/raid1/www/Hosts/bankrupt/TCR_Public/190524.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Friday, May 24, 2019, Vol. 23, No. 143
Headlines
801 HOUSTON AVE: U.S. Trustee Unable to Appoint Committee
ABC PM 652 S SUNSET: Case Summary & 9 Unsecured Creditors
AIRXCEL INC: S&P Affirms 'B' Issuer Credit Rating; Off CreditWatch
ARCADIA GROUP (USA): Chapter 15 Case Summary
BECTON DICKINSON: Moody's Assigns Ba1 Rating to Sr. Unsec. Notes
BIG ASS FANS: Moody's Affirms 'B2' CFR, Outlook Stable
BIG ASS FANS: S&P Affirms 'B' ICR on Debt Issuance; Outlook Stable
BRAZORIA HYDROCARBON: U.S. Trustee Unable to Appoint Committee
CAMBER ENERGY: Holder Converts 44,000 Series B Preferred Shares
CARVANA CO: Moody's Affirms B3 CFR & Caa2 Sr. Unsec. Notes Rating
CARVANA CO: S&P Affirms CCC+ ICR After Capital Raise
CATALYST LIFESTYLES: Involuntary Chapter 11 Case Summary
CLOUD PEAK: U.S. Trustee Forms 7-Member Committee
COASTAL CARDIOLOGY: Seeks to Hire William Johnson as Legal Counsel
COLFAX CORP: S&P Affirms BB+ Issuer Credit Rating; Off Watch Neg.
COMMUNITY BUILDERS: Case Summary & Unsecured Creditor
COX LAND & TIMBER: Examiner Taps McNair as Forensic Accountant
DAVID'S BRIDAL: S&P Downgrades ICR to 'CCC+'; Outlook Negative
DJM HOLDINGS: Seeks to Hire Forbes Law as Legal Counsel
DUNCAN BURCH: Seeks to Hire Forshey & Prostok as Legal Counsel
EAGLE SUPER: S&P Lowers ICR to B- on Weak 2018 Operating Results
EASTERN POWER: S&P Cuts Sec. Debt Rating to 'BB-'; Outlook Stable
ELK PETROLEUM: Case Summary & 2 Unsecured Creditors
FALCON V: U.S. Trustee Forms 3-Member Committee
GLASS MOUNTAIN: S&P Alters Outlook to Negative, Affirms 'B' ICR
GLOBAL EAGLE: Chief Accounting Officer Resigns
HAAKINSON INC: Voluntary Chapter 11 Case Summary
HANJIN INT'L: Moody's Affirms B2 CFR, Outlook Still Stable
HEXION INC: 1.5 Lien Group Holds $153 Million of 1.5L Notes
HEXION INC: 1st Lien Group Own $875M of 6.625% of 1st Lien Notes
HEXION INC: Johnson Law Firm Represents Utilities
IAA SPINCO: S&P Rates $400MM Senior Unsecured Notes Due 2027 'B'
ICONIX BRAND: S&P Affirms 'CCC' ICR on Continued Weak Performance
INDY FACETS: Seeks to Hire Redman Ludwig as Legal Counsel
JAGUAR HEALTH: Incurs $8.30 Million Net Loss in First Quarter
JAMES O BRADY: Bankruptcy Administrator to Form Committee
JEFF HUBBARD: U.S. Trustee Unable to Appoint Committee
KONA GRILL: 2 Creditors Appointed New Committee Members
LIMORA INVESTMENTS: Chapter 15 Case Summary
LONG BLOCKCHAIN: Hikes Authorized Common Shares to 135 Million
MONITRONICS INTERNATIONAL: Signs Restructuring Support Agreement
MTM AND ASSOCIATES: Case Summary & 2 Unsecured Creditors
NATURE'S SECOND CHANCE: June 24 Disclosure Statement Hearing
NATURE'S SECOND: June 24 Disclosure Statement Hearing
NCI NEW CAPITAL: Chapter 15 Case Summary
PIONEER ENERGY: All 4 Proposals Approved at Annual Meeting
POC PROPERTIES: Court Confirms 2nd Amended Plan
POWERTEAM SERVICES: S&P Lowers ICR to 'B-'; Outlook Negative
PRESTIGE HEALTH: Case Summary & 3 Unsecured Creditors
PWR INVEST: Voluntary Chapter 11 Case Summary
PWR OIL & GAS: Voluntary Chapter 11 Case Summary
SANTA ROSA ACADEMY: S&P Alters Outlook to Pos., Affirms BB+ Rating
VICTORY CAPITAL: S&P Downgrades ICR to 'BB-' on Higher Leverage
YUMA ENERGY: Reports Updated Corporate Developments
[^] BOOK REVIEW: GROUNDED: Destruction of Eastern Airlines
*********
801 HOUSTON AVE: U.S. Trustee Unable to Appoint Committee
---------------------------------------------------------
The Office of the U.S. Trustee on Msy 21 disclosed in a court
filing that no official committee of unsecured creditors has been
appointed in the Chapter 11 case of 801 Houston Ave Property LLC.
About 801 Houston Ave Property
801 Houston Ave Property LLC is a single asset real estate (as
defined in 11 U.S.C. Section 101(51B)).
801 Houston Ave Property sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. S.D. Texas Case No. 19-32076) on April 11,
2019. At the time of the filing, the Debtor had estimated assets
of between $1 million and $10 million and liabilities of between $1
million and $10 million.
The case has been assigned to Judge David R. Jones. The Debtor is
represented by Fuqua & Associates, P.C.
ABC PM 652 S SUNSET: Case Summary & 9 Unsecured Creditors
---------------------------------------------------------
Debtor: ABC PM 652 S Sunset LLC
652 S. Sunset Avenue
West Covina, CA 91790
Business Description: ABC PM 652 S Sunset LLC is a privately
held company that provides property
management services.
Chapter 11 Petition Date: May 22, 2019
Court: United States Bankruptcy Court
Central District of California (Los Angeles)
Case No.: 19-16004
Judge: Hon. Barry Russell
Debtor's Counsel: John H. Bauer, Esq.
FINANCIAL LEGAL ADVOCATES, INC.
56925 Yucca Trail, #512
Yuca Vally, CA 92264
Tel: (714) 319-3446
Fax: (714) 202-5862
Email: johnbhud@aol.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Juana M. Roman, managing member.
A copy of the Debtor's list of nine unsecured creditors is
available for free at:
http://bankrupt.com/misc/cacb19-16004_creditors.pdf
A full-text copy of the petition is available for free at:
http://bankrupt.com/misc/cacb19-16004.pdf
AIRXCEL INC: S&P Affirms 'B' Issuer Credit Rating; Off CreditWatch
------------------------------------------------------------------
S&P Global Ratings removed all of Airxcel Inc.'s ratings, including
the 'B' issuer credit rating, from CreditWatch with negative
implications, where they were placed on Dec. 6, 2018. S&P has also
affirmed the 'B' issuer credit rating, the 'B' issue-level rating
on the first-lien term loan, and the 'CCC+' issue-level rating on
the second-lien term loan.
The negative outlook reflects headwinds in the company's RV
segment, and S&P's forecast for adjusted debt to EBITDA to be
6.5x-7.0x and adjusted EBITDA interest coverage in the high-1x area
in 2019.
"We expect RV original equipment manufacturer (OEM) wholesale
shipments will decline year over year in the first half of 2019,
although the decline should begin to moderate in the second-half,"
S&P said. "However, we have not lowered our ratings on Airxcel
because EBITDA performance in first-quarter 2019 suggests the
company can cope with the sales decline in a manner that does not
trigger our 7x leverage threshold for a downgrade, primarily
because the company's cost structure is largely variable."
S&P said the outlook is negative, reflecting significant challenges
in the company's RV segment and the rating agency's forecast for
adjusted debt to EBITDA to be 6.5x-7.0x and adjusted EBITDA
interest coverage in the high-1x area in 2019. S&P expects RV OEM
wholesale shipments will decline year-over-year in the first half
of 2019, with the decline moderating in the second half.
"We could lower the rating if adjusted leverage is sustained above
7x or adjusted EBITDA interest coverage is sustained at less than
2x, and Airxcel experiences reduced liquidity that puts pressure on
its ability to pay interest payments, principal amortization, and
capital expenditures," S&P said, adding that it could also lower
the rating if Airxcel develops further reliance on the ABL revolver
and the springing fixed-charge coverage ratio covenant becomes
tested with less than 15% cushion for compliance.
"We could revise the outlook to stable if we become confident that
adjusted debt to EBITDA can be sustained at less than 7x. While
unlikely at the current time because of very high leverage and the
company's financial sponsor ownership, we could raise the rating if
retail RV sales recover and we are confident the company can
sustain adjusted leverage below 5x," S&P said.
ARCADIA GROUP (USA): Chapter 15 Case Summary
--------------------------------------------
Chapter 15 Debtor: Arcadia Group (USA) Limited
(in Administration)
Colegrave House
70 Berners Street
London, W1 T3NL
United Kingdom
Business Description: Arcadia Group is a London-based
operator of a number of retail stores
throughout the United States, selling
clothing and accessories under the
brand name Top Shop and Top Man.
Visit https://www.arcadiagroup.co.uk
for more information.
Chapter 15 Petition Date: May 22, 2019
Court: United States Bankruptcy Court
Southern District of New York
(Manhattan)
Chapter 15 Case No.: 19-11650
Judge: Hon. James L. Garrity Jr.
Foreign Representatives: Daniel Francis Butters and
Ian C. Wormleighton
1 New Street Square
London EC4A 3HQ
United Kingdom
Foreign Proceeding: English law administration proceeding
under the Insolvency Act 1986
Foreign Representatives'
Counsel: Jamila J. Willis, Esq.
DLA PIPER LLP (US)
1251 Avenue of the Americas
New York, NY 10020
Tel: 212-335-4500
Fax: 212-335-4501
Email: jamila.willis@dlapiper.com
- and -
Richard A. Chesley, Esq.
Oksana Koltko Rosaluk, Esq.
DLA PIPER LLP (US)
444 West Lake Street, Suite 900
Chicago, Illinois 60606
Tel: (312) 368-4000
Fax: (312) 236-7516
Email: richard.chesley@dlapiper.com
oksana.koltkorosaluk@dlapiper.com
Claims &
Noticing Agent: EPIQ CORPORATE RESTRUCTURING, LLC
(f/k/a Bankruptcy Services LLC)
777 Third Avenue, 12th Floor
New York, NY 10017
Tel: 646-282-2500
https://dm.epiq11.com/case/AGO/dockets
Estimated Assets: Unknown
Estimated Debts: Unknown
A full-text copy of the Chapter 15 petition is available for free
at:
http://bankrupt.com/misc/nysb19-11650.pdf
BECTON DICKINSON: Moody's Assigns Ba1 Rating to Sr. Unsec. Notes
----------------------------------------------------------------
Moody's Investors Service assigned Ba1 ratings to the senior
unsecured notes to be offered by Becton Dickinson Euro Finance
S.a.r.l. ("BD Euro Finance"), a newly-formed wholly owned financing
subsidiary of Becton, Dickinson and Company ("BD"). Net proceeds
from the notes and cash on hand will be used to repay existing
indebtedness and to cover associated fees and expenses. As part of
the refinancing, BD plans to repay at maturity its euro 1 billion
notes due in June 2019 and to tender for certain other outstanding
notes of BD. All other ratings for the company remain unchanged.
The outlook of BD is positive.
Moody's views the note offering and associated tender offer as
credit positive for BD. The company will benefit from lower cash
interest costs and will extend its debt maturity profile. The
transaction will be largely leverage neutral, with the exception of
some premiums paid. BD's euro denominated debt serves as a hedge to
the company's euro denominated assets and cash flows.
BD Euro Finance's principal activities include debt issuance and
intercompany group financing and it has no subsidiaries. It holds
no material assets and does not engage in any other business
activities. Its obligations under the proposed notes will be fully
and unconditionally guaranteed by BD on an unsecured basis. The
notes are rated Ba1 reflecting the senior unsecured rating of BD as
the guarantor.
Ratings assigned:
Becton Dickinson Euro Finance S.a.r.l.
New EUR senior unsecured notes, Ba1 (LGD 4)
RATINGS RATIONALE
BD's Ba1 Corporate Family Rating reflects its high financial
leverage with debt/EBITDA near 4.2 times for the most recent LTM
period. The rating also reflects the company's rapid pace of
acquisitions, evidenced by the announcement of the $25.2 billion
acquisition of C.R. Bard approximately two years after the $12.5
billion acquisition of CareFusion. The ratings reflect the
company's meaningful scale in the medical device industry with
revenues exceeding $17 billion and global reach, with approximately
43% of sales generated outside the United States. The company is
well diversified, with market leading positions across multiple
product categories. The company has made significant progress
integrating the Bard acquisition and Moody's expects BD to achieve
$300 million of cost savings by fiscal 2020.
BD's SGL-1 Speculative Grade Liquidity Rating reflects its very
good liquidity profile. The company's liquidity profile benefits
from its holdings of approximately $700 million in cash, and
Moody's expects free cash flow (after capital expenditures and
dividends) will exceed $2 billion in the next year. BD also has
full access to a substantially undrawn $2.25 billion revolving
credit facility. Moody's expects BD will use free cash flow to
redeem maturing debt in the next year as the company executes on
its deleveraging plans.
Ratings could be upgraded if the company continues to reduce
leverage while maintaining a balanced approach to capital
allocation. BD would also need to continue to successfully
integrate the Bard acquisition. Quantitatively, ratings could be
upgraded if debt/EBITDA approaches 3.5 times.
Ratings could be downgraded if the company encounters problems
integrating Bard or if the company pursues meaningful debt-financed
acquisitions while leverage remains at elevated levels.
Quantitatively, ratings could be downgraded if Moody's expects
debt/EBITDA to be sustained above 4.25 times.
Becton, Dickinson and Company, headquartered in Franklin Lakes, New
Jersey, is a global medical technology company engaged in the
development, manufacture and sale of a broad range of medical
supplies, devices, and laboratory equipment used by healthcare
institutions, physicians, clinical laboratories, and the general
public. Revenues are approximately $17 billion.
BIG ASS FANS: Moody's Affirms 'B2' CFR, Outlook Stable
------------------------------------------------------
Moody's Investors Service affirmed all of the ratings of Big Ass
Fans, LLC ("BAF"), including its B2 Corporate Family Rating, B2-PD
Probability of Default, B2 on the company's $40 million first-lien
revolver, and the B2 rating on its $344 million (upsized by $100
million) first-lien term loan. The outlook is stable.
The $100 million incremental term loan proceeds will be used to
repay a $29 million seller note, fund a $69 million distribution to
shareholders, and pay $2 million of fees and expenses. This will be
the second dividend paid to BAF's current owner, Lindsay Goldberg,
since the latter bought BAF in December 2017. The first dividend of
$10 million was paid in the quarter ended December 31, 2018.
The following ratings were affirmed:
-- B2 Corporate Family Rating
-- B2-PD Probability of Default Rating
-- B2 (LGD4 from LGD3) rating on the $40 million
first-lien senior secured revolver due 2022
-- B2 (LGD4 from LGD3) rating on the $344 million
(upsized by $100 million) first-lien senior secured
term loan due 2024
-- Stable outlook
RATINGS RATIONALE
The B2 rating reflects BAF's small size in the universe of
manufacturing companies; the fact that notable top line growth
continues to elude the company despite its possessing a very
recognizable and highly memorable brand name with a favorable
reputation and a sterling customer list; and the fact that a
sizable portion of this incremental term loan will return to
Lindsay Goldberg several years of expected free cash flow
generation. If these expectations of future free cash flows should
fail to materialize, the ratings could be adversely affected.
At the same time, the B2 acknowledges that BAF has made sizable
cost cuts, rationalized operations, and has worked to
professionalize its sales staff. As a result, BAF has been able to
improve EBITA margins dramatically and reduce debt leverage. Pro
forma for the incremental $100 million term loan, Moody's adjusted
debt to EBITDA rises to 6.0x from 4.9x at March 31, 2019. This
compares to a Moody's adjusted debt to EBITDA of 8.4x at year-end
2017. And, as noted above, the company possesses a powerful brand
name with a reputation for quality, with 72% of Fortune 500
companies as customers.
The stable outlook incorporates Moody's expectation that while
dividends will continue that will increase debt leverage, BAF has
the ability and willingness to delever and return debt leverage to
acceptable B2 levels.
Ratings are unlikely to be raised in the short term given BAF's
current debt leverage and its owner's willingness to take dividends
out. In the longer term, ratings would benefit from a large
increase in the company's size, a supportive posture from the
company's owner, and a reduction in Moody's adjusted debt/EBITDA to
sustainably below 5x.
The ratings could be downgraded if debt/EBITDA remains above 6.25x,
EBITA to interest falls below 1.5x, and/or Moody's expects a
substantial reduction in EBITA margins.
The company's liquidity is supported by expected positive free cash
flow generation, a $40 million secured revolver that had $12
million drawn as of March 31, 2019, and a relatively generous
springing 8.25x net debt/EBITDA covenant that is tested only upon a
35% utilization ($14 million) of the revolver.
