for such month, and EYM will pay to the Debtor at Closing its pro rata share of the rent for such month (with such proration based on the Deemed Closing Date). The Court previously approved the Debtor's retention of Equity Partners HG, LLC as its financial advisor with respect to the Sale. Pursuant to the Broker Order, Equity Partners is presumptively entitled to a transaction fee in the amount of $275,000, subject to (a) Equity Partners' voluntary agreement to reduce its presumptive fee by 10%, to $247,500, and (b) final Court approval. Subject to confirmation of a plan of liquidation or further order of the Court authorizing the distribution of the Net Sale Proceeds, the Net Sale Proceeds will be disbursed in accordance with the allocation set forth in Exhibit A. Notwithstanding anything to the contrary set forth in Exhibit A, upon the Closing, the Bank will possess a first priority lien on and security interest in (a) the entire $4.3 million in Gross Sale Proceeds, and (b) the funds remaining in the DIP Account on the Closing Date. None of the Net Sale Proceeds will be disbursed until (a) the UST Fees due for the fourth quarter of 2018 have been paid in full, and (b) the Debtors have reserved in a separate, segregated account an amount that either the UST or the Court has determined will be adequate to pay the UST fees that will be due for the first quarter of 2019 on account of the disbursements that the Debtors are anticipated to make during such quarter on account of (i) the Sale Proceeds, and (ii) the Debtors' operations from Jan. 1, 2019, to the Closing, as currently projected at $66,875 in Exhibit A. Likewise, none of the Gross Proceeds will be disbursed unless either (a) the Bank consents, or (b) the Bank concludes, in the exercise of its absolute discretion, that any of the disbursements, whether singly or in the aggregate, do not adversely affect the Required Bank Recovery. Anything in the previous paragraphs to the contrary notwithstanding, (x) the full Broker Commission, (y) up to 75% of the Carve-Out for the Accountant, and (z) up to 50% of the Carve-Outs for all other professionals may be paid upon the allowance of an interim or final fee application of such professional unless (i) the Bank or the UST objects to such payment, and (ii) the Court finds that any such payment will create a material risk either that the Bank will not receive the Required Bank Recovery or the UST will not receive the UST Required Recovery. The projected Carve-Out for Sorce, the Debtors' principal supplier, will be limited to such increased driver costs and truck expenses for which Sorce provides reasonable documentation (in the reasonable discretion of the Debtors or upon a finding by the Court) that Sorce incurred, or has indicated that it expects to incur, during the period Oct. 1, 2018, through the Closing, on account of the uncertainty regarding the company's future deriving from the Debtors' decision to pursue the Sale and the Auction. Within 24 hours prior to the Closing, the Debtors will provide to counsel for the Committees and the Bank (a) a revised Exhibit A reflecting the amounts that would be in the Sale Proceeds Account following the Closing, and (b) a revised Exhibit B reflecting the amounts that would be in the DIP Accounts following the Closing. In the event that the Sale Proceeds Account lacks sufficient funds to provide for the payment of the Required Bank Recovery and the Carve-Out, then the Debtors will transfer from the DIP Accounts into the Sale Proceeds Account sufficient funds to provide for all such payments. In the event that, after the transfer provided by the foregoing, the Sale Proceeds Account still lacks the Required Sale Proceeds Account Balance, the Carve-Out attributable to the Debtors' Counsel will be decreased by an amount necessary to so provide, in an amount not to exceed a $50,000 decrease from the amount set forth in Exhibit A. In the event that EYM fails to close the Sale by the Closing Date as a result of its default or failure to perform, then the Debtors, at their option, may proceed to consummate the Sale with JT under its final Bid at the Auction, with all references to EYM therein being deemed references to JT. Any stay imposed by Rule 6004(h) of the effectiveness of the Order is waived and the Order will become effective immediately upon its entry. A copy of the Exhibit A attached to the Order is available for free at: http://bankrupt.com/misc/Bartlett_Management_566_Order.pdf About Bartlett Management Services Bartlett Management Services, Inc., Bartlett Management Indianapolis, Inc., and Bartlett Management Peoria, Inc., owned 33 current franchises of KFC Corporation, the franchisor of the Kentucky Fried Chicken quick-services restaurant chain that provides a diverse menu of chicken and related side dishes and desserts. As of Feb. 28, 2018, Bartlett are operating 32 locations, 28 of which are leased. Bartlett Management Services and its affiliates sought Chapter 11 protection (Bankr. C.D. Ill. Lead Case No. 17-71890) on Dec. 5, 2017. The Debtors have sought joint administration of the cases under Case No. 17-71890. In the petitions signed by Robert E. Clawson, president, Bartlett estimated $1 million to $10 million in assets and $10 million to $50 million in liabilities. The Hon. Mary P. Gorman oversees the cases. Jonathan A Backman, Esq., at the Law Office of Jonathan A. Backman, serves as bankruptcy counsel to the Debtors. The Debtors tapped Valenti Florida Management, Inc., as accountant and financial advisor; Steven A. Nerger of Silverman Consulting, Inc., as chief restructuring officer; and Equity Partners HG LLC as its investment banker and business broker. On Jan. 8, 2018, the Office of the United States Trustee appointed an unsecured creditors' committee in each of the three cases. On Jan. 19, 2018, counsel filed appearances on behalf of all three committees. Goldstein & McClintock LLLP is representing the committees. On Oct. 9, 2018, the Court appointed Equity Partners HG, LLC, as investment banker and business broker. BEARCAT ENERGY: DOJ Watchdog Directed to Appoint Ch. 11 Trustee --------------------------------------------------------------- The having come before the Court on the Stipulation Regarding the Appointment of a Chapter 11 Trustee filed by Debtor Bearcat Energy, LLC, and the Official Committee of Unsecured Creditors of In re Bearcat Energy, LLC, and for the reasons set forth on the record in open court at the hearing on January 28, 2019, Judge Elizabeth E. Brown of the U.S. Bankruptcy Court for the District of Colorado orders the United States Trustee to appoint a Chapter 11 Trustee in the case of Bearcat Energy, LLC, Case No. 17-12011 EEB. About Bearcat Energy Bearcat Energy LLC, owner of coal bed methane wells, equipment and related fixtures located in the State of Wyoming, filed a Chapter 11 petition (Bankr. D. Colo. Case No. 17-12011) on March 14, 2017. In the petition signed by CEO Keith J. Edwards, the Debtor estimated $0 to $50,000 in assets and $1 million to $10 million in liabilities as of the bankruptcy filing. The Hon. Elizabeth E. Brown is the case judge. Kenneth J. Buechler, Esq., at Buechler & Garber, LLC, serves as bankruptcy counsel. An official committee of unsecured creditors has been appointed in the Debtor's case. BERAKAH INVESTMENT: Case Summary & 4 Unsecured Creditors -------------------------------------------------------- Debtor: Berakah Investment Solutions, LLC dba DFW Lease Option 9024 Bretshire Dr Dallas, TX 75228 Business Description: Berakah Investment Solutions is a privately owned company that leases real estate. The Company is the fee simple owner of nine properties in Texas having a total current value of $1.94 million. Chapter 11 Petition Date: February 4, 2019 Court: United States Bankruptcy Court Northern District of Texas (Dallas) Case No.: 19-30473 Judge: Hon. Barbara J. Houser Debtor's Counsel: Robert C. Newark, III, Esq. A NEWARK FIRM 1341 W. Mockingbird Lane, Ste 600W Dallas, TX 75247 Tel: (866) 230-7236 Fax: (888) 316-3398 E-mail: office@newarkfirm.com Total Assets: $1,983,499 Total Liabilities: $1,648,148 The petition was signed by LaShantell Williams, member. A full-text copy of the petition containing, among other items, a list of the Debtor's four unsecured creditors is available for free at: http://bankrupt.com/misc/txnb19-30473.pdf BERRY PETROLEUM: S&P Affirms 'B' ICR, Outlook Stable ---------------------------------------------------- S&P Global Ratings noted that U.S. oil and gas exploration and production (E&P) company Berry Petroleum Corp.'s capital, ownership, and board structure have materially changed following the conversion of the company's preferred equity and its IPO. As a result, S&P no longer believes the company's financial policy is constrained by its ownership by financial sponsors. S&P affirmed its 'B' issuer credit rating on Berry Petroleum Corp. and its subsidiary, Berry Petroleum Co. LLC. The outlook remains stable. At the same time, S&P affirmed its 'B+' issue-level rating on Berry's senior unsecured notes. The recovery rating on this debt remains '2', indicating its expectation for substantial recovery in the event of a payment default. S&P said, "The ratings affirmation reflects our expectation Berry will maintain adequate financial measures over the next couple of years despite our lower commodity prices assumptions, higher capital spending, and dividend distributions in 2019 and 2020, as well as potential $50 million in share repurchases this year. Under our base-case assumptions, including our 2019 and 2020 Brent crude oil price assumption of $55 per barrel, we project core debt ratios to remain solid for the rating, with funds from operations (FFO) to debt averaging above 30% and debt to EBITDA below 2.5x. "The stable outlook reflects our view that Berry Petroleum Co. will have modest growth in production and reserves while maintaining FFO to debt of at least 30% and debt to EBITDA in the 2x-2.5x range under our current commodity price assumptions. "We could lower the rating if we expected FFO to debt to fall below 20% or debt to EBITDA to exceed 4x on a sustained basis with no near-term remedy. This could occur if commodity prices significantly weakened and the company did not take steps to reduce cash outflows. "We could raise the rating on Berry if the company were to improve its operational performance such that the scale of its production and reserves were more consistent with higher-rated peers, while maintaining adequate liquidity and FFO to debt above 20%." BIER INTERNATIONAL: Seeks to Hire Morrison-Tenenbaum as Counsel --------------------------------------------------------------- Bier International, LLC, seeks approval from the U.S. Bankruptcy Court for the Southern District of New York to hire Morrison-Tenenbaum, PLLC, as its legal counsel. The firm will advise the Debtor regarding its duties under the Bankruptcy Code; participate in negotiation with its creditors; assist in the preparation of a plan of reorganization; and provide other legal services related to its Chapter 11 case. The firm will charge these hourly fees: Lawrence Morrison $525 Brian Hufnagel $425 Associates $380 Paraprofessionals $175 Morrison-Tenenbaum received an initial retainer fee of $7,500. The firm is "disinterested" as defined in Section 101(14) of the Bankruptcy Code, according to court filings. Morrison-Tenenbaum can be reached through: Lawrence F. Morrison, Esq. Brian J. Hufnagel, Esq. Morrison-Tenenbaum, PLLC 87 Walker Street, Floor 2 New York, NY 10013 Tel: (212) 620-0938 E-mail: lmorrison@m-t-law.com E-mail: bjhufnagel@m-t-law.com About Bier International Bier International, LLC, sought protection under Chapter 11 of the Bankruptcy Code (Bankr. S.D.N.Y. Case No. 18-13582) on Nov. 19, 2018. At the time of the filing, the Debtor estimated assets of less than $50,000 and liabilities of less than $500,000. The case is assigned to Judge Cecelia G. Morris. Morrison-Tenenbaum, PLLC, is the Debtor's counsel. BLUE CHIP CAPITAL: Seeks to Hire Cohen Baldinger as Legal Counsel ----------------------------------------------------------------- Blue Chip Capital, DC, LLC, seeks approval from the U.S. Bankruptcy Court for the District of Columbia to hire Cohen Baldinger & Greenfeld, LLC, as its legal counsel. The firm will advise the Debtor of its powers and duties in the continued operation of its business and will provide other legal services related to its Chapter 11 case. The firm will charge these hourly fees: Steven Greenfeld $475 Merrill Cohen $495 Augustus Curtis $390 Cohen Baldinger and its members do not represent any interest adverse to the Debtor and its bankruptcy estate, according to court filings. The firm can be reached through: Steven H. Greenfeld, Esq. Cohen Baldinger & Greenfeld, LLC 2600 Tower Oaks Boulevard, Suite 103 Rockville, MD 20852 Phone: (301) 881-8300 E-mail: steveng@cohenbaldinger.com About Blue Chip Capital DC Blue Chip Capital, DC, LLC sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D.D.C. Case No. 19-00062) on January 23, 2019. At the time of the filing, the Debtor had estimated assets of less than $1 million and liabilities of less than $50,000. The case has been assigned to Judge S. Martin Teel, Jr. CABLEVISION SYSTEMS: Moody's Cuts Rating on New $1BB Loan to Ba3 ---------------------------------------------------------------- Moody's Investors Service has assigned a Ba3 rating to Cablevision Systems Corporation's new $1 billion senior secured term loan (due 2027) issued by CSC Holdings, LLC. Proceeds from the new term loan will be used to fully repay the remaining portion of the 10.125% unsecured notes due held at CSC Holdings, LLC. The ratings on the notes to be repaid, will be withdrawn upon close. As a result of this shift in the capital structure to more senior priority debt, Moody's has downgraded the existing bank credit facilities and guaranteed notes held at CSC Holdings, LLC and Neptune Finco Corp. to Ba3, from Ba2. The Company also upsized their existing revolving credit facility to $2.56 billion, which has two tranches with maturities in 2021 and 2024. The B1 Corporate Family Rating, B1-PD Probability of Default Rating, and B3 rating on the senior unsecured notes held at Cablevision Systems Corporation, CSC Holdings, LLC, and Neptune Finco Corp. are unaffected. The Outlook remains Stable. Downgrades: Issuer: CSC Holdings, LLC Senior Secured Bank Credit Facility, Downgraded to Ba3 (LGD3) from Ba2 (LGD2) Gtd Senior Unsecured Regular Bond/Debenture, Downgraded to Ba3 (LGD3) from Ba2 (LGD2) Issuer: Neptune Finco Corp. Senior Secured Bank Credit Facility, Downgraded to Ba3 (LGD3) from Ba2 (LGD2) Gtd Senior Unsecured Regular Bond/Debenture, Downgraded to Ba3 (LGD3) from Ba2 (LGD2) Assignments: Issuer: CSC Holdings, LLC Gtd Senior Secured Revolving Credit Facility, Assigned Ba3 (LGD3) Gtd Senior Secured Term Loan B4, Assigned Ba3 (LGD3) Outlook Actions: Issuer: CSC Holdings, LLC Outlook, Remains Stable RATINGS RATIONALE Cablevision Systems Corporation's ("Cablevision" or "the Company") B1 Corporate Family Rating (CFR) is supported by its large size and somewhat diversified footprint which includes 8.7 million homes passed and 9.9 million subscribers, that generates over $10 billion in revenue -- scale more similar to investment grade companies. The Company is an established operator with a very strong market position in some very large markets, especially in its Optimum footprint which has very favorable demographics. This strength is reflected in very high, industry leading operating metrics including investment-grade like Revenue Per Homes (RPH) passed (currently $1,088), and a Triple Play Equivalent (TPE) ratio at 38%. The Company has an upgraded network that produces superior network speeds (up to 1 gbs) that helps compete with in-market peers and to attract and retain residential and commercial customers, particularly broadband. With revenue growth over 10% and high margins, broadband generates significant earnings and cash flows, which will helps to offset weakness in video and telephony. It also supports the generation of approximately $1.5 billion in annual free cash flow on EBITDA margins near 44%. Moody's expects this strength to continue, supported by its current investments in Fiber-to-The-Home network architecture. The Company also has very good liquidity, with strong operating cash flow, a largely undrawn revolver, substantial covenant cushion, and a manageable maturity profile. The rating is constrained by an aggressive financial policy that tolerates high leverage, that was approximately 5.4x (Moody's adjusted) at the end of the last quarter ended September 30, 2018. While management has publically stated it has a target leverage ratio between 4.5x-5.0x (reported, net of cash and collateralized obligations), management has shown a tolerance for much higher leverage (peaking above 7x) and has capacity (within the terms of its covenants) to take leverage up to as high as 9x. In addition, Moody's expects management to repurchase stock of at least $1.5 billion, possibly up to $2 billion, annually (but no more than free cash flow) pursuant to its recently announced share repurchase program. Moody's also believes the Company's largest shareholder, which has voting control and common ownership with Altice Luxembourg S.A. (B2 Negative), is a risk factor that is likely to constrain Cablevision's rating, especially when there is weakness in the European operation of Luxembourg and an ability to extract cash from the US operations through dividends or other transactions to support that business. With that said, Moody's believes there are currently better options to fund weakness in Europe and understand management has said the separation from the European operations clarifies the prioritization of capital allocation between the two companies and ensures that the US capital structure and capital allocation decisions are independent of any Europe-related considerations. Additionally, Cablevision's video business is under a lot of pressure with high programming costs being passed on to customers, and over the top video streaming competitors drawing market share. This is evidenced by falling subscriber counts (up to -3%) and declining penetration by -1% to -2% annually driving down the Company's Triple Play Equivalent ratio. The Company also faces new wireless broadband threats, as carriers are expected to begin launching 5G technology into Cablevision's markets over the next 12-18 months. While promising, it's uncertain to what extent the Company's agreement with Sprint to create a mobile virtual network will help retain customers. Headquartered in Long Island City, New York, Cablevision Systems Corporation passes 8.7 million homes in 21 states, serving approximately 4.9 million residential and business customers, with revenues generated by about 9.9 million subscribers. The Company is wholly owned by Altice USA, a public company controlled by Patrick Drahi, and is also the direct parent of CSC Holdings, LLC. Revenue for LTM September 30, 2018 was approximately $9.5 billion. CARROLL PERRY: $280K Sale of Sumrall Property to Lamar Approved --------------------------------------------------------------- Judge Katharine M. Samson of the U.S. Bankruptcy Court for the Southern District of Mississippi authorized Carroll Philbert Perry and Bobbie Nell Perry to sell outside the ordinary course of business the real property located at 2478 Rocky Branch Road, Sumrall, Mississippi to Lamar Auto Salvage for $280,000. The sale is free and clear of liens, claims and interest, with such interest attaching to the proceeds of sale. The Debtors are given 21 days from the date of the Order to remove all of their assets located on the subject property. Citizens Bank, the closing attorney as selected by Citizens Bank, the authorized and previously approved real estate agents, and Lamar Auto Salvage will schedule and conduct the standard closing and, upon receipt of the report of closing and settlement statement, the Court, after approving same, will issue an order confirming sale. Carroll Philbert Perry and Bobbie Nell Perry sought Chapter 11 protection (Bankr. S.D. Miss. Case No. 17-52445-KMS) on Dec. 18, 2017. The Debtors tapped Derek A. Henderson, Esq., as counsel. On May 24, 2018, the Court appointed RE/MAX Real Estate Partners. On Aug. 29, 2018, the Court also appointed 4 Corners Properties, LLC as real estate agent with RE/MAX Real Estate Partners. CHARLOTTE RUSSE: Files Chapter 11 to Facilitate Orderly Wind-Down ----------------------------------------------------------------- Charlotte Russe Holdings Corporation together with its subsidiaries on Feb. 4, 2019, disclosed that the Company has voluntarily filed for relief under Chapter 11 of the Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware on February 3, 2019. Charlotte Russe intends to use these proceedings to facilitate an orderly wind-down of a group of approximately 94 of its store locations, while continuing to pursue a going-concern sale of the business and assets. Charlotte Russe and Peek stores and online platforms are currently open and continuing to serve customers. The Company will provide more details about the plans for the closing locations of Charlotte Russe and Peek and their store closing sales in the near term. Charlotte Russe has received a commitment for a debtor in possession financing in the maximum amount of $50 million. If approved by the Bankruptcy Court, the financing will support the Company's operations and administration during the Chapter 11 proceedings. Charlotte Russe has filed a number of customary motions with the U.S. Bankruptcy Court seeking authorization to operate its business in the ordinary course during the Chapter 11 proceedings, including, without limitation, authority to continue payment of employee wages and benefits, and amounts due to shippers and warehousemen, utility service providers and taxing authorities. The Company also seeks authorization from the Court to continue to honor certain customer programs. Additional information regarding Charlotte Russe's Chapter 11 filing and information about the claims process is available at www.donlinrecano.com/charlotterusse or by calling the Company's claims agent, Donlin Recano, at (877) 864-4836 or submitting an inquiry via e-mail to: crinfo@donlinrecano.com. Cooley LLP is serving as the Company's legal counsel, Berkeley Research Group is serving as its financial advisor, and Guggenheim Securities, LLC is serving as its investment banker. About Charlotte Russe Charlotte Russe -- http://www.CharlotteRusse.com/-- is a fashion brand for young women, offering affordable on-trend apparel, shoes and accessories for all sizes, with a fun and engaging shopping experience wherever and whenever she wants. Charlotte Russe operates in the contiguous 48 states, Hawaii and Puerto Rico through their online store and mobile app, as well as over 500 brick-and-mortar stores located primarily in malls and outlet centers. In 2016, the Company expanded to include Peek Kids, operating 10 stores and an ecommerce site. CHF COLLEGIATE: S&P Cuts Rating on 2017A/B Bonds to BB+ ------------------------------------------------------- S&P Global Ratings lowered its long-term rating to 'BB+' from 'BBB-' on New Hope Cultural Education Finance Corp., Texas' series 2017A and taxable series 2017B student housing revenue bonds (the bonds) issued on behalf of CHF Collegiate Housing Island Campus LLC (CHF--Island Campus). CHF Collegiate Housing Island Campus LLC is a limited liability company, whose sole member is the Foundation, an Alabama not-for-profit corporation. The bonds were issued to finance the acquisition costs of the Miramar facilities on the Texas A&M University -- Corpus Christi's (A&M--Corpus Christi or the university) Island Campus. The outlook is negative. "The rating downgrade and negative outlook on the bonds reflect our opinion of management's projected debt service coverage of 1.08x for fiscal 2019, which is below the rate covenant of 1.2x, and our expectation of continued pressure on occupancy at the project as a result of recent declines in enrollment at A&M--Corpus Christi," said S&P Global Ratings credit analyst Mary Ellen Wriedt. The rating reflects S&P's view of these risks: -- Occupancy rates at the Miramar facilities of 88% in fall 2018; 83% as of Dec. 21, 2018; and 84% in spring 2019 that are falling short of projections of 95% for the academic year; -- Debt service coverage (DSC) that is projected by management at 1.08x for fiscal 2019, below the 1.2x rate covenant given the lower-than-projected occupancy; and -- Significant competition from both on-campus housing, at the university's Momentum Campus, and off-campus housing in the area, with several off-campus developments opening in recent years, a majority of which are geared toward students. The rating also reflects S&P's assessment of these credit strengths: -- The good connection between the university and the project, demonstrated by the on-campus location, as well as by the university's active role in marketing new housing as part of its own housing stock and eventual ownership of the project once the bonds are repaid, and -- The bonds' adequate security features, including the nonrecourse security pledge of net project revenue, a debt service reserve fund (DSRF) fully funded at maximum annual debt service (MADS), a 1.2x annual DSC covenant, a 1.2x additional bonds test, and business-interruption insurance requirements. S&P said, "The negative outlook reflects our expectation that the project's revenue could remain challenged by underperforming occupancy, rendering it difficult to generate cash flows sufficient to meet debt service requirements. In addition, we expect the university to stabilize and grow enrollment from current levels. "We could consider a lower rating if lower-than-targeted occupancy results in net project operating revenue that leads to DSC below 1.0x or if the fully funded DSRF is not maintained. In addition, we might consider a lower rating if future on-campus housing plans were to differ significantly from current plans; if off-campus housing competition were to grow even more significantly than current expectations; or if the university were to experience significant declines in undergraduate enrollment, housing demand, or occupancy. "We do not expect to raise the rating within the two-year outlook period, but a higher rating could be considered if DSC increases to levels commensurate with a higher rating." Approximately $84 million in bonds are outstanding. CLEAR CHANNEL: Moody's Rates New $2.2BB Subordinated Notes 'Caa1' ----------------------------------------------------------------- Moody's Investors Service assigned Clear Channel Worldwide Holdings, Inc.'s proposed $2.2 billion senior subordinated notes due 2024 a Caa1 rating. The B3 corporate family rating, B2 senior note, and existing Caa1 senior subordinate note were all affirmed. The rating of Clear Channel International B.V.'s senior note due 2020 was affirmed at B3. The outlook was changed to stable from negative. The proceeds of the senior subordinated 5 year notes are expected to be used to refinance the existing $2.2 billion of senior subordinated notes due March 2020. The new notes are expected to result in higher interest expense compared to the existing 7.625% senior subordinated notes. The outlook was changed to stable to reflect the better maturity and liquidity profile with regard to the company's subordinated notes maturity which were due in just over one year as well as expectations that the company will operate on a standalone basis as part of the separation agreement with iHeart, and also due to continued improvement in operating performance. The ratings of the existing senior subordinated notes will be withdrawn after repayment. Assignments: Issuer: Clear Channel Worldwide Holdings, Inc. $2.2 billion Gtd Senior Subordinated note due 2024, Assigned Caa1 (LGD6) Affirmations: Issuer: Clear Channel International B.V. 375 million Gtd Senior notes due 2020, Affirmed B3 (LGD4) Issuer: Clear Channel Worldwide Holdings, Inc. Corporate Family Rating, Affirmed B3 Probability of Default Rating, Affirmed B2-PD Speculative Grade Liquidity Rating, Affirmed SGL-3 275 million Series A Gtd Senior Subordinated notes due 2020, Affirmed Caa1 (LGD6) 1,925 million Series B Gtd Senior Subordinated notes due 2020, Affirmed Caa1 (LGD6) 735.75 million Series A Gtd Senior notes due 2022, Affirmed B2 (LGD3) $1,989.25 million Series B Gtd Senior notes due 2022, Affirmed B2 (LGD3) Outlook Actions: Issuer: Clear Channel International B.V. Outlook, Changed To Stable From Negative Issuer: Clear Channel Worldwide Holdings, Inc. Outlook, Changed To Stable From Negative RATINGS RATIONALE CCW's B3 CFR primarily reflects CCOH's very high leverage of 9.2x as of Q3 2018 (excluding Moody's standard lease adjustment) and a weak EBITDA minus capex to interest ratio of only 1x. The company benefits from its position as one of the largest outdoor advertising companies in the world with diversified international operations and high broadcast cash flow (BCF) margins of 38% YTD as of Q3 2018 in the Americas division. There is also the ability to convert traditional billboards to digital which Moody's expects will lead to higher revenue and EBITDA over time with appeal to a broader range of advertisers. Outdoor advertising is not likely to suffer from disintermediation as other traditional media outlets have and the industry also benefits from restrictions on the supply of additional billboards (particularly in the US) which helps support advertising rates and high asset valuations. The separation of the company from iHeart Communications, Inc. (iHeart) is a positive, although the strategy for the company is unclear and will be determined by former iHeart debtholders who will receive 89% of the equity as part of iHeart's bankruptcy settlement. Moody's expects the new owners of CCOH will consider selling the company or some of the assets with the intention to delever the balance sheet to more sustainable levels. While Moody's is positive on the prospects for the outdoor advertising industry, Moody's expects results will be more volatile than it was in the past when the industry was subject to longer term contracts. The debt balance is also in US$ where as a significant portion of revenue is denominated in foreign currencies which can increase volatility. CCOH's liquidity profile is expected to be adequate as indicated by its Speculative Grade Liquidity Rating of SGL-3. The cash balance was $191 million as of Q3 2018 and the company has a $125 million asset backed revolving facility due 2023 ($86 million of letters of credit issued with $27 million of availability). Interest coverage (excluding Moody's standard adjustments) is approximately 1.5x as of Q3 2018. Free cash flow as of LTM Q3 2018 after capex and dividends was negative $92 million or negative $5 million after capex. Moody's anticipates that the company will reduce its negative free cash flow generation despite higher interest expense as EBITDA increases and no additional dividends are paid in the near term. Capex is expected to be $219 million in 2018. Upon separation, iHeart will provide a $200 million 3 year unsecured revolving line of credit to the company, although Moody's would expect the company to put in place a more traditional revolver facility absent a sale of the company. The company is projected to recover approximately $150 million on its intercompany note with iHeart (14.4% in cash on its allowed claim of $1,031,721,306) upon exit of iHeart's bankruptcy. The company also expects to issue a modest amount of preferred equity that will provide an additional boost to liquidity. The stable outlook reflects its projection of high single digit EBITDA growth going forward due to the strength of the outdoor industry and lower expenses as the company will not need to pay trademark expenses for use of the Clear Channel name going forward. The outlook also reflects the expectation that CCOH will operate on a standalone basis going forward with no additional distributions or dividends to iHeart. While it's unclear what the strategy of the new owners will be, Moody's expects that there will be a focus on reducing the leverage of the company to more sustainable levels or a sale of the company as a whole. The rating could be upgraded if leverage decreased well below 7x with a positive free cash flow to debt ratio in the mid-single digits and an EBITDA minus capex to interest coverage ratio of over 1.5x. An adequate liquidity profile would also be required. The rating could be downgraded if leverage increased above 10x or if the liquidity position deteriorated so that there was an increased possibility of default. An EBITDA minus capex to interest coverage ratio sustained below 1x due to economic weakness or poor operational performance also has the potential to lead to a downgrade. Clear Channel Worldwide Holdings, Inc. is an intermediate holding company which houses the assets of the international outdoor advertising operating segment of Clear Channel Outdoor Holdings, Inc. Headquartered in San Antonio, Texas, CCOH is a leading global outdoor advertising company that generates LTM revenues of approximately $2.7 billion as of Q3 2018. iHeartCommunications, Inc. which is currently operating in Chapter 11 bankruptcy owns 89% of CCOH and controls 99% of the voting power. Upon exit from iHeart's bankruptcy process, former iHeart debtholders are expected to own 89% of CCOH's equity. CLOUD PEAK: S&P Cuts ICR to CCC on Potential Restructuring ---------------------------------------------------------- S&P Global Ratings noted that U.S.-based thermal coal producer Cloud Peak Energy Resources LLC announced on Jan. 29, 2019, that it retained restructuring advisers to review its capital structure and restructuring alternatives. S&P believes the risk of a distressed exchange or other restructuring within the next year is high given the deeply discounted price of the company's debt and its expectation of ongoing challenging operating conditions for the company. S&P is lowering the issuer credit rating on Cloud Peak to 'CCC' from 'CCC+'. The outlook is negative. S&P said, "At the time, we are lowering the issue-level rating on the company's second-lien notes to 'CCC' from 'CCC+', with the '3' recovery rating unchanged. We are also lowering our issue-level rating on the company's senior unsecured notes to 'CC' from 'CCC-', with the '6' recovery rating unchanged." The downgrade reflects S&P's expectation of a potential distressed exchange or restructuring within the next year following the company's announcement that it retained restructuring advisers. Cloud Peak's next material maturity is not until 2021 ($290.4 million second-lien notes), however the company's debt is trading at more than a 50% discount to par. The negative outlook reflects the risk that Cloud Peak could enter into a distressed exchange of its debt due in 2021 and in 2024 within the next 12 months. The company has deteriorating performance and limited options to refinance because it faces lower price realizations and higher operating costs. S&P said, "We expect the company to operate at near break-even FOCF and EBITDA interest coverage of about 1x. We could lower the rating on Cloud Peak in the next 12 months if a default, distressed exchange, or other debt restructuring appears to be inevitable within six months." S&P said, "We could revise the outlook to stable or even raise the rating in the next 12 months if Cloud Peak's domestic price realizations increase by at least 5% to $13.00 per ton from current assumptions, or the company secured new contracts to boost cash flow immediately. We would expect this to result in positive operating cash flow interest coverage approaching 1.5x." CURAE HEALTH: $2.5M Sale of Panola Hospital to Progressive Approved ------------------------------------------------------------------- Judge Charles M. Walker of the U.S. Bankruptcy Court for the Middle District of Tennessee authorize Curae Health, Inc. and its debtor-affiliates to sell Panola Medical Center to Progressive Medical Management of Batesville, LLC, or its designee for $2.5 million. No competing bids were submitted for the Panola Medical Center and thus no Auction was conducted. Pursuant to the Panola APA and Bidding Procedures, the Successful Bidder was the Buyer. The sale is free and clear of all Liens, with any and all Liens attaching to the net proceeds of the sale. Time is of the essence and, accordingly, the 14-day stays imposed by Rules 6004(h) and 6006(d) of the Bankruptcy Rules are waived with respect to the order, and the order will take effect immediately upon its entry. Notwithstanding anything to the contrary in the Order, or in any order or notice filed in connection with the sale of the Proposed Purchased Assets, the following agreements will be assumed and assigned to the Successful Bidder as of the effective date of sale of the Proposed Purchased Assets: (a) the Hospital Services Agreement between Debtor Batesville Regional Medical Center, Inc. and Cigna Health and Life Insurance Co., effective Aug. 1, 2017; (b) the Provider Group Services Agreement between Debtor Batesville Regional Physicians, LLC and CHLIC, effective Aug. 1, 2017; and (c) the Institutional Services Agreement between the Debtor Batesville Regional Medical Center, Inc. and Cigna Behavioral Health, Inc., effective April 1, 2016. Upon the effective date of the sale of the Proposed Purchased Assets, a cure payment of $1,104 will be paid to Cigna by the Successful Bidder, which will cure any and all defaults under the Cigna Provider Agreements and compensate Cigna for its actual pecuniary losses as required by section 365(b)(1) of the Bankruptcy Code. About Curae Health Curae Health is a 501(c)(3) not-for-profit health system formed to address the needs of rural healthcare. Focusing on rural community hospitals in the Southeastern US, Curae collaborates with medical staff and communities to add new services and upgrade the facilities, alleviating the need for patients to travel long distances for their healthcare needs. On Aug. 24, 2018, Curae Health, Inc., and its affiliates sought Chapter 11 protection (Bankr. M.D. Tenn. Lead Case No. 18-05665). Curae Health estimated $10 million to $50 million in total assets and $50 million to $100 million in total liabilities. The cases are assigned to Judge Charles M. Walker. The Debtors tapped Polsinelli PC as counsel; Glassratner Advisory & Capital Group LLC, as financial advisors; Egerton McAfee Armistead & Davis, P.C., as special counsel; Morgan Stanley as investment banker; and BMC Group, Inc., as claims and noticing agent. CURAE HEALTH: Management Services Agreement with Manager Approved ----------------------------------------------------------------- Judge Charles M. Walker of the U.S. Bankruptcy Court for the Middle District of Tennessee authorize Curae Health, Inc. and its debtor-affiliates to enter into the Sixth Amendment to Hospital Management Agreement with Strategic Healthcare Resources, LLC, as the Manager, effective Jan. 1, 2019. The Sixth Amendment will be effective as of Jan. 1, 2019. The 14-day stays imposed by Rules 6004(h) and 6006(d) of the Bankruptcy Rules are waived with respect to the Order, and the Order will take effect immediately upon its entry. Within two business days after entry of the Order, the Debtors will serve the Order on the Notice Parties provided in the Motion. About Curae Health Curae Health is a 501(c)(3) not-for-profit health system formed to address the needs of rural healthcare. Focusing on rural community hospitals in the Southeastern US, Curae collaborates with medical staff and communities to add new services and upgrade the facilities, alleviating the need for patients to travel long distances for their healthcare needs. On Aug. 24, 2018, Curae Health, Inc., and its affiliates sought Chapter 11 protection (Bankr. M.D. Tenn. Lead Case No. 18-05665). Curae Health estimated $10 million to $50 million in total assets and $50 million to $100 million in total liabilities. The cases are assigned to Judge Charles M. Walker. The Debtors tapped Polsinelli PC as counsel; Glassratner Advisory & Capital Group LLC, as