/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/200327.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, March 27, 2020, Vol. 24, No. 86 Headlines 267 SAW MILL: Seeks to Hire Houlihan Lawrence as Real Estate Broker ADVAXIS INC: Incurs $7.86 Million Net Loss in First Quarter AIMBRIDGE HOSPITALITY: Moody's Cuts CFR to B3, Outlook Negative AIR INDUSTRIES: Achieves $54.6-Mil. Revenue in 2019, up 23% YOY ALASKA UROLOGICAL: Case Summary & 20 Largest Unsecured Creditors AMC ENTERTAINMENT: Moody's Cuts CFR to B3, On Review for Downgrade AMERICAN COMMERCIAL: Bankruptcy Court Confirms Pre-Packaged Plan ASCENA RETAIL: Closes All Stores For Now Amid COVID-19 Pandemic AVIANCA HOLDINGS: Further Reduces Capacity Amid COVID-19 Pandemic AVIANCA HOLDINGS: To Conduct General Meeting via Videoconference AYTU BIOSCIENCE: Regains Compliance with Nasdaq Bid Price Rule BLINK CHARGING: Elects Kenneth Marks to Board of Directors BLOOMIN' BRANDS: Moody's Cuts CFR to Ba3, On Review for Downgrade BLUBELLE LLC: Seeks to Hire Andersen Law Firm as Legal Counsel BOSS OYSTER: Seeks to Hire Weeks Auction Group as Auctioneer BOYD GAMING: Moody's Cuts CFR to B2, Outlook Negative BRINKER INT'L: Moody's Cuts CFR to Ba3 & Unsecured Notes to B2 CARLSON TRAVEL: Fitch Places 'B+' IDR on Watch Negative CARVANA CO: Agrees to Sell a Pool of Finance Receivables to Ally CBAC GAMING: Moody's Cuts CFR to Caa2, Outlook Negative CENTURION PIPELINE: Fitch Cuts IDR to BB- & Alters Outlook to Neg. CHAMP ACQUISITION: Moody's Alters Outlook on B2 CFR to Negative CITYCENTER HOLDINGS: Moody's Cuts CFR to B2, Outlook Negative COOPER'S HAWK: Moody's Cuts CFR to Caa1, Outlook Negative COVENANT SURGICAL: Moody's Places B3 CFR on Review for Downgrade CPI CARD: Moody's Affirms 'Caa1' CFR & Rates Sr. Term Loan 'B1' CSC HOLSINGS: Moody's Assigns B1 CFR, Outlook Stable CVENT INC: Moody's Lowers CFR to Caa1 & Alters Outlook to Negative CWGS ENTERPRISES: Moody's Cuts CFR to B3, Outlook Negative DALTON LOGISTICS: Seeks to Hire Daniel Robinson as Accountant DIGICERT HOLDINGS: Fitch Withdraws B+ LT IDR on Debt Repayment DIOCESE OF HARRISBURG: Hires Epiq Corporate as Admin. Advisor E.W. SCRIPPS: Fitch Alters Outlook on 'B+' LT IDR to Negative ECHO ENERGY: Case Summary & 30 Largest Unsecured Creditors EDELMAN FINANCIAL: Moody's Lowers CFR to B3, Outlook Stable EDIFY WELLNESS: Seeks to Hire Stone & Baxter as Counsel EKSO BIONICS: Effects 1-for-15 Reverse Stock Split ENDEAVOR ENERGY: Moody's Alters Outlook on Ba3 CFR to Stable EP ENERGY: Bankruptcy Court Confirms Reorganization Plan EUREKA 93: Files Notice of Intention to Make Proposal Under BIA EYECARE PARTNERS: Moody's Places B3 CFR on Review for Downgrade FAIRWAY GROUP: Announces Qualified Overbid by Bogopa Enterprises FIFTH DAY: Seeks to Hire Rafool & Bourne as Bankruptcy Counsel FOGO DE CHAO: Moody's Cuts CFR to B3 & Alters Outlook to Negative FOUR SEASONS: Moody's Alters Outlook on Ba3 CFR to Negative FREEDOM MORTGAGE: Fitch Places 'BB-' LT IDR on Watch Negative FS ENERGY: Moody's Cuts CFR to Ba3 & Reviews Rating for Downgrade GK HOLDINGS: Moody's Cuts CFR to Ca, Outlook Negative GL BRANDS: Partners with Ontel Products to Launch 'Green Relief' GNC HOLDINGS: Incurs $33.5 Million Net Loss in Fourth Quarter GOGO INC: Elects to Borrow $22 Million Under ABL Credit Facility GOLDEN NUGGET: Moody's Cuts CFR to B3 & Sr. Unsec. Notes to Caa1 GUADALUPE REGIONAL: Fitch Affirms 'BB' Issuer Default Rating GUILBEAU MARINE: District Court to Hear Suit vs T&C Marine et al. HILTON WORLDWIDE: Moody's Places Ba1 CFR on Review for Downgrade HORIZON GLOBAL: Idles Manufacturing Facilities Amid COVID Pandemic HUDBAY MINERALS: Fitch Gives 'B+' LongTerm IDR, Outlook Stable INPIXON: Signs $6.5 Million Note Purchase Agreement with Iliad ISRAEL BAPTIST: Case Summary & 14 Unsecured Creditors LAKELAND TOURS: Moody's Cuts CFR to Caa3, Outlook Negative LIP INC: Agrees to Amendment to Plan and Disclosures LITTLE FEET: Hancock Whitney Bank Objects to Plan & Disclosures MAGNOLIA REGIONAL: Moody's Cuts Revenue Bonds to B1, Outlook Neg. MANNKIND CORP: Appoints Jennifer Grancio to Board of Directors MATADOR RESOURCES: Moody's Cuts CFR to B3, Outlook Negative MAVIS TIRE: Moody's Cuts CFR to B3, Outlook Stable MCCLATCHY COMPANY: Wins Approval of Key Motions MCDERMOTT INT'L: Bankruptcy Court Confirms Reorganization Plan MCDERMOTT INTERNATIONAL: Further Fine-Tunes Prepackaged Plan MERIDIAN MARINA: April 21 Hearing on Disclosure Statement MICROCHIP TECHNOLOGY: Fitch Affirms BB+ LongTerm IDR, Outlook Neg. MICROCHIP TECHNOLOGY: Moody's Affirms CFR at Ba1, Outlook Stable MIDAS INTERMEDIATE II: Moody's Cuts CFR to Caa1, Outlook Negative MILLS FORESTRY: Seeks to Hire Stone & Baxter as Legal Counsel MODELL'S SPORTING: A&G Begins Marketing 137 Store Leases MURPHY OIL: Moody's Lowers CFR to Ba3, Outlook Negative MUSCLE MAKER: Court Conditionally Approves Disclosure Statement NAI ENTERTAINMENT: Moody's Cuts CFR to B3 on Theatre Closures NOVABAY PHARMACEUTICALS: Appoints Interim Chief Financial Officer O'LINN SECURITY: April 14 Hearing on Amended Plan & Disclosures OBITX INC: Reports $165K Net Loss for Third Quarter OCEAN POWER: Issues Stakeholders Letter Providing COVID-19 Update OPTIMAS OE: Moody's Cuts CFR to Caa1 & Sr. Secured Notes to Caa2 OUTLOOK THERAPEUTICS: All 6 Proposals Approved at Annual Meeting OUTLOOK THERAPEUTICS: BioLexis Pte. Has 61.8% Stake as of March 23 OUTLOOK THERAPEUTICS: Board OKs $2M Bonus for CEO L. Kenyon OWENS PRECISION: Unsecureds Will be Paid 100% of Claims PAPARDELLE 1068: District of Columbia Objects to Plan Disclosures PENN NATIONAL: Moody's Lowers CFR to B1, Outlook Negative PG&E CORP: Outlines New Commitments to Reorganization Plan PHYTO-PLUS INC: Seeks Until June 8 to File Plan & Disclosures PIER 1 IMPORTS: Announces Several COVID-19 Pandemic Measures PLAY 4 FUN: High Score Amusements Objects to Disclosures & Plan PORTILLO'S HOLDINGS: Moody's Lowers CFR to Caa1, Outlook Negative RAILYARD COMPANY: District Ct. Should Affirm Bankruptcy Ct. Orders RAYONIER A.M.: Moody's Lowers CFR to B3, Outlook Negative RED LOBSTER: S&P Lowers Issuer-Level Rating to 'CCC+' RYAN'S ELECTRICAL: Case Summary & 20 Largest Unsecured Creditors SENIOR PRO SERVICES: Hires James Shepherd as Bankruptcy Counsel SERTA SIMMONS: Moody's Lowers CFR to Caa3, Outlook Negative SOUTHEAST HOSPITAL: Moody's Cuts Rating to Ba1, Outlook Negative SOUTHMINSTER INC: Fitch Affirms $86.2MM Series 2018 Bonds at 'BB' STATION CASINOS: Moody's Lowers CFR to B2, Outlook Negative SURGERY CENTER: Moody's Lowers CFR to Caa1, On Review for Downgrade TAILORED BRANDS: S&P Cuts ICR to 'CCC+' on Operational Headwinds TASEKO MINES: Moody's Lowers CFR to Caa1, Outlook Negative TEXAS SOUTH: Delays Filing of 2019 Annual Report TMT PROCUREMENT: Orders Approving Sale of Vessels Affirmed TORTOISE PARENT: S&P Lowers ICR to 'B' on Expected Higher Leverage TPT GLOBAL: Acquires 75% of Bridge Internet for 8 Million Shares TRANS-LUX CORP: Incurs $1.4 Million Net Loss in 2019 TRANSOCEAN INC: Moody's Lowers CFR to Caa1, Outlook Negative TRAVEL LEADERS: Moody's Cuts CFR to Caa1, On Review for Downgrade TRIBE BUYER: S&P Places 'B-' Issuer Credit Rating on Watch Negative TRIDENT BRANDS: Fengate Trident, et al. Report 79.9% Stake TRUE COLOURS: Seeks to Hire Blackwood Law Firm as Legal Counsel TRUE LEAF: Receives Notice Event of Default from Lind Asset TRUGREEN LP: S&P Affirms 'B' ICR, Alters Outlook to Negative TURBOCOMBUSTOR TECHNOLOGY: Moody's Lowers CFR to Caa1 TUTOR PERINI: Moody's Cuts CFR to B2, Outlook Negative UNIVERSAL FIBER: Moody's Lowers CFR to Caa1, Outlook Negative VALERITAS HOLDINGS: Bankruptcy Court Approves Zealand Pharma Sale VERIFONE SYSTEMS: Moody's Cuts CFR to B3, Outlook Stable VOYAGER AVIATION: Fitch Places 'BB-' LT IDR on Watch Negative WASHINGTON PRIME: S&P Cuts ICR to 'CCC+' on Operating Performance WESTERN MIDSTREAM: Fitch Lowers LT IDR & Sr. Unsec. Rating to 'BB+' WINDSTREAM HOLDINGS: Enters into Second Amendment to PSA WYNDHAM HOTELS: Moody's Places Ba1 CFR on Review for Downgrade YS GARMENTS: S&P Downgrades ICR to B-; Outlook Negative YUMA ENERGY: Raises Going Concern Doubt, Bankruptcy Among Options [*] May 6 Bid Deadline Set for Rehab Facility Bankruptcy Sale [*] Schulte Roth Reconstitutes SRZ Market Conditions Working Group [^] BOOK REVIEW: BOARD GAMES - Changing Shape of Corporate Power ********* 267 SAW MILL: Seeks to Hire Houlihan Lawrence as Real Estate Broker ------------------------------------------------------------------- 267 Saw Mill LLC seeks authority from the United States Bankruptcy Court for the Southern District of New York to hire Houlihan Lawrence as its real estate broker with respect to the premises at 267 Saw Mill River Road, Elmsford, NY 10523. The proposed commission is a flat $40,000. It is submitted that the commission, of at least 2% of the purchase price, is standard for this type of property. Bryan Lanza, an agent of Houlihan, attests that the broker is a disinterested person and does not hold any interest adverse to the Debtor. The broker can be reached through: Bryan Lanza Houlihan Lawrence 800 Westchester Avenue Suite N-505 Rye Brook, NY 10573 Phone: (914) 220-7000 Email: atyourservice@houlihanlawrence.com About 267 Saw Mill LLC 267 Saw Mill LLC is a Single Asset Real Estate debtor (as defined in 11 U.S.C. Section 101(51B). It owns in fee simple a property located at 267 Saw Mill River Road, Elmsford, NY 10523 valued by the company at $2.5 million. 267 Saw Mill LLC filed its voluntary petition under Chapter 11 of the Bankruptcy Code (Bankr. S.D.N.Y. Case No. 20-22281) on Feb. 20, 2020. In the petition signed by John Posimato, managing member, the Debtor estimated $2,500,000 in assets and $3,700,000 in liabilities. Anne Penachio, Esq. and PENACHIO MALARA, LLP, serves as the Debtor's counsel. ADVAXIS INC: Incurs $7.86 Million Net Loss in First Quarter ----------------------------------------------------------- Advaxis, Inc. filed with the Securities and Exchange Commission its Quarterly Report on Form 10-Q reporting a net loss of $7.86 million on $3,000 of revenue for the three months ended Jan. 31, 2020, compared to net income of $12.82 million on $19.69 million of revenue for the three months ended Jan. 31, 2019. "We have started our fiscal year with encouraging positive data presented in our ADXS-PSA and ADXS-503 clinical programs," said Kenneth A. Berlin, president and chief executive officer of Advaxis. "Importantly, data from both studies suggest that Lm immunotherapies may have the ability to synergistically enhance or restore sensitivity to checkpoint inhibitors which could be a meaningful breakthrough in improving outcomes for advanced and refractory patients. We continue to execute on our HOT off-the-shelf program in NSCLC with enrollment continuing in the combination arm of the study, Part B, and a planned initiation of Part C which will move combination therapy to a first-line setting, later this year. We are also planning to move an additional HOT construct, ADXS-504, for prostate cancer, into the clinic later this year for which the IND was allowed earlier this year." Mr. Berlin continued, "We are currently evaluating next steps for our ADXS-PSA program based on the promising increases in median overall survival observed in combination with KEYTRUDA. With an anticipated cash runway into mid-2021, we are positioned to explore the early signals of activity in our ongoing trials while advancing additional programs that leverage these important findings." As of Jan. 31, 2020, the Company had $51.35 million in total assets, $9.80 million in total liabilities, and $41.55 million in total stockholders' equity. The Company has sustained losses from operations in each fiscal year since its inception, and it expects losses to continue for the indefinite future. As of Jan. 31, 2020 and Oct. 31, 2019, the Company had an accumulated deficit of approximately $392.1 million and $384.3 million, respectively. The Company has reduced its operating expenses to $38.9 million for the fiscal year ended Oct. 31, 2019 as compared to $76.4 million during the fiscal year ended Oct. 31, 2018. Furthermore, the Company expects operating expenses to be approximately $29 million for fiscal year 2020, which includes approximately $6 million in non-recurring costs related to programs that are winding down. Based on this and raising $10.5 million in capital in January 2020, the Company expects to have sufficient capital to fund its obligations as they become due in the ordinary course of business until at least August 2021. During the quarter ended Jan. 31, 2019, the Company recognized $19.4 million in revenue associated with the revenue recognition requirements surrounding the termination of the collaboration agreement with Amgen in 2019; no similar situation existed during the fiscal quarter ended Jan. 31, 2020. Research and development expenses for the first quarter of fiscal year 2020 were $4.9 million, compared with $6.7 million for the first quarter of fiscal year 2019. The decrease is largely attributable to the winding down of the Company's Phase 3 AIM2CERV and Phase 1 ADXS-NEO studies as announced in June 2019 and October 2019, respectively. General and administrative expenses for the three months ended Jan. 31, 2020 were approximately $3.0 million compared to $2.7 million in the same three-month period in 2019 as a result of higher business development and legal fees. As of Jan. 31, 2020, the Company had approximately $34.2 million in cash and cash equivalents. The Company believes this is sufficient capital to fund its obligations, as they become due, in the ordinary course of business until at least mid-2021. A full-text copy of the Form 10-Q is available for free at: https://is.gd/PLGgtr About Advaxis, Inc. Advaxis, Inc. -- http://www.advaxis.com/-- is a clinical-stage biotechnology company focused on the development and commercialization of proprietary Lm-based antigen delivery products. These immunotherapies are based on a platform technology that utilizes live attenuated Listeria monocytogenes (Lm) bioengineered to secrete antigen/adjuvant fusion proteins. These Lm-based strains are believed to be a significant advancement in immunotherapy as they integrate multiple functions into a single immunotherapy and are designed to access and direct antigen presenting cells to stimulate anti-tumor T cell immunity, activate the immune system with the equivalent of multiple adjuvants, and simultaneously reduce tumor protection in the tumor microenvironment to enable T cells to eliminate tumors. Advaxis reported a net loss of $16.61 million for the year ended Oct. 31, 2019, compared to a net loss of $66.51 million for the year ended Oct. 31, 2018. Marcum LLP, in New York, NY, the Company's auditor since 2012, issued a "going concern" qualification in its report dated Dec. 20, 2019, citing that the Company 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. AIMBRIDGE HOSPITALITY: Moody's Cuts CFR to B3, Outlook Negative --------------------------------------------------------------- Moody's Investors Service (Moody's) downgraded the ratings of Aimbridge Hospitality Holdings, LLC (Aimbridge) including its Corporate Family Rating to B3 from B2, its Probability of Default Rating to B3-PD from B2-PD and its senior secured bank facility rating to B2 from B1. The outlook has been revised to negative from stable. "The downgrade reflects the material earnings decline Aimbridge will experience in 2020 due to travel restrictions being put in place across the US related to the spread of the COVID-19 coronavirus which will cause the company's leverage to increase to well above its downgrade trigger of 6.0x," stated Pete Trombetta, Moody's lodging and cruise analyst. "Occupancy and revenue per available room trends in the US fell significantly over the past two weeks and will continue to fall to historic lows as the number of confirmed COVID-19 cases increases in the US over the coming weeks which will cause a prolonged recovery for Aimbridge," added Trombetta. With about $115 million of cash on hand, after drawing its revolver in full, Aimbridge is able to cover its debt service requirements and maintenance capital expenditure needs for almost two years. Downgrades: Issuer: Aimbridge Hospitality Holdings, LLC Probability of Default Rating, Downgraded to B3-PD from B2-PD Corporate Family Rating, Downgraded to B3 from B2 Senior Secured Bank Credit Facility, Downgraded to B2 (LGD3) from B1 (LGD3) Outlook Actions: Issuer: Aimbridge Hospitality Holdings, LLC Outlook, Changed to Negative from Stable RATINGS RATIONALE The rapid and widening spread of the coronavirus outbreak, deteriorating global economic outlook, falling oil prices, and asset price declines are creating a severe and extensive credit shock across many sectors, regions and markets. The combined credit effects of these developments are unprecedented. The lodging sector has been one of the sectors most significantly affected by the shock given its sensitivity to consumer demand and sentiment. More specifically, the weaknesses in Aimbridge's credit profile, including its exposure to increased travel restrictions for US citizens which represents a majority of the company's revenue and earnings have left it vulnerable to shifts in market sentiment in these unprecedented operating conditions and the company remains vulnerable to the outbreak continuing to spread. Moody's regards the coronavirus outbreak as a social risk under its ESG framework, given the substantial implications for public health and safety. The action reflects the impact on Aimbridge of the breadth and severity of the shock, and the broad deterioration in credit quality it has triggered. Aimbridge's B3 credit profile is constrained by its high debt/EBITDA which will exceed its downgrade factor of 6.0x at the end of 2020 given the material decline in earnings expected due to travel restrictions related to the spread of COVID-19 (all metrics include Moody's standard adjustments). The company's debt load was higher at the end of the year following its 2019 acquisition of Interstate Hotels & Resorts for approximately $800 million, including $500 million of debt. This amount of leverage is considered high given Aimbridge's small scale in terms of revenue and earnings relative to other single B rated Business and Consumer Services companies. Aimbridge's credit profile reflects Moody's expectation that Aimbridge will successfully integrate the Interstate Hotels & Resorts acquisition further solidifying its position as the largest third-party hotel management company. Aimbridge's credit profile also benefits from its good diversification in terms of geography, brands, and hotel owners. The acquisition of Interstate will further improve the company's scale in terms of number of managed properties (to about 1,315 properties from about 830) and almost doubles Aimbridge's absolute level of EBITDA. Under normal conditions the combined company will benefit from strong free cash flow due in part to its minimal capital expenditure requirements. The negative outlook reflects Moody's expectation that Aimbridge's earnings will deteriorate materially over the next six months potentially leading to covenant concerns if travel restrictions lead to historically low occupancy levels for an extended period of time. Aimbridge's ratings could be downgraded if debt/EBITDA does not recover to below 6.5x, if EBITA/interest expense is not sustained above 1.0x or if the probability a default increases for any reason. Any deterioration in liquidity would also lead to negative ratings pressure. The outlook could return to stable if earnings declines stabilize and covenant concerns lessen. Although not likely in the near term, ratings could be upgraded if Aimbridge's debt/EBITDA and EBITA/interest expense approached 5.5x and 2.5x, respectively. Aimbridge Acquisition Co., Inc., through its subsidiaries Aimbridge Hospitality Holdings, LLC and KIHR Holdings Inc., is the largest third-party hotel operator, with over 1,300 properties and approximately 185,000 rooms under management. Aimbridge's managed properties are located in 49 states and 20 countries. The company is majority owned by Advent International. The company is private and does not file public financials. Pro forma for a full year of the Interstate acquisition, revenues (net of reimbursements) is approximately $300 million. The principal methodology used in these ratings was Business and Consumer Service Industry published in October 2016. AIR INDUSTRIES: Achieves $54.6-Mil. Revenue in 2019, up 23% YOY --------------------------------------------------------------- Fiscal 2019 Highlights from Continuing Operations * Consolidated net sales from continuing operations were $54.6 million in 2019 a significant increase of $10.1 million or 23% compared to $44.5 million in 2018. * Consolidated gross profit from continuing operations was $9.1 million in 2019 and increased dramatically by $3.7 million or 69% from $5.4 million in fiscal 2018. Gross profit as a percentage of sales increased to 16.7% for 2019 from 12.1% in 2018. This improved gross profit results in part from increased manufacturing through-put absorbing manufacturing overhead and cost savings resulting from the consolidation of factories on Long Island. * Operating expenses from continuing operations for 2019 were $8.5 million an increase of approximately $200,000 or 2.4% compared to $8.3 million in fiscal 2018. * Air Industries had operating income from continuing operations of $ 328,000 in 2019 compared to an operating loss of $4.9 million in 2018. * Interest and financing costs were $3.6 million in fiscal 2019 as compared to $3.9 million in 2018. Cash interest paid in 2019 was $2.3 million, compared to $1.5 million in 2018. On Dec. 31, 2019, the Company refinanced its credit facilities moving from PNC Business Credit to Sterling National Bank. During 2019, the PNC credit facility had interest rates of 500 basis points over the PNC Alternate Base (prime) rate, or approximately 9.5% for most of 2019. In addition PNC charged facility renewal fees of $ 500,000 for the year. The Sterling National Bank credit facility has interest rates equal to 30-day LIBOR plus 200 basis points. Air Industries interest rate today is less than 4.00%. * Adjusted EBITDA was $5.2 million. Liquidity Position Total notes payable and financed lease obligations (the large majority carried as current liabilities) were increased modestly to approximately $26.0 million as of Dec. 31, 2019 compared to $25.1 million at Dec. 31, 2018. Air Industries refinanced its credit facilities with Sterling National Bank (SNB) on Dec. 31, 2019. The SNB facility includes a term loan of $3.8 million amortizable over 8 years. The proceeds of the term loan were used to retire the PNC term loan and nearly all of Air Industries capital lease obligations. The combination of the significantly lower interest rates and extended amortization of the SNB credit facility will reduce the Company's cash interest and cash principal amortization by approximately $2.5 million per year. CEO Commentary Lou Melluzzo, CEO of Air Industries said, "Our results in 2019 are very gratifying and a testament to the successful restructuring of our operations during 2018. Sales have increased significantly and bookings were up nearly 50% from the previous year. With the added growth, our gross profit has improved by 4 and 1/2 percentage points from the previous period. The results of 2019 enabled us to refinance our credit facilities with Sterling National Bank, dramatically reducing our interest rate and greatly reducing our monthly and annual cash needs for principal amortization. This will result in significantly more financial flexibility in 2020 and beyond. "We expect to continue to increase sales, profitability and invest in our operations in 2020. It has been our custom, to issue financial guidance for the coming year in our annual press release. However, in light of the current crisis we think it prudent to defer doing so now. We will issue guidance as soon as conditions normalize." About Air Industries Headquartered in Bay Shore, New York, Air Industries Group is an integrated manufacturer of precision equipment assemblies and components for aerospace and defense prime contractors. Air Industries reported a net loss of $10.99 million in 2018 following a net loss of $22.55 million in 2017. As of Sept. 30, 2019, the Company had $50.75 million in total assets, $40.19 million in total liabilities, and $10.56 million in total stockholders' equity. Rotenberg Meril Solomon Bertiger & Guttilla, P.C., in Saddle Brook, NJ, the Company's auditor since 2008, 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 suffered a net loss in 2018 and is dependent upon future issuances of equity or other financing to fund ongoing operations, all of which raise substantial doubt about its ability to continue as a going concern. ALASKA UROLOGICAL: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Alaska Urological Institute, P.C. 188 W. Northern Lights Blvd. Suite 800 Anchorage, AK 99503 Business Description: Alaska Urological Institute, P.C. is a medical group specializing in urology, radiation oncology, registered dietitian or nutrition professional, nurse practitioner, family medicine, medical oncology, physician assistant, hematology/oncology, anesthesiology, plastic and reconstructive surgery and more. Chapter 11 Petition Date: March 25, 2020 Court: United States Bankruptcy Court District of Alaska Case No.: 20-00086 Debtor's Counsel: Cabot Christianson, Esq. LAW OFFICES OF CABOT CHRISTIANSON 911 West 8th Avenue Suite 201 Anchorage, AK 99501 Email: cabot@cclawyers.net Estimated Assets: $10 million to $50 million Estimated Liabilities: $1 million to $10 million The petition was signed by William R. Clark, president, shareholder. A copy of the petition is available for free at PacerMonitor.com at: https://is.gd/DBQSXV List of Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ 1. Internal Revenue Service Taxes $1,750,000 Ogden, UT 84201-0039 2. Oncology Supply Services $321,662 PO Box 676554 Dallas, TX 75267-6554 3. Varian Medical Systems Services $179,931 70140 Network Place Chicago, IL 60673-1701 4. Yut Communications LLC Services $155,025 PO Box 240003 Anchorage, AK 99506 5. Allscripts Healthcare LLC Services $132,117 24630 Network Place Chicago, IL 60673-1246 6. Ruby Investments, LLC Services $127,167 PO Box 93288 Anchorage, AK 99503 7. Alliance Physics Services $89,683 Solutions Inc. 405 S. Bonnie Avenue Pasadena, CA 91106 8. Cynosure Inc. Services $84,950 Attn: Accounts Receivable 5 Carlisle Road Westford, MA 01886 9. Boston Scientific Services $69,563 PO Box 951653 Dallas, TX 75395-1653 10. Weatherby Locums, Inc. Services $66,791 PO Box 942633 Dallas, TX 75397-2633 11. Premera BCBS of AK Services $64,246 PO Box 91060 Seattle, WA 98111 12. Municipality of Anchorage Taxes $61,828 Dept of Finance Treasury Div. PO Box 196040 Anchorage, AK 99519 13. Allergan USA Inc. Services $41,872 12975 Collections Center Drive Chicago, IL 60693-0129 14. Dendreon Pharmaceuticals LLC Services $41,591 1700 Saturn Way Seal Beach, CA 90740 15. MIEC Services $41,228 PO Box 22777 Oakland, CA 94609-9912 16. GCI Services $36,329 PO Box 99016 Anchorage, AK 99509-9016 17. Dilon Technologies Services $33,564 12050 Jefferson Ave., Ste 340 Newport News, VA 23606 18. NetFortris Acquisition Co. Inc. Services $32,098 Dept 111017 PO Box 150498 Hartford, CT 06115-0498 19. Henry Schein Services $31,458 PO Box 7184 Pasadena, CA 91109-7184 20. PulmOne USA Services $31,000 2711 Centerville Road Wilmington, DE 19808 AMC ENTERTAINMENT: Moody's Cuts CFR to B3, On Review for Downgrade ------------------------------------------------------------------ Moody's Investors Service has downgraded AMC Entertainment Holdings, Inc.'s Corporate Family Rating to B3 from B2 and the Probability of Default Rating to B3-PD from B2-PD. Concurrently, Moody's downgraded AMC's credit facilities to Ba3 from Ba2 (consisting of a $225 million revolving credit facility and $1.99 billion outstanding senior secured term loan) and $2.3 billion of senior subordinated notes to Caa1 from B3. The Speculative Grade Liquidity Rating was downgraded to SGL-3 from SGL-2. Moody's also placed the long-term ratings on review for further downgrade. RATINGS RATIONALE The downgrade reflects Moody's expectation for lower revenue and EBITDA this year coupled with weakened liquidity as a result of temporary closures of AMC's theatre circuit in the US (636 theatres) and overseas (368). Last week, AMC announced it will close all of its US theatres for a 6-12 week period beginning 17 March to adhere to the federal government's recommendation that public gatherings should be restricted to ten or fewer individuals and people should engage in social distancing due to the widespread coronavirus pandemic (a.k.a., COVID-19). Similar mandates have been enacted by national governments across Europe, which have led to theatre closures in the UK, Ireland, Italy, Spain, Norway and other regions where AMC operates. While Moody's expects leverage to rise significantly to the 8x-9x range (Moody's adjusted) in 2020 due to lower EBITDA, as the virus threat is neutralized, theatres reopen and EBITDA expands with moviegoers gradually returning to the cinema for what is expected to be a relatively strong movie slate next year, Moody's projects leverage will subsequently decline to the 7x area and free cash flow generation will continue to be modestly negative in 2021. The review for downgrade reflects the numerous uncertainties related to the economic impact of COVID-19 on AMC's cash flows and liquidity, especially if the virus continues to spread forcing AMC to keep its theatres closed beyond June and various government financial aid programs for the theatre industry are delayed. Under this scenario, the ratings could be downgraded if Moody's expects that AMC will exhaust its existing internal and external liquidity sources, the company is unable to access additional lines of credit and/or the headroom under its springing financial covenant decreases due to draws under its revolvers combined with higher-than-expected EBITDA shortfalls. As this global crisis unfurls, AMC's balance sheet is highly levered and annual free cash flow generation is modestly negative due to sizable debt incurred in prior years to finance acquisitions that facilitated expansion into new markets and geographies, creating the world's largest movie exhibitor. At 31 December 2019, financial leverage was 6.6x (as calculated by Moody's) and LTM free cash flow was -$23 million. Notably, AMC delivered strong operating performance in Q4 2019 owing to the release of several big franchise films, which led to solid operating cash flow of $483 million (Moody's adjusted) and positive free cash flow generation of approximately $180 million in the quarter. At 31 December 2019, unrestricted cash balances totaled $265 million and undrawn revolver availability was $332 million. This level of liquidity combined with meaningful cost cutting measures should enable AMC to absorb negative operating cash flows that Moody's projects the company will incur through the first half of 2020. Like most cinema operators, AMC has a highly variable cost structure and can quickly reduce operating costs by up to 75% in the short-run. Moody's fully expects the company to implement plans to minimize its cash burn as much as possible during the closure period via a combination of natural expense reductions (i.e., costs not incurred while theatres are closed) and management actions aimed at reductions in maintenance, utilities, payroll and theatre-level operating costs. With respect to the fixed rent costs for its theatres, Moody's expects AMC will likely seek to obtain cash relief or rent deferrals during the closure period and beyond, if necessary. In certain European countries, AMC has legal protections, which enable the company to mitigate substantially all of its rent costs. In continental Europe, governments have announced state subsidies to cover payroll costs. The UK government is the current outlier with respect to payroll subsidies, but AMC and other cinema operators are currently working with the UK Cinema Association to lobby for such support. In the US, the National Association of Theatre Owners (NATO) is lobbying the US Congress to urgently pass an emergency economic relief bill to provide financial assistance to the movie theatre industry. The aid package is designed to relieve the ongoing cost burden during the closure period, provide tax benefits to assist employers with providing support to employees and offer government loan guarantees to help ease the liquidity squeeze. Even before the coronavirus outbreak forced AMC to shut its theatres, the company had planned to reduce operating costs this year by $50 million via operational and process improvements to expand margins. AMC also reduced the annual dividend to $12 million from $84 million to improve free cash flow generation. In view of the theatre closures, Moody's expects AMC to significantly reduce its net capex this year from the originally planned $275 - $300 million to help preserve cash and reduce cash outlays. Given the possibility of its theatres remaining closed for up to three months, Moody's expects the lack of revenue generation, combined with the ongoing need to pay certain fixed expenses and debt-servicing costs, will weaken AMC's liquidity. Nonetheless, during this three-month period, Moody's expects the company's existing liquidity sources to cover the cash burn. To the extent AMC is able to reopen its theatres by mid-June and patrons gradually return to its cinemas, the company in conjunction with the major film studios could offer promotions plus early releases and re-releases of certain premium movies to stimulate moviegoer demand, especially during the summer months when AMC typically experiences a seasonally strong box office. The primary risk to AMC over the short-run would be a prolonged outbreak, causing its theatres to remain closed for an extended period beyond June coupled with an exhaustion of its existing sources of liquidity and an inability to timely access new liquidity sources to cover the cash burn into Q3 2020. To the extent the US emergency economic relief bill for cinema operators as currently drafted is passed and signed into law, this could improve AMC's ability to access additional credit lines from its banks, if this becomes necessary. The secondary risk to AMC is the headroom under its springing covenant, which could decrease rapidly due to draws under its two revolvers (US: $225 million; UK: GBP100 million) combined with a substantial decline in EBITDA. The maximum net senior secured leverage covenant of 6x is triggered if more than 35% of the domestic RCF is drawn. At December 31, 2019, the cushion was substantial at roughly 80%. Assuming AMC fully drew under its revolvers, EBITDA would have to decline more than 65% to breach the covenant. To the extent AMC's theatres reopen by mid-June, Moody's does not expect attendance to be strong in the second half of the year given that 2020 was already expected to be a weak year for big budget tentpole film debuts and movie studios have: (i) postponed releases of several films by pulling them off the spring and summer calendars due to the outbreak and pushing their releases later into 2020 or 2021; (ii) opted to simultaneously debut new films direct-to-consumer on subscription video on demand (SVOD) streaming platforms; or (iii) released movies earlier-than-normal to streaming platforms. Further, Moody's expects some consumers will be hesitant to visit theatres even after the outbreak has subsided while some moviegoers will reduce their out-of-home entertainment activities and instead watch high quality movies at home given the growing number of providers offering premium SVOD content. The stay-at-home safety measures put in place during the COVID-19 outbreak could accelerate this type of consumer behavior and some individuals could spend more time viewing movies at home even after the disease has been contained and theatres reopen. Moviegoer demand will likely remain strong for big budget "cultural event" premium films while in-home viewing will be reserved for low or medium-budget second-tier films. Despite these challenges, Moody's expects cinema operators to remain an integral part of film studios' distribution of their movie content and a key destination for consumers seeking affordable out-of-home entertainment. ESG CONSIDERATIONS The rapid and widening spread of the coronavirus outbreak, deteriorating global economic outlook, falling oil prices, and asset price declines are creating a severe and extensive credit shock across many sectors, regions and markets. The combined credit effects of these developments are unprecedented. The movie theatre sector has been one of the sectors most significantly affected by the shock given its sensitivity to consumer demand and sentiment. More specifically, the weaknesses in AMC's credit profile, including its exposure to the US and Europe have left it vulnerable to shifts in market sentiment in these unprecedented operating conditions and AMC remains vulnerable to the outbreak's continuing spread. Moody's regards the coronavirus outbreak as a social risk under its ESG framework, given the substantial implications for public health and safety. The action reflects the impact on AMC of the breadth and severity of the shock, and the broad deterioration in credit quality it has triggered. The review will focus on AMC's ability to reopen its theatres and the resulting timetable, the impact on liquidity as the coronavirus containment efforts continue, the extent to which attendance revives and AMC's prospects for returning to positive operating cash flow. Access to substantial additional sources of liquidity to cover a longer-than-expected cash burn period would also be considered as part of the review. SUMMARY OF THE RATING ACTIONS Ratings Downgraded: Issuer: AMC Entertainment Holdings, Inc. Corporate Family Rating, Downgraded to B3 from B2, Placed on Review for Downgrade Probability of Default Rating, Downgraded to B3-PD from B2-PD, Placed on Review for Downgrade $225 Million Revolving Credit Facility due 2024, Downgraded to Ba3 (LGD2) from Ba2 (LGD2), Placed on Review for Downgrade $1,985 Million Outstanding Senior Secured Term Loan B1 due 2026, Downgraded to Ba3 (LGD2) from Ba2 (LGD2), Placed on Review for Downgrade GBP500 Million (US$655.8 Million) 6.375% Senior Subordinated Notes due 2024, Downgraded to Caa1 (LGD5) from B3 (LGD5), Placed on Review for Downgrade $595 Million 5.875% Senior Subordinated Notes due 2026, Downgraded to Caa1 (LGD5) from B3 (LGD5), Placed on Review for Downgrade $475 Million 6.125% Senior Subordinated Notes due 2027, Downgraded to Caa1 (LGD5) from B3 (LGD5), Placed on Review for Downgrade Issuer: AMC Entertainment Inc. $600 Million 5.750% Senior Subordinated Notes due 2025, Downgraded to Caa1 (LGD5) from B3 (LGD5), Placed on Review for Downgrade Speculative Grade Liquidity Actions: Issuer: AMC Entertainment Holdings, Inc. Speculative Grade Liquidity, Downgraded to SGL-3 from SGL-2 Outlook Actions: Issuer: AMC Entertainment Holdings, Inc. Outlook, Changed to Rating Under Review from Stable The principal methodology used in these ratings was Business and Consumer Service Industry published in October 2016. Headquartered in Leawood, Kansas, AMC Entertainment Holdings, Inc. is the largest movie exhibitor in the US and globally, operating 1,004 movie theatres with 11,041 screens across the US, Europe and the Middle East. The company is 50% owned by Dalian Wanda Group Co., Ltd. (Wanda). Revenue totaled approximately $5.5 billion for the fiscal year ended 31 December 2019. AMERICAN COMMERCIAL: Bankruptcy Court Confirms Pre-Packaged Plan ---------------------------------------------------------------- American Commercial Lines Inc. (together with certain of its affiliates, "the Company" or "ACL") on March 20 disclosed that the United States Bankruptcy Court for the Southern District of Texas, Houston Division (the "Court") has confirmed the Company's "pre-packaged" plan to recapitalize the business. The Company expects to complete its recapitalization and successfully emerge from Chapter 11 in the coming weeks. Upon emergence, the Company will receive $200 million in new capital to support liquidity and investments in the business and will reduce its funded debt by approximately $1 billion. "We were able to reach this important milestone on an accelerated basis thanks to the continued support of our financial stakeholders, as well as our customers and business partners," said Mark Knoy, President and Chief Executive Officer of American Commercial Lines. "Through this recapitalization process, we are creating an even stronger inland barge transportation leader, with greater financial flexibility and the ability to focus more of our resources on competing in the marketplace and investing in the business to support future growth. We have continued serving our customers and providing competitive and reliable barge transportation services, 24-7, without interruption. From our barges, to our towboats and our terminals, our operations are performing well and our team is more focused than ever making sure our customers remain our top priority." Mr. Knoy continued, "We appreciate the positive feedback we received from our customers and business partners since we started this process and thank them for their continued support. I also want to thank our teammates for their continued hard work and focus on safely serving our customers. We look forward to completing this process shortly and remain focused on providing our customers the safest, most cost-effective and environmentally friendly barge transportation solutions they expect from us." Additional Information Additional information is available at aclrecapitalization.com or by calling the Company's Recapitalization Hotline, toll-free in the U.S., at (877) 425-3088. For calls originating outside of the U.S. please dial (917) 994-8379. Court documents and additional information about the court-supervised process can be found at a website administrated by the Company's claims agent, Prime Clerk, at https://cases.primeclerk.com/acl. Milbank LLP is serving as the Company's legal counsel, Greenhill & Co. is serving as its financial advisor and Alvarez & Marsal North America, LLC. is serving as restructuring advisor. About American Commercial Lines American Commercial Lines Inc. -- https://www.bargeacbl.com/ -- is a provider of liquid and dry cargo barge transportation services in the United States, operating a modern fleet of approximately 3,500 barges on the Mississippi River, its tributaries, and on the Gulf Intracoastal Waterway. In addition, ACL operates a series of strategically-placed harbor services facilities throughout the region, providing fleeting, shifting, cleaning, and repair services to their fleet of barges and 188 towboats, as well as to third-parties. With approximately 2,100 employees as of the Petition Date, and customers that include many of the country's major energy, petrochemical, industrial, and agricultural companies. ACL was founded in 1915 and is headquartered in Jeffersonville, Indiana. On Feb. 7, 2020, American Commercial Lines Inc. and 10 affiliates sought Chapter 11 protection (Bankr. S.D. Tex. Lead Case No. 20-30982) to seek confirmation of a prepackaged plan that will cut debt by $1 billion. The Hon. Marvin Isgur is the case judge. Milbank LLP is serving as the Company's legal counsel, Greenhill & Co. is serving as its financial advisor and Alvarez & Marsal North America, LLC, is serving as restructuring advisor. Porter Hedges LLP is the local counsel. The Company's claims agent is Prime Clerk LLC. ASCENA RETAIL: Closes All Stores For Now Amid COVID-19 Pandemic --------------------------------------------------------------- ascena retail group, inc. disclosed in a press release that in response to the escalating global spread of COVID-19, the Company has temporarily closed all Company-operated retail stores, effective March 18 through March 28. During this temporary closure period, all store associates will receive compensation for their scheduled shifts. The brands will continue to operate and serve their customers online at AnnTaylor.com, factory.anntaylor.com, LOFT.com, outlet.loft.com, louandgrey.com, lanebryant.com, Catherines.com, and shopjustice.com during the stores closure period. ascena will continue to monitor the global spread of COVID-19 and communicate with its stakeholders to the extent there are any updates to this timeline. Gary Muto, chief executive officer of ascena, commented, "We are following the guidance of global health professionals by closing our retail stores to ensure the health and wellbeing of our associates, customers, and communities. Our associates and customers are our main priority and our thoughts are with those affected by this situation. Despite near-term uncertainties, we remain confident in the long-term potential of our business and we will continue to monitor the situation and respond accordingly." Third Quarter 2020 Earnings Guidance Update Given the uncertain impact of COVID-19, ascena is withdrawing its third quarter guidance issued in its second quarter earnings release filed on Form 8-K on March 9, 2020. The Company is not providing updated guidance at this time. About Ascena Retail Ascena Retail Group, Inc. (Nasdaq: ASNA) -- http://www.ascenaretail.com-- is a national specialty retailer offering apparel, shoes, and accessories for women under the Premium Fashion (Ann Taylor, LOFT, and Lou & Grey), Plus Fashion (Lane Bryant, Catherines and Cacique), and Value Fashion (Dressbarn) segments, and for tween girls under the Kids Fashion segment (Justice). Ascena, through its retail brands, operates ecommerce websites and approximately 2,800 stores throughout the United States, Canada, and Puerto Rico. Ascena Retail reported a net loss of $661.4 million for the fiscal year ended Aug. 3, 2019, a net loss of $39.7 million for the year ended Aug. 4, 2018, and a net loss of $1.06 billion for the year ended July 29, 2017. As of Feb. 1, 2020, the Company had $3.07 billion in total assets, $2.99 billion in total liabilities, and $76.6 million in total equity. * * * As reported by the TCR on March 20, 2020, S&P Global Ratings raised its issuer rating on Ascena Retail Group Inc. to 'CCC-' from 'SD' and maintained the 'D' rating on the term loan due August 2022. "The rating action reflects our view of the likelihood of a conventional default or a broad-based restructuring of Ascena's capital structure in the next six months. Our opinion considers the company's unsustainable capital structure, its still significant debt burden following the repurchases, and our expectation for weak performance amid a highly challenging operating environment. The rating also reflects our view that the recent coronavirus outbreak in the U.S. will further pressure store traffic and limit conventional refinancing prospects," S&P said. In October 2019, Moody's Investors Service downgraded Ascena Retail Group, Inc.'s corporate family rating to Caa2 from B3, probability of default rating to Caa2-PD from B3-PD and senior secured term loan rating to Caa2 from B3. The downgrades reflect Moody's view that Ascena's capital structure is likely unsustainable as a result of its weak operating performance, high leverage, and negative free cash flow, creating an elevated risk of a debt restructuring including a material debt repurchase at a significant discount. AVIANCA HOLDINGS: Further Reduces Capacity Amid COVID-19 Pandemic ----------------------------------------------------------------- The spread of the Coronavirus (COVID-19) has led global regulators to impose and successively increase restrictions on passenger travel. The Colombian Federal Government on March 19, 2020 announced that it will close the Colombian international airspace to passenger travel effective March 23, 2020. As a result of this decision, as well as restrictions imposed by federal authorities at most destinations within the Avianca Holdings' network, the Company will further decrease its capacity, aligned with decreased demand. * Avianca will cease to operate international passenger capacity effective 12:00 a.m. APST/1:00 am EST on March 23, 2020. This restriction is expected to initially remain in place for the subsequent 30 days, as has been mandated by the Colombian Federal Government. Further flights to and within Peru, El Salvador, and Ecuador have already therefore been canceled until the end of April, 2020. * Passenger transportation within domestic Colombia remains unrestricted, however, demand has been severely impacted by diminished international connectivity. Avianca's domestic capacity within Colombia will therefore also decrease by 84% as of April 1, 2020. * Avianca will ground 22 wide body and 100 narrow body aircraft as well as 10 ATRs, while maintaining five Airbus A320 and five ATRs operating within the Colombian domestic market. Avianca Holdings is working with governments and their respective embassies to ensure continued humanitarian and repatriation flights. The Company is maintaining -- and potentially temporarily expanding -- operation of its cargo, freight, charter and courier business to adequately serve demand within those countries to which it flies and of its cargo customers. In addition to reducing capacity, the Company is immediately implementing additional cost savings and liquidity preservation measures, including: * An immediate hiring freeze * Implementation of voluntary unpaid leave of absence * Temporarily deferred labor contracts * Negotiating payment terms with suppliers and financing suppliers * Deferral of non-essential costs and capital expenditures Avianca continues to monitor the situation closely and will provide relevant market updates as appropriate. For further information, please contact: Avianca Investor Relations + (571) 587 7700 ext. 2474, 1349 ir@avianca.com About Avianca Holdings Avianca Holdings S.A. -- http://www.avianca.com-- is a Panama-based company engaged, through its subsidiaries, in the provision of air transportation services for passengers and commercial purposes. With a fleet of 171 aircraft, Avianca serves 76 destinations in 27 countries within the Americas and Europe. Avianca reported a net loss of US$893.99 million for the year ended Dec. 31, 2019, compared to net profit of US$1.14 million the year ended Dec. 31, 2018. KPMG S.A.S., in Bogota, Colombia, the Company's auditor since 2018, issued a "going concern" qualification in its report dated April 26, 2019, on the Company's consolidated financial statements for the year ended Dec. 31, 2018, citing that the controlling shareholder of the Company obtained a loan and pledged its shares in Avianca Holdings S.A. as security for this loan agreement (the loan agreement), which requires compliance with certain covenants by the controlling shareholder, including compliance with the Company financial ratios. Breach of these covenants provides the lender the right to enforce the security, leading to a change of control over the Company. A change of control over the Company would breach covenants included in some loan and financing, aircraft rental, and other agreements of the Company, which in turn could trigger early termination or cancelation of these contracts. On April 10, 2019, the Company was informed by the controlling shareholder and its lender, that there was a non-compliance with covenants established in the controlling shareholder's loan agreement, and no waiver was in place; thus, there is a potential risk of change of control. The auditors said this circumstance raises a substantial doubt about the Company's ability to continue as a going concern. * * * As reported by the TCR on Dec. 19, 2019, Fitch Ratings upgraded Avianca Holdings' Long-Term Foreign and Local Currency Issuer Default Ratings to 'CCC+' from 'RD'. The upgrade follows Avianca's announcement that it has completed its debt restructuring, including receipt of a US$250 million convertible secured stakeholder facility loan from United Airlines, Inc. (BB/Stable) and Kingsland Holdings Limited. AVIANCA HOLDINGS: To Conduct General Meeting via Videoconference ---------------------------------------------------------------- Anko Van Der Werff, chief executive officer of Avianca Holdings S.A., informs that the summons to the Company's Ordinary General Shareholders' Meeting, scheduled for March 27, 2020 at 8:30 a.m. as initially published in the newspaper "La Republica," has been amended as follows: Due to the spread of the Coronavirus (COVID-19) and the resulting restrictions imposed by the federal government of Colombia, the Meeting will not take place at the Company's headquarters, as previously announced; instead, it will take place by means of a videoconference. Holders of the Company's common shares will receive an invitation by electronic mail, which will include a link to join the Meeting. If a shareholder cannot attend the Meeting and instead intends to participate through a proxy, such shareholder must provide the Company with a power of attorney together with a copy of the attorney in fact's personal identification document. If the attorney in fact delegated by proxy is a legal entity, a certificate of incorporation and legal incumbency certificate or similar document will need to be provided to the Company. In accordance with the Company's articles of incorporation, holders of the Company's preferred shares are not invited to participate in this Meeting, as there will be no voting in respect of matters subject to their voting rights. About Avianca Holdings Avianca Holdings S.A. -- http://www.avianca.com/-- is a Panama-based company engaged, through its subsidiaries, in the provision of air transportation services for passengers and commercial purposes. With a fleet of 175 aircraft, Avianca serves 76 destinations in 27 countries within the Americas and Europe. Avianca reported a net loss of US$893.99 million for the year ended Dec. 31, 2019, compared to net profit of US$1.14 million the year ended Dec. 31, 2018. KPMG S.A.S., in Bogota, Colombia, the Company's auditor since 2018, issued a "going concern" qualification in its report dated April 26, 2019, on the Company's consolidated financial statements for the year ended Dec. 31, 2018, citing that the controlling shareholder of the Company obtained a loan and pledged its shares in Avianca Holdings S.A. as security for this loan agreement (the loan agreement), which requires compliance with certain covenants by the controlling shareholder, including compliance with the Company financial ratios. Breach of these covenants provides the lender the right to enforce the security, leading to a change of control over the Company. A change of control over the Company would breach covenants included in some loan and financing, aircraft rental, and other agreements of the Company, which in turn could trigger early termination or cancelation of these contracts. On April 10, 2019, the Company was informed by the controlling shareholder and its lender, that there was a non-compliance with covenants established in the controlling shareholder's loan agreement, and no waiver was in place; thus, there is a potential risk of change of control. The auditors said this circumstance raises a substantial doubt about the Company's ability to continue as a going concern. * * * As reported by the TCR on Dec. 19, 2019, Fitch Ratings upgraded Avianca Holdings' Long-Term Foreign and Local Currency Issuer Default Ratings to 'CCC+' from 'RD'. The upgrade follows Avianca's announcement that it has completed its debt restructuring, including receipt of a US$250 million convertible secured stakeholder facility loan from United Airlines, Inc. (BB/Stable) and Kingsland Holdings Limited. As reported by the TCR on March 24, 2020, S&P Global Ratings lowered its issuer credit rating on Colombia-based airline operator Avianca Holdings S.A. (Avianca) to 'CCC' from 'B-'. S&P said reduced travel demand and capacity will affect Avianca's credits metrics. AYTU BIOSCIENCE: Regains Compliance with Nasdaq Bid Price Rule -------------------------------------------------------------- Aytu BioScience, Inc. received a letter from Nasdaq Regulation, a division of The Nasdaq Stock Market LLC, notifying the Company that the Nasdaq has determined that the Company's stock price has traded above at least $1.00 for at least 10 consecutive business days since the previously announced Feb. 19, 2020 notice, and therefore, the Company has regained compliance with Nasdaq Listing Rule 5550(a)(2), commonly referred to as the Bid Price Rule. About Aytu BioScience Englewood, Colorado-based Aytu BioScience, Inc. (OTCMKTS:AYTU) -- http://www.aytubio.com/-- is a commercial-stage specialty pharmaceutical company focused on commercializing novel products that address significant patient needs. The company currently markets a portfolio of prescription products addressing large primary care and pediatric markets. The primary care portfolio includes (i) Natesto, an FDA-approved nasal formulation of testosterone for men with hypogonadism, (ii) ZolpiMist, an FDA-approved oral spray prescription sleep aid, and (iii) Tuzistra XR, an FDA-approved 12-hour codeine-based antitussive syrup. Aytu Bioscience reported a net loss of $27.13 million for the year ended June 30, 2019, compared to a net loss of $10.18 million for the year ended June 30, 2018. As of Dec. 31, 2019, the Company had $74.48 million in total assets, $57.39 million in total liabilities, and $16.76 million in total stockholders' equity. Plante & Moran, PLLC, in Denver, CO, the Company's auditor since 2015, issued a "going concern" qualification in its report dated Sept. 26, 2019, on the Company's consolidated financial statements for the year ended June 30, 2019, citing that the Company has suffered recurring losses from operations and has an accumulated deficit that raise substantial doubt about its ability to continue as a going concern. BLINK CHARGING: Elects Kenneth Marks to Board of Directors ---------------------------------------------------------- Kenneth R. Marks was elected to Blink Charging Co.'s Board of Directors on March 23, 2020. Mr. Marks, age 74, is currently the president of KRM Energy Advisors LLC, which focuses on providing strategic and financing advice in the energy sector. Mr. Marks was previously Managing Director and Head of Power, Utilities and Renewables for the Americas for HSBC from 2011 to 2016 in which he was responsible for leading the bank's investment banking and commercial banking services for clients in the sector in North and South America, including the provision of strategic advice, financing and other bank products. Prior to HSBC, Mr. Marks worked for Morgan Stanley as an investment banker for 33 years in increasingly senior roles, including as managing director in the Global Power and Utility Group. In this role, Mr. Marks provided the full range of Morgan Stanley's banking products to clients in the sector, including strategic advice, debt and equity financing, and derivatives/hedging. Mr. Marks' experience at Morgan Stanley also included participation in specialized groups at the investment bank focusing on mergers and acquisitions, financial restructuring, project financing, valuations and corporate finance. Throughout his tenure at Morgan Stanley, Mr. Marks was based in the United States, except for three years when he was based in Hong Kong as Head of M&A and Project Finance for the region. Mr. Marks is a member of the Board of Directors of the Coalition for Green Capital, a non-profit entity whose mission is to foster development of clean energy and energy efficiency, and Chairman of its Audit Committee. Mr. Marks received a B.S. degree in electrical engineering from Bucknell University, an M.B.A. in industrial management from the Wharton School of University of Pennsylvania, and a Ph.D. in finance from New York University. For a number of years, Mr. Marks served on the faculty at NYU teaching courses in its M.B.A. program and has published articles in numerous journals including Public Utilities Fortnightly, Energy Biz and Harvard Business Review. The Company said Mr. Marks' experience in the power, utility and renewable area and his leadership positions at a leading global investment bank, one of the largest global commercial banks and at a non-profit entity applicable to the sector makes his input invaluable to its Board's discussions of the EV charging and alternative energy markets. He also brings transactional expertise in mergers and acquisitions and capital markets. The Company's Board of Directors has determined that Mr. Marks is "independent," as independence is defined in the listing rules for the Nasdaq Stock Market. With Mr. Marks, the Company's Board of Directors currently consists of six members. About Blink Charging Based in Miami Beach, Florida, Blink Charging Co. (OTC: CCGID), formerly known as Car Charging Group, Inc. -- http://www.CarCharging.com-- is an owner/operator of electric vehicle ("EV") charging stations in the United States and a growing presence in Europe, Asia, Israel, the Caribbean, and South America. As of Sept. 30, 2019, the Company had $14.86 million in total assets, $4.79 million in total liabilities, and $10.06 million in total stockholders' equity. Blink Charging reported a net loss attributable to common shareholders of $26.88 million for the year ended Dec. 31, 2018, compared to a net loss attributable to common shareholders of $79.63 million for the year ended Dec. 31, 2017. "We have not yet achieved profitability and expect to continue to incur cash outflows from operations. It is expected that our operating expenses will continue to increase and, as a result, we will eventually need to generate significant product revenues to achieve profitability. These conditions indicate that there is substantial doubt about our ability to continue as a going concern within one year after the issuance date of the financial statements included in this Report. Historically, we have been able to raise funds to support our business operations, although there can be no assurance, we will be successful in raising additional funds in the future. We expect to have the cash required to fund our operations into the third quarter of 2020 while we continue to apply efforts to raise additional capital," the Company stated in its Quarterly Report for the period ended Sept. 30, 2019. BLOOMIN' BRANDS: Moody's Cuts CFR to Ba3, On Review for Downgrade ----------------------------------------------------------------- Moody's Investors Service downgraded Bloomin' Brands, Inc.'s Corporate Family Rating to Ba3 from Ba2, Probability of Default Rating to B1-PD from Ba3-PD, $1.0 billion senior secured revolver to Ba2 from Ba1 and $500 million senior secured term loan to Ba2 from Ba1. In addition, Bloomin' Brands Speculative Grade Liquidity Rating was downgraded to SGL-3 from SGL-2. All long-term ratings have been placed under review for further downgrade. "The downgrade reflects our expectation for a material deterioration in both earnings and credit metrics following the closure of all in-store dining across Bloomin' Brand's entire restaurant base due to efforts to contain the spread of the coronavirus including recommendations from Federal, state and local governments" stated Bill Fahy, Moody's Senior Credit Officer. In response to these operating challenges and to strengthen liquidity, Bloomin' Brands drew down substantially all of its $1.0 billion bank revolver while also suspending its dividend, share repurchases and all discretionary capex. "While many restaurants are still able to continue to provide take-out, curbside pick-up and delivery, total restaurant sales will still be substantially below normal operating levels for the typical casual dining restaurant" stated Fahy. Downgrades: Issuer: Bloomin' Brands, Inc. Probability of Default Rating, Downgraded to B1-PD from Ba3-PD; Placed Under Review for further Downgrade Speculative Grade Liquidity Rating, Downgraded to SGL-3 from SGL-2 Corporate Family Rating, Downgraded to Ba3 from Ba2; Placed Under Review for further Downgrade Senior Secured Bank Credit Facility, Downgraded to Ba2 (LGD2) from Ba1 (LGD2); Placed Under Review for further Downgrade Outlook Actions: Issuer: Bloomin' Brands, Inc. Outlook, Changed to Rating Under Review from Stable RATINGS RATIONALE The rapid and widening spread of the coronavirus outbreak, deteriorating global economic outlook, falling oil prices, and asset price declines are creating a severe and extensive credit shock across many sectors, regions and markets. The combined credit effects of these developments are unprecedented. The restaurant sector has been one of the sectors most significantly affected by the shock given its sensitivity to consumer demand and sentiment. More specifically, the weaknesses in Bloomin' Brands' credit profile, including its exposure to widespread location closures have left it vulnerable to shifts in market sentiment in these unprecedented operating conditions and Bloomin' Brands remains vulnerable to the outbreak continuing to spread. Moody's regards the coronavirus outbreak as a social risk under its ESG framework, given the substantial implications for public health and safety. The action reflects the impact on Bloomin' Brands of the breadth and severity of the shock, and the broad deterioration in credit quality it has triggered. Bloomin' Brands benefits from its high level of brand awareness of its four brands (Outback Steakhouse, Carrabba's Italian Grill, Bonefish Grill, and Fleming's Prime Steakhouse and Wine Bar) and its focus on 'off-premise", direct delivery, and third-party delivery services. Bloomin' Brands also benefits from its large and diversified asset base with 1,473 spread across the US and with 17% located internationally. The SGL-3 reflects Bloomin' Brands adequate liquidity supported by its balance sheet cash of over $400 million. The review for downgrade reflects that the coronavirus could have a greater and more sustained impact on Bloomin' Brands' liquidity and overall credit profile and the potential for there to be more longer-term impacts on consumers ability and willingness to spend on eating out. The review for downgrade will focus on Bloomin' Brands' ability to preserve its liquidity during this period of significant earnings decline. The review will evaluate Bloomin' Brands' ability to reduce expenses and take other actions to preserve cash. Moody's will also assess the potential length and severity of closures on revenues, earnings, credit metrics and liquidity as well the likely path to restaurant traffic recovery. Bloomin' Brands board of directors is a good mix of industry and industry related experience, as well as directors with large company experience and varied periods of board tenure. Bloomin' Brands board has 8 members, 7 of which are independent. Restaurants by their nature and relationship with sourcing food and packaging, as well as an extensive labor force and constant consumer interaction are deeply entwined with sustainability, social and environmental concerns. As part of that commitment, Bloomin' Brands has an Advisory Council, comprised of independent scientists and leading authorities who advise it on animal welfare and sustainability practices. While this may not directly impact the credit, they impact brand image and result in a more positive view of the brand overall. Bloomin' Brands owns and operates a diversified base of casual dining concepts which include Outback Steakhouse, Carrabba's Italian Grill, Bonefish Grill, and Fleming's Prime Steakhouse and Wine Bar. Annual revenues are around $4.1 billion. The principal methodology used in these ratings was Restaurant Industry published in January 2018. BLUBELLE LLC: Seeks to Hire Andersen Law Firm as Legal Counsel -------------------------------------------------------------- Blubelle LLC seeks authority from the US Bankruptcy Court for the District of Nevada to hire Andersen Law Firm, Ltd. as its general reorganization counsel. Andersen Law will provide these legal services: a) advise the Debtor with respect to its powers and duties as a debtor and debtors-in-possession in the continued management and operation of its business and property; b) attend meetings and negotiate with representatives of creditors and other parties in interest and advise and consult on the conduct of the Chapter 11 case, including the legal and administrative requirements of operating in Chapter 11; c) take all necessary action to protect and preserve the bankruptcy estate, including the prosecution of actions on its behalf, the defense of any actions commenced against the bankruptcy estate, negotiations concerning all litigation in which the Debtor may be involved, and objections to claims filed against the bankruptcy estate; d) prepare on behalf of the Debtor all motions, applications, answers, orders, reports, and papers necessary to the administration of the estate; e) negotiate and prepare on the Debtor's behalf plan(s) of reorganization, disclosure statement(s), and all related agreements and/or documents and take any necessary action on behalf of the Debtor to obtain confirmation of such plan(s); f) advise the Debtor in connection with any sale of assets; g) appear before this Court, any appellate courts, and the U.S. Trustee, and protect the interests of the bankruptcy estate before such courts and the U.S. Trustee; and h) perform all other necessary legal services and provide all other necessary legal advice to the Debtor in connection with its Chapter 11 case. The Debtor disclosed that Andersen Law is a "disinterested person" as such term is defined in Section 101(14), and does not hold or represent any interest adverse to Debtor or Debtor's bankruptcy estate. Andersen Law Firm can be reached at: Ryan A. Andersen, Esq. Ani Biesiada, Esq. Andersen Law Firm, Ltd. 101 Convention Center Drive, Suite 600 Las Vegas, NV 89109 Tel: (702) 522-1992 Fax: (702) 825-2824 Email: ryan@vegaslawfirm.legal ani@vegaslawfirm.legal About Blubelle LLC Blubelle LLC filed a voluntary petition under Chapter 11 of the Bankruptcy Code (Bankr. Case No. D. Nev. Case No. 20-11225) on March 3, 2020, listing $500,001 to $1 million in assets and $100,001 to $500,000 in liabilities. Ryan A. Andersen, Esq. at Andersen Law Firm serves the Debtor as counsel. BOSS OYSTER: Seeks to Hire Weeks Auction Group as Auctioneer ------------------------------------------------------------ Boss Oyster, Inc., and Seagrape Enterprises of Apalachicola, Inc., seek approval from the U.S. Bankruptcy Court for the Northern District of Florida to hire Weeks Auction Group, Inc. as auctioneer. Boss owns real property located at 125 Water Street Apalachicola, FL 32320. Seagrape owns real property next door to Boss, located at 123 Water Street, Apalachicola, FL 32320. Weeks Auction Group will sell the Debtors' properties. Mark Manley, the President of Weeks Auction Group, assures the court that the firm neither hold nor represent any interest adverse to the Debtors or their estate with respect to matters on which the firm is to be employed. The firm can be reached through: Mark Manley Weeks Auction Group, Inc. 2186 Sylvester Hwy Suite 1 Moultrie, GA 31768 Phone: +1 229-890-2437 About Boss Oyster Inc. Boss Oyster Inc. owns and operates an oyster bar restaurant in Apalachicola, Fla. Boss Oyster and its affiliate Seagrape Enterprises of Apalachicola, Inc., sought protection under Chapter 11 of the Bankruptcy Code (Bankr. N.D. Fla. Lead Case No. 19-40357) on July 12, 2019. At the time of the filing, Boss Oyster was estimated to have assets of between $1 million and $10 million and liabilities of the same range. The cases have been assigned to Judge Karen K. Specie. Bruner Wright, P.A. is the Debtors' bankruptcy counsel. BOYD GAMING: Moody's Cuts CFR to B2, Outlook Negative ----------------------------------------------------- Moody's Investors Service downgraded Boyd Gaming Corporation's Corporate Family Rating to B2 from B1 and Probability of Default Rating to B2-PD from B1-PD. The company's senior secured revolver and term loans were downgraded to Ba3 from Ba2, and the company's senior unsecured notes were downgraded to Caa1 from B3. The company's Speculative Grade Liquidity rating was downgraded to SGL-3 from SGL-2. The outlook is negative. The downgrade of Boyd's CFR is in response to the disruption in casino visitation resulting from efforts to contain the spread of the coronavirus including recommendations from federal, state and local governments to avoid gatherings and avoid non-essential travel. These efforts include mandates to close casinos on a temporary basis. The downgrade also reflects the negative effect on consumer income and wealth stemming from job losses and asset price declines, which will diminish discretionary resources to spend at casinos once this crisis subsides. Downgrades: Issuer: Boyd Gaming Corporation Corporate Family Rating, Downgraded to B2 from B1 Probability of Default Rating, Downgraded to B2-PD from B1-PD Speculative Grade Liquidity