The revolver and term loan are rated at the same B2 level as the
Corporate Family Rating because they essentially constitute the
entirety of the debt capital structure.
Founded in 1999 and headquartered in Lexington, Kentucky, Big Ass
Fans, LLC was one of the pioneers in the high volume, low speed and
connected fan markets. Revenues in 2018 were $251 million.
BIG ASS FANS: S&P Affirms 'B' ICR on Debt Issuance; Outlook Stable
------------------------------------------------------------------
S&P Global Ratings affirmed its 'B' issuer credit rating on Big Ass
Fans LLC's and its 'B' issue-level rating on the $100 million
first-lien term loan, which the company plans to issue to refinance
its seller note and pay a dividend to its owners. The '3' recovery
rating is unchanged.
"The affirmation reflects our view that BAF's credit metrics will
remain in line with our previous leverage expectations, despite the
debt-financed dividend," S&P said. While the company is raising
approximately $70 million of incremental debt (net of the seller
note repayment), the rating agency believes that its recent
operating improvements will contribute to higher margins and
EBITDA, and modest deleveraging over the next 12 months.
The stable outlook reflects S&P's expectation that despite the
announced debt-funded dividend, BAF's steady operating performance,
planned product launches, and contracts with industrial suppliers
will allow the company to maintain adjusted debt to EBITDA of
5.5x-6x over the next 12 months.
S&P said it could lower the rating on BAF if adjusted debt to
EBITDA were sustained at 6.5x. This could occur if there were a
significant decline in profitability due to general economic
weakness, which would decrease demand for its products; if it were
to face material unforeseen challenges in its operational
improvements plans; or if BAF were to engage in additional
leveraging transactions, according to the rating agency.
"While unlikely over the next 12 months, we could raise our rating
on BAF if it were to exhibit stronger than expected revenue growth
and continued margin expansion resulting from recent restructuring
or new product launches, sustaining adjusted debt to EBITDA well
below 5x," S&P said, adding that the rating agency would also
expect it to demonstrate financial policies, particularly around
acquisitions and shareholder returns, that support sustained lower
leverage.
BRAZORIA HYDROCARBON: U.S. Trustee Unable to Appoint Committee
--------------------------------------------------------------
The Office of the U.S. Trustee on May 21 disclosed in a court
filing that no official committee of unsecured creditors has been
appointed in the Chapter 11 case of Brazoria Hydrocarbon, LLC.
About Brazoria Hydrocarbon
Brazoria Hydrocarbon, LLC is a private company in Hempstead, Texas,
in the hydrocarbon gases business.
Brazoria Hydrocarbon sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. S.D. Texas Case No. 19-32170) on April 17,
2019. At the time of the filing, the Debtor had estimated assets
of between $1 million and $10 million and liabilities of between $1
million and $10 million.
The case has been assigned to Judge Jeffrey P Norman. The Debtor
is represented by The Law Office of Margaret M. McClure.
CAMBER ENERGY: Holder Converts 44,000 Series B Preferred Shares
---------------------------------------------------------------
Camber Energy, Inc., entered into an Agreed Conversion Agreement
with Alan Dreeben, the then holder of all 44,000 shares of the
Company's then outstanding Series B Redeemable Convertible
Preferred Stock. Pursuant to the Conversion Agreement, Mr. Dreeben
agreed to convert all of the Series B Preferred Stock which he held
into 503 shares of the Company's common stock pursuant to the
stated terms of such Series B Preferred Stock, in consideration for
$25,000 in cash. Mr. Dreeben also provided the Company a release
in connection with certain of his rights under the Series B
Preferred Stock (including any and all accrued and unpaid
dividends) and the prior December 2015 Asset Purchase Agreement
completed by the Company, of which Mr. Dreeben, who was formerly a
member of our Board of Directors, was a seller.
As a result of the Conversion Agreement, and subsequent to the
issuance of the common stock shares due thereunder, which shares
the Company plans to issue this week, the Company will have no
shares of Series B Preferred Stock issued or outstanding, and an
aggregate of $1,100,000 of the liquidation preference of the Series
B Preferred Stock will be terminated and released.
One of the reasons for entering into the Conversion Agreement was
so that no shares of Series B Preferred Stock would be outstanding
upon the closing of the acquisition.
The closing of Camber's Lineal transaction, which is an all-stock
transaction, is subject to customary closing conditions,
negotiation of final transaction documents and transaction terms,
including structuring the transaction to be on a tax free basis,
and other conditions, including, but not limited to the consent of
the holder of its Series C Preferred Stock, executing an agreement
with Camber's Series C Preferred Stock holder amending the Series C
Preferred Stock to alter the conversion rights thereof, and
obtaining the requisite NYSE American approval, which conditions
may not be satisfied in a timely manner, if at all. The
transaction contemplates the issuance of a new series of
convertible preferred stock which will be convertible into 67-70%
of the fully diluted common stock of Camber after shareholder
approval, as required under the applicable NYSE American rules and
requirements. Upon receipt of shareholder approval, it is
contemplated that the shareholders of Lineal will have voting
control of the Company.
The transaction may not close timely, on the terms set forth in the
previously executed Letter of Intent, or at all. The transaction
is subject to the conditions above, and the parties contemplate
entering into a definitive agreement in connection with the
transaction in the next ten days, which agreement and definitive
terms associated therewith will be included on a Form 8-K filed by
the Company.
About Camber Energy
Based in San Antonio, Texas, Camber Energy, Inc. (NYSE American:
CEI) -- http://www.camber.energy/-- is an independent oil and gas
company engaged in the development of crude oil, natural gas and
natural gas liquids in the Hunton formation in Central Oklahoma in
addition to anticipated project development in the Texas Panhandle.
Camber Energy is engaged in the acquisition, development and sale
of crude oil, natural gas and natural gas liquids from various
known productive geological formations, including from the Hunton
formation in Lincoln, Logan, Payne and Okfuskee Counties, in
central Oklahoma; the Cline shale and upper Wolfberry shale in
Glasscock County, Texas; and Hutchinson County, Texas, in
connection with its Panhandle acquisition which closed in March
2018.
Camber Energy reported a net loss of $24.77 million for the year
ended March 31, 2018, compared to a net loss of $89.12 million for
the year ended March 31, 2017. As of Dec. 31, 2018, Camber Energy
had $10.10 million in total assets, $2.48 million in total
liabilities, and $7.62 million in total stockholders' equity.
GBH CPAs, PC's audit opinion included in the Company's Annual
Report on Form 10-K for the year ended March 31, 2018, contains a
going concern explanatory paragraph stating that the Company has
incurred significant losses from operations and had a working
capital deficit as of March 31, 2018. These factors raise
substantial doubt about the Company's ability to continue as a
going concern.
CARVANA CO: Moody's Affirms B3 CFR & Caa2 Sr. Unsec. Notes Rating
-----------------------------------------------------------------
Moody's Investors Service affirmed all ratings of Carvana Co.,
including its B3 Corporate Family Rating; B3-PD Probability of
Default Rating and Caa2 senior unsecured rating. Carvana is
currently in the process of issuing a $250 million add-on to its
existing senior unsecured notes. Moody's also affirmed Carvana's
Speculative Grade Liquidity rating of SGL-4. The outlook is
stable.
"Carvana is progressing with its growth plans, and results are
generally in-line with our expectations," stated Moody's Vice
President Charlie O'Shea. "Unit volumes are increasing steadily,
gross profit per vehicle is improving, and early markets are
performing well, indicating that the concept is resonating with
consumers, and the new funds will be utilized to fund continued
growth," continued O'Shea. " Additionally, liquidity which is still
weak improved modestly via a longer-term facility with Ally."
Outlook Actions:
Issuer: Carvana Co.
-- Outlook, Remains Stable
Affirmations:
Issuer: Carvana Co.
-- Probability of Default Rating, Affirmed B3-PD
-- Speculative Grade Liquidity Rating, Affirmed SGL-4
-- Corporate Family Rating, Affirmed B3
-- Senior Unsecured Regular Bond/Debenture, Affirmed Caa2 (LGD5)
RATINGS RATIONALE
Carvana's credit profile (B3 stable) highlights its meaningful lack
of profitability, weak liquidity, offset by its favorable position
in the used car retail segment, its unique ordering and delivery
models, and significant management expertise in both the auto and
tech segments. The stable outlook reflects Moody's expectation that
Carvana's quantitative profile will improve sequentially as the
business scales. Given the lack of profitability, an upgrade in the
near term is unlikely. Over time, upward momentum would generate
once EBITDA turns positive with at least adequate liquidity.
Ratings could be downgraded if operating performance levels do not
continue to progress such that profitability on a quarterly basis
during 2020 is unlikely, or if liquidity weakens.
Headquartered in Tempe, Arizona, Carvana is an online-only used car
retailer with LTM revenues (ending March 2019) of slightly over
$2.5 billion.
CARVANA CO: S&P Affirms CCC+ ICR After Capital Raise
----------------------------------------------------
S&P Global Ratings affirmed its 'CCC+' issuer credit rating on
Carvana Co. to reflect the company's improved liquidity after it
raised $480 million by issuing about $230 million of common stock
and a $250 million add-on to its existing senior unsecured notes
due 2023.
At the same time, S&P revised its recovery rating on the company's
senior unsecured notes to '4' from '3' and affirmed its 'CCC+'
issue-level rating. The '4' recovery rating indicates S&P's
expectation for average (30%-50%: rounded estimate: 45%) recovery
in the event of a payment default.
The affirmation reflects Carvana's improved liquidity, which
partially offsets the risks related to its negative EBITDA, highly
negative free cash flow, and limited operating history (especially
while managing rapid growth).
"The stable outlook on Carvana reflects that it is unlikely the
company will generate positive EBITDA over the next 12 months
despite our expectation for continued revenue and profitability
improvements," S&P said. Specifically, the rating agency
anticipates that the company will continue to generate negative
free cash flow while maintaining adequate liquidity to support its
aggressive growth plans.
"We could raise our ratings on Carvana if it generates positive
EBITDA and demonstrates a path toward positive free cash flow after
adjusting for growth capex. This could occur if the company
increases its gross profit per unit (GPU) to nearly $3,000 and
attains sufficient scale such that its sales and marketing spending
becomes more efficient on a national scale," S&P said. This would
imply that the company's financial commitments are more
sustainable, according to the rating agency.
"Though unlikely over the next 12 months, we could lower our
ratings on Carvana if it is unable to expand fast enough to reach
the scale needed to generate positive EBITDA and, eventually,
positive free cash flow. This could be caused by the failure of its
online business model to attract sufficient customers in new
markets, increased competition, or a failure to improve its
inventory turns or reduce its vehicle acquisition costs," S&P said.
The company's standing in the credit and equity markets would also
need to decline such that it would be unlikely to continue
financing its aggressive growth while burning cash, according to
the rating agency.
CATALYST LIFESTYLES: Involuntary Chapter 11 Case Summary
--------------------------------------------------------
Alleged Debtor: Catalyst Lifestyles Sport Resort, LLC
2007 McCord Road
Valparaiso, IN 46383
Business Description: Catalyst Lifestyles Sport Resort
is a Single Asset Real Estate Debtor
(as defined in 11 U.S.C. Section
101(51B).
Involuntary Chapter 11
Petition Date: May 22, 2019
Court: United States Bankruptcy Court
Northern District of Indiana
(Hammond Division)
Case No.: 19-21386
Judge: Hon. James R. Ahler
Petitioners' Counsel: Michael D. Babcock, Esq.
LAYER, TANZILLO, STASSIN & BABCOCK
1160 Joliet Street, Suite 201
Dyer, IN 46311
Tel: 219-865-6262
Fax: 219-865-9230
Email: mdb@ltsblaw.net
List of Petitioners:
Petitioners Nature of Claim Claim Amount
----------- --------------- ------------
Tall Trees Capital, LLC Services $40,000
1308 Lake Shore Dr N
Barrington, IL 60010-0000
Tanzillo Stassin & Babcock p.c. Services $13,730
c/o Michael Babcock
1160 Joliet Street, Suite 201
Dyer, IN 46311-0000
Assurance Agency, Ltf Unpaid Invoice $483
1750 E Golf Rd for insurance
Schaumburg, IL 60173-0000 coverage
A full-text copy of the Involuntary Petition is available for free
at: http://bankrupt.com/misc/innb19-21386.pdf
CLOUD PEAK: U.S. Trustee Forms 7-Member Committee
-------------------------------------------------
Andrew Vara, acting U.S. trustee for Region 3, on May 22 appointed
seven creditors to serve on the official committee of unsecured
creditors in the Chapter 11 cases of Cloud Peak Energy Inc. and its
affiliates.
The committee members are:
(1) BOKF, National Association
Attn: George Kubin
1600 Broadway, 3rd Floor
Denver, CO 80202
Phone: 303-864-7206
(2) Nelson Brothers Mining Services, LLC
Attn: Jason Baker
820 Shades Creek Pkwy, Suite 2000
Birmingham, AL 35209
Phone: 205-802-5341
(3) Wyoming Machinery Company
Attn: Jim Thorpen
5300 W. Old Yellowstone Hwy
Casper, WY 82604
Phone: 307-472-1000, Ext. 4440
Fax: 307-261-4489
(4) Cummins Inc.
Attn: Andy Schilling
7401 Church Ranch Blvd, Suite 206
Westminster, CO 80021
Phone: 303-287-0201
Fax: 303-927-2040
(5) ESCO Group, LLC
Attn: Mark Teeter
2141 NW 25th Avenue
Portland, OR 97210
Phone: 503-778-6297
(6) Tractor & Equipment Co.
Attn: Roger Benford
17035 West Valley Highway
Tukwila, WA 98188
Phone: 425-251-9810
Fax: 425-251-6281
(7) Kennebec Global
Attn: Chris Arbuthnot
26 Coddington Wharf
Newport, RI 02840
Phone: 617-999-9874
Fax: 401-229-6387
Official creditors' committees serve as fiduciaries to the general
population of creditors they represent. They may investigate the
debtor's business and financial affairs. Committees have the right
to employ legal counsel, accountants and financial advisors at a
debtor's expense.
About Cloud Peak Energy
Cloud Peak Energy Inc. -- http://www.cloudpeakenergy.com/-- is a
coal producer headquartered in Gillette, Wyo. It mines low sulfur,
subbituminous coal and provides logistics supply services. Cloud
Peak owns and operates three surface coal mines and owns rights to
undeveloped coal and complementary surface assets in the Powder
River Basin. It is a sustainable fuel supplier for approximately
two percent of the nation's electricity.
Cloud Peak Energy and its affiliates sought protection under
Chapter 11 of the Bankruptcy Code (Bankr. D. Del. Lead Case No.
19-11047) on May 10, 2019. The Debtors disclosed $928,656,000 in
assets and $634,982,000 in liabilities.
The cases have been assigned to Judge Kevin Gross.
The Debtors tapped Vinson & Elkins LLP as lead counsel; Richards,
Layton & Finger, P.A. as local counsel; Centerview Partners LLC as
investment banker; FTI Consulting Inc. as operational advisor; and
Prime Clerk LLC as claims and noticing agent.
COASTAL CARDIOLOGY: Seeks to Hire William Johnson as Legal Counsel
------------------------------------------------------------------
Coastal Cardiology, LLC, seeks approval from the U.S. Bankruptcy
Court for the District of Maryland to hire the Law Offices of
William Johnson as its legal counsel.
The firm will provide services in connection with the Debtor's
Chapter 11 case, which include general advice concerning compliance
with the requirements of the Bankruptcy Code; representation of the
Debtor in adversary proceedings; negotiation with creditors;
preparation of a bankruptcy plan; and review of creditors' claims.
William Johnson, Jr., Esq., the firm's attorney who will be
handling the case, will charge $405 per hour. The initial retainer
to secure payment of post-petition fees and expenses is $5,000.
Mr. Johnson disclosed in court filings that he is "disinterested"
as defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
William C. Johnson, Jr., Esq.
Law Offices of William Johnson
6305 Ivy Lane, Suite 620
Greenbelt, MD 20770
Phone: (202) 525-2958
Fax: (202) 431-2650
Email: wcjjatty@yahoo.com
About Coastal Cardiology
Coastal Cardiology, LLC, sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. D. Md. Case No. 19-15398) on April 20,
2019. At the time of the filing, the Debtor estimated assets of
less than $500,000 and liabilities of less than $500,000. The case
is assigned to Judge Thomas J. Catliota. The Law Offices of
William Johnson is the Debtor's counsel.
COLFAX CORP: S&P Affirms BB+ Issuer Credit Rating; Off Watch Neg.
-----------------------------------------------------------------
S&P Global Ratings affirmed its ratings on Annapolis Junction,
Md.-based welding equipment and medical device manufacturer Colfax
Corp., including its 'BB+' issuer credit rating. In addition, S&P
removed the ratings from CreditWatch where it placed them with
negative implications on Nov. 19, 2018.