financial advisors; Egerton McAfee Armistead & Davis, P.C., as special counsel; Morgan Stanley as investment banker; and BMC Group, Inc., as claims and noticing agent. DAMODAR LLC: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Damodar, LLC 9901 United Drive Houston, TX 77036 Business Description: Damodar, LLC is a Single Asset Real Estate company (as defined in 11 U.S.C. Section 101(51B)). Chapter 11 Petition Date: February 4, 2019 Court: United States Bankruptcy Court Southern District of Texas (Houston) Case No.: 19-30683 Judge: Hon. Jeffrey P. Norman Debtor's Counsel: Simon Richard Mayer, Esq. HUGHES WATTERS & ASKANASE Total Plaza 1201 Louisiana, 28th Floor Houston, TX 77002 Tel: 713-759-0818 Fax: 713-759-6834 Email: srmayer@hwa.com Estimated Assets: $10 million to $50 million Estimated Liabilities: $10 million to $50 million The petition was signed by Dharmendra "Danny" Patel, member. A full-text copy of the petition is available for free at: http://bankrupt.com/misc/txsb19-30683.pdf List of Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ BancorpSouth Bank $6,987,545 Attn: Alicia Ratcliff 501 South Washington Marshall, TX 75670 BancorpSouth Bank $1,491,979 Attn: Alicia Ratcliff 501 S. Washington Marshall, TX 75670 BancorpSouth Bank $470,336 Attn: Alicia Ratcliff 501 South Washington Marshall, TX 75670 Alief I.S.D. $72,178 P.O. Box 368 Alief, TX 77411 Ann Harris Bennett $71,838 Tax Assessor-Collector P.O. Box 3547 Houston, TX 77253-3547 Intercontinental Hotels Group $34,486 P.O. Box 101074 Atlanta, GA 30392-1074 Pride Management Inc. $25,000 3536 Valmont Ave. Beaumont, TX 77706 Risk Advisors of America $18,151 240 Lookout Place Maitland, FL 32751 Ascentium Capital $17,847 Greenback Cost Recovery $13,729 P.O. Box 22656 Houston, TX 77227 H.E.S. Enterprise LLC $10,000 22914 Armur Drive Porter, TX 77365 Sysco Houston, Inc. $4,890 10710 Greens Crossing Blvd. Houston, TX 77038-2716 Equi-Tax Inc. $4,341 Tax Assessor/Collector P.O. box 73109 Houston, TX 77273-3109 Hubert $809 25401 Network Place Chicago, IL 60673-1254 OBEY Imaging Supplies, Inc. $798 16691 Gothard St., Unit B Huntington Beach, CA 92647 Royal Cup Coffee $786 P.O. Box 206011 Dallas, TX 75320-6011 HD Supply $702 P.O. Box 509058 San Diego, CA 92150-9058 Guest Supply $664 P.O. Box 6771 Somerset, NJ 08875-6771 Anytime Pest Elimination $649 5067 Garth Rd. Baytown, TX 77521 Comcast $639 P.O. Box 36701 Philadelphia, PA 19101-0601 EGALET CORP: Emerges From Bankruptcy With $61M Debt Extinguished ---------------------------------------------------------------- BankruptcyData.com reported that Egalet Corporation, et al., notified the Court hearing the Egalet Corporation case that the Debtors' First Amended Chapter 11 Plan of Reorganization became effective as of January 31, 2019. The Court had previously confirmed the Plan on January 14, 2019. The Debtors' Disclosure Statement provides that "The overall purpose of the Plan is to restructure the Debtors' Estates in a manner designed to efficiently maximize recovery to stakeholders. The Debtors have sought to achieve this purpose through the Iroko Acquisition, a debt for equity restructuring of the 5.50% Convertible Notes and 6.50% Convertible Notes, the issuance of the New Secured Notes and the other transactions contemplated by the Plan." About Egalet Corporation Headquartered in Wayne, Pennsylvania, Egalet Corporation is a fully integrated specialty pharmaceutical company focused on developing, manufacturing and commercializing innovative treatments for pain and other conditions. Egalet Corporation and Egalet US Inc. sought bankruptcy protection on Oct. 30, 2018 (Bankr. D. Del. Lead Case No. Case No. 18-12439). In the petition signed by Robert Radie, president and chief executive officer, the Debtors declared total assets of $99,980,000 and total debt of $143,338,000. The Debtors tapped Dechery LLP as general counsel; Young Conaway Stargatt & Taylor, LLP, as local Delaware counsel; Berkeley Research Group LLC as financial restructuring advisor; Piper Jaffray & Co. as investment banker; and Kurtzman Carson Consultants LLC as claims agent. ENERGYSOLUTIONS INC: S&P Lowers ICR to 'B-' on Weakened Earnings ---------------------------------------------------------------- S&P Global Ratings noted that Salt Lake City-based EnergySolutions Inc. incurred greater than anticipated charges on one project and a delay in the startup of another, resulting in a meaningful weakening of its earnings and credit measures. S&P is lowering its issuer credit rating on EnergySolutions by one notch to 'B-' and lowering our issue-level ratings commensurately. S&P said, "The downgrade reflects our view that, given the delay in permitting for Southern California Edison Co.'s San Onofre Nuclear Generating Station (SONGS) project, EnergySolutions' earnings and cash flows in 2019 are not likely to result in credit measures appropriate for the previous rating. We earlier indicated that if the company's adjusted debt to EBITDA ratio rose to 6.5x and was likely to stay above that level that we could lower the ratings." This now appears to be the case, as the wind-down of decommissioning projects at Zion, Ill., and La Crosse, Wis., along with the absence of more meaningful decommissioning progress on the SONGS project, will keep credit measures depressed. The negative outlook on EnergySolutions reflects the potential for lower ratings if liquidity weakens further while debt leverage remains very high. Charges related to the closure of the Zion station decommissioning project, along with the meaningful delay in starting the SONGS decommissioning project, meaningfully pressured the company's earnings and margins. There is some uncertainty as to whether the company can win enough new decommissioning work while maintaining profitability on its core waste logistics and disposal services to produce credit measures that support the existing ratings, particularly if receipt of the CEQA permit for SONGS is delayed to beyond 2019. In addition, a springing leverage covenant under the company's revolving credit facility (which it uses to fund letters of credit) limits the company's effective borrowing availability. If the company cannot maintain adequate availability either via an amendment or through good operating performance, its liquidity could become constrained, potentially leading to lower ratings. S&P said, "We could lower our ratings on EnergySolutions if liquidity becomes constrained while adverse conditions persist or operational execution is not satisfactory, to the point that we view EnergySolutions' capital structure as unsustainable. This may be indicated by adjusted debt to EBITDA rising above 9x with limited prospects for improvement. This scenario could occur if the operating environment for nuclear decommissioning services deteriorates and if competition intensifies. Liquidity is key to the ratings, and if the company cannot comply with or amend its covenant to allow for sufficient headroom and the risk of a covenant breach increases, then we may lower the ratings. "We could revise the outlook to stable if the company obtains an amendment to its credit facility to allow for 15% EBITDA headroom. Another route is if the company receives the necessary permits for its decommissioning projects sooner than expected and realizes revenue and earnings from such projects of a sufficient magnitude to allow for more meaningful paydown of its revolver. "While less likely in the next year given the weakness of the company's credit measures, we could raise our ratings if EnergySolutions' performance on current decommissioning projects and new project wins meaningfully increase revenue and cash flow generation beyond our base-case expectations. We could upgrade the company if leverage continues to decrease, with our adjusted debt-to-EBITDA metric decreasing to below 6.5x and likely to remain there into 2020. Management and the firm's private equity sponsors' commitment to keep leverage below that threshold on a sustained basis while maintaining adequate liquidity would also be a key consideration." FALLS EVENT CENTER: Trustee Taps RMA as Accountant -------------------------------------------------- Michael Thomson, the Chapter 11 trustee for The Falls Event Center LLC, received approval from the U.S. Bankruptcy Court for the District of Utah to hire Rocky Mountain Advisory, LLC, as his accountant. The firm will advise the trustee regarding the Debtor's finances; assist in the preparation of monthly operating reports; and provide other accounting services necessary to administer the Debtor's bankruptcy estate. The firm's hourly rates range from $140 to $395. RMA and its principals are "disinterested" as defined in section 101(14) of the Bankruptcy Code, according to court filings. The firm can be reached through: Gil A. Miller Rocky Mountain Advisory, LLC 215 South State Street, Suite 550 Salt Lake City, Utah 84111 Phone: 801.428.1602 / 801.428.1600 Fax: 801.428.1601 Email: gmiller@rockymountainadvisory.com About The Falls Event Center The Falls Event Center LLC owns various properties. It also owns a 100 percent membership interest in non-debtor subsidiaries The Falls at Cutten Road, LLC and The Falls at Stone Oak, LLC, each owning a single asset in the form of real property. The Falls Event Center sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D. Utah Case No. 18-25116) on July 11, 2018. At the time of the filing, the Debtor estimated assets of $50 million to $100 million and liabilities of $100 million to $500 million. Judge R. Kimball Mosier oversees the case. Ray Quinney & Nebeker P.C. is the Debtor's legal counsel. The Debtor tapped Gil Miller and his firm Rocky Mountain Advisory, LLC, as restructuring advisors. The Office of the U.S. Trustee appointed an official committee of unsecured creditors on July 27, 2018. The Debtor tapped Holland & Hart, LLP as its legal counsel. Michael Thomson was appointed as the Debtor's Chapter 11 trustee. Dorsey & Whitney LLP is the trustee's counsel. FORTRESS TRANSPORTATION: Moody's Affirms B1 CFR, Outlook Positive ----------------------------------------------------------------- Moody's Investors Service affirmed the B1 corporate family and senior unsecured ratings of Fortress Transportation and Infrastructure Investors LLC, as well as the company's positive outlook. Moody's withdrew the outlook on FTAI's existing instrument ratings for its own business reasons. Affirmations: Issuer: Fortress Trnsp & Infrastructure Investors LLC Corporate Family Rating, Affirmed B1 Senior Unsecured Regular Bond/Debenture, Affirmed B1 Outlook Actions: Issuer: Fortress Trnsp & Infrastructure Investors LLC Outlook, Remains Positive RATINGS RATIONALE Moody's affirmed FTAI's ratings on the basis of the firm's growing and profitable aircraft engine leasing business, as well as the performance risks associated with the company's investments in infrastructure projects at its Jefferson Terminal, Repauno, and Long Ridge port facilities. FTAI's strong capital position continues to be a credit strength, whereas rapid growth of the leasing business and the company's limited alternate liquidity are credit challenges. The positive rating outlook reflects the strong operating prospects for the company's aircraft engine leasing business as well as the improving cash flow performance of its Jefferson Terminal facility, which diversifies and strengthens the company's operations. FTAI continues to expand its investment in aircraft engines and aircraft. At September 30, FTAI's aircraft and aircraft engines assets totaled $1.3 billion and numbered 62 and 135 respectively, representing a more than doubling of the fleet in the last two years. The rapid growth expands the firm's competitive positioning in the leasing of spare engines, though it is also accompanied by elevated operating risk, given lower average utilization and shorter average remaining lease term compared to leased aircraft. Growing demand for spare engines together with FTAI's focus on the most popular models helps to offset these risks. FTAI's development of Jefferson Terminal in Beaumont, Texas, including multi-modal crude oil and refined products handling capacity, has progressed to the point that contracted use of the capacity will ramp up significantly during 2019, generating growing cash flows. However, volumetric risk is an ongoing concern, given the high cyclicality of energy markets. Given the strengthened performance prospects of the property, as well as its dependence on revenues from the energy sector, Moody's is now evaluating the credit profile of Jefferson Terminal under Moody's Midstream Energy methodology. Cash flows at FTAI's other projects have been slower to develop and rely on the firm's ability to contract capacity and access incremental project financing, which is uncertain. FTAI's strong capital position remains a key rating strength. The company's ratio of tangible common equity to tangible managed assets measured 36.2% at September 30, which compares well with other aircraft leasing companies whose ratios range from about 19% to 28%. However, Moody's believes that FTAI needs to maintain a strong capital cushion, given the performance risks of its infrastructure investments. FTAI's ratings could be upgraded if the company strengthens its aircraft and engine leasing franchise positioning through moderate growth and higher customer diversification, while maintaining strong profitability; and if the company's Jefferson Terminal generates cash flows adequate to service project financing, thereby reducing the contingent reliance on FTAI's leasing businesses. Ratings could be downgraded if profitability in leasing operations materially weaken, leverage materially increases, or if infrastructure projects experience delays or increased costs that weaken the timing and strength of operating returns. FULLBEAUTY BRANDS: Written Plan Confirmation Order Entered ---------------------------------------------------------- Judge Robert Drain of the U.S. Bankruptcy Court for the Southern District of New York on Tuesday afternoon entered a written order approving the disclosure statement and confirming the amended prepackaged plan of reorganization filed by FULLBEAUTY Brands Holdings Corp., and its debtor-affiliates, paving the way for the Debtors to exit Chapter 11. The New York-based chain selling women's plus-size apparel and home goods commenced bankruptcy proceedings Sunday evening and obtained verbal approval of the plan Monday afternoon. Fullbeauty, which sells online and through catalogs, and nine affiliated entities commenced a prepackaged Chapter 11 after entering into a restructuring support agreement with key stakeholders that include the company's equity sponsors, Apax Partners and Charlesbank Capital Partners; the holders of 100% of its first-in, last-out term loan claims; the holders of more than 99% of its first lien term loan claims; and the holders of more than 95% of its second lien term loan claims. As of September 30, 2018, the Debtors reported approximately $1.37 billion in book value in total assets and approximately $1.41 billion in book value in total liabilities. As of the Petition Date, the Debtors' capital structure consisted of outstanding funded-debt obligations in the aggregate principal amount of approximately $1.3 billion, consisting of the ABL Credit Facility, including the ABL Facility and the FILO Facility, the First Lien Credit Facility, and the Second Lien Credit Facility. Specifically, the Debtors' outstanding funded-debt obligations are: Outstanding Maturity Principal Debt Instrument Facility Size Date Amount --------------- ------------- ---------- ------------ ABL Facility $10,000,000 10/14/2020 $68,900,000 FILO Facility $75,000,000 10/14/2020 $75,000,000 First Lien Credit $820,000,000 10/14/2022 $782,000,000 Second Lien Credit $345,000,000 09/15/2023 $345,000,000 ------------ $1,271,000,000 The Plan will reduce the Company's outstanding indebtedness by roughly $900 million. Upon emergence, the Company's Post-Emergence Capital Structure will be: Principal Debt Instrument Outstanding --------------- ------------ Exit ABL Facility (including $71,000,000 letters of credit obligations) Exit New Money Facility $30,000,000 New First Lien Term Loan $252,000,000 New Junior Loan $15,000,000 - $50,000,000 -------------- $368,000,000 - $403,000,000 The Plan provides for this treatment of Claims against and Interests in the Debtors: * Holders of Allowed Administrative Claims, Allowed Priority Tax Claims, Allowed Other Secured Claims, Allowed Other Priority Claims, and Allowed Professional Claims will (i) be paid in full in Cash in the ordinary course of business, (ii) be Reinstated, (iii) receive the collateral securing the Claim, or (iv) be otherwise rendered Unimpaired, each as applicable; * Holders of Allowed ABL Claims shall be paid in full in Cash using the proceeds from the Exit ABL Facility and, in the case of outstanding letters of credit, each letter of credit shall be (i) cancelled and replaced, (ii) cash collateralized in accordance with section 2.03(f) of the ABL Credit Agreement, or (iii) backstopped or otherwise treated in a manner satisfactory to the applicable L/C Issuer (as defined in the ABL Credit Agreement) in its sole and absolute discretion; * Holders of Allowed FILO Claims will receive their Pro Rata Share of $75 million of the New First Lien Term Loan and accrued interest; * Holders of Allowed First Lien Claims shall receive, in full and final satisfaction of their First Lien Claims, their Pro Rata Share of the following: (i) $175 million in aggregate principal amount of the New First Lien Term Loan; and (ii) subject to Article III.B.6.c of the Plan, at least 87.5% of the New Common Stock, subject to dilution by the Option Rights, Warrants, and Management Incentive Plan; provided that a Holder of an Allowed First Lien Claim may, by selecting the appropriate box on the Class 5 Ballot, elect to receive in lieu of New Common Stock (which forfeited shares shall be distributed to non-electing Holders of Allowed First Lien Claims based on their Pro Rata Share) a principal amount of the New Junior Loan that is equal to 85% of the Exchange Benchmark Value (which is $79 million or the midpoint range of the Plan Equity Value) of such Holder's original New Common Stock distribution (i.e., a 15% discount to the Exchange Benchmark Value of its original New Common Stock distribution); provided, further, that electing Holders of Allowed First Lien Claims shall not receive more than $35 million in aggregate principal amount of the New Junior Loan. In the event that electing Holders of First Lien Claims (in selecting the appropriate box on the Class 5 Ballot) oversubscribe for the $35 million in aggregate principal amount of the New Junior Loan available pursuant to the Class 5 treatment, each such electing Holder of First Lien Claims will receive its Pro Rata Share of the $35 million in aggregate principal amount of the New Junior Loan with the remaining portion of the electing Holder's First Lien Claim to be satisfied with New Common Stock; * Holders of Allowed Second Lien Claims shall receive, in exchange for full and final satisfaction, settlement, release, and discharge of their Second Lien Claim, the following: (i) if Class 6 votes to accept the Plan, its Pro Rata Share of (a) $15 million of the New Junior Loan, (b) 10% of the New Common Stock, subject to dilution by the Option Rights, Warrants, and Management Incentive Plan, and (c) the Second Lien Warrant Package as set forth in the Plan and the Warrant Documents or (ii) if Class 6 votes to reject the Plan, no Holder of an Allowed Second Lien Claim shall receive any distribution under the Plan, and the 10% of the New Common Stock shall be reallocated to the Holders of Allowed First Lien Claims in Class 5 and distributed in accordance with Article III.B.5.c of the Plan; * Holders of Allowed General Unsecured Claims shall have the Claims Reinstated; * Intercompany Claims shall receive be Reinstated, compromised, or cancelled at the election of the Debtors or the Reorganized Debtors, as applicable, and in accordance with the Restructuring Support Agreement; * Holders of Interests in Holdings shall have the Interests cancelled and extinguished and be of no further force and effect, whether surrendered for cancelation or otherwise, and there shall be no distribution to Holders of Interests in Topco or Holdings on account of any such Interests; and * Holders of Intercompany Interests shall have such Intercompany Interest Reinstated, compromised, or cancelled at the election of the Debtors or the Reorganized Debtors, as applicable, and in accordance with the Restructuring Support Agreement. According to Katherine Doherty, writing for Bloomberg News, Judge Drain said Monday there were good reasons to approve the Plan promptly, including that every creditor had voted for the plan, and that the company has foreign suppliers that may not be comfortable selling to a company in bankruptcy. "We structured this deal as if bankruptcy never happened for our trade creditors, vendors and employees to avoid further disruption to the company," Jon Henes at Kirkland & Ellis, Fullbeauty's counsel, said in an interview, according to Bloomberg. "In this situation, every day in court is another day of costs without any corresponding benefit." The previous record for the fastest Chapter 11 process is held by Blue Bird Body Co., which exited bankruptcy in 2006 in less than two days, the report noted. Fullbeauty and its affiliates are a direct-to-consumer retailer in the growing U.S. plus-size apparel market with over $825.3 million in direct plus-size sales in 2018. The Debtors started their businesses in 1901 as an early pioneer in the direct-to-consumer fashion market and expanded their presence over the past 117 years to include web, mobile, and tablet platforms. The Debtors serve both women and men, offering an assortment of plus-size apparel, swimwear, footwear, and home decor. Each of the Debtors' seven brands provide a solution targeted to specific customer needs. In addition to these brands, the Debtors also operate a dedicated plus-size clothing website and eCommerce platform, fullbeauty.com, which offers their proprietary products. On December 18, 2018, the Debtors entered into the restructuring support agreement with all of their major stakeholders, pursuant to which the Debtors agreed to a comprehensive financial reorganization of their capital structure. Pursuant to the Restructuring Support Agreement, on January 6, 2019, the Debtors commenced a prepetition solicitation process and distributed the Joint Prepackaged Chapter 11 Plan of Reorganization and a related disclosure statement to creditors entitled to vote on the Plan. As of January 24, 2019, the proposed Plan voting deadline, the holders of 100% of first-in, last-out claims, 100% of first lien claims, and 100% of the second lien claims have voted to accept the Plan. The Bankruptcy Court held a hearing Monday afternoon at 2:00 p.m. in White Plains. William K. Harrington, the United States Trustee for Region 2, tried to stop confirmation of the Plan, arguing that "the lack of adequate notice renders the Plan unconfirmable." The U.S. Trustee also argued that the Plan incorporates provisions that violate the Section 503(C) of the Bankruptcy Code as The Management Incentive Plan and the Key Employee Incentive and Retention Plans are all authorized pursuant to the Plan, but there is no information presented allowing any determination that the various plans satisfies the requirements under Section 503(C). Also, the Plan includes an exculpation provision that extends beyond fiduciaries of the estate. In response, the Debtors reminded the Court they have already provided actual notice to all parties impaired by the Plan, as well as to parties not impacted in any way by the Plan, including, but not limited to, the top 30 largest unsecured creditors and all relevant governmental agencies. A notice of the confirmation hearing was also published more than 30 days ago, and other than the U.S. Trustee, no stakeholder has objected, informally or formally, to the prepackaged plan or the request to have the confirmation hearing held Monday. As to the U.S. Trustee's other objections, the Debtors clarified that there are no other incentive plans other than the KERP and the KEIP identified in the Disclosure Statement. The U.S. Trustee's objection that the Exculpation provision does not include a carve-out for gross negligence, willful misconduct, and fraud is incorrect. "Indeed, the Exculpation provision does include such carve-outs. The U.S. Trustee is correct, however, that the Exculpation does not provide that the carve-outs as applied to attorneys should be consistent with the New York Rules of Professional Conduct. The Debtors will add that concept to the Exculpation provision," Fullbeauty said. According to Bloomberg, Fullbeauty's senior lenders including Oaktree Capital Group LLC and Goldman Sachs Group Inc. are putting in more capital and get a majority equity stake as part of the restructuring. The report noted that one advantage for Fullbeauty is that it does not have stores to worry about. The company sells online and through catalogs, which frees it from having to evaluate which outlets it needs to close. The Debtors, among others, are seeking permission to use cash collateral. As of the Petition Date, the Debtors' cash on hand totaled approximately $3.8 million, substantially all of which is Cash Collateral of their prepetition secured parties. Furthermore, because the Debtors do not believe that they can provide adequate protection to the Prepetition Secured Parties, the Debtors engaged with the Prepetition Secured Parties regarding the terms on which they would consent to permit the Debtors to continue to use Cash Collateral as part of their negotiations regarding the Restructuring Support Agreement. These discussions resulted in a proposed Order, entry of which will allow the Debtors to transition smoothly into chapter 11, effectuate the Restructuring Support Agreement, and confirm and consummate the Plan, all while continuing to operate their businesses without disruption. Affiliates that filed for Chapter 11 are: Blackdog Holdings, Inc.; FULLBEAUTY Brands, Inc.; FULLBEAUTY Brands, LLC; FULLBEAUTY Brands Management Services, LLC; FULLBEAUTY Brands Merchant, Inc.; FULLBEAUTY Brands Operations, LLC; FULLBEAUTY Brands Texas, LLC; Jessica London, Inc.; and Swimsuits for All, LLC. According to the bankruptcy petition, Apax Partners, LLP owns 69.6% of the equity interest in Fullbeauty. Charlesbank Capital Partners, LLC own a 26.4% stake. The Debtors are represented by Jonathan S. Henes, P.C., George Klidonas, Rebecca Blake Chaikin, and Gene Goldmintz at Kirkland & Ellis LLP in New York; and Emily E. Geier at Kirkland's Chicago office. The Debtors have employed AlixPartners, LLP, as financial advisors; PJT Partners LP, as restructuring advisors; Prime Clerk LLC, as notice, claims, and balloting agent and as administrative advisor; and Ernst & Young LLP, as tax advisor. GABRIEL SAN ROMAN: $530K Sale of Stony Brook Property Approved -------------------------------------------------------------- Judge Robert E. Grossman of the U.S. Bankruptcy Court for the Eastern District of New York authorized Gabriel A. San Roman and Michele D. San Roman to sell the real property located at, and known as, 11 Oak Run, Unit ll, Stony Brook, New York to John J. Tipping for $530,000. A hearing on the Motion was held on Jan. 14, 2019. The sale is free and clear of all liens, claims, and encumbrances. The proceeds from the Sale of the Real Property will be distributed as follows: (a) payment to Wells to extent of its first mortgage; (b) payment of all usual and necessary costs of closing, including, but not limited to, title charges, but not counsel fees; and (c) the net proceeds after payment of (a) and (b) split as follows: (i) five percent (5%) to the Carfora Estate; and (ii) ninety-five (95%) to the RSNY Creditors and Stelling, or as directed by them in writing, in partial satisfaction of their collective subordinate mortgage, without prejudice to the remainder of their claims. Gabriel A. San Roman and Michele D. San Roman sought Chapter 11 protection (Bankr. E.D.N.Y. Case No. 18-77977) on Nov. 28, 2018. The Debtors tapped Michael J. Macco, Esq., at Macco & Stern LLP, as counsel. GETTY IMAGES: Moody's Hikes CFR to B3 & Alters Outlook to Positive ------------------------------------------------------------------ Moody's Investors Service upgraded Getty Images, Inc.'s Corporate Family Rating to B3 from Caa1 and Probability of Default Rating to B3-PD from Caa1-PD. In connection with this rating action, Moody's assigned B2 ratings to the company's proposed first-lien credit facilities consisting of a $1.085 billion first-lien term loan, $360 million (US dollar equivalent) first-lien euro term loan and up to $110 million revolving credit facility. The rating outlook was revised to positive from stable. Proceeds from the new credit facilities plus forthcoming capital raises from expected issuance of new unsecured debt, a $500 million payment-in-kind (PIK) preferred equity investment from Koch Equity Development LLC (KED) and $100 million of new common equity from the Getty family investment vehicle (GFV) and KED will be used to refinance $2.4 billion of existing debt, pay transaction-related fees and fund unpaid interest and breakage costs associated with early repayment of the existing notes. The refinancing is the second step in the company's equity recapitalization following the GFV's September 2018 buyout of The Carlyle Group's 51% majority equity stake to regain 100% ownership of the company. Following is a summary of the rating actions: Ratings Upgraded: Issuer: Getty Images, Inc. Corporate Family Rating, Upgraded to B3 from Caa1 Probability of Default Rating, Upgraded to B3-PD from Caa1-PD Ratings Assigned: Issuer: Getty Images, Inc. (Co-Borrower: Abe Investment Holdings, Inc.) $ 110 Million Senior Secured First-Lien Revolving Credit Facility due 2024 -- B2 (LGD3) EUR315 Million ($360 Million US dollar equivalent) Senior Secured First-Lien Euro Term Loan B due 2026 -- B2 (LGD3) $1,085 Million Senior Secured First-Lien Term Loan B due 2026 -- B2 (LGD3) Ratings Unchanged: Issuer: Getty Images, Inc. $ 54.6 Million Senior Secured Revolving Credit Facility due 2019 -- B3 (LGD3) $ 252.5 Million 10.5% Senior Secured Notes due 2020 -- B3 (LGD3) Issuer: Getty Images, Inc. (Co-Borrower: Abe Investment Holdings, Inc.) $1,900 Million ($1,786 Million outstanding) Senior Secured First-Lien Term Loan due 2019 -- B3 (LGD3) $ 550 Million ($316 Million outstanding) 7.0% Senior Unsecured Global Notes due 2020 -- Caa3 (LGD6) Outlook Actions: Issuer: Getty Images, Inc. Outlook, Changed To Positive From Stable The assigned ratings and outlook are subject to review of final documentation and no material change to the terms and conditions of the transaction as advised to Moody's. Ratings on the existing first-lien credit facilities, first-lien notes and unsecured notes remain unchanged as these debt instrument ratings and their LGD assessments will be withdrawn at transaction close. RATINGS RATIONALE The CFR upgrade to B3 reflects the company's improved debt capital structure, extension of debt maturities and enhanced liquidity as a result of the proposed recapitalization. While pro forma financial leverage remains elevated, it improves from around 8.5x (including Moody's adjustments as of 30 September 2018) to 6.5x (Moody's adjusted) owing to the reduced quantum of outstanding gross debt. By reallocating a portion of the debt capital structure to common equity and payment-in-kind (PIK) preferred equity, Getty has reduced financial leverage. Given the more manageable debt capital structure, enhanced liquidity and improved business profile with a path to sustainable EBITDA growth, Moody's believes a default scenario is less likely, which is factored in the B3 rating. With a return to EBITDA growth, Moody's projects adjusted leverage will decline to around 5.6x by FY20. The rating upgrade also considers the recent stabilization and expansion in Getty's revenue and EBITDA, and the potential for continued growth following several years of contraction. Over the past two years, Getty's E-Commerce and Enterprise businesses (including the fast growth Video unit) have collectively demonstrated strong annual revenue growth in the 10-13% range, roughly consistent with the market's overall growth rate. Getty has successfully mined its E-Commerce customer base to accelerate growth in the Enterprise segment. However, this growth has been masked by the decline in Getty's legacy businesses, principally Rights-Managed and Unauthorized Use, and the historically slower growth Editorial Stills business. As legacy businesses continue to contract and E-Commerce and Enterprise become a bigger share of the mix, supported by expanding annual subscriptions, Moody's expects Getty to sustain improved revenue and earnings growth. The transformation of Getty's business model transpired as a result of management's emphasis on a new customer base, integrated and efficient platform, e-commerce go-to-market strategy and value proposition for all use cases. In connection with the makeover, Getty successfully implemented strategic investments, which should set the stage for improved revenue and EBITDA growth amid favorable trends for increasing demand for media content. The B3 rating is further supported by Getty's differentiation relative to competitors, which includes its: (i) global position as the leading source of visual imagery with nearly 1 million customers annually across 200 countries; (ii) sizable collection of pictorial content, believed to be one of the largest and broadest in the world with 300 million total assets (213 million digitized) under the iStock.com (budget-conscious) and Getty Images (premium) brands; (iii) variable cost business model with imagery content sourced from independent and staff photographers and videographers, owned archives, content partners and individual contributors; and (iv) long-term relationships across a broad customer base comprising news, entertainment and sports publishing organizations. The rating benefits from the company's good geographic diversification with 55% of revenue derived from the Americas, 35% from EMEA and 10% from Asia-Pacific. Getty is also well-diversified by customer base with 49% of revenue from the fast-growing corporate segment (comprising Fortune 500 companies and SMBs), 30% from the media vertical and 21% from ad agencies. Getty has deliberately reduced exposure to the ad agency space given the continued revenue slowdown in that vertical. Management reports that no single customer represents more than 1% of revenue. The company has a large number of suppliers of content including more than 240,000 contributors under contract, roughly 300 global image partners, and more than 100 staff photographers and videographers, but no supplier is individually meaningful. The rating also acknowledges the founding family's buyout of the equity sponsor's stake to gain majority control and cash equity infusion. Unlike traditional private equity, which relies on capital from a pool of external limited partners who generally seek a return on investment within a four to five year timeframe, Moody's believes the Getty family is able to initiate a more thoughtful go-to-market strategy and take a longer-term view towards value creation. Getty intends to accrue the Preferred Shares' dividend indefinitely (i.e., dividends will be paid with additional Preferred Shares). Given the high risk, high accretion rate, dividend step up in year six (and each year thereafter) and perpetual structure, Moody's believes Getty may be incentivized to call the Preferred Shares in the future (callable at 105 in year 4; 102.5 in year 5; par thereafter). Assuming an average 12% annual accretion rate by the time the non-call period ends in 2022, the Preferred Shares will have increased to $702 million principal balance from $500 million initially. Including the 5% call premium, this equates to an additional 2 to 2.5 turns of leverage if refinanced entirely with debt. It is its understanding that management's preference is to refinance the Preferred Shares in the future via a common equity raise. However, if Getty later decides to incur debt to extinguish the Preferred Shares, Moody's believes it is critical for the company to voluntarily repay debt beyond mandatory repayments over the rating horizon to offset the high accretion and build capacity within the B3 rating category for future debt issuance. Moody's expects Getty will maintain good liquidity with access to the expected new $110 million revolver (subject to compliance with the revolver's first-lien leverage covenant, which Moody's expects) and produce positive free cash flow. Rating Outlook The positive rating outlook reflects Moody's expectation that revenue will grow in the low single-digit percentage range over the next 12-18 months and management will prioritize de-leveraging the balance sheet with a goal of reducing total debt to EBITDA to the 5.5x area (Moody's adjusted) by FY20 via EBITDA expansion and application of free cash flow to reduce debt. The outlook incorporates improving positive free cash flow generation reflecting EBITDA margin expansion as a result of realization of run-rate cost savings, improved free cash flow conversion and lower capital expenditures. Factors That Could Lead to an Upgrade Ratings could be upgraded if the company demonstrates continued revenue stability in the Midstock business within the Creative Stills unit, and exhibits continued mix shift to higher volume enterprise subscriptions and higher margin Royalty-Free products. Additionally, upward rating pressure could occur if free cash flow to debt (Moody's adjusted) improves to the low- to mid-single-digit percentage range and total debt to EBITDA approaches 5.5x (Moody's adjusted). Factors That Could Lead to a Downgrade Ratings could be downgraded if operating performance tracks below Moody's expectations or if total debt to EBITDA is sustained above 7.5x (Moody's adjusted). Ratings could also experience downward pressure if liquidity deteriorates such that free cash flow to debt is sustained below 1% (Moody's adjusted). The principal methodology used in these ratings was Media Industry published in June 2017. Headquartered in Seattle, WA, Getty Images, Inc. is a leading creator and distributor of still imagery, video and multimedia products, as well as a recognized provider of other forms of premium digital content, including music. Revenue totaled approximately $867 million for the twelve months ended 30 September 2018. GNC HOLDINGS: Fitch Lowers LongTerm IDR to B-, Outlook Negative --------------------------------------------------------------- Fitch Ratings has downgraded the ratings for GNC Holdings, Inc., including its long-term Issuer Default Rating to 'B-' from 'B'. The Rating Outlook is Negative. The downgrade and Negative Outlook reflect increased concerns about the company's ability to refinance a projected, approximately $500 million of term loans due March 2021 given weaker-than-expected topline and EBITDA trends and elevated adjusted leverage (adjusted debt/EBITDAR, capitalizing rent at 8x) at around 7.0x projected in 2018. The company had significant difficulty addressing its 2019 maturities, ultimately undertaking a distressed debt exchange, $300 million preferred equity investment and a partial refinancing of its $1.1 billion term loan due March 2019. Fitch expects GNC can address its remaining 2019/2020 maturities totalling approximately $340 million with the proceeds from the preferred equity investment and internal cash generation but will need to refinance the remainder of its term loan balance due March 2021, which Fitch estimates to be around $500 million (approximately $570 million currently less assumed FCF deployment toward debt reduction). GNC would need to successfully address its 2021 maturities in order for Fitch to stabilize the company's Outlook. GNC's ratings continue to reflect the company's leading position in the growing health and wellness products market. The rating considers