Rating, Downgraded to SGL-3 from SGL-2 Senior Secured Bank Credit Facility, Downgraded to Ba3 (LGD2) from Ba2 (LGD2) Senior Unsecured Regular Bond/Debenture, Downgraded to Caa1 (LGD5) from B3 (LGD5) Outlook Actions: Issuer: Boyd Gaming Corporation Outlook, Changed To Negative From Stable RATINGS RATIONALE Boyd's B2 CFR reflects the meaningful earnings decline over the next few months expected from efforts to contain the coronavirus and the potential for a slow recovery once properties reopen. Because of approaching September 2021 maturities, the credit profile could deteriorate meaningfully over the next three to six months if the company's operating performance does not rebound quickly from the coronavirus outbreak. The rating also reflects the company's significant size and geographic diversification. The company is the second-largest regional gaming operator in terms of net revenue and number of casino assets operated. Key credit concerns include Boyd's significant leverage prior to the coronavirus outbreak. Market saturation is another concern. While there have been some recent improvements in overall gaming demand throughout the US, Boyd and other U.S. regional gaming operators face casino oversupply conditions and the resulting cannibalization of customer dollars that is occurring throughout many US gaming markets. Moody's downgraded the speculative-grade liquidity rating to SGL-3 from SGL-2 because of the expected decline in earnings and cash flow and increased risk of a covenant violation. As of the year ended December 31, 2019, Boyd had cash of $250 million. On March 16, 2020, the company fully drew down its $945 million revolving credit facility. Moody's estimates the company could maintain sufficient internal cash sources after maintenance capital expenditures to meet required annual amortization and interest requirements assuming a sizeable decline in annual EBITDA. The expected EBITDA decline will not be ratable over the next year and because EBITDA and free cash flow will be negative for an uncertain time period, liquidity and leverage could deteriorate quickly over the next few months. Because the company's $945 million revolver and $234 million term loan A mature in September 2021, Moody's would likely lower the liquidity rating to SGL-4 if the company does not proactively address the maturities. The rapid and widening spread of the coronavirus outbreak, deteriorating global economic outlook, falling oil prices, and asset price declines are creating a severe and extensive credit shock across many sectors, regions and markets. The combined credit effects of these developments are unprecedented. The gaming sector has been one of the sectors most significantly affected by the shock given its sensitivity to consumer demand and sentiment. More specifically, the weaknesses in Boyd's credit profile, including its exposure to travel disruptions and discretionary consumer spending have left it vulnerable to shifts in market sentiment in these unprecedented operating conditions and Boyd remains vulnerable to the outbreak continuing to spread. Moody's regards the coronavirus outbreak as a social risk under its ESG framework, given the substantial implications for public health and safety. The action reflects the impact on Boyd of the breadth and severity of the shock, and the broad deterioration in credit quality it has triggered. The negative outlook considers that Boyd remains vulnerable to travel disruptions and unfavorable sudden shifts in discretionary consumer spending and the uncertainty regarding the timing of facility re-openings and the pace at which consumer spending at the company's properties will recover. The negative outlook also reflects the refinancing risk associated with the approaching September 2021 revolver and term maturities. Ratings could be downgraded if liquidity deteriorates or if Moody's anticipates Boyd's earnings declines to be deeper or more prolonged because of actions to contain the spread of the virus or reductions in discretionary consumer spending. A ratings upgrade is unlikely given the weak operating environment. However, the ratings could be upgraded if the facilities reopen and earnings recover such that positive free cash flow and reinvestment flexibility is restored and debt-to-EBITDA is sustained below 5.25x. Boyd Gaming Corporation owns and operates 29 gaming properties in ten states: Nevada, Illinois, Indiana, Iowa, Kansas, Louisiana, Mississippi, Missouri, Ohio, and Pennsylvania. Revenue for the latest 12-month period ended December 31, 2019 was about $3.3 billion. The principal methodology used in these ratings was Gaming Industry published in December 2017. BRINKER INT'L: Moody's Cuts CFR to Ba3 & Unsecured Notes to B2 -------------------------------------------------------------- Moody's Investors Service downgraded Brinker International, Inc.'s Corporate Family Rating to Ba3 from Ba1, Probability of Default Rating to Ba3-PD from Ba1-PD, guaranteed senior unsecured notes to B2 from Baa3 and senior unsecured non-guaranteed notes to B2 from Ba1. In addition, Brinker's Speculative Grade Liquidity Rating was downgraded to SGL-4 from SGL-2. All ratings remain under review for further downgrade. "The downgrade reflects the expectation for a severe deterioration in both earnings and credit metrics that are driven by the closure of in-store dining across Brinker's entire restaurant base due to efforts to contain the spread of the coronavirus including recommendations from Federal, state and local governments" stated Bill Fahy, Moody's Senior Credit Officer. In response to these operating challenges and to strengthen liquidity, Brinker is focusing on reducing all non-essential operating expenses and discretionary capex. "While many restaurants are still able to continue to provide take-out, curbside pick-up and delivery, total restaurant sales will still be substantially below normal operating levels for the typical casual dining restaurant" stated Fahy. Downgrades: Issuer: Brinker International, Inc. Probability of Default Rating, Downgraded to Ba3-PD from Ba1-PD; Placed Under Review for further Downgrade Speculative Grade Liquidity Rating, Downgraded to SGL-4 from SGL-2 Corporate Family Rating, Downgraded to Ba3 from Ba1; Placed Under Review for further Downgrade Senior Unsecured Regular Bond/Debenture, Downgraded to B2 (LGD5) from Ba1 (LGD4); Placed Under Review for further Downgrade Backed Senior Unsecured Regular Bond/Debenture, Downgraded to B2 (LGD5) from Baa3 (LGD3); Placed Under Review for further Downgrade Outlook Actions: Issuer: Brinker International, Inc. Outlook, Changed to Rating Under Review from Negative RATINGS RATIONALE The rapid and widening spread of the coronavirus outbreak, deteriorating global economic outlook, falling oil prices, and asset price declines are creating a severe and extensive credit shock across many sectors, regions and markets. The combined credit effects of these developments are unprecedented. The restaurant sector has been one of the sectors most significantly affected by the shock given its sensitivity to consumer demand and sentiment. More specifically, the weaknesses in Brinker's credit profile, including its exposure to widespread restaurant closures have left it vulnerable to shifts in market sentiment in these unprecedented operating conditions and Brinker remains vulnerable to the outbreak continuing to spread. Moody's regards the coronavirus outbreak as a social risk under its ESG framework, given the substantial implications for public health and safety. The action reflects the impact on Brinker of the breadth and severity of the shock, and the broad deterioration in credit quality it has triggered. Brinker's Ba3 benefits from its high level of brand awareness, meaningful scale, improved cost structure and strong product pipeline and technology initiatives that should help drive incremental traffic and higher check over the longer term. The Speculative Grade Liquidity Rating of SGL-4 (weak liquidity) reflects the expectation for Brinker to generate negative free cash flow during this period of severe disruption. The review for downgrade reflects that the coronavirus could have a greater and more sustained impact on Brinker's liquidity and overall credit profile and the potential for there to be more longer-term impacts on consumers ability and willingness to spend on eating out. The review for downgrade will focus on Brinker's ability to preserve its liquidity during this period of significant earnings decline. The review will evaluate Brinker's ability to reduce expenses and take other actions to preserve cash. Moody's will also assess the potential length and severity of closures on revenues, earnings, credit metrics and liquidity as well the likely path to restaurant traffic recovery. Brinker's board of directors is a good mix of industry veterans, as well as directors with large company experience and relatively varied periods of board tenure. Brinker's board has 9 members, 8 of which are independent and separate Chairman and CEO roles. Brinker is a publicly traded company. Restaurants by their nature and relationship with regards to sourcing food and packaging, as well as having an extensive labor force and constant consumer interaction are deeply entwined with sustainability, social and environmental concerns. To this end, Brinker requires its suppliers to adhere to its supplier code of conduct, which sets forth its expectations on business integrity, food safety and food ingredients, animal welfare and sustainability. While these may not directly impact the credit, these factors should positively impact brand image and result in a more positive view of the brand overall. Brinker International owns, operates and franchises the casual dining concepts Chili's Grill & Bar and Maggiano's Little Italy. As of December 25, 2019, Brinker owned and operated about 1,117 restaurants globally and franchised an additional 558 Chili's restaurants. Annual revenues are approximately $3.3 billion. The principal methodology used in these ratings was Restaurant Industry published in January 2018. CARLSON TRAVEL: Fitch Places 'B+' IDR on Watch Negative ------------------------------------------------------- Fitch Ratings has placed Carlson Travel, Inc.'s 'B+' Issuer Default Rating, 'BB+'/'RR1' senior secured debt, and 'B+'/'RR4' senior unsecured debt on Rating Watch Negative. The RWN is based on the severe disruption to global travel caused by the coronavirus outbreak as well as the unknown depth and duration of the outbreak's impact, which will significantly weigh on CWT's liquidity in the near term. Fitch estimates the company has roughly five months of aggregate liquidity based on anticipated cash burn. This takes into account levers the company can exercise around its cost structure, including labor, as well as capex. Fitch expects to resolve the RWN within the next one to two months based on the evolution of the company's liquidity. Should the company's liquidity position improve such that it could withstand a more prolonged disruption, Fitch could remove the RWN. At that time, a Negative Outlook may be assigned as Fitch expects CWT's 2020 leverage to exceed 5.0x, the threshold for a downgrade to 'B'. Fitch's current forecast for CWT anticipates that the company will be able to return to credit metrics that support the 'B+' rating by YE 2021. At this time, the rating takes into account a travel recovery that begins later this year and into 2021, and to the extent there is increased visibility with respect to the trajectory of the recovery, Fitch could revise the Rating Outlook back to Stable. KEY RATING DRIVERS Near-Term Liquidity: CWT has roughly five months of liquidity to withstand a severe short-term operating shock. This includes $134 million in cash and $123 million of revolver availability as of Dec. 31, 2019, with no meaningful debt maturities until 2023. Should the travel disruption persist into May, Fitch would expect the company to seek additional sources of liquidity and the absence of improved liquidity could result in negative rating action. The second calendar quarter will see the greatest cash burn given the sharp expected reductions in travel transactions and roughly $30 million in cash interest expense. Working capital change should not materially impact the cash burn rate given that CWT does not employ the merchant model, unlike peer Expedia Group, Inc. (BBB-/Negative). Solid Diversification: CWT is well-diversified from a geographic, customer, and contract type perspective, helping to moderate an impact from cyclical travel pressures. A majority of revenue is generated in the Americas and EMEA, with a growing presence in Asia. No single customer comprises a meaningful portion of total revenue and CWT's business clients are also diversified across industries. The company structures its contracts as either transaction fee-based (roughly two-thirds of revenue) or management fee-based, with the latter supporting cash flows in the event of travel volume declines. Continued Margin Improvement: EBITDA margins expanded 130 basis points to 14.5% since 2017 and will continue to improve toward the high teens, primarily from improvements in cost structure related to reduced labor costs and more efficient operating model. Over the medium term, headcount is being centralized at global service centers in lower cost geographies and investments in technology and systems are reducing absolute costs. CWT will also benefit from margin yield improvement (how much revenue is generated per travel booking) as its RoomIt hotel distribution business grows. CWT continues to add new hotel properties to its platform with negotiated rates and Fitch expects hotel attachment rate (hotel bookings as percentage of airline bookings) to modestly increase, which will also boost margins. These initiatives will be counterbalanced by an overall mix increase in lower margin yield online bookings. Agile Operating Model: A majority of CWT's operating costs are staff, which it monitors regularly and can adjust quickly to changes in travel volumes - including potentially lingering effects on global travel from the evolving coronavirus outbreak. In 2009, CWT was able to cut roughly 17% of its workforce, while revenue and EBITDA declined by slightly less (on constant currency basis). This resulted in low flowthrough to EBITDA and only modest pressure on margins. A number of other operating costs are variable, including fees to credit card companies, OTAs, and suppliers. Certain capex spending related to software development could also be delayed during periods of stress. Business Travel Industry: The business travel industry has a moderate degree of cyclicality, due to demand volatility stemming from economic cycles or external shocks. Long-term growth will be underpinned by increasing consumer and business confidence, improving global travel infrastructure and growth in business investment and trade. In the medium term, business travel demand should come from all countries and regions but should be particularly strong in Asia, even though this region represents less than 10% of CWT's total sales. The business travel industry is fragmented, with many companies still retaining operations in-house, though CWT is one of the largest competitors along with American Express Global Business Travel. DERIVATION SUMMARY CWT is a global operator in business travel management services with moderate leverage (4.4x gross debt/EBITDA as of Dec. 31, 2019) and improving long-term EBITDA and FCF margins. The closest Fitch-rated public peer is Expedia Inc. (BBB-/Negative), which provides business-to-consumer travel services primarily to individuals and is more exposed to leisure travel. Expedia has significantly larger scale with excess of $100 billion gross travel bookings and $1 billion in annual FCF, while it also has a long-established track record of adhering to a below 2.0x gross debt/EBITDA target. Travelport and Sabre GLBL are also peers that operate in the global distribution system (GDS) business. Travelport has operated with slightly higher leverage than CWT, while Sabre lower leverage and higher EBITDA and FCF margins. Long term, Fitch feels the disintermediation risk of GDS companies from the travel funnel is greater than business travel management companies, with the latter offering high value-add services to corporate clients. KEY ASSUMPTIONS Fitch's Key Assumptions Within the Rating Case for the Issuer -- Significant revenue declines in 2020 as a result of the coronavirus' disruption to global travel. Fitch assumes aggregate revenue declines roughly 40% in 2020, with quarterly revenue declines ranging from 20%-75%. Fitch assumes a moderate recovery in travel demand in 2021 and 2022, with revenues in 2021 roughly 15% below 2019 levels; -- Flowthrough to EBITDA is approximately 25% as variable labor costs comprise majority of operating expenses; -- Capex is lower than historical levels in 2020 as some projects are flexible, returning to normalized levels in 2021. RATING SENSITIVITIES Developments That May, Individually or Collectively, Lead to Positive Rating Action (i.e. Likely Removal of RWN with a Rating Outlook to Negative or Stable) -- Greater aggregate liquidity to withstand a prolonged period of disrupted global travel demand, potentially from incremental facility capacity or owner support; -- Evidence of a stabilization in travel demand and signs of a significant rebound in global travel demand. Developments That May, Individually or Collectively, Lead to Negative Rating Action -- A decrease in aggregate liquidity as a result of prolonged travel disruption and/or working capital drag. -- Less certainty that gross debt/EBITDA recovers to or below 5.0x by 2021 due to prospects of more prolonged depressed global travel demand. LIQUIDITY AND DEBT STRUCTURE Liquidity Strategy: CWT maintains a sufficient level of cash and revolver availability to withstand seasonally slow periods that may result in working capital swings, notwithstanding the current severe disruption to global travel demand. The company is improving its working capital management further by adjusting customer and payment terms. FCF generation is improving and will be a meaningful source of cash going forward, due to the EBITDA growth from CWT's cost initiatives. There are no meaningful debt payments until 2023 when roughly $775 million of secured debt matures. SUMMARY OF FINANCIAL ADJUSTMENTS Fitch adds back exceptional and one-time items to EBITDA, specifically for severance related to its relocation of labor to global service centers. Fitch also adds and subtracts distributions to and from affiliates to EBITDA. ESG CONSIDERATIONS Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of 3 - ESG issues are credit neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. CARVANA CO: Agrees to Sell a Pool of Finance Receivables to Ally ---------------------------------------------------------------- On March 19, 2020, a subsidiary of Carvana Co., Ally Bank, and Ally Financial amended the Amended and Restated Master Purchase and Sale Agreement to allow Ally to purchase additional finance receivables from the Company. In connection with this amendment, the Company has agreed to sell a pool of finance receivables to Ally. This sale supplants the prime component of the Company's two-shelf securitization program for Q1 2020. In addition, the Company recently priced its first nonprime securitization and the related certificate. Both pools of receivables transacted at a premium. In aggregate, the two transactions combined with year-to-date ordinary forward-flow sales to Ally totaling approximately $800 million of principal balances of receivables. About Carvana Founded in 2012 and based in Phoenix, Carvana Co. -- http://www.carvana.com/-- is a holding company that was formed as a Delaware corporation on Nov. 29, 2016. Carvana is an e-commerce platform for buying and selling used cars. Carvana reported a net loss of $364.64 million for the year ended Dec. 31, 2019, compared to a net loss of $254.74 million for the year ended Dec. 31, 2018. As of Dec. 31, 2019, the Company had $2.05 billion in total assets, $1.86 billion in total liabilities, and $191.94 million in total stockholders' equity. Carvana has incurred losses each year from inception through Dec. 31, 2019, and expects to incur additional losses in the future. However, management believes, based on the Company's operating plan, that current working capital and expected continued inventory and capital expenditure financing is sufficient to fund operations and satisfy the Company's obligations as they come due for at least one year from the financial statement issuance date. The Company determined its ability to continue as a going concern is a critical audit matter due to the estimation and execution uncertainty regarding the Company's future cash flows and the risk of bias in management's judgments and assumptions in estimating these cash flows. * * * As reported by the TCR on May 24, 2019, 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. CBAC GAMING: Moody's Cuts CFR to Caa2, Outlook Negative ------------------------------------------------------- Moody's Investors Service downgraded CBAC Gaming, LLC's Corporate Family Rating to Caa2 from Caa1 and Probability of Default Rating to Caa2-PD from Caa1-PD. The company's senior secured revolver and term loan were downgraded to Caa2 from Caa1. The outlook is negative. The downgrade of CBAC's CFR is in response to the disruption in casino visitation resulting from efforts to contain the spread of the coronavirus including recommendations from federal, state and local governments to avoid gatherings and avoid non-essential travel. These efforts include mandates to close casinos on a temporary basis. The downgrade also reflects the negative effect on consumer income and wealth stemming from job losses and asset price declines, which will diminish discretionary resources to spend at casinos once this crisis subsides. Downgrades: Issuer: CBAC Gaming, LLC Corporate Family Rating, Downgraded to Caa2 from Caa1 Probability of Default Rating, Downgraded to Caa2-PD from Caa1-PD Senior Secured Bank Credit Facility, Downgraded to Caa2 (LGD3) from Caa1 (LGD3) Outlook Actions: Issuer: CBAC Gaming, LLC Outlook, Changed to Negative from Stable RATINGS RATIONALE CBAC's Caa2 CFR reflects the meaningful earnings decline over the next few months expected from efforts to contain the coronavirus and the potential for a slow recovery once properties reopen. The rating also reflects the company's small, single property, geographically concentrated gaming operations, high debt/EBITDA relative to its scale of operations and competition from the expansion of Live!, its closest competitor, and MGM's National Harbor casino. CBAC's gaming revenue was pressured due to competition in the market even before the coronavirus outbreak. As a casino operator, social risk is elevated, as evolving consumer preferences related to entertainment choices and population demographics may drive a change in demand away from traditional casino-style gaming. Positive credit consideration is given to the population density of the Washington D.C. to Baltimore area that should enable the market to eventually absorb the new supply and management by Caesars and access to its loyalty program. Moody's views the company's liquidity as weak because of the expected decline in earnings and cash flow and high risk of a covenant violation. On March 16, 2020, the company fully drew down its $15 million revolving credit facility to supplement its approximately $40 million cash balance (as of 9/30/19). Because EBITDA and free cash flow will be negative for an uncertain time period, liquidity and leverage could deteriorate quickly over the next few months. The company's revolver matures in 2022 and term loan in 2024. The rapid and widening spread of the coronavirus outbreak, deteriorating global economic outlook, falling oil prices, and asset price declines are creating a severe and extensive credit shock across many sectors, regions and markets. The combined credit effects of these developments are unprecedented. The gaming sector has been one of the sectors most significantly affected by the shock given its sensitivity to consumer demand and sentiment. More specifically, the weaknesses in CBAC's credit profile, including its exposure to travel disruptions and discretionary consumer spending have left it vulnerable to shifts in market sentiment in these unprecedented operating conditions and CBAC remains vulnerable to the outbreak continuing to spread. Moody's regards the coronavirus outbreak as a social risk under its ESG framework, given the substantial implications for public health and safety. The action reflects the impact on CBAC of the breadth and severity of the shock, and the broad deterioration in credit quality it has triggered. The negative outlook considers that CBAC remains vulnerable to travel disruptions and unfavorable sudden shifts in discretionary consumer spending and the uncertainty regarding the timing of facility re-openings and the pace at which consumer spending at the company's properties will recover. Ratings could be downgraded if liquidity deteriorates or if Moody's anticipates CBAC's earnings declines to be deeper or more prolonged because of actions to contain the spread of the virus or reductions in discretionary consumer spending. A ratings upgrade is unlikely given the weak operating environment. However, the ratings could be upgraded if the facilities reopen and earnings recover such that positive free cash flow and reinvestment flexibility is restored and debt-to-EBITDA is sustained below 8.0x. CBAC Gaming, LLC is a joint venture whose members consist of CR Baltimore Holdings, LLC, CVPR Gaming Holdings, LLC, and PRT Two. CRBH is a joint venture between Caesars Baltimore Investment Company, LLC and Rock Gaming Mothership, LLC. CBAC developed and opened the Horseshoe Baltimore casino in Baltimore, MD on August 26, 2014. Horseshoe Baltimore features more than 2,200 slot machines, including more than 150 video poker machines, a 25-table WSOP Poker Room and over 150 table games. A wholly owned subsidiary of Caesars Operating Co., LLC manages the property. CBAC is a private company that does not disclose financial information to the public. The principal methodology used in these ratings was Gaming Industry published in December 2017. CENTURION PIPELINE: Fitch Cuts IDR to BB- & Alters Outlook to Neg. ------------------------------------------------------------------ Fitch Ratings has downgraded Centurion Pipeline Company LLC's Long-Term Issuer Default Rating (IDR) to 'BB-' from 'BB'. In addition, Fitch has downgraded the senior secured term loan and revolver rating to 'BB'/'RR1' from 'BB+'/'RR1'. The Recovery Rating of 'RR1' reflects Fitch's expectations of an outstanding recovery in the range of 91% to 100% if there is an event of default. The Rating Outlook has been revised to Negative from Stable. The downgrade to Centurion reflects the negative rating action at Centurion's primary counterparty, Occidental Petroleum Corp. (OXY; BB+/Rating Watch Negative [RWN]). Fitch had previously written that a substantial credit quality deterioration at OXY could lead to a downgrade at Centurion. OXY's IDR was downgraded reflecting negative impacts from the sharp drop in oil prices, which has caused Fitch to revise its base case price deck lower, resulting in weaker metrics and cash flow protections. The oil price collapse has also made OXY's ongoing sales of energy assets more challenging, prompting OXY to reduce capex spending and moderate its production activity in the Permian. Centurion's rating also reflects its elevated near-term leverage from historically low levels. Fitch expects year end 2020 leverage to be in the range of 3.5x-3.7x from a modest 2.1x leverage at year-end 2019. The ratings also take into account concentration risk from OXY and Centurion's limited size and scale. The rating is constrained by the fact that nearly all cash flows are generated from a single pipeline system, although the company is now expanding with its JV interest in Wink-to-Webster and the Augustus Pipeline, but remains focused on the Permian basin. Given its single basin focus and lack of business line diversity, Centurion is subject to event risk should there be a slow down or longer-term disruption of production in the Permian. This risk is mitigated to an extent by some stable cash flow assurance in the form of minimum revenue commitments from OXY and another investment-grade counterparty which provides some downside protection; and the importance of the asset to OXY given that the Centurion system spans across both basins within the Permian and has access to Midland and Cushing hubs. The Negative Outlook reflects Fitch's concerns around near-term challenges in a weak oil price environment and its continued impact on producer activity. Additionally, a resolution of the OXY RWN with a downgrade is also relevant, particularly if volumes nominated by OXY are starting to approach the level of volumes which underlies the 2020 Minimum Revenue Commitment level. KEY RATING DRIVERS Near-Term Leverage Trending Higher: Centurion has historically maintained low leverage and strong interest and distribution coverage relative to midstream peers. Leverage is expected to be elevated in the near term with expectation of moderating producer activity in the backdrop of macro headwinds in a low oil price environment. Fitch expects year-end 2020 leverage in the range of 3.5x-3.7x given higher committed growth spending, barring unforeseen events such as increases in spending or acquisitions. Fitch believes leverage is critical to Centurion's credit profile due to the company's concentrated counterparty exposure and limited geographic diversity. Counterparty Exposure: Centurion derives a significant proportion of its revenues from OXY, which is the primary counterparty on its system. Revenues from Oxy are supported by long term contracts with some minimum revenue commitments. Centurion has significant customer concentration to OXY and is expected to remain Centurion's largest customer in the near to intermediate term, as it provides OXY with logistical assets that support its operations. In addition to its own production, OXY also on-ships for others. Although the assets are critical to OXY's production in the Permian, Fitch typically views midstream providers with high counterparty concentration as having exposure to outsized event risk. Lack of Diversification: Centurion derives nearly all of its cash flows from a single asset located in the Permian basin and extending northeast to Cushing, OK. The lack of diversity exposes Centurion to geographic and asset concentration. Furthermore, Centurion lacks customer diversification given that OXY accounts for the significant proportion of its volumes. Steady Cash Flows: Centurion's operations are underpinned by long-term agreements in place with OXY, which includes a minimum revenue commitment extending until 2029. Centurion also has a long-term throughput and deficiency (T&D) agreement in place with another investment-grade customer. These minimum revenue commitments ensure cash flow assurance and provide some volumetric downside protection but these minimum revenue commitments decline over the contract period. The new projects including Wink-to-Webster and Augustus pipeline will be supported by long term take or pay contracts from counterparties that are predominantly investment grade. In addition, the Southeast New Mexico (SENM) oil gathering system has significant acreage dedication. Supportive Sponsor: Centurion's sponsor, Encap Flatrock Midstream (EnCap) has been and is expected to remain supportive of the operating profile of Centurion. As of September 2019, EnCap owned 100% of Centurion. EnCap committed equity for the purchase of Oxy's pipeline assets in 2018 and continues to provide the Company with assistance in gaining insights into new areas. EnCap supports Centurion's growth as the Company reinvests its cash flows into the business. This further highlights EnCap's commitment going forward as Centurion continues to grow. ESG - Governance: Centurion has a relevance score of 4 for Group Structure and Financial transparency as the company operates under a somewhat complex group structure. DERIVATION SUMMARY Centurion's rating is constrained by its size and lack of geographic diversification. Centurion also has significant customer concentration with Occidental Petroleum Corp. (OXY; BB+/ RWN), contributing nearly 60% of revenues for FYE 2019. The rating also takes into account that nearly all cash flows are generated from a single pipeline system, although the company is now expanding with its investment in the Augustus Pipeline and joint venture interest in Wink-to-Webster. Both Hess Midstream Operations, LP (HESM OpCo; IDR BB+/Stable Outlook) and Centurion are single basin midstream companies with concentrated but high-quality counterparty risk. HESM OpCo's parent is Hess Corporation (HES; BBB-/Stable). HESM OpCo is located in the Bakken whereas Centurion is based in the Permian basin, where Fitch expects curtailed producer activity in the near term. Although HESM OpCo's leverage is higher than Centurion's, HESM OpCo receives protection from volume downside and other risks from its investment grade parent, HES in the form of some MVCs. KEY ASSUMPTIONS - Fitch utilized its WTI oil price deck of $38/barrel in 2020, $45/ barrel in 2021 and $50/ bbl in 2022; - The Augustus Pipeline and Wink-to-Webster joint venture growth projects proceeds as planned and is in service in 2021; - Maintenance Capex consistent with management guidance; - No distributions are made; - No acquisitions in forecast period. RATING SENSITIVITIES Developments That May, Individually or Collectively, Lead to Positive Rating Action - An increase in size, scale, asset, geographic or business line diversity while maintaining leverage at or below 3.0x on a sustained basis; - Fitch would look to stabilize the Outlook if OXY's Outlook is stabilized. Developments That May, Individually or Collectively, Lead to Negative Rating Action - Credit quality deterioration of its primary counterparty, OXY in the absence of any meaningful counterparty diversification; - A significant change in cash flow stability such as an increase in cash flows from acreage dedications; - Any significant delays in the planned in-service date of Augustus Pipeline and the Wink-to-Webster JV project; - Leverage (Total Debt/Adjusted EBITDA) at or above 4.0x on a sustained basis; - An increase in spending beyond Fitch's current expectations or acquisitions funded in a manner that pressures the balance sheet; - Reduced liquidity. LIQUIDITY AND DEBT STRUCTURE Adequate Liquidity in Near Term: As of Sept. 30, 2019, Centurion had approximately $65 million in cash and cash equivalents. Centurion also has a credit facility which provides for $350 million term loan and a $100 million revolver. The revolver also has a sublimit of $25 million for letters of credit. The Credit Facility can be used to fund capital needs of Centurion and subsidiaries. As of Sept. 30, 2019, no amount was outstanding under the revolver. Obligations under the credit facility are secured by substantially all tangible and intangible assets of the Company. Beginning 1Q19, the term loan has an annual amortization of $3.5 million. The senior secured term loan and secured revolver rank pari passu. Under the facility, Centurion is required to maintain two financial covenants: (1) debt service coverage ratio (DSCR) of at least 1.10x and (2) net total leverage ratio not exceeding 4.75x. As of Sept. 30, 2019, Centurion was in compliance with the covenants and Fitch expects the Company to maintain compliance in the near to intermediate term. Debt Maturity Profile: The revolver matures on September 2023.The Senior Secured Term Loan B with an outstanding amount of $348 million has a maturity of September 2025. ESG CONSIDERATIONS Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of 3. ESG issues are credit neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Centurion has an ESG Relevance score of 4 for Governance issues with its Group Structure and financial transparency as the company operates under a somewhat complex group structure. This has negative impact on the credit profile and is relevant to the rating in conjunction with other factors. CHAMP ACQUISITION: Moody's Alters Outlook on B2 CFR to Negative --------------------------------------------------------------- Moody's Investors Service affirmed Champ Acquisition Corporation's Corporate Family Rating at B2 and Probability of Default Rating at B2-PD. Champ is the parent company of Jostens, Inc. Moody's also affirmed the rating on the senior secured first lien revolving credit facility and the senior secured first lien term loan at B1 (LGD3). The rating for the senior secured second lien term loan was affirmed at Caa1 (LGD5). The rating outlook was changed to negative from stable. The change in rating outlook to negative reflects that Champ's operating performance will be negatively affected by school closings across the United States as a result of the coronavirus outbreak as well as job losses that leads to cutbacks in discretionary consumer spending. Almost all states have canceled on-premise school instruction and Moody's expects that some graduation ceremonies will also be canceled. Moody's estimates that approximately 25% of Champ's sales are directly related to products used at commencement ceremonies such as cap and gowns, diplomas, regalia, announcements, and related apparel. Sales in the larger yearbook segment will not be materially impacted in the 2019-2020 school year as these products have mostly been contracted earlier in the school year, but there is risk to 2020-2021 school year sales from declines in consumer income and spending. Moody's expects that Champ's overall sales will decline about 10% to 20% over the next 12 months as a result of commencement ceremony cancelations and more cautious spending by consumers. Although Champ's current debt/EBITDA of 4.7x is comfortably within its rating downgrade trigger of 5.5x, Moody's expects financial leverage (debt/EBITDA) will increase over the next 6 to 12 months to 5.5x to 6.0x as a result of weaker operating performance. Additionally, Moody's expects liquidity to weaken as Champ's free cash flows will not be sufficient to support scheduled term loan amortization over the next year and the company will need to rely on its revolver to repay the debt amortization that steps up over the next year. Moody's took the following rating actions on Champ Acquisition Corporation: Ratings Affirmed: Corporate Family Rating, B2 Probability of Default Rating, B2-PD $150 million senior secured first lien revolving credit facility expiring 2023, B1 (LGD3) $775 million senior secured first lien term loan due 2025, B1 (LGD 3) $150 million guaranteed secured second lien term loan due 2026, Caa1 (LGD5) The rating outlook is changed to negative from stable. RATINGS RATIONALE Champ's credit profile reflects the company's high financial leverage of 4.7x debt/EBITDA after its December 2018 leveraged buyout by Platinum Equity. The ratings also reflect the company's weakening business fundamentals as schools across the U.S. remain closed due to the coronavirus outbreak and such closings may result in many graduation ceremony cancelations. Job losses are also likely to weaken discretionary consumer spending. The company's credit profile also reflects its narrow product focus including yearbooks, school rings, graduation gowns, and related products. Products such as class rings and yearbooks are steadily declining and there is risk to certain products from online tools that can be used to share photographs and other information. Further, business fundamentals remain weak as sale of graduation products will decline as a result of canceled commencement ceremonies due to school closings. Competitive and market risks are partially mitigated by the breadth and quality of Champ's product and service capabilities, the company's ability to personalize products, strong sales support and customer service, and the long-standing relationships of the company's large network of independent sales representatives with individual schools and colleges. In terms of ESG, social risks are a material consideration for Champ if social changes, such as school closing from a virus outbreak, materially disrupts school attendance. From a governance perspective, the company has high leverage following its acquisition by Platinum Equity. Champ's ownership by a private equity company is also a credit negative, given risk of activities such as shareholder distributions. Moody's does not expect material acquisitions over the next year, but acquisitions to increase product diversity or bolster technology capabilities if products increasingly shift to digital formats could result in increased leverage and integration risk. The negative outlook reflects Champ's relatively high financial leverage and further downside pressure on the CFR if sales for graduation products materially decline as a result of canceled graduation ceremonies or if cutbacks in discretionary consumer spending weaken the company's sales. The negative outlook also reflects Champ's weakening liquidity position as Moody's believes the company will need to rely on its revolver to repay upcoming term loan amortization. Moody's expects debt/EBITDA will increase over the next 12 months to 5.5x to 6.0x and prolonged increase in financial leverage could result in a rating downgrade. The ratings could be downgraded if Champ's operating performance deteriorates, or if the company engages in debt funded acquisitions or shareholder distributions. Ratings could also be downgraded if debt/EBITDA is sustained above 5.5x, or if liquidity deteriorates further. The ratings could be upgraded if the company achieves greater scale, maintains steady organic growth and increases product diversity. The ratings could also be upgraded if debt to EBITDA is sustained below 4.0x. The rapid and widening spread of the coronavirus outbreak, deteriorating global economic outlook, falling oil prices, and asset price declines are creating a severe and extensive credit shock across many sectors, regions and markets. The combined credit effects of these developments are unprecedented. The durables sector has been one of the sectors most significantly affected by the shock given its sensitivity to consumer demand and sentiment. More specifically, the weaknesses in Champ's credit profile, including its exposure to the U.S. schools, have left it vulnerable to shifts in market sentiment in these unprecedented operating conditions and Champ remains vulnerable to the outbreak continuing to spread. Moody's regards the coronavirus outbreak as a social risk under its ESG framework, given the substantial implications for public health and safety. The action reflects the impact on Champ of the breadth and severity of the shock, and the broad deterioration in credit quality it has triggered. The principal methodology used in these ratings was Consumer Durables Industry published in April 2017. CITYCENTER HOLDINGS: Moody's Cuts CFR to B2, Outlook Negative ------------------------------------------------------------- Moody's Investors Service downgraded CityCenter Holdings, LLC's Corporate Family Rating to B2 from B1 and Probability of Default Rating to B2-PD from B1-PD. The company's senior secured revolver and term loan B were downgraded to B2 from B1. The company's Speculative Grade Liquidity rating was downgraded to SGL-2 from SGL-1. The outlook is negative. The downgrade of CityCenter's CFR is in response to the disruption in casino visitation resulting from efforts to contain the spread of the coronavirus including recommendations from federal, state and local governments to avoid gatherings and avoid non-essential travel. These efforts include mandates to close casinos on a temporary basis. The downgrade also reflects the negative effect on consumer income and wealth stemming from job losses and asset price declines, which will diminish discretionary resources to spend at casinos once this crisis subsides. Downgrades: Issuer: CityCenter Holdings, LLC Corporate Family Rating, Downgraded to B2 from B1 Probability of Default Rating, Downgraded to B2-PD from B1-PD Speculative Grade Liquidity Rating, Downgraded to SGL-2 from SGL-1 Senior Secured Bank Credit Facility, Downgraded to B2 (LGD4) from B1 (LGD4) Outlook Actions: Issuer: CityCenter Holdings, LLC Outlook, Changed To Negative From Stable RATINGS RATIONALE CityCenter's B2 CFR reflects the meaningful earnings decline over the next few months expected from efforts to contain the coronavirus and the potential for a slow recovery once properties reopen. The rating also reflects geographic and property concentration risk as all of the company's revenue and earnings are derived from one resort complex located on the Las Vegas Strip. Supporting the credit profile is CityCenter's better than average leverage and interest coverage for the rating category as of year-end 2019 and cash flow that normally exceeds its capital spending, mandatory debt amortization and dividend needs. The credit profile incorporates an expectation that excess cash will be distributed to shareholders from time to time without negatively impacting the company's credit profile. Moody's downgraded the speculative-grade liquidity rating to SGL-2 from SGL-1 because of the expected decline in earnings and cash flow and increased risk of a covenant violation. As of the year ended December 31, 2019, CityCenter had cash of $246 million and an undrawn $125 million revolving credit facility. Moody's estimates the company could maintain sufficient internal cash sources after maintenance capital expenditures to meet required annual term loan amortization and interest requirements assuming a sizeable decline in annual EBITDA. Eliminating or reducing the company's dividend ($180 million in 2019) would reduce cash needs. The EBITDA decline will not be ratable over the next year and because EBITDA and free cash flow will be negative for an uncertain time period, liquidity and leverage could deteriorate quickly over the next few months. The company has no near-term debt maturities, with its revolver due 2022 and term loan due in 2024. The rapid and widening spread of the coronavirus outbreak, deteriorating global economic outlook, falling oil prices, and asset price declines are creating a severe and extensive credit shock across many sectors, regions and markets. The combined credit effects of these developments are unprecedented. The gaming sector has been one of the sectors most significantly affected by the shock given its sensitivity to consumer demand and sentiment. More specifically, the weaknesses in CityCenter's credit profile, including its exposure to travel disruptions and discretionary consumer spending have left it vulnerable to shifts in market sentiment in these unprecedented operating conditions and CityCenter remains vulnerable to the outbreak continuing to spread. Moody's regards the coronavirus outbreak as a social risk under its ESG framework, given the substantial implications for public health and safety. The action reflects the impact on CityCenter of the breadth and severity of the shock, and the broad deterioration in credit quality it has triggered. The negative outlook considers that CityCenter remains vulnerable to travel disruptions and unfavorable sudden shifts in discretionary consumer spending and the uncertainty regarding the timing of facility re-openings and the pace at which consumer spending at the company's properties will recover. Ratings could be downgraded if liquidity deteriorates or if Moody's anticipates CityCenter's earnings declines to be deeper or more prolonged because of actions to contain the spread of the virus or reductions in discretionary consumer spending. A ratings upgrade is unlikely given the weak operating environment. However, the ratings could be upgraded if the facilities reopen and earnings recover such that positive free cash flow and reinvestment flexibility is restored and debt-to-EBITDA is sustained below 5.0x. CityCenter Holdings, LLC owns a $9.0 billion mixed-use development on the Las Vegas Strip that opened in 2009. CityCenter is comprised of ARIA Resort & Casino, a 4,004-room casino resort; Vdara Hotel and Spa, a 1,495-room luxury condominium-hotel; and the Veer Towers which contain 669 luxury condominium residences. The company sold the Mandarin Oriental hotel property in August 2018 for $214 million. The company reported annual revenue of $1.3 billion the 12-month period ended December 31, 2019. CityCenter is a joint venture which is 50%-owned by a wholly-owned subsidiary of MGM Resorts International (Ba3 review for downgrade), and 50%-owned by Infinity World Development Corp (not rated), which is wholly-owned by Dubai World, a Dubai United Arab Emirates government decree entity. The principal methodology used in these ratings was Gaming Industry published in December 2017. COOPER'S HAWK: Moody's Cuts CFR to Caa1, Outlook Negative --------------------------------------------------------- Moody's Investors Service downgraded Cooper's Hawk Intermediate Holding LLC's corporate family rating to Caa1 from B3, its probability of default rating to Caa2-PD from Caa1-PD, its first lien senior secured bank facilities rating to Caa1 from B3. The outlook was changed to negative from stable. The downgrade considers the closure of in-store dining units across the restaurant industry due to community efforts to contain the spread of the coronavirus. While Cooper's will benefit from its active wine club sales that will help offset a portion of fixed costs, leverage prior to this event was high as a result of the 2019 recapitalization. Due to the anticipated decline in EBITDA, debt/EBITDA is expected to increase above 8.0x and EBIT/interest will deteriorate to around 1.0x. Cooper's cash balances plus the revolver draw approximate $50 million which will enable the company to meet its obligations even if the closures last for several months. The negative outlook reflects uncertainty around the duration of unit closures and pace of rebound once the pandemic begins to subside. Downgrades: Issuer: Cooper's Hawk Intermediate Holding, LLC Probability of Default Rating, Downgraded to Caa2-PD from Caa1-PD Corporate Family Rating, Downgraded to Caa1 from B3 Senior Secured Bank Credit Facility, Downgraded to Caa1 (LGD3) from B3 (LGD3) Outlook Actions: Issuer: Cooper's Hawk Intermediate Holding, LLC Outlook, Changed To Negative From Stable RATINGS RATIONALE The rapid and widening spread of the coronavirus outbreak, deteriorating global economic outlook, falling oil prices, and asset price declines are creating a severe and extensive credit shock across many sectors, regions and markets. The combined credit effects of these developments are unprecedented. The restaurant sector has been one of the sectors most significantly affected by the shock given its sensitivity to consumer demand and sentiment. More specifically, the weaknesses in Cooper's credit profile, including its exposure to widespread location closures have left it vulnerable to shifts in market sentiment in these unprecedented operating conditions and Cooper remains vulnerable to the outbreak continuing to spread. Moody's regards the coronavirus outbreak as a social risk under its ESG framework, given the substantial implications for public health and safety. The action reflects the impact on Coopers of the breadth and severity of the shock, and the broad deterioration in credit quality it has triggered. Cooper's Hawk's rating is constrained by: 1) its small size relative to its rated restaurant peers, with annual revenue for 2019 that will approximate $350 million; 2) high financial leverage which is expected to exceed 8.0 times Moody's-adjusted debt-to-EBITDA; 3) limited geographic diversification, with new restaurant openings involving execution risk and material capital outlays that will constrain free cash flow for the foreseeable future; 4) susceptibility to discretionary consumer spending patterns and regional economic factors; 5) the company's majority private equity ownership, which could lead to more aggressive financial policy over time; and 6) its adequate liquidity profile. However, the company's credit profile is supported by: 1) its position as one of the first movers with multiple locations in the nascent restaurant/wine club space, and its expectation for continued organic topline and profitability growth over the next few years; 2) its wine club is the largest in the US, with the monthly membership fee alone accounting for about 25% of the company's total revenue, which enhances topline visibility. It also bolsters restaurant traffic considerably due to the very high rate of customer in-store pickup; 3) solid pace of same store sales growth trends; and 4) its diverse customer base and broad appeal among varying demographics. The ratings could be downgraded if the duration of the closures lingers, thereby squeezing liquidity or if the probability of default increases for any reason. Quantitatively, ratings could be downgraded if debt/EBITDA increase above 9.0x. The outlook could change to stable once Cooper's is able to open its units and demand rebounds. Given the negative outlook as well as the expected severity of the impact of coronavirus on Cooper's earnings, an upgrade over the near term in unlikely. However, ratings could be upgraded once the impact of coronavirus has abated and operating performance has improved such that debt/EBITDA is sustained below 7.5x and EBITA/interest expense approached 1.25x. Cooper's Hawk Intermediate Holding, LLC is an experiential concept restaurant chain that also features the largest wine club in the US. The company currently operates 40 restaurants, which also serve as the primary pickup location for recurring monthly wine purchases by its wine club members. Cooper's Hawk was established in 2005 by founder and CEO Tim McEnery, and was purchased by Ares Private Equity Group in July 2019. Cooper's Hawk is estimated to generate 2019 revenue of approximately $350 million. The principal methodology used in these ratings was Restaurant Industry published in January 2018. COVENANT SURGICAL: Moody's Places B3 CFR on Review for Downgrade ---------------------------------------------------------------- Moody's Investors Service placed the ratings of Covenant Surgical Partners, Inc. under review for downgrade. These include the B3 Corporate Family Rating, B3-PD Probability of Default Rating, B2 Senior Secured 1st Lien Bank Credit Facility, and Caa2 Senior Secured 2nd Lien Bank Credit Facility. The rapid and widening spread of the coronavirus outbreak, deteriorating global economic outlook, falling oil prices, and asset price declines are creating a severe and extensive credit shock across many sectors, regions and markets. The combined credit effects of these developments are unprecedented. On March 18, the Centers for Medicare & Medicaid Services (CMS) advised that all elective surgeries, non-essential medical, surgical, and dental procedures be delayed in order to increase capacity and resources to fight the coronavirus outbreak. The Centers for Disease Control and Prevention (CDC), several governors and others are advising the same. Based on the guidance to limit non-essential medical and surgical procedures, Moody's believes that ambulatory surgery centers, like Covenant Physician Partners, will experience a significant drop in volumes over the coming weeks, and the timing for recovery is uncertain. The ratings review will focus on liquidity and the ability to reduce variable costs and growth capital expenditures to manage through the public health emergency. Moody's expects that there will be significant erosion of operating performance in the second quarter, and perhaps beyond, depending on the duration of the coronavirus crisis. Ratings placed on review for downgrade include: Covenant Surgical Partners, Inc. Probability of Default Rating, Placed on Review for Downgrade, currently B3-PD Corporate Family Rating, Placed on Review for Downgrade, currently B3 Senior Secured 1st Lien Bank Credit Facility, Placed on Review for Downgrade, currently B2 (LGD3) Senior Secured 2nd Lien Bank Credit Facility, Placed on Review for Downgrade, currently Caa2 (LGD5) Outlook Action: Covenant Surgical Partners, Inc. Outlook is changed to rating under review from stable RATINGS RATIONALE Notwithstanding the review for downgrade, Covenant Physician Partners' credit profile is constrained by its modest size relative to larger competitors, as well as the company's high financial leverage. Covenant Surgical also faces risks associated with its significant concentration in colonoscopy and gastroenterology procedures, which together with related services, account for nearly 74% of revenues. This risk is amplified with the coronavirus pandemic which has called for a deferral of elective procedures including routine colonoscopies. The company also deploys an aggressive acquisition strategy, which is often debt funded. While there is risk associated with integrating multiple acquisitions, Covenant Surgical has recently made investments in its systems and infrastructure that should allow it to support a larger revenue base. Additionally, Moody's acknowledges that the ambulatory surgery center (ASC) industry has favorable long-term growth prospects, which Moody's views as a positive. This is because patients and payors prefer the outpatient environment (primarily due to lower cost and better outcomes) for certain specialty procedures. Moody's believes that Covenant Surgical will maintain adequate liquidity for the next year given modest cash balances and expected declines in variable costs and working capital needs related to the coronavirus pandemic. Moody's expects the company will reduce its growth capital expenditures to limit cash burn. Moody's considers coronavirus to be a social risk given the risk to human health and safety. Aside from coronavirus, Covenant Physician Partners faces other social risks as well such as the rising concerns around the access and affordability of healthcare services. However, Moody's does not consider the ASCs to face the same level of social risk as hospitals as ASCs are viewed as an affordable alternative to hospitals for elective procedures. From a governance perspective, Moody's views Covenant Physician Partners' financial policies as aggressive given the company's aggressive debt funded acquisition strategy. The credit profile reflects the risks inherent in a rapid growth strategy, including the potential for operational disruptions, but Moody's acknowledges the company's track record of effectively adding ASCs. Headquartered in Nashville, TN, Covenant Surgical Partners, Inc. is an owner and operator of 44 ASCs across 19 states focused on colonoscopy and other gastrointestinal procedures with some ophthalmology procedures. The company also owns 25 anesthesia companies, 8 physician practices, 9 management services or administrative services companies and 3 laboratories that support its ASC operations. Covenant Surgical is owned by private equity sponsor KKR and has pro forma LTM revenues of approximately $291 million as September 30, 2019. The principal methodology used in these ratings was Business and Consumer Service Industry published in October 2016. CPI CARD: Moody's Affirms 'Caa1' CFR & Rates Sr. Term Loan 'B1' --------------------------------------------------------------- Moody's Investors Service affirmed CPI Card Group Inc.'s Caa1 Corporate Family Rating and Caa1-PD Probability of Default Rating. Additionally, Moody's affirmed the Caa1 rating on the senior secured first lien term loan of CPI Acquisition, Inc. (the debt-issuing subsidiary of CPI) and assigned a B1 rating to the new super senior term loan. Moody's upgraded the Speculative Grade Liquidity Rating to SGL-3 from SGL-4. The outlook remains negative. On March 6, 2020, CPI entered into a super senior agreement with two existing first lien term loan lenders, which provided the company with a $30 million super senior term loan maturing on May 17, 2022 and collateralized by substantially all of the company's assets. The new facility will rank senior in priority to CPI's existing senior secured first lien term loan. Net of fees, CPI received approximately $27 million. CPI will use the proceeds to support the company's strategic plan. The ratings affirmation on the CFR, PDR and existing term loan rating reflects Moody's expectation of volume growth in the company's core secure card business as the replacement cycle of initially issued EMV card continues, as well as modest conversion to dual interface cards as they become a larger part of the overall payment card market. Moody's took the following actions: Affirmations: Issuer: CPI Acquisition, Inc. Senior Secured Bank Credit Facility, Affirmed Caa1 (LGD4) Issuer: CPI Card Group Inc. Corporate Family Rating, Affirmed Caa1 Probability of Default Rating, Affirmed Caa1-PD Upgrades: Issuer: CPI Card Group Inc. Speculative Grade Liquidity Rating, Upgraded to SGL-3 from SGL-4 Assignments: Issuer: CPI Acquisition, Inc. Senior Secured Bank Credit Facility, Assigned B1 (LGD1) Outlook Actions: Issuer: CPI Acquisition, Inc. Outlook, Remains Negative Issuer: CPI Card Group Inc. Outlook, Remains Negative RATINGS RATIONALE CPI's Caa1 CFR reflects the company's high pro forma leverage of 9.2x debt-to-EBITDA (Moody's adjusted based on FYE December 31, 2019 and new debt facility), negative but improving free cash flow generation, and growing refinancing risk due to approaching maturities of the existing credit facilities that will become current in May and August of 2021. These risks are partially mitigated by improvement in the company's operating performance over the past two years due to increases in EMV card volumes, the beginning of conversion to dual interface cards with higher selling prices, and a simplified cost structure as a result of the company's cost reduction initiatives. Moody's expects EMV and dual-interface card production volumes to continue to increase in 2020, while prices will remain flat to slightly growing as small and medium size issuers begin conversion to dual interface cards. This should support at least a mid-single digit revenue growth and a further improvement in EBITDA margins, leading to a decline in debt-to-EBITDA to 7.5x over the next year. The negative outlook reflects CPI's high financial leverage and the uncertainty related to the company's ability to refinance its existing credit facilities which mature in May 2022 and August 2022. While the continued improvement in operating performance will benefit credit metrics, there is an elevated risk that CPI will be challenged to refinance its existing capital structure at a manageable cost. A prolonged coronavirus outbreak could dampen the company's operating performance and delay the ability to de-leverage. The SGL-3 reflects Moody's expectation that CPI's liquidity will be adequate over the next 12 to 18 months supported by expectation of breakeven to moderately positive free cash flow and available cash. Pro forma for the super senior term loan, cash on hand will be approximately $46 million (for FYE December 31, 2019). As a result of the new debt issuance, the company's $40 million revolving credit facility was terminated and the company currently has no other sources of external liquidity available. The super senior term loan contains a covenant, whereby CPI will be required to maintain adjusted EBITDA of $25 million for the LTM period starting from March 31, 2020. The ratings could be upgraded if CPI were to generate steady revenue growth of at least mid-single digits percent with EBITDA margins in the mid-teens percent such that debt-to-EBITDA is expected to approach 6x and free cash flow is expected to be positive. The ratings could be downgraded if the company does not make progress in addressing its 2022 debt maturities. Ratings could also be downgraded if the company experiences material market share loss, liquidity weakens, or leverage is not on track to decline to below 7x over the next 12-18 months. The rapid and widening spread of the coronavirus outbreak, deteriorating global economic outlook, falling oil prices, and asset price declines are creating a severe and extensive credit shock across many sectors, regions and markets. The combined credit effects of these developments are unprecedented. Moody's regards the coronavirus outbreak as a social risk under its ESG framework, given the substantial implications for public health and safety. The principal methodology used in these ratings was Business and Consumer Service Industry published in October 2016. CPI Card Group Inc. is a provider in payment card production and related services, offering a single source for credit, debit and prepaid debit cards including EMV chip, personalization, instant issuance, fulfillment and mobile payment services. The company generated revenues of approximately $278 million in the fiscal year ended December 31, 2019. CSC HOLSINGS: Moody's Assigns B1 CFR, Outlook Stable ---------------------------------------------------- Moody's Investors Service assigned a B1 corporate family rating, B1-PD probability of default rating, and SGL-1 speculative grade liquidity rating to CSC Holdings, LLC. Moody's has also withdrawn all ratings, and the stable outlook at Cablevision Systems Corporation (Cablevision), following the debt repayment and debt push-down of all outstanding debt issued at Cablevision Systems Corporation in Q4 2019. Additionally, Moody's affirmed all instrument ratings at CSC Holdings and Neptune Finco Corp. CSC Holdings' outlook is stable. Assignments: Issuer: CSC Holdings, LLC Probability of Default Rating, Assigned B1-PD Corporate Family Rating, Assigned B1 Speculative Grade Liquidity Rating, Assigned SGL-1 Outlook Actions: Issuer: Cablevision Systems Corporation Outlook, Changed To Rating Withdrawn From Stable Issuer: CSC Holdings, LLC Outlook, Remains Stable Issuer: Neptune Finco Corp. Outlook, None Affirmations: Issuer: CSC Holdings, LLC Senior Secured Bank Credit Facility, Affirmed Ba3 (LGD3) Senior Unsecured Regular Bond/Debenture, Affirmed B3 (LGD5) Gtd Senior Unsecured Regular Bond/Debenture, Affirmed Ba3 (LGD3) Issuer: Neptune Finco Corp. Senior Secured Bank Credit Facility, Affirmed Ba3 (LGD3) Senior Unsecured Regular Bond/Debenture, Affirmed B3 (LGD5) Gtd Senior Unsecured Regular Bond/Debenture, Affirmed Ba3 (LGD3) Withdrawals: Issuer: Cablevision Systems Corporation Probability of Default Rating, Withdrawn, previously rated B1-PD Speculative Grade Liquidity Rating, Withdrawn, previously rated SGL-1 Corporate Family Rating, Withdrawn, previously rated B1 Senior Unsecured Regular Bond/Debenture, Withdrawn, previously rated B3 (LGD6) RATINGS RATIONALE CSC Holdings' B1 CFR is supported by its large size (near $10 billion in revenue) and somewhat diversified footprint with a strong market position in its Optimum footprint which has very favorable market dynamics. This strength is reflected in very high, industry leading operating metrics including investment grade like EBITDA per homes passed (EPH) and the Triple Play Equivalent (TPE) ratio. The company has an upgraded network that produces superior network speeds that helps it compete with in-market peers and attract and retain residential and commercial customers, particularly broadband which helps to offset weakness in video and telephony. Residential broadband's strong revenue growth (over 10%) and profitability supports high margins in the broader business (near 43%), and is a significant contributor to the company's free cash flow (near $1.3 billion). Moody's expects this strength to continue, supported by network investments. The company also has very good liquidity. CSC Holdings' B1 CFR is constrained by a less than conservative financial policy that tolerates high leverage (near 5.6x, Moody's adjusted as of 31 December 2019) and substantial stock buybacks sized near free cash flow. Additionally, CSC Holdings' video and voice businesses are declining, driving down the company's market share (the Triple Play Equivalent ratio). Moody's currently rates CSC Holdings' senior secured bank debt facilities Ba3 (LGD3), one notch above the B1 CFR. The secured debt has a stock pledge and is guaranteed by the operating subsidiaries of the Company. Bank lenders benefit from junior capital provided by the senior unsecured bonds at CSC Holdings (which have no guarantee). Moody's rates the senior unsecured guaranteed notes at CSC Holdings Ba3 (LGD3), pari pasu with the senior secured creditors with the benefit of the same guarantee from the restricted subsidiaries (as the credit facility creditors) and its view that the stock pledge for secured lenders provides no additional lift/benefit as the equity collateral would likely be worthless in bankruptcy. Also, Moody's rates CSC Holdings' senior unsecured notes B3 (LGD5), two notches below the B1 CFR given the subordination in the company's capital structure. The instrument ratings reflect the probability of default of the company, as reflected in the B1-PD Probability of Default Rating, an average expected family recovery rate of 50% at default given the mix of secured and unsecured debt in the capital structure, and the particular instruments' ranking in the capital structure. In an actual default scenario, the instrument level ratings could change based on the potential outcomes (e.g. bankruptcy versus liquidation) and a detailed analysis of valuation relative to claim-by-claim asset coverage and recoveries. CSC Holdings has very good liquidity, reflected in its SGL-1 liquidity rating. Strength is supported by strong operating cash flow and covenant-lite loans. The company also benefits from a favorable maturity profile with no maturities in 2020 and limited maturities in 2021, with only about 4% of its obligations or approximately $1 billion coming due. The stable outlook reflects its expectation that the company will generate more than $10.5 billion in revenues over the next 12-18 months, about $4.4-$4.6 billion in EBITDA on margins near mid 40% range. Moody's expects free cash flows to average at least $1.5 billion, after capital expenditures of up to $1.4 billion (about 13.5% of revenue). Moody's projects leverage (total debt/EBITDA) to fall to near 5x by 2021, on adjusted debt of approximately $23.6 billion. FCF/debt will rise above 6.5%, and interest coverage (EBITDA-CAPEX/ interest) will be greater than 2.2x. (Note: values and ratios above are Moody's adjusted). Its projections also assume the company's market share will be approximately 35%, measured using its Triple-Play-Equivalent ratio, and EBITDA per homes passed will be above $500. Key assumptions include a rise in broadband subscribers of approximately 1.5%, and video subscribers' losses accelerating to near 4%. Moody's expects the company to use all available free cash flow to repurchase stock. The outlook assumes the company maintains its very good liquidity profile. Implications of the coronavirus The rapid and widening spread of coronavirus, deteriorating global economic outlook, falling oil prices, and asset price declines are creating a severe and extensive shock that is unprecedented in many sectors. Moody's expects credit quality will continue to deteriorate, especially for those companies in vulnerable sectors sensitive to consumer demand and sentiment. The pandemic has resulted in millions of people throughout the US relying on their broadband connections to work from home. Millions of other workers in sectors most exposed to the shock could face reduced pay or job losses and may be looking to lower monthly expenses. Lower-rated issuers are most vulnerable to these unprecedented operating conditions. Moody's will take rating actions as warranted to reflect the breadth and severity of the shock, and the broad deterioration in credit quality that it has triggered. With that said, Moody's believes the cable sector has less exposure than many others, with the expectation that the demand for voice, video and data are unlikely to fall. In fact, Moody's expects greater demand across residential, commercial, governmental, and mobile carriers. Video viewership and engagement is rising sharply, with subscribers spending extraordinary time watching TV for news and entertainment comfort. It also believes cable will see a significant rise in viewership for entertainment programming, and movies with a complete shutdown of US cinemas. This sharp rise in attention to the news and developments related to the virus, shift in consumption of entertainment / movie content, as well as the strong interest in the presidential election, will help offset the negative impact from disruptions in sports programming, particularly playoffs, finals and tournaments which is most avidly watched on TV and draws the highest ad rates. Moody's thinks the shift