The rating actions follow the company's announcement that it had
signed a definitive agreement to sell its air and gas handling
segment, which markets air and gas handling products under the
Howden brand name, to KPS Capital Partners for $1.8 billion,
including $1.66 billion in cash proceeds.
The rating agency said it expects the company to apply the vast
majority of the cash proceeds toward debt repayment upon closing,
resulting in S&P-adjusted debt to EBITDA below 4x by the end of
2019. The rating agency expects the transaction to close in the
second half of 2019.
The affirmation and removal from CreditWatch reflects S&P's
positive view of management's financial policies and its
expectation that the management will apply the vast majority of the
proceeds toward debt reduction. Subsequent to the company's $3.15
billion acquisition of DJO Global Inc. earlier this year, leverage
temporarily increased to the 5x area.
"In our opinion, the divesture of the company's air and gas
handling unit will allow Colfax to reduce leverage to 3.5x–4.0x
by the end of 2019 and further to 3.0x-3.5x in 2020," S&P said.
While S&P believes acquisitions are a part of the company's growth
strategy (the company has spent more than $5 billion on over 20
acquisitions in the past seven years, with DJO comprising over half
that amount), the rating agency does not expect the company to
pursue financial policies (including debt-funded acquisitions and
material share buybacks) that result in leverage staying above 4x
over the rating agency's forecast period. S&P expects the company
will remain focused on integrating its acquisition of DJO and on
organic growth over the next 12-18 months.
"The stable outlook on Colfax reflects our expectation that the
company's revenue will increase on relatively steady end-market
demand and contribution from the DJO acquisition, which will allow
the company to maintain leverage in the 3x-4x range over the next
12 months," S&P said. The rating agency also expects the company
to make financial policy decisions that will support leverage
reduction, including using the majority of the proceeds from the
divesture of the air and gas handling business to repay debt, and
limit large acquisitions and share repurchases as it integrates
DJO.
"We could lower our ratings on Colfax if the company's operating
performance declines due to difficulty integrating the DJO
acquisition or demand for its products diminishes such that its
debt to EBITDA remains above 4x with limited prospects for
improvement," S&P said, adding that it could also lower its ratings
if the company pursues large debt-financed acquisitions or material
shareholder returns that increase the company's leverage above 4x
on a sustained basis.
"While unlikely over the next 12 months, we could raise our ratings
on Colfax if the company demonstrates a willingness and ability to
sustain S&P Global Ratings-adjusted leverage below 3x and we are
convinced that management is committed to financial policies that
support an investment-grade rating over an economic cycle," S&P
said. This would require the company to fund acquisitions prudently
to maintain a balance between leverage and growth initiatives,
according to the rating agency.
COMMUNITY BUILDERS: Case Summary & Unsecured Creditor
-----------------------------------------------------
Debtor: Community Builders and Capital Development, Inc.
13250 NW 28th Ave
Opa Locka, FL 33054
Business Description: Community Builders and Capital Development,
Inc. is a tax-exempt charitable organization
in Opa Locka, Florida.
Chapter 11 Petition Date: May 22, 2019
Court: United States Bankruptcy Court
Southern District of Florida (Miami)
Case No.: 19-16724
Judge: Hon. Robert A. Mark
Debtor's Counsel: Joel M. Aresty, Esq.
JOEL M. ARESTY P.A.
309 1st Ave S
Tierra Verde, FL 33715
Tel: 305.904-1903
Fax: 800-559-1870
Email: aresty@mac.com
aresty@icloud.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Maiesah Williams, secretary.
The Debtor lists ATR Investments LLC as its sole unsecured creditor
holding a claim of $1,560,687.
A full-text copy of the petition is available for free at:
http://bankrupt.com/misc/flsb19-16724.pdf
COX LAND & TIMBER: Examiner Taps McNair as Forensic Accountant
--------------------------------------------------------------
Victor Hartman, the examiner appointed in the Chapter 11 case of
Cox Land & Timber, Inc., received approval from the U.S. Bankruptcy
Court for the Northern District of Georgia to hire McNair,
McLemore, Middlebrooks & Co., LLC, as its forensic accountant.
The firm will assist the examiner in the forensic examination of
the Debtor's books and records; identify potential victims of fraud
by the Debtor and its insiders; assist in interviews; and provide
other services to help the examiner discharge his duties.
McNair will be paid at reduced hourly rates:
Intern $80
Junior Accountant $105
Senior Accountant $140
Supervising Accountant $155
Partner/Director $270
Christopher Edwards, a partner at McNair, disclosed in court
filings that his firm is "disinterested" as defined in Section
101(14) of the Bankruptcy Code.
McNair can be reached through:
Christopher S. Edwards
McNair, McLemore, Middlebrooks & Co., LLC
389 Mulberry Street
P.O. Box One
Macon, GA 31202
Phone: (478) 746-6277
Fax: (478) 741-8353
Email: cedwards@mmmcpa.com
About Cox Land & Timber
Cox Land & Timber, Inc., is a timber company based in Pike County,
Ga. It appraises timber to determine its value, harvests and buys
timber, and offers cutting and thinning services.
Cox Land & Timber filed a Chapter 11 petition (Bankr. N.D. Ga. Case
No. 18-12425) on Nov. 21, 2018. In the petition signed by John B.
Cox, president and CEO, the Debtor estimated between $1 million and
$10 million in assets and less than $50,000 in liabilities.
The Hon. Homer W. Drake is the case judge. The Debtor tapped Stone
& Baxter, LLP as its bankruptcy counsel, and C. Brian Jarrard, LLC
as its special counsel.
Victor Hartman was appointed as examiner in the Debtor's bankruptcy
case. The examiner is represented by Baker, Donelson, Bearman,
Caldwell & Berkowitz, P.C.
DAVID'S BRIDAL: S&P Downgrades ICR to 'CCC+'; Outlook Negative
--------------------------------------------------------------
S&P Global Ratings lowered the issuer credit rating on David's
Bridal Inc. to 'CCC+' from 'B-'. The outlook is negative.
At the same time, S&P lowered its issue-level rating on the
company's priority $60 million term loan to 'B' from 'B+'. The
recovery rating is '1'. S&P also lowered its issue-level rating on
the $240 million takeback term loan to 'CCC+' from 'B-'. The
recovery rating remains '3'.
"The downgrade reflects our view that the company's capital
structure is potentially unsustainable based on its rapidly
weakening operating performance, which makes it vulnerable to
unfavorable business and financial conditions to meet its
commitments in the long term," the rating agency said.
The negative outlook reflects S&P's expectation that operating
performance will remain under significant pressure given challenged
customer traffic. It projects negative free operating cash flow and
a weaker liquidity position over the next year. S&P also notes very
limited visibility and expects a high degree of volatility in
operating performance.
"We could lower the rating if we envision a specific default
scenario over the next 12 months, including a near-term liquidity
crisis or persistent negative operating trends. This could occur if
the company fails to improve traffic and burns cash at a higher
rate than we anticipate, resulting in diminishing business
sustainability," S&P said. "This could also occur if we think the
company will undertake a distressed exchange or if near-term
liquidity worsens, perhaps because of an inability to maintain
access to the revolver."
S&P said it could revise the outlook to stable or raise the rating
if the company's performance meaningfully improves, with sufficient
FOCF to service its debt amortization payments without relying on
the exit credit facility. For this to occur, the rating agency
would expect to see customers returning to stores resulting in
same-store sales growth in the mid-single digits while reduced
promotional cadence improves operating margins.
DJM HOLDINGS: Seeks to Hire Forbes Law as Legal Counsel
-------------------------------------------------------
DJM Holdings Ltd. seeks approval from the U.S. Bankruptcy Court for
the Northern District of Ohio to hire Forbes Law LLC as its legal
counsel.
The firm will provide services in connection with the Debtor's
Chapter 11 case, which include legal advice regarding its power and
duties under the Bankruptcy Code and the preparation of a
bankruptcy plan.
The firm's hourly rates are:
Attorney $300
Paralegal $125
The Debtor paid Forbes Law the sum of $10,000 prior to the Petition
Date, plus $1,717 for court costs.
Forbes Law neither holds nor represents any interest adverse to the
Debtor's estate, according to court filings.
The firm can be reached through:
Glenn E. Forbes, Esq.
Forbes Law LLC
166 Main Street
Painesville, OH 44077-3403
Tel: (440) 357-6211
Email: bankruptcy@geflaw.net
About DJM Holdings Ltd.
DJM Holdings Ltd., a privately held company in Concord, Ohio,
sought protection under Chapter 11 of the Bankruptcy Code (Bankr.
N.D. Ohio Case No. 19-12950) on May 11, 2019. At the time of the
filing, the Debtor estimated assets of $1 million to $10 million
and liabilities of $1 million to $10 million. The case is assigned
to Judge Arthur I. Harris. Forbes Law LLC is the Debtor's
counsel.
DUNCAN BURCH: Seeks to Hire Forshey & Prostok as Legal Counsel
--------------------------------------------------------------
Duncan Burch, Inc., seeks approval from the U.S. Bankruptcy Court
for the Northern District of Texas to hire Forshey & Prostok, LLP
as its legal counsel.
The firm will provide services in connection with the Debtor's
Chapter 11 case, which include legal advice regarding its power and
duties under the Bankruptcy Code; negotiation and documentation of
agreements, debt restructuring and related transactions;
preparation of a plan of reorganization; and review of the validity
of liens asserted against the Debtor's property.
The firm's hourly rates are:
J. Robert Forshey $575
Lynda Lankford $425
Laurie Dahl Rea $425
Paralegal $175 - $225
Legal Assistant $175 - $225
The Debtor paid the firm a retainer in the amount of $25,000.
Forshey & Prostok is "disinterested" as defined in Section 101(14)
of the Bankruptcy Code, according to court filings.
The firm can be reached through:
J. Robert Forshey, Esq.
Lynda L. Lankford, Esq.
Laurie Dahl Rea, Esq.
Forshey & Prostok, LLP
777 Main St., Suite 1290
Ft. Worth, TX 76102
Telephone: (817) 877-8855
Facsimile: (817) 877-4151
E-mail: bforshey@forsheyprostok.com
llankford@forsheyprostok.com
lrea@forsheyprostok.com
About Duncan Burch
Duncan Burch, Inc., operates bars, night clubs and other locations
that sell alcoholic drinks. Duncan Burch sought protection under
Chapter 11 of the Bankruptcy Code (Bankr. N.D. Tex. Case No.
19-41699) on April 29, 2019. At the time of the filing, the Debtor
estimated assets of less than $500,000 and liabilities of between
$1 million and $10 million. The case is assigned to Judge Edward
L. Morris. Forshey & Prostok, LLP, is the Debtor's counsel.
EAGLE SUPER: S&P Lowers ICR to B- on Weak 2018 Operating Results
----------------------------------------------------------------
S&P Global Ratings lowered its issuer credit rating on Eagle Super
Global Holding B.V. (doing business as The LYCRA Company) to 'B-'
from 'B'. At the same time, S&P lowered the issue-level rating on
the company's senior secured notes to 'B-'. The recovery rating
remains '4'.
S&P said, "Our rating action follows softer-than-expected operating
results in 2018, and our expectation that despite modest
improvement in 2019 earnings, credit metrics will remain below our
previous expectation. The rating action also reflects our revised
assessment of management and governance as weak.
"The stable outlook on The LYCRA Company reflects our expectation
that it will continue to grow volumes as a result of industry
trends that require spandex, such as athleisure-wear and stretch
jeans. We also expect that producers will continue to pay a premium
for branded LYCRA fiber and that the company will continue to
receive margins higher than peers as a result. We expect that the
company will be able to effectively manage swings in raw materials
prices, such as PTMEG, and that consumer consumption will remain
positive. These assumptions support revenue and EBITDA growth over
weaker-than-expected 2018 operating performance. However, our
current expectations are lower than previous expectations partly
because we assume lower U.S. GDP growth of about 2.2% in 2019 and
consumer consumption of about 2.5% over the same period. Similarly,
we expect 1.3% GDP growth in Europe and 5.2% in Asia Pacific over
the same period. Over the next 12 months, we expect credit metrics
will remain appropriate for the rating. More specifically, we
expect debt to EBITDA to remain around 5x and that FFO to debt will
remain around 10% on a weighted average pro forma basis. We have
not factored in any significant debt-funded acquisitions or
shareholder rewards in our base case. We base the ratings on our
assumption of control by Ruyi.
"We could lower rating on the company over the next 12 months if we
expect leverage to be at unsustainable levels, with debt to EBITDA
near double digits. While currently unlikely, this could occur if
organic revenue growth fell by 4% and EBITDA margins deteriorated
400 basis points (bps) beyond our expectations. Also potentially
contributing to a downside scenario would be an economic downturn
in any of the company's key end markets, especially the apparel
segment. Given the product concentration, a downside scenario could
also transpire if there were material changes in industry trends
toward using spandex. Additionally, we could the lower rating if we
no longer expect that management is committed to maintaining
current leverage levels or if we expect that the owners will take
dividends. Along these lines, we could also lower the rating if
there was deterioration at Ruyi. In our view, credit deterioration
at Ruyi could hurt The LYCRA Company's credit quality.
"We could also lower the rating if we expect the company will no
longer maintain liquidity, such that sources will not exceed uses
by more than 1.2x or if we thought the company's covenant would be
pressured. We did not factor any material impact from Chinese
tariffs into our base-case scenario, but we could potentially take
a rating action if we expected that heavy tariffs could affect
sales or if trade tensions had a material impact on the business
structure.
"We could raise the rating on The LYCRA Company if credit metrics
improved to levels such that FFO to debt rose above 12% on a
sustained basis. This could occur if revenue grew by 2% and EBITDA
margins improved 200 bps beyond our expectations, likely from
demand in its end markets improving beyond expectations and raw
material prices not materially increasing from current levels.
Credit metrics could also strengthen if the company redeems debt
above expected levels. Our review for an upgrade would consider the
quality and timeliness of financials and other information. We
could also consider an upgrade if our management and governance
assessment reflects increased visibility into financial performance
(as the company builds up a track record of reporting) and
ownership details and governance factors."
EASTERN POWER: S&P Cuts Sec. Debt Rating to 'BB-'; Outlook Stable
-----------------------------------------------------------------
S&P Global Ratings lowered the rating on Eastern Power LLC's senior
secured facilities to 'BB-' from 'BB' following the proposed $150
million upsize to the term loan B. The total debt outstanding on
the term loan B will be $1.243 billion from $1.093 billion.
The '3' recovery rating is unchanged, indicating S&P's expectations
of meaningful recovery (50%-70%; rounded estimate: 60%) in a
default scenario.
The downgrade is largely driven by the $150 million upsize to the
term loan B. While partially offset by S&P's improved view of NYISO
Zone J capacity prices, metrics are in line with 'BB-' peers.
The stable outlook reflects Eastern's reliance on predictable
capacity payments for most of its cash flow over the next few
years, S&P's expectations for sound operational performance, and
debt outstanding on the term loan at refinancing of around $780
million. S&P expects robust DSCRs near and above 2x until
refinancing, when DSCRs drop to 1.16x minimum in the rating
agency's analysis. S&P further expects stable operational
performance and cash sweeps or voluntary prepayments that
accelerate paydown on the term loan.
"We would likely lower the rating if the expected DSCR fell below
1.13x on a sustained basis in the post-refinancing period, should
operational issues lower availability and increase maintenance
costs, lower-than-expected capacity prices in NYISO Zone J over the
next few years, sooner-than-expected implementation of New York NOx
limits for peakers, or higher debt outstanding at refinancing," S&P
said.
"Given the project's track record of paying down debt and
subsequently upsizing, we do not believe higher ratings are likely
given the sponsor's preference for distributions over higher
ratings," S&P said, adding that an upgrade would require that it's
unlikely the project would upsize again and have significantly
lower debt at maturity with DSCRs over 2x on a sustained basis, an
improved downside resilience, and cash flow visibility beyond the
current three-year cleared capacity period.
ELK PETROLEUM: Case Summary & 2 Unsecured Creditors
---------------------------------------------------
Four affiliates that have filed voluntary petitions seeking relief
under Chapter 11 of the Bankruptcy Code:
Debtor Case No.
------ --------
Elk Petroleum, Inc. (Lead Case) 19-11157
1700 Lincoln, Suite 2550
Denver, CO 80203
Elk Petroleum Aneth, LLC 19-11158
Resolute Aneth, LLC 19-11159
Elk Operating Services, LLC 19-11160
Business Description: Elk Petroleum -- https://www.elkpet.com --
is an oil and gas company specializing in
enhanced oil recovery (EOR).
Chapter 11 Petition Date: May 22, 2019
Court: United States Bankruptcy Court
District of Delaware (Delaware)
Judge: Hon. Laurie Selber Silverstein
Debtors'
General
Bankruptcy
Counsel: Gregory M. Wilkes, Esq.
Kristian W. Gluck, Esq.
Scott P. Drake, Esq.
John N. Schwartz, Esq.
Shivani Shah, Esq.