recent market share declines, driven by encroaching competition and executional missteps, which in concert with recent financial policy decisions, have weakened the company's leverage profile. KEY RATING DRIVERS 2019/2020 Maturities Addressable; 2021 Refinancing a Concern: In February 2018, GNC completed a debt refinancing and announced a $300 million preferred equity investment by Harbin Pharmaceutical Group Co., LTD, to be completed in 1Q19. Given these events and a late-2017 DDE, GNC should be able to address 2019/2020 maturities including approximately $150 million of term loans due March 2019 and $190 million of convertible notes due August 2020, assuming continued FCF deployment toward debt reduction in 2019 and 2020. Fitch projects GNC will need to address approximately $500 million of remaining term loan balance before maturity in March 2021. Recent Weakness: Despite good historical fundamentals, GNC's operating trajectory turned in 2014, with sales declining from a peak of $2.64 billion in 2013 to $2.45 billion in 2017, while EBITDA has been halved from around $530 million in 2013 to $265 million in 2017. While the category has continued its growth trajectory, channels such as grocery, drug, discount and online appear to be taking share from standalone players such as GNC. The proliferation of vitamin-related information online coupled with an increased vitamin focus by a number of competitors in the discount, grocery, drug retail and online spaces have limited GNC's competitive advantage in recent years. Fitch believes GNC also took some operational missteps in recent years. The company's marketing and merchandising efforts have historically appealed to sports-related products such as muscle-gain proteins, while industry growth has focused more on natural/organic supplements, particularly for the aging baby boomer population. In addition, while the company's Gold Card loyalty program was a historical advantage, the loyalty scheme recently created price confusion among consumers who increasingly value price transparency. The pricing structure was also misaligned in the company's stores relative to its online channel, where products were heavily discounted. EBITDA declines in recent years have outpaced revenue moderation due to the deleveraging impact on fixed expenses such as rent and store payroll as well as the company's decisions to maintain investments in marketing and product innovation. More recently, margins have declined due to the company's concerted efforts to reduce prices in an increasingly competitive environment and to align pricing across its channels and simplify its pricing model for loyalty card customers. EBITDA erosion has weakened the company's leverage profile, with adjusted debt/EBITDAR rising from the mid-4.0x range in 2013 to around 6.6x in 2017. This increase was exacerbated by the company's decision to execute debt-financed share buybacks in 2015 and the first half of 2016. Outstanding debt balances increased by around $300 million from the beginning of 2015 until the company ceased share buybacks in mid-2016 in order to use FCF to repay debt. 2017 as Re-set Year; 2018 a Step Backward: GNC launched its "One New GNC" initiative in 2017, where the company aligned prices across retail/online channels with significant net price reductions, introduced a new loyalty program, and invested in customer service to address price and product confusion. The initiative stabilized SSS in 2017, which were flat on 12% growth in transactions mitigated by price reductions and lost loyalty income, which together caused gross margins to decline around 125bps. EBITDA declined to $265 million in 2017 from approximately $350 million in 2016 on the gross margin decline and increased SG&A to support the "One New GNC" activities. Despite sales momentum exiting 2017, EBITDA in 2018 is expected to decline further to around $230 million on a modest decline in topline due to store closures. Fitch expects near-flat SSS in 2018, somewhat hurt by increased loyalty redemptions and potentially affected by One New GNC customer excitement in 2017. EBITDA margins are expected to decline to around 10% in 2018 from 10.8% in 2017 as the company laps nonrecurring income from the wind-down of the prior loyalty program (approximately $25 million) and a $10 million to $15 million increase in marketing expense to drive customer awareness. Modest Credit Profile Improvement Expected: The company announced several new strategies to drive sales and EBITDA in late 2018. In the U.S. and Canada, topline initiatives include expanding upon its initial loyalty program enrollment, using data analytics to drive retention and per customer spend. The company also plans to increase its pipeline of product innovation, particularly within its proprietary brand portfolio. Finally, GNC plans to upgrade its website to optimize key functionality like search, the mobile shopping experience, and local store inventory availability. Internationally, the company's focus regions include China, Europe, Brazil and Colombia, all of which are primarily franchised markets. GNC believes it can grow retail-level sales by over $300 million over the next three years, which would expand franchisee fee income around 15% annually. Alongside the investment by Harbin, a leading pharmaceuticals and vitamin manufacturer in China with over 300 retail pharmacies in its operating portfolio, GNC and Harbin formed a joint venture to sell GNC-branded products in China. GNC forecasts $200 million in 2021 revenue in China, compared with a Fitch-estimated $30 million in 2017 revenue or around 20% of GNC's current international revenue. Fitch currently projects international growth could accelerate from the recent 5% range to the high-single digits largely due to expansion in China. This CAGR would yield around $50 million in incremental international revenue from 2018 to 2021, below management's projections of over $150 million in incremental revenue for China alone. Fitch's projections reflect the newness of the efforts in China and the operational complexities of the region. Success in China could lead to material revenue and EBITDA upside to Fitch's forecast over the next three years. To support its topline initiatives, the company announced plans to reduce annual corporate costs by $40 million to $50 million over the next two years. Savings are expected to be generated by a variety of functional areas, including product/packaging costs, lease optimization, low-ROI marketing, and consulting. Fitch expects near-flat SG&A over the next two to three years, as savings are likely to be re-spent toward expansion strategies and absorbed by modest inflation in fixed costs. The planned closure of 700 to 900 U.S./Canada locations could be EBITDA-neutral or even modestly support EBITDA despite revenue loss, if a significant portion of sales transfer to nearby locations or GNC's websites. The closure should support medium term gross margin expansion given reduced rent expense. Fitch expects these opportunities, alongside category growth, could drive EBITDA toward $250 million over the next two to three years from a projected $230 million in 2018. Revenue is expected remain near current levels, as the impact of store closures is mitigated by modestly positive SSS and growth in GNC's international and manufacturing businesses. Assuming continued FCF deployment toward debt reduction, adjusted debt/EBITDAR could decline from the 7.0x projected in 2018 toward 6.0x over the next two to three years. Good Position in a Growing Category: Despite its challenges, GNC is a leading wellness retailer/franchisor and manufacturer with around 4% share in the U.S./Canada across over 6,500 locations, selling vitamins, minerals and supplements (VMS), and sports nutrition and weight management products. Over 80% of revenue and approximately 60% of segment-level EBITDA is generated from the U.S./Canada business. Beyond North America, GNC operates and franchises stores in approximately 50 countries, contributing approximately 8% of revenue and 18% of segment-level EBITDA. The remaining 9% of revenue and 24% of segment-level EBITDA is derived through product manufacturing and wholesaling, which allow GNC to leverage its embedded manufacturing capacity. GNC's brand strength is evident, as approximately half of revenue is derived from owned-brand product; its customer loyalty is demonstrated by 90% of sales being tracked through the company's newly introduced loyalty programs. The approximately $46 billion North American VMS industry, which remains relatively fragmented across specialty retailers, food and drug retailers, general merchants and discounters, and online-only retailers, has proven its resilience to recessions by growing at a midsingle-digit rate through economic cycles. The consumable nature of the products and high frequency of usage as part of regular dietary regimens drive the stability and defensibility of the business. Given an aging U.S. population and increased consumer focus on personal health and wellness, Fitch expects the VMS industry to continue midsingle-digit growth over the next several years, making it one of the faster growing segments within retail. Fitch recognizes the somewhat unique risk in the sector of negative media around FDA recalls, studies regarding the efficacy of certain product categories, and legal action against product manufacturers and retailers. The industry tends to absorb these risks over time, producing good long-term growth, and GNC's scale and internal manufacturing capabilities allow it to support product quality and efficacy, and therefore maintain brand trust with customers. Until recently the stand-alone vitamin retail business was historically resilient to channel disruption from discount and online players for several reasons. First, inventory breadth in the category is significant, which is an unappealing characteristic for discount players that prefer a focused, high-turning inventory mix. Second, the nature of the industry's product requires an elevated service component. GNC, whose service model provides product and regimen guidance to less-knowledgeable customers, benefits from this information asymmetry. Finally, loyalty programs prove effective for stand-alone players to maintain share in the space, with GNC's discount and loyalty programs generating at least 80% of retail sales. Notably, the estimated 10% online penetration of VMS products is significantly below the 20% or more seen across many retail categories. DERIVATION SUMMARY GNC's 'B-' rating considers recent market share declines, driven by encroaching competition and executional missteps, which in concert with recent financial policy decisions, have weakened the company's leverage profile. The Negative Outlook reflect increased concerns about the company's ability to refinance a projected, approximately $500 million of term loans due March 2021.. GNC's ability to successfully refinance its 2021 maturities will likely be dependent on its ability to show improving SSS and EBITDA trends over the next 12 to 18 months. GNC is rated similarly to J.C. Penney (B-/Stable) and one notch below Rite Aid Corporation (B/Negative). J.C. Penney's 'B-' rating reflects the significant EBITDA erosion in 2018, with EBITDA expected to decline to under $600 million from $886 million in 2017. Fitch expects EBITDA could remain constrained in the $500 million to $550 million range in 2019 on comp decline in the low single digits. Rite Aid's 'B' rating incorporates its weak position in the U.S. drug retail business, its high leverage and negative projected FCF. Fitch expects the company's drug retail business, representing around two-thirds of total EBITDA following the sale of stores to Walgreens Boots Alliance, Inc. (BBB/Stable), to continue losing share, although the company's EnvisionRx PBM (representing Rite Aid's remaining EBITDA) could grow modestly over time with Fitch forecasted adjusted debt/EBITDAR trending in the 7.5x range compared to GNC at around 7x projected in 2018. KEY ASSUMPTIONS Fitch's key assumptions within its rating case for the issuer include: -- Fitch expects total revenue to decline around 4% in 2018 to approximately $2.35 billion, primarily due to store closures - including locations inside Rite Aid stores following their transfer to Walgreens Boots Alliance (BBB/Stable) - given near-flat comps. Fitch expects revenue to trend toward $2.3 billion beginning 2019, given GNC's announced closure program of 900 U.S. stores, mitigated by modestly positive comps and ongoing growth in its manufacturing and international businesses. Fitch has not projected substantial growth from China or Europe as forecasted by management, and if the company is successful aggressively growing these geographies revenue could remain near the current $2.35 billion. -- EBITDA is expected to decline to around $230 million in 2018 from $265 million in 2017, given modest sales declines, increased marketing expenses and around $25 million in non-recurring income in 2017 from the previous loyalty card. Beginning 2019, EBITDA could expand toward $250 million despite slight sales declines due to growth in GNC's higher-margin international and manufacturing businesses, and some benefit from cost - particularly rent - reductions. -- FCF is expected to be around $100 million in 2018, lower than the approximate $190 million in 2017 given higher interest expense and lower working capital benefits. FCF could trend in the low-$100 million range annually beginning 2019, as higher EBITDA and lower interest expense could be somewhat offset by cash restructuring costs associated with the company's recently announced cost reduction program. FCF in 2018 is expected to be used to reduce debt around $50 million, with the remainder toward refinancing fees. Beginning 2019, GNC could reduce its $1.3 billion debt balance around $100 million per year through FCF deployment. -- Adjusted leverage, which was 6.6x in 2017, could rise modestly to nearly 7.0x in 2018 on lower EBITDA,but decline toward 6.0x beginning 2019 on EBITDA growth, lower rent and debt repayment. -- Fitch projects that given $100 million in annual FCF plus $200 million in remaining proceeds from Harbin's $300 million investment, GNC should be able to repay its approximately $150 million in term loans due March 2019 and $190 million in convertible notes due August 2020. GNC used the first $100 million in Harbin proceeds to pay down term loan principal due March 2021, leaving approximately $575 million due as of the end of 2018. Fitch projects GNC could reduce this principal approximately $75 million after deploying cash toward its 2019/2020 maturities, leaving around $500 million of principal which would need to be addressed prior to its March 2001 maturity. -- While Fitch is not currently projecting a U.S. recession or significant consumer slowdown in 2019/2020, GNC would be expected to experience lower-than-average declines during a downturn given the historically stable performance of the VMS category through economic cycles. A modest EBITDA contraction on slightly negative comps could pressure FCF generation, though GNC could use its ABL revolver to support paydown of 2019/2020 maturities. An EBITDA contraction or change to market conditions could, however, negatively impact GNC's ability to refinance its remaining term loan maturity due March 2021. RATING SENSITIVITIES Future Developments That May, Individually or Collectively, Lead to Positive Rating Action Fitch could stabilize GNC's Outlook if the company successfully addressed its 2019-2021 maturities in a timely fashion. Assuming this occurs, an upgrade could occur assuming increased confidence in Fitch's base case assumptions showing operational improvement, including EBITDA trending in the mid-$200 million and adjusted debt/EBITDAR trending toward 6.0x. Future Developments That May, Individually or Collectively, Lead to Negative Rating Action A downgrade would occur if EBITDA fails to improve toward $250 million, yielding adjusted debt/EBITDAR trending in the mid-6.0x range and increased concerns regarding the company's ability to refinance its 2021 maturities in a timely fashion. LIQUIDITY GNC's total liquidity as of Sept. 30, 2018 was $127.5 million, which includes $33.3 million in cash and $94.2 million in availability on the company's $100 million ABL, net of zero borrowings and $5.8 million in LOC. Following three unsuccessful attempts to refinance its $1.1 billion term loan due March 2019 during 2017, GNC completed a number of transactions beginning late 2017. In December 2017, the company executed a DDE, exchanging approximately $100 million of its $288 million in convertible notes due August 2020 for equity then-valued at around $55 million. The size of the DDE was limited by SEC regulations around equity issuance size and while it modestly reduced GNC's debt burden, the exchange highlighted GNC's difficulty in addressing its capital structure. On Feb. 28, 2018, GNC amended and restated its senior credit facility, formerly consisting of a $1.1 billion term loan due March 2019 and a $300 million revolver maturing in September 2018. As a result of the refinancing, approximately $980 million of the original term loan facility was extended to either approximately $705 million of a new Term Loan B-2 maturing March 2021 or a $275 million new ABL FILO term loan due December. The remaining approximately $150 million (now Term Loan B-1) continues to mature in March 2019. The amendment also terminated the existing $300 million revolving credit facility, entering into a new $100 million ABL revolver maturing in August 2022. The ABL revolver and ABL FILO Term Loan are secured by a first lien on assets comprising domestic inventory and receivables with a second lien on other domestic assets. ABL revolver availability is governed by a borrowing base which includes domestic inventory and receivables; Following the refinancing, the company's capital structure consisted of three term loan tranches totalling $1.1 billion and $189 million of convertible notes due August 2020. In February 2018, the company also announced a $300 million preferred equity investment by Harbin Pharmaceutical Group Co., LTD. In November 2018, following regulatory and shareholder approval, Harbin funded the first $100 million of the investment, with another $50 million funded in December 2018. The final $150 million is to be funded Feb. 13, 2019. The company indicated that the $100 million of November proceeds was primarily used to reduce its higher-coupon B-2 Term Loan. Fitch expects that the remaining $200 million of proceeds will be used to repay its $150 million of term loan due March 2019, with the final $50 million potentially earmarked to address the convertible notes. As of the final Harbin funding date in February 2019, Fitch estimates that GNC's capital structure will include approximately $850 million of term loans, $189 million of convertible notes, and the $300 million Harbin investment, which Fitch treats as 100% debt. GNC could address its next maturity, the convertible notes, through the remaining $50 million of Harbin proceeds, around $100 million of expected FCF in 2019 plus additional FCF generated in early 2020. Additional FCF could be used to reduce GNC's Term Loan B-2, though Fitch expects GNC will still need to refinance around $500 million of term loan debt prior to the March 2021 maturity. Recovery Fitch's recovery analysis is based on a going-concern value of $1.25 billion, versus approximately $600 million from an orderly liquidation of assets, composed primarily of inventory, receivables, and owned property and equipment. Post-default EBITDA was estimated at $250 million, similar to Fitch's two to three year EBITDA forecast. Given GNC's significant operational declines, over 50% reduction to EBITDA and recent DDE, its current state somewhat resembles a post-bankruptcy scenario, with the company planning to close around 30% of its weaker-performing stores and embarking upon a cost reduction program while growing its healthier international business. The analysis uses a 5.0x enterprise value/EBITDA multiple, consistent with the 5.4x median multiple for retail going-concern reorganizations. The multiple considers GNC's historically strong position in a good category, recent competitive encroachment by alternate channels and operational missteps. After deducting 10% for administrative claims, the remaining $1.125 billion would lead to full recovery for the ABL revolver and ABL FILO Term Loan, which are therefore rated 'BB'/'RR1'. The ABL revolver and ABL FILO Term Loan are secured by a first lien on assets comprising domestic inventory and receivables with a second lien on other domestic assets, though the ABL would receive priority payment in a default. ABL revolver availability is governed by a borrowing base which includes domestic inventory and receivables; Fitch assumes the revolver is 70% drawn in a default. The company's Term Loan B-1 and Term Loan B-2, which are pari passu would have outstanding recovery prospects (91%-100%) and are therefore rated 'BB'/'RR1'. GNC's convertible preferred equity, which is subordinate to its term loans and unsecured notes would have poor recovery prospects (0%-10%) and is therefore rated 'CCC+'/'RR6'. Fitch's analysis assumes GNC uses the remaining $200 million of Harbin proceeds to reduce Term Loan B-1/Term Loan B-2 borrowings, although the recovery prospects across the rated capital structure would not be affected if GNC used proceeds otherwise. FULL LIST OF RATING ACTIONS Fitch has downgraded the following ratings: GNC Holdings, Inc. -- Long-Term IDR to 'B-' from 'B'. -- Convertible Preferred Equity to 'CCC'/'RR6' from 'CCC+'/'RR6'. General Nutrition Centers, Inc. -- Long-Term IDR to 'B-' from 'B'; -- ABL Revolver and ABL FILO Term Loan to 'BB-'/'RR1' from 'BB'/'RR1'. -- Secured Term Loan to 'BB-'/'RR1' from 'BB'/'RR1'. The Rating Outlook is Negative. GYMBOREE GROUP: Seeks to Hire Hilco as Real Estate Advisor ---------------------------------------------------------- Gymboree Group, Inc. and its debtor-affiliates seek authority from the U.S. Bankruptcy Court for the Eastern District of Virginia to hire Hilco Real Estate, LLC as their real estate consultant. The firm will provide these services: a. consult with the Debtors to discuss and review their goals, objectives and financial parameters related to their store leases; b. advise the Debtors with respect to a strategic plan for restructuring the leases; c. negotiate the terms of restructuring agreements with the landlords and other persons party to the leases in accordance with the lease restructuring plan; d. provide written reports periodically to the Debtors regarding the status of such negotiations; e. assist the Debtors in closing the agreements in accordance with the lease restructuring plan; and f. assist the Debtors in calculating the proper amounts of rejection damages claims with respect to those leases they choose to reject. For each restructured lease, Hilco will earn a fee equal to a base fee of $1,000, plus the aggregate "lease savings" multiplied by 3%. This fee will be paid in a lump sum within 15 days after the closing of the transaction approved by the bankruptcy court. No termination fee will be paid to Hilco for any lease that is rejected without value by the Debtors ((i.e. without cash value paid to the Debtors by the landlord or a third party) in their bankruptcy cases. However, such lease may be considered a restructured lease if "restructured lease savings" are realized by the Debtors during the pendency of their cases prior to the rejection. Hilco holds a retainer of $133,334. The retainer is non-refundable and is to be applied to the fees and expenses due under the terms of the agreement and approved by the court. Ryan Lawlor, managing member of Hilco, attests that his firm is a "disinterested person" within the meaning of section 101(14) of the Bankruptcy Code. Hilco can be reached through: Ryan Lawlor Hilco Real Estate, LLC 5 Revere Drive, Suite 320 Northbrook, IL 60062 Phone: 847-714-1288 Fax: 847-714-1289 About Gymboree Group San Francisco-based Gymboree Group -- https://www.gymboree.com -- owns a portfolio of three children's clothing and accessories brands -- Gymboree, Janie and Jack and Crazy 8 -- each offering a different product line with a distinct brand identity and targeted product offering. Since its start in 1976, Gymboree Group has grown from offering mom-and-baby classes in the San Francisco Bay Area to currently operating over 900 retail stores in the United States and Canada, along with franchises around the world. Gymboree Group, Inc., and its affiliates sought protection under Chapter 11 of the Bankruptcy Code (Bankr. E.D. Va. Lead Case No. 19-30258) on Jan. 17, 2019. At the time of the filing, Gymboree Group had estimated assets of $100 million to $500 million and liabilities of $50 million to $100 million. The cases have been assigned to Judge Keith L. Phillips. The Debtors tapped Milbank, Tweed, Hadley & McCloy LLP as general bankruptcy counsel; Kutak Rock LLP as local counsel; Stifel, Nicolaus & Company, Incorporated and Berkeley Research Group, LLC as financial advisors; Hilco Real Estate, LLC as real estate Consultant; and Prime Clerk LLC as real estate consultant. John Fitzgerald, acting U.S trustee for Region 4, appointed an official committee of unsecured creditors on January 23, 2019. GYMBOREE GROUP: Seeks to Hire KPMG LLP as Tax Consultant -------------------------------------------------------- Gymboree Group, Inc. and its debtor-affiliates seek authority from the U.S. Bankruptcy Court for the Eastern District of Virginia to hire KPMG LLP as their tax consultant. The services to be provided by the firm include: a. analysis of issues in connection with section 382 of the Internal Revenue Code; b. analysis of "net unrealized built-in gains and losses" and Notice 2003-65 as applied to the ownership change, if any, resulting from or in connection with the Debtors' Chapter 11 cases; c. analysis of the Debtors' tax attributes including net operating losses, tax basis in assets, and tax basis in stock of subsidiaries; d. analysis of cancellation of debt (COD) income and application of section 108 of the IRC relating to the restructuring of non-intercompany debt and the completed capitalization or settlement of intercompany debt; e. analysis of the tax implications of any internal reorganizations and restructuring alternatives; f. cash tax modeling; g. analysis of the tax implications of any dispositions of assets; h. analysis of potential bad debt and worthless stock deductions; i. analysis of any proof of claims filed by a taxing authority; and j. analysis of the tax treatment of transaction or restructuring related costs. KPMG's hourly rates are: Partner/Principal $845 Managing Director $780 Senior Manager $730 Manager $610 Senior Tax Associate $515 Tax Associate $370 Howard Steinberg, a partner at KPMG, attests that his firm is a "disinterested person" within the meaning of section 101(14) of the Bankruptcy Code. The firm can be reached through: Howard Steinberg KPMG LLP 355 South Grand Avenue KPMG Tower, Suite 2000 New York, NY 90071 Phone: 213 972 4000 Fax: 213 622 1217 About Gymboree Group San Francisco-based Gymboree Group -- https://www.gymboree.com -- owns a portfolio of three children's clothing and accessories brands -- Gymboree, Janie and Jack and Crazy 8 -- each offering a different product line with a distinct brand identity and targeted product offering. Since its start in 1976, Gymboree Group has grown from offering mom-and-baby classes in the San Francisco Bay Area to currently operating over 900 retail stores in the United States and Canada, along with franchises around the world. Gymboree Group, Inc., and its affiliates sought protection under Chapter 11 of the Bankruptcy Code (Bankr. E.D. Va. Lead Case No. 19-30258) on Jan. 17, 2019. At the time of the filing, Gymboree Group had estimated assets of $100 million to $500 million and liabilities of $50 million to $100 million. The cases have been assigned to Judge Keith L. Phillips. The Debtors tapped Milbank, Tweed, Hadley & McCloy LLP as general bankruptcy counsel; Kutak Rock LLP as local counsel; Stifel, Nicolaus & Company, Incorporated and Berkeley Research Group, LLC as financial advisors; Hilco Real Estate, LLC as real estate Consultant; and Prime Clerk LLC as real estate consultant. John Fitzgerald, acting U.S trustee for Region 4, appointed an official committee of unsecured creditors on January 23, 2019. GYMBOREE GROUP: Taps Miller Buckfire, Stifel as Investment Bankers ------------------------------------------------------------------ Gymboree Group, Inc. and its debtor-affiliates seek authority from the U.S. Bankruptcy Court for the Eastern District of Virginia to hire an investment banker. The Debtors propose to employ Miller Buckfire & Co., LLC and its affiliate Stifel, Nicolaus & Co., Inc. to provide services with respect to a "transaction" which generally consists of specified sale, recapitalization and restructuring transactions. These services include developing a transaction; assisting the Debtors in structuring any new securities to be issued; and negotiating with entities or groups affected by the transaction. With respect to any financing transaction, the firms will assist the Debtors in structuring and effecting such transaction; and in identifying and negotiating with potential investors. Miller Buckfire will be paid according to this fee structure: (i) Monthly Fee: $150,000. (ii) Financing Fee: 1. For a roll-up or roll-over of "existing investor financing" not associated with a restructuring transaction, $650,000. 2. For new money financing not associated with a restructuring transaction: a. 1.5% of gross proceeds if from third party investors, b. $1.5 million if more than 50% of that financing is from existing investors and that financing was chosen over at least one other fully committed new money alternative of at least equal amount having material terms at least as favorable, or c. the lesser of 1% of gross proceeds and $1 million if that financing is from existing investors, and if more than 50% of that financing is from existing investors but the other conditions are not met. 3. For exit financing and other financing transactions associated with restructuring, the excess, if any, of the following over the related restructuring fee paid: (i) 1% of gross proceeds of such first-lien secured financing, plus (ii) 3% of any other such financing. (iii) Transaction Fees: 1. Sale Transaction Fee: a. 1.25% of "aggregate consideration" from any existing investor, plus b. 2% of aggregate consideration from any third party investor. c. However, if there is one or more sale transactions, the aggregate fee will not be less than $2 million. 2. Liquidation Transaction Fee: a. $2.5 million if the "liquidation transaction" concerns the Debtors' three brands (Gymboree(R), Janie and Jack(R), and Crazy 8(R)), and b. $1 million if the liquidation transaction concerns two brands. c. No fee is due if the liquidation transaction concerns one brand. 3. Restructuring Transaction Fee: $1.5 million. James Doak, managing director of Miller Buckfire, disclosed in a court filing that the firms are "disinterested" as defined in section 101(14) of the Bankruptcy Code. The firms can be reached through: James Doak Miller Buckfire & Co., LLC 787 Seventh Avenue, 5th Floor New York, NY 10019 Tel: (212) 895-1800 Fax: (212) 895-1853 Email: info@millerbuckfire.com About Gymboree Group San Francisco-based Gymboree Group -- https://www.gymboree.com -- owns a portfolio of three children's clothing and accessories brands -- Gymboree, Janie and Jack and Crazy 8 -- each offering a different product line with a distinct brand identity and targeted product offering. Since its start in 1976, Gymboree Group has grown from offering mom-and-baby classes in the San Francisco Bay Area to currently operating over 900 retail stores in the United States and Canada, along with franchises around the world. Gymboree Group, Inc., and its affiliates sought protection under Chapter 11 of the Bankruptcy Code (Bankr. E.D. Va. Lead Case No. 19-30258) on Jan. 17, 2019. At the time of the filing, Gymboree Group had estimated assets of $100 million to $500 million and liabilities of $50 million to $100 million. The cases have been assigned to Judge Keith L. Phillips. The Debtors tapped Milbank, Tweed, Hadley & McCloy LLP as general bankruptcy counsel; Kutak Rock LLP as local counsel; Stifel, Nicolaus & Company, Incorporated and Berkeley Research Group, LLC as financial advisors; Hilco Real Estate, LLC as real estate Consultant; and Prime Clerk LLC as real estate consultant. John Fitzgerald, acting U.S trustee for Region 4, appointed an official committee of unsecured creditors on January 23, 2019. GYMBOREE GROUP: Taps Prime Clerk as Administrative Advisor ---------------------------------------------------------- Gymboree Group, Inc. and its debtor-affiliates seek authority from the U.S. Bankruptcy Court for the Eastern District of Virginia to hire Prime Clerk, LLC as the administrative advisor. The firm will provide these bankruptcy administrative services: (a) assist the Debtors in the preparation of their schedules of assets and liabilities and statements of financial affairs; (b) provide a confidential data room, if requested; and (c) assist in the solicitation, balloting and tabulation of votes, and prepare reports in support of a Chapter 11 plan. Prime Clerk will be paid at these hourly rates: Director of Solicitation $210 Solicitation Consultant $190 COO and Executive VP No charge Director $175 - $195 Consultant/Senior Consultant $65 - $165 Technology Consultant $35 - $95 Analyst $30 - $50 Benjamin Steele, a partner at Prime Clerk, assured the court that his firm is a "disinterested person" as the term is defined in section 101(14) of the Bankruptcy Code. Prime Clerk can be reached through: Benjamin J. Steele Prime Clerk LLC 830 3rd Avenue, 9th Floor New York, NY 10022 Tel: (212) 257-5450 About Gymboree Group San Francisco-based Gymboree Group -- https://www.gymboree.com -- owns a portfolio of three children's clothing and accessories brands -- Gymboree, Janie and Jack and Crazy 8 -- each offering a different product line with a distinct brand identity and targeted product offering. Since its start in 1976, Gymboree Group has grown from offering mom-and-baby classes in the San Francisco Bay Area to currently operating over 900 retail stores in the United States and Canada, along with franchises around the world. Gymboree Group, Inc., and its affiliates sought protection under Chapter 11 of the Bankruptcy Code (Bankr. E.D. Va. Lead Case No. 19-30258) on Jan. 17, 2019. At the time of the filing, Gymboree Group had estimated assets of $100 million to $500 million and liabilities of $50 million to $100 million. The cases have been assigned to Judge Keith L. Phillips. The Debtors tapped Milbank, Tweed, Hadley & McCloy LLP as general bankruptcy counsel; Kutak Rock LLP as local counsel; Stifel, Nicolaus & Company, Incorporated and Berkeley Research Group, LLC as financial advisors; Hilco Real Estate, LLC as real estate Consultant; and Prime Clerk LLC as real estate consultant. John Fitzgerald, acting U.S trustee for Region 4, appointed an official committee of unsecured creditors on January 23, 2019. HIGHLAND SALONS: Case Summary & 4 Unsecured Creditors ----------------------------------------------------- Debtor: Highland Salons, LP 21720 Highland Knolls Dr Katy, TX 77450-5441 Business Description: Highland Salons is full service salon specializing in hair, nails, massage and esthetics. It also offers a menu of personalized skin therapies, body treatments, massage, anti-aging facials and customized packages. Chapter 11 Petition Date: February 1, 2019 Court: United States Bankruptcy Court Southern District of Texas (Houston) Case No.: 19-30540 Judge: Hon. David R. Jones Debtor's Counsel: Peter Johnson, Esq. LAW OFFICE OF PETER JOHNSON 1738 Sunset Boulevard Houston, TX 77005 Tel: 713-961-1200 Fax: 346-241-0574 E-mail: pjohnson@pjlaw.com Total Assets: $3,553,410 Total Debts: $1,019,255 The petition was signed by Manuel Guevara, president of GP Highland Salon Mgmt, Inc. A full-text copy of the petition containing, among other items, a list of the Debtor's four unsecured creditors is available for free at: http://bankrupt.com/misc/txsb19-30540.pdf HKD TREATMENT: PCO Reports Patients' Access to Medical Records -------------------------------------------------------------- Arthur E. Peabody, Jr., the appointed Patient Care Ombudsman for HKD Treatment Options, P.C., filed a report concerning the access of the patients to the medical records in the Facility. According to the Report, the Facility has closed on December 15, 2018, without notice to the PCO. The PCO maintained that physicians have ethical obligations to observe when they close a practice. In this case, the PCO has found out that the Debtor has been in a number of telephonic communications with unidentified patients with respect to referral to other services and access to patient records. Meanwhile, the PCO recommended that the patients need to be advised of the procedure to obtain their electronic medical records. The PCO has learned that all requests for medical records are referred to Dr. Hung Do, the owner. Dr. Do is presently employed in another health care facility. It is represented that he transfers the records by paper copy to the patients or to the patient's physician. The PCO also recommended that the electronic and any paper medical records should be maintained for access by patients and, after an appropriate period, placed in storage for such time as required by law. In any letter to patients, the location of the storage facility should be identified to permit patients to contact them for access to their record at such times as Dr. Do is no longer involved. A full-text copy of the Report is available for free at: http://bankrupt.com/misc/mab17-41895-204.pdf About HKD Treatment Options Based in Lowell, Massachusetts, HKD Treatment Options, P.C. -- http://www.hkdtreatmentoptions.com/-- provides behavioral health counseling and treatment plans to help patients recover from alcohol and drug addiction. HKD Treatment Options filed a Chapter 11 petition (Bankr. D. Mass. Case No. 17-41895) on Oct. 20, 2017. In the petition signed by Hung K. Do, president and director, the Debtor estimated less than $50,000 in assets and $1 million to $10 million in liabilities. Judge Elizabeth D. Katz presides over the case. The Debtor hired Richard A. Mestone, Esq., at Mestone & Associates LLC as its bankruptcy counsel; Good Schneider & Fried as its special counsel; and Dennis and Associates as its accountant. HOPKINS COUNTY HOSPITAL: Moody's Affirms B2 on $21MM Revenue Bonds ------------------------------------------------------------------ Moody's Investors Service has affirmed the B2 on approximately $21 million of Hopkins County Hospital District's (HCHD), TX outstanding revenue bonds. The outlook is revised to stable from negative. RATINGS RATIONALE Revision of the outlook to stable from negative expects near term cash flows at HCHD will be consistent, providing for steady liquidity and more predictable operating performance. The B2 expects annual lease payments from the CHRISTUS Hopkins Health Alliance (CHHA) will exceed annual debt service, and stable tax revenue and upper payment limit program revenue will provide a steady source of inflows to the District. However, the District will be highly exposed to any changes impacting these revenue streams. Moody's expects headroom to covenants will remain very narrow. While bonds cannot be accelerated, failure to meet the covenants could terminate the lease agreement under the joint venture arrangement, which is a steady source of revenue to the HCHD. RATING OUTLOOK The stable outlook expects more predictable financial performance and cash flows following the revised corporate structure of hospital operations and related cash flow. Reduced intergovernmental transfers in 2019 should allow for near term liquidity growth. FACTORS THAT COULD LEAD TO AN UPGRADE - Significant growth in operating revenues and diversification