in content consumption, with less/limited sports programming but intense interest in news and entertainment, will be a net benefit to cable operators. As a result of the data demands, broadband demand is accelerating with increased, more evenly distributed usage driven by remote workers, and a dramatic shift to online commerce and communications. Any negative implications — disruptions to direct selling, on-premise installations and service, certain programming (sports and new production / content), and operations (component supply chains, construction / network upgrades) will likely be only a partial offset. CSC Holdings' governance presents a moderate risk to the credit profile. In particular, financial policy is less than conservative, tolerating moderately high leverage (5.6x, Moody's adjusted, at the end of the last quarter ended December, and higher in past years) that is currently slightly above management's target leverage ratio of between 4.5x-5.0x (reported, net of cash and collateralized obligations). The company also plans substantial shareholder distributions that will absorb most free cash flow. Moody's expects Altice USA to repurchase stock of up to $1.7 billion (reflected as dividends at the CSC holding level), but not more than free cash flow. Moody's would consider an upgrade if: - Leverage (Moody's adjusted Debt/EBITDA) was sustained below 5.0x, and - Free cash flow to debt (Moody's adjusted) was sustained above 5.0% An upgrade would also be considered or contingent on larger scale or more diversified revenue, a stable subscriber base, or more conservative financial policy. Moody's would consider a downgrade if: - Leverage (Moody's adjusted Debt/EBITDA) is sustained above 6.25x (Moody's adjusted), or - Free cash flow to debt (Moody's adjusted) is sustained below 3% A downgrade could also be considered if the scale of the company declined, liquidity deteriorated, there was a material and unfavorable change in operating performance, or the company adopted a more aggressive financial policy. Headquartered in Long Island City, New York, CSC Holdings, LLC passes 8.8 million homes in 21 states, serving approximately 4.9 million residential and business customers and 9.8 million subscribers. The company is wholly owned by Altice USA, a public company majority owned and controlled by Patrick Drahi. Revenue for 2019 was approximately $9.8 billion. The principal methodology used in these ratings was Pay TV published in December 2018. CVENT INC: Moody's Lowers CFR to Caa1 & Alters Outlook to Negative ------------------------------------------------------------------ Moody's Investors Service downgraded Cvent, Inc.'s corporate family rating to Caa1 from B3, its probability of default rating to Caa1-PD from B3-PD and the senior secured first lien revolver and term loan to Caa1 from B3. The rating outlook was revised to Negative from Stable. The downgrade reflects anticipated deterioration in Cvent's financial performance and liquidity as broad-based coronavirus containment measures result in cancellations of in-person meetings and events for which Cvent provides technology. Issuer: Cvent, Inc. Corporate Family Rating, Downgraded to Caa1 from B3 Probability of Default Rating, Downgraded to Caa1-PD from B3-PD Senior Secured 1st lien Term Loan, Downgraded to Caa1 (LGD3) from B3 (LGD3) Senior Secured 1st lien Revolving Credit Facility, Downgraded to Caa1 (LGD3) from B3 (LGD3) Outlook Actions: Issuer: Cvent, Inc. Outlook, revised to Negative from Stable RATINGS RATIONALE The rapid and widening spread of the coronavirus outbreak, deteriorating global economic outlook, falling oil prices, and asset price declines are creating a severe and extensive credit shock across many sectors, regions and markets. The combined credit effects of these developments are unprecedented. The meeting and events industry have been one of the sectors most significantly affected by the shock given its sensitivity to coronavirus containment measures. More specifically, Cvent's exposure to the events business as well as the hospitality industry have left it vulnerable to social distancing measures that have been enacted globally to contain the spread of coronavirus. Cvent remains vulnerable to the outbreak as it continues to spread. While the company has contractual subscription arrangements with event planners and hospitality partners, and a meaningful portion of cash has been collected on behalf of the event planners and hospitality partners, Moody's anticipates that a prolonged outbreak of coronavirus could result in longer term financial stress on the company. The company's liquidity position is considered weak. Liquidity is currently supported by over $150 million of available cash which includes its fully-drawn $40 million revolving credit facility. Moody's expects that projected EBITDA deterioration increases the risk of a covenant breach. However, the credit facility provides an equity cure feature. The corporate family rating incorporates Moody's expectation that the company will avail itself of the equity cure. Moody's expects Cvent's free cash flow to remain negative through 2020. Moody's regards the coronavirus outbreak as a social risk under its ESG framework, given the substantial implications for public health and safety. Governance considerations include Cvent's ownership by affiliates of financial sponsor Vista Equity Partners and its high financial leverage. The Caa1 rating assigned to the senior secured first lien senior revolving credit facility due 2021 and term loan due 2024 reflects both the Caa1-PD PDR and a Loss Given Default (LGD) assessment of LGD3. The first lien facilities are secured on a first lien basis by substantially all property and assets of Cvent. The negative outlook reflects a heightened risk of default and a challenging operating environment during 2020. The outlook also considers the potential for further negative rating migration if coronavirus infection results in a prolonged period of social distancing and containment. The ratings could be downgraded if the likelihood of a covenant breach increases or if its expectations for Cvent's new bookings continue to be depressed for an extended period. The ratings outlook could be stabilized if Cvent's liquidity strengthens along with the coronavirus outbreak moderating and social distancing measures reducing. Ratings upgrades are unlikely over the near-term, and would require revenue growth over mid-single digits and positive FCF over several quarters. The principal methodology used in these ratings was Business and Consumer Service Industry published in October 2016. Cvent, based in Tyson's Corner, VA, provides cloud-based enterprise event management software to event and meeting planners and venues, mostly in North America. CWGS ENTERPRISES: Moody's Cuts CFR to B3, Outlook Negative ---------------------------------------------------------- Moody's Investors Service downgraded the ratings of CWGS Enterprises, LLC, including the corporate family rating to B3, the probability of default rating to B3-PD, and the senior secured bank credit facility to B3. The outlook is negative. "Today's rating action reflects the potential for ongoing softness in the RV market as consumers sort through how the effects of the corona virus will impact their big-ticket purchases during 2020," stated Moody's Vice President Charlie O'Shea. "While the culling of the Gander stores is largely complete and Camping World undertaking significant mitigation measures during Q4 2019, risks remain given the discretionary nature of the remaining product line," continued O'Shea. "That said, liquidity remains adequate, with around $140 million in cash at FYE December 2019 and significant unencumbered vehicle inventory that is fungible." Downgrades: Issuer: CWGS Enterprises, LLC Probability of Default Rating, Downgraded to B3-PD from B2-PD Corporate Family Rating, Downgraded to B3 from B2 Senior Secured Bank Credit Facility, Downgraded to B3 (LGD4) from B2 (LGD4) Outlook Actions: Issuer: CWGS Enterprises, LLC Outlook, Remains Negative RATINGS RATIONALE The rapid and widening spread of the coronavirus outbreak, deteriorating global economic outlook, falling oil prices, and asset price declines are creating a severe and extensive credit shock across many sectors, regions and markets. The combined credit effects of these developments are unprecedented. The retail sector has been one of the sectors most significantly affected by the shock given its sensitivity to consumer demand and sentiment. More specifically, the weaknesses in Camping World's credit profile, including its exposure to RV sales, has left it vulnerable to shifts in market sentiment in these unprecedented operating conditions and Camping World remains vulnerable to the outbreak continuing to spread. Moody's regards the coronavirus outbreak as a social risk under its ESG framework, given the substantial implications for public health and safety. The action partially reflects the impact on Camping World of the breadth and severity of the shock, and the broad deterioration in credit quality it has triggered. Camping World's B3 rating considers its weak quantitative credit profile due to the pruning of the Gander Mountain store network, with over half of the acquired stores now closed and soft industry fundamentals that will be exacerbated by the effects of the coronavirus on consumers, especially as they consider large, discretionary purchases. At FYE 2019, debt/EBITDA had climbed to the mid-7 times range, with EBITA/interest of 1.2 times, both of which are well weaker than its downgrade factors of 6.5 times and 2 times. Support for the rating emanates from Camping World's leading market position within the recreational vehicle segment, with a business model that provides multiple sources of revenue, with retail sales, membership sales, and parts and accessories through its dealership and retail networks, as well as the risks inherent with its acquisition-based growth strategy. The SGL-3 speculative grade liquidity rating reflects adequate liquidity, with cash and unencumbered vehicles providing over $500 million at FYE 2019, with meaningful maturities long-dated, however Moody's notes that revolving credit availability is relatively weak and free cash flow generation is variable. The negative outlook reflects Moody's view that there remains potential downside from the spread of coronavirus and the lingering economic demand "shock" which will impact discretionary large purchases by consumers including RV's. Ratings could be downgraded if, due to either weakness in operating performance or financial policy decisions such as any but de minimus share repurchases, debt/EBITDA remains above 7.5 times or EBITA/interest is sustained below 1.25 times, or if liquidity were to weaken. Ratings could be upgraded if operating performance reversed its present negative trends such that debt/EBITDA returned to around 6.5 times and EBIT/interest was sustained above 2 times, and good liquidity was maintained. The principal methodology used in these ratings was Retail Industry published in May 2018. CWGS Enterprises, LLC operates businesses predominantly involved in the recreational vehicle industry including: (1) FreedomRoads RV dealerships, which sells new and used RVs, parts, and services under the Camping World brand name (2) Membership Services, including Good Sam, which sells club membership, products, services and publications to RV owners, and (3) Retail, which includes Camping World retail stores that provide merchandise and services to RV users, as well as Gander Mountain stores. Fiscal year-end 2019 revenues were around $4.9 billion. DALTON LOGISTICS: Seeks to Hire Daniel Robinson as Accountant ------------------------------------------------------------- Dalton Logistics, Inc., seeks authority from the U.S. Bankruptcy Court for the Southern District of Texas to employ an accountant. Dalton seeks to employ Daniel Robinson, CPA, to prepare and file various state and federal tax returns, along with any other necessary accounting services which may be required. Specific services the accountant to: a. perform bookkeeping services including recording cash receipts and cash disbursements and reconciling accounts; b. assist in the preparation of any necessary financial statements; c. prepare Dalton's federal income tax return; d. provide any other special services that might be needed during this Chapter 11 case. Mr. Robinson will not charge any fees to the Debtor for the services provided. Daniel Robinson, CPA, assures the court that he is a "disinterested person" within the definition of Sec. 101(14) of the Bankruptcy Code and as required by Sec. 327(a) of the Bankruptcy Code. The firm can be reached through: Daniel Robinson, CPA Daniel Robinson CPA, LLC 6997 US-165 Columbia, LA 71418 Phone: +1 318-649-5400 Email: danielrobinsoncpa.com About Dalton Logistics Dalton Logistics, Inc. is a privately held company in the general freight trucking industry. Dalton Logistics, Inc., based in Kingwood, TX, filed a Chapter 11 petition (Bankr. S.D. Tex. Case No. 20-30902) on Feb. 3, 2020. In the petition signed by Richard Meredith, president, the Debtor was estimated to have $1 million to $10 million in both assets and liabilities. The Hon. David R. Jones oversees the case. Melissa A. Haselden, Esq., at HooverSlovacek LLP, serves as bankruptcy counsel. DIGICERT HOLDINGS: Fitch Withdraws B+ LT IDR on Debt Repayment -------------------------------------------------------------- Fitch has withdrawn the Issuer Default Ratings for Digicert Holdings, Inc. and Digicert Parent, Inc. as all the debt has been repaid following the ownership transition from Thoma Bravo and Symantec to Clearlake and TA Associates that completed in 2019. There is no outstanding debt associated with these entities and no financial updates are being provided by these entities. The withdrawal of the ratings only affects Digicert Holdings, Inc. and Digicert Parent, Inc. Ratings for DCert Buyer, Inc., and associated revolver and term loans are unaffected by these rating actions. The ratings were withdrawn with the following reason Withdrawal of A Guarantor Rating and No Underlying Rating Exists KEY RATING DRIVERS Key Rating Drivers are no longer applicable for these entities. Digicert Holdings, Inc. - LT IDR WD; Withdrawn; previously at B+ - Senior secured; LT WD; Withdrawn; previously at BB+ - Senior Secured 2nd Lien; LT WD; Withdrawn; previously at B- Digicert Parent, Inc. - LT IDR WD; Withdrawn; previously at B+ DIOCESE OF HARRISBURG: Hires Epiq Corporate as Admin. Advisor ------------------------------------------------------------- Roman Catholic Diocese of Harrisburg seeks authority from the U.S. Bankruptcy Court for the Middle District of Pennsylvania to employ Epiq Corporate Restructuring, LLC, as its administrative advisor. Services Epiq will perform are: a. assisting with the preparation of the Debtor's schedules of assets and liabilities and statements of financial affairs and gather data in conjunction therewith; b. assisting the Debtor with administrative tasks in the preparation of its bankruptcy Schedules of Assets and Liabilities and Statements of Financial Affairs, if such Schedules and Statements are required by the Court, including (as needed): (i) coordinating with the Debtor and its advisors regarding the Schedules and Statements process, requirements, timelines, and deliverables; (ii) creating and maintaining databases for maintenance and formatting of Schedules and Statements data; (iii) coordinating collection of data from the Debtor and its advisors; and (iv) providing data entry and quality assurance assistance regarding Schedules and Statements; c. providing balloting, solicitation, and tabulation services, including preparing ballots, producing personalized ballots, assisting in the production of solicitation materials, tabulating creditor ballots on a daily basis, preparing a certification of voting results, and providing court testimony with respect to balloting, solicitation, and tabulation matters; and d. providing such other processing and administrative services described in the Engagement Agreement, but not included in the Section 156(c) Application, as may be requested from time to time by the Debtor, the Court, or the Office of the Clerk of the Bankruptcy Court. Epiq shall receive a retainer in the amount of $15,000. Epiq's hourly fees are: Clerical/Administrative Support $25 - $45 IT/Programming $65 - $85 Case Managers $70 - $165 Consultants/Directors/VPs $160 - $190 Solicitation Consultant $190 Executive VP, Solicitation $190 Executives No Charge Emily Young, senior consultant of Epiq, assures the court that the firm is a "disinterested person" within the meaning of section 101(14) of the Bankruptcy Code and does not hold or represent any interest materially adverse to the Debtor's estates in connection with any matter on which it would be employed. The firm can be reached at: Emily Young EPIQ CORPORATE RESTRUCTURING, LLC 777 Third Avenue, 12th Floor New York, NY 10017 Tel: (646) 282-2500 Fax: (646) 282-2501 About Roman Catholic Diocese of Harrisburg Roman Catholic Diocese of Harrisburg filed a Chapter 11 bankruptcy petition (Bankr. M.D. Pa. Case No. 00599-HWV) on Feb. 19, 2020, disclosing under $1 million in both assets and liabilities. The Debtor hired Waller Lansden Dortch & Davis, LLP, as counsel. Epiq Corporate Restructuring, LLC, as claims and noticing agent. E.W. SCRIPPS: Fitch Alters Outlook on 'B+' LT IDR to Negative ------------------------------------------------------------- Fitch Ratings has affirmed the 'B+' Long-Term Issuer Default Rating assigned to The E.W. Scripps Company. Fitch has also affirmed the 'BB+'/'RR1' ratings on the first lien credit facilities and the 'B'/'RR5' rating on the senior unsecured notes. The Rating Outlook has been revised to Negative from Stable. The Negative Outlook incorporates Scripps' elevated leverage following 2019 acquisition activity and Fitch's expectation that the coronavirus pandemic and the resulting economic shock will weigh on the advertising environment. These near-term headwinds will weigh on Scripps' operating performance and could slow the pace of deleveraging relative to Fitch's previous expectations. Fitch believes that Scripps' Local Media business is better positioned for a pull-back in advertising spend owing to the significant amount of political advertising revenues forecast in 2020 with the anticipated contentious presidential election cycle. In addition, Scripps' retransmission revenues are poised for strong YoY growth stemming from the new Comcast retransmission contract which commenced on January 2020 (USD60+ million in incremental annual retransmission revenues with step-ups) and other upcoming distributor retransmission negotiations. Local television and other news content providers provide a vital public service during the coronavirus pandemic. Fitch expects television viewership trends to benefit as consumers increase in-home entertainment. Scripps' National Media businesses experienced robust revenue growth and improving profitability in fiscal 2019. Any pullback or weakening in the advertising environment will also impact these businesses including the Katz digital networks, but Fitch expects this will result in less of a material impact to EBITDA given the National Media segment's relatively smaller contribution to overall profitability. The 'B+' IDR reflects Scripps' high leverage, the company's increased scale and improving television station mix, the diversification afforded by the National Media assets, the improving profitability of these businesses and Fitch's expectation that Scripps will prioritize strengthening the balance sheet following its spate of acquisitions and near-term operating headwinds. KEY RATING DRIVERS Improved Scale and Higher Quality Station Assets: Scripps owns 60 television stations across 42 markets reaching 31% of U.S. television households. Scripps has number one or number two ranked stations in approximately 38% of its markets. Scripps continued its strategy to improve the quality of its station portfolio in 2019, acquiring station assets from Cordillera and Nexstar (regulatory solution to close the Tribune Media acquisition). The legacy Cordillera stations are ranked number one in their markets, with the exception of one station that is ranked number two. While the legacy Nexstar stations increased Scripps' presence in political battleground states and larger markets, they consist mostly of CW affiliates. Notably, the Nexstar New York City CW affiliate contributes minimal, if any EBITDA. Scripps pro forma two-year average revenues and EBITDA were roughly $1.7 billion and $300 million respectively (2018/2019). Weak, Albeit Improving, EBITDA Margins: Fitch expects that Scripps' EBITDA margins will continue to lag peers for the foreseeable future owing to the still-high concentration of lower-rated stations in Scripps television portfolio. Scripps' National Media segment provides diversification away from the local television business, but also is less profitable and remains a drag to overall margin performance. Fitch sees drivers for margin improvement. The extended Comcast retransmission contract (commenced January 2020) and upcoming distributor negotiations (approximately 42% of subscribers in 2020 and 18% in 2021) will support meaningful retransmission growth. While some distributor contract negotiations have been more challenged recently owing to accelerated video subscriber losses, Fitch believes that coronavirus pandemic will strengthen the value of local news content over the near term as it provides a necessary public service. Fitch also anticipates that in-home entertainment, including television viewing, will increase as more mandates limit the movements of the general public. These factors support Fitch's expectation that upcoming retransmission contract negotiations will be less contentious in the coming months. Retransmission revenues approximated 37% of Local Media revenues in 2019, as compared with mid-40% for the television broadcast peer group on average. Scripps benefits from a high proportion of 'Big Four' affiliates in its station portfolio. Scripps has modest contract renewals with the networks in 2020 (just two ABC stations), with a more meaningful number of renewals in 2021 (22 stations) and 2022 (31). As such, Fitch expects net retransmission fees will also experience growth over the near term. Diversification in New Media and National Content Assets: Scripps has refocused its efforts on its television portfolio and has invested in new media and national content brands through a number of strategic transactions since 2015. Scripps exited its radio business, completing the sale of its 34 radio stations. Balance sheet cash and proceeds from the sale helped support the company's acquisition of Triton Digital, a leader in digital audio measurement, for $150 million. In late 2017, Scripps purchased a portfolio of digital multicast networks from Katz Media for $292 million. Scripps also owns podcast creator Stitcher and Newsy, an over-the-top (OTT) provider of national news content. National Media generated $396 million in revenues but just $24 million in segment profit in fiscal 2019. Scripps expects the National Media business will generate north of $500 million in revenues by YE 2021. The company continues to experience very robust growth across all of its National Media properties. Segment profit margins for the segment increased to 6.1% in fiscal 2019, up slightly from 4.9% in fiscal 2018. Profitability has benefited from the addition of the Katz digital media networks and Triton which offer better operating profiles. Fitch expects National Media profitability to continue to scale over the forecast period. Improving FCF: Television broadcasters typically generate significant amounts of FCF due to high operating leverage and minimal capex requirements. Scripps generated $71 million in FCF for the 2018, benefiting from the return of robust political revenues. However, one-time costs related to the acquisitions, contributions to the company's pension plans, higher capex related to the FCC repack weighed on FCF in 2019. Scripps has guided to FCF in a range of $225 million-$250 million for fiscal 2020 owing to growth in retransmission fees, anticipated robust political revenues, improving National Media profitability and lower capital spending. Fitch believes that the coronavirus pandemic and the potential for a resultant recession will weigh on the overall advertising environment. These headwinds will pressure Scripps' revenues and cash flows. However, the severity is highly dependent on the duration of the crisis. Fitch expects that Scripps will generate positive FCF even with a pullback in advertisers' marketing budget. Scripps and other local broadcasters benefit from having a more material cushion from retransmission and political advertising revenues than prior economic downturns. Advertising Revenue Exposure: Advertising revenues accounted for roughly 55% of Scripps' Local Media revenues (two-year average, excluding political). Advertising revenues, especially those associated with TV, are becoming increasingly hyper cyclical and represent a significant risk to all TV broadcasters. Scripps' largest advertising categories include autos and other service categories. In an economic downturn some of these smaller advertisers may go out of business or not return. Fitch expects this pose as a higher risk for television broadcasters given the preponderance of local advertising revenues. Viewer Fragmentation: Scripps continues to face the secular headwinds present in the TV broadcasting sector including declining audiences amid increasing programming choices, with further pressures from OTT internet-based television services. However, it is Fitch's expectation that local broadcasters, particularly those with higher-rated stations, will remain relevant and capture audiences that local, regional and national spot advertisers seek. Fitch also views positively the increasing inclusion of local broadcast content in OTT offerings. Growth in OTT subscribers will continue to provide incremental revenues and offset declines of traditional MVPD subscribers. DERIVATION SUMMARY Scripps' 'B+' IDR reflects its smaller scale and higher leverage relative to the larger and more diversified media peers, like ViacomCBS, Inc. (BBB/Stable) and Discovery Communications (BBB-/Stable). Scripps' 'B+' rating reflects Fitch's expectation that pro forma EBITDA margins will continue to lag peers owing to the still high concentration of lower-rated stations in its television station portfolio. Fitch views diversification presented by the new media assets as a modest positive. Scripps' pro forma total leverage of 6.0x (two-year average) is roughly in-line with Gray Television (BB-/Stable). However, Gray benefits from television stations that are ranked number one or number two in 92% of its markets and has significant exposure in political battleground geographies. Gray's EBITDA margins, in the high 30% range (two-year average), lead the peer group. By comparison, Fitch expects Scripps' EBITDA margins will remain in the high teens range (even-odd year average). KEY ASSUMPTIONS Fitch's Key Assumptions Within Its Rating Case for the Issuer Local Media: -- 2020 results reflect the acquisition of the Cordillera stations (closed May 2019) and Nexstar stations (closed September 2019). -- Core advertising declines in low-double digits in 2020, rebounding in 2021. Core advertising returns to flat to low single digit declines thereafter. -- Political advertising revenues of roughly $200 million in 2020 with strong presidential cycle. -- Retransmission revenues of roughly $580 million in 2020, 30%+ YoY pro forma for Comcast contract (+60 million in incremental retransmission revenues). Scripps has a large number of subscribers up for renegotiation (approximately 42% in 2020 and approximately 18% in 2021). Retransmission revenue growth decelerates to the high single digits thereafter. -- EBITDA margins are soft in 2020 owing to declining core advertising revenues and high degree of fixed costs. EBITDA also fluctuates reflecting even year political revenues. Margins will improve on average due to the mix shift towards higher-margin retransmission revenues. National Media: -- Pull-back in advertising spending will also decelerate revenue growth at Scripps' National Media properties. Delayed profitability improvements for this segment in 2020 and 2021. -- Thereafter, revenue growth and improved profitability incorporate the better operating profile of the Katz digital multicast networks and Triton Digital. Newsy benefits primarily from growth in OTT advertising revenues and increased carriage arrangements with traditional multichannel programming distributors. Aggregate: -- Roughly $30 million in pension contributions in 2020 and thereafter $10 million annually over the forecast period. -- Capex at roughly $50 million annually. -- Dividends of $16 million annually. -- Scripps allocates excess cash flow to term loan repayment. -- Two-year average total leverage declines and approaches 5.5x by YE 2021. Recovery Considerations: -- The recovery analysis assumes that Scripps would be considered a going-concern in bankruptcy and that the company would be reorganized rather than liquidated. Fitch has assumed a 10% administrative claim. -- Scripps' going-concern EBITDA is based on the pro forma LTM LQ8A EBITDA December 2019 of roughly $300 million. Fitch then stresses EBITDA by assuming that an economic downturn results in a cyclical decline in advertising revenues. Scripps' Local Media (television) core advertising revenues decline by roughly 15%. Additionally, the National Media business (podcasting, digital audio measurement, national content brands like Newsy) also experience ad declines. Fitch expects traditional mediums (like television broadcasting) will be disproportionately impacted by pullback in advertisers' budgets. Scripps benefits from its higher proportion of subscription revenues (retransmission revenues) relative to the previous recessionary period. In addition, Fitch does not expect political ad revenues to be impacted by economic pressure. Given the high degree of operating leverage in the business, LQ8A EBITDA declines to $245 million. -- Fitch employs a 6x distressed enterprise value multiple reflecting the value present in the company's FCC licenses in small- and medium-sized U.S. markets. This multiple is roughly in-line with median TMT emergence enterprise value/EBITDA multiple of 5.5x. It also incorporates the following: (1) current public trading EV/EBITDA multiples range from 7x-11x; (2) Recent transaction multiples in a range of 7x-9x. Nexstar Media Group announced its planned acquisition of the Tribune Media Company in December 2018 for $6.4 billion including the assumption of Tribune's debt, which represents a 7.5x purchase price multiple (including $160 million in outlined synergies). Gray Television acquired Raycom Media for $3.6 billion in January 2019, representing a 7.8x purchase price multiple (including $80 million of anticipated synergies). Scripps announced its acquisition of 15 television stations from Cordillera Communications in October 2018 for $521 million, representing an 8.3x purchase price multiple (including $8 million in outlined synergies). Scripps incrementally announced its acquisition of eight stations from Nexstar in March 2019 for $580 million. The purchase price represents an 8.1x multiple of average two-year EBITDA excluding the New York City CW affiliate, WPIX. -- Fitch estimates an adjusted, distressed enterprise valuation of $1.5 billion. -- Fitch assumes a fully drawn revolver ($150 million) in its recovery analysis since credit revolvers are tapped as companies are under distress. Scripps had $1.05 billion of term loan debt and $900 million of senior unsecured notes as of December 2019. -- The recovery analysis results in a 'BB+' and 'RR1' recovery rating for the company's secured first lien debt reflecting Fitch's belief that 91%-100% expected recovery is reasonable. The recovery analysis results in a 'B' rating and 'RR5' recovery rating for the senior unsecured notes, reflecting 11-30% expected recovery. RATING SENSITIVITIES Developments That May, Individually or Collectively, Lead to Positive Rating Action -- Fitch would consider stabilizing the outlook once there is more clarity over the duration of the coronavirus pandemic and a resultant economic and ad recession and the timeframe for the resumption of a normalized course of business. Over the longer term, two-year average total leverage (total debt with equity credit/operating EBITDA) sustained below 4.5x and two-year average FCF/gross adjusted debt above 5%. Developments That May, Individually or Collectively, Lead to Negative Rating Action -- Any extension of the coronavirus pandemic into the summer months, any longer-lasting impacts to consumer behavior or a deeper macroeconomic shock which delays Scripps's efforts to reduce and sustain average two-year total leverage below 5.5x on a sustained basis will likely lead to a negative rating action. LIQUIDITY AND DEBT STRUCTURE Adequate Liquidity: Scripps' liquidity is supported by $30 million in balance sheet cash and $210 million in revolving credit availability as of December 2019. The company's revolver matures in April 2022. Scripps has minimal term loan amortization (approximately $7.96 million annually) through 2023. Scripps's FCF deficit of negative $105 million in fiscal 2019 was impacted by one-time costs related to the station acquisitions and higher capital expenditures related to the FCC re-pack. Management has guided to $225 million-$250 million in FCF for fiscal 2020, as results incorporate acquired stations, growing retransmission revenues, robust 2020 political revenues and expanding National Media profitability. Fitch believes FCF generation will pace weaker than this estimate owing to the COVID-19 pandemic which will impact both the economy and the advertising environment. However, there is a lot of uncertainty around the length and severity of the crisis. If concerns over COVID-19 linger into the summer months, Fitch expects a more meaningful impact to FCF generation. However, Scripps benefits from its contractual growing retransmission revenues (approximately 37% of Local Media in fiscal 2019). Also, Fitch does not anticipate any impact to political advertising revenues. The company's revolving credit facility has a 4.50x maximum first lien net leverage covenant which steps down to 4.25x and is tested only when there are revolver borrowings outstanding (springing covenant). There were no borrowings under the revolver at December 2019. Fitch forecasts sufficient cushion relative to the covenant level in its revised base case which incorporates the impact of the Coronavirus pandemic and a near-term ad recession. ESG CONSIDERATIONS ESG issues are credit neutral or have only a minimal credit impact on the entity(ies), either due to their nature or the way in which they are being managed by the entity(ies). ECHO ENERGY: Case Summary & 30 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Echo Energy Partners I, LLC 909 Fannin Street Suite 4000 Houston, TX 77010 Business Description: Echo Energy Partners I, LLC -- https://echoenergy.com -- is an upstream oil and gas firm that partners with financial institutions, pension funds, family offices, and high net worth individuals. Echo currently manages assets in the SCOOP, STACK, Midland, and Delaware basins in Oklahoma, and Texas. Chapter 11 Petition Date: March 24, 2020 Court: United States Bankruptcy Court Southern District of Texas Case No.: 20-31920 Judge: Hon. David R. Jones Debtor's General Bankruptcy Counsel: William A. (Trey) Wood III, Esq. Jason G. Cohen, Esq. BRACEWELL LLP 711 Louisiana St., Suite 2300 Houston, TX 77002 Tel: 713-221-2300 Fax: (713) 221-1212 Email: Trey.Wood@Bracewell.com Jason.Cohen@bracewell.com Debtor's Financial Advisor: OPPORTUNE LLP Debtor's Notice, Claims, Balloting Agent and Administrative Advisor: STRETTO https://cases.stretto.com/echoenergy Estimated Assets: $50 million to $100 million Estimated Liabilities: $100 million to $500 million The petition was signed by John T. Young, Jr., manager. A copy of the petition is available for free at PacerMonitor.com at: https://is.gd/WdfOga List of Debtor's 30 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ 1. Camino Natural Resources LLC Joint Interest $1,432,035 1401 17th Street, Suite 1000 Billings Denver, CO 80202 Mark Brown Email: mbrown@caminoresources.com 2. Marathon Oil Company Joint Interest $1,352,597 PO Box 732309 Billings Dallas, TX 75373 Todd Richards Email: trichards@marathonoil.com 3. Warwick Jupiter LLC Joint Interest $946,820 6608 N. Western Avenue #417 Billings Oklahoma City, OK 73116 Michael Brown Email: michael.brown@warwick-energy.com 4. Gulfport Midcon LLC Joint Interest $253,946 P.O. Box 1945 Billings Memphis, TN 38101 Rebecca Addison Email: raddison@gulfportenergy.com 5. Enable Gathering & Trade Payable $169,937 Processing LLC PO Box Dept 96-0387 Oklahoma City, OK 73196 Andy Bush Email: andy.bush@enablemidstream.com 6. Ovintiv Mid Continent Inc. Joint Interest $81,182 370 17th Street Billings Denver, CO 80202 Sarah Robertson Email: sarah.robertson@encana.com 7. EOG Resources Inc. Joint Interest $77,714 3817 NW Express Way Billings Suite 500 Oklahoma City, OK 73112 Dax Taylor Email: dax_taylor@eogresources.com 8. Devon Energy Production Joint Interest $70,906 Company LP Billings PO Box 842485 Dallas, TX 75284 Amy Carpenter Email: amy.carpenter@dvn.com 9. Acacia Energy Partners LLC Joint Interest $61,090 909 Lake Carolyn Parkway Billings Suite 1500 Irving, TX 75039 Clayton Flurry Email: flurry@acaciaep.com 10. Citation Oil and Gas Corp Joint Interest $58,556 14077 Cutten Road Billings Houston, TX 77069 Matthew Thompson Email: mthompson@cogc.com 11. Roan Resources LLC Joint Interest $55,435 14701 Hertz Quail Springs Parkway Billings Oklahoma City, OK 73134 Curtis Johnson Email: curtis@ce2ok.com 12. BP America Production Company Joint Interest $47,938 PO Box 848155 Billings Dallas, TX 75284 Wender Moreno Email: wender.moreno1@bp.com 13. Cimarex Energy Company Joint Interest $40,762 4023 Solutions Center Billings #774023 Chicago, IL 60677 Kevin Smith Email: KSmith@cimarex.com 14. Lime Rock Resources Operating Joint Interest $33,069 Company Billings 1111 Bagby Street, Suite 4600 Houston, TX 77002 Melissa Bell Email: mbell@limerockresources.com 15. Citizen Energy III LLC Joint Interest $30,493 320 S Boston Ave Billings Ste 900 Tulsa, OK 74103 Curtis Johnson Email: curtis@ce2ok.com 16. Red Rocks Oil & Gas Joint Interest $21,114 Operating LLC Billings 1321 N. Robinson Avenue Oklahoma City, OK 73103 Randy Stalcup Email: stalcup@redrockresources.com 17. Casillas Operating LLC Joint Interest $20,746 PO Box 3669 Billings Tulsa, OK 74101 Zach Malchi Email: zmalchi@casillaspetro.com 18. Alta Mesa Services LP Joint Interest $19,503 15021 Katy Freeway Billings Suite 400 Houston, TX 77094 Janie Daniel Email: jdaniel@altamesa.net 19. Chesapeake Energy Corporation Joint Interest $10,975 PO Box 207295 Billings Dallas, TX 75320-7295 Michael Lovelace Email: michael.lovelace@chk.com 20. XTO Energy Inc. Joint Interest $10,405 PO Box 840791 Billings Dallas, TX 75284-0791 Noele Fischer Email: noele_fischer@xtoenergy.com 21. Paloma Partners IV LLC Joint Interest $7,008 1100 Louisiana Street Billings Suite 5100 Houston, TX 77002 Lynn Graves Email: lgraves@palomaresources.com 22. Red Bluff Resources Joint Interest $3,950 Operating LLC Billings 3030 N.W. Expressway Suite 650 Oklahoma City, OK 73112 Andrew Jennings Email: ajennings@rbluff.com 23. Chaparral Energy LLC Joint Interest $2,283 701 Cedar Lake Blvd. Billings Oklahoma City, OK 80202 Matt Murphy Email: matt.murphy@chaparralenergy.com 24. Red Wolf Operating LLC Joint Interest $1,814 801 Covell Rd Billings Edmond, OK 73003 Jay Buckley Email: jbuckley@red-wolf.com 25. Jones Energy LLC Joint Interest $1,743 807 Las Cimas Parkway Billings Suite 350 Scott Van Sickle Email: scottv@revolutionresources.com 26. Gaedeke Oil & Gas Joint Interest $1,698 Operating LLC Billings 3710 Rawlins Street Suite 1100 Dallas, TX 75219 Brenda Loftis Email: bloftis@gaedeke.com 27. TRP Operating LLC Joint Interest $1,675 1111 Louisiana Street Billings Suite 4550 Houston, TX 77002 Joey Bernica Email: jbernica@trpenergy.com 28. Apache Corporation Joint Interest $1,645 2000 Post Oak Blvd. Billings Suite 100 Houston, TX 77053 Jay Buckley Email: jbuckley@red-wolf.com 29. Unit Petroleum Company Joint Interest $1,050 PO Box 702500 Billings Tulsa, OK 74170 Jon Strickler Email: jon.strickler@unitcorp.com 30. Continental Resources Inc. Joint Interest Unknown PO Box 952724 Billings St. Louis, MO 63195 Brooks Richardson Email: brooks.richardson@clr.com EDELMAN FINANCIAL: Moody's Lowers CFR to B3, Outlook Stable ----------------------------------------------------------- Moody's Investors Service has downgraded Edelman Financial Engines, LLC's Corporate Family Rating to B3 from B2 and its Probability of Default Rating to B3-PD from B2-PD. Moody's has also downgraded Edelman's first lien senior secured credit facilities, which consist of a $1,440 million term loan and a $150 million revolving credit facility, to B2 from B1. Additionally, Moody's has downgraded Edelman's $475 million second lien term loan to Caa2 from Caa1. The outlook is stable. The following rating actions were taken: Issuer: Edelman Financial Engines, LLC Corporate Family Rating -- downgraded to B3 from B2 Probability of Default Rating -- downgraded to B3-PD from B2-PD $1,455 million 1st Lien Term Loan, due July 2025 -- downgraded to B2 from B1 $150 million revolving credit facility, due July 2023 - downgraded to B2 from B1 $475 million 2nd Lien Term Loan, due July 2026 - downgraded to Caa2 from Caa1 Outlook Action: Issuer: Edelman Financial Engines, LLC Stable RATINGS RATIONALE The downgrade reflects its expectation that the extreme market declines and increasing economic uncertainty unleashed by the coronavirus outbreak will have a significant impact on Edelman's revenues and earnings in 2020. Consequently, Moody's expects that Edelman's leverage (adjusted debt/EBITDA) could increase to the 7x-8x range in 2020 from 6.5x at year-end 2019. The downgrade also reflects the potential for asset outflows in 2020 driven by increased cancelations and lower sales, particularly on the 401(k) side, should unemployment rise. The current market stress is also occurring against a general industry backdrop of fee rate compression across the retail managed account space, stemming from intense technology-driven competition. Prior to the current coronavirus-driven market correction, Edelman's leverage was elevated relative to its expectations for the rating level. In 2019, EBITDA was lower than expected due to lower fee revenue resulting from the market-to-market impact of Q4 2018 volatility on beginning period AUM, one-time fee rate reductions in retail, and fee rate compression in workplace. Prospectively, Moody's expects the operating environment will make it extremely difficult for the company to achieve significant deleveraging. Edelman has a solid liquidity profile when compared to similarly rated peers. The company has fully drawn down on its $150 million revolving credit facility to improve its liquidity position, which is within its expectations given the current environment. The company does not have any near-term refinancing risk because debt maturities are well laddered between 2023 and 2026. It is its expectation that at current S&P 500 market index levels, or even lower, Edelman will still generate sufficient free cash flow to cover its debt service requirements (marketing and compensation are among key expense levers should stressed conditions persist). Factors that could lead to a negative outlook or further downgrade of Edelman's ratings include 1) debt-to-EBITDA above 7.5x for a sustained period; 2) significant declines in customer acquisition rates and retention rates as well as fee rates or 3) a material weakening of the company's liquidity profile. Although highly unlikely given market conditions, factors that could lead to an upgrade of Edelman's ratings include 1) debt-to-EBITDA sustained below 5.5x; 2) high single- to double-digit revenue growth rate; or 3) pre-tax income margin above 15% on a consistent basis. Edelman's B3 rating is constrained by 1) consistently high leverage; 2) integration risk as well as the potential for execution risk in meeting revenue growth from conversions; 3) Edelman's private equity sponsor that will continue to periodically lever up the company; and 4) the potential for competition to erode fee rates across advice offerings. Edelman's B3 rating is supported by 1) solid scale and liquidity for the rating level; 2) leading market position in the 401(k) managed account space; 3) historically solid organic asset growth across the 401(k) and traditional advisory businesses; and 4) differentiated lead generation and revenue growth opportunity through its workplace clients. With roots going back over three decades, Edelman Financial Engines, LLC is one of the largest 401(k) managed account and independent Registered Investment Advisor firms providing integrated financial planning and investment management services in the United States. As of December 31, 2019, Edelman had $229 billion of assets under management. The principal methodology used in these ratings was Asset Managers Methodology published in November 2019. EDIFY WELLNESS: Seeks to Hire Stone & Baxter as Counsel ------------------------------------------------------- Edify Wellness of Georgia, LLC, seeks authority from the US Bankruptcy Court for the Northern District of Georgia to hire Stone & Baxter, LLP as its counsel. Edify requires Stone & Baxter to: a. give Debtors legal advice with respect to the powers and duties of a Debtor-in-Possession in the continued operation of the business and management of Debtors' properties; b. prepare on behalf of Debtors, as Debtors-in-Possession, necessary applications, motions, answers, reports, and other legal papers; c. continue existing litigation, if any, to which Debtors-in-Possession may be a party and to conduct examinations incidental to the administration of their estates; d. take any and all necessary actions for the proper preservation and administration of Debtors' estates; e. assist Debtors-in-Possession with the preparation and filing of their Statement of Financial Affairs and Schedules and Lists as are appropriate; f. take whatever actions are necessary with reference to the use by Debtors of their property pledged as collateral, including cash collateral, if any, and to preserve the same for the benefit of Debtors and secured creditors in accordance with the requirements of the Bankruptcy Code; g. assert, as directed by Debtors, all claims that Debtors have against others; h. assist Debtors in connection with claims for taxes made by governmental units; and i. perform all other legal services for Debtors as Debtors-in-Possession may deem necessary. The firm's hourly rates are: Attorney $175 - $525 Paralegals $135 Research Assistants $135 Stone & Baxter received an initial deposit of $18,217 for the Chapter 11 case for Edify Wellness of Georgia, LLC and $1,717 for the Chapter 11 case for Edsil Lamar Logan and Lori Dale Logan, with such deposits to cover the respective filing fees for each of the cases. Stone & Baxter can be reached through: Ward Stone, Jr., Esq. G. Daniel Taylor, Esq. 577 Mulberry Street, Suite 800 Macon, GA 31201 Phone: (478) 750-9898 Fax: (478) 750-9899 E-mail: dtaylor@stoneandbaxter.com dbury@stoneandbaxter.com About Edify Wellness of Georgia, LLC Edify Wellness of Georgia, LLC, sought protection under Chapter 11 of the Bankrupty Code (Bankr. N.D. Ga. Case No. 20-10393) on Feb. 21, 2020, listing under $1 million on both assets and liabilities. David L. Bury, Jr., Esq. and STONE & BAXTER, LLP, represents the Debtor as counsel. EKSO BIONICS: Effects 1-for-15 Reverse Stock Split -------------------------------------------------- Ekso Bionics Holdings, Inc. effected a reverse stock split of shares of its common stock at a ratio of 1-for-15, effective as of March 24, 2020 at 1:05 p.m. Pacific time. The Company's common stock opened for trading on The Nasdaq Capital Market on March 25, 2020 on a split-adjusted basis under the existing trading symbol "EKSO". The Company's common stock will trade under a new CUSIP number 282644301 upon the effectiveness of the reverse stock split. Upon the effectiveness of the reverse stock split, the number of shares of the Company's outstanding common stock will decrease from approximately 87,438,350 pre-split shares to approximately 5,829,390 post-split shares, with no change in par value per share. The reverse stock split was approved by the Company's shareholders at a special meeting held on March 12, 2020, and is primarily intended to raise the per share trading price of the Company's common stock and, in particular, enable the Company to regain compliance with the minimum bid price requirement for maintaining its listing on The Nasdaq Capital Market. To regain compliance, the closing bid price of the Company's common stock must be at least $1.00 for a minimum of ten consecutive trading days. No fractional shares will be issued as a result of the reverse stock split. Any holder that would otherwise receive a fractional share of common stock as a result from the reverse stock split will have those shares rounded up to the next whole share. The reverse stock split will affect all issued and outstanding shares of the Company's common stock, as well as the number of shares of common stock available for issuance under the Company's outstanding stock options and warrants. The reverse stock split will reduce the number of shares of common stock issuable upon the exercise of stock options or warrants outstanding immediately prior to the reverse stock split and correspondingly increase the respective exercise prices. The reverse stock split will not be accompanied by a proportional reduction in the number of authorized shares of the Company's common stock. The reverse stock split will affect all shareholders uniformly and will not significantly alter any shareholder's percentage interest in the Company's equity. Stockholders who hold their shares electronically in book-entry form at a brokerage firm or through the Ekso Bionics, Inc. 401(k) plan need not take any action, as their shares will be automatically adjusted by their brokerage firm or trustee of the 401(k) plan, as applicable, to reflect the reverse stock split. Beneficial holders may contact their bank, broker or nominee with any questions regarding the procedure of implementing the reverse stock split. Stockholders holding share certificates may request to receive information from VStock Transfer, LLC, the Company's transfer agent, regarding the process for exchanging their shares of common stock. Shareholders with questions may contact VStock Transfer by calling +1 (212) 828-8436. About Ekso Bionics Ekso Bionics -- http://www.eksobionics.com/-- is a developer of exoskeleton solutions that amplify human potential by supporting or enhancing strength, endurance and mobility across medical and industrial applications. Founded in 2005, the Company continues to build upon its unparalleled expertise to design some of the most cutting-edge, innovative wearable robots available on the market. Ekso Bionics is the only exoskeleton company to offer technologies that range from helping those with paralysis to stand up and walk, to enhancing human capabilities on job sites across the globe. The Company is headquartered in the Bay Area and is listed on the Nasdaq Capital Market under the symbol EKSO. Ekso Bionics reported a net loss of $12.13 million for the year ended Dec. 31, 2019, compared to a net loss of $26.99 million for the year ended Dec. 31, 2018. As of Dec. 31, 2019, the Company had $21.92 million in total assets, $15.12 million in total liabilities, and $6.80 million in total stockholders' equity. OUM & CO. LLP, in San Francisco, California, the Company's auditor since 2010, issued a "going concern" qualification dated Feb. 27, 2020, citing that Company has incurred significant recurring losses and negative cash flows from operations since inception and an accumulated deficit. This raises substantial doubt about the Company's ability to continue as a going concern. ENDEAVOR ENERGY: Moody's Alters Outlook on Ba3 CFR to Stable ------------------------------------------------------------ Moody's Investors Service changed Endeavor Energy Resources, L.P.'s rating outlook to stable from positive. At the same time, Moody's affirmed Endeavor's Ba3 Corporate Family Rating, its Ba3-PD Probability of Default Rating and B1 Senior Unsecured Notes rating. "The change of outlook to stable reflects our expectation that very low oil prices are likely to persist through 2020, rendering the potential for an upgrade of Endeavor's ratings remote," noted John Thieroff, Moody's analyst. "The company will curtail activity as the year progresses to preserve cash and maintain credit metrics appropriate for the rating." Outlook Actions: Issuer: Endeavor Energy Resources, L.P. Outlook, Changed to Stable from Positive Affirmations: Issuer: Endeavor Energy Resources, L.P. Probability of Default Rating, Affirmed Ba3-PD Corporate Family Rating, Affirmed Ba3 Senior Unsecured Notes, Affirmed B1 (LGD5) RATINGS RATIONALE Endeavor's Ba3 CFR reflects the company's large inventory of acreage in highly productive areas of the Midland Basin and relatively strong financial leverage and cash flow metrics. While the company is likely to significantly reduce its drilling program in 2020 due to low oil prices, production should remain flat to year-end 2019 levels. Endeavor's large acreage position in the core of the basin is considerably bigger than most of its similarly rated peers. The company is likely to modestly outspend cash flow in 2020, a significant improvement over the large cash flow deficits in recent years driven by aggressive spending. Endeavor's high margin oil-weighted production mix has allowed the company to maintain low leverage, despite the outspending. Endeavor is limited by its relatively small production base, single-basin concentration in the Permian's Midland Basin and its history of habitually outspending cash flow. The company's long-standing policy to not hedge production will leave it fully exposed to low oil prices likely to persist into 2021. The rapid and widening spread of the coronavirus outbreak, deteriorating global economic outlook, falling oil prices, and asset price declines are creating a severe and extensive credit shock across many sectors, regions and markets. The combined credit effects of these developments are unprecedented. The E&P sector has been one of the sectors most significantly affected by the shock given its sensitivity to demand and oil prices. Moody's regards the coronavirus outbreak as a social risk under its ESG framework, given the substantial implications for public health and safety. The action reflects the limited impact on Endeavor's credit quality of the breadth and severity of the oil demand and supply shocks, and the company's resilience to a period of low oil prices. Moody's expects Endeavor to maintain good liquidity through early 2021. At September 30, 2019 and pro forma the notes issue, the company had $1.45 billion of availability under its $1.5 billion borrowing base revolving credit facility. Until Endeavor is able to release rigs and frac crews down to targeted levels, the company will continue to draw on the credit facility to partially fund its drilling program, although spending will approximate cash flow in the second half of 2020. The company's extensive inventory of Midland Basin acreage, accumulated at very low historical costs, has proved a good contingent source of liquidity. During the 2015-16 commodity price collapse Endeavor was able to raise almost $1.4 billion in asset sales, predominantly for undeveloped acreage, and used the proceeds to pay down debt. The financial covenants under Endeavor's revolving credit agreement include a minimum current ratio of 1.0x and a maximum net funded debt/EBITDA ratio of 4.0x, which Moody's expects Endeavor will remain in compliance through early 2021. Endeavor's revolver expires in 2023 and the company faces no debt maturities until 2026. Endeavor's senior unsecured notes are rated B1, one notch below the CFR. The rating on the notes reflects their subordinated position to Endeavor's $1.5 billion secured revolving credit facility. The stable outlook reflects Endeavor's comparatively high cash margins and low leverage which should allow the company to navigate the current environment of very low commodity prices without a significant leverage increase. Endeavor's ratings may be upgraded if the company is able to resume production growth while maintaining its retained cash flow to debt ratio above 50% and delivering solid capital returns, with a leveraged full-cycle ratio (LFCR) above 1.5x. The company must also reduce cash flow outspending below pre-2020 levels and maintain good liquidity. The ratings may be downgraded if Endeavor's RCF to debt ratio approaches 30%, liquidity weakens or its LFCR approaches 1x. Midland, Texas-based Endeavor is an independent exploration and production (E&P) company with assets concentrated in the Permian Basin. The company holds a core net acreage position of approximately 376,000 acres in the Midland Basin. At June 30, 2019 Endeavor had 546 million boe of proved reserves of which 281 million boe was proved developed. Founded in 2000, Endeavor is privately-held and wholly owned by Autry Stephens and family. The principal methodology used in s rating these ratings was Independent Exploration and Production Industry published in May 2017. EP ENERGY: Bankruptcy Court Confirms Reorganization Plan -------------------------------------------------------- EP Energy Corporation on March 6, 2020, disclosed that the United States Bankruptcy Court for the Southern District of Texas has confirmed the Company's Plan of Reorganization. The Company expects to complete its financial restructuring process and emerge from Chapter 11 bankruptcy protection as a private company in the coming weeks. Upon emergence, the Company will reduce its debt by approximately $3.3 billion, will receive approximately $629 million in senior secured exit financing from the Company's existing revolving loan lenders, and approximately $325 million of new-money equity financing from certain of its existing noteholders. Such deleveraging and financing will ensure that EP Energy will have greater financial flexibility to support ongoing operations. President and Chief Executive Officer Russell Parker said, "This milestone represents the commitment of our financial restructuring, which is being achieved on an expedited basis thanks to the support of our creditors and stakeholders and their confidence in our long-term value creation opportunities. Confirmation of our Plan enables EP Energy to begin taking the final steps in a process that will significantly reduce our debt and strengthen our capital structure. Based on the strength of our assets and our continued improvement on our operational execution and capital efficiency, EP Energy is poised to succeed in this operating environment and drive value for all our stakeholders." Mr. Parker continued, "I want to thank our dedicated team of employees, who have maintained an unwavering focus and advanced our turnaround plan in the face of continued challenging industry dynamics. On behalf of the EP Energy Board and management team, I also want to express my appreciation for the continued partnership and support of our vendors, lessors and royalty owners. We look forward to completing this process over the coming weeks and beginning our next, stronger chapter together." Additional Information Additional resources for vendors, royalty owners, lessors and other stakeholders is available on EP Energy's restructuring website at www.EPEnergyRestructuring.com. Court filings and other documents related to the Chapter 11 process are available on a separate website administered by EP Energy's claims agent, Prime Clerk, at https://cases.primeclerk.com/EPEnergy. Information is also available by calling 877-502-9869 (toll-free in the U.S.) or +1-917-947-2373 (for calls originating outside the U.S.) or sending an email to EPEnergyinfo@primeclerk.com. Additional information regarding the Chapter 11 filing is contained in a Current Report or Form 8-K filed with the Securities and Exchange Commission. Weil, Gotshal & Manges LLP is serving as the Company's legal counsel, Evercore LLC is serving as financial advisor and FTI Consulting, Inc. is serving as restructuring advisor. About EP Energy EP Energy Corporation and its direct and indirect subsidiaries(OTC Pink: EPEG) -- http://www.epenergy.com/-- are a North American oil and natural gas exploration and production company headquartered in Houston, Texas. The Debtors operate through a diverse base of producing assets and are focused on the development of drilling inventory located in three areas: the Eagle Ford shale in South Texas, the Permian Basin in West Texas, and Northeastern Utah. EP Energy Corporation and its subsidiaries sought Chapter 11 protection on Oct. 3, 2019, after reaching a deal with Elliott Management Corporation, Apollo Global Management, LLC, and certain other noteholders on a bankruptcy exit plan that would reduce debt by 3.3 billion. The lead case is In re EP Energy Corporation (Bankr. S.D. Tex. Lead Case No. 19-35654). EP Energy was estimated to have $1 billion to $10 billion in assets and liabilities as of the bankruptcy filing. Judge Marvin Isgur oversees the case. The Debtors tapped Weil, Gotshal & Manges LLP as legal counsel; Evercore Group L.L.C. as investment banker; and FTI Consulting, Inc. as financial advisor. Prime Clerk LLC is the claims agent. EUREKA 93: Files Notice of Intention to Make Proposal Under BIA --------------------------------------------------------------- Eureka 93 Inc. on March 13, 2020, disclosed that the Board of Directors, after having reviewed strategic alternatives, resolved on February 14, 2020 to file a Notice of Intention to Make a Proposal ("NOI") under Section 50.4(1) of the Bankruptcy and Insolvency Act, R.S.C 1985, c.B-3, as amended (BIA) for each of Eureka 93 Inc., Artiva Inc., LiveWell Foods Canada Inc., and Vitality CBD Natural Health Products Inc. The Ontario Superior Court proposal motion hearing date was held on March 6, 2020, and the Order was signed and issued by the judge on March 12, 2020. As part of Eureka 93's continuous disclosure requirements, this represents a material change effective February 14, 2020 wherein the listed company and certain Canadian related entities filed for court protection to undertake to prepare a proposal under the BIA, as noted below: Eureka 93 Inc. et al (the "Company" or the "Debtor's") On February 14, 2020 (the "Filing Date"), Eureka 93 Inc., Artiva Inc., LiveWell Foods Canada Inc., and Vitality CBD Natural Health Products Inc. (the "Related Entities") each filed a Notice of Intention to Make a Proposal ("NOI") under Section 50.4(1) of the Bankruptcy and Insolvency Act, R.S.C 1985, c.B-3, as amended ("BIA"). Deloitte was appointed as Proposal Trustee ("Deloitte" or the "Trustee") under each NOI. The Proposal Motion Hearing was heard by the Ontario Superior Court of Justice (the "Court") on March 6, 2020, and the Court approved the Proposal process to proceed under Section 50.4(1) of the BIA. Pursuant to Section 69(1) of the BIA, the effect of filing an NOI is an automatic stay of proceedings (the "Stay") against all creditors from continuing or commencing any actions against the Company. The Company had 30 days to file a Proposal to its creditors, or to seek an extension of the time from the Court to file a Proposal. The Company received an extension from the Court to file a Proposal to its creditors by April 28, 2020, and can seek an extension of time if required. The Company is continuing to operate and maintain its business in the ordinary course during the NOI proceedings and the Trustee is required to monitor the Company's business and affairs during the Stay and report any material adverse changes to the Office of the Superintendent of Bankruptcy and the Court. The Company has negotiated for new financing called "debtor-in-possession" or "DIP" financing to provide additional liquidity during the NOI proceedings for which it has sought and received Court Order approval on March 12, 2020. The Company has also sought and received Court approval for an administrative consolidation of its proposal proceedings with the Related Entities. The NOI generally prohibits the Company from paying for goods and services that were received on or before the Filing Date and if you are owed monies for goods and services supplied on or before the Filing date, you will have an opportunity to file a Proof of Claim once a claims process is established. As part of the Proof of Claim process, creditors and suppliers at that time should provide invoices to the Trustee for goods and services delivered up to and including the Filing Date, and separate invoices for all goods and services delivered after the Filing Date. Creditor and contributory ranking on a Debtor's NOI under the BIA rank in the following order: Creditor claims have priority over shareholder claims. Secured creditors rank ahead of preferred and unsecured creditors other than for certain claims that are given priority under statute. Updates and information related to the NOI proceedings will be posted on Deloitte's website at www.insolvencies.deloitte.ca under the link entitled "Eureka 93 Inc. et al". If you have any additional questions regarding this matter, please contact Deloitte Restructuring Inc. attention: Stacey Greenbaum, CPA, CA. Telephone: (416) 874-4320 Fax: (416) 601-6690. Email: sgreenbaum@deloitte.ca Deloitte Restructuring Inc. 8 Adelaide Street West, Suite #200 Toronto, ON M5J 0A9. Canada Attention: Hartley Bricks, MBA, CPA, CA, CIRP, LIT Telephone: (416) 775-7326 Fax: (416) 601-6690 E-mail: hbricks@deloitte.ca - or - Attention: Stacey Greenbaum, CPA, CA Telephone: (416) 874-4320 Fax: (416) 601-6690 Email: sgreenbaum@deloitte.ca Further information will be posted on Deloitte's website at www.insolvencies.deloitte.ca under the link entitled "Eureka 93 Inc. et al". The Board of Eureka 93 Inc. plans to be in a position to complete residual restructuring matters over the coming weeks and months, and begin to focus on development in Artiva Inc. and the Cannabis license. About Eureka93 Eureka 93 Inc. (CSE: ERKA, "Eureka93") -- http://www.Eureka93.com/ -- is an integrated life sciences company focused on the cultivation, extraction, and distribution of cannabis and hemp-derived cannabidiol (CBD) through it's Health Canada licensed Artiva facility in Ottawa, Canada. EYECARE PARTNERS: Moody's Places B3 CFR on Review for Downgrade --------------------------------------------------------------- Moody's Investors Service placed the ratings of EyeCare Partners, LLC under review for downgrade. These include the B3 Corporate Family Rating, B3-PD Probability of Default Rating, B2 rating on the senior secured revolving credit facility and first lien term loans, and Caa2 rating on the second lien term loan. The rapid and widening spread of the coronavirus outbreak, deteriorating global economic outlook, falling oil prices, and asset price declines are creating a severe and extensive credit shock across many sectors, regions and markets. The combined credit effects of these developments are unprecedented. On March 18, the Centers for Medicare & Medicaid Services (CMS) advised that all elective surgeries, non-essential medical, surgical, and dental procedures be delayed in order to increase capacity and resources to fight the coronavirus outbreak. The Centers for Disease Control and Prevention (CDC), several governors and others are advising the same. Based on the guidance to limit non-essential medical and surgical procedures, Moody's believes that ECP, which provides both ophthalmology and optometry services, will experience a significant drop in volumes over the coming weeks, and the timing for recovery is uncertain. The ratings review will focus on liquidity and the ability to reduce variable costs and growth capital expenditures to manage through the public health emergency. Moody's expects that there will be significant erosion of operating performance in the second quarter, and perhaps beyond, depending on the duration of the coronavirus crisis. Ratings on Review for Downgrade: Issuer: EyeCare Partners, LLC Probability of Default Rating, Placed on Review for Downgrade, currently B3-PD Corporate Family Rating, Placed on Review for Downgrade, currently B3 First Lien Secured Bank Credit Facility, Placed on Review for Downgrade, currently B2 (LGD3) Second Lien Secured Bank Credit Facility, Placed on Review for Downgrade, currently Caa2 (LGD6) Outlook Actions: Issuer: EyeCare Partners, LLC Outlook, Changed to Rating Under Review from Stable RATINGS RATIONALE Notwithstanding the review for downgrade, ECP's B3 Corporate Family Rating reflects its high pro forma adjusted leverage of 7.6x, and the risks associated with the company's rapid expansion strategy as it grows, predominantly through acquisitions. Further, the company has recently made several large acquisitions, and as a result, the company's EBITDA is highly prospective. The company's track record as a scalable platform is somewhat limited although ECP acquires eyecare practices that often have long track records in operation. The B3 also reflects moderate geographic concentration, with around 42% of revenue generated in two states, Michigan and Missouri. In addition, while e-commerce penetration in the optical sector is likely to remain low, Moody's expects that, over time, traditional optical retailers will face margin and market share pressure from growing online competition. The credit profile is also constrained by the non-emergent nature of many of the procedures performed in its ambulatory surgery centers (ASCs), meaning that patients can delay/forego treatment as per guidelines during the coronavirus global pandemic or in times of economic weakness. The rating benefits from the industry's favorable long-term growth prospects, including growing demand for optometrist and ophthalmological services and eyewear products. This is due to aging demographics and the growing prevalence of myopia and cataracts. Further, ECP's vertical integration allows it to provide services to patients that cover all of their eyecare needs, including optometry, ophthalmology and retail. ECP also owns ambulatory surgery centers, which will benefit from growing demand (aside from the coronavirus pandemic), as patients and payors generally prefer the outpatient environment (primarily due to lower cost and better outcomes) for certain specialty procedures, including cataract surgeries. Moody's expects the company's liquidity to be adequate over the next 12-18 months given the company's access to the $110 million revolver, which are governed by very loose springing covenants. Moody's believes that ECP could experience a material drop in earnings and maintain covenant compliance under a range of scenarios. Environmental considerations are not material to the overall credit profile of ECP. Moody's considers coronavirus to be a social risk given the risk to human health and safety. Aside from coronavirus, ECP faces other social risks as well such as the rising concerns around the access and affordability of healthcare services. However, Moody's does not consider the ASCs to face the same level of social risk as hospitals as ASCs are viewed as an affordable alternative to hospitals for elective procedures. From a governance perspective, Moody's considers the proposed springing first lien net leverage covenant of 9.75x to be aggressive. The loose covenant provides ECP the flexibility to undertake large debt-funded transactions in the future. EyeCare Partners, LLC is the largest medically-focused eye care services provider headquartered in St. Louis, Missouri. ECP is vertically integrated, providing optometry, ophthalmology and retail products. The company supports 521 locations across 15 states and generated about $830 million of pro forma revenue during the last twelve months ended November 30, 2019. ECP is owned by Partners Group. The principal methodology used in these ratings was Business and Consumer Service Industry published in October 2016. FAIRWAY GROUP: Announces Qualified Overbid by Bogopa Enterprises ---------------------------------------------------------------- Fairway Market, together with its debtor affiliates in their Chapter 11 cases in the U.S. Bankruptcy Court for the Southern District of New York (Case No. 20-10161) has announced a "qualified overbid" by Bogopa Enterprises, Inc., for 6 Fairway stores and its Distribution