NORTON ROSE FULBRIGHT US LLP
2200 Ross Avenue, Suite 3600
Dallas, Texas 75201
Tel: (214) 855-8000
Fax: (214) 855-8200
Email: greg.wilkes@nortonrosefulbright.com
kristian.gluck@nortonrosefulbright.com
scott.drake@nortonrosefulbright.com
john.schwartz@nortonrosefulbright.com
shivani.shah@nortonrosefulbright.com
Debtor's
Local
Bankruptcy
Counsel: Matthew P. Ward, Esq.
Morgan L. Patterson, Esq.
WOMBLE BOND DICKINSON (US) LLP
1313 North Market Street, Suite 1200
Wilmington, DE 19801
Tel: 302.252.4338
302.252.4320
Fax: 302.661.7711
Email: matthew.ward@wbd-us.com
morgan.patterson@wbd-us.com
Debtors'
Restructuring
Advisor: ANKURA CONSULTING GROUP, LLC
Debtors'
Valuation
Analysis
Provider: OPPORTUNE LLP
Debtors'
Notice,
Claims, &
Balloting
Agent: BANKRUPTCY MANAGEMENT SOLUTIONS, INC.
D/B/A STRETTO
Elk Petroleum's
Estimated Assets: $1 million to $10 million
Elk Petroleum's
Estimated Liabilities: $0 to $50,000
The petition was signed by Scott M. Pinsonnault, chief
restructuring officer.
A full-text copy of Elk Petroleum, Inc.'s petition is available for
free at:
http://bankrupt.com/misc/deb19-11157.pdf
List of Elk Petroleum, Inc.'s Two Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
1. Banner County Nebraska Bank $135
Treasurer
PO Box 6 Harrisburgh, NE 69345
2. Wells Fargo Bank $8,505
Vendor Financial Services, LLC
PO Box 650073
Dallas, TX 75265-0073
FALCON V: U.S. Trustee Forms 3-Member Committee
-----------------------------------------------
David Asbach, acting U.S. trustee for Region 5, on May 21 appointed
three creditors to serve on the official committee of unsecured
creditors in the Chapter 11 cases of Falcon V, LLC and its
affiliates.
The committee members are:
(1) Angelo, Gordon Energy Servicer, LLC
Attn: Todd Dittmann
712 Main Street, 13th Floor
Houston, TX 77010
(2) Knight Oil Tools LLC
Attn: Cole J. Griffin
P.O. Box 52688
Lafayette, LA 70505-2688
(3) Catapult Exploration LLC
Attn: Robert Patrick
8889 Pelican Bay Blvd., Suite 403
Naples, FL 34108
Official creditors' committees serve as fiduciaries to the general
population of creditors they represent. They may investigate the
debtor's business and financial affairs. Committees have the right
to employ legal counsel, accountants and financial advisors at a
debtor's expense.
About Falcon V LLC
Falcon V, LLC is engaged in the oil and gas extraction business.
Falcon V and its affiliates sought protection under Chapter 11 of
the Bankruptcy Code (Bankr. M.D. La. Lead Case No. 19-10547) on
April 10, 2019. At the time of the filing, Falcon V had estimated
assets of between $10 million and $50 million and liabilities of
between $50 million and $100 million.
The Debtors tapped Kelly Hart & Pitre as their legal counsel; KPMG
LLP as tax consultant; Lefoldt & Company, P.A. as restructuring
advisor; and Seaport Global Securities, LLC as financial advisor.
GLASS MOUNTAIN: S&P Alters Outlook to Negative, Affirms 'B' ICR
---------------------------------------------------------------
S&P Global Ratings revised its outlook on Oklahoma City-based Glass
Mountain Pipeline LLC to negative from stable and affirmed its 'B'
issuer credit rating.
At the same time, S&P affirmed its 'B' issue-level rating on Glass
Mountain Pipeline Holdings LLC's first-lien term loan B. The '3'
recovery rating remains unchanged, indicating S&P's expectation for
meaningful (50%-70%; rounded estimate: 65%) recovery in the event
of a payment default.
The negative outlook reflects S&P's expectation that Glass Mountain
Pipeline will maintain debt to EBITDA of about 6.8x in 2019 which
is significantly higher than S&P's previous expectation of 4.7x.
Glass Mountain has faced delays in volume growth due to delays in
Devon's volume ramp and slower than anticipated third party
contracting, this has in turn led to an extended period of elevated
leverage. While it expects Glass Mountain to grow and execute new
commercial agreements, S&P expects leverage to remain high for a
longer period than in its previous forecast.
The negative outlook on Glass Mountain Pipeline LLC reflects S&P's
expectation that the company's adjusted debt to EBITDA will remain
above 6.5x in 2019 due to lower-than-anticipated throughput
volumes. However, the rating agency expects that the company's
leverage will improve in the medium term as the southern extension
of its pipeline system comes online and it expands its customer
portfolio.
"We could lower our ratings on Glass Mountain if its leverage
remains above 6x over the next 12 months. This could occur due to
lower-than-expected volume growth from depressed commodity prices
or delayed construction of the southern extension," S&P said.
"We could revise our outlook on Glass Mountain to stable if its
leverage declines below 6x on a sustained basis. This could occur
when the company completes the southern extension of the pipeline
and realizes additional throughput volumes," S&P said.
GLOBAL EAGLE: Chief Accounting Officer Resigns
----------------------------------------------
Sarlina See, chief accounting officer of Global Eagle Entertainment
Inc., submitted her resignation from her position with the Company.
Ms. See will remain an employee of the Company until May 30, 2019.
Ms. See's resignation is not due to any disagreement with the
Company, according to a Form 8-K filed with the U.S. Securities and
Exchange Commission.
About Global Eagle
Headquartered in Los Angeles, California, Global Eagle --
http://www.GlobalEagle.com-- is a provider of media, content,
connectivity and data analytics to markets across air, sea and
land. Global Eagle offers a fully integrated suite of rich media
content and seamless connectivity solutions to airlines, cruise
lines, commercial ships, high-end yachts, ferries and land
locations worldwide. The Company has approximately 1,200 employees
and 50 offices on six continents.
Global Eagle incurred a net loss of $236.6 million for the year
ended Dec. 31, 2018, compared to a net loss of $357.1 million for
the year ended Dec. 31, 2017. As of March 31, 2019, Global Eagle
had $734.9 million in total assets, $998.98 million in total
liabilities, and a total stockholders' deficit of $264.1 million.
* * *
In mid-April 2019, S&P Global Ratings lowered all ratings on Global
Eagle, including the ICR to 'CCC', to reflect its view that the
company is currently vulnerable to nonpayment over the next 12
months and is dependent on favorable business, financial, and
economic conditions to meet its financial commitments.
HAAKINSON INC: Voluntary Chapter 11 Case Summary
------------------------------------------------
Debtor: Haakinson Inc.
1089 E Hwy 40
Vernal, UT 84078
Business Description: Haakinson Inc. is a privately held company
that provides services to buildings and
dwellings.
Chapter 11 Petition Date: May 23, 2019
Court: United States Bankruptcy Court
District of Utah (Salt Lake City)
Case No.: 19-23739
Judge: Hon. Joel T. Marker
Debtor's Counsel: Theodore Floyd Stokes, Esq.
STOKES LAW PLLC
2072 North Main Suite 102
North Logan, UT 84341
Tel: 435-213-4771
Fax: 888-443-1529
Email: ted@stokeslawpllc.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $500,000 to $1 million
The petition was signed by Annette Haakinson, president.
The Debtor failed to include in the petition a list of its 20
largest unsecured creditors.
A full-text copy of the petition is available for free at:
http://bankrupt.com/misc/utb19-23739.pdf
HANJIN INT'L: Moody's Affirms B2 CFR, Outlook Still Stable
----------------------------------------------------------
Moody's Investors Service has affirmed Hanjin International Corp.'s
(HIC) B2 corporate family rating (CFR) and the Ba3 rating on its
senior secured term loan due 2020.
The outlook is maintained at stable.
RATINGS RATIONALE
"The rating affirmation mainly reflects our view that parental
support from Korean Air will continue to underpin HIC's credit
quality, despite HIC's weak earnings and high financial leverage,"
says Sean Hwang, a Moody's Analyst.
HIC's credit quality continues to benefit from the likelihood of
extraordinary support from Korean Air Lines Co., Ltd. (KAL), given
the parent's strong track record of providing financial support to
HIC. KAL guarantees all of HIC's debt, resulting in a one-notch
uplift from HIC's B3-level standalone credit quality.
Moody's expects KAL's ability to support HIC will remain largely
intact, given KAL's large scale, its leadership position in Korea's
airline industry, and its better financial profile than HIC's.
Although KAL's adjusted debt/EBITDA weakened to 7.2x in 2018 from
5.7x a year earlier, Moody's expects the ratio to recover to around
6.5x-6.7x over the next 12-18 months mainly because lower capital
spending will allow it to reduce debt levels.
Moody's expects HIC's annual EBITDA will increase to $20-$30
million over the next 12-18 months from $10 million in 2018,
supported by the ongoing ramp-up of its hotel and office leasing
businesses. However, this level of earnings is still weak and will
be insufficient to cover the company's interest expenses, debt
amortization and capital spending.
As a result, Moody's expects HIC's adjusted EBITDA/interest to
remain low at 0.5x-0.8x over this period while adjusted debt/EBITDA
will remain elevated at 30x-40x.
HIC's liquidity will likely be sufficient to cover its negative
free cash flow over the next 12 months, although Moody's expects
the company's cash holdings to fall to around $25-$30 million by
the end of 2019 from $45 million as of 31 March 2019.
HIC's CFR continues to factor in the high concentration risk
associated with the single location and small scale of its
operations, mitigated by the good competitive profile of the
Wilshire Grand Center.
The Ba3 rating on the term loan mainly reflects the first lien on
substantially all of the assets owned by HIC. The term loan
benefits from priority of claims over the Aa2-rated senior
unsecured note of $300 million -- guaranteed by The Export-Import
Bank of Korea (Aa2 stable) -- in the company's liability
structure.
The stable outlook reflects Moody's expectation that HIC will
continue to ramp up its hotel and office leasing businesses,
thereby gradually improving its earnings and cash flow over the
next 1-2 years.
Upward pressure on the ratings could arise over time if HIC's
operations stabilize with steady hotel demand and a good level of
office occupancy, such that adjusted debt/EBITDA trends down to 8x
and EBITDA/interest coverage stays above 2.0x on a sustained basis;
and/or if KAL's credit quality improves meaningfully.
Downward pressure on the ratings could emerge if HIC's or KAL's
liquidity profile weakens considerably and/or KAL's financial
leverage remains elevated.
Moody's could also review the ratings in the event of significant
adverse changes in the company's relationship with KAL.
The principal methodology used in these ratings was Business and
Consumer Service Industry published in October 2016.
Hanjin International Corp. (HIC) is a wholly owned subsidiary of
Korean Air Lines Co., Ltd. (KAL) and owns the Wilshire Grand Center
(WGC), a 73-story Class A mixed-use building located in Los Angeles
in the US.
Established in 1962, Korean Air Lines Co., Ltd. (KAL) is a leading
airline company based in Korea. At the end of April 2019, it owned
a fleet of 167 aircraft (passenger 144, cargo 23) serving 124
destinations across 44 countries. KAL is also engaged in the
aerospace and catering businesses, as well as the hotel business in
the US through HIC.
HEXION INC: 1.5 Lien Group Holds $153 Million of 1.5L Notes
-----------------------------------------------------------
Certain ad hoc beneficial holders or the investment advisors or
managers for certain beneficial holders of securities issued by
Hexion, Inc., submitted a verified statement pursuant to Rule 2019
of the Federal Rules of Bankruptcy Procedure.
Jones Day represents the members of the 1.5 Lien Group in their
capacities as holders or managers or advisors to holders of 13.75%
Senior Secured Notes Due 2022 issued by Hexion, Inc., pursuant to
the indenture dated Feb. 8, 2017, as amended, restated,
supplemented, or otherwise modified.
Certain members of the 1.5 Lien Group retained Jones Day in
February 2018 to represent them as counsel in connection with a
potential restructuring of the outstanding debt obligations of the
Debtors.
As of March 31, 2019, members of the 1.5 Lien Group hold an
aggregate:
* $251,060,000 of 1L Notes
* $153,150,000 of 1.5L Notes
* $37,587,000 of 2L Notes
* $273,000 of Unsecured Notes
The members of the Ad Hoc Group and their disclosable economic
interests as of March 31, 2019, are:
1. III Capital Management
* $8,000,000 of 1.5L Notes
2. Balyasny Asset Management L.P.
* $20,000,000 of 1.5L Notes
* $2,730,000 of 2L Notes
3. Brigade Capital Management LP
* $170,720,000 of 1L Notes
* $52,000,000 of 1.5L Notes
4. Nomura Corporate Research and Asset Management Inc.
* $27,975,000 of 1L Notes
* $32,700,000 of 1.5L Notes
* $34,857,000 of 2L Notes
5. PGIM, Inc.
* $19,865,000 of 1L Notes
* $28,300,000 of 1.5L Notes
6. Southpaw Credit Opportunity Master Fund LP
* $30,620,000 of 1L Notes
* $7,000,000 of 1.5L Notes
7. Wolverine Asset Management, LLC
* $1,880,000 of 1L Notes
* $4,150,000 of 1.5L Notes
* $273,000 of Unsecured Notes
Attorneys for the 1.5 Lien Group:
Robert S. Brady, Esq.
Edmon L. Morton, Esq.
YOUNG CONAWAY STARGATT & TAYLOR, LLP
Rodney Square
1000 North King Street
Wilmington, DE 19801
Telephone: (302) 571-6600
Facsimile: (302) 571-1253
E-mail: rbrady@ycst.com
emorton@ycst.com
- and –
Sidney P. Levinson, Esq.
Benjamin Rosenblum, Esq.
Jeremy D. Evans, Esq.
JONES DAY
250 Vesey Street
New York, NY 10281
Telephone: (212) 326-3939
Facsimile: (212) 755-7306
E-mail: slevinson@jonesday.com
brosenblum@jonesday.com
jdevans@jonesday.com
About Hexion Holdings
Based in Columbus, Ohio, Hexion Inc. -- https://www.hexion.com/ --
is a producer of thermoset resins or thermosets, and a producer of
adhesive and structural resins and coatings. Hexion Inc. employs
4,000 people around the world, including 1,300 in the U.S. across
27 production facilities.
Hexion Holdings LLC is the sole member of Hexion LLC, which is the
sole owner of Hexion Inc.
Hexion Holdings LLC and 17 of its subsidiaries, including Hexion
Inc., sought protection under Chapter 11 of the Bankruptcy Code
(Bankr. D. Del. Lead Case No. 19-10684) on April 1, 2019.
At the time of the filing, the Debtors estimated assets and
liabilities of between $1 billion and $10 billion. As of the
Petition Date, the debtors had funded debt outstanding of
approximately $3.8 billion
The cases are assigned to Judge Kevin Gross.
The Debtors tapped Latham & Watkins LLP and Richards, Layton &
Finger, P.A., as bankruptcy counsel; Paul Weiss Rifkind Wharton &
Garrison LLP, as special financing and securities; Moelis & Company
LLC as financial advisor; AlixPartners LLP as restructuring
advisor; and Omni Management Group as claims, noticing,
solicitation and balloting agent.
The Office of the U.S Trustee formed an official committee of
unsecured creditors on April 10, 2019. The committee tapped Bayard
P.A. and Kramer Levin Naftalis & Frankel LLP as its legal counsel.
FTI Consulting Inc. is the committee's financial advisor.
HEXION INC: 1st Lien Group Own $875M of 6.625% of 1st Lien Notes
----------------------------------------------------------------
Certain beneficial holders, or investment advisors or managers of
beneficial holders (the "First Lien Ad Hoc Group") of certain
indebtedness of Hexion Inc. and its affiliated debtors, namely, (i)
the 6.625% First Lien Notes, (ii) the 10.000% First Lien Notes and
(iii) the 10.325% First Lien Notes, submitted a verified statement
pursuant to Rule 2019 of the Federal Rules of Bankruptcy
Procedure.
The First Lien Ad Hoc Group engaged Akin Gump Strauss Hauer & Feld
LLP on Oct. 24, 2018 and Ashby & Geddes, P.A., on March 28, 2019 to
represent it in connection with a potential restructuring of the
Debtors.
As of 5, 2019, members of the First Lien Ad Hoc Group collectively
hold:
* $875,376,000 (56.48%) of the 6.625% First Lien Notes,
* $162,026,000 (51.44%) of 10.000% First Lien Notes,
* $227,456,000 (40.62%) of 10.375% First Lien Notes,
* $28,881,000 (12.84%) of 1.5 Lien Notes,
* $58,236,000 (10.15%) of Second Lien Notes, and
* $13,872,000 (5.27%) of Borden Notes.
Akin Gump and Ashby have been advised by members of the First Lien
Ad Hoc Group that the individual members of the First Lien Ad Hoc
Group either hold claims or manage accounts that hold claims
against the Debtors' estates.