of cash flows - Stronger financial support and legal commitment from CHRISTUS Health - Material improvement in absolute liquidity FACTORS THAT COULD LEAD TO A DOWNGRADE - Unfavorable changes to lease agreement - Reduction in tax revenues - Departure from expected levels of operating performance and liquidity - Inability to meet financial covenants LEGAL SECURITY The bonds are secured by Pledged Revenues, as defined in the bond documents, of HCHD and a debt service reserve fund. Tax revenues are not pledged to the bonds. Bond covenants include a liquidity pledge of not less than 60 days cash on hand and a rate covenant of not less than 115% for the Obligated Group measured annually; consultant required if covenants missed; event of default if rate covenant less than 115% for two consecutive years or if liquidity less than 60 days one year after consultant's report issued. PROFILE Hopkins County Hospital District is a political subdivision of the State of Texas, governed by a 7-member Board of Directors. The hospital assets are owned by the District and leased to the joint venture, CHRISTUS Hopkins Health Alliance (CHHA). HUT AIRPORT LIMOUSINE: Kenneth Eiler Named as Chapter 11 Trustee ---------------------------------------------------------------- Judge Thomas M. Renn of the U.S. Bankruptcy Court for the District of Oregon approved the appointment of Kenneth S. Eiler as Chapter 11 Trustee. Mr. Eiler was appointed by the United States Trustee as Chapter 11 Trustee for the Debtor, pursuant to 11 U.S.C. Sec. 1104(d) of the Bankruptcy Code. The Trustee’s bond is set at $350,000, subject to review and adjustment by the United States Trustee. About HUT Airport Limousine HUT Airport Limousine, Inc., doing business as HUT Airport Shuttle -- http://www.hutshuttle.com/-- is an airport shuttle services company based in Albany, Oregon. Hut Shuttle has pick-up and drop-off service at the following locations: Albany (HUT Office), Albany Comfort Suites, Corvallis (Hilton Garden), Eugene (UO Student Rec Center), OSU McNary Hall (West stairwell), Portland Airport (PDX), Salem Airport (SLE), and Woodburn (Best Western). HUT Airport Limousine filed a Chapter 11 petition (Bankr. D. Ore. Case No. 18-63699) on Dec. 6, 2018. Judge Thomas M. Renn oversees the case. Barnes Law Offices, PC, led by principal, Keith D. Karnes, is the Debtor's counsel. INTEGRATED DYNAMIC: Court Denies Bid to Appoint Examiner -------------------------------------------------------- For reasons stated on the record, Judge Victoria S. Kaufman of the U.S. Bankruptcy Court for the Central District of California denied the request asking for the appointment of an examiner for Integrated Dynamic Solutions, Inc. It was on December 20, 2018 when Creditor, Vitavet Labs, Inc. requested the Court to appoint an Examiner for the Debtor. About Integrated Dynamic Solutions Founded in 1995, Integrated Dynamic Solutions, Inc. -- http://www.idspage.com/-- is a Microsoft Certified Partner specializing in custom software development, database design, and systems integration. It offers a full range of services from office automation, database design, e-commerce, custom software development and prototyping to wireless solutions, web based programming, Facilities Management Information Systems, and simulation modeling. Integrated Dynamic Solutions sought protection under Chapter 11 of the Bankruptcy Code (Bankr. C.D. Cal. Case No. 18-11379) on Aug. 22, 2018. On Aug. 24, 2018, the case was transferred from the Northern Division to the San Fernando Valley Division, and was assigned Case No. 18-12156. In the petition signed by CEO Nasrolla Gashtili, the Debtor estimated assets of less than $50,000 and liabilities of $1 million to $10 million. Judge Victoria S. Kaufman oversees the case. The Debtor tapped The Law Offices of David A. Tilem as its legal counsel. The Office of the U.S. Trustee on Sept. 21, 2018, appointed two creditors to serve on an official committee of unsecured creditors in the Chapter 11 case. JACKIES COOKIE: Seeks to Hire Zolkin Talerico as Legal Counsel -------------------------------------------------------------- Jackie's Cookie Connection LLC seeks authority from the U.S. Bankruptcy Court for the Central District of California to hire Zolkin Talerico LLP as its legal counsel. The firm will advise the Debtor of its powers and duties in the continued operation of its business and management of its property; assist the Debtor in the administration of its assets and liabilities; prepare and implement a plan of reorganization; and provide other legal services in connection with its Chapter 11 case. The firm's hourly rates are: Derrick Talerico $495 David Zolkin $595 Martha Araki $225 Derrick Talerico, Esq., a partner at Zolkin Talerico, attests that he and his firm are "disinterested persons" within the meaning of section 101(14) of the Bankruptcy Code. The firm can be reached through: Derrick Talerico, Esq. Zolkin Talerico LLP 12121 Wilshire Blvd., Suite 1120 Los Angeles, CA 90025 Tel: 424-500-8552 Email: dtalerico@ztlegal.com About Jackie's Cookie Connection LLC Jackies Cookie Connection LLC is a baking company specializing in cookies. Jackie's cookies are available online at https://www.jackiescookieconnection.com/ or at the company's four Los Angeles locations: Century City Mall, Hollywood & Highland, The Village at Topanga and its new bakery at 12109 Santa Monica Boulevard in Santa Monica. Jackies Cookie Connection filed a Chapter 11 bankruptcy petition (Bankr. C.D. Cal. Case No. 18-24571) on December 17, 2018. In the petition signed by Rachel Galant, managing member and chief executive officer, the Debtor estimated $100,000 to $500,000 in assets and $1 million to $10 million in liabilities. The case has been assigned to Judge Neil W. Bason. Derrick Talerico, Esq. at Zolkin Talerico LLP is the Debtor's counsel. JACOBS ENTERTAINMENT: Moody's Affirms B2 Corp. Family Rating ------------------------------------------------------------ Moody's Investors Service, assigned a B2 rating to Jacobs Entertainment, Inc.'s proposed $35 million guaranteed senior secured second lien notes tack-on due 2024 and affirmed the company's Corporate Family rating at B2, Probability of Default rating at B2-PD, and existing senior secured second lien notes at B2. The approximate use of proceeds of the new notes will be to repay the company's existing revolver balance ($3.5mm), fund the acquisition of three truck stops in Louisiana ($17.8mm), financing and transaction fees ($3.1mm) and supplement cash balances ($11.7mm) for planned growth capital spending. Including the debt tack-on, Moody's estimates Jacobs pro-forma gross debt/EBITDA will increase to 6.5x from 6.2x as of LTM 9/30/2018 while EBIT/Interest will remain around 1.3x. The affirmation reflects Jacobs' revenue market share that generally exceeds its fair share of units in all markets, its stable operating performance, good liquidity that reflects its sizable cash balances, and positive free cash flow generation before growth capital expenditures. The affirmation also reflects Moody's view that the expansion of surface parking in the company's Black Hawk market, the integration of its recently acquired Sands Regency property in Reno, its newly acquired truck stops, and further investments in Reno will add incremental earnings over the next two years to support the increase in debt due to the debt tack-on. Over the next 12-18 months, Jacobs will continue to have elevated capital spending to support investments in Reno and Black Hawk. Moody's expects the company can fund a significant portion of its spending plans from free cash flow with potentially modest draws under the revolver. Moody's estimates gross debt/EBITDA will peak at around 6.6x in 2019 and decline below its downgrade target by year end 2020. The note tack-on will be issued pursuant to rule 144A and the company will not be required to complete a registered exchange offer for file a registration statement for resale of the notes. Assignments: Issuer: Jacobs Entertainment, Inc. Senior Secured Regular Bond/Debenture, Assigned B2 (LGD4) Outlook Actions: Issuer: Jacobs Entertainment, Inc. Outlook, Remains Stable Affirmations: Issuer: Jacobs Entertainment, Inc. Probability of Default Rating, Affirmed B2-PD Corporate Family Rating, Affirmed B2 Senior Secured Regular Bond/Debenture, Affirmed B2 (LGD4) RATINGS RATIONALE Jacobs' rating is constrained by its small scale in terms of revenue and EBITDA and its earnings concentration of nearly 75% in two markets, Colorado and Louisiana, above average debt/EBITDA at 6.5x pro-forma for the acquisition of 3 truck stops, and the need to continue the integration and improvement of the Sands Regency in Reno, Nevada - acquired in July 2017. Additionally, Black Hawk, CO operations will be negatively impacted temporarily by new supply (about 8%) expansion at a competitor facility that is expected to open in the second quarter of 2019. Jacob's revenue market share generally exceeds its fair share of units in all markets. The Louisiana truck stop operations provide a level of earnings stability because the state has implemented a law that limits the locations of new direct competitors. Reno's regional economy is growing and will support improving gaming demand. Rating Outlook The stable rating outlook reflects Jacobs' good liquidity, cash flow generation over the next 12 months that will be sufficient to fund a large portion of maintenance and growth capital spending plans, and modest EBITDA growth from projects such as the expansion of surface parking in the company's Black Hawk market and the integration of its recently acquired Sands Regency property in Reno. The stable outlook also incorporates the likelihood of an increase in debt/EBITDA above its downgrade trigger in 2019 due to the negative impact of new supply at an existing competitor in Black Hawk and the $35 million tack-on to its existing second lien notes to fund the acquisition of 3 truck stops in Louisiana. However, Moody's expects the supply will be absorbed and credit metrics will drop below its downgrade trigger by 2020. What Could Change the Rating - Up A ratings upgrade would require debt/EBITDA approaching 4.5 times and EBIT/interest maintained above 2.5 times. What Could Change the Rating - Down Jacobs' ratings could be downgraded if leverage exceeds its peak estimate or if EBITDA growth does not materialize at pace necessary to reduce leverage below 6.25 times or if EBIT/interest drops well below 1.5 times over the next 12 to 24 months. Weakening of the company's liquidity position or competitive position in one of its key markets could also pressure the ratings. The principal methodology used in these ratings was Gaming Industry published in December 2017. LBJ HEALTHCARE: PCO Files 15th Interim Report --------------------------------------------- Tamar Terzian, Patient Care Ombudsman (PCO) for LBJ Healthcare Partners, Inc., filed a fifteenth interim report before the U.S. Bankruptcy Court for the Central District of California. During the visit to the facility, the PCO observed that the building overall needs significant repair and improvement. The PCO recommended repairing the roof as soon as practicable for certain leak issues. The Debtor is already aware of it and worked to keep it dry until there are more funds available for replacement. Further, the PCO noted that the Debtor has no vacancies for any new patients and has no issues to report regarding the current patients. A full-text copy of the Fifteenth Interim Report is available for free at: http://bankrupt.com/misc/cacb16-15197-386.pdf About LBJ Healthcare Partners Headquartered in Whittier, Calif., LBJ Healthcare Partners Inc., formerly doing business as Bayshore Villa Healthcare Partners, Inc., filed for Chapter 11 bankruptcy protection (Bankr. C.D. Cal Case No. 16-15197) on April 21, 2016, disclosing $49,370 in assets and $1.27 million in liabilities. The petition was signed by Brian Buenviaje, president and CEO. Judge Vincent P. Zurzolo presides over the case. Robert M. Aronson, Esq., at the Law Office of Robert M. Aronson, serves as the Debtor's bankruptcy counsel. Constance Doyle was appointed patient care ombudsman for the Debtor. Subsequently, Tamar Terzian was appointed as the PCO on February 21, 2018. LEVI STRAUSS: Fitch Raises LongTerm IDR to BB+, Outlook Stable -------------------------------------------------------------- Fitch Ratings has upgraded Levi Strauss & Co.'s long term Issuer Default Rating to 'BB+' from 'BB'. The Rating Outlook is Stable. The upgrade recognizes Levi's stable performance, with accelerating growth in revenue and EBITDA in 2018, meaningful cash flow generation, and reasonable adjusted leverage (defined as adjusted debt/EBITDAR, capitalizing leases at 8x) expected to trend in the low-3.0x range. The ratings continue to reflect Levi's strong brand, market share and operating initiatives, which should collectively drive low- to mid-single digit annual EBITDA growth over the next 24-36 months. The ratings also recognize the secular challenges in the mid-tier apparel industry, mitigated somewhat by Levi's geographic diversity, minimal fashion exposure, and presence across a wide spectrum of distribution channels. KEY RATING DRIVERS Strengthening Top-Line: Levi's top-line has accelerated, with 8% revenue growth in fiscal 2017 (ended November 2017) and 11% growth expected in fiscal 2018 following modestly positive constant-currency growth the prior few years. The company's merchandising and branding efforts are bearing fruit, with strong growth across categories and geographies. Levi's brand and offering are clearly trend-right currently, and the company is successfully exploiting opportunities to capitalize on this momentum through new product assortments, brand and celebrity collaborations, and square-footage expansion. Levi's positive constant currency growth over the past five years is evidence of the company's somewhat resilient business model in the face of apparel industry volatility, particularly for U.S. brick-and-mortar mid-tier apparel retailers. The company's product portfolio is primarily basic denim product, which is more replenishment-oriented and relatively less susceptible to significant fashion trends over time. The company is also broadly distributed across retail channels, including department store and specialty, but also general merchandise/discount and online; thus Levi is somewhat agnostic to the impact of shifts in shopping channels. Management has outlined three strategic initiatives that should support Fitch's expectation of low single digit positive sales growth over time, despite Levi's somewhat mature business profile. The first is to drive the profitable core businesses and brands through product innovation and strengthened customer relationships. The core businesses are the Levi's men's bottoms business globally, the Dockers brand in the U.S. and key global wholesale accounts, such as Wal-Mart Stores Inc. (AA/Stable) and J. C. Penney Co., Inc. (B-/Stable). The second initiative is to expand Levi's presence in less-penetrated product categories and markets. Businesses to expand include men's tops and outerwear; women's; and key emerging markets, such as Russia, India and China. Levi's women's line supported growth in recent years, especially in key emerging markets. Finally, Levi plans to grow its company-owned and omnichannel presence. The company's owned retail stores and online channel accounted for 30% of sales in 2017, with multibrand retailers and franchised Levi's locations accounting for the remaining 70%. Direct-to-consumer online sales were around 5% of total company sales. Levi plans to grow its company-operated and online penetration rates through retail unit expansion and investments in its e-commerce operations to improve the online customer experience and functionality. Stable to Growing EBITDA Story: Fitch expects 10% EBITDA growth in fiscal 2018 and low single-digit EBITDA growth beginning in 2019 from USD610 million in fiscal 2017, predicated on sales growth and selling, general and administrative (SG&A) investments, which will be somewhat mitigated by ongoing expense management. In late 2016 the company completed a cost-reduction program started in 2014, which benefited EBITDA by around USD150 million net of reinvestments. Fitch expects EBITDA margins to be stable near the low-13% expected in fiscal 2018, as low single-digit growth allows Levi to absorb fixed-cost inflation while investing in its business. Reasonable Credit Metrics: Levi should end fiscal 2018 with adjusted debt/EBITDAR around 3.3x, significantly lower than the recent peak of 5.3x in fiscal 2011, as EBITDA grew around 45% to a projected USD670 million from the fiscal 2012 trough of USD463 million and adjusted debt (on a rent-adjusted basis) declined around 10% to USD2.9 billion. Fitch expects leverage to remain in the low 3.0x range given stable EBITDA and near-flat projected debt levels. Fitch expects minimal debt paydown, as the company could direct cash flow toward the company's growth initiatives, dividend program and tuck-in M&A to improve its growth profile or product diversification. Strong Liquidity: Levi had USD613 million of cash on hand and USD669 million of revolver availability at Aug. 26, 2018. Cash should approach around USD700 million by the end of fiscal 2018 due to working capital seasonality. Annual FCF after dividends is projected in the low USD100 million range in fiscal 2018 (somewhat negatively affected by inventory build and higher pension contributions) but climb to the high USD100 million range beginning in fiscal 2019 on neutral working capital. Following the refinancing of Levi's USD525 million unsecured notes in February 2017, Levi's next debt maturity is USD500 million of unsecured notes due 2025. Evolving Financial Policy: Levi ended 2017 with leverage at 3.5x, significantly lower than the recent peak of 5.3x in 2011; leverage is expected to further decline to around 3.3x in 2018 on EBITDA growth. While some of the improvement was due to EBITDA growth, the company also directed FCF toward debt paydown, reducing debt around 50% to USD1.1 billion beginning 2012 through the end of 2016. The company has not directed cash flow toward debt reduction since 2016, and Fitch expects minimal debt reduction over the rating horizon. As such, Levi has increased optionality around use of its FCF, expected to be nearly USD200 million beginning 2019, for growth investments and tuck-in acquisitions. Tuck-in acquisitions could improve the company's business profile, if it acquired new brands or tilted its portfolio to be less concentrated on bottoms. Assuming flattish debt levels and modestly increasing EBITDA, Fitch forecasts adjusted leverage will remain in the low-3.0x range over the next two to three years. DERIVATION SUMMARY Levi's ratings reflects the company's position as one of the world's largest branded apparel manufacturers, with broad channel and geographic exposure, while also considering the company's somewhat narrow focus the Levi brand (86% of sales) and in bottoms (72% of sales). The company benefits from its broad distribution across department stores, specialty, mass, and discount, in addition to self-distribution (around 30% of sales are generated from company-operated stores and its online presence) which somewhat mitigates secular challenges in the U.S. mid-tier apparel industry. The company's financial profile improved in recent years from a focus on expense management and more stable constant currency revenue growth, somewhat mitigated by the negative impact of the strengthening U.S. dollar. Finally, while the ratings recognize the company's global and broad channel exposure, they also recognize Levi's concentration in the Levi brand (86% of sales) and in bottoms (72% of sales). Levi's 'BB' rated retail peers include off-price apparel retailer Burlington Stores (BB+/Stable) and jeweller Signet Jewelers (BB-/Negative). Burlington's IDR reflects good growth trajectory in the off-price channel, strong FCF and declining leverage, offset by lower margins and sales productivity than industry peers. Levi is somewhat focused on the denim category, compared with Burlington's broader product assortment. However, Levi has a more diverse channel and geographic exposure. Signet's ratings reflect the company's elevated leverage profile following declines in EBITDA and the sale of its credit portfolio, with adjusted leverage expected to remain above 5.0x over the next 24-36 months. Like Levi, Signet is somewhat narrowly focused on the mid-tier U.S. jewellery category. Fitch has Credit Opinions on two apparel manufacturers in the 'bb*' category, Hanesbrands Inc. and PVH Corp. Hanesbrands' Issuer Default Credit Opinion of bb*/stable reflects the company's leading brands, including Hanes, Champion and Maidenform, and good market share, and considers the company's acquisitive history that leads to volatile adjusted debt/EBITDAR, which is expected to trend over 3.0x. The credit opinion also reflects recently improved operating margins, improved financial flexibility and the company's solid liquidity PVH Corp.'s Issuer Default Credit Opinion of 'bb*'/stable reflects its large scale, and diverse channel and geographic presence in the apparel space. The company has been successful at repositioning its Calvin Klein and Tommy Hilfiger brands as premium in Europe and Asia, and has seen solid growth in both the brands. The strong growth in the international segment is expected to continue to offset softness domestically. The Credit Opinion also reflects significant FCF generation and Fitch's expectation that adjusted debt/EBITDAR will be in the low- to mid-4x range. KEY ASSUMPTIONS Fitch's key assumptions within its rating case for the issuer include: -- Annual revenues on a constant-currency basis grow at around 2% beginning in fiscal 2019, following around 11% projected growth in fiscal 2018, with sales approaching USD5.7 billion by fiscal 2020. Given the cyclical nature of fashion trends, some deceleration or even negative growth is possible at Levi following its very strong fiscal 2018 performance. Over the next two to three years, higher growth is projected in the less-mature European and Asian markets, with lower growth levels in the Americas, especially given the ongoing challenges faced by U.S. retailers of mid-tier apparel. -- Fitch expects EBITDA, which was around USD600 million over the past four years and somewhat limited by the strong U.S. dollar, to be around USD670 million in fiscal 2018 and grow toward USD700 million thereafter. Fitch projects expansion to match sales growth, with near-flat EBITDA margins resulting from ongoing expense-management initiatives mitigating SG&A investments. -- Fitch expects FCF in the high-USD100 million range annually, with annual dividend growth of around 10%-20% from around USD90 million in 2018. FCF in fiscal 2018 could be in the low USD100 million range due to inventory build and above-average pension contributions. Dividends are expected to grow 10%-20% annually. FCF could be used for further growth initiatives, including tuck-in M&A. -- Fitch expects adjusted debt/EBITDAR, which declined to 3.5x in fiscal 2017 from a peak of 5.0x in fiscal 2012, to modestly decline to the low 3.0x range in fiscal 2018 and remain there over the next two to three years, assuming no further debt paydown. -- While Fitch is not currently projecting a U.S. recession or significant consumer slowdown in 2019/2020, Levi's discretionary apparel focus puts the company at risk of sales and EBITDA volatility in a downturn, especially given its recent acceleration in top-line. Mitigating this concern is Levi's geographic diversity, with 50% of sales outside the U.S. Given Levi's cash flow characteristics and liquidity sources of USD1.3 billion as of the most recent quarter, Fitch expects Levi could withstand a potential consumer slowdown and potentially use its scale to strengthen its market position relative to weaker competitors. RATING SENSITIVITIES Developments That May, Individually or Collectively, Lead to Positive Rating Action: Fitch would consider a positive rating action if Levi sustained mid single-digit increases in constant-currency revenue and EBITDA such that EBITDA approached USD800 million, yielding adjusted debt/EBITDAR below 3.0x. Levi would also need to publicly articulate a financial policy which would imply adjusted debt/EBITDAR remaining under 3.0x over time. Developments That May, Individually or Collectively, Lead to Negative Rating Action: Fitch would consider a negative rating action if top-line weakness and increased marketing/promotion investments drive EBITDA to the mid to high USD500 million range, resulting in sustained adjusted debt/EBITDAR over 3.5x. A debt-financed M&A transaction which yielded sustained adjusted debt/EBITDAR over 3.5 could also yield a downgrade. LIQUIDITY Strong Liquidity: Levi's liquidity is strong, supported by cash on hand of USD613 million and revolver availability of USD669 million as of Aug. 26, 2018. The USD850 million revolving credit facility is secured by U.S. and Canadian inventories, receivables and the U.S. Levi trademark, and benefits from upstream guarantees from the domestic operating companies. Availability is subject to a borrowing base, essentially defined as 90% of credit card receivables, plus 85% of net eligible accounts receivable, plus 50% of raw materials inventory, plus 95% of finished goods inventory, plus 100% of cash in the collateral account and the U.S. Levi trademark. The borrowing base totalled USD714 million as of Aug. 26, 2018, which left net availability of USD669 million after netting USD45 million for LOC. The company has a total of USD1.1 billion of senior notes due 2025-2027. As shown in the Organizational Structure section, substantially all borrowing takes place at the Levi level. Levi is the parent and U.S. operating company. Borrowings under small, country-specific revolving credit facilities at subsidiary levels total USD36 million and are structurally senior to Levi's unsecured obligations with respect to the assets at those subsidiaries. The notes contain limitation-on-liens covenants that would permit secured debt up to approximately USD1.9 billion (equal to 3.5x EBITDA plus 15% of consolidated net tangible assets) less the revolver commitment of USD850 million, for a net incremental amount of approximately USD1.1 billion. The restricted payments basket in the note indentures is 50% of consolidated net income plus 100% of proceeds from equity issuance, subject to the fixed-charge coverage ratio being above 2.0x. RECOVERY CONSIDERATIONS Fitch does not employ a waterfall recovery analysis for issuers assigned ratings in the 'BB' category. The further up the speculative grade continuum a rating moves, the more compressed the notching between the specific classes of issuances becomes. Fitch assigned a 'BBB-'/'RR1' rating to Levi's ABL revolver, whose availability is subject to a borrowing base essentially defined as 90% of credit card receivables, plus 85% of net eligible accounts receivable, plus 50% of raw materials inventory, plus 95% of finished goods inventory, plus 100% of cash in the collateral account and the U.S. Levi trademark. The ABL revolver would be expected to have outstanding (91%-100%) recovery prospects in the event of default. Fitch assigned a 'BB+'/'RR4' rating to Levi's unsecured notes, indicating average (31%-50%) recovery prospects. FULL LIST OF RATING ACTIONS Fitch has upgraded the following ratings: Levi Strauss & Co. - Long-Term IDR to 'BB+' from 'BB'; - Unsecured Notes to 'BB+'/' RR4' from 'BB'/RR4'; Fitch has affirmed the following rating: Levi Strauss & Co. - Senior Secured ABL at 'BBB-'/'RR1'. The Rating Outlook is Stable. LUBY'S INC: Provides Update Regarding Annual Meeting Results ------------------------------------------------------------ On Jan. 30, 2019, Luby's, Inc. filed a Form 8-K with the Securities and Exchange Commission with the results from its annual meeting of shareholders held in Houston, Texas on Jan. 25, 2019. As indicated in the Election Results Filing, contrary to what Bandera Master Fund L.P. stated on its proxy card and in its proxy statement filed with the SEC on Dec. 26, 2018, Bandera did not vote the proxies it held for the Company's director candidates other than Christopher J. Pappas, Harris J. Pappas, Frank Markantonis and Gasper Mir, III, and instead only voted for its own director candidates. Luby's said that at the Annual Meeting, the independent inspector of elections pointed out to representatives of Bandera prior to the closing of the polls that Bandera's voting was inconsistent with the voting instructions outlined on Bandera's proxy card. In response, Bandera's proxy solicitor, who was one of the named proxies in Bandera's proxy card, explicitly confirmed that he understood and this was how he intended to vote. The Company did not learn about this issue until the Inspector of Elections released the preliminary results three days later, which Bandera chose to certify. The Company's counsel was not contacted by Bandera's lawyers about this purported "mistake" until after the certification and public filing of the final vote results. As a legal matter, following the closing of the polls, there was no legal action available to change the vote. The Company's counsel had explained that to Bandera's counsel. About Luby's Houston, Texas- based Luby's, Inc. (NYSE: LUB) -- http://www.lubysinc.com/-- operates 140 restaurants nationally as of Dec. 19, 2018: 82 Luby's Cafeterias, 57 Fuddruckers, one Cheeseburger in Paradise restaurants. Luby's is the franchisor for 103 Fuddruckers franchise locations across the United States (including Puerto Rico), Canada, Mexico, the Dominican Republic, Panama, and Colombia. Luby's Culinary Contract Services provides food service management to 30 sites consisting of healthcare, corporate dining locations, and sports stadiums. Luby's reported a net loss of $33.56 million for the year ended Aug. 29, 2018, compared to a net loss of $23.26 million for the year ended Aug. 30, 2017. As of Dec. 19, 2018, Luby's had $208.89 million in total assets, $100.83 million in total liabilities, and $108.05 million in total shareholders' equity. Grant Thornton LLP, in Houston, Texas, issued a "going concern" qualification in its report on the consolidated financial statements for the year ended Aug. 29, 2018, noting that the Company sustained a net loss of approximately $33.6 million and net cash used in operating activities of approximately $8.5 million. The Company's term and revolving debt of approximately $39.5 million is due May 1, 2019. The Company was in default of certain debt covenants of its term and revolving credit agreements maturing on May 1, 2019. On Aug. 24, 2018, the lenders agreed to waive the existing events of default resulting from any breach of certain financial covenants or the limitation on maintenance capital expenditures, in each case that may have occurred during the period from and including May 9, 2018 until Aug. 24, 2018, and any related events of default. Additionally, the lenders agreed to waive the requirements that the Company comply with certain financial covenants until Dec. 31, 2018, at which time the Company will be in default without an additional waiver or alternative financing. These conditions, along with other matters, raise substantial doubt about the Company's ability to continue as a going concern. MEEKER NORTH: No Deficiency in the Facility, PCO's 4th Report Says ------------------------------------------------------------------ William J. Whited, Oklahoma State Long-Term Care Ombudsman, having been appointed Patient Care Ombudsman for Meeker North Dawson Nursing, LLC, filed a fourth report to the Court pursuant to 11 U.S.C Section 333. The Report disclosed that multiple visits have been made by the designated Ombudsman staff. During the visits by the designees, the Ombudsman noted the following: 1. The facility has cleared prior deficiencies identified in PCO's last report and has been determined to be in substantial compliance; 2. The facility has met the required staff to resident ratios during each Ombudsman visit; 3. All supplies and food stocks have been adequate during each Ombudsman visit; 4. The Office of the State Long-Term Care Ombudsman has not received any complaints from residents since the last filed report; 5. A review of survey and complaint information from the Oklahoma State Department of Health provides that no new deficiencies have been issued since the Ombudsman report; and 6. Residents report that they are happy with the care they are receiving and are complimentary of the staff in all areas of the facility. A full-text copy of the Fourth Report is available for free at: http://bankrupt.com/misc/ganb18-56883-113.pdf About Meeker North Dawson Nursing Meeker North Dawson Nursing, LLC, sought protection under Chapter 11 of the Bankruptcy Code (Bankr. N.D. Ga. Case No. 18-56883) on April 24, 2018. In the petition signed by Christopher F. Brogdon, managing member, the Debtor estimated assets of less than $50,000 and liabilities of less than $1 million. Theodore N. Stapleton P.C. serves as its legal counsel; and Synergy Healthcare Resources, LLC, as its financial advisor. Daniel M. McDermott, the U.S. Trustee for Region 21, appoints William J. Whited as the patient care ombudsman in the Chapter 11 case of Meeker North Dawson Nursing, LLC. MJW FILMS: Committee Seeks to Hire May Potenza as Counsel --------------------------------------------------------- The official committee of unsecured creditors of MJW Films, LLC, and J Wick Productions, LLC, seeks approval from the U.S. Bankruptcy Court for the District of Arizona to hire May, Potenza, Baran & Gillespie PC as its legal counsel. The firm will advise the committee regarding its duties under the Bankruptcy Code; assist the committee in negotiations with the Debtors concerning the terms of any proposed plan of reorganization; provide creditors with access to information; evaluate claims; and provide other legal services related to the Debtors' Chapter 11 cases. The firm will charge these hourly fees: Grant Cartwright Partner $395 Andrew Harnisch Partner $395 Elizabeth Luna Paralegal $200 May Potenza is "disinterested" as defined in section 101(14) of the Bankruptcy Code, according to court filings. The firm can be reached through: Grant L. Cartwright, Esq. Andrew A. Harnisch, Esq. May, Potenza, Baran & Gillespie PC 201 N. Central Avenue, Suite 2200 Phoenix, AZ 85004-0608 Telephone: (602) 252-1900 Facsimile: (602) 252-1114 E-mail: gcartwright@maypotenza.com E-mail: aharnisch@maypotenza.com About MJW Films and JW Films MJW Films, LLC and J Wick Productions, LLC are movie production companies based in Gilbert, Arizona. MJW Films and J Wick filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code (Bankr. D. Ariz. Case No. 18-12874) on Oct. 22, 2018. In the petitions signed by John Glassgow, designated representative, the Debtors estimated $1 million to $10 million in both assets and liabilities. Patrick A. Clisham, Esq., at Engelman Berger, P.C., represents the Debtors. MOHEGAN TRIBAL: Moody's Confirms B2 CFR, Outlook Negative --------------------------------------------------------- Moody's Investors Service confirmed Mohegan Tribal Gaming Authority's B2 Corporate Family Rating and B2-PD Probability of Default Rating. The company's B1 senior secured credit facility rating and B3 senior unsecured note rating were also confirmed. These rating actions conclude the review for downgrade initiated on October 31, 2018. The rating outlook is negative. MTGA has an SGL-2 Speculative Grade Liquidity rating. Outlook Actions: Issuer: Mohegan Tribal Gaming Authority Outlook, Changed To Negative From Rating Under Review Confirmations: Issuer: Mohegan Tribal Gaming Authority Probability of Default Rating, Confirmed at B2-PD Corporate Family Rating, Confirmed at B2 Senior Secured Bank Credit Facility, Confirmed at B1 (LGD3) Senior Unsecured Regular Bond/Debenture, Confirmed at B3 (LGD4 from LGD5) "The confirmation of MTGA's ratings considers that the impact on gaming revenue and profitability from MGM Springfield, a competing facility own by MGM Resorts that opened in August 2018, has been less than Moody's expected at the time the review for downgrade was initiated," stated Keith Foley, a Senior Analyst at Moody's. "MTGA's monthly gross slot revenue took a hit shortly after Springfield opened, however the declines lessened considerably and relatively rapidly from a peak of -10.6% in October to -6.8% in November, and to only -.05% in December," added Foley. "As a result of MTGA's better than expected monthly gaming revenue performance, Moody's believes the company will be able to maintain debt/EBITDA on a Moody's adjusted basis below 6.0 times." Moody's 4.5 times debt/EBITDA downgrade trigger that had been in effect was based on Moody's view that MTGA's leverage would need to be down to that level in order to absorb the impact of the Springfield opening. The fact that the impact was not as severe as expected, and that MTGA's debt/EBITDA remains below 6.0 times, provides Moody's with a higher level of confidence that MTGA can maintain its credit profile in the face on continuing and considerable competition. Also contributing to the ratings confirmation is Moody's expectation that MTGA will continue to generate a modest amount of free cash flow after cash interest, cash distributions, maintenance and development capital expenditures, and about $72 million of mandatory debt maturities in each of the next two years. Additionally, Moody's expects that the company will continue to aggressively manage its cost structure to reduce as much revenue risk as possible. The negative rating outlook considers that despite MTGA's better than expected performance following the opening of MGM Springfield, the company's revenue and earnings remain susceptible to increased competition coming from Massachusetts. Wynn Resorts, Ltd.'s Boston casino is currently scheduled to open in June 2019. And while Moody's believes MTGA can maintain debt/EBITDA at below 6.0 times, the negative outlook acknowledges that MTGA remains weakly positioned within the B2 rating category with respect to leverage. Ratings could be downgraded if it appears MTGA will not be able to manage its debt/EBITDA at or below 6.0 times, for any reason. A higher rating requires that MTGA achieve and maintain debt/EBITDA on a Moody's adjusted basis at/below 4.5 times. RATINGS RATIONALE MGTA's credit profile (B2 negative) reflects the company's high quality, well-established, and large amount of gaming and attractive non-gaming amenities along with its earnings diversification efforts. Diversification efforts include management and development fees from unaffiliated casinos in the U.S., along with MTGA's investment in a resort casino project South Korea, which Moody's views as a long-term positive for the company, despite inherent risks. Credit concerns include MTGA's high leverage -- debt/EBITDA for the latest 12-month period ended September 30, 2018 was 5.6 times on a Moody's adjusted basis -- and heavy revenue and earnings concentration in Connecticut given that the level of direct competition has and will continue to increase. In addition to competition from MGM Springfield which opened in August 2018. Wynn Resorts, Limited (Ba3 negative) is in the process of constructing a large resort casino in Everett, MA, a suburb near Boston that is scheduled to open in June of 2019. MTGA owns and operates Mohegan Sun, a gaming and entertainment complex near Uncasville, Connecticut, and Mohegan Sun at Pocono Downs, a gaming and entertainment facility offering slot machines and harness racing in Plains Township, Pennsylvania. MTGA also receives fees for the management of several nonaffiliated casinos. MTGA generated consolidated net revenue of about $1.36 billion for the fiscal year ended Sep. 30, 2018 period ended June 30, 2018. NANDINI INC: Seeks to Hire Ure Law Firm as Legal Counsel -------------------------------------------------------- Nandini, Inc., seeks approval from the U.S. Bankruptcy Court for the Central District of California to hire Ure Law Firm as its legal counsel. The firm will advise