Center, for $75 million. Bogopa is a family-owned business that has operated grocery stores in the New York area for 32 years, and currently operates 26 supermarkets under the "Food Bazaar" banner in New York City, New Jersey, Long Island, Connecticut and Westchester. An auction will be held on March 16, 2020, pursuant to the Court-supervised sale process. Fairway has also received competitive bids for various other stores that are being evaluated. "We would like to extend gratitude to our employees, vendors, distributors and customers for their continued support, dedication and loyalty during this process. Fairway's store performance has generated significant interest in our stores. We look forward to a robust auction," said Abel Porter, Chief Executive Officer at Fairway Market. Fairway Market is a unique food retailer offering customers a differentiated one-stop shopping experience as "The Place To Go Fooding." Fairway has established itself as a leading food retail destination in the greater New York City metropolitan area, recently expanding with the opening of The Cooking Place in June 2019, a cooking school that brings the same passion and philosophy about fooding to its customers. Fairway offers an extensive selection of fresh, natural and organic products, prepared foods and hard-to-find specialty and gourmet offerings, along with a full assortment of conventional groceries. About Fairway Group Fairway Group -- https://www.fairwaymarket.com/ -- is a food retailer operating 14 supermarkets across the New York, New Jersey and Connecticut tri-state area, including two with freestanding wine and liquor stores (the Stamford and Pelham locations) and two with in-store wine and liquor stores (the Woodland Park and Paramus locations). The company's flagship store is located at Broadway and West 74th Street, on the Upper West Side of Manhattan, featuring a cafe, Sur la Route, and state of the art cooking school. Fairway's stores emphasize an extensive selection of fresh, natural, and organic products, prepared foods, and hard-to-find specialty and gourmet offerings, along with a full assortment of conventional groceries. Fairway Group Holdings Corp. and 25 affiliated companies sought Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 20-10161) on Jan. 23, 2020. In the petitions signed by CEO Abel Porter, the Debtors were estimated to have $100 million to $500 million in assets and liabilities. Judge James L. Garrity, Jr., is assigned to the cases. The Debtors tapped Weil, Gotshal & Manges LLP as legal counsel; Peter J. Solomon and Mackinac Partners, LLC as financial advisor; and Omni Agent Solutions as claims, noticing and solicitation agent. The Ad Hoc Group of senior lenders is represented by King & Spalding, LLP. FIFTH DAY: Seeks to Hire Rafool & Bourne as Bankruptcy Counsel -------------------------------------------------------------- Fifth Day Restaurants, LLC DBA T.G.I. Fridays seeks authority from the US Bankruptcy Code for the Central District of Illinois to hire Rafool & Bourne, P.C., as its bankruptcy counsel. Services Rafool & Bourne will render: (a) give Debtor legal advice with respect to its rights, powers and duties as Debtor In Possession in connection with the administration of its bankruptcy estate and the disposition of his property; (b) take such action as may be necessary with respect to claims that may be asserted against the Debtor and property of its estate; (c) prepare applications, motions, complaints, orders and other legal documents as may be necessary in connection with the appropriate administration of this case; (d) represent Debtor with respect to inquiries and negotiations concerning creditors of its estate and property; (e) initiate, defend or otherwise participate on behalf of Debtor in all proceedings before this Court or any other court of competent jurisdiction; and (f) perform any and all other legal services on behalf of Debtor which may be required to aid in the proper administration of its bankruptcy estate. Rafool & Bourne has agreed to be employed at the hourly rate is $250. The Debtor provided Rafool & Bourne with a $25,000 retainer. Rafool & Bourne is a "disinterested person" within the scope of 11 U.S.C. Sec. 101(14) as required by 11 U.S.C. Sec. 327(a). The firm can be reached through: Sumner A. Bourne, Esq. RAFOOL & BOURNE, P.C. 411 Hamilton, Suite 1600 Peoria, IL 61602 Tel: (309) 673-5535 E-mail: notices@rafoolbourne.com About Fifth Day Restaurants, LLC Fifth Day Restaurants, LLC DBA T.G.I. Fridays is in the restaurants industry. Fifth Day Restaurants, LLC DBA T.G.I. Fridays filed its voluntary petition under Chapter 11 of the Bankruptcy Code (Bankr. C.D. Ill. Case No. 20-80285) on March 2, 2020. In the petition signed by William H. Torchia, manager, the Debtor estimated $500,000 to $1 million in assets and $1 million to $10 million in liabilities. Sumner A. Bourne, Esq. at Rafool & Bourne, P.C. serves as its bankruptcy counsel. FOGO DE CHAO: Moody's Cuts CFR to B3 & Alters Outlook to Negative ----------------------------------------------------------------- Moody's Investors Service downgraded Fogo De Chao, Inc.'s corporate family rating to B3 from B2, its probability of default rating to B3-PD from B2-PD and its B2 senior secured bank facilities rating to B3 from B2. The outlook was changed to negative from stable. The downgrade considers the mandated closure of in-store dining units across the restaurant industry due to efforts to contain the spread of the coronavirus. As a principally dine-in and group restaurant, Fogo will have difficulty covering all fixed costs during the shut-down, the duration of which is currently unknown. Fogo will offer some take-out options that will provide some cash flow support. Due to the anticipated decline in EBITDA, debt/EBITDA is expected to increase above Moody's downgrade trigger of 6.0x from approximately 5.4x as of the last twelve months ended September 2019 and EBIT/interest will deteriorate toward 1.0x. The negative outlook reflects uncertainty around the duration of unit closures and pace of the rebound once the pandemic begins to subside. Downgrades: Issuer: Fogo De Chao, Inc. Probability of Default Rating, Downgraded to B3-PD from B2-PD Corporate Family Rating, Downgraded to B3 from B2 Senior Secured Bank Credit Facility, Downgraded to B3 (LGD3) from B2 (LGD3) Outlook Actions: Issuer: Fogo De Chao, Inc. Outlook, Changed To Negative From Stable RATINGS RATIONALE The rapid and widening spread of the coronavirus outbreak, deteriorating global economic outlook, falling oil prices, and asset price declines are creating a severe and extensive credit shock across many sectors, regions and markets. The combined credit effects of these developments are unprecedented. The restaurant sector will be one of the sectors most significantly affected by the shock given its sensitivity to consumer demand and sentiment. More specifically, the weaknesses in the credit profile of restaurant companies, including their exposure to travel disruptions and discretionary consumer spending have left them vulnerable to shifts in market sentiment in these unprecedented operating conditions and the companies remain vulnerable to the outbreak continuing to spread. Moody's regards the coronavirus outbreak as a social risk under its ESG framework, given the substantial implications for public broad deterioration in credit quality it has triggered. Fogo de Chao, Inc. is constrained by the company's high leverage stemming from the acquisition of the company by Rhône Capital in 2018, its small size and limited product offering diversity relative to other rated restaurant chains. Fogo de Chao is also subject to potential earnings volatility due to exposure to commodities such as beef, and exposure to currency fluctuations as 8.6% of revenue is generated in Brazil while all the debt is denominated in US dollars. Fogo de Chao benefits from its strong operating margins, which are largely attributable to its continuous service model (gaucho chefs serve tableside) and lower operating costs relative to peers and brand awareness within its core markets. The company's geographic diversity in both the U.S. and Brazil, as well as its unique Brazilian steakhouse customer experience, help drive same store sales and cash generation. The company is reducing costs and capital spending to manage through this period of disruption. Fogo's liquidity is adequate evidenced by cash balances (around $22 million) and revolver drawing of approximately $35 million which will enable the company to meet its obligations even if the closures last for several months. Additionally, the company has no near-term maturities (revolver expires in April 2023 and term loan matures in April 2025) and Moody's expects the company can maintain compliance with its financial covenant. The ratings could be downgraded if the duration of the closures increase, thereby squeezing liquidity or if the probability of default increases for any reason. Quantitatively, ratings could be downgraded if debt/EBITDA is increases above 7.0x. The outlook could change to stable after Fogo is able to open its units, operations stabilize, and demand rebounds. Given the negative outlook and the severity of the crisis, an upgrade is unlikely at the current time. However, ratings could be upgraded once liquidity stabilizes, debt/EBITDA improves to 5.75x and EBIT/interest is sustained around 1.4x Fogo de Chao, Inc. based in Plano, TX, operates a Brazilian steakhouse restaurant chain with 41 restaurants in the U.S., 8 in Brazil, 3 joint venture restaurants in Mexico and 2 joint venture restaurants in the Middle East. Revenue for the twelve-month period September 30, 2019 was approximately $343 million, with about 91% derived in the U.S. Fogo de Chao is owned by affiliates of Rhône Capital. The principal methodology used in these ratings was Restaurant Industry published in January 2018. FOUR SEASONS: Moody's Alters Outlook on Ba3 CFR to Negative ----------------------------------------------------------- Moody's Investors Service affirmed Four Seasons Hotels Limited's Ba3 corporate family rating, Ba3-PD probability of default rating and the Ba3 rating on its senior secured bank facility. The outlook was changed to negative from stable. The negative outlook reflects Moody's expectation of a sharp drop in earnings linked to the coronavirus outbreak and a more challenging operating and economic landscape through 2020. Despite an acute slowdown in lodging demand globally through at least H1 2020, Four Seasons will maintain very good liquidity this year and Moody's expects leverage to fall back towards 4.5x in 2021 after peaking over 6.5x (4.2x LTM as of Sept 2019). Affirmations: Issuer: Four Seasons Hotels Limited Corporate Family Rating, Affirmed Ba3 Probability of Default Rating, Affirmed Ba3-PD Gtd. Senior Secured 1st Lien Term Loan, Affirmed Ba3 (LGD3) Gtd. Senior Secured 1st Lien Revolver, Affirmed Ba3 (LGD3) Outlook Actions: Issuer: Four Seasons Hotels Limited Outlook, Changed to Negative from Stable RATINGS RATIONALE Four Seasons (Ba3 CFR) benefits from: (1) its well-recognized brand name and broad geographic diversification; (2) high proportion of base fees which supports operating stability; (3) conservative financial policy; and (4) very good liquidity. The company is constrained by: (1) its small scale in terms of revenues and number of hotel rooms versus competitors; and (2) revenue concentration in one segment (luxury) of the hotel industry. The rapid and widening spread of the coronavirus outbreak, deteriorating global economic outlook, falling oil prices, and asset price declines are creating a severe and extensive credit shock across many sectors, regions and markets. The combined credit effects of these developments are unprecedented. The lodging sector has been one of the sectors most significantly affected by the shock given its sensitivity to consumer demand and sentiment. More specifically, weaknesses in Four Seasons credit profile, including its exposure to the luxury segment of the global lodging industry, have left it vulnerable to shifts in market sentiment in these unprecedented operating conditions and the company remains vulnerable to the outbreak continuing to spread. Moody's regards the coronavirus outbreak as a social risk under its ESG framework, given the substantial implications for public health and safety. The action reflects the impact on Four Seasons, of the breadth and severity of the shock, and the broad deterioration in credit quality it has triggered. The ratings could be upgraded if debt to EBITDA remains below 3.5x (4.2x LTM 09/19) and EBITA to interest expense rises above 4.5x while maintaining good liquidity, and the operating environment improves. The ratings could be downgraded if debt to EBITDA remains above 4.5x and EBITA to interest expense falls below 3.5x. Downward pressure on the ratings would also arise if there is a prolonged deterioration in cash flow or liquidity, or if financial policy becomes more aggressive. Four Seasons has very good liquidity. As of December 2019, Moody's estimates sources totaled around $280 million, consisting of cash on hand of about $275 million, and about $5 million in positive free cash flow during 2020. Uses in the next twelve months total close to $9 million in term loan amortizations. The company's revolving credit facility has a total leverage and a fixed charge coverage covenant, applicable if there are any drawings on the facility. Moody's does not expect the revolver to be drawn. Governance considerations include the company's conservative financial policies, reflective of the long-term focus of the investors, who have focused on the prudent expansion of the Four Seasons brand globally rather than seeking short-term returns on their initial investments. Four Seasons is majority owned by Kingdom Holding Company (47.5%) and Cascade Investment, LLC (47.5%), with the balance owned by founder and Chairman Isadore Sharp and his family. Four Seasons Hotels Limited is a leading luxury hotel management company with a portfolio of 115 managed hotel properties in 47 countries. During the twelve months ended September 2019, revenue was about $350 million. The principal methodology used in these ratings was Business and Consumer Service Industry published in October 2016. FREEDOM MORTGAGE: Fitch Places 'BB-' LT IDR on Watch Negative ------------------------------------------------------------- Fitch Ratings has placed Freedom Mortgage Corporation's 'BB-' Long-Term Issuer Default Rating and 'B+' senior unsecured debt rating on Rating Watch Negative. KEY RATING DRIVERS IDR AND SENIOR DEBT The Negative Rating Watch reflects Fitch's expectation that Freedom could experience meaningful strains on its liquidity given the consumer mortgage forbearance programs being proposed by the U.S. government in response to the coronavirus pandemic, as under the current framework, the firm would need to continue to advance principal and interest (P&I) payments to bondholders even as incoming cash flows slow considerably. An increase in servicing advances, to fund the P&I payments, and valuation declines associated with Freedom's mortgage servicing rights (MSRs), given the decline in rates, could also lead to elevated leverage in the near term. Fitch believes the pressure on the non-bank mortgage sector is particularly acute at present, given more limited funding profiles compared to banks, and could be exacerbated further as an unintended consequence of the government's mortgage forbearance program. The Federal Reserve yesterday announced the relaunch of the Term Asset-Backed Securities Loan Facility (TALF), which will initially provide up to $100 billion in loans that will be fully secured by eligible asset-backed security (ABS) collateral. Eligible ABS collateral includes senior tranches of ABS backed by eligible servicing advance receivables, which may provide an avenue for liquidity relief to Freedom. However, Fitch believes there is execution risk for servicers trying to access this facility as it would require securitization of servicing advance receivables in a short timeframe. Additionally, servicers would need to self-fund or raise external financing for retention of junior tranches of securitizations, which presents additional liquidity and execution challenges. As of Sep. 30, 2019, Freedom had available borrowings of $366.0 million on certain revolving corporate credit facilities that are collateralized by Fannie Mae and Freddie Mac MSRs and servicing advances which could be utilized to fund future servicing advances. Additionally, Freedom had borrowing capacity of $447 million on a facility secured by Ginnie Mae MSRs which could be utilized for liquidity. The fair value of Freedom's MSR portfolio accounted for 26% of total assets and 172% of tangible equity as of Sept. 30, 2019. The MSR portfolio is expected to experience valuation declines given the drop-in interest rates and the potential for increased delinquencies, as unemployment is expected to increase. The fair value decline will negatively impact tangible equity and ultimately Fitch's calculation of Freedom's leverage. Additionally, increased mortgage originations, which typically occur when there is a decline in rates, would also lead to higher gross debt balances as these originations would be funded by warehouse facilities. Fitch evaluates Freedom's leverage metrics primarily on the basis of gross debt, inclusive of borrowings on warehouse facilities to fund originations, to tangible equity, which amounted to 5.3x as of Sept. 30, 2019; already modestly above Fitch's negative rating sensitivity of 5.0x. Should leverage be sustained above 5.0x for an extended period, Freedom's ratings could be downgraded. Freedom's current ratings reflect its solid franchise and historical track record in the U.S. nonbank residential mortgage space, experienced senior management team with extensive industry background, a sufficiently robust and integrated technology platform, good historical asset quality performance in its prime servicing portfolio, adequate reserves to absorb a reasonable level of repurchase or indemnification demands, and appropriate earnings coverage of interest expenses. Fitch believes the highly cyclical nature of the mortgage origination business and the capital intensity and valuation volatility of MSRs of the mortgage servicing business represent primary rating constraints for nonbank mortgage companies, including Freedom. Furthermore, the mortgage business is subject to intense legislative and regulatory scrutiny, which further increases business risk, and the imperfect nature of interest rate hedging can introduce liquidity risks related to margin calls and/or earnings volatility. These industry constraints typically limit ratings assigned to nonbank mortgage companies to below investment grade levels. Rating constraints specific to Freedom include the company's continued reliance on secured, wholesale funding facilities and elevated key man risk related to its founder and Chief Executive Officer, Stanley Middleman, who sets the tone, vision and strategy for the company. The senior unsecured debt rating is one-notch below Freedom's Long-Term IDR, given the subordination to secured debt in the capital structure and, therefore, weaker relative recovery prospects in a stressed scenario. ESG CONSIDERATIONS Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of 3 - ESG issues are credit neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Freedom has an ESG Relevance Score of 4 for Governance Structure due to elevated key person risk related to its founder and Chief Executive Officer, Stanley Middleman, who sets the tone, vision and strategy for the company. An ESG Relevance Score of 4 means Governance Structure is relevant to Freedom's rating but not a key rating driver. However, it does have an impact to the rating in combination with other factors. RATING SENSITIVITIES IDR AND SENIOR DEBT Resolution of the Rating Watch will be driven primarily by the effectiveness of the government facilities in addressing the imminent liquidity pressures facing Freedom should it need to fund elevated P&I payments to bondholders while forbearance programs are in place. If the government facilities do not sufficiently address Freedom's liquidity needs, Fitch would expect to downgrade Freedom's ratings, likely by multiple notches, as pressure on its liquidity profile would mount over a relatively short period of time. If TALF proves viable, Fitch will evaluate Freedom's ability to execute on the securitization of servicer advance receivables in a timely manner while maintaining sufficient financial capacity to retain junior tranches of such securitizations. If Fitch believes TALF or subsequent government facilities sufficiently address Freedom's liquidity needs, the ratings could be removed from Negative Rating Watch. However, the ratings and/or Outlook could still be modestly pressured, reflecting Fitch's expectations for increased delinquencies, MSR valuation volatility, and growth in origination volume, all of which would likely keep leverage above 5.0x over the medium term. Fitch believes servicing costs could also increase to the extent delinquencies rise meaningfully, which could pressure earnings and interest coverage ratios. A return to a Stable Rating Outlook depends on a clearer understanding of potential peak delinquency rates, MSR valuation marks, funding sufficiency for increased origination volume, near-term earnings performance, and a reduction in and maintenance of leverage at 5.0x or below. The senior unsecured debt is primarily sensitive to any changes to Freedom's Long-Term IDR and would be expected to move in tandem. Founded in 1990 and based in Mount Laurel, NJ, Freedom is a leading, private, full-service, nonbank mortgage company engaged in originating, servicing, selling and securitizing residential mortgage loans. In 2018, the company was the twelfth largest residential mortgage lender in the United States by closed loan volume, according to Inside Mortgage Finance. As of Sept. 30, 2019, Freedom had total assets of approximately $10.2 billion. FS ENERGY: Moody's Cuts CFR to Ba3 & Reviews Rating for Downgrade ----------------------------------------------------------------- Moody's Investors Service downgraded FS Energy and Power Fund's corporate family and long-term senior secured debt ratings to Ba3 from Ba2. Following the downgrade, the ratings were placed on review for downgrade. Downgrades: Issuer: FS Energy and Power Fund Corporate Family Rating, Downgraded to Ba3 from Ba2; Placed on Review for further Downgrade Senior Secured Regular Bond/Debenture, Downgraded to Ba3 from Ba2; Placed on Review for further Downgrade Outlook Actions: Issuer: FS Energy and Power Fund Outlook, Changed to Rating Under Review from Stable RATINGS RATIONALE The downgrade of FSEP's ratings reflects the heightened risk to the company's financial strength and performance from the recent plunge in oil prices and Moody's view that oil prices will remain lower than previously expected in 2020. Oil prices have declined markedly to below $30/bbl. driven by an acute oil demand dislocation caused by the coronavirus and the lack of production cuts by the OPEC+ countries. FSEP is more exposed to the oil price decline than other rated business development companies (BDCs) because it invests primarily in private US energy and power companies, with significant exposure to exploration and production (E&P) companies. Although FSEP has recently reduced its exposure to E&P companies, E&P investments accounted for a meaningful 49% of FSEP's total portfolio as of 30 September 2019. Moody's expects the recent decline in oil prices to severely stress the E&P sector on top of its limited access to capital and high refinancing requirements in 2020-21. Moody's expects the culmination of supply and demand shocks to force producers to take drastic action on costs and make further reductions in capital spending to cope with the difficult price environment in 2020. During the review, Moody's will assess the impact of depressed oil prices on the asset quality of FSEP's investment portfolio, including the impact of fair value marks on profitability, the Asset Coverage Ratio (ACR) cushion, capitalization and liquidity. The Ba3 ratings are supported by FSEP's strong capitalization, which significantly reduces the company's probability of default. At the same time, the ratings are constrained by FSEP's relatively weak liquidity and funding profile, with large debt maturity concentrations and a sole reliance on secured debt. FSEP's ratings also reflect its limited operating history, as well as risks common to all BDCs, including illiquid investments that need to be marked to fair value, high dividend payouts, and limitations of the minimum ACR requirements. FSEP's exposure to environmental risks is high given its significant exposure to the energy sector through the company's investment portfolio. The company's exposure to social risks is low, consistent with Moody's general assessment for BDCs. Moody's does not have any particular concerns with FSEP's governance. What could change the ratings up/down FSEP's ratings could be downgraded if Moody's determines that the company is likely to incur substantial realized and unrealized losses that meaningfully reduce FSEP's ACR cushion, increasing the risk of the ACR covenant breach under the company's credit facilities. Given the downgrade and the ongoing review, an upgrade of FSEP's ratings is unlikely. FSEP's ratings could be confirmed at their current levels if the company maintains a sufficient ACR cushion above its 200% minimum requirement. The principal methodology used in these ratings was Finance Companies Methodology published in November 2019. GK HOLDINGS: Moody's Cuts CFR to Ca, Outlook Negative ----------------------------------------------------- Moody's Investors Service downgraded its ratings for GK Holdings, Inc., including the company's corporate family rating (CFR, to Ca from Caa2) and probability of default rating (to Ca-PD from Caa2-PD), along with its senior secured first lien bank credit facilities (to Caa3 from Caa1) and senior secured second lien term loan (to C from Caa3). The ratings outlook remains negative. "The downgrades reflect heightened refinancing risk given upcoming debt maturities, continued deterioration in operating results, a very levered balance sheet and weak liquidity," said Shirley Singh, Moody's lead analyst for Global Knowledge. "Growing macroeconomic weakness will further reduce demand volumes, which in turn will pressure earnings and result in a much more cash absorptive profile over the course of 2020, increasing the risk of default," added Singh. The negative outlook reflects Moody's expectation that Global Knowledge's credit profile will weaken further in a tough operating environment, and that refinancing risk will rise as the company's debt maturities approach. The rapid and widening spread of the coronavirus outbreak, the deteriorating global economic outlook, falling oil prices and asset price declines are creating a severe and extensive credit shock across many sectors, regions and markets. The combined credit effects of these developments are unprecedented. The business services sector has been one of the more exposed sectors affected by the shock given its sensitivity to broad market demand and sentiment. More specifically, the weaknesses in Global Knowledge's credit profile has left it vulnerable to shifts in market sentiment in these unprecedented operating conditions, and the company remains vulnerable to the outbreak continuing to spread. Moody's regards the coronavirus outbreak as a social risk under its ESG framework, given the substantial implications for public health and safety. The actions reflect the impact on Global Knowledge of the breadth and severity of the shock, and the broad deterioration in credit quality it has triggered. The following rating actions were taken: Downgrades: Issuer: GK Holdings, Inc. Corporate Family Rating, Downgraded to Ca from Caa2 Probability of Default Rating, Downgraded to Ca-PD from Caa2-PD Senior Secured 1st Lien Bank Credit Facility, Downgraded to Caa3 (LGD3) from Caa1 (LGD3) Senior Secured 2nd Lien Bank Credit Facility, Downgraded to C (LGD5) from Caa3 (LGD5) Outlook Actions: Issuer: GK Holdings, Inc. Outlook, Remains Negative RATINGS RATIONALE Global Knowledge's Ca CFR broadly reflects the company's weak liquidity and rising refinancing risk given its upcoming debt maturities, declining operating performance and very high leverage (8.4x at December 2019). Lower volumes continue to weaken earnings and prompt cash burn, further eroding liquidity and exacerbating already weak key credit metrics. The rating also reflects Global Knowledge's small scale relative to other rated business services companies, and the secular decline in its traditional in-classroom training services in North America, the company's largest operating region. Global Knowledge's governance risk is high as evidenced by its history of employing significant debt funding and an ensuing highly leveraged balance sheet. Nonetheless, Global Knowledge's rating is supported by the company's wide geographic footprint, a highly diversified customer base and ongoing cost reduction initiatives to enhance operating efficiencies, which should support profitability margins over time. The ratings could be upgraded if the company is able to avoid default by successfully refinancing its debt at par and reversing the trend of revenue declines while improving liquidity to adequate levels. The ratings could be downgraded if liquidity deteriorates further, including more negative free cash flows and/or covenant compliance issues. The ratings could also be downgraded if the company undertakes a pre-emptive restructuring of its debt at sub-par levels and/or Moody's estimates of ultimate recovery deteriorate further. The principal methodology used in these ratings was Business and Consumer Service Industry published in October 2016. Headquartered in Cary, North Carolina, Global Knowledge provides information technology and business skills training solutions to corporations and their employees. The company has operations throughout North America and EMEA. Net revenue for the twelve months ended December 31, 2019 was $255 million. The company is largely owned by funds affiliated with Rhône Group, LLC. GL BRANDS: Partners with Ontel Products to Launch 'Green Relief' ---------------------------------------------------------------- GL Brands, Inc. has partnered with "As Seen on TV" leader Ontel Products Corporation for the launch of hemp topical Green Relief, a proprietary, deep penetrating, Celadrin-based formula designed to help relieve aches and pains and promote flexible and healthy joints. "Ontel couldn't be more excited to inject its wealth of television and digital knowledge into the Green Relief brand and introduce the product to its global network of 80,000 retail partners and loyal consumers," notes Ontel President Amar Khubani. "Ontel is always looking for innovative ways to improve the lives of our customers and we're confident our partnership with GL Brands and the launch of Green Relief does just that, and then some." GL Brands CEO Carlos Frias states, "With a marketing and distribution network of Ontel's size and reach, Ontel has a longstanding track record of moving its products across a diverse number and assortment of channels. This also opens the door for further product development partnership opportunities between GL Brands and Ontel for innovative hemp products with mass appeal that can help people everywhere." About GL Brands Inc. GL Brands -- https://www.glbrands.com -- is a global hemp consumer packaged goods company engaged in the development and sale of cannabis-derived wellness products. Through its premier brands Green Lotus and Irie CBD, GL Brands delivers a full portfolio of hemp-derived CBD products, including tinctures, soft gels, gummies, sparkling beverages, vapes, flower and topical segments to promote greater wellness and balance, in the U.S. and throughout the world. GL Brands reported a net loss attributable to common stockholders of $12.73 million for the year ended June 30, 2019, compared to a net loss attributable to common stockholders of $4.63 million for the year ended June 30, 2018. As of Sept. 30, 2019, GL Brands had $19.46 million in total assets, $13.43 million in total liabilities, and $6.02 million in total stockholders' equity. Sadler, Gibb & Associates, LLC, in Salt Lake City, UT, the Company's auditor since 2018, issued a "going concern" qualification in its report dated Nov. 14, 2019, citing that the Company has suffered recurring losses from operations and has a net capital deficiency that raise substantial doubt about its ability to continue as a going concern. GNC HOLDINGS: Incurs $33.5 Million Net Loss in Fourth Quarter ------------------------------------------------------------- GNC Holdings, Inc., reported consolidated revenue of $470.4 million in the fourth quarter of 2019, compared with consolidated revenue of $547.9 million in the fourth quarter of 2018. The decrease in revenue was primarily a result of the transfer of the Nutra manufacturing and China businesses to joint ventures formed in the first quarter of 2019, the closure of company-owned stores under the Company's ongoing store portfolio optimization strategy and U.S. company-owned same store sales decrease of 2.4%. In connection with the transactions, the Company received proceeds of $99.2 million for first installment of the manufacturing joint venture and proceeds of $300.0 million for the issuance of convertible preferred stock. Key Updates * U.S. and Canada segment operating income margin improved 62 bps compared with the fourth quarter of 2018, excluding the non-cash intangible asset impairment charge in the prior year quarter * E-Commerce revenues grew approximately 15% compared with the fourth quarter of 2018 driven by increased conversion rates due to an improved site experience * Although the Company is experiencing slowing progress on the refinancing due to the worldwide impact from COVID-19, the Company continues to evaluate all strategic alternatives to address upcoming maturities, including refinancing options in the U.S. and Asia * Cash provided by operating activities was $97 million for 2019; Full year 2019 free cash flow was $81 million and Adjusted EBITDA was $192 million * Reduced debt by $290 million during 2019 and ended fourth quarter with $183 million in liquidity For the fourth quarter of 2019, the Company reported net loss of $33.5 million compared with net income of $58.8 million in the prior year quarter. Diluted loss per share was $0.46 in the current quarter compared with diluted earnings per share ("EPS") of $0.62 in the prior year quarter. Adjusted net loss was $0.4 million in the current quarter, compared with adjusted net loss of $10.0 million in the prior year quarter. Adjusted diluted loss per share was $0.07 in the current quarter compared with adjusted diluted loss per share of $0.13 in the prior year quarter. Adjusted EBITDA, as defined and reconciled to net income was $26.3 million, or 5.6% of revenue, in the current quarter compared with $35.0 million, or 6.4% of revenue, in the prior year quarter. "Certainly, COVID-19 has created a difficult business environment, and slowed the process of refinancing our debt," said Ken Martindale, CEO. "As we work through these issues we remain highly focused on the health and safety of GNC associates and customers, which includes meeting the growing demand for our immunity and wellness products." Segment Operating Performance U.S. & Canada Revenues in the U.S. and Canada segment decreased $32.6 million, or 7.3%, to $412.4 million for the three months ended Dec. 31, 2019 compared with $445.0 million in the prior year quarter. E-commerce sales comprised 11.5% of U.S. and Canada revenue for the three months ended Dec. 31, 2019 compared with 9.3% in the prior year quarter. The closure of company-owned stores under the Company's store portfolio optimization strategy resulted in a $17.6 million decrease in revenue, while the 2.4% decline in U.S. company-owned same store sales, which includes GNC.com, resulted in a $7.7 million revenue decline. In domestic franchise locations, same store sales for the fourth quarter of 2019 decreased 3.2% over the prior year quarter. Operating income was $17.0 million for the three months ended Dec. 31, 2019 compared with operating loss of $5.9 million for the same period in 2018. In the prior year quarter, the U.S and Canada segment was significantly impacted by a $21.6 million non-cash long-lived asset impairment charge related to an indefinite-lived intangible asset. Excluding the long-lived asset impairment charges in the prior year quarter and immaterial gains on refranchising in the current quarter and prior year quarter, operating income was $16.9 million, or 4.1% of segment revenue in the current quarter, compared with $15.4 million, or 3.5% of segment revenue in the prior year quarter. The increase in operating income percentage was driven by lower salaries and benefit costs, lower occupancy expense and product margin improvements including the comparative effect of a prior year reserve related to risk associated with a third party vendor, partially offset by deleverage associated with a decrease in sales and higher marketing expense. International Revenues in the International segment decreased $10.4 million, or 20.4%, to $40.9 million for the three months ended Dec. 31, 2019 compared with $51.3 million in the prior year quarter primarily due to the transfer of the China business to the joint ventures formed with Harbin Pharmaceutical Group effective Feb. 13, 2019. Operating income increased $0.7 million to $14.4 million, or 35.3% of segment revenue, for the three months ended Dec. 31, 2019 compared with $13.7 million, or 26.8% of segment revenue, for the same period in 2018. The prior year quarter included a non-cash indefinite-lived intangible asset impairment of $2.1 million and China joint venture start-up costs of $0.7 million. Excluding these items, operating income was $16.5 million, or 32.2% of segment revenue, for the three months ended Dec. 31, 2018. The increase in operating income percentage in the current quarter compared to the prior year quarter was primarily a result of the transfer of the China business to the joint ventures. Manufacturing/Wholesale Revenues in the Manufacturing/Wholesale segment, excluding intersegment sales, decreased $34.5 million, or 66.8%, to $17.1 million for the three months ended Dec. 31, 2019 compared with $51.6 million in the prior year quarter primarily due to the transfer of the Nutra manufacturing business to the manufacturing joint venture formed with International Vitamin Corporation effective March 1, 2019. Operating income decreased $6.5 million to $8.6 million, or 50.5% of segment revenue, for the three months ended Dec. 31, 2019 compared with $15.1 million, or 12.4% of segment revenue, in the prior year quarter. Revenue decreased as a result of the transfer of the Nutra manufacturing business to the Manufacturing JV, however, operating income margins were positively impacted as the Manufacturing / Wholesale segment recognized profit margin that resulted from maintaining consistent pricing to what was charged to the Company's other operating segments prior to the inception of the manufacturing joint venture, and recorded profit on intersegment sales associated with inventory produced prior to the transfer of the Nutra manufacturing business to the Manufacturing JV. Year-to-Date Performance For the year ended Dec. 31, 2019, the Company reported consolidated revenue of $2,068.2 million, a decrease of $285.3 million compared with consolidated revenue of $2,353.5 million for the year ended Dec. 31, 2018. The decrease in revenue during the year ended Dec. 31, 2019 compared to the prior year was largely due to the following: * The transfer of the Nutra manufacturing business to the Manufacturing JV resulted in a decrease to revenue of $107.5 million; * The closure of company-owned stores under its store portfolio optimization strategy resulted in a $66.7 million decrease to revenue; * A decline of 2.9% in U.S. company-owned same store sales, which includes GNC.com sales, resulted in a decrease in revenue of $41.2 million; * The transfer of the China business to the joint ventures resulted in a decrease to revenue of $27.4 million; and * Lower sales to the Company's wholesale partners of $15.7 million primarily due to the renegotiated contract with Rite Aid effective in January 2019 in which the unprofitable consignment portion of the prior contract was terminated. In addition, the new contract with Rite Aid eliminated the radius restriction which allowed the Company to generate revenue through new strategic partnerships For the year ended Dec. 31, 2019, the Company reported a net loss of $35.1 million and diluted loss per share of $0.64 compared with net income of $69.8 million and diluted EPS of $0.81 for the year ended Dec. 31, 2018. Excluding the expenses, adjusted EPS was $0.25 and $0.34 in the year ended Dec. 31, 2019 and 2018, respectively. Cash Flow and Liquidity Metrics For the year ended Dec. 31, 2019, the Company generated net cash from operating activities of $96.5 million compared with $95.9 million for the year ended Dec. 31, 2018. The increase was driven primarily by an increase in accounts payable as a result of the Company's cash management efforts as well as the establishment of payables associated with the Manufacturing JV, lower interest payments a result of the reduction in long-term debt of approximately $298 million during the first half of 2019 and a decrease in inventory, partially offset by an increase in prepaid and other current assets. For the year ended Dec. 31, 2019, the Company generated $81.4 million in free cash flow compared with $76.9 million for year ended Dec. 31, 2018. At Dec. 31, 2019, the Company's cash and cash equivalents were $117.0 million and debt was $862.6 million. No borrowings were outstanding on the Company's Revolving Credit Facility at the end of the fourth quarter of 2019. About GNC Holdings GNC Holdings, Inc., headquartered in Pittsburgh, PA, is a global health and wellness brand with a diversified, multi-channel business. The Company's assortment of performance and nutritional supplements, vitamins, herbs and greens, health and beauty, food and drink and other general merchandise features innovative private-label products as well as nationally recognized third-party brands, many of which are exclusive to GNC. The Company serves consumers worldwide through company-owned retail locations, domestic and international franchise activities, and e-commerce. As of Dec. 31, 2019, GNC had approximately 7,500 locations, of which approximately 5,400 retail locations are in the United States (including approximately 1,800 Rite Aid licensed store-within-a-store locations) and the remainder are locations in approximately 50 countries. GNC Holdings reported net income of $69.78 million for the year ended Dec. 31, 2018, compared to a net loss of $150.26 million for the year ended Dec. 31, 2017. As of Sept. 30, 2019, the Company had $1.68 billion in total assets, $1.64 billion in total liabilities, $211.39 million in convertible preferred stock, and a total stockholders' deficit of $175.66 million. * * * As reported by the TCR on Nov. 15, 2018, S&P Global Ratings affirmed its 'CCC+' issuer credit rating on Pittsburgh-based vitamin and supplement retailer GNC Holdings Inc. and removed all of its ratings on the company from CreditWatch, where S&P placed them with negative implications on Feb. 14, 2018. "The affirmation reflects our belief that GNC's capital structure remains unsustainable over the long term in light of its current operating performance, including its cash flow generation, because of increased competitive threats amid the ongoing secular changes in the retail industry," S&P said. GOGO INC: Elects to Borrow $22 Million Under ABL Credit Facility ---------------------------------------------------------------- Gogo Inc. provided notice to the lenders under its credit agreement, dated as of Aug. 26, 2019 to borrow $22 million under the ABL Credit Facility on March 18, 2020. The Company elected to borrow such amount to increase its liquidity and preserve financial flexibility in light of uncertainty within the airline industry and the economy resulting from the COVID-19 pandemic. Gogo Inc., Gogo Intermediate Holdings LLC, a direct wholly owned subsidiary of Gogo, and Gogo Finance Co. Inc., a direct wholly owned subsidiary of the Company and an indirect wholly owned subsidiary of Gogo, are parties to the Credit Agreement, among the Borrowers, the other loan parties party thereto, the lenders, JPMorgan Chase Bank, N.A., as administrative agent, and Morgan Stanley Senior Funding, Inc., as syndication agent, which provides for an asset-based revolving credit facility of up to $30 million, subject to borrowing base availability, and includes letter of credit and swingline sub-facilities. As of Dec. 31, 2019, the Borrowers had no outstanding borrowings under the ABL Credit Facility. As of Feb. 29, 2020, Gogo had approximately $209 million in cash on its consolidated balance sheet and no outstanding borrowings under the ABL Credit Facility. About Gogo Inc. Gogo Inc. -- http://www.gogoair.com-- is an inflight internet company. Gogo is a global provider of broadband connectivity products and services for aviation. It designs and sources innovative network solutions that connect aircraft to the Internet, and develop software and platforms that enable customizable solutions for and by its aviation partners. Gogo's products and services are installed on thousands of aircraft operated by the leading global commercial airlines and thousands of private aircraft, including those of the largest fractional ownership operators. Gogo is headquartered in Chicago, IL, with additional facilities in Broomfield, CO, and locations across the globe. Gogo Inc. reported a net loss of $146 million for the year ended Dec. 31, 2019, compared to a net loss of $162.03 million for the year ended Dec. 31, 2018. As of Dec. 31, 2019, the Company had $1.21 billion in total assets, $1.61 billion in total liabilities, and a total stockholders' deficit of $398.89 million. * * * As reported by the TCR on April 18, 2019, Moody's Investors Service changed the outlook on Gogo Inc. to stable from negative. Concurrently, Moody's affirmed Gogo's corporate family rating at Caa1. Moody's said that despite the improvement in liquidity, Gogo's Caa1 CFR remains warranted given the company's high leverage which Moody's expects at around 9.9x (Moody's adjusted debt/EBITDA) by end 2019 along with the continued need for Gogo to invest heavily in technology and equipment installs to pursue its growth ambitions outside of North America. Gogo's Caa1 also reflects the company's small scale relative to other players in the wider telecommunications industry as well as the highly competitive environment it operates in. S&P Global Ratings affirmed its 'CCC+' issuer credit rating on Gogo Inc., according to a TCR report dated April 19, 2019. S&P said the company's proposed refinancing of the Company's capital structure will boost its short-term liquidity by extending the maturity profile of its obligations but the rating agency expects the company to burn cash over the next year. The rating agency said it affirmed its 'CCC+' issuer credit rating because it does not envision a default within the next year. GOLDEN NUGGET: Moody's Cuts CFR to B3 & Sr. Unsec. Notes to Caa1 ---------------------------------------------------------------- Moody's Investors Service downgraded Golden Nugget, LLC's Corporate Family Rating to B3 from B2 and Probability of Default Rating to B3-PD from B2-PD. Moody's also downgraded GN's senior secured bank credit facilities to B1 from Ba3, senior unsecured notes rating to Caa1 from B3 and senior subordinated note rating to Caa2 from Caa1. The outlook is negative. "The downgrade reflects our expectation for a material deterioration in both earnings and credit metrics following the restrictions and closures across GN's restaurant base and casinos due to efforts to contain the spread of the coronavirus including recommendations from Federal, state and local governments" stated Bill Fahy, Moody's Senior Credit Officer. In response to these operating challenges and strengthen liquidity, GN is focusing on reducing all non-essential operating expenses and discretionary capex. "While many restaurants are still able to continue to provide take-out, curbside pick-up and delivery, total restaurant sales will still be substantially below normal operating levels for the typical casual dining restaurant" stated Fahy. The negative outlook reflects the uncertainty with regards to the potential length and severity of closures and the ultimate impact these closures will have on GN's revenues, earnings and ultimate liquidity. The outlook also takes into account the negative impact on consumers ability and willingness to spend on eating out until the crisis materially subsides. Downgrades: Issuer: Golden Nugget, LLC Probability of Default Rating, Downgraded to B3-PD from B2-PD Corporate Family Rating, Downgraded to B3 from B2 Senior Subordinated Regular Bond/Debenture, Downgraded to Caa2 (LGD6) from Caa1 (LGD6) Senior Secured Bank Credit Facility, Downgraded to B1 (LGD2) from Ba3 (LGD2) Senior Unsecured Regular Bond/Debenture, Downgraded to Caa1 (LGD5) from B3 (LGD5) Issuer: Landry's, Inc. Backed Senior Secured Bank Credit Facility, Downgraded to B1 (LGD2) from Ba3 (LGD2) Backed Senior Unsecured Regular Bond/Debenture, Downgraded to Caa1 (LGD5) from B3 (LGD5) Outlook Actions: Issuer: Golden Nugget, LLC Outlook, Changed To Negative From Stable RATINGS RATIONALE The rapid and widening spread of the coronavirus outbreak, deteriorating global economic outlook, falling oil prices, and asset price declines are creating a severe and extensive credit shock across many sectors, regions and markets. The combined credit effects of these developments are unprecedented. The restaurant sector has been one of the sectors most significantly affected by the shock given its sensitivity to consumer demand and sentiment. More specifically, the weaknesses in Golden Nugget's credit profile, including its exposure to widespread location closures have left it vulnerable to shifts in market sentiment in these unprecedented operating conditions and Golden Nugget remains vulnerable to the outbreak continuing to spread. Moody's regardsregard the coronavirus outbreak as a social risk under its ESG framework, given the substantial implications for public health and safety. The action reflects the impact on Golden Nugget of the breadth and severity of the shock, and the broad deterioration in credit quality it has triggered. Golden Nugget's B3 rating reflects it aggressive financial policy under its private equity owners which include both debt financed acquisitions and the recent January 2020 debt financed dividend which increased Golden Nugget's pro forma leverage to 6.3x to 6.4x prior to any impact on earnings from the coronavirus. Golden Nugget benefits from its material scale, the brand value of its various restaurant and gaming properties, good geographic diversification and adequate liquidity. GN's private ownership is a rating constraint given the potential implications from both a capital structure and operating perspective. Financial policies are always a key concern of privately-owned companies with regards to the potential for higher leverage, extractions of cash flow via dividends, or more aggressive growth strategies. Restaurants by their nature and relationship with sourcing food and packaging, as well as an extensive labor force and constant consumer interaction are deeply entwined with sustainability, social and environmental concerns. While these factors may not directly impact the credit, they should positively impact brand image and result in a more positive view of the brands overall. Factors that could result in a stable outlook include the lifting of restrictions on restaurant and casino's and a sustained improvement in operating performance, liquidity and credit metrics. A stable outlook would also require debt/EBITDA sustained below 6.5 times and good liquidity. Given the current operating environment a ratings upgrade over the near term is unlikely. However, an upgrade would require debt to EBITDA of around 5.0 times and EBITA to interest of around 2.0 times on a sustained basis. A higher rating would also require good liquidity. Factors that could result in a downgrade include longer than currently anticipated period of restaurant and casino closures and any further deterioration in liquidity. Ratings could also be downgraded in the event that credit metrics remained weak despite a lifting of restrictions on restaurants and casino's and a subsequent recovery in earnings and liquidity. Specifically, ratings could be downgraded in the event debt to EBITDA exceeded 6.5 times on a sustained basis. GN owns and operates the Golden Nugget hotel, casino, and entertainment resorts in downtown Las Vegas and Laughlin, Nevada, Lake Charles Louisiana, Biloxi Mississippi and Atlantic City New Jersey. The company also owns and operates mostly casual dining restaurants under the trade names Landry's Seafood House, ChartHouse, Saltgrass Steak House, Rainforest Café, Bubba Gump, McCormick & Schmicks, Dos Caminos, Bill's Bar & Burger, Joe's Crab Shack, Brick House Tavern + Tap, Morton's Restaurants, Inc, Del Frisco's Double Eagle, Del Frisco's Grille, and Mastro's as well as restaurants from RUI. GN is wholly owned indirectly by Fertitta Entertainment, Inc. which is wholly owned by Tilman J. Fertitta. The principal methodology used in these ratings was Restaurant Industry published in January 2018. GUADALUPE REGIONAL: Fitch Affirms 'BB' Issuer Default Rating ------------------------------------------------------------ Fitch Ratings has affirmed the 'BB' Issuer Default Rating (IDR) for Guadalupe Regional Medical Center and the 'BB' rating on the following bonds issued by the Board of Managers, Joint Guadalupe County - City of Seguin, TX Hospital, d/b/a Guadalupe Regional Medical Center (GRMC): -- $111.6 million hospital mortgage revenue, refunding and improvement bonds, series 2015. The Rating Outlook is Stable. SECURITY The bonds are secured by a mortgage on hospital property, pledge of gross revenues and a debt service reserve fund. ANALYTICAL CONCLUSION The 'BB' IDR and revenue bond rating reflects GRMC's slightly improved, but weak financial profile. The rating also incorporates the risks associated with GRMC's small average daily census and high exposure to potential changes in governmental reimbursement and supplemental funding that can bring revenue volatility. Capital spending is expected to remain above depreciation, somewhat limiting GRMC's expected liquidity growth, but cash flow should remain at a sufficient level to slowly improve GRMC's leverage position over time. The recent outbreak of coronavirus and related government containment measures worldwide has created an uncertain environment for the entire healthcare system in the near term. While GRMC's financial performance through the most recently available data has not indicated any impairment, material changes in revenue and cost profiles will occur across the sector, and will likely worsen in the coming weeks and months as economic activity suffers and as government restrictions are maintained or expanded. Fitch's ratings are forward-looking in nature, and Fitch will monitor developments in the sector as a result of the virus outbreak as it relates to severity and duration, and incorporate revised expectations for future performance and assessment of key risks. KEY RATING DRIVERS Revenue Defensibility: 'bbb' Competitive but Growing Service Area; Stable Payor Mix GRMC's service area and payor mix are stable with limited exposure to Medicaid and self-pay patients. GRMC is the market leader in its primary service area, but faces strong competition with two major providers within 20 miles. Operating Risk: 'a' Good Cost Management; Limited Routine Capital Needs The strong operating risk assessment is based on Fitch's view of GRMC's strong core hospital profitability. The assessment also incorporates near-term expense increases associated with expansion plans and the Meditech Expanse EHR upgrade go live in 2020. Elevated capital needs reflect an 8.7-year average age of plant and a five-year investment above depreciation in a fragmented and competitive healthcare market. Financial Profile: 'bb' Weak Financial Profile Fitch expects GRMC to improve its weak financial profile given the strong operating profitability of its core hospital operations. Weaker net leverage under the stress scenario highlights GRMC's currently limited liquidity relative to leverage and emphasizes the importance of maintaining strong profitability. Asymmetric Additional Risk Considerations There are no asymmetric additional risk considerations. RATING SENSITIVITIES The Stable Rating Outlook reflects GRMC's stable market position in a growing service area that supports Fitch's expectation for strong core hospital operating EBITDA margins and a stable financial profile through the cycle. Developments That May, Individually or Collectively, Lead to Positive Rating Action -- Consistent profitability and liquidity growth that leads cash to adjusted debt to approach 50%. Developments That May, Individually or Collectively, Lead to Negative Rating Action -- Operating EBITDA margins that weaken to be consistently at or around 6%. -- A lower unrestricted cash and investments balance or debt issuance that produces weaker leverage metrics. CREDIT PROFILE GRMC's 153-bed medical center is located in Seguin, TX, about 35 miles east of San Antonio, TX. The hospital serves the counties of Guadalupe, Caldwell, Comal, DeWitt, Gonzales, Hays, Karnes and Wilson, with the city of Seguin as its primary service area. GRMC estimates the cost of charity care provided under its charity care policy in fiscal 2019 as $13 million. It received $2.3 million in payments from Guadalupe County and city of Seguin sponsors in fiscal 2019 to help offset the cost of charity care. The original GRMC hospital was built in 1965 and underwent significant renovation and expansion in 2010. GRMC is the sole member of Guadalupe Regional Medical Group, which has grown to have employed physicians spanning a variety of specialties. GRMC offers additional specialty services through affiliations with regional providers. Revenue Defensibility GRMC's gross patient revenues are derived primarily from Medicare (52%) and commercial (25%) payors, with lesser exposure to self-payors (10%) and Medicaid payors (10%). Net patient revenues of $202.7 million in fiscal 2019 consisted of GRMC health system operations (55%) and largely pass-through revenues from 13 nursing homes (45%). In its capacity as a non-state, government-owned facility, GRMC qualifies for nursing facility supplemental support and shares the benefit through its lease terms with the nursing facilities. GRMC recognized $5.6 million of revenue related to the Quality Incentive Payment Program (QIPP) in support of its nursing home operations in fiscal 2019, $3.1 million in uncompensated care (UC) and $2.7 million in Delivery System Reform Incentive Payments (DSRIP) in fiscal 2019. Changes or volatility related to supplemental payments are a risk, but this is somewhat mitigated by a stable payor mix and growing local service area. GRMC operates the only acute care hospital in its primary service territory with a reported market share of 20.6%. The primary service area is responsible for 85% of hospital admissions. There are multiple competitors scattered within a 46-mile radius from GRMC, and three of these are within 20 miles from the hospital. Major competitors include Tenet Healthcare's Resolute Health Hospital that opened in New Braunfels, TX in 2014 and CHRISTUS' Santa Rosa Health System that has five full-service hospitals in the San Antonio/New Braunfels area. Despite the strong competitors, GRMC remains focused on recruiting physicians with the right long-term fit for the community and extending its reach through outpatient clinics. GRMC will be opening an urgent care center and family practice in New Braunfels, which has experienced 34.3% population growth from five years ago. Management's expansion and physician growth efforts are expected to help solidify GRMC's presence in the region and produce growing volumes over time. Seguin (2018 population 29,700) is the county seat of Guadalupe County (population 163,694). Guadalupe County is characterized by above average population growth (14.5% over five years), low unemployment and above average median household income. GRMC's service area growth benefits from the expanding regional San Antonio-New Braunfels MSA economy that includes the prominent sectors of manufacturing, government, waste management, retail trade, construction and health care. These factors should produce steady revenues and a stable payor mix for GRMC going forward. Operating Risk GRMC has maintained good profitability over the past five fiscal years averaging an 8.7% operating EBITDA margin. Though profitability has been good, it has also been uneven, reflecting the inception of nursing home operations in fiscal 2016 and a full year of nursing home operations in fiscal 2018. Fiscal 2019 operating EBITDA of 8.1% incorporates nursing facility revenue and expense as reported in GRMC's audited financial statements. Excluding nursing home operations, GRMC's core fiscal 2019 health system operating EBITDA is well above 10%, which provides a strong base of positive cash flow and is the primary basis for the strong operating risk assessment. Fitch expects future margins to be generally consistent with fiscal 2019 with modest profitability declines reflecting the planned phase out of DSRIP supplemental payments beginning in fiscal 2020, an upcoming EHR upgrade go live and the opening of the new urgent care facility. The current operating cost flexibility assessment also reflects the potential risks associated with revenue volatility due to GRMC's limited physician base, though this risk is currently tempered by the region's strong population growth. In fiscal 2018, GRMC completed a hospital facility renovation that included a surgical suite replacement, cardiac catheterization laboratory addition, relocation of post-operative recovery space, and maternal service expansion. Historical capital spending of 125% of depreciation over the past five fiscal years has been healthy and management expects to continue spending around 130% of depreciation over the next five years. Future capital plans include the buildout of a center for women's services in the confines of the hospital and a remodeling of GRMC's lab space. Financial Profile As of Sept. 30, 2019, GRMC's unrestricted cash and investments and debt service reserve funds totaled $55.2 million, equating to a low 47% cash-to-debt and 41% cash-to-adjusted debt. Under Fitch's criteria, adjusted debt includes Fitch's adjusted net pension liability (estimated at $17.7 million based on a 6% discount rate, instead of the $6.9 million level reported by the district, which is based on a 7% discount rate). Net adjusted debt to adjusted EBITDA, which is a measure of how many years of cash flow is needed to repay net outstanding long-term debt, is 3.6x at Sept. 30, 2019. Fitch's base case reflects a continuation of good operations with operating EBITDA margins remaining above 8% in all the years of the scenario. No further debt issuances are incorporated into Fitch's analysis at this time. The stressed case reflects a standard stress to revenues and assumes some tighter expense control in the stressed years. GRMC recovers from the application of economic stress to exhibit leverage metrics in line with fiscal 2019 levels as indicated by a fourth-year net adjusted debt to adjusted EBITDA of 3.7x and cash to adjusted debt of 43%. Asymmetric Additional Risk Considerations No asymmetric additional risk considerations were applied in this rating determination. In addition to the sources of information identified in Fitch's applicable criteria specified, this action was informed by information from Lumesis. ESG CONSIDERATIONS ESG issues are credit neutral or have only a minimal credit impact on the entity(ies), either due to their nature or the way in which they are being managed by the entity(ies). GUILBEAU MARINE: District Court to Hear Suit vs T&C Marine et al. ----------------------------------------------------------------- Chief District Judge Nannette Jolivette Brown granted Paul's Insurance Services, LLC's motion to withdraw reference in the case captioned IN RE: GUILBEAU MARINE, INC., GUILBEAU MARINE, INC., v. T&C MARINE, LLC, et al. SECTION: "G"(1), Civil Action No. 20-4 (E.D. La.). On Sept. 11, 2018, Guilbeau Marine, Inc. filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Eastern District of Louisiana. On Nov. 4, 2019, Guilbeau filed a complaint before the bankruptcy court asserting state law negligence and breach of contract claims against T&C Marine, LLC, state law breach of contract claims against Stonington Insurance Company, and state law negligence claims against Paul's. On Dec. 19, 2019, Paul's filed an answer to the Adversary Proceeding, wherein Paul's requested a jury trial. On Jan. 2, 2020, Paul's filed the motion seeking withdrawal of the reference of the Adversary Proceeding to the bankruptcy court. The motion was set for submission on Feb. 12, 2020. Paul's asserts that it has timely and properly demanded a jury trial in its answer, but bankruptcy courts in the Eastern District of Louisiana are not authorized to conduct jury trials. Second, because the claims raised in the Adversary Proceeding are for negligence and breach of contract to be determined under Louisiana law, these claims are "non-core" matters. Therefore, Paul's contends that cause exists to withdraw the reference. According to Judge Brown, the Fifth Circuit instructs district courts to consider several factors in determining whether to withdraw the reference for cause shown including: (1) whether the matter is a "core" or a "non-core" proceeding; (2) whether the proceedings involve a jury demand; and (3) whether withdrawal would further "the goals of promoting uniformity in bankruptcy administration, reducing forum shopping and confusion, fostering the economical use of the debtors' and creditors' resources, and expediting the bankruptcy process." Paul's argues that the claims raised by Guilbeau in the Adversary Proceeding are "noncore." Section 157(b)(2) of the Bankruptcy Code provides a non-exclusive list of core proceedings including: matters concerning the administration of the bankruptcy estate; estimation of claims; and counterclaims by the bankruptcy estate against persons filing claims against the estate. A proceeding is considered a core proceeding "if it invokes a substantive right provided by title 11 or if it is a proceeding that, by its nature, could arise only in the context of a bankruptcy case." By contrast, claims based upon state created rights that could arise outside the bankruptcy context and which could have proceeded in state court absent a bankruptcy are considered non-core proceedings. According to Judge Brown, Guilbeau brings state law negligence and breach of contract claims against T&C, state law breach of contract claims against Stonington, and state law negligence claims against Paul's. These claims could arise outside the bankruptcy context and could proceed in state court absent the Chapter 11 bankruptcy. Accordingly, these claims are non-core state law matters, and this factor weighs in favor of withdrawal of the reference. Paul's has exercised its right to a trial by jury. Bankruptcy courts in the Eastern District of Louisiana are not authorized to conduct jury trials. The Seventh Amendment provides a right to a jury trial where the suit is to ascertain and determine legal rights, as opposed to equitable rights. A suit for monetary damages is legal in nature. Accordingly, because Paul's has exercised its right to a trial by jury, which favors withdrawal of the reference. According to Judge Brown, the matter does not involve the interpretation of bankruptcy laws. Additionally, there is no evidence of forum shopping. Granting the motion to withdraw will also serve the interests of judicial economy because it will obviate any need to appeal the bankruptcy court's rulings to the Court and will bring the matter to a more expeditious resolution. Therefore, the Court finds that withdrawal of the reference would promote judicial economy. Accordingly, Paul's motion is granted and the Adversary Proceeding will proceed in the District Court as a civil action. A copy of the Court's Order dated Feb. 18, 2020 is available https://bit.ly/2Idz1NT from Leagle.com. Guilbeau Marine, Inc., Plaintiff, represented by Frederick L. Bunol -- fbunol@derbeslaw.com -- Derbes Law Firm, LLC & David Michael Serio -- dserio@derbeslaw.com -- The Derbes Law Firm, LLC. Stonington Insurance Company, Defendant, represented by Michael Franklin Held , Phelps Dunbar, LLP. Paul's Insurance Services, L.L.C., Defendant, represented by Max Jeffrey Cohen -- Mcohen@lowestein.com -- Lowe, Stein, Hoffman, Allweiss & Hauver, LLP, Abigail Frank Gerrity -- agerrity@lowestein.com -- Lowe, Stein, Hoffman, Allweiss & Hauver, LLP & Melanie Lockett – mlockett@lowestein.com --Lowe, Stein, Hoffman, Allweiss & Hauver, LLP. About Guilbeau Marine Guilbeau Marine, Inc., based in Golden Meadow, La., filed a Chapter 11 petition (Bankr. E.D. La. Case No. 18-12409) on Sept. 11, 2018. In the petition signed by Anthony Guilbeau, Jr., president, the Debtor estimated $1 million to $10 million in assets and liabilities. Frederick L. Bunol, Esq., of The Derbes Law Firm, L.L.C., serves as bankruptcy counsel and Pontchartrain Capital, LLC, acts as financial advisor. HILTON WORLDWIDE: Moody's Places Ba1 CFR on Review for Downgrade ---------------------------------------------------------------- Moody's Investors Service placed the ratings of Hilton Worldwide Finance, LLC on review for downgrade including its Ba1 Corporate Family Rating, Ba1-PD Probability of Default Rating, Baa3 senior secured rating and Ba2 senior unsecured rating. The company's Speculative Grade Liquidity rating of SGL-1 is unchanged at this time. "The review for downgrade is prompted by earnings pressure Hilton will face in 2020 as travel restrictions being put in place across the US related to the spread of the COVID-19 coronavirus causes significant declines in occupancy and revenue per available room," stated Pete Trombetta, Moody's lodging and cruise analyst. "Hilton's leverage will increase to well above its downgrade trigger of 4.5x, but Hilton's liquidity is adequate to get the company through this period of earnings pressure," added Trombetta. On Review for Downgrade: Issuer: Hilton Domestic Operating Company Inc. Senior Unsecured Regular Bond/Debenture, Placed on Review for Downgrade, currently Ba2 (LGD5) Issuer: Hilton Escrow Issuer LLC Senior Unsecured Regular Bond/Debenture, Placed on Review for Downgrade, currently Ba2 (LGD5) Issuer: Hilton Worldwide Finance, LLC Probability of Default Rating, Placed on Review for Downgrade, currently Ba1-PD Corporate Family Rating, Placed on Review for Downgrade, currently Ba1 Senior Secured Bank Credit Facility, Placed on Review for Downgrade, currently Baa3 (LGD2) Senior Unsecured Regular Bond/Debenture, Placed on Review for Downgrade, currently Ba2 (LGD5) Outlook Actions: Issuer: Hilton Worldwide Finance, LLC Outlook, Changed to Rating Under Review from Stable RATINGS RATIONALE The rapid and widening spread of the coronavirus outbreak, deteriorating global economic outlook, falling oil prices, and asset price declines are creating a severe and extensive credit shock across many sectors, regions and markets. The combined credit effects of these developments are unprecedented. The lodging sector has been one of the sectors most significantly affected by the shock given its sensitivity to consumer demand and sentiment. More specifically, the weaknesses in Hilton's credit profile, including its exposure to increased travel restrictions for US citizens which represents a majority of the company's revenue and earnings have left it vulnerable to shifts in market sentiment in these unprecedented operating conditions and Hilton remains vulnerable to the outbreak continuing to spread. Moody's regards the coronavirus outbreak as a social risk under its ESG framework, given the substantial implications for public health and safety. The action reflects the impact on Hilton of the breadth and severity of the shock, and the broad deterioration in credit quality it has triggered. Hilton's Ba1 Corporate Family Rating benefits from its large scale -- with 971,780 rooms Hilton is