As of April 5, 2019, the members of the First Lien Ad Hoc Group and
their disclosable economic interests:
1. Angelo, Gordon & Co., L.P.
245 Park Ave, 26th Floor
New York, NY 10167
* $1,000,000 of 6.625% First Lien Notes
2. Aristeia Capital, L.L.C.
One Greenwich Plaza
Greenwich, CT 06830
* $23,400,000 of 6.625% First Lien Notes
* $16,100,000 of 10.375% First Lien Notes
* $(10,000,000) of Second Lien Notes
3. Barclays Bank PLC
745 7th Avenue
New York, NY 10019
* $2,000,000 of 6.625% First Lien Notes
* $9,280,000 of 10.000% First Lien Notes
* $1,213,000 of 10.375% First Lien Notes
* $2,970,000 of Second Lien Notes
* $346,000 of Borden Notes
4. Beach Point Capital Management LP
1620 26th Street, Suite 6000N
Santa Monica, CA 90404
* $32,307,000 of 6.625% First Lien Notes
* $13,475,000 of 10.375% First Lien Notes
5. Capital Research and Management Company
333 South Hope Street
Los Angeles, CA 90071
* $42,585,000 of 6.625% First Lien Notes
* $25,050,000 of 10.000% First Lien Notes
* $42,390,000 of 10.375% First Lien Notes
6. Citadel Advisors LLC
601 Lexington Avenue
New York, NY 10022
* $17,000,000 of 6.625% First Lien Notes
* $14,000,000 of 10.000% First Lien Notes
* $4,000,000 of 10.375% First Lien Notes
7. Contrarian Capital Management, LLC
411 West Putnam Avenue, Suite 425
Greenwich, CT 06830
* $32,600,000 of 6.625% First Lien Notes
8. Credit Suisse Securities (USA) LLC
11 Madison Avenue, 4th Floor
New York, NY 10010
* $13,844,000 of 6.625% First Lien Notes
* $1,027,000 Borden Notes
9. Davidson Kempner Capital Management LP
520 Madison Avenue, 30th Floor
New York, NY 10022
* $102,615,000 of 6.625% First Lien Notes
10. DoubleLine Capital LP
333 S. Grand Avenue, 18th Floor
Los Angeles, CA 90071
* $18,755,000 of 10.375% First Lien Notes
* $4,415,000 of 1.5 Lien Notes
11. Eaton Vance Management
2 International Place
Boston, MA 02110
* $45,000,000 of 6.625% First Lien Notes
12. Federated Investment Counseling
1001 Liberty Avenue
Pittsburgh, PA 15222
* $48,475,000 of 6.625% First Lien Notes
13. GoldenTree Asset Management LP
9300 Park Avenue
New York, NY 10022
* $199,297,000 of 6.625% First Lien Notes
* $100,012,000 of 10.375% First Lien Notes
* $22,466,000 of 1.5 Lien Notes
* $49,266,000 of Second Lien Notes
* $4,431,000 of Borden Notes
14. Graham Capital Management, L.P.
40 Highland Avenue Rowayton, CT 06853
* $8,250,000 of 6.625% First Lien Notes
15. GSO Capital Partners LP
10345 Park Avenue, 31st Floor
New York, NY 10154
* $178,776,000 of 6.625% First Lien Notes
* $17,000,000 of 10.000% First Lien Notes
* $15,000,000 of 10.375% First Lien Notes
16. Heyman Enterprise LLC
667 Madison Avenue 20th Floor
New York, NY 10065
* $4,000,000 of 6.625% First Lien Notes
* $2,000,000 of 1.5 Lien Notes
* $1,000,000 of Second Lien Notes
17. Hotchkis and Wiley Capital Management LLC
725 South Figueroa Street
39th Floor Los Angeles, CA 90017
* $31,592,000.00 of 6.625% First Lien Notes
18. OSK VII, LLC
4121 West 50th Street, Suite 300
Edina, MN 55424
* $5,000,000 of 10.375% First Lien Notes
* $4,000,000 of 10.000% First Lien Notes
19. Pacific Investment Management Company LLC
650 Newport Center Drive
Newport Beach, CA 92660
* $3,750,000 of 6.625% First Lien Notes
* $1,375,000 of 10.375% First Lien Notes
20. Silver Rock Financial LP
12100 Wilshire Boulevard, Suite 1000
Los Angeles, CA 90025
* $39,643,000 of 6.625% First Lien Notes
* $49,900,000 of 10.000% First Lien Notes
* $3,339,000 of 10.375% First Lien Notes
21. Sound Point Capital Management, LP
375 Park Avenue, 33rd Floor
New York, NY 10152
* $18,742,000 of 6.625% First Lien Notes
* $4,796,000 of 10.000% First Lien Notes
* $4,797,000 of 10.375% First Lien Notes
22. Tor Asia Credit Master Fund LP
c/o Tor Investment Management (Hong Kong) Limited
Henley Building 19/F
5 Queen’s Road
Central Hong Kong
* $30,000,000 of 10.000% First Lien Notes
23. UBS Securities LLC
1285 6th Avenue
New York, NY 10019
* $8,000,000 of 10.000% First Lien Notes
* $8,068,000 of Borden Notes
24. Whitebox Advisors LLC
3033 Excelsior Blvd.
Minneapolis, MN 55416
* $30,500,000 of 6.625% First Lien Notes
* $2,000,000 of 10.375% First Lien Notes
* $15,000,000 of Second Lien Notes
The Firms can be reached at:
William P. Bowden, Esq.
David F. Cook, Esq.
ASHBY & GEDDES, P.A.
500 Delaware Avenue, 5th Floor
P.O. Box 1150
Wilmington, DE 19899
Tel: (302) 654-1888
Fax: (302) 654-2067
- and –
Ira S. Dizengoff, Esq.
Philip C. Dublin , Esq.
Naomi Moss, Esq.
AKIN GUMP STRAUSS HAUER & FELD LLP
One Bryant Park
New York, NY 10036
Tel: (212) 872-1000
Fax:(212) 872-1002
About Hexion Holdings
Based in Columbus, Ohio, Hexion Inc. -- https://www.hexion.com/ --
is a producer of thermoset resins or thermosets, and a producer of
adhesive and structural resins and coatings. Hexion Inc. employs
4,000 people around the world, including 1,300 in the U.S. across
27 production facilities.
Hexion Holdings LLC is the sole member of Hexion LLC, which is the
sole owner of Hexion Inc.
Hexion Holdings LLC and 17 of its subsidiaries, including Hexion
Inc., sought protection under Chapter 11 of the Bankruptcy Code
(Bankr. D. Del. Lead Case No. 19-10684) on April 1, 2019.
At the time of the filing, the Debtors estimated assets and
liabilities of between $1 billion and $10 billion. As of the
Petition Date, the debtors had funded debt outstanding of
approximately $3.8 billion
The cases are assigned to Judge Kevin Gross.
The Debtors tapped Latham & Watkins LLP and Richards, Layton &
Finger, P.A., as bankruptcy counsel; Paul Weiss Rifkind Wharton &
Garrison LLP, as special financing and securities; Moelis & Company
LLC as financial advisor; AlixPartners LLP as restructuring
advisor; and Omni Management Group as claims, noticing,
solicitation and balloting agent.
The Office of the U.S Trustee formed an official committee of
unsecured creditors on April 10, 2019. The committee tapped Bayard
P.A. and Kramer Levin Naftalis & Frankel LLP as its legal counsel.
FTI Consulting Inc. is the committee's financial advisor.
HEXION INC: Johnson Law Firm Represents Utilities
-------------------------------------------------
Pursuant to Rule 2019 of the Federal Rules of Bankruptcy Procedure,
the Law Firm of Russell R. Johnson III filed a verified statement
of the firm's multiple representation of these utility companies in
the Chapter 11 cases of Hexion Holdings, LLC, et al.:
A. Commonwealth Edison Company
Attn: Lynn R. Zack, Esq.
Assistant General Counsel
Exelon Corporation
2301 Market Street, S23-1
Philadelphia, PA 19103
B. CenterPoint Energy Services, Inc.
Attn: Timothy Muller, Esq.
Senior Counsel
CenterPoint Energy Inc.
1111 Louisiana St.
Houston, TX 77002
C. Niagara Mohawk Power Corporation
Attn: Christopher S. Aronson
Senior Counsel
National Grid
40 Sylvan Road
Waltham, MA 02451
The Firm was retained in April 2019 to represent the utilities.
The firm can be reached at:
Russell R. Johnson III
LAW FIRM OF RUSSELL R. JOHNSON III
2258 Wheatlands Drive
Manakin-Sabot, VA 23103
Tel: (804) 749-8861
Fax: (804) 749-8862
About Hexion Holdings
Based in Columbus, Ohio, Hexion Inc. -- https://www.hexion.com/ --
is a producer of thermoset resins or thermosets, and a producer of
adhesive and structural resins and coatings. Hexion Inc. employs
4,000 people around the world, including 1,300 in the U.S. across
27 production facilities.
Hexion Holdings LLC is the sole member of Hexion LLC, which is the
sole owner of Hexion Inc.
Hexion Holdings LLC and 17 of its subsidiaries, including Hexion
Inc., sought protection under Chapter 11 of the Bankruptcy Code
(Bankr. D. Del. Lead Case No. 19-10684) on April 1, 2019.
At the time of the filing, the Debtors estimated assets and
liabilities of between $1 billion and $10 billion. As of the
Petition Date, the debtors had funded debt outstanding of
approximately $3.8 billion
The cases are assigned to Judge Kevin Gross.
The Debtors tapped Latham & Watkins LLP and Richards, Layton &
Finger, P.A., as bankruptcy counsel; Paul Weiss Rifkind Wharton &
Garrison LLP, as special financing and securities; Moelis & Company
LLC as financial advisor; AlixPartners LLP as restructuring
advisor; and Omni Management Group as claims, noticing,
solicitation and balloting agent.
The Office of the U.S Trustee formed an official committee of
unsecured creditors on April 10, 2019. The committee tapped Bayard
P.A. and Kramer Levin Naftalis & Frankel LLP as its legal counsel.
FTI Consulting Inc. is the committee's financial advisor.
IAA SPINCO: S&P Rates $400MM Senior Unsecured Notes Due 2027 'B'
----------------------------------------------------------------
S&P Global Ratings assigned its 'B' issue-level rating and '6'
recovery rating to Illinois-based IAA Spinco Inc.'s new $400
million senior unsecured notes due 2027. The '6' recovery rating
indicates S&P's expectation that lenders will receive negligible
recovery (0%-10%; rounded estimate: 0%) in the event of a default.
The rating agency expects the company to use the proceeds from
these notes to help fund a dividend to KAR Auction Services Inc.
S&P's ratings on IAA Spinco Inc. reflect its solid and predictable
business as one of the two leading salvage vehicle auction
providers in North America. The company's strong adjusted EBITDA
margins and solid, recurring cash flow generation demonstrate the
strength of its business.
ISSUE RATINGS--RECOVERY ANALYSIS
Key analytical factors
S&P's simulated default scenario assumes a default occurring in
2023 due to prolonged economic weakness accompanied by higher
interest rates and oil prices that leads to a reduction in vehicle
sales and miles driven. S&P's scenario also assumes increased
competition for fewer vehicles erodes the company's margins and
that it experiences difficulty in achieving its forecast cost
savings.
Simulated default assumptions
-- Simulated year of default: 2023
-- EBITDA at emergence: $149 million
-- EBITDA multiple: 6x
Simplified waterfall
-- Net enterprise value (after 5% administrative costs): $850
million
-- Valuation split (obligors/nonobligors): 90%/10%
-- Value available to first-lien debt claims: $820 million
-- Secured first-lien debt claims: $1.100 billion
-- Recovery expectations: 70%-90% (rounded estimate: 75%)
-- Total value available to unsecured claims: $30 million
-- Senior unsecured debt claims: $414 million
-- Other pari passu unsecured claims: $310 million
-- Recovery expectations: 0%-10% (rounded estimate: 0%)
Ratings List
IAA Spinco Inc.
Issuer Credit Rating BB-/Stable/--
New Rating
IAA Spinco Inc.
Senior Unsecured
US$400 mil nts due 2027 B
Recovery Rating 6(0%)
ICONIX BRAND: S&P Affirms 'CCC' ICR on Continued Weak Performance
-----------------------------------------------------------------
S&P Global Ratings affirmed its 'CCC' issuer credit rating on New
York City–based brand portfolio manager Iconix Brand Group Inc.
At the same time, S&P raised its issue-level rating on the
company's senior secured term loan to 'B-' from 'CCC+' and revised
the recovery rating to '1' (90%-100%; rounded estimate: 95%) from
'2' reflecting improving recovery prospects driven by lower term
loan balance and the increasing EBITDA contribution and value of
certain nonsecuritized brands, particularly Umbro.
"The affirmation of the issuer credit rating reflects our view
that, absent an unforeseen positive development, the company would
likely engage in a distressed debt exchange or redemption offer,
default due to a near-term liquidity crisis, or violate a
covenant," S&P said. S&P projects the company will not generate
enough cash flow to satisfy the 7% amortization on its securitized
facility and will defer the principal payments to the ultimate
maturity in 2043; and that it will begin to accrue the 5% penalty
interest rate on the facility in 2020, increasing its effective
interest rate on the notes to close to 10%. Furthermore, the
company's senior secured term loan's required annual amortization
increases to close to $20 million in 2019, putting additional
pressure on its dwindling cash flow. Iconix's convertible note is
also trading at a steep discount that could incentivize the company
to seek a subpar exchange.
"While our current view is the company will likely default in the
next 12 months, absent an unforeseen positive event, the negative
outlook reflects the risk that a default or distressed debt
exchange becomes inevitable in the short term (six months) due to
continued weak operating performance and deteriorating liquidity,"
S&P said.
"We could lower the ratings if we believe it is inevitable the
company will engage in a distressed exchange or redemption, face a
near-term liquidity crisis, or breach a covenant within six months.
Given the company's continuously weak operating trends, weakening
liquidity, cash flows, and its convertible debt levels trading
significantly below par, we believe it could sell some assets and
restructure its debt in order to right-size its capital structure,"
S&P said. A payment shortfall or a covenant breach could occur if
the company's operating performance continues to weaken because of
accelerated contract loss or weak sales of its products at retail,
according to the rating agency.
"We could revise the outlook to stable or raise our ratings if we
believe a distressed exchange is not likely, and the company's cash
flow stabilizes such that it could generate sufficient free cash
flow to service the required debt amortization and pay interest
while maintaining projected covenant cushion of at least 15%," S&P
said, adding this could occur if Iconix wins new contracts,
improves contract renewal rates, and strengthens its profitability.
INDY FACETS: Seeks to Hire Redman Ludwig as Legal Counsel
---------------------------------------------------------
Indy Facets, LLC, seeks approval from the U.S. Bankruptcy Court for
the Southern District of Indiana to hire Redman Ludwig, PC, as its
legal counsel.
The firm will provide services in connection with the Debtor's
Chapter 11 case, which include legal advice regarding its power and
duties under the Bankruptcy Code; investigation and prosecution of
actions to recover its assets; and the preparation of a plan of
reorganization.
Redman Ludwig will charge an hourly fee of $300.
The firm neither represents nor holds any interest adverse to the
Debtor, according to court filings.
Redman Ludwig can be reached through:
Eric C. Redman, Esq.
Redman Ludwig, PC
151 N. Delaware Street, Suite 1106
Indianapolis, IN 46204
Phone: 317-854-0175
Fax: 317-636-8686
E-mail: eredman@redmanludwig.com
About Indy Facets
Indy Facets, LLC sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. S.D. Ind. Case No. 19-03433) on May 13,
2019. At the time of the filing, the Debtor had estimated assets
of less than $50,000 and liabilities of less than $1 million. The
case has been assigned to Judge Robyn L. Moberly.
JAGUAR HEALTH: Incurs $8.30 Million Net Loss in First Quarter
-------------------------------------------------------------
Jaguar Health, Inc., filed with the U.S. Securities and Exchange
Commission on May 21, 2019, its quarterly report on Form 10-Q
reporting a net loss attributable to common shareholders of $8.30
million on $1.58 million of total revenue for the three months
ended March 31, 2019, compared to a net loss attributable to common
shareholders of $6.69 million on $804,356 of total revenue for the
three months ended March 31, 2018.
As of March 31, 2019, Jaguar Health had $40.66 million in total
assets, $24.86 million in total liabilities, $9 million in series A
convertible preferred stock, and $6.79 million in total
stockholders' equity.
The Company has incurred recurring operating losses since inception
and has an accumulated deficit of $102.9 million as of March 31,
2019. The Company expects to incur substantial losses in future
periods. Further, the Company's future operations are dependent on
the success of the Company's ongoing development and
commercialization efforts, as well as securing additional
financing. There is no assurance that profitable operations, if
ever achieved, could be sustained on a continuing basis.