the Debtor regarding its duties under the Bankruptcy Code; assist the Debtor in the administration of the bankruptcy estate's assets and liabilities; prepare a plan of reorganization; and provide other legal services related to its Chapter 11 case. Ure Law Firm will charge these hourly fees: Thomas Ure, Esq. $450 Patricia Briseno $95 Yolanda Segura $95 Thomas Ure, Esq., the attorney who will be handling the case, received $8,467 from the Debtor prior to its bankruptcy filing. He will receive $18,250 from the Debtor to be placed in trust pending approval of fees and costs. Mr. Ure disclosed in a court filing that his firm is "disinterested" as defined in section 101(14) of the Bankruptcy Code. The firm can be reached through: Thomas B. Ure, Esq. Ure Law Firm 800 West 6th Street, Ste. 940 Los Angeles, CA 90017 Tel: 213-202-6070 Fax: 213-202-6075 E-mail: tbuesq@aol.com E-mail: tom@urelawfirm.com About Nandini Inc. Nandini, Inc., a privately held company that manufactures women's apparel, sought protection under Chapter 11 of the Bankruptcy Code (Bankr. C.D. Cal. Case No. 18-24837) on Dec. 24, 2018. At the time of the filing, the Debtor estimated assets of less than $50,000 and liabilities of $1 million to $10 million. The case is assigned to Judge Ernest M. Robles. Ure Law Firm is the Debtor's counsel. NAVEGAR NETWORK: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Navegar Network Alliance LLC aka Navigant Network Alliance LLC 500 De La Tanca, Suite 209 San Juan, PR 00901 Business Description: Navegar Network Alliance is an outsource service provider in the field of medical laboratory billing. Chapter 11 Petition Date: February 4, 2019 Court: United States Bankruptcy Court District of Puerto Rico (Old San Juan) Case No.: 19-00558 Judge: Hon. Brian K. Tester Debtor's Counsel: Nayuan Zouairabani Trinidad, Esq. MCCONNEL VALDES LLC 270 Munoz Rivera Ave Suite 7 San Juan, PR 00918 Tel: 787-250-5619 E-mail: nzt@mcvpr.com Estimated Assets: $50,000 to $100,000 Estimated Liabilities: $100 million to $500 million The petition was signed by Brian Campbell, vice-presient of operations. A copy of the Debtor's list of 20 largest unsecured creditors is available for free at: http://bankrupt.com/misc/prb19-00558_creditors.pdf A full-text copy of the petition is available for free at: http://bankrupt.com/misc/prb19-00558.pdf NEW YORK IRON GYM: Seeks to Hire John Lehr as Legal Counsel ----------------------------------------------------------- New York Iron Gym, Inc. seeks authority from the U.S. Bankruptcy Court for the Eastern District of New York to hire John Lehr, P.C. as its legal counsel. The firm will advise the Debtor of its power and duties in the continued management of its property; negotiate with its creditors in formulating a plan of reorganization or liquidation; and provide other legal services in connection with the Debtor's Chapter 11 case. The firm will be paid an hourly fee of $300 for its services. Lehr received a $7,500 retainer from the Debtor's president from non-debtor funds. John Lehr, Esq., disclosed in a court filing that his firm does not represent any interest adverse to the Debtor or its bankruptcy estate. The firm can be reached through: John Lehr, Esq. John Lehr, P.C. 1979 Marcus Avenue, Suite 210 New Hyde Park, NY 11042 Tel: (516) 200-3523 About New York Iron Gym Inc. Based in Amityville, New York, New York Iron Gym, Inc. filed a voluntary Chapter 11 petition (Bankr. E.D.N.Y. Case No. 18-78439) on December 14, 2018, listing under $1 million in both assets and liabilities. The case has been assigned to Judge Alan S. Trust. John Lehr, Esq., at John Lehr, P.C., serves as the Debtor's legal counsel. NORTHWEST ACQUISITIONS: Moody's Cuts CFR to B3, Outlook Stable -------------------------------------------------------------- Moody's Investors Service downgraded Northwest Acquisitions ULC's corporate family rating to B3 from Ba3, Probability of Default Rating to B3-PD from Ba3-PD, its first lien secured rating to B1 from Ba1, and its second lien secured rating to B3 from Ba3. Moody's has also withdrawn the speculative grade liquidity rating previously assessed at SGL-2. The ratings outlook is stable. "Northwest's ratings have been downgraded because of materially lower production expected in 2019, continued weak diamond pricing, a now uncertain development plan to address its short mine life, and the likelihood of a covenant breach in 2019", said Jamie Koutsoukis, Moody's Vice-President, Senior Analyst. Downgrades: Issuer: Northwest Acquisitions ULC Probability of Default Rating, Downgraded to B3-PD from Ba3-PD Corporate Family Rating, Downgraded to B3 from Ba3 Senior Secured Revolving Bank Credit Facility, Downgraded to B1 (LGD2) from Ba1 (LGD2) Senior Secured Second Lien Notes due 2022, Downgraded to B3 (LGD4) from Ba3 (LGD4) Outlook Actions: Issuer: Northwest Acquisitions ULC Outlook, Remains Stable Withdrawals: Issuer: Northwest Acquisitions ULC Speculative Grade Liquidity Rating, Withdrawn , previously rated SGL-2 RATINGS RATIONALE Northwest's B3 CFR is driven by 1) operating underperformance in the last year and a material decline in production expected in 2019, 2) an undefined plan to address its short mine life 3) new management that has recently been put in place, creating increased execution risk, 4) the opaqueness of diamond pricing, including the managed supply-demand characteristics of this luxury good and the disruption synthetic diamonds could have on the market, 5) the likelihood the company will breach its financial covenants in 2019, and 4) concentration risk (one mineral, two co-located mines). The company benefits from being located in favorable mining jurisdiction (Canada), and from expected cost reductions from recent restructuring efforts. In 2019, Moody's expects Northwest will produce 6 million carats (compared to 10 million expected for 2019 when the rating was first assigned) which, coupled with current diamond prices, will result in leverage (adjusted debt/EBITDA) increasing to 3.1x from 2.5x at Q3/18 (debt/annualized Q3 EBITDA). Though the company has guided that production will increase back to over 8 million carats in 2020, given the material production shortfall that will occur in 2019, Moody's cannot be confident in Northwest's 2020 plan until an operational track record for this new management team can be established. Also, the company's existing producing kimberlite pipes have a mine life of about 4 years. Northwest will need to develop new kimberlite pipes to maintain production past 2023, and that will require a higher capital spend in the development years, which will likely lead to an increase in negative free cash flow. The company has weak liquidity, as its leverage covenant is likely to be breached in 2019. Sources of liquidity include $122 million of cash as of September 2018, and $112 million of availability on its $200 million credit facility maturing 2021. Moody's expects that Northwest will generate negative free cash flow of about $35 million over the next four quarters. Northwest's credit facility has covenants including maximum net debt to EBITDA of 2.25x, with annual step downs to 2.0x in Dec 2019 and 1.75x in Dec 2020. Moody's believes that the company is at risk of breaching its leverage covenant in 2019. Moody's anticipates net debt to EBITDA of 2.6x (Moody's estimate) at year end 2019. The stable outlook reflects Moody's belief that Northwest will be able to negotiate covenant relief and that it has sufficient liquidity over the next year, during which new management will have time to develop a plan to extend mine life and to develop an operating track record. The B3 CFR could be downgraded if liquidity deteriorates, that could result from an unresolved covenant breach, if operating performance fails to improve past 2019, or if management is unable to develop a credible plan for extending mine life past 2023, coupled with funding and liquidity for that plan. The B3 CFR could be upgraded if management is able to demonstrate an ability to meet its covenants, if management is able to execute on improved operating performance including producing over 8 million carats in 2020 and leverage falls below 2x (debt/annualized EBITDA of 2.5x at Q3/18). An upgrade would also require that management develops a credible plan for extending mine life past 2023, coupled with funding and liquidity for that plan. Northwest Acquisitions ULC, was purchased from public shareholders in October 2017, and is ultimately owned by the Roy Dennis Washington Trust. It is the fourth largest diamond miner globally, historically supplying about eight to nine million carats/year of rough diamond assortments to the global market. It owns an 89% interest in and operates the Ekati diamond mine and holds a 40% ownership interest in the Diavik diamond mine, operated by Rio Tinto plc., both located in the Northwest Territories of Canada. OAKLAND PARK: Broward County Seeks Ch. 11 Trustee Appointment ------------------------------------------------------------- Broward County, a political subdivision of the State of Florida, requested the U.S. Bankruptcy Code for the Southern District of Florida to appoint a Chapter 11 trustee for Oakland Park Inn Inc. Based on the request, the Debtor cannot be trusted to manage its affairs for the benefit of creditors, or even for its own benefit, because of dishonesty and/or gross mismanagement, including, inter alia, an apparent failure to maintain basic accounting records or tax returns, and failure to collect and remit trust-fund taxes owed to the County and the State of Florida, which have spurred criminal investigations targeting the hotel’s CEO. In this case, the Broward County believes that a trustee could protect the creditors by, inter alia, operating the business honestly and productively, identifying and recovering assets, such as the County’s tax revenues, that appear to have been improperly transferred out of the bankruptcy estate, and by seeking legal and equitable remedies such as substantive consolidation to bring in assets that should be made a part of the estate. About Oakland Park Inn Oakland Park Inn Inc. -- http://ramadaoaklandparkinn.com/-- owns and operates the Ramada Oakland Park Inn located at 3001 N. Federal Hwy., Fort Lauderdale 33306. The Ramada branded hotel features outdoor heated pool, business center, fitness center, tiki bar, and restaurant. Oakland Park Inn, Inc., based in Fort Lauderdale, FL, filed a Chapter 11 petition (Bankr. S.D. Fla. Case No. 19-10620) on Jan. 16, 2019. In the petition signed by Walter W. Johnson, Jr., authorized representative, the Debtor disclosed $7,118 in assets and $3,187,752 in liabilities. The Hon. John K. Olson oversees the case. Kevin C. Gleason, Esq., at Florida Bankruptcy Group, LLC, serves as bankruptcy counsel. OMA GROUP: Case Summary & 3 Unsecured Creditors ----------------------------------------------- Debtor: OMA Group, LLC 6006 N. Mesa St., Ste. 406 El Paso, TX 79912 Business Description: OMA Group is a Single Asset Real Estate Debtor (as defined in 11 U.S.C. Section 101(51B)). It owns in fee simple a property located at 110 Borderland Dr., El Paso, Texas, having a current value of $5.80 million. Chapter 11 Petition Date: February 4, 2019 Court: United States Bankruptcy Court Western District of Texas (El Paso) Case No.: 19-30183 Judge: Hon. Christopher H. Mott Debtor's Counsel: E. P. Bud Kirk, Esq. E. P. BUD KIRK 600 Sunland Park Drive, Ste. 400 El Paso, TX 79912 Tel: (915) 584-3773 Fax: (915) 581-3452 E-mail: budkirk@aol.com Total Assets: $5,804,338 Total Liabilities: $3,099,186 The petition was signed by Octavio Manzano, president. A copy of the Debtor's list of three unsecured creditors is available for free at: http://bankrupt.com/misc/txwb19-30183_Creditors.pdf A full-text copy of the petition is available for free at: http://bankrupt.com/misc/txwb19-30183.pdf OREGON CLEAN: Moody's Rates $550MM in Secured Loans 'Ba3' --------------------------------------------------------- Moody's Investors Service assigned a Ba3 rating to Oregon Clean Energy, LLC's $500 million senior secured term loan and $50 million senior secured revolving credit facility maturing in February 2026 and February 2024, respectively. The rating outlook is stable. Proceeds from the secured term loan will be used to refinance an existing construction loan and make an equity distribution of approximately $62.7 million. The $50 million revolving facility will be utilized for working capital and other general corporate purposes, including $16 million in committed project LCs and the $21.6 million in a DSR LC. RATINGS RATIONALE The Ba3 rating on the $500 million senior secured term loan and $50 million revolving facility, together the credit facilities, of Oregon Clean Energy, LLC (OCE) factor in the completion of a new, highly efficient and competitive combined cycle gas turbine power plant, OCE (or the project), serving as a base load unit in PJM. The Ba3 rating considers the known capacity revenues through May 2022 derived from past PJM base residual auctions as a source of reliable cash flow and future revenues over the next three and a half years. OCE is located in the PJM ATSI (American Transmission Systems Inc.) capacity zone which broke away at a premium from the RTO region by 22% in the most recent auction at $171.33/MW-day, mainly due to the inability of 1.5 GWs of nearby nuclear plants to clear in the capacity auction. Moody's believes this capacity price premium will be maintained in the short to medium term given the announced large coal and nuclear retirements in the zone, but should converge again with RTO prices over the long-run. The Ba3 rating further acknowledges the existence of a revenue put which provides downside protection to the project from weak energy margins. Together, Moody's calculates that these two sources of revenue provide more than 90% of gross margin in most years. The rating recognizes the cost competitive position of the asset relative to other generation resources in PJM providing it with the potential for sustained high capacity factors and meaningful energy margins over the life of the transaction. The rating factors in the limited operating history since OCE reached commercial operations in July 2017. For most months, performance has been adequate but there have been some forced outages in 2017 and 2018 so far leading to equivalent availability factors (EAF) of 88.2% and 78.1%, respectively. Excluding months where there were repair outages, capacity factors were in the 80% range with low heat rates in the 6,500 Btu/kWh range. The plant suffered a major outage in February 2018 which lasted through May due to a generator failure requiring a major repair and part replacement. The project was able to operate at a reduced capacity in a 1x1 configuration during the outage without any negative impact to its low heat rate. The equipment replacement and related costs were covered by warranty and insurance. The plant's technology is widely utilized across the globe, and per discussions with the independent engineer Moody's does not believe that this issue will chronically impact the project's performance in the long-run. That said, in September 2018 there was a one-time curtailment issue caused by a switchyard rebuild (not OCE's), negatively affecting the EAF and in October 2018 there was a forced outage that lasted four and a half days due to a combustion turbine igniter. The repair costs were minor and were covered under warranty. These one-time events are not expected to recur nor impact OCE's long-term performance or reliability. In November and December 2018, EAFs were back at 95% and 99%, respectively. Project Description As mentioned, OCE is located in Ohio, in PJM's ATSI (American Transmission Systems Inc.) capacity zone, and utilizes well known technology from Siemens consisting of a 2x1 combined-cycle unit with two Siemens SGT6-8000H combustion turbines and generators (CTGs), two heat recovery steam generators (HRSGs) and a Siemens steam turbine generator (STG). There are currently 60 units in operation world-wide utilizing the same CTGs and the fleet has achieved proven-technology status. The project's two-year warranty under its EPC agreement with Black and Veatch Corporation, an experienced contractor in the field, runs through mid-2019. The project has contracted with Siemens for operations and maintenance of the project for an initial term of five years from COD. Siemens in turn has subcontracted much of the on-site labor to WorleyParsons, an engineering services company with significant international experience, who has worked together with Siemens on at least three other similar projects in the US. Siemens will remain responsible for the overall management and administration of the O&M agreement. In addition, the project has a long-term program contract (LTP) with Siemens for major maintenance services for the combustion turbines. The LTP however does not cover the generators, steam turbine generator unit or the heat recovery steam generators, which per the independent engineer's opinion is a common exclusion. According to the independent engineer, the LTP includes warranty provisions that are more extensive and favorable to the project than what is typically seen in the current market, providing an 18-month extended warranty on the CTGs and STG (including the generators) as well as the usual evergreen warranty on any parts repaired or replaced during the term of the LTP. Warranty coverage on CT12 was extended to three-years as a result of the generator failure in 2018. The project has contracted with an experienced energy manager, Tenaska Power Services Co. (Tenaska) through December 2022, subject to two, one-year contract renewals, and asset management services are provided by Power Plant Management Services, LLC (PPMS). Operating and Financial Profile Given the expected dispatch profile of the plant, financial performance is highly dependent upon the robustness and volatility of the PJM merchant energy market which will be influenced by several factors including the demand for electricity, expected plant retirements, including coal-fired generation, and anticipated plant additions throughout the region. OCE is expected to receive about $122 million of capacity revenues through May 2022 from capacity cleared in PJM's base residual auction, representing around 52% of cash flow available for debt service (CFADs) for the period, per Moody's calculations. Natural gas transportation is contracted through an affiliate of North Coast Gas Transmission, LLC (NCGT) through a 22 mile lateral pipe which connects to the ANR Pipeline Company (ANR) and Panhandle Eastern Pipeline Company (Panhandle) interstate pipelines. Although the long-term contract with NCGT is for 280 MMcfd, which is above the project's average daily needs of around 120 MMcfd, the firm transportation contracts with ANR and Panhandle only amount to 100 MMcfd. Remaining transportation needs will be met via the energy management agreement (EMA) with Tenaska Power Services. This lack of fully contracted transportation needs is partly mitigated by the excess contracted capacity on the lateral line, the fact that only around 17% of average daily transportation needs are not contracted, and by the significant transportation availability on both the ANR and Panhandle Pipelines as well as the potential to tap into a third pipeline, Nexus, in the future. The owners intend to actively market the extra capacity in the NCGT pipeline which could generate some limited additional revenue for the project in the future. The project has contracted gas supply for a total of 150,000 Dth/day through agreements with Ascent and EQT (on a "take or pay basis"), as well as Tenaska (on a "take and pay" basis) relative to the project's average daily needs of 120,000 Dth/Day. Fuel supply is primarily indexed to the MichCon gas hub with an adder. Moody's does not anticipate fuel interruption to occur given Tenaska's position as the largest gas marketer in the region, coupled with the region's abundant gas supply. Moody's notes that the MichCon price hub has historically traded at small discounts to Henry Hub. MichCon was also the lowest index during the lower temperatures experienced in the early winter of 2018 (bomb cyclone). However, certain other natural gas power plants in the region are able to source gas at even greater discounts to Henry Hub, relative to MichCon (such as Dominion-South hub and others), which will benefit those plants and cause them to dispatch ahead of OCE, all things being equal. As such, while OCE is more efficient than most of the existing gas power plants in the pricing region, its fuel costs are somewhat higher than a few other natural gas plants, narrowing its competitive advantage. Even so, the project is expected to benefit from higher spark spreads and wider margins in this continuing environment of low natural gas prices given the large number of coal power plants remaining within the PJM ATSI region (around 48% of capacity relative to 34% in PJM as a whole) where OCE operates, and where coal is still on the margin primarily during peak hours. Further, the recently announced coal and nuclear retirements in PJM will positively impact the supply/demand balance in the region benefitting OCE over the medium to long term, particularly with respect to capacity prices. OCE further benefits from a five-year revenue put with Morgan Stanley Capital Group, Inc. which provides an energy margin and ancillary revenue floor of around $50 million per year through August 2022. Through the mechanics of the agreement which settles quarterly and trues-up annually, the revenue put will likely be triggered in the event spark spreads or margins decline to around $9/MWh versus the $13/MWh on average observed since the project reached commercial operations in July 2017 (after nodal discounts and assuming no change to forecasted generation). However, Moody's notes that it is possible that the revenue put may not be triggered in some cases where the project's actual annual energy margin and ancillary revenues are below $50 million. Specifically, according to the market consultant, OCE's interconnection into the ATSI Zone's 345 kV transmission systems runs along Lake Erie and has traded at a 3.5% average discount in the majority of hours. This discount stems from node marginal losses owing to historical west-to-east power flows to serve load near Cleveland, which are expected to decrease in the medium term as nearby coal and nuclear retirements take place reducing congestion and losses. Since the revenue put is indexed to ATSI Hub, it is possible that the revenue put would not be triggered even though the project's actual energy margin is below $50 million. That said, this protection, while a positive, would occur in the unlikely event that energy margins were to reach very low levels. Moody's estimates that should a scenario surface, the project debt service coverage ratio (DSCR) would likely be at or around 1.0x to 1.4x given the known capacity revenues through May 2022, providing some degree of downside protection. Financing Structure & Expected Financial Performance The financing structure will have a 75% excess cash flow sweep, and with distributions permitted on a quarterly basis subject to a 1.10x financial covenant (calculated on a trailing 12 month basis), stepping down to 50% and 25% once debt to EBITDA ratios decline to below 4.0x and 3.0x respectively. Moody's views having quarterly distributions of dividends as a credit weakness since distributions can be made in any given quarter even if on an annual basis, the project may not be able to meet the financial covenant. The ability for excess cash flow to step down weakens the effectiveness of this feature and raises refinancing risk particularly given the volatility of future cash flow. Liquidity is provided by the revolving credit facility and supported by a 6-month debt service reserve backed by a L/C. There are L/C requirements (provided under the revolving facility), associated with the firm transportation agreements with NCGT of $15.2 million initially, stepping down to around $4.6 million in August 2019, as well as a $21.6 million debt service reserve, leaving about $25 million of working capital after the transportation agreement step-down. There is no major maintenance reserve contemplated, and the level of working capital is modest relative to the size of the debt and the potential for cash flow volatility. Initial leverage is moderate with Debt to EBITDA of 5.9x, per 2018 unadjusted budget (with eleven months actual and one estimated, which is a weaker year given the major forced outage earlier in the year), and $575 debt/kW at financial close. Debt to normalized EBITDA in 2018 which includes $17.9 million of lost energy margin during the Feb-May outage less $1.9 million of business interruption insurance proceeds received in August is 5.0x. Assuming a normalized 2019 as the second full year of operations, debt to EBITDA would be around 5.0x per Moody's assumptions. Credit metrics are expected to be in the middle of the range under the Ba rating category under its case, which assumes similar spark spreads as those observed since July 2017, with capacity auction prices for the ATSI region remaining at a similar premium to RTO in the near to medium term, and capacity factors in the low 80% throughout the projected period. Average annual DSCR is expected to be around 2.6x and CFO/debt around 15.8%. By comparison, management's case results in 3.55x average DSCR and 24.9% average CFO/Debt over the forecasted period. Given known capacity auction results through the 2021-2022 period and its expectation for a continued premium for PJM ATSI over RTO in the upcoming capacity auction results prior to converging with RTO prices, financial performance is expected to remain reasonably stable over the next three years. From a refinancing perspective, Moody's calculates that approximately 49.2% of the original debt is expected to remain outstanding at maturity which is similar to management's case as cash flow sweep step-downs are triggered to 50% by year 2022 and to 25% by year 2023 in the management's case. The project's DSCR is expected to remain comfortably above the 1.10x financial covenant throughout the forecasted period. Moody's also examined a sensitivity scenario that contemplates a hypothetical forced outage in year 2020 similar to the one which occurred in 2018. Under this case, the project's DSCR declines appreciably to 1.42x, and CFO/Debt at 4.59% in that year, but the project would still be able to meets its maintenance financial covenant test of 1.10x (prior to any insurance reimbursement assumption). Security is typical of project financing structures, comprised of a first priority security interest in all tangible and intangible assets, as well as a pledge of equity interests, and change of control provisions. Additional indebtedness for general working capital purposes up to $30 million is subject to a rating affirmation. Receipt from insurance proceeds are to be applied towards mandatory prepayments and there is a maximum 18 month business interruption insurance subject to a 60 day deductible. The financial maintenance covenant of 1.10x is subject to no more than two equity cures during any rolling four quarters, and not more than five times in the aggregate. Rating Outlook The stable outlook assumes that actions taken to remediate the generator failure which occurred earlier in 2018, will enable the project to operate within expected performance parameters going forward, closely aligning to heat rates in the 6,700 range and capacity factors around 80%. What could change the rating up The ratings are unlikely to move up at this time given the limited operating history and occurrence of a major forced outage due to a generator failure in February of 2018, as well as its expectations for near-term financial performance owing in large part to the impact of known capacity auction results through May 2022. In the event that actual performance, particularly on the energy margin side appreciably exceeds current expectations, resulting in financial performance more in line with management case of a DSCR that is greater than 2.5x and an CFO/Debt that is greater than 15%, there could be upward pressure on the ratings. What could change the rating down The ratings could move down if the project experiences significant and prolonged operating issues again during its second year of operations which are either not covered by warranty or insurance or lead to significantly lower than expected cash flow generation and debt service coverage over the next 12 months. Specifically, the ratings could be downgraded if cash flow to debt is expected to approximate 9% or lower and the project's DSCR is less than 2.0x on a sustained period. Project Background OCE is located in Lucas County, City of Oregon, Ohio. The project is a natural gas fired combined cycle plant consisting of two Siemens SGT6-8000H CTGs, two NEM HRSGs, and one Siemens STG. The project is capable of production approximately 870 MW at average annual conditions (approximately 50°F) and over 930 MW at extreme winter ambient conditions (below 0°F), with full duct firing. According to the independent engineer report, the 2018 capacity tests for PJM demonstrated a net summer capacity of 823.6 MW and winter capacity of 907.8 MW. The project has been operational since July 1, 2017 and was constructed by Black and Veatch Corporation, and the corresponding warranty under the EPC agreement will expire in July 2019. The project is indirectly owned 50/50 by affiliates of Ares EIF Management, LLC (Ares EIF) and I Squared Capital (ISQ). Ares EIF is a wholly-owned subsidiary of publicly traded Ares Management L.P., with significant experience in developing power generation projects in the U.S. ISQ is an independent global infrastructure investment manager focusing on energy utilities and transportation in various regions of the globe. The rating is predicated upon final documentation in accordance with Moody's current understanding of the transaction, its terms and conditions, including pricing, and final debt sizing consistent with initially projected credit metrics. OSR PATENT: P. Siragusa Seeks Ch. 11 Dismissal, Trustee Appointment ------------------------------------------------------------------- Movant, Paul Siragusa, requested the U.S. Bankruptcy Court for the Northern District of Texas to dismiss the Chapter 11 case of OSR Patent, LLC, or in the alternative, appoint a Chapter 11 trustee for the Debtor. Mr. Siragusa requested for the dismissal of the Chapter 11 case because of the substantial or continuing loss to or diminution of the Debtor’s estate, the gross mismanagement of the estate, and the absence of a reasonable likelihood of its rehabilitation. Hence, Mr. Siragusa requested to proceed with the trial set in the State Court Action on March 25, 2019, and not reward the Debtors by allowing them to re-acquire that which the State Court kept away from them under the guise of the Bankruptcy Code. On the other hand, the Movant contended that the Debtor’s current manager, Jitendra Rajpal, is incapable of administering the Debtor’s bankruptcy estate in accordance with the fiduciary duties of a debtor-in-possession, such that the appointment of a Chapter 11 Trustee is not only warranted but imperative. Mr. Siragusa is represented by: Patrick J. Schurr, Esq. SCHEEF & STONE, L.L.P. 2601 Network Boulevard Frisco, TX 75034 Tel.: 214.472.2100 Fax: 214.472.2150 Email: patrick.schurr@solidcounsel.com About OSR Patent and Shoe Shield Based in Addison, Texas, OSR Patent LLC filed a voluntary Chapter 11 petition (Bankr. N.D. Tex. Case No. 19-30180) on Jan. 18, 2019. An affiliate, Shoe Shields LLC, also filed a voluntary Chapter 11 petition (Bankr. N.D. Tex. Case No. 19-03007) on Jan. 24, 2019. At the time of filing, the Debtor had $100,001 to $500,000 in estimated assets and $50,001 to $100,000 in estimated liabilities. The petition was signed by Sangeeta Rajpal, manager. The Debtor is represented by: John J. Gitlin 16901 Park Hill Drive Dallas, TX Tel: 972-385-8450 Email: johngitlin@gmail.com PAINTSVILLE INVESTORS: PCO Files 4th Report ------------------------------------------- Sherry Culp, the appointed Patient Care Ombudsman for Paintsville Investors, LLC, filed with the U.S. Bankruptcy Court for the Eastern District of Kentucky a fourth Report, covering the period of October 16, 2018, through February 4, 2019. The PCO reported that the facility had recently added five new nurse aides to the staff. Meanwhile, the PCO observed that the residents had no concerns regarding therapy, supplies, and food temperatures. According to the Report, the Long-Term Care Ombudsman Program has not observed any significant changes in the facility services or resident satisfaction. The PCO noted that the facility staff appears to be responsive to problems or complaints brought to them by the Ombudsman for investigation and resolution. A full-text copy of the Fourth Report is available for free at: http://bankrupt.com/misc/kyeb18-70219-307.pdf About Paintsville Investors Mountain Manor of Paintsville -- http://mountainmanorofpaintsville.com/-- is a 126-bed skilled nursing facility in Prestonsburg, Kentucky. Mountain Manor of Paintsville provides inpatient nursing and rehabilitative services to patients who require continuous health care. It offers many amenities for its patients, including: two large gathering rooms for family events, daily planned activities, secured courtyard, chapel, hair salon, in-house laundry, registered dietician, physical therapy services, occupational therapy services, speech therapy services, spacious dining room, 24/7 skilled nursing, private/semi-private rooms and a rehab unit. Paintsville Investors, LLC, doing business as Mountain Manor of Paintsville, doing business as Buckingham Place, filed a Chapter 11 petition (Bankr. E.D. Ky. Case No. 18-70219), on April 9, 2018. In the petition signed by Franklin D. Fitzpatrick, trustee, manager, the Debtor disclosed $7.01 million in total assets and $9.81 million in total debt. The case is assigned to Judge Tracey N. Wise. The Debtor is represented by Dean A. Langdon, Esq. at Delcotto Law Group PLLC; and Providence Health Group, LLC, serves as its management consultant. PANIOLO CABLE: DOJ Watchdog Directed to Appoint Ch. 11 Trustee -------------------------------------------------------------- Judge Robert J. Faris of the U.S. Bankruptcy Court for the District of Hawaii directed the United States Trustee to appoint a Chapter 11 trustee for Paniolo Cable Company, LLC. About Paniolo Cable Company, LLC Paniolo Cable Company, LLC owns a fiber optic network connecting five major Hawaiian Islands. Paniolo Cable Company, LLC filed a Chapter 11 petition (Bankr. D. Haw. Case No. 18-01319) on November 13, 2018, and is represented by Andrew V. Beaman, Esq., in Honolulu, Hawaii. PC USA RE: $1.5M Sale of Hallandale Property to Elana Approved -------------------------------------------------------------- Judge Robert A. Mark of the U.S. Bankruptcy Court for the Southern District of Miami authorized PC USA RE, LLC and STRE, LLC's settlement with secured creditor, GGH 58, LLC, in connection with the sale of the commercial real estate located at 700 South Dixie Highway and 708-716 South Dixie Highway, Hallandale, Florida to Elana Investment II Corp. for $1.5 million. A hearing on the Motion was conducted on Jan. 17, 2019. The sale is free and clear of all liens, claims and interests. The Secured Creditor is granted all of the protections afforded by 11 U.S.C. Section 363(f) relating to the conveyance of the Property. About PC USA RE Each of PC USA RE, LLC and STRE LLC is a lessor of real estate based in Miami Gardens, Florida. The debtors list their business as single asset real estate (as defined in 11 U.S.C. Section 101(51B)), whose principal assets are located at 708-716 South Dixie Highway Hallandale, FL 33009. PC USA RE, LLC and STRE LLC sought Chapter 11 protection (Bankr. S.D. Fla. Lead Case No. 18-12378 and 18-12392) on Feb. 28, 2018. In the petitions signed by Doron Topaz, manager, PC USA RE estimated $500,000 to $1 million in assets and $1 million to $10 million in liabilities, and STRE LLC estimated less than $50,000 in both assets and liabilities. Judge Robert A Mark presides over the cases. Daniel Y. Gielchinsky, Esq., at Daniel Y. Gielchinsky, P.A., serves as bankruptcy counsel to the Debtors. Development Specialists, Inc., is their financial advisor. No official committee of unsecured creditors has been appointed in the Chapter 11 cases. The request of creditor GGH 58, LLC to appoint a trustee for the Debtors or to dismiss the cases has been denied. PERTL RANCH: Seeks Ch. 11 Trustee Appointment --------------------------------------------- Debtors, Pertl Ranch, LLC, and Pertl Ranch Feeders, LLC, ask the U.S. Bankruptcy Court for the District of Kansas to direct the United States Trustee to appoint a Chapter 11 trustee. In order to properly preserve the assets of the estate, Debtors believe that the appointment of a chapter 11 trustee is in the best interests of the estate and its creditors. In this case, the Debtors request Steeplechase Advisors, LLC, who was in possession of the property of the estate, as an agent of GemCap Lending I, LLC, be deemed not to be disinterested, and that Steeplechase and GemCap be ordered to deliver all assets of the estates to the chapter 11 trustee immediately upon appointment. The Debtors further request that any orders of the Court approving the use of cash collateral, authorizing the payment of pre-petition expenses, or authorizing the sale of assets be applied for the benefit of the chapter 11 trustee appointed in the cases, just as if the chapter 11 trustee were the debtor in possession. The Debtors are represented by: David Prelle Eron, Esq. ERON LAW, P.A. 229 E. William, Suite 100 Wichita, KS 67202 Fax: 316-262-5500 / 316-262-5559 Email: david@eronlaw.net About Pertl Ranch Pertl Ranch Feeders, LLC and Pertl Ranch, LLC filed voluntary petitions (Bankr. D. Kan. Case No. 19-10130 and 19-10131) on January 29, 2019, and is represented by David P. Eron, Esq. in Wichita, Arkansas. Pertl Ranch -- https://pertlranch.com -- is a privately held company in Hays, Kansas in the cattle ranching and farming business. The Company provides cattle feeding services utilizing homegrown hay and local grain sourcing to help keep feed costs low and quality high. Pertl Ranch also offers custom hay, custom planting, and farm management services. At the time of filing, Pertl Ranch Feeder has $1 million to $10 million in estimated assets and $10 million to $50 million in estimated liabilities. Moreover, at the time of filing, Pertl Ranch has 10 million to $50 million in estimated assets and $10 million to $50 million in estimated liabilities. The petitions were signed by William Shane Pertl, member manager. The full-text copies of the petitions are available for free at: http://bankrupt.com/misc/ksb19-10130.pdf http://bankrupt.com/misc/ksb19-10132.pdf PLAINS END: Fitch Affirms BB on Sec. Bonds & Alters Outlook to Pos. ------------------------------------------------------------------- Fitch Ratings has affirmed Plains End Financing LLC's senior secured bonds at 'BB' and subordinated secured bonds at 'B+'. The Rating Outlook for the senior bonds is revised to Positive from Stable, and the Outlook for the subordinated bonds is Stable. The Positive Outlook reflects the project's low dispatch levels and improved coverage metrics that are supported by a stabilized cost profile. Successful completion of remaining major maintenance in 2019 could result in further rating action. KEY RATING DRIVERS Summary: The ratings reflect expectations of continued stable operations and cost profile. The project also benefits from a fixed-price tolling agreement with an investment-grade counterparty. However, the potential for intermittent dispatch and actual operating costs above the original projections have impacted cash flows, resulting in an average rating case debt service coverage ratio (DSCR) of 1.34x for the senior notes through the senior debt's maturity in 2028. Additionally, the junior note's two-notch rating difference reflects potential refinance