the second largest rated hotel company, only behind Marriott -- its well-recognized brands and good diversification by geography and industry segment. Hilton's hotels are located in 119 countries and territories across the world. Hilton's credit profile also benefits from its very good liquidity profile which, under normal circumstances, includes strong free cash flow and a $1.75 billion revolving credit facility. In March 2020 Hilton drew down its revolver in full to have additional cash on hand during this period of unprecedented financial volatility. Following the revolver draw Moody's estimates that Hilton has about $2.1 billion of cash on hand. Hilton has maintained high adjusted leverage relative to other Ba1 rated companies, and therefore Moody's expects its leverage at the end of 2020 to well exceed its downgrade trigger of 4.5x. However, the company's very good liquidity, including a cash position of about $2.1 billion and the ability to cut cash uses such as share repurchases which totaled $1.5 billion in 2019, will give the company the ability to reduce leverage when demand returns to more normal levels. The review will focus on Hilton's ability to reduce expenses and take other actions to preserve liquidity during this period of significant earnings decline, the pace of declining occupancy and RevPAR in the US, and the impact on business and leisure travel over the next two years as people feel more comfortable with traveling again. Its current assumption is that its lodging companies' systemwide RevPAR is weakest in the second quarter, down more than 60%, with some recovery in the third and fourth quarters resulting in total earnings decline for the year of at least 40% for most lodging companies. The review will consider the depth of occupancy declines over the coming weeks and the likelihood of a prolonged dislocation caused by continued travel restrictions. Hilton currently has significant cash balances after drawing the full availability under its $1.75 billion revolver, but Moody's will assess the potential severity and duration of the drop in occupancy, and the effects on the company's metrics and liquidity. Hilton Worldwide Holdings Inc. is a leading hospitality company with 6,110 managed, franchised, owned and leased hotels, resorts and timeshare properties comprising more than 971,780 rooms in 119 countries and territories. Annual net revenues are $3.8 billion. The principal methodology used in these ratings was Business and Consumer Service Industry published in October 2016. HORIZON GLOBAL: Idles Manufacturing Facilities Amid COVID Pandemic ------------------------------------------------------------------ Horizon Global Corporation said in a Form 8-K filed with the Securities and Exchange Commission that the Company and its subsidiaries have been adhering to mandates and other guidance from local governments and health authorities with regards to the novel coronavirus ("COVID-19"), as well as the World Health Organization and the Centers for Disease Control. The Company has implemented risk mitigation plans across the enterprise to reduce the risk of spreading the virus while continuing to operate to the extent possible. The Company's main priority is the health of its employees and others in the communities where it does business. Recently, certain customers in Europe and North America have announced the temporary idling of their manufacturing facilities. The Company continues to operate and fill customer orders; however, in response to the customer shutdowns referenced above and other anticipated changes in demand, the Company: (i) temporarily idled its manufacturing facilities in Rheda- Wiedenbruck, Germany and Brasov, Romania, effective March 23, 2020; (ii) expects to temporarily idle its manufacturing facilities in Hartha, Germany and Luneray, France on or before March 27, 2020; and (iii) will flex down operations at its manufacturing facilities in Reynosa, Mexico and its distribution facilities in the United States, including its facility in Edgerton, Kansas, in line with customer demand in North America and in accordance with any government mandated operational restrictions. Horizon Global said, "The Company is taking immediate steps to mitigate the impact of COVID-19 on its business. The Company expects to participate in various governmental programs in Europe that will protect both the Company's workforce and preserve liquidity. In North America, the Company expects to furlough a portion of its workforce at its manufacturing facilities in Reynosa, Mexico and distribution facilities in the United States and participate in governmental programs to the extent available. Further, the Company will continue to implement cost reduction measures at its Plymouth, Michigan headquarters. "The extent and duration of the impact of COVID-19 and resulting effect on the Company's operations continues to evolve and remains uncertain. The Company will continue to assess the operational and financial impact of COVID-19 and will provide a further update as and when appropriate, including when results for the first quarter of 2020 are reported." About Horizon Global Horizon Global -- http://www.horizonglobal.com/-- is a designer, manufacturer, and distributor of a wide variety of custom-engineered towing, trailering, cargo management and other related accessory products in North America, Australia and Europe. The Company serves OEMs, retailers, dealer networks and the end consumer. As of Dec. 31, 2019, the Company had $421.04 million in total assets, $412.44 million in total liabilities, and $8.60 million in total shareholders' equity. * * * As reported by the TCR on Dec. 16, 2019, S&P Global Ratings affirmed the 'CCC' issuer credit rating on Horizon Global Corp. and revised the outlook to negative from developing. The outlook revision to negative reflects S&P's view that despite recent debt reduction and temporary improvement in liquidity, Horizon's credit metrics and liquidity remain quite weak and could worsen as the rating agency expects the company to generate negative free flow. As reported by the TCR on June 18, 2019, Moody's Investors Service downgraded Horizon Global Corporation's Corporate Family Rating to C from Caa3. The downgrade reflects Moody's expectations that modest earnings improvement will not be sufficient to reduce leverage to a sustainable level and that the sale of the Asia-Pacific segment will, while reducing secured leverage, increase total leverage and create greater reliance on a quick turnaround in the more weakly performing U.S. and European operations to diminish restructuring risk. HUDBAY MINERALS: Fitch Gives 'B+' LongTerm IDR, Outlook Stable -------------------------------------------------------------- Fitch Ratings has assigned a first-time, Long-Term Issuer Default Rating of 'B+' to Hudbay Minerals Inc. and Hudbay Peru S.A.C. Fitch has also assigned a 'BB+'/'RR1' rating to the company's senior secured revolving credit facilities and a 'B+'/'RR4' rating to the unsecured notes. The Rating Outlook is Stable. The ratings reflect Hudbay's modest size and concentration in four mines, its extensive track record of operating copper mines from exploration to production, its low cost position at Lalor and average cost position at Constancia, long mine life at Constancia and modest mine lives in Manitoba, operations in low risk jurisdictions, and leverage in-line with the ratings. The ratings also reflect Hudbay's commodity diversification and Fitch's expectation for significant FCF generation beginning in 2022, following a period of elevated growth capital spending to improve the production profile. Fitch believes Hudbay's organic growth pipeline and its ability to offer operational expertise in a potential partnership provides optionality should Rosemont be delayed further than expected. KEY RATING DRIVERS Low Cost Position: Hudbay's key mines have a first or second quartile cost position and are located in low-risk mining-friendly jurisdictions in Canada and Peru. The mine plan for Constancia supports a 17-year mine life, Lalor supports a 10-year mine life, Pampacancha supports a six-year mine life and the 777 mine is expected to be depleted in 2022. Hudbay has an extensive track record of operating copper mines from exploration to production and has a number of projects currently in the exploration and development phases. Fitch expects annual copper production to generally average between 110,000 tonnes and 120,000 tonnes over the next few years. Exposure to Copper: Fitch views Hudbay as having meaningful commodity diversification through its gold and zinc production, although Hudbay has a longer-term focus on copper. Copper accounted for 58% of consolidated revenues in 2019. Hudbay estimates that a 10% change in the price of copper from their 2020 base case of $2.75/pound would change operating cash flow before working capital changes by $62 million in 2020. Hudbay's average realized price per pound of copper was $2.73 in 2019 compared with $2.93 in 2018. Copper prices started trading below $2.72/pound in the second quarter of 2019 as a result of lower growth expectations in China with the escalation of trade tensions between the U.S. and China given that China accounts for about half of global copper consumption. Prices began trading above $2.72/pound with the announcement of the phase one trade deal peaking at about $2.86/pound prior to awareness of the coronavirus, after which, copper prices fell precipitously to below $2.54/pound. Current spot prices are around $2.12/pound, which compares with Fitch's assumptions of $2.59/pound in 2020, $2.72/pound in 2021 and $2.81/pound in 2022. FCF Expectations: The combination of lower copper production and elevated growth capital spending results in Fitch's expectation for negative FCF in 2020 and 2021. New Britannia mill refurbishment costs are expected to total approximately $115 million over 2020 and 2021 and Pampacancha development capex is expected to be $70 million before costs associated with recognizing current uses of the land by certain community members. Fitch expects significantly higher FCF generation, averaging around $200 million in 2022 and 2023, following this period of elevated capital spend, driven by higher copper and gold production and reduced growth capital spending. High Grade Pampacancha Deposit: In 2020, production of copper in Peru is forecast to decrease by approximately 22% compared with 2019 production, primarily due to planned lower copper grades at Constancia. In February 2020, Hudbay received approval of a surface rights agreement for the Pampacancha deposit and expects to begin mining ore in late 2020. The addition of Pampacancha, a higher-grade deposit, helps offset lower grade Constancia production and results in total copper production in Peru expected to increase by roughly 29% from 2020 to 2022. Significant Gold Production: The New Britannia restart is expected to be completed in 2021, in concert with higher-grade gold production at Lalor beginning in 2022. The combination results in significantly higher gold production, which Fitch expects to account for roughly 20% of sales in 2022 and 2023 given Fitch's price assumptions. Once the New Britannia mill is commissioned, annual gold production from Snow Lake is expected to be approximately 140,000 ounces during the first five years at a sustaining cash cost, net of by-product credits, of approximately $450 per ounce of gold. Fitch expects total gold production in 2022 to be roughly double 2019 gold production. Fitch views the higher gold production as diversifying Hudbay's commodity exposure and benefiting FCF generation. Rosemont Development Delayed: Rosemont is a $1.9 billion project in Arizona that is expected to average 112,000 tonnes of copper over the 19-year LOM plan at C1 cash costs of $1.29/lb. In March 2019, the U.S. Army Corps of Engineers issued the Section 404 Water Permit for Rosemont and Rosemont received the Final Record of Decision (FROD) from the U.S. Forest Service (USFS) in June 2017. In March 2019, the USFS approved the Mine Plan of Operations for Rosemont, the final administrative step in the permitting process before the project can move forward to development. On July 31, 2019, the U.S. District Court issued a ruling where it vacated the USFS's issuance of the FROD, suspending construction work at Rosemont. Hudbay has appealed the decision to the U.S. 9th District Court of Appeals; however, the company believes the appeal process could delay the project several years. Fitch has conservatively not included Rosemont production or spending over the ratings horizon in its ratings case given the uncertainty in timing of completion of the court process. Fitch views Hudbay's exploration success, organic growth pipeline and its ability to offer operational expertise in a potential partnership as providing optionality should the Rosemont project be delayed beyond expectations. Declining Leverage Profile: Fitch expects total debt/EBITDA to peak in 2020 at roughly 6.6x before trending to below 2.5x in 2022, driven by higher copper and gold production. Rosemont spending, not included in Fitch's forecast, will require substantial capital. Fitch believes Hudbay will likely pursue a partnership for Rosemont, and any other considerably large capital spending projects in order to de-risk projects and protect its balance sheet. Additionally, Hudbay amended an inherited stream agreement with Wheaton Precious Metals in February 2019, which contemplates an upfront initial deposit of $230 million in exchange for the delivery of approximately 100% of payable gold and silver produced from Rosemont at a cash price of $450 and $3.90 per ounce respectively, which provides upfront capital to fund Rosemont development. DERIVATION SUMMARY Hudbay compares favorably in size, in terms of EBITDA, and in commodity diversification with diamond producers Mountain Province Diamonds Inc. (B/Stable) and Dominion Diamond Mines ULC (B+/Negative). Hudbay is smaller than copper producer First Quantum Minerals Ltd. (B/Stable), although First Quantum has significant exposure to higher risk jurisdictions and less favorable leverage metrics. Hudbay is larger and more diversified by commodity, has less concentrated operations and a favorable reserve life compared with gold mining company Gran Columbia Gold Corp. (B/Stable) however, Gran Columbia has favorable leverage metrics. KEY ASSUMPTIONS Fitch's Key Assumptions Within the Rating Case for the Issuer - Production generally in line with the LOM plan; - Copper prices of $5,700/tonne in 2020, $6,000/tonne in 2021, $6,200/tonne in 2022 and $6,400/tonne in 2023; - Zinc prices of $2,000/tonne in 2020 through 2023; - Gold price of $1,400/oz in 2020 and $1,300/oz from 2021 through 2023; - New Britannia mill refurbishment is completed in 2021 and begins production in 2022 in line with higher grade gold production at Lalor; - Significant Rosemont capital spending is delayed beyond the ratings horizon; - The recovery analysis assumed Hudbay would be reorganized as a going concern in a bankruptcy rather than liquidated. Assumptions for the going concern (GC) approach: Hudbay's GC EBITDA assumption of $200 million assumes a scenario of lower grade mining and sustained weak copper prices during a period of elevated capital spending. The GC EBITDA estimate reflects Fitch's view of a sustainable, post-reorganization EBITDA level upon which Fitch bases the enterprise valuation. An EV multiple of 5.5x EBITDA is applied to the GC EBITDA to calculate a post-reorganization enterprise value after an assumed 10% administrative claim of $990 million. Fitch assumed the revolving credit facilities are fully drawn in the recovery analysis. Fitch typically uses multiples in the 4.0x-6.0x range for mining companies given the cyclical nature of commodity prices. Hudbay's 5.5x multiple, at the higher end of the range, reflects its extensive operating history, the low-cost position of its key mines, the quality of its assets located in low risk mining-friendly jurisdictions and the growth potential its pipeline of projects presents. The recovery analysis results in a 100% recovery for the first lien secured revolving credit facilities corresponding to a 'BB+'/'RR1' rating and a 44% recovery for the senior unsecured notes corresponding to a 'B+'/'RR4' rating. RATING SENSITIVITIES Developments That May, Individually or Collectively, Lead to Positive Rating Action - Improved copper price environment and/or higher metal recoveries leading to total debt/EBITDA sustained below 3.0x; - FFO net leverage sustained below 3.0x; - Reduced completion risks and funding strategy which mitigates risk associated with the Rosemont project; - Improved size and scale or improved commodity diversification. Developments That May, Individually or Collectively, Lead to Negative Rating Action - Total debt/EBITDA sustained above 4.0x; - FFO net leverage sustained above 4.0x; - Sustained negative FCF beyond 2021 excluding Rosemont development capital; - Material delays in completion of the New Britannia mill refurbishment beyond 2021 which drives a material shift in expected production and commodity mix; - Shift in financial policy resulting in shareholder returns being prioritized in combination with the average mine life depleting materially. LIQUIDITY AND DEBT STRUCTURE Solid Liquidity: As of Dec. 31, 2019, cash and cash equivalents were $396 million and $420.6 million was available under the company's $550 million, in aggregate, revolving credit facilities after utilization for letters of credit. The Hudbay Minerals Inc. revolver is $350 million and the Hudbay Peru S.A.C. revolver is $200 million and both mature Julys 14, 2022. Fitch expects an FCF drain of $340 in 2020 and positive FCF beginning in 2022. Debt maturities are modest before the $400 million notes come due in January 2023. Given Fitch's commodity price assumptions and its expectation for lower grade mining in 2020, Fitch believes headroom under the credit facilities' financial maintenance leverage covenant could be limited in 2020. However, Fitch views Hudbay's ability to amend the credit facilities on Feb. 12, 2020, and achieve favorable terms, including a loosening of the financial maintenance as lowering this risk. ESG Considerations Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of 3 - ESG issues are credit neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. INPIXON: Signs $6.5 Million Note Purchase Agreement with Iliad -------------------------------------------------------------- Inpixon entered into a note purchase agreement with Iliad Research & Trading, L.P. ("Holder"), pursuant to which the Company agreed to issue and sell to the Holder an unsecured promissory note in an aggregate initial principal amount of $6,465,000, which is payable on or before the date that is 12 months from the issuance date. The Initial Principal Amount includes an original issue discount of $1,450,000 and $15,000 that the Company agreed to pay to the Holder to cover the Holder's legal fees, accounting costs, due diligence, monitoring and other transaction costs. In exchange for the Note, the Holder paid an aggregate purchase price of $5,000,000. Iliad Research is the holder of an outstanding promissory note of the Company's issued on Sept. 17, 2019 with a current outstanding balance as of March 17, 2020 of approximately $1.1 million. The Holder is also an affiliate of Chicago Venture Partners, L.P. and St. George Investments LLC. CVP is a holder of the Company's outstanding promissory notes issued on Dec. 21, 2018, June 27, 2019 and Aug. 8, 2019, with outstanding balances, as of March 17, 2020 of approximately $222,000, approximately $998,000 and approximately $2.0 million, respectively. St. George is a holder of the Company's outstanding promissory note issued on Nov. 22, 2019 with an outstanding balance, as of March 17, 2020 of approximately $1.1 million. The terms of the Note include: * Interest on the Note accrues at a rate of 10% per annum and is payable on the maturity date or otherwise in accordance with the Note. * The Company may pay all or any portion of the amount owed earlier than it is due; provided, that in the event the Company elects to prepay all or any portion of the outstanding balance, it shall pay to the Holder 115% of the portion of the outstanding balance the Company elects to prepay. * Beginning on the date that is 6 months from the issuance date and at the intervals indicated below until the Note is paid in full, the Holder shall have the right to redeem up to an aggregate of 1/3 of the initial principal balance of the Note each month by providing written notice delivered to the Company; provided, however, that if the Holder does not exercise any Monthly Redemption Amount in its corresponding month then such Monthly Redemption Amount shall be available for the Holder to redeem in any future month in addition to such future month's Monthly Redemption Amount. Upon receipt of any Monthly Redemption Notice, the Company shall pay the applicable Monthly Redemption Amount in cash to the Holder within five business days of the Company's receipt of such Monthly Redemption Notice. * If the Note is still outstanding on the date that is six months from the issuance date, then a one-time monitoring fee equal to ten percent of the then-current outstanding balance shall be added to the Note. * The Note includes customary event of default provisions, subject to certain cure periods, and provides for a default interest rate of 22%. Upon the occurrence of an event of default (except a default due to the occurrence of bankruptcy or insolvency proceedings), the Holder may, by written notice, declare all unpaid principal, plus all accrued interest and other amounts due under the Note to be immediately due and payable. Upon the occurrence of a Bankruptcy-Related Event of Default, without notice, all unpaid principal, plus all accrued interest and other amounts due under the Note will become immediately due and payable at the Mandatory Default Amount. In addition, at any time while the Note is outstanding, if the Company intends to enter into a financing pursuant to which it will issue securities that (A) have or may have conversion rights of any kind, contingent, conditional or otherwise, in which the number of shares that may be issued pursuant to such conversion right varies with the market price of the Company's common stock, or (B) are or may become convertible into common stock (including without limitation convertible debt, warrants or convertible preferred stock), with a conversion price that varies with the market price of the common stock, even if such security only becomes convertible following an event of default, the passage of time, or another trigger event or condition, then the Company must first offer such opportunity to the Holder to provide such financing to the Company on the same terms no later than five trading days immediately prior to the trading day of the expected announcement of the Future Offering. If the Holder is unwilling or unable to provide such financing to the Company within five trading days from the Holder's receipt of notice of the Future Offering from the Company, then the Company may obtain such financing upon the exact same terms and conditions offered by the Company to the Holder, which transaction must be completed within 30 days after the date of the notice. If the Company does not receive the financing within 30 days after the date of the notice, then the Company must again offer the financing opportunity to the Holder as described above, and the process detailed above will be repeated. The Right of First Refusal does not apply to an Exempt Issuance (as defined in the Purchase Agreement) or to a registered offering made pursuant to a registration statement on Form S-1 or Form S-3. Pursuant to the terms of the Purchase Agreement, so long as the Note is outstanding, the Holder has the right to participate in any offering of securities by the Company which contains any term or condition more favorable to the holder of such security or with a term in favor of the holder of such security that was not similarly provided to the Holder. The Participation Right does not apply in connection with an offering of securities which qualifies as an Exempt Issuance, a transaction under Section 3(a)(10) of the Securities Act of 1933, as amended, a registered offering made pursuant to a registration statement on Form S-1 or Form S-3, or in connection with the satisfaction of outstanding trade payables. The Purchase Agreement also provides for indemnification of the Holder and its affiliates in the event that they incur loss or damage related to, among other things, a breach by the Company of any of its representations, warranties or covenants under the Purchase Agreement. The Company intends to use the net proceeds from the sale of the Note for general working capital purposes. As of March 20, 2020, the Company has a total of approximately 5,789,492 issued and outstanding shares of common stock, which includes the issuance of the shares of the Company's common stock. Exchange Agreement Since the filing of its Annual Report on Form 10-K for the year ended Dec. 31, 2019 on March 3, 2020, the Company has issued an aggregate of 480,000 shares of common stock to CVP, the holder of that certain outstanding promissory note issued on June 27, 2019 in each case at a price per share equal to the Minimum Price as defined in Nasdaq Listing Rule 5635(d) for a weighted average price per share equal to approximately $1.44 in connection with exchange agreements pursuant to which the Company and CVP agreed to (i) partition new promissory notes in the form of the Original Note in the aggregate original principal amount equal to $692,400 and then cause the outstanding balance of the Original Note to be reduced by an aggregate of $692,400; and (ii) exchange the partitioned notes for the delivery of the Shares. About Inpixon Headquartered in Palo Alto, California, Inpixon (Nasdaq: INPX) is an indoor intelligence company that specializes in capturing, interpreting and giving context to indoor data so it can be translated into actionable intelligence. The company's indoor location and data platform ingests diverse data from IoT, third-party and proprietary sensors designed to detect and position all active cellular, Wi-Fi, UWB and Bluetooth devices, and uses a proprietary process that ensures anonymity. Paired with a high-performance data analytics engine, patented algorithms, and advanced mapping technology, Inpixon's solutions are leveraged by a multitude of industries to do good with indoor data. This multidisciplinary depiction of indoor data enables users to increase revenue, decrease costs, and enhance safety. Inpixon customers can boldly take advantage of location awareness, analytics, sensor fusion and the Internet of Things (IoT) to uncover the untold stories of the indoors. Inpixon reported a net loss of $33.98 million for the year ended Dec. 31, 2019, compared to a net loss of $24.56 million for the year ended Dec. 31, 2018. As of Dec. 31, 2019, the Company had $21.22 million in total assets, $15.17 million in total liabilities, and $6.05 million in total stockholders' equity. Marcum LLP, in New York NY, the Company's auditor since 2012, issued a "going concern" qualification in its report dated March 3, 2020, 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. ISRAEL BAPTIST: Case Summary & 14 Unsecured Creditors ----------------------------------------------------- Debtor: Israel Baptist Church of Baltimore City 1220 N. Chester Street Baltimore, MD 21213-3393 Business Description: Israel Baptist Church of Baltimore City -- http://israelbaptist.org-- is a tax-exempt religious organization. The Church was founded and organized in 1891. Chapter 11 Petition Date: March 26, 2020 Court: United States Bankruptcy Court District of Maryland Case No.: 20-13857 Debtor's Counsel: Alan M. Grochal, Esq. TYDINGS & ROSENBERG LLP 1 E. Pratt Street Suite 901 Baltimore, MD 21202 Tel: 410-752-9700 E-mail: agrochal@tydingslaw.com Estimated Assets: $1 million to $10 million Estimated Liabilities: $1 million to $10 million The petition was signed by Ernest Ford, chair, Board of Trustees. A copy of the petition containing, among other items, a list of the Debtor's 14 unsecured creditors is available for free at PacerMonitor.com at: https://is.gd/rU0jR1 LAKELAND TOURS: Moody's Cuts CFR to Caa3, Outlook Negative ---------------------------------------------------------- Moody's Investors Service downgraded its ratings for Lakeland Tours, LLC, including the company's corporate family rating (CFR, to Caa3 from B2) and probability of default rating (to Caa3-PD from B2-PD), and the ratings for its senior secured first lien bank credit facilities (to Caa2 from B1). The ratings outlook remains negative. "The downgrades reflect significant disruption caused by the COVID-19 coronavirus crisis, which will impose meaningful liquidity stress on the company's business," said Shirley Singh, Moody's lead analyst for Worldstrides. Moody's expects a significant increase in trip cancellations to prompt a big cash drain as deposits already received are refunded. "Liquidity will quickly weaken and WorldStrides' very high leverage in excess of 9.0x increases the risk of default, whether pre-emptively via a distressed exchange of debt or otherwise," added Singh. Moody's acknowledged that not all deposits received are eligible for refund, and that the company's insurance policy could partially support its cash flow needs during the current disruptive period. The rapid and widening spread of the coronavirus outbreak, the deteriorating global economic outlook, falling oil prices and asset price declines are creating a severe and extensive credit shock across many sectors, regions and markets. The combined credit effects of these developments are unprecedented. The travel sector has been one of the sectors most significantly affected by the shock given its sensitivity to consumer demand and sentiment. More specifically, WorldStrides' thinly capitalized balance sheet and outsized exposure to significantly curtailed educational travel have left it vulnerable to shifts in market sentiment in these unprecedented operating conditions, and the company remains vulnerable to the outbreak continuing to spread. Moody's regards the coronavirus outbreak as a social risk under its ESG framework, given the substantial implications for public health and safety. The actions reflect the impact on WorldStrides of the breadth and severity of the shock, and the broad deterioration in credit quality it has triggered. The following rating actions were taken: Downgrades: Issuer: Lakeland Tours, LLC Corporate Family Rating, Downgraded to Caa3 from B2 Probability of Default Rating, Downgraded to Caa3-PD from B2-PD Senior Secured Bank Credit Facility, Downgraded to Caa2 (LGD3) from B1 (LGD3) Outlook Actions: Issuer: Lakeland Tours, LLC Outlook, Remains Negative RATING RATIONALE Lakeland Tours' Caa3 CFR broadly reflects the company's levered balance sheet and eroding liquidity given its weak earnings and cash flow profile following the COVID-19 outbreak and in consideration of a weakening macroeconomic outlook. Moody's expects key credit metrics and liquidity to weaken near term, increasing the risk of a pre-emptive default. The rating also reflects the mature demand for the company's core K-12 domestic business, and continued weakness in the individual higher education services business. WorldStrides' governance risk is high characterized by its history of high leverage and debt-financed acquisitions. Nonetheless, WorldStrides' rating benefits from the company's leading position as a provider of full service domestic and international travel and education services, well-diversified customer base with broad geographical footprint, and a track record of having successfully integrated acquired businesses. The company's market position provides the ability to negotiate favorable rates with numerous airlines, coach lines and hotels, which could help extract certain cost savings to support margins. WorldStrides also collects deposits on travel itineraries well in advance of service provisioning, which provides some visibility into forward free cash flow generation, in more typical times. The negative ratings outlook reflects the Moody's expectation of significant near-term liquidity pressure on WorldStrides, which could prompt a pre-emptive distress exchange or debt restructuring. The ratings could be downgraded if default risks rise as prompted by a potential distressed exchange of debt or a deterioration in the company's liquidity from a cash burn rate in excess of Moody's expectations. Conversely, the ratings could be upgraded if the sector outlook and economic conditions stabilize after a period of short-term disruption, earnings and free cash flow turn positive, leverage falls and liquidity provisions remain adequate. The principal methodology used in these ratings was Business and Consumer Service Industry published in October 2016. Headquartered in Charlottesville, Virginia, Lakeland Tours, LLC is an accredited educational institution that provides full service educational travel programs to K-12, undergraduate and post graduate students, both domestically and internationally. WorldStrides generated revenues of approximately $706 million (excluding pro forma results for November acquisitions) over the twelve months ended December 30, 2019. The company is owned by Eurazeo and minority investor Primavera Capital Group. LIP INC: Agrees to Amendment to Plan and Disclosures ---------------------------------------------------- On Feb. 12, 2020, LIP, Inc., et al., the Debtors in this case, each filed their respective Plan of Reorganization and a Consolidated Disclosure Statement. After filing the Plans and Disclosure Statement, the Debtors were notified by certain creditors and parties in interest of the need to correct or include certain provisions in the Disclosure Statement. As proposed in Debtors' Disclosure Statement, Debtors worked with these creditors to develop the following amendments: * Section 7.07(b) of the Disclosure Statement and Section 3.06 of the LIP, Inc. Plan are hereby amended to clarify the following: Class 6 in the LIP Plan consists of creditors having claims other than those in Classes 4, 5, 7 or 9. * Section 6.07(b) of the Disclosure Statement and Section 4.07 of the LIP II, Inc. Plan are hereby amended to clarify the following: Class 7 in the LIP II, Inc. Plan consists of creditors having claims other than those in Classes 4, 6, 8 or 9. * Article VII of the Disclosure Statement is amended to read as follows: The following is a summary of the treatment provided in the Plan to each Class of Claims and Interests: * Section 7.01(a)(1) of the Disclosure Statement and Section 2.01 of the Plans are hereby amended to state the following: General Allowed Administrative Claims. Each holder of an Administrative Claim, except as otherwise set forth in subsections (2) through (6) below shall receive either: (i) with respect to Administrative Claims which are Allowed Claims on the Effective Date, the amount of such holder’s Allowed Claim in cash on the Effective Date; (ii) with respect to Administrative Claims which become Allowed Clai ms after the Effective Date, the amount of such holder’s Allowed Claim in one cash payment within thirty (30) calendar days after such Claim becomes an Allowed Administrative Claim; or (iii) such other treatment agreed upon by the Debtor and such holder; provided that any such Administrative Claim representing a liability incurred in the ordinary course of business by any of the Debtors shall be paid in accordance with the terms and conditions of the particular transaction giving rise to such liability and any agreements relating thereto. * Section 5.04 of the Disclosure Statement is hereby amended to state the following: Debtors intend to continue to employ all employees, including "insiders" under 11 U.S.C. Sec. 101(31) that were employed as of the Petition Date. This explicitly includes the continued employment of Mark Clark as President and CEO, Joey Clark as bookkeeper, and Karen Clark as secretary. As of the Petition Date and throughout these cases, the Debtors have employed Joey Clark to provide bookkeeping services to all Debtors. Mr. Clark’s tasks include tracking the Debtors’ day to day books and records, interacting with the general managers for each Debtor location regarding the Debtors’ finances, tracking cash flow and managing payables, and similar tasks that would ordinarily be filled by a financial officer of a company. Mr. Clark’s bi-weekly pay is shared equally by each Debtor and amounts to $2,307.69 gross every two weeks, or $60,000 per year (with $20,000 per year paid by each Debtor). * Section 13.02(d) is hereby amended to read as follows: Absolute Priority Rule. The Debtors submit that all non-insider Classes of Claims are being paid in full and that, therefore, the Absolute Priority Rule is not implicated. * Section 10.07 of the Disclosure Statement is hereby amended to include the following language as subsection (b): In the event any Creditor or does not consent to the Debtors' Plan(s) or the third-party stay proposed thereby, and is also subject to a third-party stay referenced in subsection (a) above, the Debtors' ability to obtain a third-party stay with respect to the objecting creditor shall be conditioned on the Debtors' ability to satisfy the Dow Corning factors. * Exhibit C to the Disclosure Statement is hereby amended as follows: Pages 46-47 are the July-December 2020 projections for LIP II; Pages 48-49 are the 2021 pro forma projections for LIP II; and Pages 50-51 are the 2022 pro forma projections for LIP II. These projections were improperly labeled in the Disclosure Statement. A full-text copy of the Amendment dated March 11, 2020, is available at https://tinyurl.com/taqxbjv from PacerMonitor.com at no charge. Attorneys for the Debtor: Griffin S. Dunham Alex Payne DUNHAM HILDEBRAND, PLLC 2416 21st Avenue South, Suite 303 Nashville, Tennessee 37212 Tel: 629.777.6529 E-mail: alex@dhnashville.com About LIP Inc. LIP, Inc., doing business as Mellow Mushroom Vanderbilt, and its subsidiaries are privately held companies that operate in the restaurant industry. LIP and its affiliates sought protection under Chapter 11 of the Bankruptcy Code (Bankr. M.D. Tenn. Lead Case No. 19-05784) on Sept. 9, 2019. In the petitions signed by Mark Clark, president, the Debtors were each estimated to have assets ranging between $100,000 and $500,000 and liabilities ranging between $1 million and $10 million. Dunham Hilderbrand, PLLC is the Debtors' counsel. LITTLE FEET: Hancock Whitney Bank Objects to Plan & Disclosures --------------------------------------------------------------- Hancock Whitney Bank objects to the Disclosure Statement conditionally approved by the Court and to confirmation of the chapter 11 Plan of Reorganization filed by Little Feet Learning Center, LLC. Hancock Whitney Bank points out that the Disclosure Statement fails to contain adequate information sufficient to enable creditors to determine whether to vote for the Plan. Hancock Whitney Bank further points out that inn page 3 of the Disclosure Statement alleges that the Debtor "has seen an increase in enrollment during late 2019 ..." However, the Disclosure Statement provides no information regarding the reasons for and amount of the alleged increase so that creditors and the Court can evaluate the feasibility of the Plan. Hancock Whitney Bank complains that in page 4 of the Disclosure Statement alleges that the Bank initiated foreclosure based on failure to pay taxes. While it is true that the Debtor had failed to pay ad valorem and federal taxes, the foreclosure resulted from the loan having fully matured. Hancock Whitney Bank asserts that in page 13 of the Disclosure Statement calculates monthly disposable income using a chapter 13 statute that does not apply to a corporate chapter 11. According to the Bank, the Plan violates 11 U.S.C. Sec. 1129(a)(5) as it does not disclose the information required by that provision. Bank points out that the Plan violates 11 U.S.C. Sec. 1129(a)(11) as it is not feasible. Bank further points out that the default provision of Article XVI of the Plan is inappropriate as it shifts the burden and cost to creditors to provide notice to the Debtor of a default and to then file a motion to compel the Debtor to perform if defaults are not cured. Since the Debtor will know if it has defaulted (and controls whether it defaults), this provision unnecessarily delays creditors (such as the Bank) from exercising their rights and increases their costs. Counsel for the Debtor: Jeffrey R. Barber JONES WALKER LLP 190 East Capitol Street, Suite 800 (39201) Post Office Box 427 Jackson, Mississippi 39205-0427 Telephone (601) 949-4765 Telecopy (601) 949-4804 Email jbarber@joneswalker.com About Little Feet Learning Center Little Feet Learning Center filed a voluntary Chapter 11 petition (Bankr. S.D. Miss. Case No. 19-52507) on Dec. 18, 2019, listing under $1 million in both assets and liabilities, and is represented by W. Jarrett Little, Esq. and William J. Little, Jr., Esq., at Lentz & Little, PA. MAGNOLIA REGIONAL: Moody's Cuts Revenue Bonds to B1, Outlook Neg. ----------------------------------------------------------------- Moody's Investors Service has downgraded Magnolia Regional Health Center's revenue bonds from Ba3 to B1. The downgrade affects approximately $71.5 million of rated debt. The outlook remains negative at the lower rating level. RATINGS RATIONALE The downgrade to B1 incorporates the negative variance to financial expectations including the breach of the debt service coverage covenant in fiscal 2019; reported debt service coverage was 1.17x compared to a covenant of 1.25x. As a result of the covenant breach, management may retain an independent consultant. At this time, it is uncertain if a consultant will be obtained, bond documents outline a 90 day cure period if a covenant is breached. As of Q1 the system was in compliance with its debt service coverage covenant. Based on interim performance through Q1 2020 financial performance and liquidity will remain constrained this year, resulting in continued thin headroom to financial covenants measured at FYE 2020 (September 2020). Significant turnover in senior management over the past year, contributes to uncertainty regarding MRHC's ability to improve performance and grow liquidity. Expectations of continued challenged performance will elevate the risk of an event of default resulting in a potential acceleration of debt. As of FYE 2019 the system's cash to debt ratio was 64%, and therefore in the event of a default the system would not have sufficient liquidity to pay accelerated debt service. The B1 incorporates MRHC's role as an essential healthcare provider in the market, and a fully funded debt service reserve fund. The coronavirus outbreak will impact MRHC and all other hospitals. MRHC's rating and outlook incorporate assumptions that it will see some containment of the outbreak in the second half of 2020 and that the economy will gradually recover. Under this scenario, the outlook reflects the expectation that MRHC will experience additional pressure on financial performance as elective procedures are reduced. Additionally, there is a high degree of uncertainty given a rapidly changing situation. Therefore, risk that the outbreak will be prolonged and the economic fallout will be more severe is elevated. Depending on how MRHC is affected, this could result in downward pressure on the rating. RATING OUTLOOK The negative outlook incorporates the expectation that the risk of an event of default is elevated over the next year, which may cause an acceleration of bonds. Challenged operating performance and the recent debt service coverage covenant violation, resulting in a consultant call in, elevates near-term risk of an event of default covenant violation and debt acceleration in FY 2020. A further decline in performance or liquidity beyond current expectations, or a filing for reorganization or credit relief would result in downward rating pressure. Additionally, the negative outlook incorporates assumptions that it will see some containment of the coronavirus outbreak in the second half of 2020 and that the economy will gradually recover. Reductions in elective procedures will place further pressure on operating performance. FACTORS THAT COULD LEAD TO AN UPGRADE - Significant and sustained improvement in headroom to financial covenants - Material growth of liquidity metrics - Multi-year trend of significantly improved and sustained operating performance FACTORS THAT COULD LEAD TO A DOWNGRADE - Event of default - Further deterioration of headroom to financial covenants - A corporate reorganization or bankruptcy filing - Unexpected high level of operating disruption associated with COVID-19 cases or much more severe downturn in the economy LEGAL SECURITY The bonds are secured by a gross revenue pledge of Magnolia Regional Health Center. There is a debt service reserve fund and negative mortgage lien. Financial covenants include a 1.25 times maximum annual debt service coverage; falling below 1.25 but above 1.1 requires the system to hire a consultant while below 1.1 times would be an event of default. The covenant is measured annually. In 2018, the system was able to amend its debt service coverage covenant calculation, which now excludes reported pension expense under Governmental Accounting Standards Board (GASB) Statement 68. MRHC also must maintain at least 65 days on hand, measured semiannually. Days cash on hand below 65 days for two consecutive periods requires the system to hire a consultant. PROFILE Magnolia Regional Health Center is a 200-bed hospital located in Corinth, Mississippi. MRHC provides services to patients in Northeast Mississippi and is about five miles from the Tennessee border. The hospital is a component unit of the City and County. The system has limited competition, a joint venture cancer center and a trauma center. METHODOLOGY The principal methodology used in this rating was Not-For-Profit Healthcare published in December 2018. MANNKIND CORP: Appoints Jennifer Grancio to Board of Directors -------------------------------------------------------------- Jennifer Grancio has been appointed to MannKind Corporation's Board of Directors, effective March 23, 2020. Ms. Grancio will also serve as a member of the Audit Committee of the Board. Ms. Grancio brings to MannKind over 20 years of financial services experience and an expertise in creating disruptive business models. "We are excited to welcome Ms. Grancio and her years of invaluable leadership to our board of directors," said Kent Kresa, chairman of the Board. "Her financial services leadership experience will be an essential asset for MannKind as the company continues to grow. We are committed to surrounding ourselves with the best talent available, and the appointment of Ms. Grancio reflects that effort." Ms. Grancio served as a founder and executive with BlackRock's iShares business from 1999 to 2018. She spearheaded the distribution of iShares in the United States and Europe and acted as the Global Head of Marketing and Partnerships for BlackRock's indexing service. Through those efforts, Ms. Grancio established herself as a global leader in exchange-traded and mutual funds. Since her time at BlackRock, she founded Grancio Capital, where she consults with company leaders on the best ways to expand market reach and how to build effective teams to do so. Previously, she was a senior associate with PricewaterhouseCoopers, a management consulting firm. Ms. Grancio has served as a board member for Ethic, a sustainable investing firm, since November 2019. She serves on the board of Harvest Savings & Wealth as of Q1 2020 and is on the advisory boards of Say Technologies and m+ funds. Ms. Grancio is also active as a strategic advisor and speaker to organizations that are committed to developing diverse senior leaders and to developing leadership in young women. She earned a bachelor's degree in economics and international relations from Stanford University, and an MBA degree in strategy and finance from Columbia Business School. With the addition of Ms. Grancio, there are nine members of the MannKind Board of Directors. Ms. Grancio is expected to receive compensation for service as a director in accordance with the Company's non-employee director compensation program, including an annual cash retainer and an annual equity grant. The Company will also enter into an indemnification agreement with Ms. Grancio. About MannKind Corp MannKind Corporation (NASDAQ: MNKD) -- http://www.mannkindcorp.com/ -- focuses on the development and commercialization of inhaled therapeutic products for patients with diseases such as diabetes and pulmonary arterial hypertension. MannKind is currently commercializing Afrezza (insulin human) Inhalation Powder, the Company's first FDA-approved product and the only inhaled rapid-acting mealtime insulin in the United States, where it is available by prescription from pharmacies nationwide. MannKind is headquartered in Westlake Village, California, and has a state-of-the art manufacturing facility in Danbury, Connecticut. The Company also employs field sales and medical representatives across the United States. MannKind reported a net loss of $51.90 million for the year ended Dec. 31, 2019, compared to a net loss of $86.97 million for the year ended Dec. 31, 2018. As of Dec. 31, 2019, the Company had $93.72 million in total assets, $284.25 million in total liabilities, and a total stockholders' deficit of $190.53 million. Deloitte & Touche LLP, in Los Angeles, California, the Company's auditor since 2001, issued a "going concern" qualification in its report dated Feb. 25, 2020, citing that the Company's available cash resources and continuing cash needs raise substantial doubt about its ability to continue as a going concern. MATADOR RESOURCES: Moody's Cuts CFR to B3, Outlook Negative ----------------------------------------------------------- Moody's Investors Service downgraded Matador Resources Company's Corporate Family Rating to B3 from B1, Probability of Default Rating to B3-PD from B1-PD, and senior unsecured notes to Caa1 from B2. The Speculative Grade Liquidity Rating was downgraded to SGL-3 from SGL-2. The rating outlook was revised to negative. The downgrade reflects Matador's high debt leverage at a time when very low commodity prices are likely to lead to dramatically reduced cash flow. The downgrade also encompasses concerns about the company's ability to cut spending and realize cost savings quickly enough to preserve liquidity and prevent breaching its leverage covenant under its revolving credit facility, should oil prices remain at or below $30 per bbl. Downgrades: Issuer: Matador Resources Company Probability of Default Rating, Downgraded to B3-PD from B1-PD Speculative Grade Liquidity Rating, Downgraded to SGL-3 from SGL-2 Corporate Family Rating, Downgraded to B3 from B1 Senior Unsecured Notes, Downgraded to Caa1 (LGD5) from B2 (LGD4) Outlook Actions: Issuer: Matador Resources Company Outlook, Changed To Negative From Stable Withdrawals: Issuer: Matador Resources Company Senior Unsecured Notes, Withdrawn, previously rated B2 (LGD5) RATINGS RATIONALE The rapid and widening spread of the coronavirus outbreak, deteriorating global economic outlook, falling oil prices, and asset price declines are creating a severe and extensive credit shock across many sectors, regions and markets. The combined credit effects of these developments are unprecedented. The E&P sector has been one of the sectors most significantly affected by the shock given its sensitivity to demand and oil prices. More specifically, the weaknesses in Matador's credit profile have left it vulnerable to shifts in market sentiment in these unprecedented operating conditions and Matador remains vulnerable to the outbreak continuing to spread and oil prices remaining weak. Moody's regards the coronavirus outbreak as a social risk under its ESG framework, given the substantial implications for public health and safety. The action reflects the impact on Matador of the breadth and severity of the oil demand and supply shocks, and the broad deterioration in credit quality it has triggered. Matador's B3 CFR reflects its relatively high debt leverage, measured by its average daily production ratio which Moody's expects to approach $25,000 boe per day by year-end 2020. The rating also considers Matador's limited size and scale and its narrow focus on developing its Delaware Basin acreage. Despite good progress in 2019 to reduce outspending, Matador's revised 2020 drilling plan is likely to require significant capital outspending given the very low commodity price expected to linger into 2021. The company is targeting a number of ways to reduce costs along with spending in order to preserve liquidity and limit borrowing. Although the company's borrowings at its midstream joint venture increase Matador's consolidated debt, the JV's existing cash flow and potential future cash flow growth help reduce the impact on the company's consolidated financial leverage. The company's production profile will gradually become more oil-concentrated as it focuses development on its oil-weighted Delaware Basin acreage. Matador also benefits from a large and repeatable drilling inventory, which has good growth potential. While most of the company's capital spending targets the Delaware Basin; however, Matador's Eagle Ford Shale and Haynesville Shale assets are essentially fully held by production and provide a measure of geographic diversity. Matador's Speculative Grade Liquidity Rating is SGL-3, reflecting Moody's expectation that Matador will maintain adequate liquidity under its base case commodity prices. At December 31, 2019, the company had $40 million of cash, and $399 million available under its revolving credit facility, pro forma the February 2020 commitment size increase. Matador benefits from hedging at attractive pricing on 45% of its 2020 oil production; however, the company's 2021 production is essentially unprotected. Availability under the revolver should provide sufficient funding to cover Matador's 2020 outspending, which Moody's expects to range between $150 million and $200 million under its base case pricing assumption. The credit agreement requires the company to maintain a leverage ratio (maximum net debt to adjusted EBITDA) under 4.00x. Moody's expects Matador to remain in compliance with the leverage covenant through early 2021 under base case pricing, though with not much cushion. Under stress pricing, the company may not be able to maintain compliance. Matador's investment in its midstream joint venture, San Mateo Midstream, LLC, is unencumbered by Matador's borrowing base facility and could potentially be a source of alternate liquidity. The company has no debt coming due until the revolver maturity in 2023. The Caa1 rating of Matador's $1,050 million of senior unsecured notes due 2026, one notch below the B3 CFR, reflects the notes subordination to the company's senior secured revolving credit facility expiring in October, 2023. The credit facility has a maximum commitment size of $1,500 million, but the February 2020 redetermination affirmed the borrowing base at $900 million. Matador elected to set the commitment size of the credit facility at $700 million. A sizeable increase in the elected commitment size of the revolver could pressure the ratings on the unsecured notes. The negative outlook reflects the potential that credit metrics could erode further if the company is slow or unable to execute planned spending reduction or cost cutting, or if commodity prices fall further than Moody's currently expects. Ratings could be downgraded if 2021 RCF is likely to fall below 15% or liquidity becomes constrained. Although an upgrade is unlikely in the near term, ratings could improve if Matador's RCF/debt ratio improves to 30% while maintaining a leveraged full cycle ratio greater than 1.5x. Dallas, TX-based Matador Resources Company is an independent exploration and production company focused on developing its acreage in the oil and liquids-rich Wolfcamp and Bone Spring plays of the Delaware Basin. The company also operates in the Eagle Ford Shale, the Haynesville Shale, and the Cotton Valley plays. The company engages in midstream operations through San Mateo Midstream, its joint venture with Five Point Energy. Average daily production in 2019, was 66,200 barrels per day, of which 58% was oil. The principal methodology used in these ratings was Independent Exploration and Production Industry published in May 2017. MAVIS TIRE: Moody's Cuts CFR to B3, Outlook Stable -------------------------------------------------- Moody's Investors Service, Inc. downgraded the ratings of Mavis Tire Express Services Corp., including the corporate family rating, which was downgraded to B3 from B2. The outlook is stable. "Today's downgrade considers Mavis' leverage, which has remained in excess of the 8.5 times pro-forma level at rating initiation," stated Moody's Vice President Charlie O'Shea. "The uncertainty surrounding the potential impact of the coronavirus on the company's customer base and demand for its products and services is an additional contributing factor, though Moody's notes that auto repair is being considered 'essential' by many state and local governments, and facilities remain open," continued O'Shea. "Moody's notes that Mavis maintains good liquidity, with no debt maturities until 2023." Downgrades: Issuer: Mavis Tire Express Services Corp. Probability of Default Rating, Downgraded to B3-PD from B2-PD Corporate Family Rating, Downgraded to B3 from B2 Senior Secured 1st Lien Bank Credit Facility, Downgraded to B2 (LGD3) from B1 (LGD3) Senior Secured 2nd Lien Bank Credit Facility, Downgraded to Caa2 (LGD5) from Caa1 (LGD5) Outlook Actions: Issuer: Mavis Tire Express Services Corp. Outlook, Remains Stable RATINGS RATIONALE Mavis' B3 corporate family rating considers its weak quantitative profile, particularly its leverage, which remains in excess of the initial 8.5 times (giving credit for the pro-forma run-rate earnings from recent acquisitions and greenfield locations), its favorable market position in a highly fragmented segment of retail, with penetration and brand recognition evident in its chosen markets. Mavis' liquidity profile, which Moody's characterizes as good, is another key factor, with the expectation that the company will maintain meaningful levels of balance sheet cash over the next 12-18 months. Ratings also consider the potential for shareholder-friendly financial policies associated with the company's financial sponsor ownership, including an aggressive pace of debt-funded acquisitions which has resulted in elevated leverage levels. While the company's scale will benefit from growth in revenue and EBITDA driven by new acquisitions, greenfields, and the continued ramp of recently-acquired locations, the company runs the risk of limited financial flexibility in the event that earnings deteriorate from current levels. Until Mavis' leverage profile improves materially and becomes more predictable, there is no tolerance for equity extractions at the current rating level. Social considerations are moderate for Mavis due to the risks related to workplace safety; however, the company has had no issues of note in this regard. Additionally, social risk related to demographic and societal trends, including changing consumer preferences remain a factor for retail issuers, although it is viewed as immaterial given the relatively nondiscretionary nature of Mavis's business offering. The rapid and widening spread of the coronavirus outbreak, deteriorating global economic outlook, falling oil prices, and asset price declines are creating a severe and extensive credit shock across many sectors, regions and markets. The combined credit effects of these developments are unprecedented. The retail sector has been one of the sectors most significantly affected by the shock given its sensitivity to consumer demand and sentiment. More specifically, the weaknesses in Mavis's credit profile, including its exposure to a potential decline in customer traffic have left it vulnerable to shifts in market sentiment in these unprecedented operating conditions and Mavis remains vulnerable to the outbreak continuing to spread. Moody's regards the coronavirus outbreak as a social risk under its ESG framework, given the substantial implications for public health and safety. The action reflects the impact on Mavis of the breadth and severity of the shock, and the broad deterioration in credit quality it has triggered. The stable outlook hinges on Mavis' ability to successfully source, finance, and integrate new acquisition opportunities such that they are accretive from an EBITDA perspective within 12-18 months. Ratings could be upgraded if debt/EBITDA reduces below 7 times and EBIT/interest was sustained around 1.5 times. Ratings could be downgraded if liquidity were to weaken, or if credit metrics were to weaken from present levels for any reason. Mavis Tire Express Services Corp. is the parent company of Mavis Discount Tire, Inc. and Express Oil Change & Tire Engineers, and is owned by affiliates of Golden Gate Capital. The principal methodology used in these ratings was Retail Industry published in May 2018. MCCLATCHY COMPANY: Wins Approval of Key Motions ----------------------------------------------- McClatchy continued its momentum in its Chapter 11 reorganization as Hon. Michael E. Wiles of the U.S. Bankruptcy Court for the Southern District of New York has granted final approval of key motions at its "Second Day" hearing on March 9, 2020. These matters were uncontested, and the entry of these orders will authorize, among other things, the Company's funding of customer and subscriber programs and payment of employees, critical vendors, utilities, and taxes in the ordinary course. "At this important moment for essential local news and information, we are gratified by time and attention of the Court to our Chapter 11 case. We will continue to do our best to support our commitment to our employees, partners, vendors, and most importantly, our readers," said McClatchy President and CEO Craig Forman. "Credible, independent local journalism is essential to keeping the public informed and engaged, and we are seeing progress with each step we take." Last week McClatchy began mediation with the Official Committee of Unsecured Creditors (including the Pension Benefit Guaranty Corporation) and Chatham Asset Management. An associated discovery process under Rule 2004 of the Federal Rules of Bankruptcy Procedure is ongoing. It is the Company's hope that this mediation will result in a timely resolution of outstanding issues, so it can emerge from Chapter 11 protection with a more appropriate capital structure and better able to accelerate its ongoing digital transformation. More information about McClatchy's restructuring can be found by visiting the Company's dedicated site at https://McClatchyTransformation.com. In addition, legal filings and other information related to the Chapter 11 case are available at www.kccllc.net/McClatchy, or by calling KCC, the Company's noticing and claims agent, at +1 (866) 810-6898. About The McClatchy Company The McClatchy Co. (OTC-MNIQQ) -- https://www.mcclatchy.com/ -- operates 30 media companies in 14 states, providing each of its communities local journalism in the public interest and advertising services in a wide array of digital and print formats. McClatchy publishes iconic local brands including the Miami Herald, The Kansas City Star, The Sacramento Bee, The Charlotte Observer, The (Raleigh) News & Observer, and the Fort Worth Star-Telegram. McClatchy is headquartered in Sacramento, Calif., and listed on the New York Stock Exchange American under the symbol MNI. On Feb. 13, 2020, The McClatchy Company and 53 affiliates sought Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 20-10418) with a Plan of Reorganization that will cut $700 million of funded debt in half. McClatchy was estimated to have $500 million to $1 billion in assets and debt of at least $1 billion as of the bankruptcy filing. The cases are pending before the Honorable Michael E. Wiles. The Debtors tapped Skadden, Arps, Slate, Meagher & Flom LLP as general bankruptcy counsel; Togut, Segal & Segal LLP as co-bankruptcy counsel with Skadden; Groom Law Group as special counsel; FTI Consulting, Inc. as financial advisor; and Evercore Inc. as investment banker. Kurtzman Carson Consultants LLC is the claims agent. MCDERMOTT INT'L: Bankruptcy Court Confirms Reorganization Plan -------------------------------------------------------------- McDermott International, Inc. on March 12, 2020, disclosed that the U.S. Bankruptcy Court for the Southern District of Texas (the "Court") has confirmed the Company's Plan of Reorganization (the "Plan") and approved the sale of Lummus Technology to a joint partnership between The Chatterjee Group and Rhône Capital (the "Joint Partnership"). "With the support of our creditors, employees, customers and suppliers, we have been able to confirm our Plan of Reorganization less than two months after we initially filed for Chapter 11," said David Dickson, President and Chief Executive Officer of McDermott. "This is a significant achievement and allows us to emerge in the near-term as a stronger, more competitive player, with a sustainable capital structure that matches the strength of our operating business. I would like to thank our customers, employees, suppliers, partners, lenders and advisors for their support during the process and continued confidence in our business." Under the terms of the Plan, McDermott will complete a comprehensive restructuring transaction (the "Transaction") to de-lever its balance sheet and immediately position the Company for long-term growth. The Transaction will allow the Company to emerge with more cash on hand than debt, eliminating over $4.6 billion of debt. The Company expects to emerge in the second quarter following the receipt of regulatory approval for the sale of Lummus Technology to the Joint Partnership. As announced on January 21, 2020, subsidiaries of McDermott entered into a share and asset purchase agreement (the "Agreement") to sell Lummus Technology to the Joint Partnership, as the "stalking horse bidder," for a base purchase price of $2.725 billion, subject to higher or otherwise better bids received through a court-supervised auction process. Proceeds from the sale of Lummus Technology are expected to repay McDermott's DIP financing in full, as well as fund emergence costs and provide cash to the balance sheet for long-term liquidity. More information about McDermott's restructuring, including access to Court documents, will be available at https://cases.primeclerk.com/McDermott or contact Prime Clerk, the Company's noticing and claims agent, at +1 877-426-7705 (for toll-free U.S. domestic calls) and +1 917-994-8380 (for tolled international calls), or email McDermottInfo@primeclerk.com. About McDermott International Headquartered in Houston, Texas, McDermott (NYSE: MDR) -- http://www.mcdermott.com/-- is a provider of engineering, procurement, construction and installation and technology solutions to the energy industry. Its common stock was/is listed on the New York Stock Exchange under the trading symbol MDR. As of Sept. 30, 2019, McDermott had $8.75 billion in total assets, $9.86 billion in total liabilities, $271 million in redeemable preferred stock, and a total stockholders' deficit of $1.38 billion. On Jan. 21, 2020, McDermott International announced that it has the support of more than two-thirds of all its funded debt creditors for a restructuring transaction that will equitize nearly all the Company's funded debt, eliminating over $4.6 billion of debt. McDermott solicited votes from its lenders and bondholders in support of a prepackaged Chapter 11 Plan of Reorganization and commenced the prepackaged Chapter 11 later in the day, on Jan. 21, 2020 in the U.S. Bankruptcy Court for the Southern District of Texas. McDermott International and 224 affiliates on Jan. 21 and 22, 2020, filed Chapter 11 bankruptcy petitions (Bankr. Lead Case No. 20-303360). The Hon. Marvin Isgur is the case judge. The Debtors tapped KIRKLAND & ELLIS LLP (NEW YORK) as general bankruptcy counsel; JACKSON WALKER L.L.P. as local counsel; ALIXPARTNERS, LLP as restructuring advisor; AP SERVICES, LLC as operational advisor; ARIAS, FABREGA & FABREGA as Panamanian counsel; and BAKER BOTTS L.L.P., as corporate counsel. PRIME CLERK is the claims agent, maintaining the page https://cases.primeclerk.com/mcdermott MCDERMOTT INTERNATIONAL: Further Fine-Tunes Prepackaged Plan ------------------------------------------------------------ McDermott International, Inc., et al., filed a Second Amended Joint Prepackaged Chapter 11 Plan of Reorganization. The Debtors will fund distributions under the Plan with: (1) cash on hand, including cash from operations, and the proceeds of the rights offering, the technology business sale; (2) the new common stock; (3) the new warrants; and (4) the distributions under the Exit Facilities, as applicable. The Debtors have conducted a marketing process and are soliciting bids for their all or substantially all of their technology business. On the Effective Date, any technology business sale proceeds that have not otherwise been applied in accordance with the DIP Credit Agreement will be applied as follows: (a) first, to fund the minimum Cash balance of $820 million, as required by the Business Plan, (b) second, to repay Funded DIP Indebtedness (other than the Make Whole Amount); (c) third, payment of the Make Whole Amount; and (d) fourth, to fund cash to support new or additional letters of credit sufficient to meet the $2.44 billion letter of credit capacity contemplated by the exit facilities term sheet; and (e) fifth, the repayment of Prepetition Funded Secured Claims on a Pro Rata basis. On the Effective Date, the prepetition funded secured claims will be repaid on a pro rata basis from (i) the Residual Technology Business Sale Proceeds and (ii) any available cash in excess of $820 million available cash at emergence after payment of all fees and transaction expenses ((i) and (ii) together the "Residual Prepetition Funded Secured Claims Pay Down"). If the Residual Prepetition Funded Secured Claims Pay Down amount is greater than $0, the initial allocation of 94% of the New Common Stock to the holders of Prepetition Funded Secured Claims will be reduced, and the initial allocation of 6% of the New Common Stock to holders of Senior Notes Claim will be increased, by the percentage calculated by dividing: (a) the Residual Prepetition Funded Secured Claims Pay Down amount by (b) an amount equal to: (i) the aggregate amount of Prepetition Funded Secured Claims (including, without limitation, principal and any accrued prepetition or postpetition interest at the default rate as applicable) minus an amount equal to the sum of (y) the aggregate amount of the loans to be issued under the Term Loan Exit Facility and (z) any proceeds of the Rights Offering up to $150 million; divided by (ii) 94% minus an amount equal to (y) the aggregate proceeds of the Rights Offering up to $150 million divided by (z) Plan Equity Value (such adjustment of initial allocations, the "Prepetition Funded Secured Claims Excess Cash Adjustment"). The Prepackaged Plan provides that: * Class 5 - 2021 Letter of Credit Claims. Impaired. (i) with respect to any 2021 Letter of Credit Claims on account of unfunded 2021 Letters of Credit, participation in the Roll-Off LC Exit Facility in an amount equal to each such holder's participation in any such unfunded 2021 Letters of Credit, (ii) with respect to any 2021 Letter of Credit Claims on account of funded 2021 Letters of Credit, its Secured Creditor Pro Rata Share of the Secured Creditor Funded Debt Distribution, and (iii) payment in full in Cash of any amounts accrued and unpaid as of the Petition Date due to such holder of an Allowed 2021 Letter of Credit Claim pursuant to Section 2.15 of the 2021 LC Agreement. * Class 6A - 2023 Letter of Credit Claims. Impaired. (i) with respect to any 2023 Letter of Credit Claims on account of unfunded 2023 Letters of Credit, participation in the Roll-Off LC Exit Facility in an amount equal to each such holder's participation in any such unfunded 2023 Letters of Credit, (ii) with respect to any 2023 Letter of Credit Claims on account of funded 2023 Letters of Credit, its Secured Creditor Pro Rata Share of the Secured Creditor Funded Debt Distribution, and (iii) payment in full in Cash of any amounts accrued and unpaid as of the Petition Date due to such holder of an Allowed 2023 Letter of Credit Claim pursuant to Section 2.15 of the Credit Agreement. * Class 6B - Revolving Credit Claims. (i) with respect to any Revolving Credit Claims on account of unfunded Revolving LCs, participation in the Roll-Off LC Exit Facility in an amount equal to each such holder's participation in any such unfunded Revolving LCs, (ii) with respect to any Revolving Credit Claims on account of (x) Revolving Loans or (y) funded Revolving LCs, its Secured Creditor Pro Rata Share of the Secured Creditor Funded Debt Distribution, and (iii) payment in full in Cash of any amounts accrued and unpaid as of the Petition Date due to such holder of an Allowed Revolving Credit Claim pursuant to Section 2.15 of the Credit Agreement. * Class 6C - Term Loan Claims. Impaired. Each holder of an Allowed Term Loan Claim shall receive its Secured Creditor Pro Rata Share of the Secured Creditor Funded Debt Distribution. * Class 6D - Credit Agreement Hedging Claims. Impaired. Each holder of an Allowed Credit Agreement Hedging Claim that remains unpaid as of the Effective Date will receive for any Allowed Credit Agreement Hedging Claims such holder's Secured Creditor Pro Rata Share of the Secured Creditor Funded Debt Distribution. * Class 7 - Cash Secured Letter of Credit Claims. Impaired. Each holder of an Allowed Cash Secured Letter of Credit Claim outstanding as of such date shall: (i) be deemed to reissue its Cash Secured Letters of Credit under the Cash Secured LC Exit Facility which shall be secured by the same cash collateral which secured the Cash Secured Letters of Credit prior to the Petition Date, and (ii) receive payment in full in Cash of any amounts accrued and unpaid as of the Petition Date due to such holder of an Allowed Cash Secured Letter of Credit Claim pursuant to Section 2.15 of the Credit Agreement. * Class 9 - Senior Notes Claims. Impaired. Each holder of an Allowed Senior Notes Claim shall receive its pro rata share of: (i) 6% of the New Common Stock, plus additional shares of New Common Stock as a result of the Prepetition Funded Secured Claims Excess Cash Adjustment, subject to dilution on account of the New Warrants and the Management Incentive Plan; and (ii) the New Warrants. * Class 10 - General Unsecured Claims. Unimpaired. (i) payment in full in Cash; or (ii) Reinstatement. * Class 11 - Intercompany Claims. Each Allowed Intercompany Claim shall be, at the option of the applicable Debtor (with the consent of the Required Consenting Lenders), either: (i) Reinstated; (ii) canceled, released, and extinguished, and will be of no further force or effect; or (iii) otherwise addressed at the option of each applicable Debtor such that holders of Intercompany Claims will not receive any distribution on account of such Intercompany Claims. * Class 12 - Existing Equity Interests Other Than in McDermott Each Existing Equity Interests Other Than in McDermott shall be, at the option of the applicable Debtor, either: (i) Reinstated; (ii) canceled, released, and extinguished, and will be of no further force or effect; or (iii) otherwise addressed at the option of each applicable Debtor such that holders of Existing Equity Interests Other Than in McDermott will not receive any distribution on account of such Existing Equity Interests Other Than in McDermott. * Class 13 - Existing Preferred Equity Interests. Impaired. Holders of Existing Preferred Equity Interests will not receive any distribution on account of such Interests, which will be canceled, released, and extinguished as of the Effective Date, and will be of no further force or effect. * Class 14 - Existing Common Equity Interests. Impaired. Holders of Existing Common Equity Interests will not receive any distribution on account of such Interests, which will be canceled, released, and extinguished as of the Effective Date, and will be of no further force or effect. A full-text copy of the Second Amended Joint Prepackaged Chapter 11 Plan of Reorganization dated March 11, 2020, is available at https://tinyurl.com/rgap295 from PacerMonitor.com at no charge. About McDermott International Headquartered in Houston, Texas, McDermott (NYSE: MDR) -- http://www.mcdermott.com/-- is a provider of engineering, procurement, construction and installation and technology solutions to the energy industry. Its common stock was/is listed on the New York Stock Exchange under the trading symbol MDR. As of Sept. 30, 2019, McDermott had $8.75 billion in total assets, $9.86 billion in total liabilities, $271 million in redeemable preferred stock, and a total stockholders' deficit of $1.38 billion. On Jan. 21, 2020, McDermott International announced that it has the support of more than two-thirds of all its funded debt creditors for a restructuring transaction that will equitize nearly all the Company's funded debt, eliminating over $4.6 billion of debt. McDermott solicited votes from its lenders and bondholders in support of a prepackaged Chapter 11 Plan of Reorganization and commenced the prepackaged Chapter 11 later in the day, on Jan. 21, 2020 in the U.S. Bankruptcy Court for the Southern District of Texas. McDermott International and 224 affiliates on Jan. 21 and 22, 2020, filed Chapter 11 bankruptcy petitions (Bankr. Lead Case No. 20-303360). The Hon. Marvin Isgur is the case judge. The Debtors tapped KIRKLAND & ELLIS LLP (NEW YORK) as general bankruptcy counsel; JACKSON WALKER L.L.P. as local counsel; ALIXPARTNERS, LLP as restructuring advisor; AP SERVICES, LLC as operational advisor; ARIAS, FABREGA & FABREGA as Panamanian counsel; and BAKER BOTTS L.L.P. as corporate counsel. PRIME CLERK is the claims agent, maintaining the page https://cases.primeclerk.com/mcdermott MERIDIAN MARINA: April 21 Hearing on Disclosure Statement --------------------------------------------------------- Judge Mindy A. Mora has ordered that the hearing on the Disclosure Statement explaining Meridian Marina & Yacht Club of Palm City, LLC's Chapter 11 Plan will be on April 21, 2020 at 1:30 p.m. in United States Bankruptcy Court, 1515 North Flagler Drive, Courtroom A, West Palm Beach Florida 33401. The deadline for objections to the adequacy of the Disclosure Statement is on April 14, 2020. About Meridian Marina & Yacht Club Meridian Marina & Yacht Club of Palm City, LLC, based in Palm City, FL, filed a Chapter 11 petition (Bankr. S.D. Fla. Case No. 19-18585) on June 27, 2019. In the petition signed by Timothy Mullen, member and manager, the Debtor disclosed $8,528,155 in assets and $5,790,533 in liabilities. The Hon. Erik P. Kimball oversees the case. Craig I. Kelley, Esq. at Kelley Fulton & Kaplan, P.L., serves as bankruptcy counsel to the Debtor. No official committee of unsecured creditors has been appointed in the Chapter 11 case. MICROCHIP TECHNOLOGY: Fitch Affirms BB+ LongTerm IDR, Outlook Neg. ------------------------------------------------------------------ Fitch Ratings has affirmed the ratings for Microchip Technology, Inc., including the Long-Term Issuer Default Rating at 'BB+' and first lien senior secured debt rating at 'BBB-'/'RR1'. Fitch has also assigned a 'BBB-'/'RR1' rating to the $615 million first lien senior secured 365-day credit facility (bridge facility). The Rating Outlook remains Negative. Fitch's actions affect $12 billion of total debt including the undrawn revolving credit facility. On March, 21, 2020, Microchip entered into $615 million bridge facility as part of a second amendment to the company's May 29, 2018 first lien senior secured credit facility. The bridge facility will be pari passu with Microchip's existing first lien senior secured debt, which includes a RCF, term loan and secured notes. Microchip will use net proceeds to fund the cash portion of an exchange transaction under which the company will pay $615 million in cash for an aggregate principal amount of outstanding 1.625% convertible senior unsecured notes due 2025. Microchip will fund premiums with new common equity. Pro forma for the exchange, approximately $1.1 billion of 1.625% convertible notes due 2025 will remain outstanding. The rating and Negative Outlook reflect Microchip's still elevated leverage metrics from the May 29, 2018 acquisition of Microsemi Corp. and Fitch's concerns that sharply lower demand from the coronavirus pandemic could extend beyond the first half of calendar 2020 constraining Microchip's capacity for near-term debt reduction. While liquidity remains adequate and Fitch expects Microchip will continue to use substantially all of its FCF for debt reduction, Fitch forecasts total debt to operating EBITDA (just below 5.0x exiting calendar 2019) is likely to remain above Fitch's 3.5x negative rating sensitivity through calendar year 2020. Nonetheless, Fitch expects Microchip's solid share in a diversified set of secular growth markets positions the company to perform at least in line with the broader industry through market headwinds, as it did during 2019 within the context of global trade tensions. KEY RATING DRIVERS Coronavirus Threatened Recovery: Fitch believes the coronavirus pandemic threatens Microchip's nascent recovery that began in the December 2019 quarter, as bookings accelerated within the context of already lean channel inventory. Fitch expects sharply weaker results through at least the first half of 2020 from meaningfully lower global demand as the virus continues to spread. Fitch's rating case contemplates recovery in the second half of calendar 2020 while Fitch's downside case incorporates a prolonged pandemic impact. Deleveraging Behind Plan: Deleveraging will remain behind plan due to lower than previously expected revenue and profitability from of combination of Microsemi's excess channel inventory at close, lost sales to ZTE and Huawei resulting from U.S. export bans and uncertainty caused by U.S.