The Company plans to finance its operations and capital funding
needs through equity and/or debt financing, collaboration
arrangements with other entities, as well as revenue from future
product sales. However, there can be no assurance that additional
funding will be available to the Company on acceptable terms on a
timely basis, if at all, or that the Company will generate
sufficient cash from operations to adequately fund operating needs
or ultimately achieve profitability. If the Company is unable to
obtain an adequate level of financing needed for the long-term
development and commercialization of its products, the Company will
need to curtail planned activities and reduce costs. Doing so will
likely have an adverse effect on the Company's ability to execute
on its business plan. The Company said these matters raise
substantial doubt about its ability to continue in existence as a
going concern within one year after the issuance date of the
condensed consolidated financial statements.
A full-text copy of the Form 10-Q is available for free at:
https://is.gd/BRKqC4
About Jaguar Health
Jaguar Health, Inc. -- http://www.jaguar.health/-- is a commercial
stage pharmaceuticals company focused on developing novel,
sustainably derived gastrointestinal products on a global basis.
Its wholly-owned subsidiary, Napo Pharmaceuticals, Inc., focuses on
developing and commercializing proprietary human gastrointestinal
pharmaceuticals for the global marketplace from plants used
traditionally in rainforest areas. Jaguar Health's principal
executive offices are located in San Francisco, California.
Jaguar Health reported a net loss of $32.14 million for the year
ended Dec. 31, 2018, compared to a net loss of $21.96 million for
the year ended Dec. 31, 2017. As of Dec. 31, 2018, Jaguar Health
had $41.04 million in total assets, $26.65 million in total
liabilities, $9 million in series A convertible preferred stock,
and $5.38 million in total stockholders' equity.
BDO USA, LLP, in San Francisco, California, the Company's auditor
since 2013, issued a "going concern" opinion in its report dated
April 10, 2019, on the Company's consolidated financial statements
for the year ended Dec. 31, 2018, citing that the Company has
suffered recurring losses from operations and an accumulated
deficit that raise substantial doubt about its ability to continue
as a going concern.
JAMES O BRADY: Bankruptcy Administrator to Form Committee
---------------------------------------------------------
William Miller, U.S. bankruptcy administrator, on May 21 filed with
the U.S. Bankruptcy Court for the Middle District of North Carolina
a notice of opportunity to serve on the official committee of
unsecured creditors in James O. Brady, Inc.'s bankruptcy case.
Unsecured creditors willing to serve on the committee are required
to file a response within 10 days from May 21.
An organizational meeting will be scheduled after the committee is
appointed, according to the filing.
Mr. Miller can be reached through:
Susan O. Gattis
Bankruptcy Analyst
101 S. Edgeworth Street
Greensboro, NC 27401
Fax: 336-291-9913
Email: susan_gattis@ncmba.uscourts.gov
About James O. Brady Inc.
James O. Brady, Inc., a privately held company that provides
mailing and shipping services, sought protection under Chapter 11
of the Bankruptcy Code (Bankr. M.D. N.C. Case No. 19-10555) on May
20, 2019. At the time of the filing, the Debtor disclosed in
$861,042 in assets and $2,594,441 in liabilities.
The case has been assigned to Judge Benjamin A. Kahn. The Debtor
is represented by Ivey, McClellan, Gatton & Siegmund, LLP.
JEFF HUBBARD: U.S. Trustee Unable to Appoint Committee
------------------------------------------------------
No official committee of unsecured creditors has been appointed in
the Chapter 11 case of Jeff Hubbard Logging LLC as of May 22,
according to a court docket.
About Jeff Hubbard Logging
Hubbard Logging, Inc., filed a Chapter 11 bankruptcy petition
(Bankr. S.D. W.Va. Case No. 19-10048) on April 15, 2019, disclosing
under $1 million in both assets and liabilities. The case has been
assigned to Judge Frank W. Volk. The Debtor is represented by
Caldwell & Riffee, PLLC.
KONA GRILL: 2 Creditors Appointed New Committee Members
-------------------------------------------------------
The Office of the U.S. Trustee on May 21 appointed two new members
to the official committee of unsecured creditors in the Chapter 11
cases of Kona Grill, Inc., and its affiliates.
The two unsecured creditors are:
(1) JFC International, Inc.
Attn: Mr. Hidetaka Iinuma
7101 E. Slauson Avenue
Los Angeles, CA 90040
Phone: 323-236-0291
(2) Washington Prime Group, Inc.
Attn: Stephen E. Ifeduba
180 West Broad Street
Columbus, OH 43215
Phone: 614-621-9000
The bankruptcy watchdog had earlier appointed The Taubman Company,
Brookfield Property REIT Inc., Edward Don & Company, Tracy Fortman
and True Worlds Foods, LLC, court filings show.
About Kona Grill
Kona Grill, Inc. -- https://www.konagrill.com/ -- owns and operates
27 casual dining restaurants in 18 states, as well as Puerto Rico,
serving contemporary American favorites, sushi, and alcoholic
beverages throughout the United States and Puerto Rico.
Kona Grill, Inc., and its subsidiaries sought protection under
Chapter 11 of the Bankruptcy Code (Bankr. Del. Lead Case No.
19-10953) on April 30, 2019. As of Dec. 31, 2018, the Debtors'
total assets is $53,613,000 and total liabilities of $74,049,000.
The petition was signed by Christopher J. Wells, chief
restructuring officer.
The Debtors tapped Pachulski Stang Ziehl & Jones LLP as counsel;
Piper Jaffray as investment banker; Alvarez & Marsal North America,
LLC as restructuring advisor and Epiq Corporate Restructuring, LLC
as claims and noticing agent.
LIMORA INVESTMENTS: Chapter 15 Case Summary
-------------------------------------------
Chapter 15 Debtor: Limora Investments Limited
P.O. Box 146
Road Town, Tortola
British Virgin Islands
Chapter 15 Petition Date: May 23, 2019
Court: United States Bankruptcy Court
Southern District of New York
(Manhattan)
Chapter 15 Case No.: 19-11678
Judge: Hon. Martin Glenn
Foreign Representatives: Alexander Lawson and Paul Pretlove
70 Harbour Drive
PO Box 2507, 2nd Floor
George Town, GC
Cayman Islands
Foreign Representatives'
Counsel: Madlyn Gleich Primoff, Esq.
FRESHFIELDS BRUCKHAUS DERINGER US LLP
601 Lexington Avenue, 31st Floor
New York, NY 10019-9710
Tel: 212-277-4000
Fax: 212-277-4001
Email: madlyn.primoff@freshfields.com
Estimated Assets: Unknown
Estimated Debts: Unknown
A full-text copy of the petition is available for free at:
http://bankrupt.com/misc/nysb19-11678.pdf
LONG BLOCKCHAIN: Hikes Authorized Common Shares to 135 Million
--------------------------------------------------------------
Long Blockchain Corp. held a special meeting of its stockholders on
May 15, 2019, at which the Company's stockholders approved a
proposal to amend the Company's certificate of incorporation to
increase the total number of shares of common stock the Company is
authorized to issue by 100,000,000 shares, from 35,000,000 shares
to 135,000,000 shares.
The Amendment became effective on May 20, 2019, upon the filing of
a certificate of amendment with the Delaware Secretary of State.
Promptly after the filing of the certificate of amendment, on May
21, 2019, in accordance with the second amended and restated loan
and option agreement, dated as of Jan. 18, 2019, by and between the
Company and Court Cavendish Ltd., as lender, the Company issued to
certain of its key officers and consultants four-year warrants to
purchase 3,000,000 shares of the Company's common stock at an
exercise price of $0.25 per share, including Warrants to purchase
2,000,000 shares to Andy Shape, the Company's chief executive
officer. The exercise price and the number of shares issuable upon
exercise of the Warrants are subject to adjustment for stock
splits, stock dividends and similar transactions. In addition, the
Warrants may be exercised on a "cashless" basis. The lender
requested that the Warrants be issued in order to ensure the
interests of the recipients were aligned with those of the lender.
The Warrants were offered and sold, and the underlying shares of
the Company's common stock are being offered for sale, in reliance
on the exemption from registration provided by Section 4(a)(2) of
the Securities Act of 1933, as amended, for transactions not
involving a public offering.
About Long Blockchain Corp.
Headquartered in Hicksville, New York, Long Blockchain Corp. --
http://www.longblockchain.com/-- is focused on developing and
investing in globally scalable blockchain-based financial
technology solutions. It is dedicated to becoming a significant
participant in the evolution of blockchain technology that creates
long-term value for its shareholders and the global community by
investing in and developing businesses that are "on-chain".
Blockchain technology is fundamentally changing the way people and
businesses transact, and the Company will strive to be at the
forefront of this dynamic industry, actively pursuing
opportunities. Its wholly-owned subsidiary Long Island Brand
Beverages, LLC operates in the non-alcohol ready-to-drink segment
of the beverage industry under its flagship brand 'The Original
Long Island Brand Iced Tea'.
Long Blockchain incurred a net loss of $15.21 million in 2017 and
net loss of $10.44 million in 2016. As of Sept. 30, 2018, the
Company had $12.96 million in total assets, $4.14 million in total
liabilities, and $8.81 million in total stockholders' equity.
Marcum LLP, the Company's auditor since 2014, issued a "going
concern" opinion in its report on the consolidated financial
statements for the year ended Dec. 31, 2017, citing that the
Company has a significant working capital deficiency, has incurred
significant losses and needs to raise additional funds to meet its
obligations and sustain its operations. These conditions raise
substantial doubt about the Company's ability to continue as a
going concern.
MONITRONICS INTERNATIONAL: Signs Restructuring Support Agreement
----------------------------------------------------------------
Monitronics International, Inc., a wholly owned subsidiary of
Ascent Capital Group, Inc., has entered into a restructuring
support agreement with its largest creditors that will eliminate
approximately $885 million in debt.
Under the terms of the Support Agreement, up to approximately $685
million of debt will be converted to equity, including up to
approximately $585 million of the Company's 9.125% Senior Notes due
in 2020 and $100 million of the Company's term loans. The Company
will also receive an additional $200 million in cash from the
Company's noteholders through an equity rights offering and,
subject to certain conditions, from Ascent in connection with the
proposed merger with Monitronics, which cash will be used to, among
other things, repay remaining term loan debt.
Following the completion of the restructuring, the Company is
currently expected to have approximately $990 million of total
debt. Recurring Monthly Revenue as of March 31, 2019, was $40.8
million.
Under the terms of the Support Agreement, Monitronics and its
subsidiaries would effectuate the proposed transactions through a
partial pre-packaged plan of reorganization under Chapter 11 of the
U.S. Bankruptcy Code. The Company has already obtained support for
the proposed transactions from holders of approximately 83 percent
of its secured term loans and approximately 72 percent of its
senior unsecured notes.
The Company is confident, based on the Support Agreement reached
with its largest creditors, that it will be able to meet its
financial commitments and otherwise continue to operate its
business as usual throughout the restructuring period, including
paying its employees, dealers and suppliers in the normal course of
business and providing best-in-class home security to all of its
customers. As part of the anticipated Chapter 11 process, the
Company has secured a commitment for $245 million in
debtor-in-possession (DIP) financing that will be replaced by $295
million in exit financing at the completion of the reorganization.
The Support Agreement contemplates that all trade claims (whether
arising prior to or after the commencement of the voluntary Chapter
11 Cases) will be paid in full in the ordinary course of business,
and that the Company will continue operating its business without
disruption to its customers, vendors, partners or employees.
"The restructuring announced today will give our Company the
strongest balance sheet in our industry and, in doing so, will make
us an even stronger competitor and partner," said Jeffery Gardner,
president and chief executive officer of Monitronics. "With the
support of our largest creditors now solidly behind us, we look
forward to efficiently and definitively completing this debt
restructuring, so we may realize our full potential for long-term
growth and success."
Concurrent with the completion of the reorganization of Monitronics
under the Plan, Ascent will, subject to, among other things, the
receipt of the requisite approval of Ascent's stockholders, merge
into Monitronics. As a result of the Merger, all assets of Ascent,
including an anticipated approximately $23 million in cash, will
become assets of Monitronics. Ascent's stockholders are expected
to receive approximately up to 5.82% of the total shares of
Monitronics common stock expected to be issued and outstanding
immediately following completion of the reorganization and Merger,
but subject to dilution by certain shares issued under a management
incentive plan for the Company, in exchange for all then issued and
outstanding shares of Ascent common stock. If, however, Ascent is
expected to hold cash equal to or in excess of $20 million but less
than the Target Cash Amount as of the date of completion of the
reorganization of Monitronics under the Plan, the stockholders of
Ascent will receive a proportionately lower percentage of shares of
Monitronics common stock, and certain participants in the equity
rights offering have agreed to contribute the shortfall. If Ascent
is expected to hold less than $20 million in cash as of the date of
completion of the reorganization of Monitronics under the Plan, the
Merger will not be consummated, and certain participants in the
equity rights offering have agreed to contribute the full Target
Cash Amount. Additional information regarding the exchange ratio
to be applied in the Merger and the potential consequences of
Ascent failing to participate in the Merger will be set forth in a
proxy statement/prospectus related to the Merger to be filed with
the Securities and Exchange Commission.
Under the terms of the Support Agreement, Ascent must obtain
approval for the Merger from its stockholders within 65 days
following the date on which Monitronics commences the Chapter 11
cases. If the Merger is not approved within 65 days following the
Petition Date or the Merger is not completed on the effective date
of the Plan for any reason (including as a result of the occurrence
of certain circumstances described in the Support Agreement), the
Merger will not occur, and the restructuring of Monitronics will be
completed without the participation of Ascent. Further, if the
restructuring of Monitronics occurs without the participation of
Ascent, Ascent's equity interests in Monitronics will be, pursuant
to the Plan, cancelled without Ascent recovering any property or
value on account of such equity interests.
William Niles, chief executive officer and general counsel of
Ascent, stated, "It was important to us to retain value for the
Ascent stockholders, and the proposed Plan allows us to achieve
this objective. If the restructuring is completed with the
participation of Ascent, we believe Ascent stockholders will be
able to benefit from their investment in what will then be a
financially stronger and more competitive Monitronics."
A new Monitronics Board of Directors will be appointed at the
completion of the reorganization.
The shares of Series A common stock of Ascent are currently traded
on the NASDAQ Global Select Market (NASDAQ) under the symbol
"ASCMA," and the shares of Series B common stock of Ascent are
quoted on the OTC Markets under the symbol "ASCMB." There is no
current trading market for Monitronics' common stock. However,
Monitronics expects to seek the quotation of its common stock on
the OTC Markets following completion of the reorganization and the
Merger.
It is expected that shares of Ascent Series A common stock will
continue to trade through the completion of the Merger, subject to
applicable Nasdaq listing requirements. Ascent previously
disclosed in 8-Ks filed with the SEC, that it had received letters
from Nasdaq indicating that it was not in compliance with certain
public float and minimum bid price requirements necessary for
continued listing. Ascent is currently in the 180 day grace period
during which it could regain compliance. If upon expiration of
this grace period (which will occur during the restructuring
period), Ascent remains in non-compliance and is unsuccessful in
securing an extension of the grace period, the Ascent Series A
common stock will be delisted.
Monitronics is represented in this matter by Latham & Watkins LLP,
Hunton Andrews Kurth LLP, Moelis & Company LLC and FTI Consulting
Inc. Ascent is represented in this matter by Baker Botts L.L.P.
and B. Riley FBR, Inc.
About Monitronics
Headquartered in the Dallas-Fort Worth area, Monitronics provides
security alarm monitoring services to approximately 900,000
residential and commercial customers as of March 31, 2019. Ascent
Capital Group, Inc., is a holding company that owns Monitronics
International, Inc., doing business as Brinks Home Security.
Monitronics reported a net loss of $678.8 million for the year
ended Dec. 31, 2018, compared to a net loss of $111.29 million for
the year ended Dec. 31, 2017. As of March 31, 2019, Monitronics
had $1.33 billion in total assets, $1.95 billion in total
liabilities, and a total stockholders' deficit of $623.8 million.
KPMG LLP, in Dallas, Texas, the Company's auditor since 2011,
issued a "going concern" qualification in its report dated April 1,
2019, on the Company's consolidated financial statements for the
year ended Dec. 31, 2018, citing that the Company has substantial
indebtedness classified within current liabilities that raises
substantial doubt about its ability to continue as a going
concern.
* * *
In April 2019, S&P Global Ratings lowered the issuer credit rating
on Monitronics International Inc. to 'SD' from 'CC'. The downgrade
follows Monitronics' election not to make an approximately $26.7
million in interest on its 9.125% unsecured notes due 2020.
In April 2019, Moody's Investors Service downgraded Monitronics'
Corporate Family Rating to 'Ca' from 'Caa2'. The downgrade
reflects the Company's near-term debt maturities and the high
likelihood of a default event under Moody's definition in the near
term.
MTM AND ASSOCIATES: Case Summary & 2 Unsecured Creditors
--------------------------------------------------------
Debtor: MTM and Associates, Inc.
714 I St. NE
Washington, DC 20002
Business Description: MTM and Associates, Inc. owns in fee simple
four real estate properties in Washington,
D.C. having a total current value of
$2,433,115.
Chapter 11 Petition Date: May 22, 2019
Court: United States Bankruptcy Court
District of Columbia (Washington, D.C.)