risk, structural subordination, and a minimum consolidated rating case coverage of 1.09x through the subordinated debt's maturity in 2023. Operational Stability Mitigates Cost Increases - Operation Risk: Midrange The project consisting of two peaking facilities (PEI and PEII) was designed to provide backup generation for nearby wind projects due to the intermittency of wind resources. The project faces accelerated major maintenance and less than full recovery of variable expenses when the project is dispatched at a rate higher than anticipated. Dispatch has decreased from the 2008 high; however, the project is still susceptible to decreased cash flow from accelerated major maintenance. This risk is partially mitigated by strong availability and a stabilized cost profile. Low Supply Risk - Supply Risk: Stronger The power purchase agreements (PPAs) with Public Service Company of Colorado (PSCo; A-/Stable) are tolling-style agreements. Under the contracts, all variable fuel expenses are passed through to PSCo, subject to heat rate adjustments. The contracts represent a stronger attribute that limits the fuel supply risk to the project. Stable Contracted Revenues - Revenue Risk: Midrange The project benefits from stable and predictable revenues under two 20-year fixed PPAs with a strong utility counterparty, PSCo. Under the tolling-style agreements, PEI and PEII receive substantial capacity payments that account for approximately 88% of consolidated revenues. However, energy margins may not sufficiently fund accelerated overhaul expenses resulting from increased dispatch. Refinance Risk for Subordinated Debt- Debt Structure: Midrange (Senior), Weaker (Subordinate) While the senior debt benefits from a typical project finance structure, the 'B+' rating on the subordinate notes reflects the potential for refinance risk in 2023 if the project is unable to meet target amortization amounts. Under the Fitch rating case, which demonstrates the effect of reduced cash flow to the subordinate tranche, sufficient cushion remains to repay the sub notes by 2023. If the project only pays the minimum amortization payments, but there would be a balloon in 2023 for the outstanding amount. The project has met all target amortization to date. Financial Profile Historical average coverage ratios have remained consistent with Fitch's rating case metrics. Under Fitch's rating case, which incorporates increased dispatch to accelerate costs as well as a 5% increase in operating costs and a 10% increase for major maintenance, the average senior DSCR is 1.34x with a minimum of 0.92x during the final year, and consolidated DSCR averages 1.12x with a minimum of 1.09x. PEER GROUP Mackinaw Power, LLC (BBB-/Stable Outlook) is a portfolio of natural gas-fired plants that operates under tolling agreements similar to Plains End. However, Mackinaw benefits from adequate cost recovery from higher dispatch. Mackinaw's average rating case DSCR is 1.46x, resulting in the higher rating. Lower rated projects typically exhibit higher sensitivity to operational stresses and have lower rating case coverages. RATING SENSITIVITIES Developments That May, Individually or Collectively, Lead to Negative Rating Action: -- Sustained increased dispatch that accelerates major maintenance and negatively impacts cash flow and financial metrics to below rating case expectations. Developments That May, Individually or Collectively, Lead to Positive Rating Action: -- No material findings resulting from major maintenance completed in 2019 requiring additional expenses or escalation in the project's cost profile; -- Improvements in cost savings or structural revenue enhancements resulting in coverage exceeding base case expectations. CREDIT UPDATE Operating performance was favorable in 2018 with overall dispatch low at less than 1%, leading to energy revenues that represented less than 0.5% of total revenues. Management attributes the lower dispatch levels to the increased presence of hydro and renewable power facilities and anticipates dispatch levels to remain level at approximately 1%. Plant availability remained high at 99.9% and capacity payments, the project's largest source of income, remained stable at about 88% of total revenues. Fitch views favorably that the project has continued benefiting from a low capacity factor as sustained increases in dispatch and resulting energy sales may not fully compensate for the increases in associated maintenance costs. Revenues were generally stable as capacity payments and ancillary revenues exceeded budget leading to total revenues that exceeded budgeted expectations. A combination of lower operation and maintenance costs and a smaller deposit to the project's major maintenance reserve account led to a decrease in operating expenses from the prior year. Management attributes the decreases in expenses to the plant operating for fewer hours than forecasted. PEII completed one major maintenance overhaul on one engine in 2018 and plans to complete the remainder in 2019. The work is fully covered under its amended LTSA with engine manufacturer Wartsila. PEII is expecting 12,000-hour scheduled outages on four engines and a 16,000-hour scheduled outage on one engine in 2019. The scheduled nature of the overhauls should minimize any impact to availability. Management has advised that any further major maintenance would require the plant's running hours to increase such that capacity factor reaches a level of 4-5% over for a duration of several years. As such, there are no further major overhauls expected for PEI and PEII over the remaining debt term due to the expected low dispatch of the project. FY 2018 performance led to a Fitch-calculated DSCR of 1.42x (senior) and 1.16x (consolidated). Fitch views the project's 2018 performance favorably, as the 2018 Fitch base case estimated DSCR of 1.32x (senior) and 1.08x (consolidated). Fitch Cases Fitch's base case assumes a forced outage rate of 0.8%, 99.2% availability, an average heat rate of 9,032 Btu/kWh, consolidated capacity factor of 1.6%, and a 2.5% cost escalator. The resulting profile produces an average senior DSCR of 1.38x and minimum of 0.95x. The final year of repayment is adequately supported by liquidity available in the debt service reserve account. On a consolidated basis, the DSCR averages 1.15x with a minimum of 1.11x. Fitch's rating case assumes a forced outage rate of 1%, 99% availability, consolidated capacity factor of 1.6%, and elevated costs 5% above the base case. Major maintenance reserve deposits are also elevated. The resulting profile produces an average senior DSCR of 1.34x and minimum of 0.92x and consolidated DSCR of 1.12x and a minimum of 1.09x. Asset Description Plains End consists of two peaking facilities located in Arvada, Jefferson County, Colorado with a combined capacity of 228.6MW, used primarily as a back-up for wind generation, as well as other generation sources. The project is indirectly owned by Tyr Energy (50%), John Hancock (35%) and Prudential (15%). Combined cash flows from both plants service the obligations under the two bond issues. POWERMAX INC: Trustee's $5K Sale of Remnant Assets to Oak Point OKd ------------------------------------------------------------------- Judge Thomas J. Catliota of the U.S. Bankruptcy Court for the District of Maryland authorized Janet M. Nesse, the Litigation Trustee of the PowerMax, Inc. Litigation Trust, to sell the remnant assets, consisting of known or unknown assets or claims, which have not been previously sold, assigned, or transferred, to Oak Point Partners, LLC for $5,000. The sale is free and clear of liens, claims, interests and encumbrances, with such liens, claims, interests, and encumbrances to attach to the proceeds of the Sale. The 14-day stay under Bankruptcy Rule 6004(h) is waived. About PowerMax, Inc. PowerMax, Inc., located 8501 Muscatello Ct. Gaithersburg, Maryland, sought Chapter 11 protection (Bankr. D. Md. Case No. 14-13996) on March 14, 2014. In the petition signed by Edward J. Murray, vice-president, the Debtor estimated assets in the range of $0 to $50,000 and $1 million to $10 million in debt as of the bankruptcy filing. The Debtor tapped James Greenan, Esq., at McNamee, Hosea, Jernigan, Kim, Greenan & Lynch, P.A. as counsel. On Aug. 6, 2015, the Court entered an order confirming Debtor's Third Amended Plan of Liquidation, pursuant to which the Litigation Trust was created and Janet M. Nesse was appointed Litigation Trustee. QUANTUM CORP: Appoints New Chief Accounting Officer --------------------------------------------------- Quantum Corporation has appointed Lewis W. Moorehead as the Company's chief accounting officer, effective Jan. 29, 2019. From November 2016 to October 2018, Mr. Moorehead, 46, served as the director of finance, accounting and tax of Carvana Co. Prior to joining Carvana Co., Mr. Moorehead was the managing partner of Quassey Holdings LLC from September 2013 to December 2014 and from April 2014 to September 2016. From January 2014 to March 2014, Mr. Moorehead was the chief financial officer of SMTP, Inc. Prior to joining Quassey, Mr. Moorehead served as vice president and principal accounting officer for Limelight Networks from March 2010 to August 2013. From June 2008 to March 2010, Mr. Moorehead served as chief accounting officer for eTelecare Global Solutions. Mr. Moorehead started his career with PricewaterhouseCoopers. He holds a BBA in accounting from the University of Wisconsin -Whitewater. In connection with his employment as chief accounting officer, Mr. Moorehead entered into an offer letter with the Company providing for the following terms: Base salary: $300,000 Bonus Opportunity: Mr. Moorehead will be eligible to participate in the Company's annual incentive plan on terms determined by the Leadership and Compensation Committee of the Board, with a target bonus of 50% of his annual base salary. Equity awards: Restricted stock units: Mr. Moorehead will be entitled to RSUs covering 50,000 shares of the Company's common stock, which will vest in equal annual installments on the first, second and third anniversary of the award date, subject to Mr. Moorehead's continued service with the Company. Performance Units: In addition to the RSU award, Mr. Moorehead will be entitled to PSUs covering a maximum of 50,000 shares of the Company's common stock. The PSUs will vest based on achievement of specified levels of the average closing prices of the Company's common stock during any 60 day trading period, occurring during the time frames specified below, subject to Mr. Moorehead's continued service with the Company through the later of the achievement date and the vest date as follows: * 16,666 Shares will be earned, if, at any time between June 1, 2018 and May 31, 2022, the 60-Day Average Price is at least $4.00 and will vest upon the later of the LCC certification and May 31, 2019. * An additional 16,666 Shares will be earned, if, at any time between June 1, 2018 and May 31, 2022, the 60-Day Average Price is at least $5.00 and will vest upon the later of the LCC certification and May 31, 2020. * An additional 16,667 Shares will be earned, if, at any time between June 1, 2018 and May 31, 2022, the 60-Day Average Price is at least $6.00 and will vest upon the later of the LCC certification and May 31, 2021. The RSU and PSU awards will be subject to the terms of the Company's 2012 Long-Term Incentive Plan and will be made effective as of the first business day on which the Company becomes current with respect to its filings under the Securities Exchange Act of 1934, as amended. Change of Control: Mr. Moorehead has entered into a Change of Control Agreement with the Company, under which, if a Change of Control of the Company occurs and within 12 months following the Change of Control, Mr. Moorehead's employment with the Company ends as a result of an Involuntary Termination (as each such term is defined in the Change of Control Agreement), the Company will provide to Mr. Moorehead the following severance payments and benefits: * a lump sum cash payment equal to 12 months of his then-annual base salary and target bonus, * 100% accelerated vesting of his then-outstanding equity awards, and * Reimbursement of premiums for 12 months continued COBRA coverage for Mr. Moorehead and his eligible dependents (or such earlier date that Mr. Moorehead is no longer eligible for COBRA), subject to the terms set forth in the Change of Control Agreement. The severance payments are subject to Mr. Moorehead entering into and not revoking a release agreement in substantially the form attached to the Change of Control Agreement following his termination. About Quantum Corp. Based in San Jose, California, Quantum Corp. (NYSE:QTM) -- http://www.quantum.com-- is a scale-out tiered storage, archive and data protection company, providing solutions for capturing, sharing, managing and preserving digital assets over the entire data lifecycle. From small businesses to major enterprises, more than 100,000 customers have trusted Quantum to address their most demanding data workflow challenges. Quantum's end-to-end, tiered storage foundation enables customers to maximize the value of their data by making it accessible whenever and wherever needed, retaining it indefinitely and reducing total cost and complexity. As of Sept. 30, 2017, Quantum Corp had $211.2 million in total assets, $335.5 million in total liabilities, and a total stockholders' deficit of $124.3 million. On Jan. 11, 2018, Quantum received a subpoena from the SEC regarding its accounting practices and internal controls related to revenue recognition for transactions commencing April 1, 2016. Following receipt of the SEC subpoena, the Company's audit committee began an independent investigation with the assistance of independent advisors, which is currently in process. QUANTUM CORP: TCW Group Has 10.9% Stake as of Dec. 31 ----------------------------------------------------- The TCW Group, Inc., on behalf of the TCW Business Unit disclosed in a Schedule 13G/A filed with the Securities and Exchange Commission that as of Dec. 31, 2018, it beneficially owns 4,327,179 shares of common stock of Quantum Corporation, which represents 10.98 percent of the shares outstanding. The Shares consist of 478,813 shares of common stock held by The TCW Group, Inc. as of Feb. 4, 2019, together with warrants for 3,848,366 shares of common stock which are currently exercisable. Those warrants are subject to cashless exercise provisions and therefore the actual number of shares received upon exercise may be less than the full amount disclosed hereunder if The TCW Group, Inc. elects to utilize such cashless exercise mechanics. Investment funds affiliated with The Carlyle Group, L.P. hold a minority indirect ownership interest in TCW that technically constitutes an indirect controlling interest in TCW. The principal business of The Carlyle Group is acting as a private investment firm with affiliated entities that include certain distinct specialized business units that are independently operated including the TCW Business Unit. A full-text copy of the regulatory filing is available for free at: https://is.gd/3EUmuw About Quantum Corp. Based in San Jose, California, Quantum Corp. (NYSE:QTM) -- http://www.quantum.com-- is a scale-out tiered storage, archive and data protection company, providing solutions for capturing, sharing, managing and preserving digital assets over the entire data lifecycle. From small businesses to major enterprises, more than 100,000 customers have trusted Quantum to address their most demanding data workflow challenges. Quantum's end-to-end, tiered storage foundation enables customers to maximize the value of their data by making it accessible whenever and wherever needed, retaining it indefinitely and reducing total cost and complexity. As of Sept. 30, 2017, Quantum Corp had $211.2 million in total assets, $335.5 million in total liabilities, and a total stockholders' deficit of $124.3 million. On Jan. 11, 2018, Quantum received a subpoena from the SEC regarding its accounting practices and internal controls related to revenue recognition for transactions commencing April 1, 2016. Following receipt of the SEC subpoena, the Company's audit committee began an independent investigation with the assistance of independent advisors, which is currently in process. RAYCO MACHINE: Seeks to Hire Hester Baker as Legal Counsel ---------------------------------------------------------- Rayco Machine & Engineering Group, Inc. seeks authority from the U.S. Bankruptcy Court for the Southern District of Indiana to hire Hester Baker Krebs LLC as its legal counsel. The firm will advise the Debtor of its powers and duties in the management of its property; take necessary action to avoid the attachment of any lien against the property threatened by secured creditors; and provide other legal services in connection with the Debtor's Chapter 11 case. The firm will charge these hourly fees: Jeffrey Hester Attorney $375 Christopher Baker Attorney $375 David Krebs Attorney $375 John Allman Attorney $300 Donna Adams Paralegal $165 Tricia Hignight Paralegal $165 Marsha Hetser Paralegal $165 Hester Baker received an initial retainer of $15,000, plus the filing fee of $1,717 prior to the Debtor's bankruptcy filing. David Krebs, Esq., at Hester Baker, attests that his firm does not represent any interest adverse to the Debtor and its bankruptcy estate. The firm can be reached through: David R. Krebs, Esq. John Joseph Allman, Esq. Hester Baker Krebs LLC One Indiana Square, Suite 1600 211 N. Pennsylvania Street Indianapolis, IN 46204 Tel: 317-833-3030 Fax: 317-833-3031 Email: dkrebs@hbkfirm.com Email: jallman@hbkfirm.com About Rayco Machine & Engineering Group Rayco Machine & Engineering Group, Inc. operates a machine shop and tool repair business in Indianapolis, Indiana. Rayco Machine & Engineering Group filed its voluntary Chapter 11 petition (Bankr. S.D. Ind. Case No. 19-00242) on January 15, 2019. In the petition signed by Gregory A. Cox, owner and president, the Debtor estimated $100,000 to $500,000 in assets and $1 million to $10 million in liabilities. The case has been assigned to Judge Robyn L. Moberly. Hester Baker Krebs LLC is the Debtor's counsel. RCR HEALTHCARE: Feb. 25 Determination for PCO Appointment Set ------------------------------------------------------------- Judge Mark X. Mullin of the U.S. Bankruptcy Court for the Northern District of Texas set a hearing on February 25, 2019, at 10:00 A.M. to determine the issue of whether or not a patient care ombudsman shall be appointed for RCR Healthcare, LLC. Based in Arlington, Texas, RCR Healthcare, LLC, filed a voluntary Chapter 11 petition (Bankr. N.D. Tex. Case No. 19-40403) on Jan. 31, 2019, disclosing $1 million to $10 million in assets and liabilities. The petition was signed by Raju Indukuri, M.D., authorized manager. The Debtors are represented by: Stephen M. Pexanosky, Esq. HAYNES AND BOONE, LLP 301 Commerce Street, Suite 2600 Fort Worth, TX 76102 Tel: 817-347-6600 Email: stephen.pezanosky@haynesandboone.com RITE AID: Fitch Rates $450MM FILO Term Loan 'BB', Outlook Neg. -------------------------------------------------------------- Fitch Ratings has affirmed Rite Aid Corporation's Long-Term Issuer Default Rating at 'B'. Fitch has also assigned Rite Aid Corporation's new $450 million first lien, last out term loan a 'BB'/'RR1' rating. The FILO term loan provides the company incremental liquidity, which is now expected to trend around $2.3 billion compared with $1.8 billion as of Dec. 1, 2018. Fitch has downgraded Rite Aid's non-guaranteed senior unsecured notes to 'CCC+'/'RR6' from 'B'/'RR4', based on its updated recovery analysis following the issuance of the FILO term loan. Fitch has affirmed Rite Aid's remaining ratings, including its ABL Revolver and guaranteed unsecured notes at 'BB'/'RR1'. The Rating Outlook remains Negative. Rite Aid's 'B' rating incorporates recent weakening in drug retail results and concerns regarding the company's ability to stabilize EBITDA following the sale of 43% of stores and three distribution centers to Walgreens Boots Alliance, Inc. (BBB/Stable) for $4.4 billion, or around 16.0x LTM EBITDA. Declining operating results have been somewhat mitigated by the more stable results at Rite Aid's Envision Pharmaceutical Services (EnvisionRx) pharmacy benefits management (PBM) business. However, Fitch expects limited FCF generation and high adjusted leverage (adjusted debt/EBITDAR on a lease-adjusted basis, capitalizing rent at 8x) of approximately 7.5x, even after debt paydown from sale proceeds. While Fitch recognizes some improvement to same-store sales (SSS) in recent quarters after negative comps through much of 2016 and 2017, the Negative Outlook reflects concerns that the company may be unable to sustainably reverse weak trends in pharmaceutical network negotiations and customer traffic. Fitch could downgrade Rite Aid if continued negative SSS drove EBITDA from around $500 million projected in 2018 (Rite Aid's fiscal year ending February 2019) toward $400 million yielding negative FCF and adjusted leverage to 8.0x. KEY RATING DRIVERS Competition Intensifying: Drug retail competition is intensifying from current and newer players. Existing participants are exploring partnerships and M&A to reduce costs and strengthen customer connections. CVS Health Corp's acquisition of insurer Aetna Inc. and Walgreens' numerous partnerships across healthcare, retail and technology are examples of leading drug retailers exploiting their scale to fortify share. These retailers are also increasingly negotiating narrow and preferred networks to fortify market share. Finally, there exists some threat of new entrants, most notably from Amazon.com, Inc. (A+/Stable), which recently acquired online pharmacy Pillpack. Rite Aid Structurally Disadvantaged: While Rite Aid has good local market share positions, its scale and geographic concentration relative to Walgreens and CVS may negatively impact its ability to compete for inclusion in pharmaceutical contracts. Following the transfer of approximately 40% of its store base to Walgreens in 2017/2018, Rite Aid's footprint includes 2,525 stores, almost half of which are in four states, compared with the national footprints of over 9,800 and 9,450 for CVS and Walgreens U.S., respectively. In addition, Rite Aid's limited FCF generation yields reduced ability to make customer-facing investments to drive loyalty and traffic. Recently Weak Retail Operations: Rite Aid's pro forma EBITDA steadily declined from approximately $850 million in 2015 to $500 million in the TTM ending Dec. 1, 2018. Weak pharmacy trends drove overall pro forma SSS to negative 2.2% in 2016 and negative 2.9% in 2017, though SSS improved to 0.6% in the first nine months of 2018. Negative SSS and declining reimbursement rates drove EBITDA margins to 2.3% in the TTM from the 4% range in 2015. Fitch believes a protracted transaction process with Walgreens, which originally proposed to acquire Rite Aid in October 2015, created uncertainty about Rite Aid's future, affecting its strategic planning and pharmacy contract negotiations. Relatively Stable PBM Business: Results at EnvisionRx have been more stable than retail albeit somewhat disappointing relative to original expectations, with around $175 million of EBITDA in the TTM ending Dec. 1, 2018, modestly below full-year EBITDA in 2016 and 2017. The 2015 acquisition of EnvisionRx allowed Rite Aid to diversify its business and provide exposure to the relatively faster growing specialty pharmaceuticals business and the mail-order channel. Fitch believes this business was also negatively impacted by the Walgreens transaction process and expects EnvisionRx, now representing one-third of Rite Aid's overall EBITDA, to grow modestly beginning 2019. EBITDA Around $500 Million: Fitch projects annualized EBITDA $500 million range beginning 2018 compared with approximately $560 million in 2017, pro forma for store divestitures. Revenue is expected to be steady near $22 billion on near-flat comps and minimal change to store count. EBITDA Margins are projected to trend in the 2.3% to 2.5% range, as ongoing gross margin pressure is mitigated by proactive cost reductions and benefits from the company's transition service agreement with Walgreens. Challenged FCF; High Leverage: FCF in 2017 was modestly positive at $52 million. Fitch expects FCF in 2018 to be in the negative $100 million range on higher working capital but improve to near-breakeven beginning 2019. Adjusted leverage, which was around 7.0x in 2016 prior to store divestitures, could be approximately 7.5x in 2018 given $500 million of EBITDA and debt repayment using asset proceeds. Assuming near-flat EBITDA over the next two to three years, leverage could remain in the mid-7x. Rite Aid has no debt maturities until 2023, providing the company time to stabilize operations despite near term expectations of limited FCF. Strong Liquidity and Asset Base: Rite Aid's ample liquidity of around $2 billion should provide flexibility to navigate through its current operating challenges. Given the reduced store portfolio, Rite Aid replaced its $3.7 billion revolving credit facility with a $2.7 billion facility, adding a $450 million FILO term loan in December 2018. Fitch expects that proceeds from the FILO term loan were used to reduce revolver borrowings, providing Rite Aid with additional liquidity. Rite Aid's asset value is supported by the 11.5x EBITDA multiple implied by Walgreens' original offer to buy it in 2015 for $17.2 billion and the 16.0x multiple Walgreens paid for 1,932 stores. Complex Industry Fundamentals: Despite projections of continued modest growth in pharmaceuticals revenue, the healthcare industry remains complex given intricate relationships between critical constituents in the industry, strategic initiatives by large players and regulatory overlay. Rite Aid benefits from close relationships with end customers, which Fitch believes is a critical structural advantage for drug retailers, and some business diversification through EnvisionRx. However, Rite Aid's challenged operations and regional focus following its store divestiture has weakened its competitive positioning, particularly given the rise of preferred and narrow pharmaceutical networks. DERIVATION SUMMARY Rite Aid's 'B' rating incorporates its weak position in the relatively stable U.S. drug retail business and its high leverage. The company's drug retail business, representing two-thirds of total EBITDA following the sale of roughly 43% of stores to Walgreens Boots Alliance, Inc. (BBB/Stable), is expected to continue losing share, although the company's EnvisionRx PBM -- representing Rite Aid's remaining EBITDA -- should grow modestly over time. The Negative Outlook reflects concerns about the company's ability to stabilize topline results following a protracted transaction process with Walgreens and an ultimately cancelled merger process with Alberstons Companies Inc. Rite Aid has significantly smaller scale and weaker operating metrics than Walgreens and CVS Health Corp., which may have a negative impact on its relative ability to compete for inclusion in pharmacy networks. Rite Aid's cash flow is minimal to modestly negative, and its leverage profile is significantly higher than its larger peers at over 7.0x, limiting its ability to invest meaningfully in its business. Rite Aid's B-rated non-food retail peers include GNC Holdings, Inc. (B-/Negative), whose rating considers recent market share declines, driven by encroaching competition and executional missteps, which in concert with recent financial policy decisions, have weakened the company's leverage profile. The Negative Outlook reflects increased concerns about the company's ability to refinance a projected, approximately $500 million of term loans due March 2021. J.C. Penney Company, Inc.'s 'B-'/Outlook Stable rating reflects the significant EBITDA erosion in 2018, with EBITDA expected to decline to under $600 million from $886 million in 2017. Fitch expects EBITDA could remain constrained in the $500 million to $550 million range in 2019 on comp decline in the low single digits, slightly more than Fitch's forecast for Rite Aid 2019 EBITDA at around $500 million. The deterioration reflects significant execution issues, and in the near term, sales could be hampered by Sears Holding Corp's store closing liquidation sales (even if Sears emerges as a smaller chain but still closes a significant number of stores). Adjusted leverage currently projected in the low 7x range for 2018 in comparison to Rite Aid at around 7.5x. KEY ASSUMPTIONS Fitch's Key Assumptions Within Its Rating Case for the Issuer - Rite Aid's pro forma EBITDA is expected to decline to around $500 million in 2018, compared with around $570 billion and $850 million in 2017 and 2016, primarily due to gross margin contraction from reduced reimbursement rates and efforts to re-orient the company's product distribution operations following its sale of stores. SSS, which have been modestly negative the prior two years, are modestly positive through the first nine months of 2018 and are expected to be near-flat in the full year 2018. - Fitch projects Rite Aid will receive around $100 million in transition support service fees from Walgreens in 2018. These fees will wind down over the next year or so but Rite Aid expects to match lower fee income with cost reductions as the company adjusts its cost structure to its smaller footprint. - Fitch projects flat to slightly positive SSS beginning 2019, assuming continued low single digit growth in the pharmaceuticals industry and modest share loss by Rite Aid. Retail gross margins are expected to decline on reimbursement rate pressure, mitigated somewhat by ongoing expense management efforts as Rite Aid adjusts its cost structure to its smaller footprint. Retail EBITDA, which is projected around $320 million in 2018, could therefore remain near this level beginning 2019. - Fitch expects EnvisionRx, which generates approximately one-third of Rite Aid's EBITDA, to produce 2018 EBITDA around $175 million, compared with around $190 million in 2017. The decline is likely due to contract negotiation challenges during the Walgreens transaction process, exacerbated by an aborted attempt to merge with Albertsons Companies in 2018. Fitch expects that barring further business interruptions, EnvisionRx could grow topline and EBITDA in the 3% range on net contract wins and growth in its specialty business. - Fitch expects Rite Aid's EBITDA to trend near $500 million beginning 2019, with revenue remaining near $22 billion and margins close to the 2.3% expected in 2018. - Fitch expects FCF could be around negative $100 million in 2018 but improve toward breakeven beginning 2019 on lower interest expense and neutral working capital. Adjusted leverage is expected to trend in the mid-7.0x range over the next two to three years, assuming $500 million of ongoing EBITDA and debt levels around $3.3 billion. - While Fitch is not currently projecting a U.S. recession or significant consumer slowdown in 2019/2020, Rite Aid would be expected to experience lower-than-average declines during a downturn given its merchandise mix of pharmaceuticals and low-ticket general merchandise items. A modest topline contraction would exacerbate Rite Aid's FCF generation challenges but the company has over $2 billion in liquidity with which to withstand any economic shocks; in addition the company has no maturities until 2023. - Fitch has not currently modeled any impact on total coverage, volume or pricing based on potential changes to the Affordable Care Act (ACA) or other legislative activity affecting the pharmaceutical industry. RATING SENSITIVITIES Developments That May, Individually or Collectively, Lead to Positive Rating Action - Sustained positive SSS leading to EBITDA growth, coupled with reduced debt, which would yield adjusted debt/EBITDAR toward mid-5.0x. Developments That May, Individually or Collectively, Lead to Negative Rating Action - Deteriorating sales and profitability trends that lead to EBITDA around $400 million, consistently negative FCF and leverage toward 8.0x. Fitch could stabilize Rite Aid's rating assuming the company can stabilize EBITDA in the low- to mid-$500 million range, yielding modestly negative FCF and leverage in the low-7x. LIQUIDITY Ample Liquidity: Rite Aid had ample liquidity -- $1.8 billion as of Dec. 1, 2018, and at least $950 million for the past five years -- supported by a RCF whose borrowing base includes prescription files, inventory and receivables. Fitch projects Rite Aid's liquidity improved to around $2.3 billion in late December 2018 following the issuance of a $450 million FILO term loan, which Fitch assumes was used to reduce revolver borrowings per public comments by management. Rite Aid maintains solid liquidity given its valuable asset base, despite a history of operating challenges. The value of Rite Aid's asset base is supported by the 11.5x EBITDA multiple implied by Walgreen's original offer to buy Rite Aid in October 2015 for $17.2 billion and the 16.0x multiple Walgreens paid for 1,932 stores. Following the transfer Walgreens announced plans to close 600 of these stores and transfer prescription files to nearby Walgreens locations, further illustrating the value placed on prescription files. Rite Aid's liquidity position should provide it with flexibility to navigate through its current operating challenges. Recovery Rite Aid's business profile could yield a distressed enterprise value of approximately $4.8 billion on Rite Aid's estimated $3.5 billion liquidation value on inventory, receivables, prescription files, owned real estate and a $1.4 billion enterprise value for EnvisionRx. The $1.4 billion for the healthy EnvisionRx business values the company at 7.0x Fitch's projected $190 million in EnvisionRx EBITDA in the next 12-24 months, well below the $2 billion, or 13.0x EBITDA Rite Aid paid for the business in 2015. PBM valuations declined over the past several years, although Express Scripts Holding Co. (BBB-/Stable) was acquired by Cigna Corporation at an enterprise valuation of approximately 9.0x TTM EBITDA. The $4.8 billion in resulting enterprise value exceeds Fitch's assessment of Rite Aid's $3.0 billion valuation as a going concern. The going concern valuation is based upon a $500 million distressed EBITDA, similar to the current run rate, as Fitch views Rite Aid's current operating trajectory as somewhat distressed. Fitch assumes Rite Aid could generate a 6.0x EBITDA multiple in a going-concern sale, somewhat lower than valuations implied in the Walgreens process due to ongoing declines in the company's operations. Rite Aid directed the approximately $4 billion in proceeds from the Walgreens transaction to debt repayment, including $1 billion of term loans, $1.7 billion of unsecured notes and revolver borrowings. The company also replaced its $3.7 billion ABL facility with a new $2.7 billion ABL facility given lower collateral levels and subsequently issued a $450 million FILO term loan in late December 2018. As a result, Rite Aid's current capital structure includes the downsized $2.7 billion credit facility, $450 million FILO term loan due 2023, $1.8 billion in guaranteed unsecured notes due 2023 and approximately $420 million in nonguaranteed unsecured notes due 2027/2028. Given a $4.8 billion enterprise value, the downsized RCF, FILO term loan, and the $1.8 billion of guaranteed unsecured notes would be expected to have outstanding recovery prospects (91%-100%) and are thus rated 'BB'/'RR1'. The approximately $420 million unsecured nonguaranteed notes would be expected to have poor (0%-10%) recovery prospects and are therefore rated 'CCC+'/'RR6'. FULL LIST OF RATING ACTIONS Fitch has affirmed the following ratings for Rite Aid: Rite Aid Corporation -- Long-Term IDR at 'B'; -- $2.7 billion ABL Revolver at 'BB'/'RR1'; -- Guaranteed unsecured notes at 'BB'/'RR1'. In addition, Fitch has assigned the following: Rite Aid Corporation -- $450 million FILO Term Loan 'BB'/'RR1'. Finally, Fitch has downgraded the following: Rite Aid Corporation -- Non-guaranteed unsecured notes to 'CCC+'/'RR6' from 'B'/'RR4'. The Rating Outlook is Negative. ROBERTSHAW US: Moody's Cuts CFR to B3, Outlook Stable ----------------------------------------------------- Moody's Investors Service downgraded Robertshaw US Holding Corp.'s (NEW) Corporate Family Rating to B3 from B2, the Probability of Default Rating to B3-PD from B2-PD, the first-lien senior secured term loan rating to B3 from B1 and the second-lien senior secured term loan rating to Caa2 from Caa1. The rating outlook is stable. RATINGS RATIONALE The downgrades reflect Robertshaw's underperformance relative to Moody's expectations since the ratings were assigned, with debt-to-EBITDA currently in the mid-7x range (versus roughly 6x expected for fiscal year-end March 2019) and an EBITDA margin over 250 basis points lower than anticipated. The company is experiencing lower volumes in its appliance end markets, North America and Eurasia, as well as a negative drag from higher commodity prices such as copper, aluminum and steel. Other than steel, input costs have come off of recent highs yet appliance demand is expected to remain soft into 2020, hindering fixed cost absorption. The weak end market conditions and free cash flow that is expected to be limited, combined with a stretched balance sheet from the leveraged buyout in early 2018 will constrict financial flexibility and sustain weaker credit metrics well into 2020. The downgrade of the first-lien senior secured rating to B3 additionally reflects that first-lien senior secured debt represents the overwhelming majority of the debt capital structure factoring in recent secured debt issuance, and that the first-lien debt should therefore be rated equivalent to the B3 CFR. Moody's took the following rating actions on Robertshaw US Holding Corp. (NEW): - Corporate Family Rating, downgraded to B3 from B2 - Probability of Default Rating, downgraded to B3-PD from B2-PD - First-Lien Gtd Senior Secured Term Loan, downgraded to B3 (LGD3) from B1 (LGD3) - Second-Lien Gtd Senior Secured Term Loan, downgraded to Caa2 (LGD6) from Caa1 (LGD5) - Rating outlook stable The B3 CFR reflects Robertshaw's high leverage, limited scale with a niche focus, exposure to cyclical consumer spending on appliances and vulnerability to customer price concessions. Modest and inconsistent free cash flow, including the impact of large working capital swings, also constrains the rating. Robertshaw provides parts/products such as gas valves, top burners, thermostats, electronic control panels, water valves and ignition controls to original equipment manufacturers (OEMs) that are integral to regulating larger electrical or mechanical equipment and processes such as appliances and heating, ventilation and air conditioning (HVAC) systems. The ratings are supported by the company's leading market share positions, end markets that are expected to grow in-line with normalized GDP, longstanding relationships with a reputable customer base and an improving fixed-to-variable cost structure. An aging installed base (i.e. pent up replacement demand) of residential appliances and commercial HVAC systems as well as largely resilient home renovation spending support longer-term growth prospects. A transformation of the cost structure, combined with new product introductions and continuous improvement initiatives, were expected to more than offset the ongoing impact from volatile input costs and customer price concessions. In contrast, margins have fallen since peaking in fiscal 2017. The company has options to mitigate the impact of commodity movements with a lag, but the current headwinds have proven difficult to overcome. Planned annual price increases as well as anticipated synergies from the relocation of manufacturing capacity should offset end market weakness and begin to restore margin expansion later this year. Robertshaw's adequate liquidity is supported by Moody's expectations for the company to maintain $20 million - $30 million of cash on the balance sheet and generate free cash flow in excess of $10 million annually over the next two