-China trade tariffs. Fitch forecasts total debt to operating EBITDA will remain above Fitch's 3.5x negative sensitivity through 2020 (beyond the two-years post Microsemi close Fitch originally expected). Nonetheless, Microchip has publicly committed to using substantially all of its FCF for debt reduction until the company achieves investment grade (IG) credit metrics (2.5x total debt to operating EBITDA) and has repaid $2 billion of debt since closing the Microsemi acquisition. Poised for Share Gains: Over the long term, Fitch expects Microchip will outgrow semiconductor markets due to the company's broad product set enabling custom and semi-custom integrated solutions in markets with longer-product life cycles. The acquisition of Microsemi expanded Microchip's product capabilities and exposure to secular growth end markets, driven by increasing semiconductor content. Fitch believes Microchip's increasingly differentiated solutions drive substantial collaboration with customers, providing incumbent advantage for follow-on designs. Meaningful Revenue Diversification: Despite still cyclical end markets, Microchip's end market, product and customer diversification should drive comparatively even operating results. The acquisition of Microsemi increased communications and data center, computing, and aerospace and defense end market exposure, but also added to Microchip's already significant industrial end market sales. The deal also strengthened Microchip's solutions systems capabilities with high voltage power management, high-reliability discretes, storage and field programmable gate array products while reducing customer concentration. Credible Profit Expansion Roadmap: Fitch believes Microchip's target end markets and proprietary embedded solutions drive longer product life cycles and greater demand visibility. This leverages Microchip's in-house manufacturing, assembly and test strategy and drives strong profit and cash flow margins. Microchip's realization of $300 million of Microsemi acquisition-related synergies from the elimination of redundancies, integration of historical Microsemi deals and the internalization of Microsemi's outsourced production will drive higher operating leverage and, therefore, profit margin expansion from current levels. Reduced Acquisition Activity: Fitch expects reduced acquisition activity from Microchip, as well as for the broader semiconductor industry more broadly, given intensifying scrutiny of deals by both U.S. and Chinese regulators. While deals have picked up in 2019, transactions are generally smaller in size than the blockbuster deals in recent years and largely funded with cash flow. Meanwhile, Microchip has committed to focusing on integrating Microsemi, debt reduction and organic growth opportunities rather than incremental deals, which should result in more stable credit protection measures once the company achieves credit protection measure targets. Recovery Rationale: The senior secured RCF (including the bridge facility), term loan and bonds are secured by substantially all assets of Microchip and its subsidiaries. As a result, Fitch notches up the secured debt by one notch to 'BBB-'/'RR1' representing Fitch's expectation for superior recovery for the first lien debt. DERIVATION SUMMARY Fitch believes Microchip is strongly positioned for the rating, given its leading share in secular growth markets, broad product set enabling long product life cycle customized solutions and diversified customer base, resulting in expectations for top line growth exceeding the broader market and profitability more in-line with the 'BBB'-category. A number of competitors are meaningfully more highly rated, including Samsung (AA-), Texas Instruments (A+) and NXP (BBB-), due largely to a combination of greater FCF scale and more conservative financial policies, including a greater focus on organic growth, although strained trade relations between the U.S. and China should limit meaningful further industry consolidation. Growing annual FCF and the resumption of top line growth should enable Microchip to meaningfully improve credit protection measures over the near- to intermediate-term, at which point Fitch believes Microchip will be positioned to migrate to IG. KEY ASSUMPTIONS - Revenue down considerably for the first half of 2020 and begins recovering in the back half of 2020, resulting in moderately down revenue for fiscal 2021. - Modest deterioration of near-term gross profit margins but still in the low-60s% and increasing from there driven by internalizing Microsemi's back-end assembly and test, which should increase operating leverage for the company. - Opex at roughly 22.5% of revenue through the forecast period with largely fixed R&D moderated by variable compensation growing in-line with revenue. - The company uses substantially all of FCF for debt reduction until leverage metrics return to below Fitch's 3.5x negative rating sensitivity. - Only slight dividend growth until total debt to operating EBITDA reaches 2.5x. RATING SENSITIVITIES Developments That May, Individually or Collectively, Lead to Positive Rating Action: - Fitch could stabilize the ratings if Microchip uses substantially all of its FCF for reduction, resulting in near-term expectations for total debt to operating EBITDA at or below 3.5x (or 2.5x for an upgrade to IG). - Microchip's top line growth exceeds that of underlying markets, supporting the case for share gains and, therefore faster profitability and cash flow growth from considerable operating leverage. Developments That May, Individually or Collectively, Lead to Negative Rating Action: - Microchip fails to use substantially all of its FCF for debt reduction prior to the company achieving total debt to operating EBITDA of 3.5x or total debt to FCF approaching mid-single digits. - Microchip's top line growth rate lags that of its core growth end markets resulting in reduced liquidity from slower than anticipated profitability and cash flow. - An expectation that FCF or FCF margin would be sustained below $500 million or 10%, respectively. LIQUIDITY AND DEBT STRUCTURE Adequate Liquidity: As of Dec. 31, 2019, Fitch believes Microchip's liquidity was adequate and supported by $402.3 million of cash, cash equivalents and short-term investments and approximately $945.5 million of remaining availability under the company's $3.57 billion RCF. Fitch anticipates cash will remain near current levels but that rapid repayment of the RCF will bolster liquidity with excess FCF through the forecast period. Fitch's expectation for roughly $1.0 billion to 1.5 billion of annual FCF also supports liquidity, although Fitch expects Microchip will use its FCF for debt reduction until the company achieves its 2.5x total leverage target. ESG CONSIDERATIONS ESG issues are credit neutral or have only a minimal credit impact on the entity(ies), either due to their nature or the way in which they are being managed by the entity(ies). MICROCHIP TECHNOLOGY: Moody's Affirms CFR at Ba1, Outlook Stable ---------------------------------------------------------------- Moody's Investors Service affirmed the Ba1 corporate family rating and Baa3 senior secured rating of Microchip Technology Inc. following the company's announcement that it has agreed to exchange $615 million in aggregate principal amount of senior unsecured convertible notes and fund the cash portion of the exchange with a $615 million, 364-day senior secured bridge term loan facility. The speculative grade liquidity rating was downgraded from SGL-1 to SGL-2. The outlook is stable. Although the transaction is leverage neutral, Moody's views the transaction as credit negative since it increases near term maturities and results in an increase in the proportion of secured debt in the capital structure. RATINGS RATIONALE Microchip's credit profile is supported by the company's leading position as a provider of microcontroller, analog, mixed signal, and specialized semiconductor solutions. While Moody's expects near term demand conditions will be weak due to coronavirus, Moody's expects revenue growth to resume later this year driven by GDP-based growth plus share gains and semiconductor content growth. Microchip benefits from its broad diversification by product, process, end market, customer, and geography. Given the company's broad product portfolio and long product cycles of primarily proprietary products, gross margins should remain in the low-to-mid 60% range with EBITDA margins sustained at the low 40% level. The rapid and widening spread of the coronavirus outbreak, deteriorating global economic outlook, falling oil prices, and asset price declines are creating a severe and extensive credit shock across many sectors, regions and markets. The combined credit effects of these developments are unprecedented. While the semiconductor sector has been less affected than many other sectors by the shock, and despite Microchip's broad diversification in many respects, the company remains vulnerable to shifts in market sentiment in these unprecedented operating conditions. Moreover, Microchip remains vulnerable to the outbreak continuing to spread. Moody's regards the coronavirus outbreak as a social risk under its ESG framework, given the substantial implications for public health and safety. On March 2, Microchip noted that revenue for the fourth fiscal quarter ending March 2020 will be flat sequentially, weaker than the company anticipated in mid-February as the company's supply chain is returning to normal operations at a slower pace than anticipated because of the developing impacts from the coronavirus. That update, and broader macro-economic developments, are credit negative and portends downside risk to many companies in the semiconductor industry. Positively, Microchip noted that underlying demand trends remain intact, suggesting that the revenue shortfall this quarter would likely shift into the next quarter presuming supply chain dislocations correct themselves. While its own supply chain is not disrupted, a bigger issue for Microchip is customer demand and its customers' supply chain. While March quarter revenue is estimated to be down $70 million from original expectations in mid-February, revenue will likely be shifted to future quarters, because there will be a pent-up need for product from most customers who wanted to buy it. The company estimates that 21% to 22% of its business is shipped into China, with half of that for exports and half for internal consumption. Despite lower revenue in the next few quarters, Moody's expects Microchip will continue to generate solid profitability with gross margins over 60%, EBITDA margins over 40%, and nearly all free cash flow after dividends being used to pay down debt incurred from the acquisition of Microsemi two years ago. Moody's expects adjusted gross debt to EBITDA will decrease from 5.8x at the end of fiscal March 2019 to around 4.5x in fiscal March 2021 while free cash flow to gross adjusted debt exceeds 10%. The downgrade of the speculative grade liquidity rating to SGL-2 reflects the potential call on liquidity in the event the company does not refinance the bridge loan with permanent financing. Microchip has good liquidity, with $402 million of cash at December 2019 and approximately $940 million available under its revolving credit facility that matures May 2023. The stable ratings outlook reflects Moody's expectation that Microchip will continue to apply nearly all free cash flow toward debt repayment, sustain strong margins over the next 12 to 18 months despite the currently weak environment, and maintain good liquidity. The ratings could be upgraded if gross debt to EBITDA approaches 3.5x; if there is a substantial reduction of secured debt; EBITDA margins are sustained around 40%; and the company maintains solid liquidity. The ratings could be downgraded if gross adjusted debt to EBITDA is sustained above 4.5x; EBITDA margins migrate towards 35%; or if liquidity falls below $500 million of total cash and revolving credit availability. The rating on the company's secured debt could be downgraded if there a further material increases in the proportion of secured debt in the capital structure. Ratings affirmed: Corporate Family Rating affirmed at Ba1 Probability of Default Rating affirmed at Ba1-PD Senior Secured Revolving Credit Facility due 2023, affirmed at Baa3 (LGD3) Senior Secured Term Loan due 2025, affirmed at Baa3 (LGD3) Gtd Senior Secured Notes due 2021, affirmed at Baa3 (LGD3) Gtd Senior Secured Notes due 2023, affirmed at Baa3 (LGD3) Ratings downgraded: Speculative Grade Liquidity Rating downgraded to SGL-2 from SGL-1 Outlook actions: Outlook: Remains Stable The principal methodology used in these ratings was Semiconductor Industry published in July 2018. Microchip Technology Inc., headquartered in Chandler Arizona, is a leading provider of microcontroller, analog, mixed signal, and specialized semiconductor solutions. Microchip reported revenue of $5.3 billion for the twelve months ended December 2019. MIDAS INTERMEDIATE II: Moody's Cuts CFR to Caa1, Outlook Negative ----------------------------------------------------------------- Moody's Investors Service downgraded Midas Intermediate Holdco II, LLC's Corporate Family Rating and Probability of Default Rating to Caa1 and Caa1-PD, respectively. At the same time, Moody's downgraded the rating on the company's senior secured bank credit facility to B2 from B1 and affirmed the Caa2 rating on the senior unsecured notes. The outlook remains negative. "The downgrade and negative outlook reflect the increased refinancing risk related to the August 2021 maturity of the company's term loan as the company's leverage remains very high," stated Moody's VIce President Charlie O'Shea. "The action also reflects the heightened risk that the company will incur much higher cash interest costs as part of a refinancing transaction such that it meaningfully constrains its future investment capacity and free cash flow generation long-term," continued O'Shea. "Moody's continues with its favorable view of the fundamentals for the collision repair sector and believes that management has a strategy that can, if well-executed, reverse weak operating trends." Downgrades: Issuer: Midas Intermediate Holdco II, LLC Probability of Default Rating, Downgraded to Caa1-PD from B3-PD Corporate Family Rating, Downgraded to Caa1 from B3 Senior Secured Bank Credit Facility, Downgraded to B2 (LGD3) from B1 (LGD3) Affirmations: Issuer: Midas Intermediate Holdco II, LLC Senior Unsecured Regular Bond/Debenture, Affirmed Caa2 (LGD5) Outlook Actions: Issuer: Midas Intermediate Holdco II, LLC Outlook, Remains Negative RATINGS RATIONALE Service King's Caa1 rating reflects its weak credit metrics, with pro forma debt/ EBITDA at FY 2019 of around 8 times and EBIT/interest well below 1 time (including 50% credit for cost savings from front-office re-structuring initiatives executed in early 2020), as well as the looming 2021 debt maturities. Supporting the rating is Service King's solid market position in the highly fragmented collision repair sub-sector, its mutually-beneficial relationships with national and major insurance carriers which represents the vast majority of revenue, and strong industry fundamentals which should support continuing stable demand for its services. However, while demand fundamentals are stable, recent pricing pressure with certain carriers along with higher costs has resulted in an erosion in margins, EBITDA and free cash flow. Leverage and interest coverage are expected to improve such that they approach the mid-7.0 times range and approximately 1.0 times respectively over the next 12-18 months should the company's successfully execute its operating efficiency initiatives. Additionally, the contribution from recent and future store additions should offset labor pressures and support earnings growth. Service King's liquidity profile is adequate, supported by its $176 million cash balance following a $92 million draw on its revolving credit facility which expires in May 2021, and $26 million of short-term investments as of FY 2019, with roughly $85 million restricted as to use. The adequate liquidity is predicated on the expectation that Service King will address the upcoming August 2021 maturity of its roughly $600 million senior secured Term Loan. The negative outlook reflects the risks surrounding the speed with and level to which credit metrics will improve, as well as the August 2021 term loan maturity. Given the negative outlook, an upgrade over the near term is unlikely. Over time, ratings could be upgraded if the company is able to drive meaningful revenue and EBITDA growth such that debt/EBITDA approaches 6.5 times with EBIT/interest sustained materially above 1.25 times. An upgrade would also require the company to maintain at least good liquidity, and the expectation that financial policies will sustain metrics at these levels. Over a shorter horizon, the outlook could return to stable if operating improvements are achieved such that credit metrics begin to generate meaningful positive momentum away from the current downgrade triggers. A stabilization of the outlook would also require addressing the term loan maturity in timely manner. Ratings could be downgraded if "steady state" operating performance does not show signs of stabilization or financial policies become more aggressive such that debt/EBITDA remains above 7.5 times and EBIT/interest remains below 1.0 times. Ratings could also be downgraded if the company's liquidity profile were to deteriorate for any reason, or if meaningful progress is not made towards addressing the August 2021 term loan maturity in due course or should the probability of default increase for any reason. Service King is exposed to environmental risk as the company is subject to governmental laws and regulations regarding hazardous waste. Service King could be impacted if they are found to be in purported violation of or subject to liabilities under any of these laws or regulations, or if new laws or regulations are enacted that adversely affect the operations, business, reputation, financial condition, or results of operations. Service King was recently fined by the State of California for failure to adhere with hazardous waste regulations. However, the fine was reduced to an immaterial amount, $1.8 million, following Service Kings early adoption of remediation efforts. Service King has put in a place an ongoing training program to ensure that its employees comply with all hazardous waste requirements going forward. Service King's overall corporate governance risk is high given its financial sponsor ownership. Financial strategy and leverage policy are a key concern with sponsor-owned companies, and in the case of Service King, the key risk is that the sponsor's pursuit of an aggressive pace of debt-funded acquisitions, which has increased total funded debt by more than $300 million since 2014, has resulted in an elevated leverage profile that may limit the company's financial flexibility in the event that earnings deteriorate from current levels. Headquartered in Richardson, Texas, Midas Intermediate Holdco II, LLC is a leading provider of vehicle body repair services with annual revenue of over $1.3 billion. The company operates under the Service King brand name and operated 346 locations in 24 states as of FY 2019. The principal methodology used in these ratings was Retail Industry published in May 2018. MILLS FORESTRY: Seeks to Hire Stone & Baxter as Legal Counsel ------------------------------------------------------------- Mills Forestry Service, LLC, seeks approval from the U.S. Bankruptcy Court for the Southern District of Georgia to hire Stone & Baxter, LLP as its legal counsel. The firm will provide these services in connection with the Debtor's Chapter 11 case: a. advise the Debtor of its powers and duties in the continued operation of the business and management of its properties; b. prepare legal papers; c. continue existing litigation, if any, to which the Debtor may be a party and conduct examinations incidental to the administration of its estate; d. take all necessary actions for the proper preservation and administration of the estate; e. assist in the preparation and filing of the Debtor's statement of financial affairs and bankruptcy schedules; f. take actions related to the use by the Debtor of its property pledged as collateral, including cash collateral; g. assert all claims asserted by the Debtor; and h. assist the Debtor in connection with claims for taxes made by governmental units. The hourly rates for the firm's attorneys range from $175 to $525. Paralegals and research assistants charge $135 per hour. Stone & Baxter neither holds nor represents any interest adverse to the Debtor and its estate, according to court filings. The firm can be reached through: David L. Bury, Jr., Esq. G. Daniel Taylor, Esq. Stone & Baxter, LLP 577 Mulberry Street, Suite 800 Macon, Georgia 31201 Phone: (478) 750-9898 Fax: (478) 750-9899 Email: dbury@stoneandbaxter.com dtaylor@stoneandbaxter.com About Mills Forestry Service Mills Forestry Service, LLC, sought protection under Chapter 11 of the Bankruptcy Code (Bankr. S.D. Ga. Case No. 20-60110) on March 7, 2020. At the time of the filing, the Debtor disclosed assets of between $1 million and $10 million and liabilities of the same range. Judge Edward J. Coleman III oversees the case. The Debtor tapped Stone & Baxter, LLP as its legal counsel. MODELL'S SPORTING: A&G Begins Marketing 137 Store Leases -------------------------------------------------------- A&G Real Estate Partners (A&G) has begun marketing 137 Modell's Sporting Goods store leases in nine Northeastern and Mid-Atlantic states and the District of Columbia in connection with the 111-year-old retailer's voluntary Chapter 11 bankruptcy filing and liquidation. Full information on the leases is now available at www.agrep.com. An auction date and deadline for bids will be announced at a later date. "This iconic brand had an extraordinary real estate strategy, with the family-owned business assembling one of the strongest portfolios of top retail locations in New York City's five boroughs -- an area with significant barriers to entry," said A&G Co-President Emilio Amendola. "Similarly, the vast majority of Modell's sites on Long Island and in New Jersey, Pennsylvania, New England and the Mid-Atlantic are 'A' locations with very advantageous rent structures. Opportunities like this come around once every 10 years." The available stores average 17,500 square feet and range in size from 6,800 to 32,700 square feet. "In addition to favorable rents, many of the leases offer multiple renewal options," he added. "With locations in prime highway retail centers, busy central business districts and regional malls, the Modell's sites offer tremendous opportunities for specialty retailers, restaurants, medical tenants and other uses," Mr. Amendola noted. "Given the quality of this real estate, we anticipate a robust response." "We have partnered with A&G in the past on both the sale and re-negotiation of leases, and they have delivered phenomenal results," said Mitchell Modell, CEO of Modell's Sporting Goods. Bob Duffy, Managing Partner of BRG and Chief Restructuring Officer of Modell's Sporting Goods, added: "A&G has always delivered maximum returns to the creditors in these unfortunate circumstances. We are confident they will do that in this case as well." For more information on the available leases, visit www.agrep.com or contact Emilio Amendola, emilio@agrep.com, (631) 465-9507; Mike Matlat, mike@agrep.com, (631) 465-9508; or Todd Eyler, todd@agrep.com, (631) 465-9510 About Modell's Sporting Goods Modell's Sporting Goods -- https://www.modells.com/ -- is a family-owned and operated retailer of sporting goods, athletic footwear, active apparel, and fan gear. Modell's Sporting Goods operates stores throughout New York, New Jersey, Pennsylvania, Connecticut, Massachusetts, New Hampshire, Delaware, Maryland, Virginia and the District of Columbia. Modell's Sporting Goods, Inc., and its affiliates sought Chapter 11 protection (Bankr. D.N.J. Lead Case No. 20-14179) on March 11, 2020. Modell's Sporting Goods was estimated to have $500,000 to $1 million in assets and $1 million to $10 million in liabilities. The Hon. Vincent F. Papalia is the case judge. The Debtors tapped Cole Schotz P.C. as counsel; Berkeley Research Group, LLC, as restructuring advisor; and Prime Clerk LLC as claims agent. MURPHY OIL: Moody's Lowers CFR to Ba3, Outlook Negative ------------------------------------------------------- Moody's Investors Service downgraded Murphy Oil Corporation's Corporate Family Rating to Ba3 from Ba2, its Probability of Default Rating to Ba3-PD from Ba2-PD and its senior unsecured notes rating to Ba3 from Ba2. The Speculative Grade Liquidity Rating was downgraded to SGL-2 from SGL-1. The outlook is negative. Downgrades: Issuer: Murphy Oil Corporation Probability of Default Rating, Downgraded to Ba3-PD from Ba2-PD Speculative Grade Liquidity Rating, Downgraded to SGL-2 from SGL-1 Corporate Family Rating, Downgraded to Ba3 from Ba2 Senior Unsecured Shelf, Downgraded to (P)Ba3 from (P)Ba2 Senior Unsecured Notes, Downgraded to Ba3 (LGD4) from Ba2 (LGD4) Outlook Actions: Issuer: Murphy Oil Corporation Outlook, Changed to Negative from Stable RATINGS RATIONALE The downgrade of Murphy's CFR to Ba3 reflects Moody's expectation that Murphy will generate retained cash flow to debt of less than 20% and negative free cash flow in 2020 as a result of the downturn in oil prices. This will result in weak cash flow-based credit metrics in 2020 under its base assumptions for oil and gas prices and those metrics may not meaningfully improve in 2021. The rapid and widening spread of the coronavirus outbreak, deteriorating global economic outlook, falling oil prices, and asset price declines are creating a severe and extensive credit shock across many sectors, regions and markets. The combined credit effects of these developments are unprecedented. The E&P sector has been one of the sectors most significantly affected by the shock given its sensitivity to demand and oil prices. More specifically, the weaknesses in Murphy's credit profile have left it vulnerable to shifts in market sentiment in these unprecedented operating conditions and Murphy remains vulnerable to the outbreak continuing to spread and oil prices remaining weak. Moody's regards the coronavirus outbreak as a social risk under its ESG framework, given the substantial implications for public health and safety. The action reflects the impact on Murphy of the breadth and severity of the oil demand and supply shocks, and the broad deterioration in credit quality it has triggered. Murphy's SGL-2 Speculative Grade Liquidity Rating reflects its adequate liquidity through mid-2021. The liquidity position is supported by cash balances that stood at $307 million and year-end 2019 and $1.6 billion unsecured revolving credit facility (undrawn) with $3.7 million of letters of credit outstanding. The revolving credit facility matures in November 2023. Moody's expects the company to remain well in compliance with its financial covenants of EBITDAX/Interest coverage no less than 2.5x and debt/EBITDAX of less than 4.0x. Murphy's next maturity is $260 million and $318 million of senior notes maturing in 2022. The Ba3 CFR reflects Murphy's diversified portfolio of onshore and offshore assets, significant scale, oil-weighted production and modest leverage for the rating. Its onshore production is sourced from the Eagle Ford shale and Canada, while its offshore production is predominately in the US Gulf of Mexico (GOM). Approximately two-thirds of production is liquids. Murphy has scale typical of a higher rated entity. Moody's expects the company to lower its leverage by growing its production volumes and generating higher earnings. Moody's believes there are higher exploration risks associated with developing deep water US GOM assets compared to onshore Eagle Ford shale and Canadian onshore assets. The company reduced its negative free cash flow (after dividends) in 2017-2018, and turned free cash flow positive in Q3 2019 (after its portfolio realignment). However, in the current weak commodity price environment, Murphy is not likely to generate positive free cash flow. Murphy's negative outlook reflects Moody's expectation that the company's production will not meaningfully decline and liquidity will remain adequate. Murphy's ratings could be downgraded if retained cash flow to debt remains below 20% or the LFCR falls below 1.5x or the company generates sustained negative free cash flow beyond 2020. While an upgrade is unlikely, the ratings could be upgraded if the company demonstrates consistent production growth funded within its cash flow, while sustaining a solid leverage profile with retained cash flow to debt above 30% and a leveraged full-cycle ratio of at least 1.5x. The principal methodology used in these ratings was Independent Exploration and Production Industry published in May 2017. Murphy Oil Corporation, headquartered in El Dorado, Arkansas, is an independent E&P company with producing and/or exploration activities in the US and Canada, as well as in Mexico, Australia, Brazil and Vietnam. MUSCLE MAKER: Court Conditionally Approves Disclosure Statement --------------------------------------------------------------- Judge Karen K. Specie has ordered that the Disclosure Statement explaining the Chapter 11 Plan filed by Muscle Maker Grill Tallahassee, LLC on March 9, 2020 is conditionally approved. April 8, 2020, is fixed as the last day for filing and serving written objections to the Disclosure Statement, and is fixed as the last day for filing acceptances or rejections of the Plan. A hearing to consider confirmation of the Plan will be held at 110 E. Park Avenue, 2nd Floor Courtroom, Tallahassee, FL 32301 on April 15, 2020 at 01:30 p.m., Eastern Time. Objections to confirmation of the Plan are due seven days before April 15, 2020. About Muscle Maker Grill Tallahassee Muscle Maker Grill Tallahassee is a fast casual restaurant brand that serves nutritious alternatives to traditional dishes. Based in Tallahassee, Fla., Muscle Maker Grill Tallahassee filed a Chapter 11 petition (Bankr. N.D. Fla. Case No. 19-40280) on May 16, 2019, listing under $1 million in both assets and liabilities. Robert C. Bruner, Esq., at Bruner Wright, P.A., is serving as the Debtor's counsel. NAI ENTERTAINMENT: Moody's Cuts CFR to B3 on Theatre Closures ------------------------------------------------------------- Moody's Investors Service has downgraded NAI Entertainment Holdings LLC's Corporate Family Rating to B3 from B1 and the Probability of Default Rating to B3-PD from B1-PD. Concurrently, Moody's downgraded NAI's credit facilities to B3 from B1, consisting of a $75 million revolving credit facility and $300 million senior secured term loan $261.25 million outstanding). Moody's also placed the ratings on review for further downgrade. RATINGS RATIONALE The downgrade reflects two recent credit negative events. First, Moody's expects lower revenue and EBITDA this year coupled with weakened liquidity as a result of temporary closures of NAI's theatre circuit in the US (24 theatres), Latin America (31) and the UK (21). Last week, NAI closed all of its US theatres to adhere to the federal government's recommendation that public gatherings should be restricted to ten or fewer individuals and people should engage in social distancing due to the widespread coronavirus pandemic (a.k.a., COVID-19). Similar mandates have been enacted by national governments across Europe and Latin America, which have led NAI to close its theatres in the UK, Argentina and Brazil. Moody's expects the closures to last up to 3 months, similar to other movie exhibitors. While Moody's expects leverage to rise significantly to the 9.5x-10x area (Moody's adjusted) in 2020 due to lower EBITDA, as the virus threat is neutralized, theatres reopen and EBITDA expands with moviegoers gradually returning to the cinema for what is expected to be a relatively strong movie slate next year, Moody's projects leverage will subsequently decline to the 8x-9x band in 2021. Second, the value of NAI's pledged ViacomCBS shares (roughly 15.4 million), which are pledged as collateral for the term loan, has fallen substantially below the 1.5x collateral value to loan covenant due to the market selloff over the past few weeks related to economic uncertainties associated with the coronavirus outbreak. Based on the most recent share price, Moody's estimates the pledged shares are valued at approximately 0.8x the loan value. The share price decline was also exacerbated by news that the NCAA men's basketball tournament was cancelled, which is a key broadcasting event for CBS and will likely result in the loss of ad revenue. Though the company was in technical default, it received a waiver through 28 March. Moody's expects the covenant situation to be favorably resolved in the near future. NAI also owns around 7.2 million of unpledged ViacomCBS shares. If they were pledged, Moody's estimates the total collateral value would be roughly 1.2x the loan value. Previously, the B1 rating was driven principally by the pledged and unpledged shares' high collateral value relative to the term loan balance; however, given that Moody's expects asset values will remain depressed for some time, NAI's rating is now being driven by the company's underlying creditworthiness, liquidity and debt protection measures. The review for downgrade reflects the numerous uncertainties related to the economic impact of COVID-19 on NAI's cash flows and liquidity, especially if the virus continues to spread forcing NAI to keep its theatres closed beyond June and various government financial aid programs for the theatre industry are delayed. Under this scenario, Moody's could lower the ratings if NAI exhausts its existing internal and external liquidity sources, if this becomes necessary. The review will focus on NAI's ability to reopen its theatres and the resulting timetable, the impact on liquidity as the coronavirus containment efforts continue, the extent to which attendance revives and NAI's prospects for returning to positive operating cash flow. Access to substantial additional sources of liquidity to cover a longer-than-expected cash burn period would also be considered as part of the review. As this global crisis unfurls, NAI's balance sheet is highly levered and annual free cash flow generation has been mostly neutral to negative over the past four years due to weakening moviegoer attendance in the US and underperformance in challenged Latin American economies. At 31 September 2019, financial leverage was just over 9x (as calculated by Moody's) and LTM free cash flow was $1 million. Following strong operating performance in Q4 2019 owing to the release of several big franchise films, Moody's projects the company generated free cash flow of approximately $7.5 million in the quarter. Cash balances are just under $25 million. Moody's expects NAI's internal liquidity combined with approximately $5.4 million of quarterly dividend income from its owned ViacomCBS shares and meaningful cost cutting measures should enable the company to absorb weakening and potentially negative operating cash flows that Moody's projects NAI will incur over the next two fiscal quarters. Like most cinema operators, NAI has a highly variable cost structure and can quickly reduce operating costs by up to 75% in the short-run. Moody's fully expects the company to implement plans to minimize its cash burn as much as possible during the closure period via a combination of natural expense reductions (i.e., costs not incurred while theatres are closed) and management actions aimed at reductions in maintenance, utilities, payroll and theatre-level operating costs. With respect to the fixed rent costs for its theatres, Moody's expects NAI will likely seek to obtain cash relief or rent deferrals during the closure period and beyond, if necessary. In the US, the National Association of Theatre Owners (NATO) is lobbying the US Congress to urgently pass an emergency economic relief bill to provide financial assistance to the movie theatre industry. The aid package is designed to relieve the ongoing cost burden during the closure period, provide tax benefits to assist employers with providing support to employees and offer government loan guarantees to help ease the liquidity squeeze. In the UK, NAI and other cinema operators are currently working with the UK Cinema Association to lobby the government for state subsidies to cover payroll costs. Given the possibility of its theatres remaining closed for up to three months, Moody's expects the lack of revenue generation, combined with the ongoing need to pay certain fixed expenses and debt-servicing costs, will weaken NAI's liquidity. Nonetheless, during this three-month period, Moody's expects the company's existing liquidity sources to cover the cash burn. To the extent NAI is able to reopen its theatres by mid-June and patrons gradually return to its cinemas, the company in conjunction with the major film studios could offer promotions plus early releases and re-releases of certain premium movies to stimulate moviegoer demand, especially during the summer months when NAI typically experiences a seasonally strong box office. The primary risk to NAI over the short-run would be a prolonged outbreak, causing its theatres to remain closed for an extended period beyond June coupled with an exhaustion of its existing sources of liquidity and an inability to timely access new liquidity sources to cover the cash burn into Q3 2020. To the extent the US emergency economic relief bill for cinema operators is signed into law before June, the government loan guarantee program could facilitate NAI's ability to access new credit lines from its banks, if this becomes necessary. To the extent NAI's theatres reopen by mid-June, Moody's does not expect attendance to be strong in the second half of the year given that 2020 was already expected to be a weak year for big budget tentpole film debuts and movie studios have: (i) postponed releases of several films by pulling them off the spring and summer calendars due to the outbreak and pushing their releases later into 2020 or 2021; (ii) opted to simultaneously debut new films direct-to-consumer on subscription video on demand (SVOD) streaming platforms; or (iii) released movies earlier-than-normal to streaming platforms. Further, Moody's expects some consumers will be hesitant to visit theatres even after the outbreak has subsided while some moviegoers will reduce their out-of-home entertainment activities and instead watch high quality movies at home given the growing number of providers offering premium SVOD content. The stay-at-home safety measures put in place during the COVID-19 outbreak could accelerate this type of consumer behavior and some individuals could spend more time viewing movies at home even after the disease has been contained and theatres reopen. Moviegoer demand will likely remain strong for big budget "cultural event" premium films while in-home viewing will be reserved for low or medium-budget second-tier films. Despite these challenges, Moody's expects cinema operators to remain an integral part of film studios' distribution of their movie content and a key destination for consumers seeking affordable out-of-home entertainment. ESG CONSIDERATIONS The rapid and widening spread of the coronavirus outbreak, deteriorating global economic outlook, falling oil prices, and asset price declines are creating a severe and extensive credit shock across many sectors, regions and markets. The combined credit effects of these developments are unprecedented. The movie theatre sector has been one of the sectors most significantly affected by the shock given its sensitivity to consumer demand and sentiment. More specifically, the weaknesses in NAI's credit profile, including its exposure to the US and Europe have left it vulnerable to shifts in market sentiment in these unprecedented operating conditions and NAI remains vulnerable to the outbreak's continuing spread. Moody's regards the coronavirus outbreak as a social risk under its ESG framework, given the substantial implications for public health and safety. The action reflects the impact on NAI of the breadth and severity of the shock, and the broad deterioration in credit quality it has triggered SUMMARY OF THE RATING ACTIONS Ratings Downgraded: Issuer: NAI Entertainment Holdings LLC Corporate Family Rating, Downgraded to B3 from B1, Placed On Review For Downgrade Probability of Default Rating, Downgraded to B3-PD from B1-PD, Placed on Review for Downgrade $75.0 Million Revolving Credit Facility due 2023, Downgraded to B3 (LGD3) from B1 (LGD3), Placed on Review for Downgrade $261.3 Million Outstanding Senior Secured Term Loan B due 2025, Downgraded to B3 (LGD3) from B1 (LGD3), Placed on Review for Downgrade Outlook Actions: Issuer: NAI Entertainment Holdings LLC Outlook, Changed to Rating Under Review from Stable The principal methodology used in these ratings was Business and Consumer Service Industry published in October 2016. Headquartered in Norwood, Massachusetts, NAI Entertainment Holdings LLC is a wholly-owned subsidiary of National Amusements Inc. (a private media holding company owned by the Redstone family) and operates a significant proportion of National Amusements Inc.'s cinema assets through its 24 theatres operating in the US and 52 theatres operating internationally. Revenue totaled approximately $427 million for the twelve months ended 3 October 2019. NOVABAY PHARMACEUTICALS: Appoints Interim Chief Financial Officer ----------------------------------------------------------------- The Board of Directors of NovaBay Pharmaceuticals, Inc. appointed Lynn Christopher as the Company's interim chief financial officer and treasurer, effective March 18, 2020. In connection with the appointment of Ms. Christopher, on March 18, 2020, the Company entered into a Statement of Work with RoseRyan, Inc., a consulting and executive services firm, pursuant to a Master Consulting Services Agreement, dated March 28, 2008, between the Company and RoseRyan. Pursuant to the Statement of Work, the Company will pay RoseRyan $295 per hour for Ms. Christopher's services as the Company's interim chief financial officer and treasurer beginning March 23, 2020 through the earlier of the Company's hire of a permanent chief financial officer and treasurer or June 30, 2020, unless the Statement of Work is earlier terminated by either party. Pursuant to the Master Consulting Services Agreement, Ms. Christopher is employed and compensated by RoseRyan. Ms. Christopher, age 65, has served as a consultant at RoseRyan since September 2015. Prior to joining RoseRyan, Ms. Christopher served as corporate controller for Adap.tv, Inc. (from March 2013 to June 2015), Lumasense Technologies, Inc. (from April 2011 to December 2012) and Responsys, Inc. (from August 2009 to May 2011). Ms. Christopher brings over 20 years of professional experience to the Company including directing all facets of finance and accounting management for private and public companies including managing an accounting department and leading quarterly reviews. Ms. Christopher received a B.A. in Accounting from the University of Washington. As previously disclosed, Jason Raleigh resigned as NovaBay's chief financial officer and treasurer to pursue a new opportunity, to be effective March 31, 2020. About NovaBay Pharmaceuticals Based in Emeryville, California, NovaBay Pharmaceuticals -- http://www.novabay.com/-- is a biopharmaceutical company focusing on commercializing and developing its non-antibiotic anti-infective products to address the unmet therapeutic needs of the global, topical anti-infective market with its two distinct product categories: the NEUTROX family of products and the AGANOCIDE compounds. The Neutrox family of products includes AVENOVA for the eye care market, NEUTROPHASE for wound care market, and CELLERX for the aesthetic dermatology market. The Aganocide compounds, still under development, have target applications in the dermatology and urology markets. Novabay reported a net loss and comprehensive loss of $6.54 million for the year ended Dec. 31, 2018, compared to a net loss and comprehensive loss of $7.40 million for the year ended Dec. 31, 2017. As of Sept. 30, 2019, the Company had $14.60 million in total assets, $11.09 million in total liabilities, $584,000 in series A non-voting convertible preferred stock, and total stockholders' equity of $2.92 million. OUM & CO. LLP, in San Francisco, California, the Company's auditor since 2010, issued a "going concern" opinion in its report dated March 29, 2019, on the Company's consolidated financial statements for the year ended Dec. 31, 2018, citing that the Company has experienced operating losses for most of its history and expects expenses to exceed revenues in 2019. The Company also has recurring negative cash flows from operations and an accumulated deficit. All of these matters raise substantial doubt about its ability to continue as a going concern. O'LINN SECURITY: April 14 Hearing on Amended Plan & Disclosures --------------------------------------------------------------- Judge Scott C. Clarkson has ordered that the deadline to file and serve a First Amended Disclosure Statement and Plan of O'Linn Security Incorporated, the Debtor in this case, is March 19, 2020. The hearing on the First Amended Disclosure Statement and Plan is April 14, 2020 at 1:30 p.m. Any oppositions must be filed no later than April 2, 2020. Any reply must be filed no later than April 9, 2020. The Status Conference has been continued to April 14, 2020 at 1:30 p.m. A status report is due 14 days prior to the status conference. About O'Linn Security O'Linn Security Incorporated, a security firm that provides services in the Palm Springs area and greater Coachella Valley, in California, sought Chapter 11 protection (Bankr. C.D. Cal. Case No.19-17085) on Aug. 13, 2019, estimating both assets and liabilities of less than $1 million. The case is assigned to Judge Scott C. Clarkson. Steven R. Fox, Esq., and W. Sloan Youkstetter, Esq., at The Fox Law Corporation, Inc., serve as the Debtor's counsel. OBITX INC: Reports $165K Net Loss for Third Quarter --------------------------------------------------- OBITX, Inc. filed with the Securities and Exchange Commission its Quarterly Report on Form 10-Q reporting a net loss from operations of $164,516 on $0 of sales for the three months ended Oct. 31, 2019, compared to a net loss from operations of $216,184 on $46,320 of sales for the three months ended Oct. 31, 2018. For the nine months ended Oct. 31, 2019, the Company reported a net loss from operations of $506,443 on $0 of sales compared to a net loss from operations of $690,702 on $84,610 of sales for the nine months ended Oct. 31, 2018. As of Oct. 31, 2019, the Company had $2.08 million in total assets, $579,598 in total liabilities, and $1.51 million in ttoal stockholders' equity. The Company had cash available of $0 as of Oct. 31, 2019. Based on its revenues, cash on hand and current monthly burn rate, the Company must rely on financing to fund current operations on a daily basis. Currently all operating costs are being accrued as accounts payable. The Company used $8,152 in cash by operating activities for the nine months ended Oct. 31, 2019, as compared to cash used in the amount of $56,140 for the nine months ended Oct. 31, 2018. Net cash used by operations consisted primarily of the net loss of $506,446 offset by non-cash expenses of $365,412 in depreciation and amortization of assets. Additionally, changes in assets and liabilities consisted of decreases of $4,500 in accounts receivable, prepaid expenses of $149 and $128,233 in accounts payable. There was no increase in cash in investing activities for the nine months ended Oct. 31, 2019 compared to using $122,319 for the nine months ended October, 2018. A full-text copy of the Form 10-Q is available for free at: https://is.gd/q1EHvw About OBITX, Inc. Headquartered in Jacksonville, Florida, OBITX, Inc. is engaged in the business of marketing and advertising through its proprietary software. The Company believes that its products will provide its consumers in the tech, internet, blockchain, and cannabis markets with an advertising and marketing approach uniquely designed for them. OBITX reported a net loss of $2.12 million for the year ended Jan. 31, 2019, compared to net income of $688,735 for the year ended Jan. 31, 2018. Dov Weinstein & Co. C.P.A. (Isr), in Jerusalem, Israel, the Company's auditor since 2017, issued a "going concern" qualification in its report dated April 15, 2019, citing that the Company's ability to continue as a going concern is dependent upon raising additional funds through debt and equity financing and generating revenue. There are no assurances the Company will receive the necessary funding or generate revenue necessary to fund operations. These and other factors raise substantial doubt about the Company's ability to continue as a going concern. OCEAN POWER: Issues Stakeholders Letter Providing COVID-19 Update ----------------------------------------------------------------- On March 20, 2020, Ocean Power Technologies, Inc. issued a letter to its customers and stakeholders relating to the Company's actions taken in response to the COVID-19 pandemic. A full-text copy of that letter is as follows: "With a global COVID-19 pandemic now upon us, and consistent with the directives of our federal, state and local government officials, our priority remains the health, safety and well-being of our employees, partners, and customers, as well as their families and communities located around the world. In the face of these evolving challenges, our thoughts go out to those that have been impacted by the virus around the world, including those individuals who are sick, and healthcare providers and first responders who are working to care for people in need. "At OPT, we are following public health directives while continuing to support our customers that face similar circumstances worldwide. As a company whose inherent workplace includes the unforgiving and remote environment of the open ocean, risk and crisis management is an aspect of our work that we take seriously each and every day. Business continuity has always been an important part of our approach to risk management. Our ability to use mobile devices, digital collaboration tools, and secure VPN access to our servers allows our business and project support teams to seamlessly transition to a remote working environment. Our dedicated production staff is keeping our project builds on track by staggering their shifts to maximize social distancing in a sanitized workspace. "Our sales and projects teams are working with customers around the world through digital channels as much as possible, where most of our in-person meetings are being converted to video and tele-conferences. In addition, we are taking the opportunity to leverage conference postponements to create virtual customer events that allow broader participation of both OPT and customer organizations. "The OPT team remains laser-focused on delivering and driving business for our customers and stakeholders. We are pulling together and doing whatever is necessary to conduct business in what are anything but usual conditions. We support and appreciate the unprecedented efforts of everyone working for the safety and well-being of our families to secure a healthy future for all. I am proud of our colleagues around the world, and I remain optimistic for the future of our company. As circumstances change, we will keep you updated, and know that we always value your questions, ideas and feedback." Sincerely, George H. Kirby President & CEO Ocean Power Technologies, Inc. About Ocean Power Technologies Headquartered in Monroe Township, New Jersey, OPT -- http://www.oceanpowertechnologies.com/-- offers ocean wave power conversion technology. Its PB3 PowerBuoy solution platform provides clean and reliable electric power and real-time data communications for remote offshore and subsea applications in markets such as offshore oil and gas, defense and security, science and research, and communications. Ocean Power reported a net loss of $12.25 million for the 12 months ended April 30, 2019, compared to a net loss of $10.16 million for the 12 months ended April 30, 2018. As of Jan. 31, 2020, the Company had $13.75 million in total assets, $3.98 million in total liabilities, and $9.77 million in total stockholders' equity. KPMG LLP, in Philadelphia, Pennsylvania, the Company's auditor since 2004, issued a "going concern" qualification in its report dated July 22, 2019, citing that as of April 30, 2019 the Company has cash and cash equivalents of $16.7 million, and the Company has suffered recurring losses from operations and has an accumulated deficit. These factors raise substantial doubt about its ability to continue as a going concern. OPTIMAS OE: Moody's Cuts CFR to Caa1 & Sr. Secured Notes to Caa2 ---------------------------------------------------------------- Moody's Investors Service downgraded Optimas OE Solutions Holding, LLC 's Corporate Family Rating to Caa1, Probability of Default Rating to Caa1-PD and senior secured rating to Caa2. The outlook is changed to negative. "With significant exposure to the automotive and trucking manufacturing industry, low profitability, elevated leverage, and significant debt maturities due in June 2021, Optimas is highly susceptible to a cyclical downturn in the global economy and may not be able to refinance its debt" said Emile El Nems, a Moody's VP-Senior Analyst. The following rating actions were taken: Downgrades: Issuer: Optimas OE Solutions Holding, LLC Probability of Default Rating, Downgraded to Caa1-PD from B3-PD Corporate Family Rating, Downgraded to Caa1 from B3 Senior Secured Regular Bond/Debenture, Downgraded to Caa2 (LGD5) from Caa1 (LGD4) Outlook Actions: Issuer: Optimas OE Solutions Holding, LLC Outlook, Changed to Negative from Stable RATINGS RATIONALE Optimas' Caa1 CFR reflects high exposure to the automotive and trucking manufacturing industry, elevated debt leverage, declining EBITA margins and significant debt maturities due in June 2021. At year-end 2020, Moody's projects total debt-to-EBITDA to be at 8.5x and EBITA-to-Interest expense at 1.0x. At the same time, the rating reflects Moody's consideration of the company's large revenue base, long standing customer relationships and its integrated distribution platform within the automotive and trucking industries. In a typical year, Optimas distributes approximately nine billion components sourced from over 3,300 suppliers to its customers. The negative outlook reflects Moody's view that Optimas will face some uncertainty restoring its profitability, generating free cash flow, and improving its credit metrics. Moody's also believes that Optimas' high leverage will negatively impact the company's ability to address near term maturities and refinance its debt prompting the need for additional distressed exchanges or restructuring. Further, the rapid and widening spread of the coronavirus outbreak, deteriorating global economic outlook, falling oil prices, and asset price declines are creating a severe and extensive credit shock across many sectors, regions and markets. The combined credit effects of these developments are unprecedented. The automotive manufacturing industry, a key end market for Optimas, has been one of the sectors most significantly affected by the shock given its sensitivity to consumer demand and sentiment. More specifically, the weakness in Optimas' credit profile has left it vulnerable to shifts in market sentiment in these unprecedented operating conditions and Optimas remains vulnerable to the outbreak continuing to spread. Moody's regards the coronavirus outbreak as a social risk under its ESG framework, given the substantial implications for public health and safety. As of January 3, 2020, Optimas had $44.7 million in cash and $28 million of availability under its $175 million revolving credit facility. However, the company's liquidity profile will become increasingly more challenged as it heads into 2020 unless the outstanding amount of the secured notes is addressed ahead of their June 1, 2021 maturity date. As a result, until these maturities are addressed, it deems the company's liquidity profile to be weak. The rating could be upgraded if: - The company improves its liquidity profile and its EBITA margin - The company addresses upcoming maturities The rating could be downgraded if: - The company conducts additional distressed exchanges or the potential losses for lenders increases - The company's liquidity deteriorates further - A further deterioration in the company's end markets Among ESG considerations for Optimas, in addition to the coronavirus effects, is the potential impact that regional emission requirements, particularly those relating to CO2, could have on the auto industry over the medium to long term. Continued tightening of emissions standards and regulations across most major markets, due to environmental concerns, may shift and accelerate demand into electrification, a business segment in which the company has little presence, and disrupt the company's dependence on traditional (non-electrical) cars and trucks. The principal methodology used in these ratings was Distribution & Supply Chain Services Industry published in June 2018. Headquartered in Glenview, IL, Optimas OE Solutions Holding, LLC (Optimas), is a distributor of engineered fasteners and other small components to global commercial vehicle manufacturers, luxury automakers, agricultural equipment manufacturers, and power generation equipment manufacturers. The company's product portfolio includes nuts, bolts, screws, washers, clips, fittings, brackets and rivets. OUTLOOK THERAPEUTICS: All 6 Proposals Approved at Annual Meeting ---------------------------------------------------------------- Outlook Therapeutics, Inc., held its 2020 Annual Meeting of the Stockholders on March 19, 2020, at which the stockholders: (1) elected Yezan Haddadin, Kurt J. Hilzinger, and Faisal G. Sukhtian to serve as Class I directors on the Board until the Company's 2023 Annual Meeting of Stockholders or until their successors have been duly elected and qualified; (2) approved the Certificate of Amendment to increase the effective conversion rate of the Series A-1 Preferred and expand the voting rights in proportion thereto, but capped at the "Minimum Price" under applicable Nasdaq rules; (3) approved, in accordance with Nasdaq Listing Rule 5635(d), the issuance of more than 20% of the Common Stock outstanding at a price per share that is less than the "Minimum Price" pursuant to the terms of the Company's outstanding Series A-1 Preferred; (4) approved, in accordance with Nasdaq Listing Rules 5635(c) and (d), the issuance of shares of Common Stock to the principals of MTTR LLC, which includes two of the Company's executive officers; (5) approved, in accordance with Nasdaq Listing Rule 5635(d), the issuance of more than 20% of the outstanding Common Stock at a price per share that is less than the "Minimum Price" upon conversion of the outstanding senior secured notes issued December 2019; and (6) ratified the selection by the Audit Committee of the Board of KPMG, LLP as the Company's independent registered public accounting firm for its fiscal year ending Sept. 30, 2020. On March 19, 2020, following approval by the stockholders of the Company at the Annual Meeting, the Company filed the Certificate of Amendment of the Certificate of Designation of Series A-1 Convertible Preferred Stock. Pursuant to the Certificate of Amendment, the effective conversion rate of the Series A-1 Preferred was increased from $18.89797 per share to $431.03447263 per share. The Certificate of Amendment also clarifies that while the Series A-1 Preferred vote on an as-converted basis, they will use a conversion rate of $111.982082867 per share, resulting in approximately 112 votes per share (or an effective rate of $0.893 per share, the "Minimum Price" on Jan. 27, 2020) in order to comply with applicable Nasdaq rules. On Jan. 27, 2020, Outlook Therapeutics and MTTR LLC entered into a termination agreement and mutual release to terminate the strategic partnership agreement for the Company's ONS-5010 product candidate by and between the Company and MTTR. The Termination Agreement became effective upon stockholder approval of the share issuance at the Company's 2020 Annual Meeting of Stockholders held on March 19, 2020, and accordingly, the strategic partnership agreement with MTTR is terminated. On March 23, 2020, the Company, following approval by the Company's stockholders at the Annual Meeting and subsequent filing of the amendment of the Certificate of Designation of its outstanding Series A-1 Preferred Stock, par value $0.01 per share, issued 29,358,621 shares of its common stock, par value $0.01 per share upon conversion of the 68,112 shares of Series A-1 Preferred outstanding and held by BioLexis Pte. Ltd. Following such conversion by BioLexis, there are no longer any shares of Series A-1 Preferred outstanding. The shares of Common Stock were issued without registration in reliance upon the exemptions provided in Section 3(a)(9) and Section 4(a)(2) of the Securities Act of 1933, as amended. Effective March 19, 2020, the Company, following approval by the stockholders of the Company at the Annual Meeting, issued an aggregate of 7,244,739 shares of Common Stock to the four principals of MTTR, including two of the Company's executive officers, Messrs. Dagnon and Evanson, pursuant to the terms of those previously disclosed consulting agreements with each of the four principals dated Jan. 27, 2020. Those shares were issued without registration in reliance upon the exemption provided in Section 4(a)(2) of the Securities Act. About Outlook Therapeutics Outlook Therapeutics, Inc., formerly known as Oncobiologics, Inc. -- http://www.outlooktherapeutics.com-- is a late clinical-stage biopharmaceutical company working to develop the first FDA-approved ophthalmic formulation of bevacizumab for use in retinal indications, including wet AMD, DME and BRVO. If ONS-5010, its investigational ophthalmic formulation of bevacizumab, is approved, Outlook Therapeutics expects to commercialize it as the first and only on-label approved ophthalmic formulation of bevacizumab for use in treating retinal diseases in the United States, Europe, Japan and other markets. Outlook Therapeutics reported a net loss attributable to common stockholders of $36.04 million for the year ended Sept. 30, 2019, compared to a net loss attributable to common stockholders of $48.02 million for the year ended Sept. 30, 2018. As of Dec. 31, 2019, the Company had $10.42 million in total assets, $35.83 million in total liabilities, $5.53 million in total convertible preferred stock, and a total stockholders' deficit of $30.93 million. KPMG LLP, in Philadelphia, Pennsylvania, the Company's auditor since 2015, issued a "going concern" qualification in its report dated Dec. 19, 2019, on the consolidated financial statements for the year ended Sept. 30, 2019, citing that the Company has incurred recurring losses and negative cash flows from operations and has a stockholders' deficit of $16.1 million, $6.7 million of convertible senior secured notes that