Case No.: 19-00348
Debtor's Counsel: William C. Johnson, Jr., Esq.
LAW OFFICES OF WILLIAM C. JOHNSON, JR.
1310 L St. NW, Suite 750
Washington, DC 20005
Tel: (202) 525-2958
Fax: (301) 388-7473
E-mail: wjohnson@dcmdconsumerlaw.com
wcjjatty@yahoo.com
Total Assets: $2,433,115
Total Liabilities: $1,327,750
The petition was signed by Michael T. McIntosh, chief executive
officer.
A full-text copy of the petition containing, among other items, a
list of the Debtor's two unsecured creditors is available for free
at:
http://bankrupt.com/misc/dcb19-00348.pdf
NATURE'S SECOND CHANCE: June 24 Disclosure Statement Hearing
------------------------------------------------------------
The hearing to consider the adequacy of the Amended Disclosure
Statement explaining Nature's Second Chance Hauling, LLC's Chapter
11 Plan of Liquidation is scheduled for June 24, 2019 at 10:00 AM.
Deadline to object to the Disclosure Statement is June 14.
Class 2 consists of Allowed Unsecured Claim. Each holder of an
Allowed General Unsecured Claim shall receive its Pro Rata share of
remaining Cash. Distributions to holders of Allowed General
Unsecured Claims shall be made as soon as practicable as the
Liquidating Trustee may determine in its sole discretion.
The Liquidating Trustee will pursue all litigation against the KLT
Entities and other parties in order to maximize the recover to
creditors. The Plan is feasible on that basis.
A full-text copy of the Amended Disclosure Statement dated May 9,
2019, is available at https://tinyurl.com/yygquvyw from
PacerMonitor.com at no charge.
Attorney for the Debtor is Steven M. Wallace, Esq., at HeplerBroom,
LLC, in Edwardsville, Illinois.
About Nature's Second Chance Hauling
Nature's Second Chance Hauling, LLC, based in Alton, Illinois, is
a
privately-held company that provides specialty trucking services
to
a number of Fortune 500 Companies throughout the United States.
Nature's Second Chance Hauling sought protection under Chapter 11
of the Bankruptcy Code (Bankr. S.D. Ill. Case No. 18-30328) on
March 19, 2018.
In the petition signed by Vern Van Hoy, managing member, the
Debtor
estimated assets of $1 million to $10 million and liabilities of
$1
million to $10 million.
The Debtor tapped Heplerbroom LLC as its legal counsel.
The U.S. Trustee for Region 10 on April 25, 2018, appointed two
creditors to serve on the official committee of unsecured
creditors
in the Chapter 11 case. The committee members are: (1) Ryder
System, Inc.; and (2) Hogan Truck Leasing, Inc.
NATURE'S SECOND: June 24 Disclosure Statement Hearing
-----------------------------------------------------
The hearing to consider the adequacy of the Amended Disclosure
Statement with respect to Nature's Second Chance Leasing, LLC's is
scheduled for June 24, 2019 at 10:00 AM.
Deadline to object to Disclosure Statement is June 14.
Class 2 consists of Allowed Unsecured Claim, is impaired. Each
holder of an Allowed General Unsecured Claim shall receive its Pro
Rata share of remaining Cash. Distributions to holders of Allowed
General Unsecured Claims shall be made as soon as practicable as
the Liquidating Trustee may determine in its sole discretion.
The Liquidating Trustee will pursue all litigation against the KLT
Entities and other parties in order to maximize the recover to
creditors. The Plan is feasible on that basis.
A full-text copy of the Amended Disclosure Statement dated May 9,
2019, is available at https://tinyurl.com/y4k5s5bx from
PacerMonitor.com at no charge.
Attorney for the Debtor is Steven M. Wallace, Esq., at HeplerBroom,
LLC, in Edwardsville, Illinois.
About Nature's Second Chance Leasing
Nature's Second Chance Leasing, LLC, is a trucking company based
in
Alton, Illinois. It was in the business of owning trucks,
tractors, trailers, skid steers, and other Bobcat(R)-branded
equipment, which it leased to its affiliated entity, Nature's
Second Chance Hauling, LLC. Nature's Second Chance Hauling
sought
bankruptcy protection (Bankr. S.D. Ill. Case No. 18-30328) on
March 19, 2018.
Nature's Second Chance Leasing sought Chapter 11 protection
(Bankr.
S.D. Ill. Case No. 18-30777) on May 23, 2018. In the petition
signed by Vern Van Hoy, managing member, the Debtor estimated
assets and liabilities in the range of $1 million to $10 million.
The Debtor tapped Steven M. Wallace, Esq., at Heplerbroom, LLC, as
counsel.
NCI NEW CAPITAL: Chapter 15 Case Summary
----------------------------------------
Three affiliates that filed voluntary petitions seeking relief
under Chapter 15 of the Bankruptcy Code:
Debtor Case No.
------ --------
NCI New Capital Invest Oil & Gas USA 11 GmbH 19-16768
Nymphenburger Strasse 4
Munich 80335
Federal Republic of Germany
NCI New Capital Invest Oil & Gas USA 16 GmbH 19-16772
Nymphenburger Strasse 4
Munich 80335
Federal Republic of Germany
NCI New Capital Invest Oil & Gas USA 19 GmbH 19-16773
Nymphenburger Strasse 4
Munich 80335
Federal Republic of Germany
Chapter 15 Petition Date: May 22, 2019
Court: United States Bankruptcy Court
Southern District of Florida (Miami)
Foreign Representative: Rolf Pohlman, in his capacity as
insolvency administrator
Unterer Anger 3
Munich 80331
Germany
Foreign Representative's
Counsel: Gabriela Ruiz, Esq.
KOBRE & KIM LLP
201 S. Biscayne Blvd Suite 1900
Miami, FL 33131
Tel: (305) 967-6110
Email: gabriela.ruiz@kobrekim.com
Foreign Proceedings: Munich Local Court, Division for
Bankruptcy Matters, Ref.: 1500 IN
2874/14
Munich Local Court, Division for
Bankruptcy Matters, Ref.: 1500 IN
2876/14
Munich Local Court, Division for
Bankruptcy Matters, Ref.: 1500 IN
1011/15
Estimated Assets: Unknown
Estimated Debts: Unknown
Full-text copies of the Chapter 15 petitions are available for free
at:
http://bankrupt.com/misc/flsb19-16768.pdf
http://bankrupt.com/misc/flsb19-16772.pdf
http://bankrupt.com/misc/flsb19-16773.pdf
PIONEER ENERGY: All 4 Proposals Approved at Annual Meeting
----------------------------------------------------------
At Pioneer Energy Services Corp.'s annual meeting held on May 16,
2019, the Company's stockholders:
(a) elected J. Michael Rauh as a Class III director to hold
office until the Company's 2022 Annual Meeting of
Shareholders;
(b) approved the amendment and restatement of the Amended and
Restated Pioneer Energy Services Corp. 2007 Incentive
Plan;
(c) approved, on an advisory basis, the compensation paid to
the Company's named executive officers; and
(d) ratified the appointment of KPMG LLP as the Company's
independent registered public accounting firm for the 2019
fiscal year.
The Company's shareholders approved the amendment and restatement
of the Amended and Restated Pioneer Energy Services Corp. 2007
Incentive Plan to:
i. increase the number of authorized shares that can be
awarded under the plan by 3,200,000 shares (from 13,850,000
shares to 17,050,000 shares);
ii. extend the term of the plan from May 13, 2023, until May
16, 2029;
iii. update the plan to conform to certain changes made to
Section 162(m) of the Internal Revenue Code of 1986, as
amended by the Tax Cut and Jobs Act of 2017, which
includes, among other things, removing the annual limits
on awards to employees and consultants;
iv. provide that no portion of an award granted under the plan
(other than a cash award) may vest or become exercisable
before the one-year anniversary of the date of grant of
such award; provided that (a) the Compensation Committee
retains discretion to accelerate the vesting and
exercisability of any award granted under the plan, and
(b) up to 5% of the shares available for issuance under the
plan may be issued without regard to this minimum vesting
requirement;
v. provide that no dividends or dividend equivalents may be
paid currently on an unvested stock award. Further, no
dividends or dividend equivalents may be paid with respect
to a stock option or stock appreciation right granted
under the plan on or after May 16, 2019; and
vi. make certain other clarifying changes.
About Pioneer Energy
Based in San Antonio, Texas, Pioneer Energy Services --
http://www.pioneeres.com/-- provides well servicing, wireline, and
coiled tubing services to producers in the U.S. Gulf Coast,
Mid-Continent and Rocky Mountain regions through its three
production services business segments. Pioneer also provides
contract land drilling services to oil and gas operators in Texas,
the Mid-Continent and Appalachian regions and internationally in
Colombia through its two drilling services business segments.
Pioneer Energy reported a net loss of $49.01 million for the year
ended Dec. 31, 2018, compared to a net loss of $75.11 million for
the year ended Dec. 31, 2017. As of March 31, 2019, the Company
had $737.09 million in total assets, $586.12 million in total
liabilities, and $150.96 million in total shareholders' equity.
* * *
Moody's Investors Service had upgraded Pioneer Energy Services'
Corporate Family Rating to 'Caa2' from 'Caa3'. Moody's said that
Pioneer's 'Caa2' CFR reflects the company's elevated debt balance
pro forma for the $175 million senior secured term loan issuance.
Moody's said that while the company's operating cash flow is
expected to improve due to good demand for its drilling rigs and
equipment services, Pioneer Energy Services' leverage metrics are
weak, as reported by the Troubled Company Reporter on Nov. 13,
2017.
In January 2019, S&P Global Ratings lowered the issuer credit
rating on Pioneer Energy Services Corp. to 'CCC+' from 'B-'. S&P
said, "The downgrade on Pioneer Energy Services Corp. primarily
reflects what we believe to be increasing refinancing risk, as well
as subdued expectations for operating results in 2019.
POC PROPERTIES: Court Confirms 2nd Amended Plan
-----------------------------------------------
The Bankruptcy Court has issued an order confirming the Second
Amended Joint Plan of Reorganization of POC Properties, LLC, and
its debtor affiliates.
If the Debtors amend their schedules of claims, any creditor
affected by the amendment shall have 21 days after receiving notice
of the amendment to file a proof of claim.
Class 4: Allowed Unsecured Claims of Monty. As of the Effective
Date, the total of Monty's Allowed Unsecured Claims against the
Debtors is $6,875,404. Monty shall retain its Liens on its
Collateral to secure the obligations of the Debtors and Reorganized
Debtor to Monty on its Allowed Unsecured Claims under the Plan.
Warren and Steve Blumenthal shall make payments as required in
Addendum 3.11 to the Debtors.
Class 6: Allowed Unsecured Claim of Seavey against POC. Seavey
shall be paid $160,000 on or before 30 days after the Effective
Date. The lease of the Verano Property to Insiteworks, PC, a New
Mexico professional corporation, is assumed as of the Effective
Date. Insiteworks, PC's 5-year sublease commencing June 1, 2016
with Precision Survey is ratified and approved by POC and assigned
to Monty. Upon delivery of the Payment, the Seavey Parties' shall
assign their claims against POC Properties, LLC, Warren S.
Blumenthal and Steven H. Blumenthal, including but not limited to
claims arising under the Promissory Note dated August 22, 2007 in
the original stated principal amount of $1,250,000 and the
Blumenthals' guaranties executed in connection with the Note to an
unaffiliated entity designated by the Blumenthals.
Class 7: Allowed Unsecured Claims Against the Debtors. Allowed
Unsecured Claims in Class 7 shall be paid by the Debtors in full,
without interest, within 30 days of the Effective Date.
Class 8: Allowed Unsecured Insider Claims. Allowed Claims in Class
8 are impaired. Allowed Claims in Class 8 shall retain any Claims
they may have against the Debtors. Class 8 Insider Claims shall not
be paid.
Class 3: Allowed Secured Claims of Monty against the Debtors. The
Allowed Claims of Monty against the Debtors are impaired. As of the
Effective Date, the total of Monty’s Secured Claims is
$20,457,579. This includes Adequate Protection Payments and the
proceeds from the sale of the Masthead Property.. On the Effective
Date, the Debtors shall execute deeds in lieu of foreclosure
conveying the Verano, Otono and Tanoan Properties to Monty. On the
Effective Date, the Debtors shall execute a deed in lieu of
foreclosure dated as of January 2, 2020, conveying the Conejos
Property to Monty, or its designee. The deed in lieu for the
Conejos Property shall be held in trust for the benefit of the
Debtors pursuant to and subject to the terms of Addendum 3.11. As
of the Effective Date, the Conejos Property shall remain under the
management of the Receiver, and all of the Receiver’s decisions
regarding the management and operation of the Conejos Property
shall be made with Monty’s consent. The Receiver shall pay all
net operating income to Monty after she has paid all expenses of
the property.
Class 5: Security Deposit Claims Against the Debtors. The Security
Deposit Claims against the Debtors are unimpaired by the Plan. The
Reorganized Debtors will honor their obligations under the Claims
pursuant to the agreements existing on the Petition Date and
entered into after it. The Security Deposits are identified on
Addendum 3.5 and shall be held by the Receiver.
Class 9: Equity Interests in the Debtors. The Interests in the
Debtors in Class 9 are unimpaired and unaffected under the Plan.
They shall retain their Interests.
Payments to Creditors shall be from the regular business income of
the Reorganized Debtors, Cash available to the Debtors on the
Effective Date and contributions from Steven and Warren Blumenthal
made pursuant to Addendum 3.11. The Blumenthals shall each
contribute $600,000, a total of $1.2 million, as capital
contributions to the Debtors during the first three years after the
Effective Date.
A full-text copy of the Disclosure Statement dated May 9, 2019, is
available at https://tinyurl.com/y6rcrbmx from PacerMonitor.com at
no charge.
About POC Properties
POC Properties, LLC, SOP Academy, LLC and Academy Road Partners,
LLC, filed Chapter 11 bankruptcy petitions (Bankr. E.D. Wisc. Case
Nos. 15-33291, 15-33292 and 15-33293, respectively) on Dec. 11,
2015. Warren S. Blumenthal signed the petition as authorized
person. The Debtors estimated both assets and liabilities in the
range of $10 million to $50 million. Judge Susan V. Kelley is
assigned to the case. Kerkman & Dunn represents the Debtors.
POWERTEAM SERVICES: S&P Lowers ICR to 'B-'; Outlook Negative
------------------------------------------------------------
S&P Global Ratings lowered its issuer-credit rating on Gas and
electric infrastructure maintenance and service provider PowerTeam
Services LLC to 'B-' from 'B'. The outlook is negative.
At the same time, S&P lowered its issue-level ratings on the
company's $60 million revolver and $595 million first-lien term
loan to 'B-' from 'B'. S&P also lowered its issue-level rating on
the company's $135 million second-lien term loan to 'CCC' from
'CCC+'.
The rating actions reflect the continued deterioration in
PowerTeam's credit measures, despite decent demand in both the
electric and gas end markets. Although S&P expects restructuring
initiatives will contribute toward longer-term margin improvement,
the rating agency said it could lower the rating if the company is
unable to generate sustainable positive free cash flow in the near
term and reduce its debt load.
The negative outlook reflects S&P's expectation that over the next
12 months, the company will be challenged to generate positive free
cash flow as it undertakes restructuring efforts and cost-cutting
initiatives in its electric segment and services its increased
debt.
"We could lower the ratings within the next 12 months if
weaker-than-expected operating performance results in sustained
negative free operating cash flow (FOCF) or strained liquidity,"
S&P said, adding this could occur if cash flow is meaningfully
negative due to a continued decline in margins or continued
slowdown in the company's electric segment.
"Alternatively, we could lower the ratings if we come to believe
that PowerTeam depends on favorable business, financial, and
economic conditions to meet its financial commitments. We could
also do so if we view the company's financial commitments as
unsustainable in the long term, even though it may not face a
credit or payment crisis within the next 12 months," the rating
agency said.
"Although unlikely over the next 12 months, we could raise the
rating if the company improves its operating performance, such that
FOCF to debt increases toward the low-single-digit percentage area.
We would need to believe that the company and its financial sponsor
are committed to maintaining financial policies that will support a
reduction in leverage and increased cash flow generation," S&P
said.
PRESTIGE HEALTH: Case Summary & 3 Unsecured Creditors
-----------------------------------------------------
Debtor: Prestige Health Care Services, Inc.
340 Main Street, Suite 977
Worcester, MA 01608
Business Description: Prestige Health Care Services, Inc. --
https://www.prestigehcs.com -- provides
these health care services: skilled nursing,
medical social services, private pay
services, physical therapy, occupational
therapy, and home health aide. In addition,
Prestige Health specializes in caring for
workers who contracted illnesses while
working in the uranium industry during the
Cold War.
Chapter 11 Petition Date: May 22, 2019
Court: United States Bankruptcy Court
District of Massachusetts (Worcester)
Case No.: 19-40852
Judge: Hon. Christopher J. Panos
Debtor's Counsel: Richard N. Gottlieb, Esq.