years. The company has an unrated, undrawn $50 million ABL facility, set to expire in 2023. The ABL is subject to a springing covenant - minimum fixed charge coverage ratio of 1.0x - tested only if excess availability is less than a specified amount. The first and second lien term loans do not have financial maintenance covenants. There are no near-term debt maturities and only around $5 million of annual amortization payments required on the first-lien term loan. With the ABL and secured term loans, substantially all assets are pledged. The rating outlook is stable, reflecting Moody's expectations that revenue growth will resume at levels consistent with normal GDP expansion and margins, boosted by price hikes and operating efficiencies, will show steady improvement beginning in the latter half of 2019. Free cash flow will remain modest but positive as working capital needs and capital expenditures will be consistent with fiscal 2018 outlays. An upgrade is unlikely at this time but could occur with a return of meaningful growth in revenues and margins, potentially buoyed by expanding end market opportunities, the realization of earmarked synergies and/or a growing pipeline of new product introductions. Debt-to-EBITDA below 5.75x on a sustained basis and free cash flow-to-debt in the low-to-mid-single digit range would also be necessary for an upgrade. Additionally, accelerated penetration into the high-margin electric vehicle market would be viewed favorably. The ratings could be downgraded if debt-to-EBITDA remains above 7x or if the EBITDA margin falls further as a result of the inability to offset reduced fixed cost absorption and higher raw material costs. The lack of positive and increasing free cash flow generation as well as organic revenue growth as expected, or a weaker liquidity profile, including a cash position below $20 million, would also place downward pressure on ratings. Robertshaw US Holding Corp. designs and manufactures electro-mechanical solutions, mechanical combustion systems, and electrical controls primarily for use in residential and commercial appliances, HVAC and transportation applications. Revenues for the latest twelve months ended September 30, 2018 were nearly $550 million. The principal methodology used in these ratings was Global Manufacturing Companies published in June 2017. RONALD GOODWIN: $103K Sale of Three El Dorado Parcels Approved -------------------------------------------------------------- Judge Robert E. Nugent of the U.S. Bankruptcy Court for the District of Kansas authorized Ronald A. Goodwin and Michelle L. Goodwin to sell to AllMetal Recycling, LLC of the following three real estate located in Butler County, Kansas: (i) commonly known as 615 N. Industrial Rd., El Dorado, Kansas for $38,500; (ii) commonly known as 174 Purity Springs, El Dorado, Kansas to AllMetal for $34,100; and (iii) commonly known as 417 N. Industrial Rd., El Dorado, Kansas for $30,250. The sale is subject to all rights of way and easements of record in its present, "as is" condition, with no express or implied warranties; and free and clear of all mortgages, liens, interests and encumbrances. The proceeds from the sale of Parcel 1 will be distributed in the following order: a. Delinquent general taxes and special assessments attributable to Parcel 1 for the fiscal years 2014 through 2017 in the aggregate amount of $4,966, plus any other amounts due thereunder; b. The Debtors' share of the unpaid general taxes and assessments attributable to the Real Estate for fiscal year 2018, prorated to the date of closing, plus any other amounts due thereunder; c. The Debtors' share of the unpaid general taxes and assessments attributable to the Real Estate for fiscal year 2019, if applicable, prorated to the date of closing, plus any other amounts due thereunder; d. The Debtors' share of the closing expenses for title insurance, recording fees and other related fees; e. Attorneys' fees and expenses of $1,100 for legal work performed by the Debtors' counsel related to the sale of Parcel 1; f. Statutory fees due the United States Trustee; g. Brokerage and Auctioneer Fee of $3,500 to McCurdy Auction, LLC representing the 10% "Buyer's Premium" that was added to the Buyer's winning bid of $35,000; h. The balance on the tax lien of the Internal Revenue Service; and j. The remainder, if any, first to allowed administrative claims, then to priority claims, then to the bankruptcy estate's 2018 federal income tax liabilities, then to the general unsecured creditor claims in the Debtors' Chapter 11 case without interest and pro rata as set out in the Confirmation Order entered on Oct. 17, 2018. The proceeds from the sale of Parcel 2 will be distributed in the following order: a. Delinquent general taxes and special assessments attributable to the Real Estate for the fiscal years 2013 through 2017 in the aggregate amount of $2,671, plus any other amounts due thereunder; b. The Debtors' share of the unpaid general taxes and assessments attributable to Parcel 2 for fiscal year 2018, prorated to the date of closing, plus any other amounts due thereunder; c. The Debtors' share of the unpaid general taxes and assessments attributable to the Real Estate for fiscal year 2019, if applicable, prorated to the date of closing, plus any other amounts due thereunder; d. The Debtors' share of the closing expenses for title insurance, recording fees and other related fees; e. Attorneys' fees and expenses of $1,100 for legal work performed by the Debtors' counsel related to the sale of Parcel 2; f. Statutory fees due the United States Trustee; g. Brokerage and Auctioneer Fee of $2,750 to McCurdy Auction, LLC representing the 10% "Buyer's Premium" that was added to the Buyer's winning bid of $27,500; h. The balance on the tax lien of the Internal Revenue Service; and j. The remainder, if any, first to allowed administrative claims, then to priority claims, then to the bankruptcy estate's 2018 federal income tax liabilities, then to the general unsecured creditor claims in the Debtors' Chapter 11 case without interest and pro rata as set out in the Confirmation Order entered on Oct. 17, 2018. The proceeds from the sale of Parcel 3 will be distributed in the following order: a. Delinquent general taxes and special assessments attributable to Parcel 3 for the fiscal years 2013 through 2017 in the aggregate amount of $6,186, plus any other amounts due thereunder; b. The Debtors' share of the unpaid general taxes and assessments attributable to the Real Estate for fiscal year 2018, prorated to the date of closing, plus any other amounts due thereunder; c. The Debtors' share of the unpaid general taxes and assessments attributable to the Real Estate for fiscal year 2019, if applicable, prorated to the date of closing, plus any other amounts due thereunder; d. The Debtors' share of the closing expenses for title insurance, recording fees and other related fees; e. Attorneys' fees and expenses of $1,100 for legal work performed by the Debtors' counsel related to the sale of Parcel 3; f. Statutory fees due the United States Trustee; g. Brokerage and Auctioneer Fee of $2,750 to McCurdy Auction, LLC representing the 10% "Buyer's Premium" that was added to the Buyer's winning bid of $27,500; h. The balance on the tax lien of the Internal Revenue Service; and j. The remainder, if any, first to allowed administrative claims, then to priority claims, then to the bankruptcy estate's 2018 federal income tax liabilities, then to the general unsecured creditor claims in the Debtors' Chapter 11 case without interest and pro rata as set out in the Confirmation Order entered on Oct. 17, 2018. The Court allows the administrative fees and expenses identified; orders the cancellation of the 14-day stay set out in Fed. R. Bankr. P. 6004(h); and authorizes disbursement of the sale proceeds without further notice. Ronald A. Goodwin and Michelle L. Goodwin sought Chapter 11 protection (Bankr. D. Kan. Case No. 16-12205) on Nov. 8, 2017. The Debtors tapped Mark J. Lazzo, Esq., as counsel. RONALD GOODWIN: $143K Sale of Wichita Property to Wyatt Approved ---------------------------------------------------------------- Judge Robert E. Nugent of the U.S. Bankruptcy Court for the District of Kansas authorized Ronald A. Goodwin and Michelle L. Goodwin to sell the real estate located in Sedgwick County, Kansas, commonly known as 302 E. 25th St. N., Wichita, Kansas, to James Wyatt for $143,000. The sale is subject to all rights of way and easements of record in its present, "as is" condition, with no express or implied warranties; and free and clear of all mortgages, liens, interests and encumbrances. From the sale proceeds, the Debtors will pay the following in descending order: a. Delinquent general taxes and special assessments attributable to the Real Estate for the fiscal years 2013 through 2017 in the aggregate amount of $13,403, plus any other amounts due thereunder; b. The Debtors' share of the unpaid general taxes and assessments attributable to the Real Estate for fiscal year 2018, prorated to the date of closing, plus any other amounts due thereunder; c. The Debtors' share of the unpaid general taxes and assessments attributable to the Real Estate for fiscal year 2019, if applicable, prorated to the date of closing, plus any other amounts due thereunder; d. The Debtors' share of the closing expenses for title insurance, recording fees and other related fees; e. Attorney's fees and expenses of $1,600 for legal work performed by the Debtors' counsel related to the sale; f. Statutory fees due the United States Trustee; g. Brokerage and Auctioneer Fee of $13,000 to McCurdy Auction, LLC representing the 10% "Buyer's Premium" that was added to the Buyer's winning bid of $130,000; h. The balance due secured creditor David Waters on the Contract for Deed described in paragraph 3 of the Debtors’ Motion; i. The balance on the tax liens of the Internal Revenue Service; and j. The remainder, if any, first to allowed administrative claims, then to priority claims, then to the bankruptcy estate's 2018 federal income tax liabilities, then to the general unsecured creditor claims in the Debtors' Chapter 11 case without interest and pro rata as set out in the Confirmation Order entered on Oct. 17, 2018. The Court allows the administrative fees and expenses identified; orders the cancellation of the 14-day stay set out in Fed. R. Bankr. P. 6004(h); and authorizes disbursement of the sale proceeds without further notice. Ronald A. Goodwin and Michelle L. Goodwin sought Chapter 11 protection (Bankr. D. Kan. Case No. 16-12205) on Nov. 8, 2017. The Debtors tapped Mark J. Lazzo, Esq., as counsel. RONALD GOODWIN: $32K Sale of Two Sedgwick Parcels to GBRB Approved ------------------------------------------------------------------ Judge Robert E. Nugent of the U.S. Bankruptcy Court for the District of Kansas authorized Ronald A. Goodwin and Michelle L. Goodwin to sell the real estate located in Sedgwick County, Kansas, described as (i) Lots 10 and 12, Washington Avenue, Moore's Addition to Wichita, Sedgwick County, Kansas; and (ii) Lots 14, 16, 18, 20, 22 and 24, Washington Avenue, Moore's Addition to Wichita, Sedgwick County, Kansas, to GBRB Properties, LLC for $31,900. The sale is subject to all rights of way and easements of record in its present, "as is" condition, with no express or implied warranties; and free and clear of all mortgages, liens, interests and encumbrances. From the sale proceeds, the Debtors will pay the following in descending order: a. Delinquent general taxes and special assessments attributable to the Real Estate for the fiscal years 2013 through 2017 in the aggregate amount of $3,212, plus any other amounts due thereunder; b. The Debtors' share of the unpaid general taxes and assessments attributable to the Real Estate for fiscal year 2018, prorated to the date of closing, plus any other amounts due thereunder; c. The Debtors' share of the unpaid general taxes and assessments attributable to the Real Estate for fiscal year 2019, if applicable, prorated to the date of closing, plus any other amounts due thereunder; d. The Debtors' share of the closing expenses for title insurance, recording fees and other related fees; e. Attorney's fees and expenses of $1,600 for legal work performed by the Debtors' counsel related to the sale; f. Statutory fees due the United States Trustee; g. Brokerage and Auctioneer Fee of $2,900 to McCurdy Auction, LLC representing the 10% "Buyer's Premium" that was added to the Buyer's winning bid of $29,000; h. The balance on the tax liens of the Internal Revenue Service; and j. The remainder, if any, first to allowed administrative claims, then to priority claims, then to the bankruptcy estate's 2018 federal income tax liabilities, then to the general unsecured creditor claims in the Debtors' Chapter 11 case without interest and pro rata as set out in the Confirmation Order entered on Oct. 17, 2018. The Court allows the administrative fees and expenses identified; orders the cancellation of the 14-day stay set out in Fed. R. Bankr. P. 6004(h); and authorizes disbursement of the sale proceeds without further notice. Ronald A. Goodwin and Michelle L. Goodwin sought Chapter 11 protection (Bankr. D. Kan. Case No. 16-12205) on Nov. 8, 2017. The Debtors tapped Mark J. Lazzo, Esq., as counsel. RONALD GOODWIN: $33K Sale of Arkansas Property to Nelson Approved ----------------------------------------------------------------- Judge Robert E. Nugent of the U.S. Bankruptcy Court for the District of Kansas authorized Ronald A. Goodwin and Michelle L. Goodwin to sell the real estate located in Sedgwick County, Kansas, commonly known as 1417 W. Madison, Arkansas City, Kansas to Brent E. Nelson for $33,000. The sale is subject to all rights of way and easements of record in its present, "as is" condition, with no express or implied warranties; and free and clear of all mortgages, liens, interests and encumbrances. From the sale proceeds, the Debtors will pay the following in descending order: a. Delinquent general taxes and special assessments attributable to the Real Estate for the fiscal years 2013 through 2017 in the aggregate amount of $8,613, plus any other amounts due thereunder; b. The Debtors' share of the unpaid general taxes and assessments attributable to the Real Estate for fiscal year 2018, prorated to the date of closing, plus any other amounts due thereunder; c. The Debtors' share of the unpaid general taxes and assessments attributable to the Real Estate for fiscal year 2019, if applicable, prorated to the date of closing, plus any other amounts due thereunder; d. The Debtors' share of the closing expenses for title insurance, recording fees and other related fees; e. Attorney's fees and expenses of $1,600 for legal work performed by the Debtors' counsel related to the sale; f. Statutory fees due the United States Trustee; g. Brokerage and Auctioneer Fee of $3,000 to McCurdy Auction, LLC representing the 10% "Buyer's Premium" that was added to the Buyer's winning bid of $30,000; h. The balance on the first mortgage of A to Z Recycling, LLC set forth, made payable to Vince Wilson, sole member of A to Z Recycling, LLC when the company forfeited its status to do business in Kansas on July 15, 2012; and j. The remainder, if any, first to allowed administrative claims, then to priority claims, then to the bankruptcy estate's 2018 federal income tax liabilities, then to the general unsecured creditor claims in the Debtors' Chapter 11 case without interest and pro rata as set out in the Confirmation Order entered on Oct. 17, 2018. The Court allows the administrative fees and expenses identified; orders the cancellation of the 14-day stay set out in Fed. R. Bankr. P. 6004(h); and authorizes disbursement of the sale proceeds without further notice. Ronald A. Goodwin and Michelle L. Goodwin sought Chapter 11 protection (Bankr. D. Kan. Case No. 16-12205) on Nov. 8, 2017. The Debtors tapped Mark J. Lazzo, Esq., as counsel. RONALD GOODWIN: $74K Sale of Wichita Property to Larry Cook Okayed ------------------------------------------------------------------ Judge Robert E. Nugent of the U.S. Bankruptcy Court for the District of Kansas authorized Ronald A. Goodwin and Michelle L. Goodwin to sell the real estate located in Sedgwick County, Kansas, commonly known as 2711 N. Hydraulic Avenue, Wichita, Kansas, to Larry Cook Construction, LLC for $74,250. The sale is free and clear of all liens, with any such liens attaching to the sale proceeds. From the sale proceeds, the Debtors will pay the following in descending order: a. Delinquent general taxes and special assessments attributable to the Real Estate for the fiscal years 2013 through 2017 in the aggregate amount of $4,941, plus any other amounts due thereunder; b. The Debtors' share of the unpaid general taxes and assessments attributable to the Real Estate for fiscal year 2018, prorated to the date of closing, plus any other amounts due thereunder; c. The Debtors' share of the unpaid general taxes and assessments attributable to the Real Estate for fiscal year 2019, if applicable, prorated to the date of closing, plus any other amounts due thereunder; d. The Debtors' share of the closing expenses for title insurance, recording fees and other related fees; e. Attorney's fees and expenses of $1,600 for legal work performed by the Debtors' counsel related to the sale; f. Statutory fees due the United States Trustee; g. Brokerage and Auctioneer Fee of $6,750 to McCurdy Auction, LLC representing the 10% "Buyer's Premium" that was added to the Buyer's winning bid of $67,500; h. The balance due secured creditor David Waters on the Contract for Deed described in paragraph 3 of the Debtors’ Motion; i. The balance on the tax liens of the Internal Revenue Service; and j. The remainder, if any, first to allowed administrative claims, then to priority claims, then to the bankruptcy estate's 2018 federal income tax liabilities, then to the general unsecured creditor claims in the Debtors' Chapter 11 case without interest and pro rata as set out in the Confirmation Order entered on Oct. 17, 2018. The Court allows the administrative fees and expenses identified; orders the cancellation of the 14-day stay set out in Fed. R. Bankr. P. 6004(h); and authorizes disbursement of the sale proceeds without further notice. Ronald A. Goodwin and Michelle L. Goodwin sought Chapter 11 protection (Bankr. D. Kan. Case No. 16-12205) on Nov. 8, 2017. The Debtors tapped Mark J. Lazzo, Esq., as counsel. SAS HEALTHCARE: Feb. 25 Determination for PCO Appointment Set ------------------------------------------------------------- Judge Mark X. Mullin of the U.S. Bankruptcy Court for the Northern District of Texas set a hearing on February 25, 2019, at 10:00 A.M. to determine the issue of whether or not a patient care ombudsman shall be appointed for SAS Healthcare, Inc. About SAS Healthcare SAS Healthcare, Inc., and its subsidiaries -- https://sunbhc.com/ -- collectively own three mental health facilities in the Dallas/Forth Worth area. Due to a decline in patient census and the resulting decline in revenues, which resulted in large part from the investigation by the Tarrant County District Attorney and subsequent indictments, SAS ceased operating the medical facilities and ceased accepting new patients as of Dec. 21, 2018. SAS Healthcare and three subsidiaries sought Chapter 11 protection (Bankr. N.D. Tex. Lead Case No. 19-40401) on Jan. 31, 2019. SAS Healthcare estimated assets of $1 million to $10 million and liabilities of the same range. The Hon. Mark X. Mullin is the case judge. The Debtors tapped Haynes and Boone, LLP as counsel; PHOENIX MANAGEMENT SERVICES as financial advisor; RAYMOND JAMES & ASSOCIATES, INC., as investment banker; and OMNI MANAGEMENT GROUP, as claims and noticing agent. SHOE SHIELDS: P. Siragusa Seeks Ch. 11 Dismissal, Trustee --------------------------------------------------------- Movant, Paul Siragusa, requested the U.S. Bankruptcy Court for the Northern District of Texas to dismiss the Chapter 11 case of Shoe Shields, LLC, or in the alternative, appoint a Chapter 11 trustee for the Debtor. Mr. Siragusa requested for the dismissal of the Chapter 11 case because of the substantial or continuing loss to or diminution of the Debtor's estate, the gross mismanagement of the estate, and the absence of a reasonable likelihood of its rehabilitation. Hence, Mr. Siragusa requested to proceed with the trial set in the State Court Action on March 25, 2019 and not reward the Debtors by allowing them to re-acquire that which the State Court kept away from them under the guise of the Bankruptcy Code. On the other hand, the Movant contended that the Debtor's current manager, Jitendra Rajpal, is incapable of administering the Debtor’s bankruptcy estate in accordance with the fiduciary duties of a debtorin-possession, such that the appointment of a Chapter 11 Trustee is not only warranted, but imperative. Mr. Siragusa is represented by: Patrick J. Schurr, Esq. SCHEEF & STONE, L.L.P. 2601 Network Boulevard Frisco, TX 75034 Tel.: 214.472.2100 Fax: 214.472.2150 Email: patrick.schurr@solidcounsel.com About OSR Patent and Shoe Shield Based in Addison, Texas, OSR Patent LLC filed a voluntary Chapter 11 petition (Bankr. N.D. Tex. Case No. 19-30180) on Jan. 18, 2019. An affiliate, Shoe Shields LLC, also filed a voluntary Chapter 11 petition (Bankr. N.D. Tex. Case No. 19-03007) on Jan. 24, 2019. At the time of filing, the Debtor had $100,001 to $500,000 in estimated assets and $50,001 to $100,000 in estimated liabilities. The petition was signed by Sangeeta Rajpal, manager. The Debtor is represented by: John J. Gitlin 16901 Park Hill Drive Dallas, TX Tel: 972-385-8450 Email: johngitlin@gmail.com SHORT ENVIRONMENTAL: Seeks to Extend Exclusive Period to April 1 ---------------------------------------------------------------- Short Environmental Laboratories, Inc. asked the U.S. Bankruptcy Court for the Southern District of Florida to extend the period during which it has the exclusive right to file a Chapter 11 plan of reorganization through April 1. The company's current exclusive filing period expired on Feb. 3. Nadine White-Boyd, Esq., at White-Boyd Law, P.A., said the company is still in negotiations with its creditors and is implementing process to increase revenue. "Promulgating a plan at this time would be premature and its diligent reorganization efforts would be hampered by a premature plan," Ms. White-Boyd said in a motion she filed with the court. In the same filing, Short Environmental also proposed to move the deadline for filing a plan and disclosure statement to April 1. About Short Environmental Laboratories Short Environmental Laboratories, Inc., is a privately-held company in Sebring, Florida, that offers environmental testing for a wide variety of industries. Some of its services include water and waste water testing, compliance testing, and sample collection. It also provides ground water, soils, and surface water testing. Short Environmental Laboratories sought protection under Chapter 11 of the Bankruptcy Code (Bankr. S.D. Fla. Case No. 18-19640) on Aug. 7, 2018. In the petition signed by David Murto, president, the Debtor disclosed $217,285 in assets and $1,463,746 in liabilities. Judge Mindy A. Mora presides over the case. Nadine V. White-Boyd, Esq., at the law firm of Nadine White-Boyd, is the Debtor's legal counsel. STONEMOR PARTNERS: Secures Bank Waiver, $35MM Financing Facility ---------------------------------------------------------------- StoneMor Partners L.P., a leading owner and operator of cemeteries and funeral homes, on Feb. 4, 2019, announced a number of key financial and operational updates representing further steps forward in its ongoing turnaround effort. These steps include a waiver and amendment of certain loan covenants, growth financing from its largest investor and the completion of an extensive review of its asset base. Joe Redling, StoneMor's President and Chief Executive Officer, said, "We continue to make progress with our efforts to revitalize the business and position StoneMor for future success. Securing the waiver is an important step and we are grateful to our lenders for their continued support as we get current with our financial statements. The new facility from our largest unitholder, Axar Capital, brings greater financial flexibility to our turnaround efforts and we plan to use these funds to manage the business, continue our reorganization and drive long-term growth. The findings of a comprehensive asset review also reinforce our belief that StoneMor's portfolio of assets contains a significant number of properties that are attractive and valuable. The insights obtained will help us better deploy capital within a more focused investment, development and divestiture strategy to strengthen the business." Key Bank Waiver and Amendment Obtained The Partnership has obtained from its lenders a waiver and amendment of certain loan covenants under its senior credit facility that, among other things: * Extends to February 6, 2019 the date by which the Partnership must file its Form 10-Q for the fiscal quarter ended March 31, 2018, and to February 15, 2019 for the quarters ended June 30, 2018 and September 30, 2018 * Removes the financial covenant regarding the Partnership's maximum Consolidated Secured Leverage Ratio and minimum Fixed Charge Coverage Ratio and replaces both with a minimum Consolidated EBITDA covenant * Progressively increases the Applicable Rate and adds ticking fees for credit facility loans * Changes the Stated Maturity Date of credit facility to May 1, 2020 from August 4, 2021 Financing Signed with Axar Capital As contemplated by the recent amendment to its credit facility, the Partnership has added a "last out" senior secured credit facility with Axar Capital Management for up to $35.0 million. The proceeds of the facility will be used to finance the working capital needs and for other general corporate purposes to drive improvements in sales. Additional details of the financing facility include: * Interest rate of 8.0% per annum * Availability of the last $10 million of the facility is subject to delivery of a fairness opinion * Maturity date substantially the same as the bank's senior credit facility * $700,000 in OID at closing, plus additional interest of $700,000 to be paid at the termination and payment in full of the facility The Partnership's board of directors has separately approved an amendment to the voting and standstill agreement and director voting agreement with Axar to permit Axar funds to acquire up to 27.5% of the Partnership units. The Partnership also noted it has initiated the process to evaluate options for a complete refinancing of its existing credit facility. The Partnership has retained an investment advisor to assist in the process. Asset Review Completed The Partnership completed a detailed review of its more than 400 properties across 27 states and Puerto Rico, obtaining insights into individual financial and operational performance, local market dynamics, current industry trends, including cremation, the impact of clustering efforts and growth opportunities. Jim Ford, StoneMor's Chief Operating Officer, commented, "More than two thirds of our cemetery and funeral home properties are assets with attractive financial and operational metrics. The review demonstrated, for example, the top two-thirds of our properties, which primarily account for more than 75% of property level billings, generate substantial profit potential before consideration of corporate and administrative expenses, with average property level profit margins primarily between 25% and 30%. We also identified the bottom third properties that are marginally unprofitable in the aggregate. We believe if we emulate the practices of our most profitable properties, many of our other properties can generate improved levels of profitability. This will be one of the key areas of focus for our three recently appointed Divisional Presidents." Because StoneMor does not generate GAAP financials on a property by property basis, the estimate of property level profit margins is a non-GAAP financial measure. The actual GAAP reported financial results and future results of top properties may not be consistent with this review, and the Partnership may not be able to improve the performance of those properties. Total operating results will be the result of the aggregation of all properties, including the lower performing one-third which are, in the aggregate, marginally unprofitable as currently operated. These properties, while retaining local or regional value, may not fit with StoneMor's long-term strategy and the Partnership may choose to divest them over time. First Quarter 10-Q Filed - Cost Savings Identified The Partnership also announced it has filed its Form 10-Q for the three months ended March 31, 2018 with the Securities and Exchange Commission (the "SEC"). Investors are encouraged to read the quarterly report, which can be found at www.stonemor.com. Revenues of $77.9 million were in line with preliminary results previously disclosed. Since reporting preliminary results on November 1, 2018, the Partnership identified various weather related inventory deterioration which resulted in impairment charges of approximately $1.9 million for the three months ended March 31, 2018 and are recorded in cost of goods. Included with these weather related impairments, and as a result of enhanced inventory control procedure, the Partnership determined that certain merchandise was damaged or deemed impractical for use which resulted an estimated total impairment to other assets on the balance sheet of approximately $5 million which is included in other losses. Net loss was $17.8 million for the three months ended March 31, 2018 compared to a net loss of $8.6 million for the prior year period. The increased loss was driven largely by increases in costs of goods and the impairment charges previously described, as well as the impact of higher corporate overhead related to professional fees associated with delayed financial filings and legal costs. Mr. Redling continued, "Our reorganization to drive greater accountability and improved performance continues. We have put in place key elements of our long-term plan, including decentralizing control to three Divisional Presidents, eliminating additional layers of management in the field and completing a major assessment of corporate expenses that we expect to result in savings of more than $20.0 million during 2019. It will take additional time to deliver the full results we seek from these initiatives. While many of the benefits of the identified cost reductions will occur throughout the year, last week we completed a 20% reduction in force at the Corporate Office in Trevose, Pa. These decisions are always difficult, but it was a key area of focus as we continue to streamline operations and eliminate redundancies. While our first quarter results demonstrated some stability in sales in 2018, the reorganization efforts combined with cost cutting measures did have a disruptive impact during the second half of 2018, but we believe the actions taken will support improvements in 2019." About StoneMor Partners L.P. Headquartered in Trevose, Pennsylvania, StoneMor Partners L.P. -- http://www.stonemor.com-- is an owner and operator of cemeteries and funeral homes in the United States, with 322 cemeteries and 91 funeral homes in 27 states and Puerto Rico. StoneMor is the only publicly traded death care company structured as a partnership. StoneMor's cemetery products and services, which are sold on both a pre-need (before death) and at-need (at death) basis, include: burial lots, lawn and mausoleum crypts, burial vaults, caskets, memorials, and all services which provide for the installation of this merchandise. SUNDANCE BEHAVIORAL: Feb. 25 Determination for PCO Appointment Set ------------------------------------------------------------------ Judge Mark X. Mullin of the U.S. Bankruptcy Court for the Northern District of Texas set a hearing on February 25, 2019, at 10:00 A.M. to determine the issue of whether or not a patient care ombudsman shall be appointed for Sundance Behavioral Health Care, Inc. About SAS Healthcare SAS Healthcare, Inc., and its subsidiaries -- https://sunbhc.com/ -- collectively own three mental health facilities in the Dallas/Forth Worth area. Due to a decline in patient census and the resulting decline in revenues, which resulted in large part from the investigation by the Tarrant County District Attorney and subsequent indictments, SAS ceased operating the medical facilities and ceased accepting new patients as of Dec. 21, 2018. SAS Healthcare and three subsidiaries sought Chapter 11 protection (Bankr. N.D. Tex. Lead Case No. 19-40401) on Jan. 31, 2019. SAS Healthcare estimated assets of $1 million to $10 million and liabilities of the same range. The Hon. Mark X. Mullin is the case judge. The Debtors tapped Haynes and Boone, LLP as counsel; PHOENIX MANAGEMENT SERVICES as financial advisor; RAYMOND JAMES & ASSOCIATES, INC., as investment banker; and OMNI MANAGEMENT GROUP, as claims and noticing agent. TILLMAN PARK: $170K Sale of Condo Unit 901 to Sanders Approved -------------------------------------------------------------- Judge Edward J. Coleman, III, of the U.S. Bankruptcy Court for the Southern District of Georgia authorized Tillman Park, LLC's sale of the condominium unit bearing unit number 901 of the condominium development known as Tillman Park and shown on the condominium plat recorded with the Clerk of Superior Court of Bulloch County, Georgia in Plat Book 63, Page 72-23. Unit 604, Tillman Park Condominiums, to Michael Sanders for $170,000. The sale is free and clear of all liens. From the proceeds of the sale, the Debtor will pay, the following, in order of priority: a. any real estate taxes, back or current, owed to any local taxing authorities for ad valorem taxes (with current year taxes being pro-rated at closing); b. any other costs of closing as set forth in Contract; c. a sales commission to Coldwell Banker Tanner Realty of 6% of the purchase price under Contract; and d. the balance of any sales proceeds, after payment, will be paid over to the LS Capital. In consideration of the amounts set forth to be paid at closing to parties identified in the Order, all of such entities will release all claims of interest in Property and the proceeds therefrom. Any other valid liens not otherwise paid out at closing will attach to the net proceeds sale to the same extent and priority as such lien would have attached to Property. About Tillman Park Tillman Park, LLC, filed a Chapter 11 bankruptcy petition (Bankr. S.D. Ga. Case No. 16-60147) on April 4, 2016. The petition was signed by T. Holmes Ramsey, Jr., managing member. The case is assigned to Judge Edward J. Coleman, III. The Debtor is represented by Jon A. Levis, Esq. at Merrill & Stone, LLC. At the time of filing, the Debtor had $3.28 million in assets and $5.20 million in liabilities. TRANSDIGM GROUP: Fitch Affirms B Issuer Default Rating ------------------------------------------------------ Fitch Ratings has affirmed the IDRs of TransDigm Group Inc. and TransDigm Inc. at 'B'. Fitch has also assigned 'BB'/'RR1' ratings to TGI's new senior first lien secured notes, affirmed the company's senior first lien secured credit facility at 'BB'/'RR1', and downgraded the company's senior subordinated notes to 'CCC+'/'RR6'. The Rating Outlook is Stable. The downgrade of the company's senior subordinated notes is a result of TGI's issuance of $3.8 billion of new 6.25% senior secured notes due 2026 to pre-fund the previously announced acquisition of Esterline Technologies Corporation (ESL). The material increase to the senior first lien debt level is in excess of Fitch's previous assumptions and results in weaker potential recovery for the senior subordinated debt. As a result of the new debt issuance, TDG's consolidated secured debt will total almost $12 billion compared to approximately $5 billion of subordinated debt. The affirmation of TDG's IDR is based on Fitch's updated projections for the company including the impact of the ESL acquisition. The anticipated increase in the company's leverage metrics following the acquisition will not trigger Fitch's negative rating sensitivities, as outlined below, and Fitch believes the company's overall credit profile will not change significantly. Fitch has some concerns regarding the valuation of the transaction and its integration, but in the near term Fitch believes these concerns are offset by the company's strong margin profile and cash flow generation. Fitch's base case projections for the company assumed debt-funded acquisitions in the coming years, so the ESL transaction is not entirely incremental to Fitch's expectations, though TDG debt-financed a greater percentage of the transaction than Fitch had originally expected. The ESL acquisition is expected to be fully accretive by the middle of fiscal year 2020, and Fitch projects TDG will generate nearly $5 billion in revenues and $2 billion EBITDA by fiscal year end 2019 and greater than $6 billion in revenues and approximately $2.3 billion in EBITDA by 2020. The acquisition will enable the company to expand horizontally. Fitch estimates the new debt associated with the acquisition will increase TDG's adjusted leverage (adjusted debt/EBITDAR) from approximately 7.1x at the end of fiscal 2018 to approximately 8.2x at the end of fiscal 2019, but Fitch expects the company's adjusted leverage will be approximately 7.5x on a pro forma basis including ESL's full results. KEY RATING DRIVERS TDG's ratings are supported by strong FCF generation (cash from operations less capex and regular dividends), good liquidity, strong margins, healthy commercial aerospace markets, higher U.S. defense spending, and a favorable debt maturity schedule. TDG generates significant cash flow due to the ability to command a premium for its products. A high percentage of sales from a relatively stable and profitable aftermarket business, low research and development costs, low capex and a high percentage of sole source products support TDG's industry-leading 47% EBITDA margins and above 20% FCF margins on a standalone basis. However, following the Esterline transaction Fitch forecasts the company's consolidated FCF margins will decline to the mid-teens, and EBITDA margins will likely decline to around or below 40%. Rating concerns include the company's high leverage, declining interest coverage, long-term cash deployment strategy which focuses on acquisitions and occasional debt-funded special dividends, and weak collateral support for the secured bank facility in terms of asset coverage. Fitch is also concerned with the integration risk of Esterline as the acquisition will be the largest in the company's history, even though TDG is a serial acquirer and has a demonstrated ability to seamlessly integrate multiple acquisitions annually. DERIVATION SUMMARY TDG does not have any similarly sized peers with comparable operating profiles. The company has some of the highest operating margins and percentage of sole-source and proprietary product among aerospace and defense companies rated by Fitch. The company's diversification, high content of aftermarket sales, strong operations and cash generation are commensurate with higher-rated aerospace & defense companies such as Rockwell Collins Inc. However, TDG's financial policies, which include an appetite for high-leverage, debt-funded acquisitions and special dividends, override its strong, non-leverage credit metrics. Although TDI is stronger than TDG, the IDRs of both entities are equalized because of strong operating ties between the entities as TDI (the issuing entity) is the main operating subsidiary of TDG and is consolidated in the parent's financial statements. No country ceiling or operating environment influence was in effect for these ratings. KEY ASSUMPTIONS Fitch's Key Assumptions Within Its Rating Case for the Issuer -- The Esterline transaction will close in March or April 2019, and senior secured notes are pari passu with senior secured term loans; -- ESL revenues will be only partially accretive with TDG's financial