become due on Dec. 22, 2019, $3.6 million of unsecured indebtedness due on demand and $1.0 million of unsecured indebtedness also due on demand, but subject to a forbearance agreement through March 2020, that raise substantial doubt about its ability to continue as a going concern. OUTLOOK THERAPEUTICS: BioLexis Pte. Has 61.8% Stake as of March 23 ------------------------------------------------------------------ In an amended Schedule 13D filed with the Securities and Exchange Commission, these entities and individuals reported beneficial ownership of shares of common stock of Outlook Therapeutics, Inc., as of March 23, 2020: Shares Percent Beneficially of Reporting Person Owned Class ---------------- ------------ ------- BioLexis Pte. Ltd. 50,965,058 61.8% Ghiath M. Sukhtian 54,656,003 65.3% Arun Kumar Pillai 50,965,058 61.8% GMS Ventures and Investments 3,690,945 4.4% The aggregate percentage of Shares reported owned by each Reporting Person was based upon 82,506,453 Shares outstanding (which does not include the 7,244,739 Shares to be issued to the principals of MTTR LLC) based on information provided by the Issuer. At the Company's 2020 Annual Meeting of Stockholders, the Company's stockholders approved an amendment to the Certificate of Designation in respect of the Preferred Stock to modify the conversion ratio from $18.89797 per share to $431.03447263 per share. Following such approval which took place on March 19, 2020, in accordance with the COD Amendment Agreement, on March 23, 2020, BioLexis delivered a notice of conversion for 68,112 shares of Preferred Stock (which constituted all of the Preferred Stock held by BioLexis) in exchange for 29,358,621 Shares. Such conversion was consummated and effective on March 23, 2020. On March 23, 2020, BioLexis delivered a notice of conversion for 68,112 shares of Preferred Stock (which constituted all of the Preferred Stock held by BioLexis) in exchange for 29,358,621 Shares. Such conversion was consummated and effective on March 23, 2020. A full-text copy of the regulatory filing is available for free at: https://is.gd/THPZCn About Outlook Therapeutics Outlook Therapeutics, Inc., formerly known as Oncobiologics, Inc. -- http://www.outlooktherapeutics.com-- is a late clinical-stage biopharmaceutical company working to develop the first FDA-approved ophthalmic formulation of bevacizumab for use in retinal indications, including wet AMD, DME and BRVO. If ONS-5010, its investigational ophthalmic formulation of bevacizumab, is approved, Outlook Therapeutics expects to commercialize it as the first and only on-label approved ophthalmic formulation of bevacizumab for use in treating retinal diseases in the United States, Europe, Japan and other markets. Outlook Therapeutics reported a net loss attributable to common stockholders of $36.04 million for the year ended Sept. 30, 2019, compared to a net loss attributable to common stockholders of $48.02 million for the year ended Sept. 30, 2018. As of Dec. 31, 2019, the Company had $10.42 million in total assets, $35.83 million in total liabilities, $5.53 million in total convertible preferred stock, and a total stockholders' deficit of $30.93 million. KPMG LLP, in Philadelphia, Pennsylvania, the Company's auditor since 2015, issued a "going concern" qualification in its report dated Dec. 19, 2019, on the consolidated financial statements for the year ended Sept. 30, 2019, citing that the Company has incurred recurring losses and negative cash flows from operations and has a stockholders' deficit of $16.1 million, $6.7 million of convertible senior secured notes that become due on Dec. 22, 2019, $3.6 million of unsecured indebtedness due on demand and $1.0 million of unsecured indebtedness also due on demand, but subject to a forbearance agreement through March 2020, that raise substantial doubt about its ability to continue as a going concern. OUTLOOK THERAPEUTICS: Board OKs $2M Bonus for CEO L. Kenyon ----------------------------------------------------------- The Compensation Committee of Outlook Therapeutics, Inc.'s Board of Directors recommended, and the Board approved, the terms of a bonus for Lawrence A. Kenyon, the Company's president, chief executive officer, chief financial officer, treasurer and secretary, in recognition of achievement of certain pre-defined targets for fiscal year 2019. Mr. Kenyon was determined to have achieved 110% of his targets, and was awarded a bonus of $116,875 in cash, and granted stock options to acquire 216,435 shares of Common Stock under the Company's 2015 Equity Incentive Plan, which options have an exercise price of $0.54 per share, a term of 10 years, and vest in four equal annual installments such that vested in full on the four-year anniversary of the grant date, and subject to acceleration upon a Change in Control as defined in the 2015 Plan, in each case subject to Mr. Kenyon providing continuous service to the Company on each such date. Including Mr. Kenyon's $116,875 of non-equity incentive plan compensation earned in 2019, his new total compensation earned for fiscal 2019 was $1,980,776. The Company will include the grant date fair value of the options awarded to Mr. Kenyon in the summary compensation table for fiscal 2020. About Outlook Therapeutics Outlook Therapeutics, Inc., formerly known as Oncobiologics, Inc. -- http://www.outlooktherapeutics.com-- is a late clinical-stage biopharmaceutical company working to develop the first FDA-approved ophthalmic formulation of bevacizumab for use in retinal indications, including wet AMD, DME and BRVO. If ONS-5010, its investigational ophthalmic formulation of bevacizumab, is approved, Outlook Therapeutics expects to commercialize it as the first and only on-label approved ophthalmic formulation of bevacizumab for use in treating retinal diseases in the United States, Europe, Japan and other markets. Outlook Therapeutics reported a net loss attributable to common stockholders of $36.04 million for the year ended Sept. 30, 2019, compared to a net loss attributable to common stockholders of $48.02 million for the year ended Sept. 30, 2018. As of Dec. 31, 2019, the Company had $10.42 million in total assets, $35.83 million in total liabilities, $5.53 million in total convertible preferred stock, and a total stockholders' deficit of $30.93 million. KPMG LLP, in Philadelphia, Pennsylvania, the Company's auditor since 2015, issued a "going concern" qualification in its report dated Dec. 19, 2019, on the consolidated financial statements for the year ended Sept. 30, 2019, citing that the Company has incurred recurring losses and negative cash flows from operations and has a stockholders' deficit of $16.1 million, $6.7 million of convertible senior secured notes that become due on Dec. 22, 2019, $3.6 million of unsecured indebtedness due on demand and $1.0 million of unsecured indebtedness also due on demand, but subject to a forbearance agreement through March 2020, that raise substantial doubt about its ability to continue as a going concern. OWENS PRECISION: Unsecureds Will be Paid 100% of Claims ------------------------------------------------------- Owens Precision, Inc., filed a Third Amended Chapter 11 Plan of Reorganization and Combined Disclosure Statement that provides that: * Class 2 Allowed Secured Claim of UMB Bank, N.A. (successor by merger to Marquette Business Credit SPE I, LLC). Impaired. The Debtor shall pay the Class 2 claim in accord with the terms set forth in the Loan and Security Agreement dated as of November 25, 2014, between Lender, Debtor and Texas Contract Manufacturing Group, Inc. (as has heretofore been, and may hereafter be, amended, restated, modified or supplemented from time to time, the "Loan Agreement") as modified below: -- No Additional Revolving Loans. Notwithstanding any provisions of the Loan Agreement to the contrary, Lender will have no obligation to make Revolving Loans. -- Notwithstanding any provisions of the Loan Agreement to the contrary, interest on the Obligations will continue to accrue at the Default Rate and Borrower will not be required to make principal payments prior to the Termination Date. Borrowers will pay accrued interest on the first day of each month. All Obligations will be immediately due and payable on the Termination Date. * Class 4 Allowed General Unsecured Vendor Claims. Impaired. Class 5 will consist of Allowed General Unsecured Vendor Claims in the total estimated amount of $155,000.00. Class 5 shall be paid a 100 percent distribution in the total amount of all proofs of claim timely filed, to which no objection is filed and sustained, which shall be paid not later than 18 months from the Effective Date, and which the Debtor intends to pay between the Effective Date and that deadline, with funds as they become reasonably available for application to such payment in a manner that comports with responsible business management, and which the Debtor aspires to generally pay in three equal tranches on dates 6, 12, and 18 months following the Effective Date. * Class 5 Allowed Equity Interest. Impaired. From and after the Effective Date, Allowed Equity Interest in the Debtor will continue to remain in the Debtor, so as to permit the Debtor to implement and execute the Plan. The Debtor does not believe the absolute priority rule applies. The Debtor will implement the Plan by using: (i) the Operating Reserves, and (ii) funds added to Cash on hand after the Effective Date resulting from continued operation in order to (a) fund the continued operation of the CNC-machining shop located, and (b) fund Distributions to Creditors of the Debtor as contemplated by the Plan, first to the Holders of Allowed Administrative Expense Claims, Allowed Professional Claims, Allowed Priority Tax Claims and Allowed Priority Claims in accordance with the scheme of priorities set forth in the Bankruptcy Code, second to Holders of Allowed Secured Claims, if any, who hold valid, duly-perfected and non-avoidable security interests in and Liens on such assets and the proceeds therefrom. A full-text copy of the Third Amended Chapter 11 Plan of Reorganization and Combined Disclosure Statement dated March 11, 2020, is available at https://tinyurl.com/uosbsra from PacerMonitor.com at no charge. Attorneys for the Debtor: Brittany M. Woodman, Esq. Maurice B. VerStandig, Esq. THE VERSTANDIG LAW FIRM, LLC 1452 W. Horizon Ridge Pkwy, #665 Henderson, NV 89012 Telephone: 301-444-4600 Facsimile: 301-576-6885 E-mail: britt@mbvesq.com About Owens Precision Owens Precision, Inc. -- http://owensprecision.com/-- is a Carson City, Nevada-based CNC machining shop that provides contract manufacturing services to the aerospace, defense, semiconductor, and process control industries. Owens Precision filed a Chapter 11 petition (Bankr. D. Nev. Case No. 19-51323) on Nov. 12, 2019 in Reno, Nevada. In the petition signed by James Mayfield, president and director of Owens Precision, Inc., the Debtor was estimated with assets $1 million to $10 million, and liabilities within the same range. Judge Bruce T. Beesley oversees the case. The Verstandig Law Firm, LLC, is the Debtor's counsel. PAPARDELLE 1068: District of Columbia Objects to Plan Disclosures ----------------------------------------------------------------- The District of Columbia, by and through counsel, the Office of the Attorney General for the District of Columbia, filed objections to Papardelle 1068, Inc.'s Amended Disclosure Statement. The District points out that the Debtor has failed to provide adequate information in its Amended Disclosure Statement sufficient for creditors to make an informed judgment about the plan. The District further points out that the statements made by Debtor in Amended Disclosure Statement are inaccurate and misleading. The District complains that the Debtor fails to provide adequate information regarding its ability to operate profitably and that a firm commitment for funding exists. The District asserts that the Debtor has not demonstrated a firm commitment of financing to prove plan feasibility. According to the District, in its Amended Disclosure Statement, Debtor failed to provide adequate information regarding topics the court wanted addressed. Papardelle 1068, Inc., operator of a restaurant in the Georgetown section of the District of Columbia which trades as Ristorante Piccolo, filed for chapter 11 bankruptcy protection (Bankr. D.D.C. Case No. 19-00554) on Aug. 16, 2019, and is represented by Steven H. Greenfeld, Esq. -- steveng@cohenbaldinger.com -- at Cohen, Baldinger & Greenfeld LLC. PENN NATIONAL: Moody's Lowers CFR to B1, Outlook Negative --------------------------------------------------------- Moody's Investors Service downgraded Penn National Gaming, Inc.'s Corporate Family Rating to B1 from Ba3 and Probability of Default Rating to B1-PD from Ba3-PD. The company's senior secured facilities were downgraded to B1 from Ba2 and senior unsecured rated notes to B3 from B2. The company's Speculative Grade Liquidity rating remains SGL-2. The outlook is negative. The downgrade of Penn's CFR is in response to the disruption in casino visitation resulting from efforts to contain the spread of the coronavirus including recommendations from federal, state and local governments to avoid gatherings and avoid non-essential travel. These efforts include mandates to close casinos on a temporary basis. The downgrade also reflects the negative effect on consumer income and wealth stemming from job losses and asset price declines, which will diminish discretionary resources to spend at casinos once this crisis subsides. Downgrades: Issuer: Penn National Gaming, Inc. Corporate Family Rating, Downgraded to B1 from Ba3 Probability of Default Rating, Downgraded to B1-PD from Ba3-PD Senior Secured Bank Credit Facility, Downgraded to B1 (LGD3) from Ba2 (LGD3) Senior Unsecured Regular Bond/Debenture, Downgraded to B3 (LGD6) from B2 (LGD6) Outlook Actions: Issuer: Penn National Gaming, Inc. Outlook, Changed to Negative from Stable RATINGS RATIONALE Penn's B1 CFR reflects the meaningful earnings decline over the next few months expected from efforts to contain the coronavirus and the potential for a slow recovery once properties reopen. The rating also reflects Penn's high leverage along with longer-term fundamental challenges facing Penn and other regional gaming companies related to consumer entertainment preferences and US population demographics that Moody's believes will continue to move in a direction that does not favor traditional casino-style gaming. Positive credit considerations include Penn's large size in terms of revenue and high level of geographic diversification and the operating and financial benefits Moody's' believes are available to Penn through the company's relationship with Gaming & Leisure Properties, Inc. (GLPI, Ba1 stable), a real estate investment trust. Penn benefits from its relationship with GLPI in that it can present opportunities for Penn to secure management contracts from new assets at GLPI. The company's speculative-grade liquidity rating remains SGL-2 and incorporates an expected decline in earnings and cash flow and reduced covenant cushion. As of the year ended December 31, 2019, Penn had cash of $437 million, and $140 million drawn on its $700 million revolving credit facility. This facility was fully drawn down in March. Moody's estimates the company could maintain sufficient internal cash sources after maintenance capital expenditures to meet required annual amortization and interest requirements assuming a sizeable decline in annual EBITDA. The expected EBITDA decline will not be ratable over the next year and because EBITDA and free cash flow will be negative for an uncertain time period, liquidity and leverage could deteriorate quickly over the next few months. The company has no near-term debt maturities, with its revolver and term loan A maturing in 2023. The rapid and widening spread of the coronavirus outbreak, deteriorating global economic outlook, falling oil prices, and asset price declines are creating a severe and extensive credit shock across many sectors, regions and markets. The combined credit effects of these developments are unprecedented. The gaming sector has been one of the sectors most significantly affected by the shock given its sensitivity to consumer demand and sentiment. More specifically, the weaknesses in Penn's credit profile, including its exposure to travel disruptions and discretionary consumer spending have left it vulnerable to shifts in market sentiment in these unprecedented operating conditions and Penn remains vulnerable to the outbreak continuing to spread. Moody's regards the coronavirus outbreak as a social risk under its ESG framework, given the substantial implications for public health and safety. The action reflects the impact on Penn of the breadth and severity of the shock, and the broad deterioration in credit quality it has triggered. The negative outlook considers that Penn remains vulnerable to travel disruptions and unfavorable sudden shifts in discretionary consumer spending and the uncertainty regarding the timing of facility re-openings and the pace at which consumer spending at the company's properties will recover. Ratings could be downgraded if liquidity deteriorates or if Moody's anticipates Penn's earnings declines to be deeper or more prolonged because of actions to contain the spread of the virus or reductions in discretionary consumer spending. A ratings upgrade is unlikely given the weak operating environment. However, the ratings could be upgraded if the facilities reopen and earnings recover such that positive free cash flow and reinvestment flexibility is restored and debt-to-EBITDA is sustained below 6.0x. Penn owns, operates or has ownership interests in gaming and racing facilities and video gaming terminal operations with a focus on slot machine entertainment. The Company operates 41 facilities in 19 jurisdictions. The Company also offers social online gaming through its Penn Interactive Ventures division. Most of Penn's gaming facilities are subject to triple net master leases; the most significant of which are the Penn Master Lease and the Pinnacle Master Lease with Gaming and Leisure Properties, Inc., a publicly traded real estate investment trust as the landlord under the Master Leases. Penn has four reportable segments: Northeast, South, West and Midwest. Revenue for the latest 12-month period ended December 31, 2019 was $5.3 billion. The principal methodology used in these ratings was Gaming Industry published in December 2017. PG&E CORP: Outlines New Commitments to Reorganization Plan ---------------------------------------------------------- PG&E Corporation and Pacific Gas and Electric Company disclosed that PG&E filed on March 20 a motion with the Bankruptcy Court outlining new commitments to its Plan of Reorganization ("Plan"). The Governor's Office has filed a statement in the Bankruptcy Court that is supportive of the company's Plan and its compliance with Assembly Bill (AB) 1054. "We appreciate the Governor's statements in the Bankruptcy Court. We now look to the California Public Utilities Commission to approve the Plan through its established regulatory process, so that we can exit Chapter 11, pay wildfire victims fairly and as soon as possible, and participate in the State's Wildfire Fund," said CEO and President of PG&E Corporation Bill Johnson. New Commitments to Position PG&E for Long-Term Success PG&E has made a series of new commitments regarding its governance, operations, and financial structure, all designed to further prioritize safety and expedite the company's successful emergence from Chapter 11. The new commitments include: -- Supporting the CPUC's enactment of measures to strengthen PG&E's governance and operations, including enhanced regulatory oversight and enforcement that provides course-correction tools as well as stronger enforcement if it becomes necessary; -- Agreeing to host an observer to provide the State with insight into the company's progress on safety goals before the company exits Chapter 11; -- Agreeing that, in the unlikely event the Plan is not confirmed, or PG&E does not exit Chapter 11 in a timely manner, an orderly process for a sale of the business to the State or another party will be commenced; -- A commitment not to reinstate a dividend for approximately 3 years, which is estimated to contribute an additional $4 billion of equity to pay down debt and invest in the business; -- Pursuing a rate-neutral $7.5 billion securitization transaction after PG&E emerges from Chapter 11, to reduce the cost of financing for customers and to accelerate payments to wildfire victims; and -- Committing not to seek recovery in customer rates of any portion of the approximately $25.5 billion that will be paid to victims of the 2017-2018 wildfires under the company's plan when PG&E emerges from Chapter 11 (except through the rate-neutral securitization transaction). The Governor's Bankruptcy Court filing states that, assuming the Bankruptcy Court and CPUC approve these commitments, PG&E's Plan of Reorganization "will, in the Governor's judgment, be compliant with AB 1054." The Governor's filing also states that a rate neutral securitization under Senate Bill 901 that meets all legal requirements would, in the Governor's judgment, be in the public interest, as it would strengthen the going-forward business and support the company's ability to provide safe, reliable, affordable and clean energy to its customers. Existing Commitments in PG&E's Plan of Reorganization Previously, PG&E took a number of significant steps to ensure its Plan complies with AB 1054, including: selecting a substantial number of new members of the Boards of Directors of PG&E Corporation and Pacific Gas and Electric Company upon emergence from Chapter 11; pursuing a plan to regionalize the company's operations and its infrastructure to enhance the company's focus on local communities and customers; appointing an independent safety advisor after the term of the court-appointed Federal Monitor expires; and taking other safety and oversight actions. Earlier this week, PG&E filed an updated plan to incorporate the terms of prior settlements, among other changes. Exit Financing Approved Another major milestone was achieved this week when the Bankruptcy Court approved commitment letters with respect to PG&E's exit financing. This followed PG&E's resolution of outstanding wildfire claims with federal and state agencies in a manner that minimizes the impact on the payment of wildfire victims' claims. PG&E's Plan has the support of wildfire victims' groups, the company's labor unions, and other key stakeholders, including the Governor. "Our Plan will position the company to make necessary safety and wildfire mitigation investments in the coming years, partner with the State in achieving its bold climate goals, and, importantly, provide protection to California if the Chapter 11 process is not concluded in a timely manner," said Mr. Johnson. "We reaffirm our commitment to delivering safe and reliable electric and gas service and implementing needed changes across our business to become a new and transformed company that is positioned to meet our commitments to California and our customers." PG&E's Plan remains subject to approval by the California Public Utilities Commission and the Bankruptcy Court. The Bankruptcy Court is scheduled to hold a hearing on the confirmation of PG&E's Plan on May 27, 2020, following a vote solicitation process for relevant parties that will take place in the coming weeks. Wildfire Victim Settlements As part of the Chapter 11 process, PG&E has previously reached settlements with all wildfire victims' groups to be implemented pursuant to PG&E's Plan, valued at approximately $25.5 billion, including: -- A $1 billion settlement with cities, counties, and other public entities; -- An approximately $13.5 billion settlement resolving claims by individual victims and others relating to the 2015 Butte Fire, 2017 Northern California Wildfires (including the 2017 Tubbs Fire), and the 2018 Camp Fire; and -- An $11 billion agreement with insurance companies and other entities that paid claims by individuals and businesses related to the wildfires. Key Safety Improvements Since the 2018 Camp Fire, PG&E has taken many additional safety actions and implemented a risk-based, comprehensive approach to reduce wildfire risks including enhanced inspections of the company's electric system, additional vegetation management, and new operational protocols with short-, medium- and long-term plans to make its system safer. PG&E's goal is to help keep customers and communities safe across its service territory. More information about those safety investments and improvements is here. About PG&E Corporation PG&E Corporation (NYSE: PCG) -- http://www.pgecorp.com/-- is a Fortune 200 energy-based holding company, headquartered in San Francisco. It is the parent company of Pacific Gas and Electric Company, an energy company that serves 16 million Californians across a 70,000-square-mile service area in Northern and Central California. As of Sept. 30, 2018, the Debtors, on a consolidated basis, had reported $71.4 billion in assets on a book value basis and $51.7 billion in liabilities on a book value basis. PG&E Corp. and Pacific Gas employ approximately 24,000 regular employees, approximately 20 of whom are employed by PG&E Corp. Of Pacific Gas' regular employees, approximately 15,000 are covered by collective bargaining agreements with local chapters of three labor unions: (i) the International Brotherhood of Electrical Workers; (ii) the Engineers and Scientists of California; and (iii) the Service Employees International Union. On Jan. 29, 2019, PG&E Corp. and its primary operating subsidiary, Pacific Gas and Electric Company, filed voluntary Chapter 11 petitions (Bankr. N.D. Cal. Lead Case No. 19-30088). PG&E Corporation and its regulated utility subsidiary, Pacific Gas and Electric Company, said they are facing extraordinary challenges relating to a series of catastrophic wildfires that occurred in Northern California in 2017 and 2018. The utility said it faces an estimated $30 billion in potential liability damages from California's deadliest wildfires of 2017 and 2018. Weil, Gotshal & Manges LLP and Cravath, Swaine & Moore LLP are serving as PG&E's legal counsel, Lazard is serving as its investment banker and AlixPartners, LLP is serving as the restructuring advisor to PG&E. Prime Clerk LLC is the claims and noticing agent. In order to help support the Company through the reorganization process, PG&E has appointed James A. Mesterharm, a managing director at AlixPartners, LLP, and an authorized representative of AP Services, LLC, to serve as Chief Restructuring Officer. In addition, PG&E appointed John Boken also a Managing Director at AlixPartners and an authorized representative of APS, to serve as Deputy Chief Restructuring Officer. Mr. Mesterharm, Mr. Boken and their colleagues at AlixPartners will continue to assist PG&E with the reorganization process and related activities. Morrison & Foerster LLP, as special regulatory counsel. Munger Tolles & Olson LLP, as special counsel. The Office of the U.S. Trustee appointed an official committee of creditors on Feb. 12, 2019. The Committee retained Milbank LLP as counsel; FTI Consulting, Inc., as financial advisor; Centerview Partners LLC as investment banker; and Epiq Corporate Restructuring, LLC as claims and noticing agent. On Feb. 15, 2019, the U.S. trustee appointed an official committee of tort claimants. The tort claimants' committee is represented by Baker & Hostetler LLP. PHYTO-PLUS INC: Seeks Until June 8 to File Plan & Disclosures ------------------------------------------------------------- PHYTO-PLUS, INC., filed a motion for an extension of the deadline to file a Disclosure Statement and Plan of Reorganization. The The Debtor imports all of its licorice from Italy. Unfortunately, the current outbreak of COVID-19 has resulted in a near complete quarantine of Italy. The Debtor's suppliers are currently unable to ship any products to the Debtor. Without product, the Debtor cannot operate. Accordingly, the Debtor seeks to extend the deadline to file its Plan of Reorganization and Disclosure Statement for an additional 90 days to June 8, 2020. The Debtor is hopeful that the quarantine in Italy will end prior to June 2020. If the quarantine has not ended, the Debtor reserves the right to seek a subsequent extension. Because the Debtor’s request to extend the deadline to file its Plan and Disclosure Statement for an additional 45 days runs on April 20, 2020, the Debtor also requests, in an abundance of caution, that the Court extend the Debtor's exclusivity period to file a Chapter 11 Plan pursuant to 11 U.S.C. Sec. 1121(e) of the Bankruptcy Code until July 23, 2020. PHYTO-PLUS, INC., the Debtor, requests the Honorable Court to enter an order: (1) extending the time within which it must file its Disclosure Statement and Plan of Reorganization to June 8, 2020; and (2) extending the Debtor's exclusivity period to file a Chapter 11 Plan until July 23, 2020. A full-text copy of the Motion dated March 11, 2020, is available at https://tinyurl.com/skym8fw from PacerMonitor.com at no charge. Attorney for the Debtor: Buddy D. Ford, Esquire Jonathan A. Semach, Esquire Heather M. Reel, Esquire 9301 West Hillsborough Avenue Tampa, Florida 33615-3008 Telephone #: (813) 877-4669 Facsimile #: (813) 877-5543 Email: All@tampaesq.com E-mail: Buddy@tampaesq.com E-mail: Jonathan@tampaesq.com E-mail: Heather@tampaesq.com About Phyto-Plus Phyto-Plus Inc. sought protection under Chapter 11 of the Bankruptcy Code (Bankr. M.D. Fla. Case No. 19-10837) on Nov. 14, 2019. At the time of the filing, the Debtor disclosed assets of between $100,001 and $500,000 and liabilities of the same range. Judge Michael G. Williamson oversees the case. Buddy D. Ford, P.A., is the Debtor's legal counsel. The U.S. Trustee, until further notice, will not appoint an official committee of unsecured creditors in the Chapter 11 case. PIER 1 IMPORTS: Announces Several COVID-19 Pandemic Measures ------------------------------------------------------------ Pier 1 Imports, Inc. (OTCPK: PIRRQ) on March 22, 2020 announced several measures that it is taking across its business in response to the COVID-19 pandemic. "We are navigating an evolving and unprecedented time for our company, industry and country due to the impact of the COVID-19 pandemic," said Robert Riesbeck, Pier 1's Chief Executive Officer and Chief Financial Officer. "With the health and safety of our employees, customers and communities top-of-mind, we are temporarily closing our stores and installing a work from home practice in our home office, as well as taking other precautions for our distribution, fulfillment and customer service center associates as we continue to serve our customers. We will continue to take actions to weather the current challenges and best position Pier 1 for the future." Pier 1 will temporarily close its stores nationwide, effective Sunday, March 22. The Company will continue to follow the guidelines of government and health officials in determining when it will reopen its stores and offices. In addition the Company will temporarily close its corporate headquarters, effective March 23, and corporate associates will work remotely, as appropriate. Pier 1 will continue to serve customers through Pier1.com, and orders will be processed and filled as normal, with certain distribution and fulfillment centers operating with a leaner staff. In addition, the Company's customer service representatives will work remotely and remain available to assist customers by phone and through Pier 1's active social channels. The Company is also eliminating non-essential expenditures and expenses as well as evaluating additional measures to preserve liquidity. As previously announced in February 2020, Pier 1 commenced voluntary Chapter 11 proceedings in the U.S. Bankruptcy Court for the Eastern District of Virginia to pursue a sale of the Company. About Pier 1 Imports Founded with a single store in 1962, Pier 1 Imports, Inc. -- http://www.pier1.com/-- is a leading omni-channel retailer of unique home decor and accessories. Its products are available through approximately 930 Pier 1 stores in the U.S. and online at pier1.com. Pier 1 Imports and seven affiliates sought Chapter 11 protection (Bankr. E.D. Va. Lead Case No. 20-30805) on Feb. 17, 2020, to pursue a sale of the assets. Pier 1 Imports disclosed $426.6 million in assets and $258.3 million in debt as of Jan. 2, 2020. Judge Kevin R. Huennekens oversees the cases. A&G Realty Partners is assisting Pier 1 Imports with its previously announced store closures and lease modifications. Pier 1 Imports landlords are encouraged to contact A&G Realty Partners through its website, http://www.agrep.com/ Kirkland & Ellis LLP and Osler, Hoskin & Harcourt LLP serve as legal advisors to Pier 1 Imports and its affiliated debtors in the U.S. and Canada, respectively. The Debtors tapped AlixPartners LLP as restructuring advisor; Guggenheim Securities, LLC as investment banker; and Epiq Bankruptcy Solutions as claims agent. PLAY 4 FUN: High Score Amusements Objects to Disclosures & Plan --------------------------------------------------------------- High Score Amusements Ltd. objects to the Chapter 11 Disclosure Statement and the Chapter 11 Plan of Reorganization filed by Play 4 Fun, Inc. High Score points out specific disclosure deficiencies with respect to the Disclosure Statement, including inadequate information: 1. about the source of proposed plan payments. 2. in disclaimer about financial data. 3. about value of assets. 4. about pending litigation. 5. about administrative claims. 6. about the high score claim. 7. about means of effectuating the plan. 8. about assumptions underlying the Debtor's liquidation analysis. 9. about feasibility. 10. regarding the Debtor's compliance with the absolute priority rule. High Score further points out that the plan cannot be confirmed because the claim including all amounts owed for legal fees and expenses are not being on the Effective Date. High Score complains that the plan cannot be confirmed because it likely violates the absolute priority rule. Counsel for High Score Amusements: RICHARD H. GOLUBOW ALASTAIR M. GESMUNDO WINTHROP GOLUBOW HOLLANDER, LLP 1301 Dove Street, Suite 500 Newport Beach, CA 92660 Telephone: (949) 720-4100 Facsimile: (949) 720-4111 E-mail: rgolubow@wghlawyers.com agesmundo@wghlawyers.com About Play 4 Fun Play 4 Fun, Inc operates a franchise under the name "Luv 2 Play Irvine" which is an indoor playground & cafe franchise geared towards young children, offering an indoor playground, separate baby and toddler areas, redemption games and a select cafe type menu. The business is operated at the commercial property located at 13722 Jamboree Rd., Irvine, CA 92602. Play 4 Fun, Inc., sought Chapter 11 protection (Bankr. C.D. Cal. Case No. 19-11965) on May 21, 2019. Play 4 Fun was estimated to have assets of up to $50,000 and liabilities of $1 million to $10 million. The Hon. Mark S. Wallace is the case judge. HALLSTROM KLEIN & WARD LLP, led by Paul J. Kurtzhall, Esq., is the Debtor's counsel. PORTILLO'S HOLDINGS: Moody's Lowers CFR to Caa1, Outlook Negative ----------------------------------------------------------------- Moody's Investors Service downgraded Portillo's Holdings, LLC.'s corporate family rating to Caa1 from B3, its probability of default rating to Caa1-PD from B3-PD, its first lien senior secured term loan and bank facility rating to B3 from B2, and its second lien term loan to Caa3 from Caa2. The outlook was changed to negative from stable. The downgrade considers to the closure of in-store dining units across the restaurant industry due to efforts to contain the spread of the coronavirus. While Portillo's will benefit from its active delivery and drive-thru business that will help offset a portion of fixed costs, leverage prior to this event was high due the 2019 LBO. Given the anticipated decline in earnings, debt/EBITDA is expected to increase near 9.0x from approximately 7.5x as of the last twelve months and EBIT/interest will deteriorate below 1.0x. Portillo's cash balances which include recent revolver draws approximate $50 million which will enable the company to meet its obligations even if the closures last for several months. Downgrades: Issuer: Portillo's Holdings, LLC. Probability of Default Rating, Downgraded to Caa1-PD from B3-PD Corporate Family Rating, Downgraded to Caa1 from B3 Senior Secured 1st Lien Bank Credit Facility, Downgraded to B3 (LGD3) from B2 (LGD3) Senior Secured 2nd Lien Bank Credit Facility, Downgraded to Caa3 (LGD5) from Caa2 (LGD5) Outlook Actions: Issuer: Portillo's Holdings, LLC. Outlook, Changed to Negative from Stable RATINGS RATIONALE The rapid and widening spread of the coronavirus outbreak, deteriorating global economic outlook, falling oil prices, and asset price declines are creating a severe and extensive credit shock across many sectors, regions and markets. The combined credit effects of these developments are unprecedented. The restaurant sector will be one of the sectors most significantly affected by the shock given its sensitivity to consumer demand and sentiment. More specifically, the weaknesses in the credit profile of restaurant companies, including their exposure to travel disruptions and discretionary consumer spending have left them vulnerable to shifts in market sentiment in these unprecedented operating conditions and the companies remain vulnerable to the outbreak continuing to spread. Moody's regards the coronavirus outbreak as a social risk under its ESG framework, given the substantial implications for public broad deterioration in credit quality it has triggered. Portillo's Holdings, LLC. is constrained by the company's high leverage, very small scale and a geographically concentrated restaurant base consisting of 61 units, primarily within the Chicagoland market. The ratings also consider risks associated with its private equity ownership and an aggressive financial policy, most recently evidenced by the primarily debt financed dividend taken in late 2016. The rating is supported by the company's loyal customer following in its core market and strong profit margins, all of which have helped drive revenue growth, healthy unit economics and cash flow generation. In addition, Portillo's is reducing costs and capital spending to manage through this period of disruption. Portillo's liquidity is adequate. Portillo's cash balances which include recent revolver draws approximate $50 million which will enable the company to meet its obligations even if the closures last for several months. The company's revolver expires in 2024, the first lien term loan matures in 2026 and second lien term loan in 2024. The company is subject to net first lien financial covenant with limited headroom to absorb lower earnings. The ratings could be downgraded if the duration of the closures lingers, thereby squeezing liquidity or if the probability of default increases for any reason. Quantitatively, ratings could be downgraded if debt/EBITDA reaches 9.0x. The outlook could change to stable once Portillo's is able to open its units, operations stabilize, and demand rebounds. Given the negative outlook and the severity of the crisis, an upgrade is not likely at present. However, ratings could be upgraded if debt/EBITDA drops below 6.5x and EBIT/interest is sustained above 1.0x. Portillo's Holdings, LLC., based in Oak Brook, Illinois, operates 61 locations primarily in the Chicagoland area under the Portillo's Hot Dogs and Barnelli's Pasta Bowls banners. Revenue for the last twelve-month period ended September 29, 2019 was approximately $470 million. In July 2014, private equity firm Berkshire Partners and a co-investor purchased Portillo's from founder, Dick Portillo, in a leveraged buyout transaction. The principal methodology used in these ratings was Restaurant Industry published in January 2018. RAILYARD COMPANY: District Ct. Should Affirm Bankruptcy Ct. Orders ------------------------------------------------------------------ The case captioned STEVE DURAN and RICK JARAMILLO, Appellants, v. CRAIG DILL, Chapter 7 Trustee, Appellee, No. 19-cv-589 MV/SCY (D.N.M.) came before the District Court for the District of New Mexico on a bankruptcy appeal by Appellants Steve Duran and Rick Jaramillo from two June 10, 2019 Orders entered by the United States Bankruptcy Court for the District of New Mexico in the Chapter 11 case of Railyard Company, LLC. The Honorable Martha Vazquez on July 8, 2019, referred the bankruptcy appeal to the District Court for proposed findings and a recommended disposition. Because Appellants lack standing and because the record submitted is insufficient for meaningful review, Magistrate Judge Steven C. Yarbrough recommends that the District Court affirm the bankruptcy court's June 10, 2019 decisions. Railyard Company sought Chapter 11 bankruptcy protection on Sept. 4, 2015. On July 13, 2016, Craig H. Dill was appointed as the Chapter 11 Trustee of the bankruptcy estate of the debtor. On Dec. 17, 2018, the bankruptcy court entered an order converting the case to Chapter 7 and appointing Mr. Dill as the Chapter 7 trustee. At issue in this appeal are two orders the bankruptcy court entered on June 10, 2019: Order Approving Motion To Approve Settlement Agreement With The City Of Santa Fe; and Order Granting Trustee's Motion To Strike Objection To Motion To Approve Settlement Agreement With The City Of Santa Fe. In these orders, the Bankruptcy Court approved the settlement Craig H. Dill, the Chapter 7 trustee for Railyard Company, with the City of Santa Fe, a creditor of the estate, and struck Appellants' objection to the deal. The Court found that Appellants lacked standing to object to the settlement and approved the settlement in all respects. In their opening brief, Appellants raise three issues: (1) the bankruptcy court erred when it struck Appellants' objection to the settlement with the City of Santa Fe; (2) the bankruptcy court erred in approving the settlement; and (3) the bankruptcy judge should have recused himself. The Trustee argues that these issues are not properly before the Court, and in the alternative, that the bankruptcy court did not err. The bankruptcy court found that "[t]here are insufficient funds to pay the allowed unsecured claims in full." On appeal, the Trustee says that, as of Dec. 31, 2018, the Bankruptcy Estate had $303,251.78 in cash and owed $40,506.95 in administrative expenses, and the total amount of allowed unsecured claims was $5,294,402.38. These figures, if accurate, would certainly demonstrate that the bankruptcy's factual finding of insolvency is not clearly erroneous. Appellants do not challenge these numbers, or make any arguments directed at the bankruptcy court's reasoning. Instead, they argue that they have standing as creditors of the estate. The reasoning behind this assertion is unclear. Appellants allege that a state district court has entered a judgment against them in their personal capacities in the amount of $4.4 million. They indicate that they intend to make a claim against the bankruptcy estate based on this judgment. They offer no citations to the record to support these assertions, and present no legal or factual support for the notion that a judgment against them in their personal capacities gives them a valid claim against their company. This argument is therefore waived as it "consists of mere conclusory allegations with no citations to the record or any legal authority for support." Judge Yarbrough recommends the District Court affirm the bankruptcy court's ruling that Appellants lack standing to object to the settlement with the City of Santa Fe. The bankruptcy court's orders striking Appellants' objections and approving the settlement should be affirmed. Appellants argue on appeal that Judge Thuma should have recused himself from this case on the basis that his former law partner is an attorney for the Trustee. Appellants indicate that they filed a motion to excuse Judge Thuma in 2016. They allege that Judge Thuma denied the motion on the basis of attorney-client privilege. The conclusion that Appellants lack bankruptcy standing indicates that they also lack standing to appeal Judge Thuma's recusal decision. Appellants do not have standing because they do not convincingly demonstrate that any of their pecuniary interests could be affected by decisions such as Judge Thuma's decision not to recuse himself. Even if Appellants had standing, however, another reason to affirm exists: the record is inadequate to review Appellants' contentions. A copy of the Court's Proposed Findings and Recommended Disposition dated Feb. 18, 2020 is available at https://bit.ly/2PFGedL from Leagle.com. Appellants appeared pro se. Craig Dill, Chapter 7 Trustee, Appellee, is represented by Samuel I. Roybal -- sroybal@walkerlawpc.com -- Walker & Associates PC & Thomas D. Walker -- twalker@walkerlawpc.com -- Walker & Associates, P.C.. About Railyard Company Railyard Company, LLC, owns and developed two-story Market Station that houses the REI sporting goods store and other tenants. It filed a Chapter 11 petition (Bankr. D. N.M. Case No. 15-12386) on Sept. 4, 2015. The petition was signed by Richard Jaramillo as managing member. The Debtor is represented by William F. Davis, Esq., at William F. Davis & Associates, P.C., as counsel. According to the Chapter 11 petition, the Debtor had about $11.2 million in debts and $13.8 million in assets. Craig Dill was appointed as Chapter 11 Trustee for Railyard Company, LLC. The Chapter 11 Trustee hired Hunt & Davis, P.C., as counsel, and Steven W. Johnson, CPA, LLC as accountant. The case was later converted to Chapter 7. RAYONIER A.M.: Moody's Lowers CFR to B3, Outlook Negative --------------------------------------------------------- Moody's Investors Service downgraded Rayonier A.M. Products Inc.'s corporate family rating to B3 from B1, probability of default rating to B3-PD from B1-PD, senior unsecured bond rating to Caa2 from B3. The speculative grade liquidity rating was upgraded to SGL-3 from SGL-4. The rating outlook remains negative. "The downgrade reflects weaker than anticipated operating and financial performance and expectations that the company's high leverage (14x in 2019) will improve, but remain elevated (about 8x) over the next 12 to 18 month as commodity markets remain challenged for longer than previously expected," said Ed Sustar, Senior Vice President with Moody's. Downgrades: Issuer: Rayonier A.M. Products Inc. Corporate Family Rating, Downgraded to B3 from B1 Probability of Default Rating, Downgraded to B3-PD from B1-PD Senior Unsecured Regular Bond/Debenture, Downgraded to Caa2 (LGD5) from B3 (LGD5) Upgrades: Issuer: Rayonier A.M. Products Inc. Speculative Grade Liquidity Rating, Upgraded to SGL-3 from SGL-4 Outlook Actions: Issuer: Rayonier A.M. Products Inc. Outlook, Remains Negative RATINGS RATIONALE RYAM's B3 CFR is constrained by: (1) high consolidated leverage (about 8x adjusted debt/EBITDA expected for 2020 after duties and including Moody's standard adjustments); (2) adequate liquidity; (3) volatile lumber and pulp pricing, both which were well below normalized levels in 2019; (4) declining markets for acetate-based specialty cellulose pulp (SC), which is primarily used to manufacture cigarette filters and newsprint; and (5) the uncertainties from the potential negotiation of a new softwood lumber agreement between Canada and the US. RYAM benefits from: (1) its leading global market position as a SC pulp manufacturer; (2) operational and geographic diversity through four SC facilities located in the US, Canada and France; and (3) end-market and product diversity from lumber (with seven sawmills), commodity pulp (one high-yield pulp mill), and paper operations with a consumer paper packaging mill and a newsprint mill. The rapid and widening spread of the coronavirus outbreak, deteriorating global economic outlook, falling oil prices, and asset price declines are creating a severe and extensive credit shock across many sectors, regions and markets. The combined credit effects of these developments are unprecedented. The paper and forest products sector have been affected by the shock given its sensitivity to consumer demand and sentiment. More specifically, the weaknesses in RYAM's credit profile, including its exposure to China and Europe, have left it vulnerable to shifts in market sentiment in these unprecedented operating conditions and RYAM remains vulnerable to the outbreak continuing to spread. Moody's currently expects that the global spread of the coronavirus will likely delay the company's financial recovery until well into the second half of 2020. Moody's regards the coronavirus outbreak as a social risk under its ESG framework, given the substantial implications for public health and safety. Moody's's action reflects the impact on RYAM of the breadth and severity of the shock, and the broad deterioration in credit quality it has triggered. RYAM's SGL-3 rating reflects adequate liquidity with $150 million of liquidity sources to cover about $20 million of current debt maturities. RYAM had about $64 million of cash (at December 31, 2019) and $87 million of revolver availability (the $210 million revolving credit facility that matures in November 2022 is undrawn, but availability is reduced by $33 million for letters of credit and the company's requirement to maintain between $80 million and $90 million of availability to cover a covenant liquidity restriction). Moody's expects that the company will generate breakeven free cash flow in 2020 and that the company will remain in compliance with its recently amended financial covenants over the next four quarters. All of the company's assets are encumbered and Moody's expects that any asset sale proceeds would be used to reduce bank debt. The negative outlook reflects Moody's view that RYAM's elevated financial leverage will remain high given the challenging commodity markets and the company's limited ability to reduce debt through free cash flow generation and asset sales. Moody's expects that the company will be able to improve operating earnings through stronger lumber prices, improved operational performance and lower lumber and Chinese tariffs. This will be partially offset by lower average pulp prices, weaker newsprint prices and the negative demand impacts of the coronavirus. As a manufacturing company, RYAM is moderately exposed to environmental risks, such as air and water emissions, and social risks, such as labor relations, health and safety issues, and changing consumer trends (which include smoking less cigarettes, which lessens the demand for acetate-based SC and fewer people reading paper newspapers). The company has established expertise in complying with these on-going risks, and has incorporated procedures to address them in their operational planning and business models. Governance risks are moderate, as RYAM is a public company with transparent reporting. The company is expected to direct most of its free cash flow, if and when generated, towards debt reduction, as its leverage is currently significantly above its long-term net leverage target of 2.5x. RYAM's rating could be downgraded if: - the company's liquidity profile deteriorates; - the company fails to strengthen its operating performance, or - adjusted Debt/EBITDA was expected to remain at or above 7x (8x expected for 2020). RYAM's rating could be upgraded if: - liquidity improves, including the ability to generate meaningful positive free cash flow; - sustaining adjusted Debt/EBITDA is below 5.5x (8x expected for 2020) and - EBITDA/Interest is around 1.5x (2x expected for 2020). The Caa2 rating on the company's $496 million senior unsecured notes due June 2024 is two notches below the CFR, reflecting the note holders' subordinate position behind the secured $210 million revolving credit facility, about $500 million of secured term loans and about $83 million of secured project debt (all unrated). The principal methodology used in these ratings was Paper and Forest Products Industry published in October 2018. Rayonier A.M. Products Inc, headquartered in Jacksonville, Florida, is a leading global producer of specialty cellulose (SC) pulp, which is used as a raw material to manufacture a diverse array of consumer products, such as cigarette filters, LCD screens, coatings and plastics films. RYAM also produces commodity pulp, lumber, consumer paper packaging and newsprint, with revenue of about $1.8 billion (FY2019). RED LOBSTER: S&P Lowers Issuer-Level Rating to 'CCC+' ----------------------------------------------------- S&P Global Ratings lowered all ratings on Red Lobster Intermediate Holdings LLC, including our issuer-level rating on Red Lobster to 'CCC+' from 'B-'. At the same time, S&P placed all ratings on CreditWatch with negative implications. "The downgrade reflects our view that the company's capital structure is unsustainable based on rapidly weakening operating performance in the company's largely dine-in operations that makes it vulnerable to meet its financial commitments. Specifically, company remains predominantly a dine-in establishment with more than 90% of revenue coming from in restaurant experiences. We expect dine-in casual dining to be negatively affected by the COVID-19 pandemic including government-mandated closure of dine-in establishments, social distancing, and our expectation for a significant weakening of the economy," S&P said. "We expect to resolve the CreditWatch within the next three months as more information becomes available, including the refinancing of its asset-backed revolver and term loan along with company's next earnings release. We believe there is at least a 50% chance that we could lower the ratings at least one notch as we evaluate the company's liquidity profile and operating performance," the rating agency said. RYAN'S ELECTRICAL: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Ryan's Electrical Services, LLC 2917 Falls Ave. Waterloo, IA 50701 Business Description: Ryan's Electrical Services is an electrical contractor in Waterloo, Iowa. Chapter 11 Petition Date: March 25, 2020 Court: United States Bankruptcy Court Northern District of Iowa Case No.: 20-00411 Debtor's Counsel: Kevin D. Ahrenholz, Esq. BEECHER, FIELD, WALKER, MORRIS, HOFFMAN & JOHNSON 620 Lafayette St., Suite 300 PO Box 178 Waterloo, IA 50704-0178 Tel: 319-234-1766 E-mail: ahrenholz@beecherlaw.com Estimated Assets: $500,000 to $1 million Estimated Liabilities: $1 million to $10 million The petition was signed by Ryan J. Etten, member. A copy of the petition containing, among other items, a list of the Debtor's 20 largest unsecured creditors is available for free at PacerMonitor.com at: https://is.gd/40k4dN SENIOR PRO SERVICES: Hires James Shepherd as Bankruptcy Counsel --------------------------------------------------------------- Senior Pro Services, LLC, seeks authority from the United States Bankruptcy Court for the Central District of California to hire the Law Offices of James Shepherd as its bankruptcy counsel. The Debtor requires experienced bankruptcy counsel to represent it and provide legal services in connection with: i) the Initial Debtor Interview and Meeting of Creditors conducted by the U.S. Trustee; ii) preparation of Monthly Operating Reports; iii) wage, cash collateral, critical vendor and motions related to other operational issues; iv) contested matters, including prosecuting and responding to all motions herein and conducting discovery related thereto; v) creditor and U.S. Trustee inquiries; vi) compliance with applicable laws, guidelines and procedures, including all local rules of this court; vii) court hearings, status conferences and in all other proceedings; viii) negotiation and obtaining confirmation of a Chapter 11 plan and assistance with post-confirmation issues; and ix) all services related to the foregoing. The Debtor executed a written fee agreement that required payment of an initial deposit of $15,000 to Law Offices of James Shepherd, which deposit was reduced to $0.00 after pre-petition professional fees and the Chapter 11 case filing fee were paid by the Debtor. James A. Shepherd attests that his firm has no connections with the Debtor, nor any of its known creditors, attorneys or accountants, the United States Trustee or any person employed with the Office of the United States Trustee to the extent applicable, and is a disinterested person within the meaning of 11 U.S.C. section 101(14) and as required by 11 U.S.C. section 327(a). The firm may be reached at: James A. Shepherd, Esq. LAW OFFICES OF JAMES SHEPHERD 3000 Citrus Circle, Suite 204 Walnut Creek, CA 94598 Tel: (925) 954-7554 Fax: (925) 281-2341 Email: jim@jsheplaw.com About Senior Pro Services, LLC Senior Pro Services, LLC is a home health care service provider in San Leandro, California. Senior Pro Services, LLC, sought protection under Chapter 11 of the Bankruptcy Code (Bankr. C.D. Cal. Case No. 20-40408) on Feb. 22, 2020. In the petition signed by Fessha Taye, manager and CEO, the Debtor estimated $1 million to $10 million in assets and $100,000 to $500,000 in liabilities. James A. Shepherd, Esq. at the LAW OFFICES OF JAMES SHEPHERD is the Debtor's counsel. SERTA SIMMONS: Moody's Lowers CFR to Caa3, Outlook Negative ----------------------------------------------------------- Moody's Investors Service downgraded Serta Simmons Bedding, LLC's Corporate Family Rating to Caa3 from Caa1. Moody's also downgraded the company's Probability of Default Rating to Caa3-PD from Caa1-PD, the rating on its first lien term loan to Caa3 from Caa1 and the second lien term loan rating to Ca from Caa3. These actions reflect Serta Simmons' continuing weak operating performance and Moody's view that the very highly leveraged capital structure is unsustainable. Moody's also expects the impact of the coronavirus to place additional pressure on the company's operating performance as consumers adhere to government recommendations to limit activity outside their homes, which will reduce visitation at retail stores where the company's products are sold. The rating outlook is negative. Serta Simmons has struggled to adapt to a steadily-evolving competitive marketplace within the bedding segment including the growth of online sales and lower-priced options. This has resulted in senior management turnover and weak earnings. It has also resulted in very high financial leverage of about 10.3x debt-to-EBITDA, with little visibility as to how the company can materially strengthen its capital structure over the next few years. As these conditions persist, the probability increases that the company will pursue a debt restructuring or other transaction that Moody's would consider a distressed exchange, and hence a default. Serta Simmons' adequate liquidity provides it with some cushion to execute its turn-around strategy. This includes about $100 million in cash, and no material debt maturities until 2023. The negative outlook reflects Moody's belief that Serta Simmons will maintain high financial leverage. It also reflects Moody's view that Serta Simmons' ability to materially improve revenues, earnings and free cash flow is weakened by efforts to curtail the coronavirus and an anticipated pullback in consumer spending. Ratings downgraded: Serta Simmons Bedding, LLC Corporate Family Rating to Caa3 from Caa1; Probability of Default Rating to Caa3-PD from Caa1-PD; $1.95 billion 1st lien secured term loan due 2023 to Caa3 (LGD3) from Caa1 (LGD3); $450 million 2nd lien secured term loan due 2024 to Ca (LGD5) from Caa3 (LGD6) Outlook, the outlook on all ratings is negative RATINGS RATIONALE Serta Simmons' Caa3 CFR reflects its high financial leverage at over 10.0x debt to EBITDA, aggressive financial policies and Moody's concern over the sustainability of the company's capital structure. The ratings are also constrained by the volatility in profitability and cash flows experienced during economic downturns. The rating benefits from the company's good cash flow, solid scale with revenue of about $2.3 billion, and leading market share. Serta Simmons' well-known brand names and product development capabilities are also a benefit. Serta Simmons is moderately exposed to environmental, social and governance (ESG) risks. The company uses, transports, and stores chemicals in its foam manufacturing process. A failure to adhere to environmental regulations and safe practices could result in financial penalties and remediation costs. From a governance standpoint, Serta Simmons has an aggressive financial policy under private equity ownership, evident by the $670 million debt financed dividend paid in 2016 and its high financial leverage. The rapid and widening spread of the coronavirus outbreak, deteriorating global economic outlook, falling oil prices, and asset price declines are creating a severe and extensive credit shock across many sectors, regions and markets. The combined credit effects of these developments are unprecedented. The consumer products sector has been one of the sectors affected by the shock given its sensitivity to consumer demand and sentiment. More specifically, the weaknesses in Serta's credit profile, including its exposure to multiple affected countries have left it vulnerable to shifts in market sentiment in these unprecedented operating conditions and the company remains vulnerable to the outbreak continuing to spread. Moody's regards the coronavirus outbreak as a social risk under its ESG framework, given the substantial implications for public health and safety. The action in part reflects the impact on Serta of the breadth and severity of the shock, and the broad deterioration in credit quality it has triggered. Ratings could be downgraded if revenue and earnings do not improve, the company does not refinance its debt obligations well before maturity, or liquidity otherwise weakens. Ratings could also be downgraded if recovery values weaken, or the probability increases that Serta Simmons will pursue a debt restructuring or other transactions that Moody's would likely consider a default. The company needs to materially improve its operating performance, reduce its high leverage, and address its debt maturities before Moody's would consider an upgrade. The principal methodology used in these ratings was Consumer Durables Industry published in April 2017. Serta Simmons Bedding, LLC is the parent company of Serta International Holdco. LLC and Simmons Bedding Company, LLC. Both Serta and Simmons manufacture, distribute and sell mattresses, foundations, and other related bedding products. The company's brand names include, Serta, Beautyrest, Tuft & Needle and Simmons. The company is majority owned Advent International and generates about $2.3 billion in annual revenue. SOUTHEAST HOSPITAL: Moody's Cuts Rating to Ba1, Outlook Negative ---------------------------------------------------------------- Moody's Investors Service has downgraded Southeast Hospital's (MO) rating to Ba1 from Baa3, affecting approximately $127 million of rated debt. The outlook is revised to negative from stable. RATINGS RATIONALE The downgrade from Baa3 to Ba1 anticipates weaker financial performance and narrower covenant headroom in fiscal 2020 given the recent trend of volume decline and 2019 operating results that were unfavorable to budget. Volumes will remain compressed after several unexpected events during 2019, including the departure of the system's orthopedic group following its acquisition by the local competitor and environmental disruptions from excessive river flooding. Further, given the current coronavirus outbreak, there is a high degree of potential disruption to operations given a rapidly changing situation, including the deferral of high margin elective service lines over the near term. Favorably, the system maintains an all fixed rate debt structure, a limited indirect debt burden and a small exposure to equities which will limit some fluctuations on and demand for liquidity. RATING OUTLOOK The negative outlook reflects the expectation that the system will face headwinds as its newly recruited physicians seek to replace the orthopedic volumes during fiscal 2020, while facing potential disruption from the current coronavirus outbreak. Further, the negative outlook incorporates pressure on balance sheet metrics if financial performance weakens. FACTORS THAT COULD LEAD TO AN UPGRADE - Material growth in liquidity - Sustained improved levels of operating performance - Continued execution of strategies which translate into market presence and enterprise growth FACTORS THAT COULD LEAD TO A DOWNGRADE - Narrowing headroom to covenants - Inability to stabilize volumes - Additional debt which materially weakens leverage metrics - Material loss of market share - Unexpected high level of operating disruption associated with coronavirus cases or much more severe downturn in the economy LEGAL SECURITY Bonds are secured by a joint and several pledges of unrestricted receivables of the obligated group, consisting solely of SouthEastHEALTH hospital. There is a negative mortgage lien with permitted encumbrances. Additional indebtedness is permitted under the Master Trust Indenture (MTI). Financial covenants under the MTI include a debt service coverage ratio (DSCR) of at least 1.25 times measured at mid-year (trailing twelve months) and annually, with provisions relating to retention of a consultant if those levels are not met. An event of default will occur if coverage of at least 1.00 is not attained. Additionally, there is a liquidity covenant equal to 60 days cash on hand. As of fiscal 2019, the obligated group reported declining yet still adequate headroom to covenants with reported maximum annual debt service coverage of 1.9 times and days cash on hand of 99 days. PROFILE Southeast Hospital, d/b/a SoutheastHEALTH is a not-for-profit 501(c)(3) health system located in Missouri. The system operates a flagship hospital of 245 licensed beds in Cape Girardeau, a rural community hospital in Dexter, and numerous outpatient clinics. METHODOLOGY The principal methodology used in these ratings was Not-For-Profit Healthcare published in December 2018. SOUTHMINSTER INC: Fitch Affirms $86.2MM Series 2018 Bonds at 'BB' ----------------------------------------------------------------- Fitch Ratings has affirmed the 'BB' rating on the following Public Finance Authority bonds issued on behalf of Southminster, Inc., NC (SM): -- $86,200,000 retirement facilities first mortgage revenue bonds (Southminster) series 2018. The Rating Outlook is Stable. SECURITY A gross revenue pledge, mortgage on the facility and a debt service reserve fund for the 2018 tax-exempt bonds. KEY RATING DRIVERS CAMPUS REPOSITIONING PROJECT PROGRESSES: The 'BB' rating incorporates SM's multi-phase capital plan that began in 2018, has an estimated cost of approximately $140 million and is being funded by long-term debt, short-term bank loans, and equity, including new entrance fee receipts. SM completed the phase one, Terraces 1, building and filling 30 new independent living (IL) units. Construction on Terraces 2, a 36-unit IL expansion, has begun and all 36 units have been pre-sold. Construction on the new skilled nursing building continues. Both construction projects are expected to be completed by late summer 2020. Upon completion and fill-up of Terrace 2, SM is planning to convert the legacy health center into newly renovated IL apartments. ELEVATED LONG-TERM LIABILITY PROFILE: SM's long-term liabilities shows maximum annual debt service of $9 million equating to an elevated 28.3% of fiscal 2019 (Sept. 30 YE) revenues. Debt to net available was also elevated at 14.2x at YE fiscal 2019. Both metrics improved YOY and are expected to continue to moderate, as expansion IL revenues begin to flow. MADS will not be tested until 2022. SM covered MADS at 1.2x at YE fiscal 2019 and 2x in the three-month fiscal 2020 interim period. In 2019, SM covered its actual debt service of $4.7 million at a solid 2.2x (as calculated by Fitch), which indicates financial flexibility for 2020 as the project progresses. GOOD IL/AL DEMAND: SM's IL and assisted living (AL) occupancies have averaged 99% and 93%, respectively, over the last four years. Occupancy in its skilled nursing facility has been lower at 70%, but the lower occupancy is less of a concern given SM's good budgeting, steady operating performance and limited short-term rehabilitation census. SM does not take Medicare or Medicaid. The strong demand is evidenced by the quick fill up for the Terraces I expansion and the pre-sale of all the units for the Terraces 2 expansion. SOLID OPERATING METRICS: The strong IL occupancy has driven solid operating metrics. Over the past four audited years, SM has averaged a 94% operating ratio and a 29.8% net operating margin - adjusted (NOMA). While the operating ratio has risen in the last few years (it was 98.7% in fiscal 2019) that is largely due to the construction. Fitch expects the operating ratio to improve as revenues from the new projects come online over the next two to three years. The operating ratio was improved through the first three months of fiscal 2020, reflecting the fill up of the Terraces 1. Asymmetric Risk Factors: There are no asymmetric risk factors affecting this rating determination. RATING SENSITIVITIES Fitch expects SM's performance to remain relatively stable over the next year as the capital plan progresses. Developments That May, Individually or Collectively, Lead to a Negative Rating Action: -- Significant project execution issues such as cost overruns, construction delays, or slow fill-up that negatively impacts SM's financial profile and hinders SM's ability to pay down the short-term loans. Developments That May, Individually or Collectively, Lead to a Positive Rating Action: -- Successful project completion, coupled with improvement to debt service coverage to levels consistently at or above 1.6x and cash to debt above 25%. CREDIT PROFILE SM is a North Carolina nonprofit corporation organized in 1984 that owns and operates Southminster, a single site, Type B contract, senior living community. SM is the only member of the obligated group. At Dec. 31, 2019, SM had 265 IL units (ILUs), 25 AL units (ALUs), 60 skilled nursing beds. Total operating revenues in fiscal 2019 was $30.1 million. SM residents are offered type B modified residency agreements with three options. Over 80% of residents are on the standard plan, which amortizes the entrance fee paid at 5% per month for 20 months and offers no refund. The other residents are divided between a 50% refundable plan, which amortizes the entrance fee paid at 5% per month for the first 10 months of occupancy, and a 90% refundable plan where the plan is amortized at 5% per month for two months following occupancy. The recent outbreak of coronavirus and related government containment measures worldwide has created an uncertain environment for the entire healthcare system in the near term. While SM's financial performance through the most recently available data has not indicated any impairment, material changes in revenue and cost profiles will occur across the sector, and will likely worsen in the coming weeks and months as economic activity suffers and as government restrictions are maintained or expanded. Fitch's ratings are forward-looking in nature, and Fitch will monitor developments in the sector as a result of the coronavirus as it relates to severity and duration, and incorporate revised expectations for future performance and assessment of key risks. CAPITAL PROJECT PROGRESSES SM is midway through a 66 ILU expansion--the Terraces 1 (30 IL units) and the Terraces 2 (36 ILUs) --and its health care facility replacement project. The Terraces 1 filled on time and was on budget, despite a delay due to a combination of longer than expected masonry work and underground water issues. Construction work on the Terraces 2 and the new healthcare facility have commenced. Initial occupancy for both projects is expected in late summer 2020. All 36 of the Terrace 2 apartments have been pre-sold. After completing that phase, SM is expected to renovate the current healthcare facility and potentially create 23 new IL apartments. The project is being funded by the series 2018 bonds, short-term bank debt, and equity, including entrance fees from the new ILUs. SM drew down $13.8 million in short-term bank debt for the Terraces 1 and repaid the debt with new entrance fees. The total entrance fee pool for Terraces 1 was $15.8 million. Through February 2020, approximately $23 million in short-term bank debt will be used for Terraces 2 and also be paid back by the entrance fees from the 36 new ILUs. The final phase IL expansion will be funded largely with entrance fees as well. The cash flow from the Terraces 1 units has already led to good YOY revenue growth, and Fitch believes the new skilled nursing, memory care and AL building, which will have enhanced services--SM is moving to a neighborhood model of care--will be