LAW OFFICES OF RICHARD N. GOTTLIEB
Ten Tremont Street
Suite 11, 3rd Floor
Boston, MA 02108
Tel: (617) 742-4491
Fax: (617) 742-5188
Email: rnglaw@verizon.net
Estimated Assets: $0 to $50,000
Estimated Liabilities: $1 million to $10 million
The petition was signed by Isdory Lyamuya, president.
A full-text copy of the petition containing, among other items, a
list of the Debtor's three unsecured creditors is available for
free at:
http://bankrupt.com/misc/mab19-40852.pdf
PWR INVEST: Voluntary Chapter 11 Case Summary
---------------------------------------------
Debtor: PWR Invest, LP
3710 Rawlins Street, Suite 1100
Dallas, TX 75219
Business Description: PWR Invest, LP is a privately held company
in Dallas, Texas.
Chapter 11 Petition Date: May 23, 2019
Court: United States Bankruptcy Court
District of Delaware (Delaware)
Case No.: 19-11164
Judge: Hon. Mary F. Walrath
Debtor's
Counsel: PRONSKE & KATHMAN, P.C.
Debtor's
Co-Counsel: Kevin G. Collins, Esq.
BARNES & THORNBURG LLP
1000 N. West Street, Suite 1500
Wilmington, DE 19801
Tel: 302-300-3455
Fax: 302-300-3456
Email: kevin.collins@btlaw.com
Debtor's
Restructuring
Advisor: FTI CONSULTING, INC.
Estimated Assets: $50 million to $100 million
Estimated Liabilities: $50 million to $100 million
The petition was signed by Mark H. Reed, director GP PWR Invest,
Inc., general partner.
The Debtor failed to include in the petition a list of its 20
largest unsecured creditors.
A full-text copy of the petition is available for free at:
http://bankrupt.com/misc/deb19-11164.pdf
PWR OIL & GAS: Voluntary Chapter 11 Case Summary
------------------------------------------------
Debtor: PWR Oil & Gas General Partners, Inc.
3710 Rawlins Street, Suite 1100
Dallas, TX 75219
Business Description: PWR Oil & Gas General Partners, Inc. is a
privately held company in the oil and gas
industry.
Chapter 11 Petition Date: May 22, 2019
Court: United States Bankruptcy Court
District of Delaware (Delaware)
Case No.: 19-11161
Judge: Hon. Mary F. Walrath
Debtor's Co-Counsel: Kevin G. Collins, Esq.
BARNES & THORNBURG LLP
1000 N. West Street, Suite 1500
Wilmington, DE 19801
Tel: 302-300-3455
302-300-3434
Fax: 302-300-3456
Email: kevin.collins@btlaw.com
Debtor's
General
Counsel: PRONSKE & KATHMAN, P.C.
Debtor's
Restructuring
Advisor: FTI CONSULTING, INC.
Estimated Assets: $50 million to $100 million
Estimated Liabilities: $50 million to $100 million
The petition was signed by Mark H. Reed, director.
The Debtor failed to submit a list of its 20 largest unsecured
creditors at the time of the filing.
A full-text copy of the petition is available for free at:
http://bankrupt.com/misc/deb19-11161.pdf
SANTA ROSA ACADEMY: S&P Alters Outlook to Pos., Affirms BB+ Rating
------------------------------------------------------------------
S&P Global Ratings revised its outlook to positive from stable and
affirmed its 'BB+' long-term rating on the California Municipal
Finance Authority's series 2012 and series 2015 charter school
revenue bonds, issued for Santa Rosa Academy Inc. (SRA or the
academy).
"The outlook revision is based on our view of the academy's growing
unrestricted days' cash on hand, and consistently positive
operations, which combined with the academy's already steady market
position supports the potential for an upgrade," said S&P Global
Ratings credit analyst Shivani Singh. "In our view, the academy's
strengthening liquidity, cash flow, and coverage provides an offset
for its above-average debt burden; should overall trends continue,
we could consider raising the rating over the outlook period."
S&P assessed the academy's enterprise profile as strong,
characterized by a long institutional tenure, successful charter
renewals, steady enrollment (including homeschoolers), robust wait
lists, and a stable management team. It assessed the academy's
financial profile as vulnerable with a high debt burden compared
with peers and the rating median.
VICTORY CAPITAL: S&P Downgrades ICR to 'BB-' on Higher Leverage
---------------------------------------------------------------
S&P Global Ratings said it lowered its issuer credit rating on
Victory Capital Holdings Inc. to 'BB-' from 'BB' and removed the
rating from CreditWatch, where it placed it with negative
implications in September 2018. The outlook is stable.
At the same time, S&P rated Victory's proposed secured first-lien
term loan and secured revolving facility 'BB-'. The recovery rating
on the company's debt is '4', indicating S&P's expectation for
average (approximately 40%) recovery.
Victory intends to fund its acquisition of USAA Asset Management
through a $1.13 billion term loan. The proposed debt offering will
push leverage, as measured by net debt to EBITDA, between 3.0x-4.0x
on an annual run-rate basis, breaking through S&P's previous 3x
threshold for a downgrade. Following this offering, Victory will be
one of the most leveraged publicly traded asset managers that it
covers.
"Our stable outlook is based on our belief that Victory will
successfully integrate USAA. We expect stable AUM and some cost
savings will propel EBITDA higher, leading to lower leverage. We
don't expect any additional debt-fueled acquisitions," S&P said.
"We could lower the rating if the company makes an additional debt
fueled acquisition. Moreover, integration complications, such as
net outflows of acquired AUM, could lead us to lower the rating,"
the rating agency said.
S&P said an upgrade is unlikely over the next 12 months, adding
that over the long term, it could upgrade the company if leverage
declines below 3.0x on a sustained basis.
YUMA ENERGY: Reports Updated Corporate Developments
---------------------------------------------------
Yuma Energy, Inc., on May 20, 2019, filed its quarterly report on
Form 10-Q for the three months ended March 31, 2019 with the
Securities and Exchange Commission. Investors and stockholders may
obtain the Company's Form 10-Q, Form 10-K and other documents filed
with the SEC free of charge at the SEC's website,
http://www.sec.gov/ In addition, copies of the Company's filings
are available on its website at http://www.yumaenergyinc.com/
Recent Developments
On April 26, 2018, the Company closed the previously announced sale
of its California assets for $2.1 million, resulting in net
proceeds of $1.8 million. Approximately $1.2 million was applied
against the principal of its outstanding debt, and the balance
($0.6 million) provided working capital to the Company.
On March 1, 2019, Mr. Anthony C. Schnur was appointed chief
restructuring officer, and on March 28, 2019, he was appointed
interim chief executive officer of the Company following the
departure of Mr. Sam L. Banks. On April 5, 2019, Mr. Schnur was
further appointed interim chief financial officer in addition to
his other duties. As reported, Mr. Schnur will not receive any
additional compensation for the incremental duties.
The Company believes that with the leadership and management of Mr.
Schnur, it has the requisite experience and expertise in place to
affect a restructuring of its business operations and its balance
sheet; however, significant uncertainty exists as to the viability
of a restructuring and the Company's ability to continue as a going
concern.
During the first quarter and continuing to date, the Company has
taken significant steps to reduce corporate overhead. These
reductions will be reflected in the Company's second quarter
results. Additional cost cutting measures are being considered and
will be implemented when determined that those reductions will not
impair the Company's ability to reasonably manage the business.
In addition, the Company is conducting a comprehensive review of
its operations, particularly regarding those wells and facilities
with high operating costs. Funds allocated to field work will be
directed toward those activities that provide short payback
periods, maintain production levels, or provide additional
production from higher margin operations. The Company does not
anticipate its activities will include expensive workovers or the
drilling of new wells through the restructuring process.
Multiple options to restructure the Company are being investigated
and pursued. These include, but are not limited to, restructuring
the Company's credit facility, which may involve the sale of its
existing commercial bank loan to a third party, sales of additional
properties, or acquisitions from or with a financial sponsor to
create a larger company with greater operating activities. The
Company is engaged in various discussions on these fronts and
continues to work with Seaport Global Securities LLC, an investment
banking firm, to advise the Company on its strategic alternatives.
Management Comments
Mr. Anthony C. Schnur, interim chief executive officer and chief
restructuring officer stated, "We are acting swiftly and diligently
to identify an actionable restructuring solution to better position
the Company for the future benefit of all stakeholders. We are
committed to this process and pursuing a strategy and resulting
transaction which may include additional asset sales, one or more
acquisitions, restructured debt facilities, equity financings
and/or a corporate merger. We believe that a successful resolution
to Yuma's financial circumstances will require not only improving
cash flow margins, but a likely blend of debt refinancing and asset
combinations."
Continuing Uncertainty
The Company's audited consolidated financial statements for the
year ended Dec. 31, 2018, included a going concern qualification.
The risk factors and uncertainties described in the Company's SEC
filings for the year ended Dec. 31, 2018 and the quarter ended
March 31, 2019, as well as continuing events of default under the
Company's credit agreement, and its substantial working capital
deficit of approximately $40.0 million as of March 31, 2019,
including approximately $34.0 million of bank debt, continue to
raise substantial doubt about the Company's ability to continue as
a going concern.
Other Matters
Finally, as previously reported, the Company received a deficiency
letter from the NYSE American stock exchange indicating the
Company's common stock has been selling for a low price per share
for a substantial period of time, and the Company must demonstrate
an improved share price or effect a reverse stock split of its
common stock by no later than July 4, 2019, in order to maintain
the listing of the Company's common stock on the NYSE American.
The Company could be subject to immediate de-listing should the
stock price decline to $0.06. The NYSE American notification of
continued listing deficiency does not affect the Company's business
operations or its SEC reporting obligations. At present, the
Company intends to affect a reverse stock split to maintain its
listing, pending the approval of our shareholders at its annual
meeting scheduled for June 12, 2019.
About Yuma Energy
Yuma Energy, Inc. -- http://www.yumaenergyinc.com/-- is an
independent Houston-based exploration and production company
focused on acquiring, developing and exploring for conventional and
unconventional oil and natural gas resources. Historically, the
Company's activities have focused on inland and onshore properties,
primarily located in central and southern Louisiana and
southeastern Texas. Its common stock is listed on the NYSE
American under the trading symbol "YUMA."
Yuma Energy reported a net loss attributable to common stockholders
of $17.07 million for the year ended Dec. 31, 2018, compared to a
net loss attributable to common stockholders of $6.80 million for
the year ended Dec. 31, 2017. As of March 31, 2019, Yuma Energy
had $66.53 million in total assets, $45.84 million in total current
liabilities, $14.68 million in total other noncurrent liabilities,
and $5.99 million in total stockholders' equity.
Going Concern Uncertainty
Moss Adams LLP, in Houston, Texas, the Company's auditor since
2017, issued a "going concern" qualification in its report dated
April 2, 2019, on the Company's consolidated financial statements
for the year ended Dec. 31, 2018, citing that the Company is in
default on its credit facility, has a substantial working capital
deficit, no available capital to maintain or develop its properties
and all hedging agreements have been terminated by counterparties.
These conditions raise substantial doubt about the Company's
ability to continue as a going concern.
[^] BOOK REVIEW: GROUNDED: Destruction of Eastern Airlines
----------------------------------------------------------
Grounded: Frank Lorenzo and the Destruction of Eastern Airlines
Author: Aaron Bernstein
Publisher: Beard Books
Softcover: 272 Pages
List Price: $34.95
Order a copy today at
http://www.beardbooks.com/beardbooks/grounded.html
Barbara Walters once referred to Frank Lorenzo as "the most hated
man in America." Since 1990, when this work was first published and
Eastern Airlines' troubles were front-page news, there have been
many worthy contenders for the title. Nonetheless, readers
sensitive to labor-management concerns, particularly in the context
of corporate restructurings, will find in this book much to support
Barbara Walters' characterization.
To recap: For a few brief and discordant years, Frank Lorenzo was
boss of the biggest airline conglomerate in the free world
(Aeroflot was larger), combining Eastern, Continental, Frontier,
and People Express into Texas Air Corporation, financing his empire
with junk bonds. TAC ultimately comprised a fleet of 451 planes and
50,000 employees, with revenues of $7 billion.
But Lorenzo was lousy on people issues, famously saying, "I'm not
paid to be a candy ass." The mid-1980s were a bad time to take that
approach. Those were the years when the so-called Japanese model of
management, which emphasized cooperation between management and
labor, was creating a stir. The Lorenzo model was old school: If
the unions give you any trouble, break 'em.
That strategy had worked for him at Continental, where he'd filed
Chapter 11 despite the airline's $60 million in cash reserves, in
order to exploit a provision in Bankruptcy Code allowing him to
abrogate his contracts with the unions. But Congress plugged that
loophole by the time Lorenzo went to the mat with Charles Bryan, I
AM chapter president. Lorenzo might have succeeded in breaking the
machinists alone, but when flight attendants and pilots honored the
picket lines, he should have known it was time to deal. He didn't.
Instead he tried again for a strategic advantage through the
bankruptcy courts, by filing Chapter 11 in the Southern District of
New York where bankruptcy judges were believed to be more favorably
disposed toward management than in Miami where Eastern was
headquartered. Eastern had to hide behind the skirts of its
subsidiary, Ionosphere Clubs, Inc., a New York corporation, in
order to get into SDNY. Six minutes later, Eastern itself filed in
the same court as a related proceeding.
The case was assigned to Judge Burton Lifland, whom Eastern's
bankruptcy lawyer, Harvey Miller, knew well, but Lorenzo was
mistaken if he believed that serendipitous lottery assignment would
be his salvation. Judge Lifland a year later declared Lorenzo unfit
to run the airline and appointed Martin Shugrue as trustee.
Most hated man or not, one wonders whether the debacle was all
Lorenzo's fault. Eastern's unions, in particular the notoriously
militant machinists, were perpetual malcontents, and Charlie Bryan
was an anti-management zealot, to the point of exasperating even
other IAM officers.
The book provides a detailed account of the three-and-a-half-year
period between Lorenzo's acquisition of Eastern in the autumn of
1986 and Judge Lifland's appointment of the trustee in April 1990.
It includes the history of Eastern's pre-Lorenzo management, from
World War I flying ace Eddie Rickenbacker to astronaut Frank
Borman.
Aaron Bernstein won numerous awards during his 20-year career as a
professional journalist. He is an associated editor for Business
Week.
Aaron Bernstein is the editor of Global Proxy Watch, a corporate
governance newsletter for institutional investors. He is also a
non-resident Senior Research Fellow at the Pensions and Capital
Stewardship Project at Harvard Law School. He left BusinessWeek
magazine in 2006 after a 23-year career as an editor and senior
writer covering workplace and social issues.
*********
Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par. Prices are
obtained by TCR editors from a variety of outside sources during
the prior week we think are reliable. Those sources may not,
however, be complete or accurate. The Monday Bond Pricing table
is compiled on the Friday prior to publication. Prices reported
are not intended to reflect actual trades. Prices for actual
trades are probably different. Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy or
sell any security of any kind. It is likely that some entity
affiliated with a TCR editor holds some position in the issuers
public debt and equity securities about which we report.
Each Tuesday edition of the TCR contains a list of companies with
insolvent balance sheets whose shares trade higher than $3 per
share in public markets. At first glance, this list may look like
the definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical cost
net of depreciation may understate the true value of a firm's
assets. A company may establish reserves on its balance sheet for
liabilities that may never materialize. The prices at which
equity securities trade in public market are determined by more
than a balance sheet solvency test.
On Thursdays, the TCR delivers a list of recently filed
Chapter 11 cases involving less than $1,000,000 in assets and
liabilities delivered to nation's bankruptcy courts. The list
includes links to freely downloadable images of these small-dollar
petitions in Acrobat PDF format.
Each Friday's edition of the TCR includes a review about a book of
interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.
Monthly Operating Reports are summarized in every Saturday edition
of the TCR.
The Sunday TCR delivers securitization rating news from the week
then-ending.
TCR subscribers have free access to our on-line news archive.
Point your Web browser to http://TCRresources.bankrupt.com/and use
the e-mail address to which your TCR is delivered to login.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published
by Bankruptcy Creditors Service, Inc., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA.
Jhonas Dampog, Marites Claro, Joy Agravante, Rousel Elaine
Tumanda, Valerie Udtuhan, Howard C. Tolentino, Carmel Paderog,
Meriam Fernandez, Joel Anthony G. Lopez, Cecil R. Villacampa,
Sheryl Joy P. Olano, Psyche A. Castillon, Ivy B. Magdadaro, Carlo
Fernandez, Christopher G. Patalinghug, and Peter A. Chapman, Editors.
Copyright 2019. All rights reserved. ISSN: 1520-9474.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers. Information contained
herein is obtained from sources believed to be reliable, but is
not guaranteed.
The TCR subscription rate is $975 for 6 months delivered via
e-mail. Additional e-mail subscriptions for members of the same
firm for the term of the initial subscription or balance thereof
are $25 each. For subscription information, contact Peter A.
Chapman at 215-945-7000.
*** End of Transmission ***