results in fiscal 2019 and will be fully reflected by fiscal 2020; -- TDG's margins will decrease in fiscal 2019 following the acquisition of ESL; EBITDA margins will decrease to below 40% in 2020 after ESL's results are fully consolidated; -- TDG will make additional acquisitions in fiscal 2019 and beyond; -- TDG will maintain leverage in the range of 7x-8x over the rating horizon; -- Excess cash will be paid to shareholders in the form of special dividends or share repurchases if the company does not make acquisitions; -- Fitch assumes the company will issue new debt in the range of $500 million to $3 billion annually; -- Fitch expects the majority of the newly issued debt will be in the form of senior secured debt. Recovery Analysis The recovery analysis assumes TDG would be considered a going concern and would be reorganized rather than liquidated. Fitch has assumed a 10% administrative claim in the recovery analysis. TDG's recovery analysis reflects a potential severe down-cycle in the aerospace market and assesses the going concern pro forma EBITDA at approximately $1.8 billion based on the company's stable operations, high operating margins and significant percentage of revenues derived from aftermarket products. Fitch believes the recovery analysis also incorporates the risks of integrating large acquisitions. The $1.8 billion ongoing EBITDA assumption represents an approximately 20% decline from Fitch's projected pro forma EBITDA at the end of fiscal 2020. Fitch expects the EV multiple used in the TDG recovery analysis will fluctuate in the range of 7x-8x, and Fitch is currently using a 7.5x multiple to calculate a post-reorganization valuation. Fifty-six percent of industrial and manufacturing defaulters had exit multiples in the range of 5.0x to 8.0x according to the "Industrial, Manufacturing, Aerospace and Defense Bankruptcy Enterprise Values and Creditor Recoveries" report published by Fitch in July of 2018. Within the report, Fitch observed that more than 90% of the bankruptcy cases analyzed were resolved as a going concern. The A&D defaulters typically had significant operational issues; low product, contract and customer diversification; or delays in receipt of contractual revenues in addition to over-leveraged capital structures. While TDG has a highly leveraged capital structure, Fitch believes the company's business profile is stronger than the profiles in the A&D bankruptcy observations. Fitch utilizes the 7.5x EV multiple based on TDG's solid contract and product diversifications, high percentage of sole-source and proprietary products, and significant EBITDA derivation from higher margin and more stable aftermarket sales. In addition, recent transactions for similar companies have been completed at EBITDA multiples in the range of 11x-12x, as evidenced by a recent purchase of Orbital ATK, Inc. by Northrop Grumman Corporation at an approximately 14x EBITDA multiple in 2018. The $600 million revolving credit facility (RFC) and the $300 million accounts receivable securitization facility (ARSF) are assumed to be fully drawn upon default. The ARSF, RFC and first lien senior secured term loans are senior to the senior subordinated unsecured notes in the waterfall. The waterfall results in a recovery between 91% and 100% for the first lien debt and ARSF corresponding to a Recovery Rating of 'RR1'. The waterfall also indicates a recovery of between 0% and 10% for the senior subordinated unsecured notes corresponding to 'RR6'. RATING SENSITIVITIES Developments That May, Individually or Collectively, Lead to Positive Rating Action -- Fitch does not anticipate positive rating actions in the near term given current credit metrics and the company's cash-deployment strategies. Positive rating actions could be considered if the company modifies its cash-deployment strategy and focuses on debt reduction. Developments That May, Individually or Collectively, Lead to Negative Rating Action -- A negative rating action may be considered if there is significant cash flow margin erosion without commensurate deleveraging of the company. -- Fitch may consider a negative rating action if TDG's adjusted leverage (adjusted debt to EBITDAR) and FFO-adjusted leverage increase and remain between 8.0x and 8.25x, and above 9.5x, respectively, driven by weakening of the global economy, a downturn in the aerospace sector, or by issuance of additional debt to fund special dividends or acquisitions. LIQUIDITY Strong Liquidity: As of Sept. 30, 2018, TDG's liquidity was strong, comprised of $2.1 billion in cash and equivalents and $582.5 million of revolver availability, after giving effect to $17.5 million of letters of credit outstanding. The company does not have significant debt maturities until 2020, when $550 million of senior subordinated notes become due. Fitch anticipates the company will refinance the maturing debt and estimates TDG's liquidity will typically fluctuate between $1 billion to $1.5 billion over the rating horizon. Fitch anticipates recently completed and future acquisitions will allow TDG to accelerate its revenue, EBITDA and FCF growth over the rating horizon. TDG has adequate financial flexibility and good liquidity supported by a $600 million revolving credit facility and a sizable cash balance, as the company typically holds above $500 million in cash. Debt Structure: TDG's capital structure has historically consisted of senior secured credit facilities, senior subordinated unsecured notes and a $300 million trade receivable securitization facility. The company is issuing $3.8 billion of new senior first lien secured notes due in 2026 to fund the Esterline acquisition, which is expected to close in either March or April of 2019. On May 8, 2018 TDG UK, a first time issuer and direct wholly owned subsidiary of TDG, issued $500 million of subordinated notes due in 2026. TDI is a co-obligor of the $500 million senior subordinated debt issued by TDG UK. All other debt is issued at the main operating subsidiary, TransDigm Inc. FULL LIST OF RATING ACTIONS Fitch affirmed the following ratings: TransDigm Group Inc. -- Long-term Issuer Default Rating (IDR) at 'B', Outlook Stable. TransDigm Inc. -- Long-term IDR at 'B', Outlook Stable; -- Senior secured credit facility at 'BB'/'RR1'; Fitch downgraded the following ratings: TransDigm Inc. -- Senior subordinated notes to 'CCC+'/'RR6' from 'B-'/'RR5'. TransDigm UK Holdings plc -- Senior subordinated notes to 'CCC+'/'RR6' from 'B-'/'RR5'. Fitch assigned the following ratings: TransDigm Inc. -- Senior secured notes 'BB'/'RR1'; TWISTLEAF HOLDINGS: Voluntary Chapter 11 Case Summary ----------------------------------------------------- Debtor: Twistleaf Holdings LLC 6600 West Charleston Blvd., Suite 117 Las Vegas, NV 89146 Business Description: Twistleaf Holdings is a lessor of real estate headquartered in Las Vegas, Nevada. Chapter 11 Petition Date: February 4, 2019 Court: United States Bankruptcy Court District of Nevada (Las Vegas) Case No.: 19-10654 Judge: Hon. August B. Landis Debtor's Counsel: Ryan A. Andersen, Esq. ANDERSEN LAW FIRM, LTD. 101 Convention Center Drive, Suite 600 Las Vegas, NV 89109 Tel: (702) 522 1992 Fax: (702) 825 2824 Email: ryan@vegaslawfirm.legal Total Assets: $399,233 Total Liabilities: $1,306,756 The petition was signed by Shawn Samol, authorized signatory. The Debtor filed an empty list of its 20 largest unsecured creditors. A full-text copy of the petition is available for free at: http://bankrupt.com/misc/nvb19-10654.pdf UNITI GROUP: Fitch Affirms BB- LongTerm IDR, Outlook Stable ----------------------------------------------------------- Fitch Ratings has affirmed Uniti Group Inc.'s Long-Term Issuer Default Rating at 'BB-'. The Rating Outlook remains Stable. In addition, Fitch has affirmed Uniti Group L.P.'s debt, which was previously issued by Uniti Group Inc. and assumed by Uniti Group LP upon the formation of an UP-REIT. Uniti Group Inc. is a guarantor of the debt. Uniti's affirmation reflects Fitch's belief that Uniti's operating cash flows are more stable than the operating cash flows at its main tenant, Windstream Services LLC, as well as the improved revenue diversification Uniti has attained through acquisitions of communications infrastructure since the spin-off from Windstream in 2015. Although diversification has improved it remains high and constrains the Long-Term IDR. Unit also has weaker contingent liquidity relative to traditional REITs. KEY RATING DRIVERS Slight Rise In Leverage: For 2019, Fitch expects gross leverage to approximate 6.0x when giving 50% equity treatment for preferred stock. For acquisitions completed or expected to be completed, leverage incorporates EBITDA only from the date of acquisition. Fitch expects Uniti to finance future transactions so gross leverage will remain relatively stable and should remain in the high-5x range to approximately 6x over the longer term. Acquisitions: In 2018 and early 2019, Uniti completed, or has pending, several transactions. In the leasing business, Uniti entered into leasing transactions that are expected to generate approximately $21 million of revenue and $19 million of EBITDA on an annualized basis. Outlays for the larger transactions,U.S. TelePacific Holdings Corp. (TPx) and CableSouth,were disclosed, totaling approximately $126 million. A transaction with Macquarie Infrastructure Partners in early 2019 is expected to lead to initial annualized rent of $20.3 million. In the fiber business, Uniti acquired Information Transport Solutions, Inc. (ITS) for $54 million, at a multiple of 7.7x. Annual synergies of $2.6 million are expected by 2022. Very Stable Cash Flow: Fitch expects Uniti's cash flows to be very stable, owing to the fixed nature of long-term lease payments from Windstream Holdings, Inc., and subsidiary Windstream Services, LLC (B/Rating Watch Negative), and the contractual nature of revenue streams in Uniti's Fiber and Tower businesses. The master lease with Windstream currently produces slightly more than $650 million in cash revenue annually. As highlighted by the MIP and TPx sale-leaseback transactions, Fitch believes similar master lease-based transactions are possible, as are acquisitions of communications infrastructure. Tenant Concentration: The Windstream master lease provides approximately 64% of Uniti's revenue, pro forma for 2017 and 2018 acquisitions. At the time of the spinoff, nearly all revenue was from Windstream Holdings. In Fitch's view, the improved diversification is a positive for the company's credit profile, and combined with a revised view on the strength of the master lease and its necessity to Windstream's continued operations, Uniti's IDR could be higher than Windstream Services' IDR. Major customer verticals outside of Windstream consist of the large wireless carriers, national cable operators, government agencies and education. Fitch estimates Windstream's rent coverage (EBITDAR less capex/rents) was in the 1.6x to 1.7x range in 2018. A stress scenario where Windstream's EBITDAR declined more than 15% relative to estimated 2018 levels would still cover rents by more than 1.2x. U.S. bankruptcy courts have repeatedly upheld the unitary, indivisible nature of well-structured master leases. Additionally, Uniti's master lease is important to Windstream's operations. These two factors provide a material degree of protection against a Windstream initiated rejection of the master lease in a Windstream bankruptcy scenario, thereby protecting Uniti's cash flows in connection with the master lease. In Fitch's view, there is a greater risk that the level of rent could be renegotiated to a lower level on a mutually economic basis than the lease unilaterally being rejected by Windstream. Seniority: Uniti's master lease is with Windstream Holdings, which is subordinate to Windstream Services. However, Fitch believes Uniti's assets are essential to Windstream Services' operations and are a priority payment, as a default on the lease could cause Windstream Holdings to lose control of the leased assets. Fitch also believes in a bankruptcy scenario where Windstream Holdings is very unlikely to reject the master lease, owing to its indivisible nature, and lenders are likely to consent to the lease payment to preserve the value of the assets. Geographic Diversification: The company's geographic diversification is solid, given Windstream Holdings' geographically diverse operations and the expanded footprint provided by acquisitions since the spinoff. DERIVATION SUMMARY As the only fiber-based telecommunications REIT, Uniti currently has no direct peers. Uniti is a telecom REIT that was formed through the spin-off of a significant portion of Windstream Services, LLC's fiber optic and copper assets. Windstream retained the electronics necessary to continue as a telecommunications services provider. Fitch believes Uniti's operations are geographically diverse, spread across more than 30 states, and the assets under the master lease with Windstream provide adequate scale. Other close comparable telecommunications REITs are tower companies including American Tower (BBB/Stable Outlook), Crown Castle (BBB/Stable Outlook) and SBA Communications (not rated). The tower companies lease space on towers and ground space to wireless carriers, and are a key part of the wireless industry infrastructure. However, the primary difference is that the tower companies operate on a shared infrastructure basis (multiple tenants) whereas a substantial portion of Uniti's revenues are derived on an exclusive basis under sale-leaseback transactions. Uniti's leverage is higher than American Tower or Crown Castle, but lower than SBA. In the Uniti Fiber segment, the most direct comparable company would be Zayo Group Holdings (not rated), a company that operates with moderately lower leverage than Uniti. Zayo plans to separate into two companies, including an infrastructure company that will have a path to REIT conversion. While expanding primarily through acquisitions, Uniti Fiber has relatively small scale. The business models of Uniti Fiber and Zayo are unlike the wireline business of communications services providers such as AT&T (A-/Stable), Verizon (A-/Stable) or CenturyLink (BB/Stable). Uniti Fiber and Zayo are providers of infrastructure, which may be used by communications service providers to provide retail services (wireless, voice, data, internet). Increasingly, Crown Castle is becoming a larger participant in the fiber infrastructure business through a series of acquisitions. The large communications services providers do self-provision, and may use a fiber infrastructure provider to augment their networks. Communications services providers may sell dark fiber and connectivity services on a wholesale basis but Fitch believes they have more of a focus on selling retail services to consumers and businesses, as well as solutions to business customers. Uniti's fiber acquisitions since the spin-off are a key credit consideration as they have reduced the concentration of revenues and EBITDA from the Windstream master lease. While Windstream's EBITDAR coverage of the master lease payment remains strong, in a stress situation where the potential exists for a renegotiation and reduction in terms (in return for certain economic offsets by Windstream), the other sources of EBITDA provide protection to Uniti. Customers in the fiber business include wireless carriers, enterprises, and governments. Fitch believes aspects of Uniti's credit profile are similar to cases in the gaming industry where there are single tenant or concentrated leases between operating companies (OpCos) and their respective REITs (PropCos). Both Uniti and gaming REITs benefit from triple net leases. Fitch believes that the PropCos are better positioned as rents may continue uninterrupted through the tenant's bankruptcy, because such rents are an operating expense, and unlikely to be rejected to the master lease structure. KEY ASSUMPTIONS Fitch's Key Assumptions Within Its Rating Case for the Issuer: -- Fitch estimates Uniti's revenue grew approximately 10% to 11% in 2018 primarily due to acquisitions, and will grow in the high single digits in 2019. Thereafter, revenues grow in the mid single digits assuming no further acquisitions. -- Fitch expects EBITDA margins to be in the high 70% range due to acquisitions of operating businesses and the low initial margins in the tower business (these margins improve as tenants are added). -- Fitch has assumed Uniti will continue to be acquisitive and that it will fund transactions with a mix of debt and equity that can maintain relatively stable credit metrics. No large acquisitions have been included in the forecast. -- Uniti will target long-term net leverage in the mid-5x range to 6x range; Fitch expects gross leverage to be in the high-5x range to 6x longer term. Leverage is anticipated to come down modestly as dark fiber and small cell projects are completed and the contracted revenues come on line. -- Fitch expects net success-based capital spending just over $200 million in 2018, including integration and maintenance capex, in line with company public net success-based capex guidance on spending for Uniti Fiber and Uniti Towers. Additional asset acquisitions in 2018 were accounted for as capex, including the $95 million TPx fiber network acquisition, the $31 million CableSouth acquisition and an undisclosed amount for the CenturyLInk fiber acquisition. RATING SENSITIVITIES Developments That May, Individually or Collectively, Lead to Positive Rating Action: -- An upgrade could be considered if 25%-30% of its EBITDA is derived from tenants or operations other than Windstream. -- Uniti maintains gross debt leverage in the 5.5x range and FFO fixed charge coverage of 2.8x or greater. Developments That May, Individually or Collectively, Lead to Negative Rating Action -- A negative rating action could occur if gross debt leverage is expected to be sustained at higher than 6x and FFO adjusted leverage is sustained above 6.5x and FFO charge coverage of 2.4x or lower. -- Fitch has assumed the company will issue equity in 2019 (similar to past policies), as well as sell its Latin American tower business, to partially fund completed and expected acquisitions. Material delays in concluding these transactions could lead to a negative action. -- If Uniti does not refinance its revolver in the first few months of 2019 as assumed by Fitch. -- In addition, if Windstream's rent coverage (EBITDAR - capex)/rents approaches 1.2x, a negative rating action could occur but Fitch will also take into account Uniti's level of revenue and EBITDA diversification at that time. LIQUIDITY AND DEBT STRUCTURE Solid Liquidity: Uniti's revolving credit facility (RCF, due 2020), which had $210 million available on Sept. 30, 2018, provides sufficient backstop for liquidity needs. Fitch expects Uniti will restore revolver availability following transactions by terming out borrowings over time through more permanent means of equity and debt funding. The company had $118 million in cash at Sept. 30, 2018. Subsequent to the end of the 3rd quarter Uniti used $31 million in funds to close the CableSouth Media, LLC acquisition and $54 million for the Information Transport Solutions, Inc. (ITS) transaction. Working capital needs for Uniti are quite low as the largest business segment, Leasing, works on a triple net lease basis although Fitch notes working capital needs have increased slightly as the company has acquired operating businesses that have higher annual operating expenses than the REIT and higher capital spending levels. The primary uses of liquidity will be to support the timing of the receipt of cash and the REIT-required level of distributions. Capital Spending: In 2018, net capex is expected to be just over $200 million, including integration capex, in comparison to net capex of $135 million in 2017 (net capex consists of gross capex less up-front payments from customers); gross capex in 2017 was $166 million. The 2018 acquisitions of TPx, CableSouth and the CenturyLink transaction are expected to be recorded in gross capital spending, thus Fitch estimates gross capex in 2018 was $391 million ($297 million was spent through the first nine months). Covenants: The principal financial covenants in the company's credit agreement require Uniti to maintain a consolidated secured leverage ratio of 5.0x. The company can also obtain incremental term loan borrowings or increased commitments in an unlimited amount as long as on a pro forma basis the consolidated secured leverage ratio does not exceed 4x. Maturities: Uniti's maturity profile is solid as, other than the RCF, which matures in late April 2020, there are no major maturities until 2022 when the $2.1 billion term loan matures. Capital Market Activities: To fund its acquisition activities Uniti has supplemented debt offerings with equity to maintain a relatively balanced capital structure. In April 2017, the company raised approximately $499 million in net proceeds from a common stock issuance with the proceeds used to fund a portion of the cash consideration of the Southern Light and Hunt acquisitions. Uniti has an at-the-market (ATM) common stock offering program that allows for the issuance of up to $250 million of common equity to keep the capital structure in balance when funding capex in the tower or fiber operating businesses as well as to finance small transactions. Through September 30, 2018, the company had issued approximately $65 million under the ATM program in 2018. In May 2017, an umbrella partnership REIT (UPREIT) structure was implemented, which will enable the company to acquire properties through the issuance of limited partnership interests in its operating partnership in an efficient manner. The acquisitions of Southern Light and Hunt, which closed on July 3, 2017, were partly funded by the issuance of operating partnership units REIT-required distributions limit Uniti's ability to generate significant amounts of FCF. Capital intensity varies by business unit: in the leasing business, capital intensity is virtually non-existent as capex is the responsibility of the tenant. In the Fiber and Tower segments intensity is high as the company is in the process of completing projects in the Fiber segment and has an ongoing build program in the tower business. In 2018, net success-based capex in Uniti Fiber is expected to range from $120 million to $140 million (excluding $12 million and $5 million of integration and maintenance capex, respectively), and net success-based capex in Uniti Towers is expected to range from $65 million to $70 million. WEATHERFORD INT'L: Egan-Jones Lowers Sr. Unsecured Ratings to CCC+ ------------------------------------------------------------------ Egan-Jones Ratings Company, on January 29, 2019, downgraded the foreign currency and local currency senior unsecured ratings on debt issued by Weatherford International plc to CCC+ from B-. EJR also downgraded the rating on commercial paper issued by the Company to C from B. Headquartered in Houston, Texas, Weatherford International plc, an Irish-domiciled company, is one of the largest multinational oil and natural gas service companies. WINDSTREAM SERVICES: Fitch Maintains B IDR on Rating Watch Neg. --------------------------------------------------------------- Fitch Ratings has maintained the 'B' Issuer Default Rating of Windstream Services, LLC on Rating Watch Negative. In addition, Fitch has maintained Windstream's first lien secured debt ratings of 'BB'/'RR1', second lien secured debt ratings of 'BB-'/'RR2' and unsecured debt ratings of 'CCC+'/'RR6' on Negative Watch. KEY RATING DRIVERS Revenue Pressures Continue: Windstream continues to experience pressure across all segments due to declining legacy-products-related revenue and effects of competition in a challenging operating environment for wireline operators. The enterprise segment remains weak due to effects of legacy revenue, although the strategic revenues, comprised of SDWAN and UCaaS offerings, continue to climb and constituted 54% of the enterprise segment sales during 3Q18. Fitch's base case assumes revenues continue to decline over the forecast horizon, albeit at a slowing pace supported by a growth in strategic revenue. Revenue Mix Changes: Windstream's revenues from enterprise services, consumer high-speed internet services and its carrier customers (core and wholesale), pro forma for the EarthLink consumer internet business sale, are in the mid-80% range; these revenues provide the best prospects for stable revenues in the long term. Certain legacy revenues remain pressured; however Fitch anticipates Windstream's revenues should stabilize gradually as legacy revenues dwindle in the mix. Leverage Metrics: Fitch estimates total adjusted debt/EBITDAR was approximately 5.8x at year-end 2018. Fitch anticipates Windstream to utilize proceeds from recent asset sales towards reducing debt balances. In the absence of material future debt reduction using asset sale proceeds, Fitch expects total adjusted debt/EBITDAR will remain in the high 5x range over the rating horizon supported by cost reductions and synergy realization. In calculating total adjusted debt, Fitch applies an 8x multiple to the sum of the annual rental payment to Uniti plus other rental expenses. Cost Savings and Synergies: Windstream is on track to realize the total stated synergies of $180 million from EarthLink and Broadview acquisitions. The company achieved the targeted $75 million in opex and $25 million in capex synergies by the end of 2017. In addition, realization of cost savings from interconnection expenses (approximately $140 million of annual savings) and moving "off-net" traffic "on-net" are key in supporting EBITDA over the next few years. Fitch believes realization of full run-rate of synergies is manageable and expects EBITDAR margin improvement in the range of 100 basis points (bps)-200bps by the end of 2019. Beyond 2019, Fitch will carefully monitor the pace and execution of cost cuttings that help support EBITDA levels in the future. Asset Sales: Fitch believes Windstream will continue to seek to monetize non-core assets. To that effect, the company recently announced sale of the legacy EarthLink consumer internet business housed under the Consumer CLEC segment for $330 million. In addition, Windstream completed $80 million of dark fiber asset sales in 2018. Fitch believes Windstream will utilize the asset sale proceeds to reduce revolver borrowings, providing the company the flexibility to invest internally in future capital projects. DERIVATION SUMMARY Windstream has a weaker competitive position based on scale and size of its operations in the higher-margin enterprise market. Larger companies, including AT&T Inc. (A-/Stable), Verizon Communications Inc. (A-/Stable), and CenturyLink, Inc. (BB/Stable), have an advantage with national or multinational companies given their extensive footprints in the U.S. and abroad. In comparison AT&T and Verizon maintain lower financial leverage, generate higher EBITDA margins and FCF, and have wireless offerings that provide more service diversification. Fitch also believes Windstream has a weaker FCF profile than CenturyLink including the LVLT acquisition, as CenturyLink's FCF will benefit from enhanced scale and LVLT's net operating loss carryforwards. Although Windstream has less exposure to the more volatile residential market compared to its wireline peer, Frontier Communications Corp. (B/Stable), it has higher leverage than Frontier. Within the residential market, incumbent wireline providers face wireless substitution and competition from cable operators with facilities-based triple play offerings, including Comcast Corp. (A-/Stable) and Charter Communications Inc. (Fitch rates Charter's indirect subsidiary, CCO Holdings, LLC, BB+/Stable). Cheaper alternative offerings such as Voice over Internet Protocol (VoIP) and over-the-top (OTT) video services provide additional challenges. Incumbent wireline providers have had modest success with bundling broadband and satellite video service offerings in response to these threats. No country-ceiling, parent/subsidiary or operating environment aspects impact the rating. KEY ASSUMPTIONS Fitch's Key Assumptions Within Its Rating Case for the Issuer -- Revenues total approx. $5.7 billion for 2018 and decline near mid-single digits in 2019, pro-forma for sale of Consumer CLEC segment. Fitch expects organic revenue to continue to decline over the forecast horizon, albeit at a slowing pace. -- EBITDA is expected to benefit from continued realization of cost synergies achieved from acquisitions and other cost savings. Fitch expects EBITDA margins to expand by roughly 70bps in 2018 and by 100 bps in 2019 as additional cost synergies and interconnect savings are realized. -- Fitch expects total adjusted debt/EBITDAR to remain in 5.8x-5.9x range over the rating horizon. Fitch assumed refinancing of revolver will be completed in the first few months of 2019 and that term loan will be refinanced at or prior to maturity. Recovery Analysis: The recovery analysis assumes that Windstream would be considered a going concern in a bankruptcy and that the company would be reorganized rather than liquidated. Fitch has assumed a 10% administrative claim. Windstream's going concern EBITDA is based on LTM EBITDA as of Sept. 30, 2018, pro forma for sale of CLEC consumer business and synergies. The going-concern EBITDA estimate reflects Fitch's view of a sustainable, post-reorganization EBITDA level, upon which Fitch bases the valuation of the company. A lower going-concern EBITDA factors in the competitive dynamics of the industry that result in account losses and pricing pressures. The overall decline also considers Windstream's cost cutting efforts as an offsetting factor. This leads to a post-reorganization EBITDA estimate of over $1 billion. The current network lease with Uniti is expected to remain unchanged. An EV multiple of 4.5x is used to calculate a post-reorganization valuation. Comparable market multiples in the industry range from 5.4x-8.7x and recent acquisition multiples range from 3.8x-6.6x. There are two bankruptcy cases analyzed in Fitch's TMT bankruptcy case study report - Fairpoint and Hawaiian Telecom - both of which filed bankruptcy in 2008 and emerged with multiplies of 4.6x and 3.7x, respectively. Both were also sold in recent acquisitions for 5.9x and 5.6x. The recovery multiple takes into account Windstream's weaker competitive position in the industry and the company's exposure to legacy assets. Fitch's multiple for Windstream's recovery analysis also considers dependence on legacy revenues that will decline in future, aided by revenue from acquisitions in cloud and connectivity space. Fitch has assumed a reduction in the revolver commitment amount from the current $1,250 million as asset sales proceeds have been used to reduce the revolver. The revolving facility is assumed to be fully drawn upon default. The waterfall analysis results in a 100% recovery corresponding to a 'RR1' Recovery Rating for the first-lien credit facility, revolving facility and the senior secured notes. The recovery for the second lien-notes is estimated at 'RR2'/83%. The senior secured tranche, including both first and second liens of Windstream's capital structure, benefits from a first and second priority lien, respectively, on all assets and capital stock of its subsidiaries (subject to regulatory approval) and a guaranty from Windstream's material direct and indirect domestic subsidiaries (except for subsidiaries of PAETEC Holding Corp and subject to regulatory approval). The waterfall also indicates an 'RR6' recovery for senior unsecured notes. RATING SENSITIVITIES Developments That May, Individually or Collectively, Lead to Positive Rating Action -- The company sustains total adjusted debt/EBITDAR below 5.0x-5.2x. -- Revenues and EBITDA would need to stabilize on a sustained basis. -- Continued execution on the integration of its recent transactions. -- If there is material reduction in leverage on a sustained basis following asset sales related repayment of debt. -- Fitch intends to resolve the Rating Watch once it can be sufficiently determined that the allegations under the notice will not affect Windstream's credit profile. Developments That May, Individually or Collectively, Lead to Negative Rating Action -- A negative rating action could occur if total adjusted debt/EBITDAR is 6.0x-6.2x or higher for a sustained period. -- The company no longer makes progress toward revenue and EBITDA stability due to competitive and business conditions. Any concerns or execution risks around realization of synergies or cost savings will negatively impact the ratings. -- The revolver is not refinanced, as assumed, in the first few months of 2019. -- Evidence of deterioration in liquidity, including lack of positive run-rate FCFs and declining FCF margin. -- Any negative developments related to the outcome of the receipt of notice of default. LIQUIDITY AND DEBT STRUCTURE The rating is supported by the liquidity provided by Windstream's $1.25 billion revolving credit facility (RCF). At Sept 30, 2018, approximately $196.6 million was available for borrowing under the revolving facility. The RCF is due to mature in 2020. Fitch believes the company will refinance the revolver in the coming months. Additionally, Fitch expects Windstream to utilize proceeds from recent asset sales to reduce borrowings under the revolver. The revolver availability was supplemented with $37.3 million in cash at the end of 3Q18. The $1.25 billion senior secured RCF is in place until April 2020. Principal financial covenants in Windstream's secured credit facilities require a minimum interest coverage ratio of 2.75x and a maximum leverage ratio of 4.5x. Outside of annual term loan amortization payments, Windstream does not have any material maturities until 2020 when the revolving facility and approximately $78 million of 2020 notes become due. The second lien exchanges consummated in 2018 helped push out maturities on average by two years, while reducing the overall debt by approximately $227 million and improving the liquidity profile in the interim. Fitch expects capital spending to remain in the 13%-15% range and estimates FCF in 2018 will range from zero to negative $100 million. For 2019, Fitch expects the company to return to positive FCF with FCF margins in the low single digits over the forecast. WOODBRIDGE GROUP: Seeks to Extend Exclusive Period to April 29 -------------------------------------------------------------- Woodbridge Group of Companies, LLC asked the U.S. Bankruptcy Court for the District of Delaware to extend the period during which it has the exclusive right to file a Chapter 11 plan through April 29, and to solicit acceptances for the plan through July 1. The extension, if granted by the court, would allow the company and its affiliates to take the necessary steps to effectuate their Chapter 11 plan of liquidation, according to their attorney Betsy Feldman, Esq., at Young Conaway Stargatt & Taylor, LLP. Effectuation of the plan, which the court confirmed in October last year, requires the companies to close certain sale transactions. Some buyers, however, have requested additional time to close the sales. The companies are targeting emergence from bankruptcy within the first quarter of this year, according to court filings. About Woodbridge Group Headquartered in Sherman Oaks, California, The Woodbridge Group Enterprise -- http://www.woodbridgecompanies.com/-- is a comprehensive real estate finance and development company. Its principal business is buying, improving, and selling high-end luxury homes. The Woodbridge Group Enterprise also owns and operates full-service real estate brokerages, a private investment company, and real estate lending operations. The Woodbridge Group Enterprise and its management team have been in the business of providing a variety of financial products for more than 35 years, and have been primarily focused on the luxury home business for the past five years. Since its inception, the Woodbridge Group Enterprise has completed more than $1 billion in financial transactions. These transactions involve real estate, note buying and selling, hard money lending, and alternative financial transactions involving thousands of investors. Woodbridge Group of Companies and certain of its affiliates filed Chapter 11 bankruptcy petitions (Bankr. D. Del. Lead Case No. 17-12560) on Dec. 4, 2017. Woodbridge estimated assets and liabilities at between $500 million and $1 billion. The Chapter 11 cases are being jointly administered. Judge Kevin J. Carey presides over the case. Samuel A. Newman, Esq., Oscar Garza, Esq., Daniel B. Denny, Esq., Jennifer L. Conn, Esq., Eric J. Wise, Esq., Matthew K. Kelsey, Esq., and Matthew P. Porcelli, Esq., at Gibson, Dunn & Crutcher, LLP, and Sean M. Beach, Esq., Edmon L. Morton, Esq., Ian J. Bambrick, Esq., and Allison S. Mielke, Esq., at Young Conaway Stargatt & Taylor, LLP, serve as the Debtors' bankruptcy counsel. Homer Bonner Jacobs, PA, as special counsel, Province, Inc., as expert consultant, Moelis & Company LLC, as investment banker. The Debtors' financial advisors are Larry Perkins, John Farrace, Robert Shenfeld, Reece Fulgham, Miles Staglik, and Lissa Weissman at SierraConstellation Partners, LLC. Beilinson Advisory Group is serving as independent management to the Debtors. Garden City Group, LLC, is the Debtors' claims and noticing agent. Venable LLP is the Fiduciary Committee of Unitholders' legal counsel. Drinker Biddle & Reath LLP is counsel to the Ad Hoc Group of Noteholders, and Conway MacKenzie, Inc., as its financial advisor. Pachulski Stang Ziehl & Jones is counsel to the Official Committee of Unsecured Creditors; and FTI Consulting, Inc., serves as its financial advisor. An official committee of unsecured creditors was appointed in the Chapter 11 cases on Dec. 14, 2017. On Jan. 23, 2018, the Court approved a settlement providing for the formation of an ad hoc noteholder group and an ad hoc unitholder group. YAKIMA VALLEY HOSPITAL: Moody's Cuts $32MM Revenue Bonds to Ba1 --------------------------------------------------------------- Moody's Investors Service has downgraded Yakima Valley Memorial Hospital's (WA), (d/b/a Virginia Mason Memorial) revenue bond rating to Ba1 from Baa3, affecting approximately $32 million of debt. Bonds were issued by the Washington Health Care Facilities Authority. The outlook remains negative at the lower rating level. RATINGS RATIONALE The downgrade to Ba1 reflects its expectation of continued weak performance in fiscal 2019 following a miss to budget in fiscal 2018. While the organization is budgeting for some operational improvement in 2019, Yakima faces headwinds to significantly improve and return cash flow margins to historical levels. Strengths of the organization include leading market share, favorable debt structure, and benefits from the organization's affiliation with Virginia Mason Medical Center. RATING OUTLOOK The negative outlook reflects its expectation of still modest margins in fiscal 2019, despite expectations of improvement, reflecting continued cost and market challenges. FACTORS THAT COULD LEAD TO AN UPGRADE - Material and sustained improvement in operating margins in line with Baa3 medians - Measurably strengthened liquidity position FACTORS THAT COULD LEAD TO A DOWNGRADE - Inability to meet budget and meaningfully improve operating performance - A decline in cash reserves and relative liquidity metrics - Weaker volume trends or deterioration of organization's competitive position - Failure to meet debt covenants LEGAL SECURITY Bonds are secured by a receivables pledge and a lien on the primary hospital campus. There is also a debt service reserve fund. Key financial covenants include minimum days cash on hand of 40 days, and debt service coverage of 1.2x. PROFILE Yakima Valley Memorial Hospital d/b/a Virginia Mason Memorial is a 226 staffed bed community hospital located in Yakima, WA. The system employees nearly 125 physicians, representing approximately 47% of the active medical staff. ********* 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. 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