accretive to SM's financial and operating profiles. OPERATING PERFORMANCE STABLE Over the last four fiscal years, SM has averaged a 94% operating ratio and 29.8% NOM-adjusted, both of which are very good for the rating level. Performance in the three-month fiscal 2020 interim improved, reflecting the effect of the revenues from the newly filled 30 ILUs from the Terraces 1 and a good quarter for net entrance fee receipts from turnover ILUs. Southminster had a 91.8% operating ratio and a 41.3% NOM-adjusted. SM's liquidity metrics are mixed. SM had 479 days cash on hand at Dec. 31, 2019; however, cash to debt was low at 20.8%, reflecting the effect of the 2018 debt issuance and the amount drawn down on the bank loan. But cash to debt remains within Fitch's expectations and that figure is expected to remain in the 20 to 25% range through the project's construction and fill periods. After stabilization, Fitch expects SM's unrestricted liquidity to grow as the new project revenues come online and cash flow from turnover units remains steady. SM showed steady unrestricted liquidity growth in the four-year period leading up to the project and after it filled its last expansion. GOOD DEMAND, MANAGEABLE COMPETITION SM has consistently demonstrated strong demand for its services, which is attributed to its longstanding operating history, favorable reputation, and its location in a growing area of south Charlotte. Over the last four fiscal years, SM's occupancy has averaged 99% in IL, 93% in its AL, and 69% in its skilled nursing beds. The lower skilled nursing occupancy is not a concern. SM does not rely on revenues from the post-acute care rehabilitation and does not accept any outside short-term rehabilitation stays. SM does allow direct admissions to skilled nursing; however, those admits sign a long-term care contract. SM's skilled nursing facility is all private pay as SM is not certified for Medicare or Medicaid. Fitch views both the limited financial exposure to government payors and to the post-acute care space as credit positives. Post-acute care services, particularly, have seen reimbursement headwinds over the last two years. SM's primary service area remains competitive with five competitors within 10 miles of SM. Most of them have high IL occupancies, which indicate good demand and a deep market across the service area. SM's IL pricing is at the midrange of the market with one close competitor having higher priced ILUs and another close competitor with lower priced units, which Fitch believes positions SM well. DEBT PROFILE At Dec. 31, 2019, SM had approximately $152 million of long-term debt and that includes the series 2018 bonds, the series 2016 bonds, and the draw down construction loan funds at that date. Fitch expects this figure to come down as the project progresses and debt amortizes and the short-term bank debt is paid down. SM has no swaps. DISCLOSURE SM covenants to disclose annual reports no later than 120 days after each fiscal year end and quarterly reports no later than 45 days after quarter end. All information is provided via the Electronic Municipal Market Access System, which is maintained by the Municipal Securities Rulemaking Board. ESG CONSIDERATIONS ESG issues are credit neutral or have only a minimal credit impact on the entity(ies), either due to their nature or the way in which they are being managed by the entity(ies). STATION CASINOS: Moody's Lowers CFR to B2, Outlook Negative ----------------------------------------------------------- Moody's Investors Service downgraded Station Casinos LLC's Corporate Family Rating to B2 from B1 and Probability of Default Rating to B2-PD from B1-PD. The company's senior secured revolver and term loans were downgraded to B1 from Ba3, and the company's senior unsecured notes were downgraded to Caa1 from B3. The company's Speculative Grade Liquidity rating was downgraded to SGL-2 from SGL-1. The outlook is negative. The downgrade of Station's CFR is in response to the disruption in casino visitation resulting from efforts to contain the spread of the coronavirus including recommendations from federal, state and local governments to avoid gatherings and avoid non-essential travel. These efforts include mandates to close casinos on a temporary basis. The downgrade also reflects the negative effect on consumer income and wealth stemming from job losses and asset price declines, which will diminish discretionary resources to spend at casinos once this crisis subsides. Downgrades: Issuer: Station Casinos LLC Corporate Family Rating, Downgraded to B2 from B1 Probability of Default Rating, Downgraded to B2-PD from B1-PD Speculative Grade Liquidity Rating, Downgraded to SGL-2 from SGL-1 Senior Secured Bank Credit Facility, Downgraded to B1 (LGD3) from Ba3 (LGD3) Senior Unsecured Regular Bond/Debenture, Downgraded to Caa1 (LGD5) from B3 (LGD5) Outlook Actions: Issuer: Station Casinos LLC Outlook, Changed to Negative from Stable RATINGS RATIONALE Station's B2 CFR reflects the meaningful earnings decline over the next few months expected from efforts to contain the coronavirus and the potential for a slow recovery once properties reopen. The rating is supported by historically stable operating results, limited supply growth, solid margins, positive free cash flow before growth capex and good liquidity. Station is constrained by the slower than expected ramp-up of the redeveloped Palms and Palace Station during 2019, its limited geographic diversification and earnings vulnerability to changes in the general economic environment given the highly discretionary nature of consumer spending on casino gaming. As a casino operator, social risk is elevated, as evolving consumer preferences related to entertainment choices and population demographics may drive a change in demand away from traditional casino-style gaming. Moody's downgraded the speculative-grade liquidity rating to SGL-2 from SGL-1 because of the expected decline in earnings and cash flow and increased risk of a covenant violation. As of the year ended December 31, 2019, Station had cash of $128 million. In January 2020 the company put in place a new $1 billion revolving credit facility. This facility was drawn down in March, adding $1 billion of cash to the balance sheet. Moody's estimates the company could maintain sufficient internal cash sources after maintenance capital expenditures to meet required annual term loan amortization and interest requirements assuming a sizeable decline in annual EBITDA. The expected EBITDA decline will not be ratable over the next year and because EBITDA and free cash flow will be negative for an uncertain time period, liquidity and leverage could deteriorate quickly over the next few months. The company has no near-term debt maturities, with its nearest maturity in 2025 given its recent refinancing. The rapid and widening spread of the coronavirus outbreak, deteriorating global economic outlook, falling oil prices, and asset price declines are creating a severe and extensive credit shock across many sectors, regions and markets. The combined credit effects of these developments are unprecedented. The gaming sector has been one of the sectors most significantly affected by the shock given its sensitivity to consumer demand and sentiment. More specifically, the weaknesses in Station's credit profile, including its exposure to travel disruptions and discretionary consumer spending have left it vulnerable to shifts in market sentiment in these unprecedented operating conditions and Station remains vulnerable to the outbreak continuing to spread. Moody's regards the coronavirus outbreak as a social risk under its ESG framework, given the substantial implications for public health and safety. The action reflects the impact on Station of the breadth and severity of the shock, and the broad deterioration in credit quality it has triggered. The negative outlook considers that Station remains vulnerable to travel disruptions and unfavorable sudden shifts in discretionary consumer spending and the uncertainty regarding the timing of facility re-openings and the pace at which consumer spending at the company's properties will recover. Ratings could be downgraded if liquidity deteriorates or if Moody's anticipates Station's earnings declines to be deeper or more prolonged because of actions to contain the spread of the virus or reductions in discretionary consumer spending. A ratings upgrade is unlikely given the weak operating environment. However, the ratings could be upgraded if the facilities reopen and earnings recover such that positive free cash flow and reinvestment flexibility is restored and debt-to-EBITDA is sustained below 6.0x. Station Casinos LLC owns and operates ten major hotel/casino properties and ten smaller casino properties (three of which are 50% owned) in the Las Vegas metropolitan area. Station manages the Graton Resort & Casino located in Sonoma County, CA on behalf of The Federated Indians of Graton Rancheria. The Graton contract has a seven-year term and expires in November 2020. Station's net revenue for the LTM period ended December 31, 2019 was $1.86 billion. Station is owned by Red Rock Resorts, Inc., a publicly traded holding company whose principal asset is Station. Red Rock Resorts owns Station Casinos LLC; The Fertitta family controls approximately 86% of the voting rights and 40% of the economic interest in Red Rock Resorts. The principal methodology used in these ratings was Gaming Industry published in December 2017. SURGERY CENTER: Moody's Lowers CFR to Caa1, On Review for Downgrade ------------------------------------------------------------------- Moody's Investors Service downgraded ratings of Surgery Center Holdings, Inc. ("doing business as Surgery Partners") and placed the ratings under review for further downgrade. Moody's downgraded the Corporate Family Rating to Caa1 (from B3), the Probability of Default Rating to Caa1-PD (from B3-PD), and the first lien senior secured debt rating to B2 (from B1). Moody's placed these ratings on review for further downgrade. The unsecured notes, rated Caa2, were also placed on review for downgrade. Additionally, Moody's downgraded the Speculative Grade Liquidity Rating to SGL-3 (adequate) from SGL-2 (good). The rapid and widening spread of the coronavirus outbreak, deteriorating global economic outlook, falling oil prices, and asset price declines are creating a severe and extensive credit shock across many sectors, regions and markets. The combined credit effects of these developments are unprecedented. On March 18, the Centers for Medicare & Medicaid Services (CMS) advised that all elective surgeries, non-essential medical, surgical, and dental procedures be delayed in order to increase capacity and resources to fight the coronavirus outbreak. The Centers for Disease Control and Prevention (CDC), several governors and others are advising the same. Based on the guidance to limit non-essential medical and surgical procedures, Moody's believes that ambulatory surgery centers, like those owned by Surgery Partners, will experience a significant drop in volumes over the coming weeks, and the timing for recovery is uncertain. The downgrade of the CFR to Caa1 is related to Surgery Partners' already high leverage and the expected weakening of liquidity given reduced elective procedures due to the coronavirus pandemic. The company's high leverage and high cash interest expense relative to its earnings increase the risk that the company could pursue a transaction that Moody's deems to be a distressed exchange, and hence a default under Moody's definition. The ratings review will focus on liquidity and the ability to reduce variable costs and growth capital expenditures to manage through the public health emergency. Moody's expects that there will be significant erosion of operating performance in the second quarter, and perhaps beyond, depending on the duration of the coronavirus crisis. The downgrade of the Speculative Grade Liquidity Rating to SGL-3 reflects Moody's expectation that cash burn over the next several quarters could be material due to the expected reduction in patient volumes. Some of the cash burn can likely be mitigated by reduced capital expenditures and dividends to physician owners. Moody's expects that Surgery Partners' adequate liquidity will be supported by cash, which, including a recent draw on the revolving credit facility, approximates $200 million. That said, depending on the level of EBITDA contraction due to coronavirus, there could be a covenant violation in upcoming quarters that would require a bank waiver or amendment. Ratings Downgraded and Placed on Review for Downgrade: Issuer: Surgery Center Holdings, Inc. Probability of Default Rating, downgraded to Caa1-PD from B3-PD; placed on Review for Downgrade Corporate Family Rating, downgraded to Caa1 from B3; placed on Review for Downgrade Senior Secured Bank Revolving Credit Facility, downgraded to B2 (LGD2) from B1 (LGD2); placed on Review for Downgrade Senior Secured First Lien Term Loan, downgraded to B2 (LGD2) from B1 (LGD2); placed on Review for Downgrade Ratings placed on review for downgrade: Issuer: Surgery Center Holdings, Inc. Senior Unsecured GTD Global Notes due 2025 Placed on Review for Downgrade, currently Caa2 (LGD5) Senior Unsecured GTD Global Notes due 2027 Placed on Review for Downgrade, currently Caa2 (LGD5) Rating Downgraded: Issuer: Surgery Center Holdings, Inc. Speculative Grade Liquidity Rating downgraded to SGL-3 from SGL-2 Outlook Actions: Issuer: Surgery Center Holdings, Inc. Outlook, Changed to Rating Under Review from Stable RATINGS RATIONALE Notwithstanding the review for downgrade, Surgery Partners' Caa1 Corporate Family Rating reflects its high financial leverage, weak interest coverage and history of negative free cash flow. The credit profile is also constrained by the elective nature of many of the procedures performed in its ambulatory surgery centers (ASCs), meaning that patients can delay/forego treatment as per guidelines during the coronavirus global pandemic or in times of economic weakness. Further, the ratings are constrained by risk stemming from exposure to government payers (mostly Medicare), which could lead to future reimbursement pressures on ASCs. The ratings are supported by Moody's expectation of favorable industry fundamentals (coronavirus aside). This is because over the longer term, payers including Medicare and private insurers, will continue to drive patients out of hospitals and into less costly points of care, such as ASCs. The rating also benefits from the company's strong market position and good case mix that favors procedures with higher reimbursements. Moody's considers coronavirus to be a social risk given the risk to human health and safety. Aside from coronavirus, Surgery Partners faces other social risks as well such as the rising concerns around the access and affordability of healthcare services. However, Moody's does not consider the ASCs to face the same level of social risk as hospitals as ASCs are viewed as an affordable alternative to hospitals for elective procedures. From a governance perspective, Moody's views Surgery Partner's governance positively due to its ownership model. The model includes partnerships or limited liability companies with physicians -- which helps to align economic incentives with physicians to perform procedures in the ASCs. That said, Surgery Partner's financial policies are aggressive given its history of acquisitions and high leverage. Surgery Partners, headquartered in Nashville, TN, is an operator of 128 short stay surgical facilities in 31 states. The surgical facilities, which include 112 ASCs and 16 surgical hospitals, primarily provide non-emergency surgical procedures across many specialties. Surgery Partners also provides ancillary services including physician practice services, anesthesia services, a diagnostic laboratory, a specialty pharmacy and optical services. Surgery Partners is 66% owned by Bain Capital Private Equity and listed on the NASDAQ. Revenue is approximately $1.8 billion LTM December 31, 2019. The principal methodology used in these ratings was Business and Consumer Service Industry published in October 2016. TAILORED BRANDS: S&P Cuts ICR to 'CCC+' on Operational Headwinds ---------------------------------------------------------------- S&P Global Ratings lowered all ratings on Calif.-based specialty apparel retailer Tailored Brands Inc., including its issuer credit rating to 'CCC+' from 'B', reflecting its view of the company's capital structure as unsustainable in light of substantially weakened earnings prospects. "The downgrade reflects our view of Tailored's capital structure as potentially unsustainable, based on our view that the company's earnings prospects have substantially weakened. We believe the anticipated performance pressures at Tailored, combined with the adverse effects of the coronavirus pandemic, will increase refinancing risk as the company's debt comes due. We expect performance will remain pressured over the next several quarters amid decelerating economic growth and discretionary consumer spending in the U.S. because of the pandemic. In addition, we expect demand for formalwear to significantly drop with corporations' remote working arrangements and a decline in corporate and social events as people practice social distancing," S&P said. If Tailored cannot refinance its unsecured senior notes (with about $174 million outstanding) due in July 2022 by April 2022, its sizable term loan B (with about $880 million outstanding) due in April 2025 will mature early in April 2022. Also, the company's $550 million asset-based lending (ABL) revolver (with about $360 million outstanding) is due in October 2022. With these sizable upcoming debt maturities, the company has very limited time to turn performance around and regain lender confidence to complete a refinancing transaction at par. Considering the current term loan pricing in the $60s, S&P believes Tailored has an economic incentive to repurchase its debt below par, which S&P may consider tantamount to a default. The negative outlook reflects substantial risks to Tailored's operating performance given its weak earnings in fiscal 2019, continued challenges and execution risk as management works to execute strategic initiatives, and anticipated substantial decline in demand because of the coronavirus pandemic. "We could lower our rating on Tailored if there is an increased likelihood of default in the next 12 months. This could occur if the company's performance does not improve materially ahead of the 2022 debt maturities, which would lead us to believe refinancing at par is unlikely. We could also lower the rating if we believe the company is increasingly likely to buy back its debt at below par," S&P said. "We could raise our ratings on Tailored or revise our outlook to stable if we believe the company will likely refinance its 2022 unsecured senior notes and ABL revolver. This could occur if the macroeconomic situation improves and operating performance stabilizes," S&P said. TASEKO MINES: Moody's Lowers CFR to Caa1, Outlook Negative ---------------------------------------------------------- Moody's Investors Service downgraded Taseko Mines Limited's Corporate Family rating to Caa1 from B3, Probability of Default Rating to Caa1-PD from B3-PD, senior secured note ratings to Caa1 from B3 and Speculative Grade Liquidity Rating to SGL-4 from SGL-3. The ratings outlook was changed to negative from stable. "The downgrade of Taseko's rating is driven by the company's high leverage and Moody's expectation of continued weakness in copper prices ", said Jamie Koutsoukis, Moody's Vice-President, Senior Analyst. The rapid and widening spread of the coronavirus outbreak, deteriorating global economic outlook, falling oil prices, and asset price declines are creating a severe and extensive credit shock across many sectors, regions and markets. The combined credit effects of these developments are unprecedented. The mining sector has been one of the sectors affected by the shock. More specifically, the weaknesses in Taseko's credit profile, including its exposure to copper prices, has left it vulnerable to shifts in market sentiment in these unprecedented operating conditions. Moody's regards the coronavirus outbreak as a social risk under its ESG framework, given the substantial implications for public health and safety. The action reflects the impact on Taseko of the breadth and severity of the shock, and the broad deterioration in credit quality it has triggered. Downgrades: Issuer: Taseko Mines Limited Corporate Family Rating, Downgraded to Caa1 from B3 Probability of Default Rating, Downgraded to Caa1-PD from B3-PD Speculative Grade Liquidity Rating, Downgraded to SGL-4 from SGL-3 Senior Secured Regular Bond/Debenture, Downgraded to Caa1 (LGD4) from B3 (LGD4) Outlook Actions: Issuer: Taseko Mines Limited Outlook, Changed To Negative From Stable RATINGS RATIONALE Taseko's (Caa1 negative) credit is constrained by the company's concentration of cash flows from one metal (copper) at a single mine (Gibraltar), variability in grade and costs due to mine sequencing, and high leverage (7.2x at Q4/19). The company benefits from its mine location in a favorable mining jurisdiction (Canada) and long reserve life (19 year mine life). Using Moody's copper price sensitivity of US$2.25/lb in 2020 leverage will be over 5x . Moody's expects there to be a high degree of volatility in Taseko's metrics, as changes in ore grade, copper prices, and the Canadian/US exchange rate can substantively change leverage. Also, with all the company's production from one mine, and its exposure to volatile copper prices, Taseko could see potential material reductions in cash flows should there be operational problems or a continued fall in copper prices. Taseko is exposed to environmental risks typical for a company in the mining industry. This includes, but is not limited to wastewater discharges, site remediation and mine closure, waste rock and tailings management, and air emissions. The company is subject to environmental laws and regulations in the areas in which it operates. Taseko's liquidity is weak over the next year (SGL-4). Taseko had CAD54 million in cash and equivalents at December 31, 2019, against Moody's expectation that the company will have negative free cash flow of CAD15 million over the next 12 months (using a 2.25/lb copper price sensitivity, after deducting capex and stripping costs). The company does not have a credit facility. Taseko has no debt maturities until June 2022. The negative outlook reflects the risk that Taseko's performance and credit metrics will continue to weaken unless the price of copper improves and also incorporates its view that Taseko will continue to generate negative free cash leading to a weaker liquidity profile. The ratings could be downgraded if it becomes more likely that Taseko will not be able to refinance its debt prior to the June 2022 maturity, the company experiences operating challenges at Gibraltar, or if liquidity weakens further. Taseko's CFR could be upgraded if there is a sustained recovery in commodity prices that improve the company's profitability, the company is able to generate sustained positive free cash flow and Taseko is able to maintain total adjusted debt/EBITDA at or below 5x . The principal methodology used in these ratings was Mining published in September 2018. Headquartered in Vancouver, Canada, Taseko Mines Limited operates Gibraltar, an open-pit copper and molybdenum mine located in British Columbia (BC), Canada, producing about 130 million pounds/year. Gibraltar is an unincorporated joint venture, 75% owned by Taseko and 25% owned by Cariboo Copper Corp. (a Japanese consortium). The Company also owns the New Prosperity gold-copper (BC), Aley niobium (BC), Florence copper (Arizona) and Yellowhead copper-gold-silver (BC) projects. Revenues in 2019 were CAD330 million. TEXAS SOUTH: Delays Filing of 2019 Annual Report ------------------------------------------------ Texas South Energy, Inc. filed a Form 12b-25 with the Securities and Exchange Commission notifying the delay in the filing of its Annual Report on Form 10-K for the period ended Dec. 31, 2019. The Company was unable to complete its preparation of its Form 10-K in a timely matter because of working capital issues. The Company's Form 10-Q's for the period ended June 30, 2019 and Sept. 30, 2019 have not yet been filed. About Texas South Headquartered in Houston, Texas, Texas South Energy, Inc. is engaged in the oil and gas business, generating or acquiring oil and gas projects, drilling and operating the wells, and producing the oil and gas reserves. Texas South reported a net loss of $3.11 million for the 12 months ended Dec. 31, 2018, following a net loss of $3.84 million for the 12 months ended Dec. 31, 2017. As of March 31, 2019, the Company had $14.73 million in total assets, $9.19 million in total liabilities, and $5.53 million in total stockholders' equity. LBB & Associates Ltd., LLP, in Houston, Texas, the Company's auditor since 2013, issued a "going concern" qualification in its report dated April 1, 2019, citing that the Company's absence of significant revenues, recurring losses from operations, and its need for additional financing in order to fund its projected loss in 2019 raise substantial doubt about its ability to continue as a going concern. TMT PROCUREMENT: Orders Approving Sale of Vessels Affirmed ---------------------------------------------------------- In the case captioned Hsin Chi Su, Appellant, v. TMT Procurement Corporation, et al., Appellees, Civil Action No. H-14-2172 Jointly administered with, Civil Actions Nos. H-14-2167 and H-14-2177 (S.D. Tex.), Su appeals the bankruptcy court's orders authorizing the sales of large cargo vessels. District Judge Lynn N. Hughes rules that the appeals are moot and the bankruptcy court's orders approving the sale of the vessels are affirmed. Su was the president of multiple corporations that bought and operated large cargo vessels. Those corporations included Whale A, Whale B, Whale D, Whale G, and Whale H, Inc. Each Whale corporation owned a vessel with a corresponding name, Whales A, B, D, G, and H. Su personally guaranteed the bans used to purchase the vessels. When the vessels did not generate enough revenue to cover their costs, the Whale corporations filed petitions for reorganization under Chapter 11 of the United States Bankruptcy Code. The bankruptcy cases for the Whale corporations were administered as a part of a much larger bankruptcy proceeding. Su joined the bankruptcy proceeding as guarantor of the debt. All parties to the bankruptcy action, including the debtors and the lenders, agreed to sell the vessels. They proposed a sale process that would employ a professional broker to obtain competitive bids and sell the vessels at auction. The bankruptcy court approved the sale process. Su did not object. A professional broker solicited bids from the market. The winning bids were not enough to satisfy the full amount financed, leaving Su liable for the balance of the loans. Su objected to selling Whales A, B, D, G, and H free and clear of his foreign patent rights. He also alleged that the vessels were marketed in a manner that was designed to depress their price. Over Su's objections, the bankruptcy court approved the sale of the vessels to the winning bidders free and clear of all claims and interests, including Su's patent claims. Su moved for a stay pending appeal. The stay was denied by the bankruptcy court, this court, and the United States Court of Appeals for the Fifth Circuit. The Whale vessels were sold. Su appealed the sale orders for Whales A, B, D, G, and H. The District Court issued orders to jointly administer the appeals. Su says the bankruptcy court erred when it approved the sales of the vessels free and clear of claims and interests. Su also says the bankruptcy court erred when it found that the buyers bought the vessels in good faith. Su argues that the bankruptcy court's sale orders should be reversed and vacated. The District Court notes that under the Bankruptcy Code, absent a stay, reversal of an authorization to sell an asset does not affect the validity of the sale made in good faith. Here, there was no stay. Su's appeal is moot unless he can show the buyers purchased the vessels in bad faith. The District Court will not reverse the bankruptcy court unless the District Court is "left with the definitive and firm conviction that a mistake has been committed." Su has not met his burden. After three days of hearings during which many witnesses testified, the bankruptcy court found that the buyers purchased the vessels in good faith. The court's independent review of the record confirms the bankruptcy court's conclusion. Su merely rehashes allegations that were carefully reviewed and rejected by the bankruptcy court. There is no evidence of bad faith. It appears to the court that the bidding and sale processes were conducted professionally and appropriately. The bankruptcy court's findings stand. Because the vessels were sold in good faith, the district court cannot grant the relief that Su seeks. A copy of the Court's Opinion dated Feb. 18, 2020 is available at https://bit.ly/2PGkFd5 from Leagle.com. In re TMT Procurement Corporation, Plaintiff, represented by Evan Flaschen , Bracewell LLP, Jason G. Cohen , Bracewell LLP, John P. Melko , Foley Gardere/Foley & Lardner LLP, Marcy E. Kurtz , Bracewell & Giuliani LLP, William Alfred Trey Wood, III , Bracewell LLP & Ilia M. O'Hearn , Bracewell Giuliani. In re H Whale Corporation, Plaintiff, represented by William Alfred Trey Wood, III , Bracewell LLP & Jason G. Cohen , Bracewell LLP. Hsin Chi Su, also known as Nobu Morimoto, Appellant, represented by David B. Shemano , Robins Kaplan LLP, Jeffrey Alan Hovden , Robins Kaplan LLP & Scott F. Gautier , Robins Kaplan LLP. OCM Formosa Strait Holdings Ltd, Movant, represented by Andrew J. Erhlich -- aehrlich@paulweiss.com -- Paul Weiss Rifkind, et al, pro hac vice & Gregory F. Laufer -- glaufer@paulweiss.com -- Paul Weiss Rifkind, pro hac vice. Wilmington Trust, N. A., Movant, represented by Alistair B. Dawson -- adawson@beckredden.com -- Beck Redden LLP, Andrew J. Ehrlich , Paul, Weiss, Rifkind, Wharton & Garrison LLP, Gregory F. Laufer , Paul Weiss Rifkind, pro hac vice & Mary Kate Raffetto -- mkraffetto@beckredden.com -- Beck Redden. Pacific Orca Holdings H, LLC, Pacifica Orca Holdings D, LLC & Pacifica Orca Holdings G, LLC, Movants, represented by Gregory F. Laufer , Paul Weiss Rifkind, pro hac vice. About TMT Group Known in the industry as TMT Group, TMT USA Shipmanagement LLC and its affiliates own 17 vessels. Vessels range in size from approximately 27,000 dead weight tons (dwt) to approximately 320,000 dwt. TMT USA and 22 affiliates, including C. Ladybug Corporation, sought Chapter 11 protection (Bankr. S.D. Tex. Lead Case No. 13- 33740) in Houston, Texas, on June 20, 2013 after lenders seized seven vessels. Two of the cases were dismissed on July 23, 2013. The remaining 21 cases are jointly administered under TMT Procurement Corporation, Bankruptcy Case Number 13-33763. The other debtors are: (1) A Whale Corporation; (2) B Whale Corporation; (3) C Whale Corporation; (4) D Whale Corporation; (5) E Whale Corporation; (6) G Whale Corporation; (7) H Whale Corporation; (8) A Duckling Corporation; (9) F Elephant Inc; (10) A Ladybug Corporation; (11) C Ladybug Corporation; (12) D Ladybug Corporation; (13) A Handy Corporation; (14) B Handy Corporation; (15) C Handy Corporation; (16) B Max Corporation; (17) New Flagship Investment Co., Ltd; (18) RoRo Line Corporation; (19) Ugly Duckling Holding Corporation; and (20) Great Elephant Corporation. On a consolidated basis, the Debtors have $1.52 billion in assets and $1.46 billion in liabilities. TMT Shipmanagement LLC, (Case No. 13-33740), and F Elephant Corporation, (Case No. 13-33749) also sought Chapter 11 protection. TMT filed a lawsuit in U.S. bankruptcy court aimed at forcing creditors to release the vessels so they can return to generating income. Judge Marvin Isgur presides over the case. TMT tapped attorneys from Bracewell & Giuliani LLP as bankruptcy counsel, and AlixPartners as financial advisors. The U.S. Trustee, in July 2013, appointed an official committee to represent the interests of all unsecured creditors. The Committee retained Kelley, Drye & Warren LLP as its principal investigation/litigation counsel, Seward & Kissel LLP as its principal bankruptcy/restructuring/maritime counsel, and FTI Consulting as its financial advisor. An Examiner was appointed to review Estate Professional Fees and to provide a report as to the Non-Debtor Affiliate Avoidance Actions. Handy Debtors -- AHC, BHC, and CHC -- confirmed a joint plan of reorganization on April 8, 2014. However, the "effective date" under the joint plan did not occur and, the plan was terminated, followed by the sale of the Vessels owned by AHC, BHC, and CHC. Mr. Su, on July 2, 2014, filed plans of reorganization for BWAC, GWAC, and HWAC. The plans could not proceed, however, because the Vessels owned by BWAC, GWAC and HWAC were sold shortly after the Plans were filed. The Debtors, on April 10, 2015, filed two joint plans of reorganization. Proceedings on the plans and related disclosure were postponed and, ultimately, the Debtors withdrew the plan. As a result of the 2017 Mediation, the Debtors filed the Su Parties Settlement Plan, which incorporated a settlement in principle among the Debtors, the Committee, and the Su Parties. The Debtors and the Committee, in the exercise of their business judgment and their fiduciary duties, decided not to pursue the Su Parties Settlement Plan. TORTOISE PARENT: S&P Lowers ICR to 'B' on Expected Higher Leverage ------------------------------------------------------------------ S&P Global Ratings said it lowered its issuer credit rating on Tortoise Parent Holdco LLC to 'B' from 'BB-'. S&P also lowered its debt rating on Tortoise's secured first-lien term loan and secured revolving facility to 'B-' from 'BB-'. At the same time, S&P revised its recovery rating on the company's debt to '5', indicating its expectation for modest (mid-20% area) recovery. "We believe Tortoise's leverage, as measured by debt to EBITDA, will be higher than we anticipated earlier and will likely remain well above 5.0x over the next several years. We think Tortoise is more exposed to energy volatility despite operating in its niche in asset management. As a result, we have reassessed the company's business risk profile (BRP) to weak from fair," S&P said. The negative outlook reflects over expectation that Tortoise's leverage will remain above 5.0x over the next 12 months along with year-over-year declines in revenue, AUM, and EBITDA. "We believe the ratings could be further pressured by a deterioration in the company's business position and higher leverage. We could lower the rating if debt to EBITDA remains elevated, or if we see further deterioration in its business position," S&P said. "An upgrade is unlikely over the next 12 months. We could revise the outlook to stable if operating metrics stabilize," the rating agency said. S&P's recovery analysis includes the company's $314 million first-lien term loan and 85% usage of the $35 million secured revolving credit facility signed in conjunction with the first-lien term loan. S&P applies a 5.0x multiple for all asset managers because it believes this represents an average multiple for asset managers emerging from a default scenario. The rating agency's simulated default scenario includes substantial market depreciation leading to a significant reduction in EBITDA sufficient to trigger a payment default. TPT GLOBAL: Acquires 75% of Bridge Internet for 8 Million Shares ---------------------------------------------------------------- TPT Global Tech, Inc. (OTCBB:TPTW) has recently completed the acquisition of a majority of Bridge Internet, LLC, a Delaware corporation. The company acquired 75% of Bridge Internet for 8M shares of common stock of TPTW, 4M of which vest equally over two years. As sufficient funding is raised by the Company, defined as around $3M, marketing funds of up to $200,000 per quarter for the next year will be provided and a formal employment agreement will be created for Trip Camper. Tower industry Veteran, Founder and CEO of Bridge Internet, Trip Camper, will retain the remaining 25% of Bridge Internet and stay on as the CEO, as well as become the acting CEO of TPT Speed Connect LLC. Speed Connect LLC's assets were acquired by the Company in May of 2019 and conveyed into a wholly owned subsidiary TPT SpeedConnect, LLC. TPT Speed Connect is one of the largest Rural Wireless Internet Service Providers in the United States with operations in 10 Midwestern States. Bridge Internet offers a Joint Venture (JV) business model to Municipalities, Cooperatives and Individual Territory Owners throughout the United States. It currently has no revenues. As a territorial, duplicatable, wireless internet service provider, this is a unique opportunity for potential JV partners to join an incredible revenue sharing business model. It is very easy for Municipalities, Cooperatives or Individual Owners to start JV businesses with Bridge Internet to provide their communities with state-of-the-art High-Speed Internet, Voice and IPTV services. The internet is a commodity many take for granted but for those with limited access every day is an unnecessary struggle. With millions of rural Americans struggling to find a reliable internet provider, Bridge Internet will help make a difference in people's lives by providing access to online classes, healthcare, news and entertainment. "The acquisition of a majority of Bridge Internet is a milestone in the continued growth of TPT Global Tech as a leading player in the wireless internet markets. Bridge Internet coupled with TPT Speed Connect remains focused on serving the Internet infrastructure needs of our customers and strengthening our industry leading position," Says Trip Camper, CEO of Bridge Internet. "Adding Trip Camper to TPT Global Tech's management team in a very short period of time has already proven to be a great new asset for the company. His many years of working in the US Cell Tower industry and his experience in running US public companies is very welcomed at TPT Global Tech," said Stephen Thomas CEO. About TPT Global Tech TPT Global Tech Inc. (OTC:TPTW) based in San Diego, California, is a Technology/Telecommunications Media Content Hub for Domestic and International syndication and also provides Technology solutions to businesses domestically and worldwide. TPT Global offers Software as a Service (SaaS), Technology Platform as a Service (PAAS), Cloud-based Unified Communication as a Service (UCaaS) and carrier-grade performance and support for businesses over its private IP MPLS fiber and wireless network in the United States. TPT's cloud-based UCaaS services allow businesses of any size to enjoy all the latest voice, data, media and collaboration features in today's global technology markets. TPT's also operates as a Master Distributor for Nationwide Mobile Virtual Network Operators (MVNO) and Independent Sales Organization (ISO) as a Master Distributor for Pre-Paid Cellphone services, Mobile phones Cellphone Accessories and Global Roaming Cellphones. TPT Global reported a net loss of $5.38 million for the year ended Dec. 31, 2018, compared to a net loss of $3.81 million for the year ended Dec. 31, 2017. As of Sept. 30, 2019, the Company had $16.99 million in total assets, $30.85 million in total liabilities, and a total stockholders' deficit of $13.89 million. Sadler, Gibb & Associates, LLC, in Salt Lake City, UT, the Company's auditor since 2016, issued a "going concern" qualification in its report dated April 10, 2019, citing that the Company has suffered recurring losses from operations and has a net capital deficiency which raise substantial doubt about its ability to continue as a going concern. TRANS-LUX CORP: Incurs $1.4 Million Net Loss in 2019 ---------------------------------------------------- Trans-Lux Corporation filed with the Securities and Exchange Commission its Annual Report on Form 10-K reporting a net loss of $1.40 million on $17.03 million of total revenues for the year ended Dec. 31, 2019, compared to a net loss of $4.69 million on $14.40 million of total revenues for the year ended Dec. 31, 2018. As of Dec. 31, 2019, the Company had $12.25 million in total assets, $13.99 million in total liabilities, and a total stockholders' deficit of $1.74 million. The Company has incurred recurring losses and has a working capital deficiency. The Company had a working capital deficiency of $3.1 million as of Dec. 31, 2019. The Company is dependent on future operating performance in order to generate sufficient cash flows in order to continue to run its businesses. Future operating performance is dependent on general economic conditions, as well as financial, competitive and other factors beyond our control. In order to more effectively manage its cash resources, the Company had, from time to time, increased the timetable of its payment of some of its payables, which delayed certain product deliveries from our vendors, which in turn delayed certain deliveries to our customers. In March and April 2019, the Company received aggregate proceeds of $8.0 million from (i) a rights offering to current shareholders under which the shareholders could purchase shares of its Common Stock at an exercise price of $1.00 per share, resulting in gross proceeds of $2.5 million and (ii) the exercise of the $5.5 million warrant issued to Unilumin North America Inc. Of these proceeds, a portion was used to satisfy outstanding obligations including certain long-term debt, certain payables, certain accrued liabilities and pension obligations. On Sept. 16, 2019, the Company entered into a Loan and Security Agreement with MidCap Business Credit LLC as lender. The Loan Agreement allows the Company to borrow up to an aggregate of $4.0 million on a revolving credit loan based on accounts receivable, inventory and equipment for general working capital purposes. A stockholder of the Company has committed to providing additional capital up to $2.0 million through Dec. 31, 2020, to the extent necessary to fund operations. Management believes that its current cash resources and cash provided by operations will be sufficient to fund its anticipated current and near-term cash requirements within one year from the date of issuance of this Form 10-K. The Company continually evaluates the need and availability of long-term capital in order to meet its cash requirements and fund potential new opportunities. A full-text copy of the Form 10-K is available for free at: https://is.gd/ZZUGmJ About Trans-Lux Headquartered New York, New York, in Trans-Lux Corporation -- http://www.trans-lux.com/-- designs and manufactures digital display solutions and fixed digit scoreboards. TRANSOCEAN INC: Moody's Lowers CFR to Caa1, Outlook Negative ------------------------------------------------------------ Moody's Investors Service downgraded Transocean Inc.'s Corporate Family Rating to Caa1 from B3, Probability of Default Rating to Caa1-PD from B3-PD, and senior unsecured notes rating to Caa3 from Caa2. Concurrently, Moody's also downgraded Transocean's senior secured revolving credit facility to B1 from Ba3, senior secured notes issued by various Transocean's subsidiaries to B2 from B1 and priority guaranteed senior unsecured notes to Caa2 from Caa1. Transocean's Speculative Grade Liquidity rating was downgraded to SGL-2 from SGL-1. The rating outlook remains negative. "The offshore sector's modest signs of improvement in 2019 did not significantly increase Transocean's contract backlog vis-a-vis its debt burden, and while day rates have modestly improved, for some rig types and geographic markets, the appreciation has been considerably slower than expected. The commodity price collapse in the first quarter of 2020 poses a substantial challenge for the company to improve its cash flow outlook, as near-term improvement of offshore fundamentals is unlikely," commented Sreedhar Kona, Moody's senior analyst. "Transocean's very high financial leverage could worsen making its capital structure untenable." Downgrades: Issuer: Transocean Inc. Corporate Family Rating, Downgraded to Caa1 from B3 Probability of Default Rating, Downgraded to Caa1-PD from B3-PD Senior Secured Revolving Credit Facility, Downgraded to B1 (LGD2) from Ba3 (LGD2) Senior Unsecured Notes (PGNs), Downgraded to Caa2 (LGD4) from Caa1 (LGD4) Senior Unsecured Notes, Downgraded to Caa3 (LGD5) from Caa2 (LGD6) Speculative Grade Liquidity Rating, Downgraded to SGL-2 from SGL-1 Issuer: Transocean Guardian Limited Senior Secured Notes, Downgraded to B2 (LGD2) from B1 (LGD2) Issuer: Transocean Pontus Limited Senior Secured Notes, Downgraded to B2 (LGD2) from B1 (LGD2) Issuer: Transocean Poseidon Limited Senior Secured Notes, Downgraded to B2 (LGD2) from B1 (LGD2) Issuer: Transocean Sentry Limited Senior Secured Notes, Downgraded to B2 (LGD2) from B1 (LGD2) Outlook Actions: Issuer: Transocean Inc. Outlook, Remains Negative Issuer: Transocean Guardian Limited. Outlook, Remains Negative Issuer: Transocean Pontus Limited. Outlook, Remains Negative Issuer: Transocean Poseidon Limited. Outlook, Remains Negative Issuer: Transocean Sentry Limited. Outlook, Remains Negative RATINGS RATIONALE Transocean's downgrade to Caa1 CFR reflects the potential for the company's high financial leverage to become untenable as the recovery in offshore activity continues to be slower than expected. The prevailing weak commodity price environment further dampens the prospect of improvement in Transocean's cash flow outlook. The rapid and widening spread of the coronavirus outbreak, deteriorating global economic outlook, falling oil prices, and asset price declines are creating a severe and extensive credit shock across many sectors, regions and markets. The combined credit effects of these developments are unprecedented. The OFS sector has been one of the sectors most significantly affected by the shock given its sensitivity to demand and oil prices. More specifically, the weaknesses in Transocean's credit profile have left it vulnerable to shifts in market sentiment in these unprecedented operating conditions and Transocean remains vulnerable to the outbreak continuing to spread and oil prices remaining weak. Moody's regard the coronavirus outbreak as a social risk under its ESG framework, given the substantial implications for public health and safety. The action reflects the impact on Transocean of the breadth and severity of the oil demand and supply shocks, and the broad deterioration in credit quality it has triggered. Moody's expects Transocean to maintain good liquidity as reflected in its SGL-2 rating, because of its sizable cash balance and borrowing availability under its credit facility. As of December 31, 2019, the company had $1.8 billion of cash on the balance sheet and full availability under its $1.3 billion senior secured revolving credit facility, which Moody's expects will be modestly drawn upon in 2021. The credit agreement contains several financial covenants including maximum debt to capitalization ratio of 0.60:1.00, minimum liquidity of $500 million, minimum guarantee coverage ratio of 3.00x and minimum collateral coverage ratio of 2.10x. Moody's expects the company will remain in compliance with its covenant requirements. Asset sales are unlikely, given the market conditions for offshore drilling rigs, but might be used to raise cash since some of the company's assets are unencumbered. Transocean's Caa1 CFR reflects the persistent oversupply of floating rigs to keep current market day rates restrained. The company is obligated to spend approximately $860 million through 2021 to take the delivery of two rigs currently under construction, one of which currently does not have a drilling contract. Although the company's good liquidity can partly address the company's significant near-term maturities, capital markets unfavorable sentiment towards the oil and gas industry poses an elevated refinancing risk for Transocean. Transocean benefits from its revenue backlog of approximately $10 billion, and the company's measures to maintain high levels of revenue efficiency, reduce operating costs, and enhance operational utilization of its active rigs. The B1 rating on Transocean's revolving credit facility reflects its superior position in Transocean's capital structure relative to the guaranteed unsecured notes and the unsecured notes, given its security interest in some of Transocean's rigs and strong collateral cushion in the form of a 2.1x collateral coverage ratio covenant requirement. The Guardian Notes, the Pontus Notes, the Poseidon Notes and the Sentry Notes are rated B2, two notches above the Caa1 CFR and one notch below the revolver's B1 rating. The B2 rating reflects these Notes' respective security interest in only one or two drill ships and the cash flow generated from their drilling contracts, and the potential for any residual claims from these Notes to become subordinated to secured claims at Transocean, which has provided unsecured guarantee to these notes. The Caa2 rating on PGNs, reflects the secured debt which the PGNs are subordinated to and the PGNs priority claim to the unsecured notes to which PGNs are senior, because of the guarantees from Transocean's intermediate holding company subsidiaries, effectively giving these notes a priority claim to the assets held by Transocean's operating and other subsidiaries. Transocean's remaining senior unsecured notes are rated Caa3, or two notches below the Caa1 CFR, reflecting their lack of security or subsidiary guarantees. The rating outlook is negative, reflecting the continued oversupply of deep-water and ultra-deep-water rigs reducing the likelihood of sufficient day rate improvement for Transocean. The company could also potentially erode some of its liquidity strength. The ratings could be downgraded if Transocean's liquidity becomes weak or its covenant compliance risk increases. Higher risk of debt transactions that could be viewed as distressed exchange could also result in a ratings downgrade. An upgrade is unlikely in the near term, given the lack of substantial recovery in day rates and low likelihood of reduction in high financial leverage. If Transocean can achieve sequential increases in EBITDA in an improving offshore drilling market while maintaining good liquidity and the company's interest coverage exceeds 1.5x, an upgrade could be considered. The principal methodology used in these ratings was Global Oilfield Services Industry Rating Methodology published in May 2017. Transocean Inc. is a wholly-owned subsidiary of Transocean Ltd., a leading international offshore drilling contractor operating in every major offshore producing basin around the world. TRAVEL LEADERS: Moody's Cuts CFR to Caa1, On Review for Downgrade ----------------------------------------------------------------- Moody's Investors Service downgraded Travel Leaders Groups, LLC's Corporate Family Rating to Caa1 from B2, Probability of Default Rating to Caa1-PD from B2-PD and its senior secured first lien credit facility (revolver and term loan B) to Caa1 from B2. The ratings have also been placed under review for further downgrade. The downgrade to Caa1 CFR and review reflects severe disruptions within the global corporate and high-end leisure travel sectors from the coronavirus (COVID-19) pandemic. The action also incorporates Moody's expectation that Travel Leaders' operating results and liquidity will deteriorate materially in the near-term, and considers uncertainty surrounding the longer-term economic outlook. RATINGS RATIONALE The rapid and widening spread of the coronavirus outbreak, the deteriorating global economic outlook, falling oil prices and asset price declines are creating a severe and extensive credit shock across many sectors, regions and markets. The combined credit effects of these developments are unprecedented. The global travel sector has been one of the sectors most significantly affected by the shock given its exposure to travel restrictions and sensitivity to consumer demand and sentiment. More specifically, Travel Leaders is left vulnerable to shifts in market sentiment in these unprecedented operating conditions, and the company remains vulnerable to the outbreak continuing to spread. Moody's regards the coronavirus outbreak as a social risk under its ESG framework, given the substantial implications for public health and safety. The actions reflect the impact on Travel Leaders of the breadth and severity of the shock, and the broad deterioration in credit quality it has triggered. In its review, Moody's will consider (i) the sufficiency of the company's liquidity sources over the next 12 months; (ii) Travel Leaders ability to timely and aggressively reduce expenses and capital investments to preserve cash outflows as travel booking levels recede; (iii) the timing of when global travel restrictions will be lifted, (iv) the potential for and types of support the US government might provide to small businesses (independent travel agencies); and (v) the company's ability to restore or halt the deterioration of its credit metrics. Moody's downgraded and placed the following ratings of Travel Leaders Group, LLC on review for further downgrade: - Corporate Family Rating, downgraded to Caa1 from B2 - Probability of Default Rating, downgraded to Caa1-PD from B2-PD - $50 million senior secured first lien revolving credit facility due 2022, downgraded to Caa1 (LGD3) from B2 (LGD3) - $631 million senior secured first lien term loan B due 2024, downgraded to Caa1 (LGD3) from B2 (LGD3) Outlook Actions: - Outlook, changed to rating under review from stable The principal methodology used in these ratings was Business and Consumer Service Industry published in October 2016. TLG headquartered in New York, NY manages corporate, leisure, franchise, and consortia travel operations under its network of diversified divisions and brands. Brands include Tzell Travel Group, Protravel International, Nexion, Vacation.com, Travel Leaders, Cruise Holidays, Cruise Specialists, and Altour. TLG is controlled by its largest shareholder, Certares. The company generated revenues of approximately $900 million for the last twelve months ended September 30, 2019. TRIBE BUYER: S&P Places 'B-' Issuer Credit Rating on Watch Negative ------------------------------------------------------------------- S&P Global Ratings placed all of its ratings on U.S.-based construction staffing firm Tribe Buyer LLC, including its 'B-' issuer credit rating, on CreditWatch with negative implications. CreditWatch placement reflects the high uncertainty regarding the severity and duration of the impact from the COVID-19 pandemic, and the anticipated slowdown in the nonresidential commercial construction market, where Tribe Buyer generates the substantial portion of its revenues. "In resolving our CreditWatch, we will determine if the extent of the business interruption brought on by COVID-19 significantly affects the company's revenue and earnings. We could lower the rating by one notch if we believe reduced activity will derail Tribe Buyer's ability to deliver on our expectations for revenue and EBITDA, which will be required to achieve positive DCF and maintain leverage well below 8x for the ratings. Additionally, we will consider whether missing these targets could hinder Tribe Buyer's ability to maintain sufficient liquidity and avoid a covenant breach," S&P said. "We could affirm the ratings if we believe the company can achieve these targets and maintain sufficient liquidity amid significant stress on its operations," the rating agency said. TRIDENT BRANDS: Fengate Trident, et al. Report 79.9% Stake ---------------------------------------------------------- In an amended Schedule 13D filed with the Securities and Exchange Commission, Fengate Trident LP, Fengate Trident GP Inc., and Fengate Capital Management Ltd. disclosed that as of Jan. 9, 2020, they beneficially own 117,092,739 shares of common stock of Trident Brands, Inc., which represents 79.9% of the shares outstanding. The percentage was based on 32,311,887 shares outstanding, per the Issuer's Form 10-K dated March 16, 2020, plus 114,280,853 shares of Common Stock into which the Convertible Notes may be converted. As of March 13, 2020, the Reporting Persons had acquired from the Issuer Convertible Notes in an aggregate principal amount of $22,300,000 and the total accrued but unpaid interest on those Convertible Notes, as of March 13, 2020 was $4,098,877. None of the shares of Common Stock or Convertible Notes were acquired on margin, or otherwise using borrowed funds or pursuant to any loan or credit arrangement. A full-text copy of the regulatory filing is available for free at: https://is.gd/bIdrco About Trident Brands Based in Brookfield, Wisconsin, Trident Brands Incorporated, f/k/a Sandfield Ventures Corp., is focused on the development of high growth branded and private label consumer products and ingredients within the nutritional supplement, life sciences and food and beverage categories. The platforms the Company is focusing on include: life science technologies and related products that have applications to a range of consumer products; nutritional supplements and related consumer goods providing defined benefits to the consumer; and functional foods and beverages ingredients with defined health and wellness benefits. Trident Brands reported a net loss of $12.22 million for the 12 months ended Nov. 30, 2019, compared to a net loss of $8.42 million for the 12 months ended Nov. 30, 2018. As of Nov. 30, 2019, the Company had $3.95 million in total assets, $28.48 million in total liabilities, and a total stockholders' deficit of $24.54 million. MaloneBailey, LLP, in Houston, Texas, the Company's auditor since 2015, issued a "going concern" qualification in its report dated March 16, 2020 citing that the Company has suffered recurring losses from operations and has a net capital deficiency that raise substantial doubt about its ability to continue as a going concern. TRUE COLOURS: Seeks to Hire Blackwood Law Firm as Legal Counsel --------------------------------------------------------------- True Colours, Inc., seeks approval from the U.S. Bankruptcy Court for the Western District of Oklahoma to hire Blackwood Law Firm, PLLC as its legal counsel. Blackwood will advise the Debtor of its powers and duties under the Bankruptcy Code and will provide other legal services in connection with its Chapter 11 case. The firm's attorneys will be paid up to $225 per hour. Legal assistants and law clerks will charge an hourly fee of $75. Blackwood neither holds nor represents any interest adverse to the Debtor's bankruptcy estate, according to court filings. The firm can be reached through: Gary D. Hammond, Esq. Hammond & Associates, PLLC 512 N.W. 12th Street Oklahoma City, OK 73103 Tel: (405) 216-0007 Email: gary@okatty.com About True Colours Inc. True Colours, Inc. -- http://www.gardenpartyflowershop.com/-- is a full-service florist offering a large selection of gift items and artistically crafted floral designs. It offers a wide range of services, including daily delivery arrangements, floral services for wedding and events, wedding and event styling, and interior decorating services. True Colours sought protection under Chapter 11 of the Bankruptcy Code (Bankr. W.D. Okla. Case No. 20-10845) on March 11, 2020. At the time of the filing, the Debtor disclosed $536,446 in assets and $1,662,160 in liabilities. The Debtor tapped Hammond & Associates, PLLC as its legal counsel. TRUE LEAF: Receives Notice Event of Default from Lind Asset ----------------------------------------------------------- True Leaf Brands Inc. (MJ) (otcqx:TRLFF) (TLA) on March 23, 2020, disclosed that Lind Asset Management XV, LLC (the "Lender") managed by alternative asset management firm The Lind Partners, LLC, under the Company's convertible security funding agreement dated February 12, 2019, and under the waiver, amendment and funding supplement agreement dated October 7, 2019 (together the "Credit Agreement"), provided the Company with a "Notice Event of Default, Investigation of Event of Default and Reservation of Rights" letter (the "Demand Notice"). The Lender has provided the Company with two business days from March 23, 2020 ("Notice Date") to remedy all breaches under the Credit Agreement, the main breach being the immediate payment of $250,000 which was due on March 21, 2020. The Lender has also requested the Company provide certain financial information within five business days from the Notice Date. The Lender, without waiving any of its legal rights under the Credit Agreement, has notified the Company it does not intend to take any further action until after March 27, 2020. After that date, the Lender may enforce all rights available to it under the Credit Agreement. The Company is reviewing and considering the Demand Notice and its options. At present, there can be no assurance as to what, if any, alternatives might be pursued by the Company . There can also be no assurance that the Company will reach any solution with the Lender, or as to the terms of any such solution, if achieved. About True Leaf True Leaf Brands Inc. -- http://www.trueleaf.com/-- is a wellness company for both people and their pets. True Leaf Cannabis Inc., a division of True Leaf Brands Inc., is a Licensed Producer and owns True Leaf Campus, an 18,000 square foot facility located on a 40-acre site zoned for the cultivation, processing, and sale of cannabis in Lumby, British Columbia. True Leaf Pet Inc., a division of True Leaf Brands Inc., is a global pet care company offering plant-focused wellness products that improve the quality of life for companion animals. The company is guided by its mission to "Return the Love" which was inspired by the unconditional love that pets give us every day. TRUGREEN LP: S&P Affirms 'B' ICR, Alters Outlook to Negative ------------------------------------------------------------ S&P Global Ratings affirmed its 'B' issuer credit rating on Memphis, Tenn.-based lawn and shrub care company TruGreen L.P. (TruGreen) and Outdoor Home Services Holdings LLC, but revised the outlook to negative from stable. S&P believes TruGreen will experience a decline in demand for its services over the next few months, as consumers prioritize essential spending during the COVID-19 pandemic. TruGreen's business is concentrated in a single product line--residential lawn service (about 85% of revenue)--that is discretionary and susceptible to lower consumer spending, especially during weak economic cycles or a housing downturn. "We believe, given social distancing recommendations and stricter containment measures such as "shelter-in-place" that may be enacted broadly across the country, homeowners may restrict outside services for some time, resulting in revenue declines for the company. Our economists have stated that we are currently in a recession, and they expect GDP to be flat for the year, assuming some recovery in the second half of the year. However, if the pandemic worsens, an economic contraction could be prolonged," S&P said. The negative outlook reflects the potential for a lower rating if TruGreen's leverage rises and stays above 7x. "We could lower our rating if the economic downturn persists, resulting in TruGreen's EBITDA declining by at least 15% or its operational performance suffering due to client attrition from coronavirus-related containment measures. Additionally, we could lower our rating if TruGreen pursues additional debt-funded dividends such that leverage is sustained above 7x," S&P said. "We could revise our outlook back to stable if TruGreen can weather the COVID-19 pandemic with moderate deterioration in its credit metrics and we believe it would return to growth in its 2021 season with leverage sustained in the low-6x area," S&P said. TURBOCOMBUSTOR TECHNOLOGY: Moody's Lowers CFR to Caa1 ----------------------------------------------------- Moody's Investors Service downgraded its ratings for TurboCombustor Technology, Inc., including the company's corporate family rating (CFR, to Caa1 from B3) and probability of default rating (to Caa1-PD from B3-PD), and the ratings for its senior secured credit facilities (to Caa1 from B3). The ratings remain under review for downgrade. RATINGS RATIONALE The downgrades primarily reflect risk concerning TurboCombustor's short-dated capital structure, including the looming principal obligations that mature in December 2020. The downgrades also reflect the company's large-sized exposure to the Boeing 737 MAX (24% of sales) and ongoing uncertainty related to the prospective timing of that program's ungrounding by various regulators globally. In addition, Moody's considers elevated uncertainty stemming from the COVID-19 virus and the risk of the company's OEM customers reducing production volumes which would in turn pressure TurboCombustor's earnings and cash flow. The Caa1 corporate family rating reflects TurboCombustor's modest scale, pronounced customer concentration (top 3 customers account for about 75% of sales), elevated near-term operational and financial risk, and weak track record of cash generation. Moody's expects production rates on the LEAP-1B (the engine for the 737 MAX) to be significantly lower in 2020 relative to the prior year, which will weigh on and sales and earnings, although continued growth on other platforms such as the Joint Striker Fighter will help mitigate some of these headwinds. The rating also considers TurboCombustor's meaningful content on other commercial engine platforms such as the Airbus A320neo and A220 (former C-Series), as well as barriers to entry such as engineering and technical expertise, bolstered by significant capacity investments that TurboCombustor has made over the last few years. Moody's also notes moderate levels of financial leverage with estimated Moody's-adjusted debt-to-EBITDA of about 3.5x as of December 2019, although leverage is expected to increase (between 0.5 to 1x) during 2020 on earning headwinds from the MAX. Moody's has concerns about TurboCombustor's short-dated capital structure and the ability of the company to extend and/or refinance its looming maturities given current capital market dislocations stemming from the coronavirus. An inability to extend debt maturities within the next 4 to 8 weeks would likely result in further downward rating pressure. The rapid and widening spread of the coronavirus outbreak, the deteriorating global economic outlook, falling oil prices and asset price declines are creating a severe and extensive credit shock across many sectors, regions and markets. The combined credit effects of these developments are unprecedented. The aerospace and defense industry is exposed to the shock given its sensitivity to business and consumer demand. Moody's regards the coronavirus outbreak as a social risk under its ESG framework, given the substantial implications for public health and safety. The actions in part reflect the impact on TurboCombustor of the breadth and severity of the shock, and the broad deterioration in credit quality it has triggered. All ratings remain on review for downgrade. The review will continue to focus on (1) TurboCombustor's ability to improve its liquidity profile by extending its principal obligations beyond December 2020; (2) the expected production rate of the MAX and other commercial platforms during 2020 and beyond; (3) the likely timing of the ungrounding of the 737 MAX by various regulators; and (4) the likelihood and form of support that the company might receive from its OEM customers and/or the US government. The following summarizes the rating actions: Issuer: TurboCombustor Technology, Inc. Corporate Family Rating, downgraded to Caa1 from B3, remains on review for downgrade Probability of Default Rating, downgraded to Caa1-PD from B3-PD, remains on review for downgrade $260 million senior secured first-lien term loan due 2020, downgraded to Caa1 (LGD3) from B3 (LGD3), remains on review for downgrade $70 million senior secured first-lien revolving credit facility due 2020, downgraded to Caa1 (LGD3) from B3 (LGD3), remains on review for downgrade Outlook, remains rating under review Headquartered in Manchester, Connecticut, TurboCombustor Technology, Inc. (dba "Paradigm Precision") is involved with the fabrication and assembly of gas turbine engine parts for use in commercial, military and industrial applications. The company is majority-owned by entities affiliated with The Carlyle Group. Estimated revenues for the twelve months ended December 2019 are approximately $590 million. The principal methodology used in these ratings was Aerospace and Defense Industry published in March 2018. TUTOR PERINI: Moody's Cuts CFR to B2, Outlook Negative ------------------------------------------------------ Moody's Investors Service downgraded Tutor Perini Corporation's corporate family rating to B2 from B1, its probability of default rating to B2-PD from B1-PD, and its senior unsecured notes rating to B3 from B2. At the same time, Moody's downgraded Tutor Perini's Speculative Grade Liquidity Rating to SGL-4 from SGL-3 to reflect the looming maturity of its revolving credit facility in December 2020. The ratings outlook has been revised to negative from stable. "The downgrade of Tutor Perini's ratings and the negative outlook reflects the company's challenges in refinancing $200 million of convertible notes in light of the recent deterioration in credit market conditions and the plunge in its share price due to concerns about work stoppages and the economic impact of the coronavirus, which have exacerbated worries about its inconsistent cash flows and somewhat weak liquidity." said Michael Corelli, Moody's Vice President -- Senior Credit Officer and lead analyst for Tutor Perini Corporation. Downgrades: Issuer: Tutor Perini Corporation Probability of Default Rating, Downgraded to B2-PD from B1-PD Speculative Grade Liquidity Rating, Downgraded to SGL-4 from SGL-3 Corporate Family Rating, Downgraded to B2 from B1 Senior Unsecured Regular Bond/Debenture, Downgraded to B3 (LGD4) from B2 (LGD4) Outlook Actions: Issuer: Tutor Perini Corporation Outlook, Changed to Negative from Stable RATINGS RATIONALE Tutor Perini's B2 corporate family rating is supported by its moderate leverage, ample interest coverage, good market position, meaningful scale and diversity across a number of US nonresidential building and civil infrastructure construction markets and its strong project backlog. However, its rating is constrained by its relatively thin margins, low funds from operations as a percentage of its outstanding debt, inconsistent free cash flow generation, high level of unbilled receivables, significant exposure to fixed-price construction contracts and the risk of work stoppages and delays related to the coronavirus. The company is also exposed to contingent risks associated with periodic contract disputes and the possibility of further write-downs as it pursues past due payments. Its rating also reflects the looming maturity of its $350 million revolving credit facility on December 17, 2020 if its convertible notes remain outstanding at that time, and the potential difficulty in refinancing these notes under current market conditions. The rapid and widening spread of the coronavirus outbreak, deteriorating global economic outlook, falling oil prices, and asset price declines are creating a severe and extensive credit shock across many sectors, regions and markets. The combined credit effects of these developments are unprecedented. Moody's regards the coronavirus outbreak as a social risk under its ESG framework, given the substantial implications for public health and safety. The action reflects the impact on Tutor Perini of the breadth and severity of the shock, and the broad deterioration in credit quality it has triggered. This has been evident in the substantial decline in the company's share price which declined by about 70% in four trading days last week and remains down about 60% from early March 2020. The plunge in share price has reduced the probability of the company successfully completing a sale or cost effectively refinancing its convertible notes. The company confirmed on March 2, 2020 that a Special Committee of its Board of Directors comprised of independent directors was engaged in discussions regarding a potential transaction for the acquisition of Tutor Perini. Tutor Perini's operating performance has moderately weakened over the past few years, and its cash flows have remained weak and inconsistent due to working capital investments resulting from slow paying customers, client driven delays in billing for out of scope work, and the time lag on recoveries on approved change orders. These issues have resulted in Tutor investing about $1.5 billion in working capital and caused its unbilled receivables balance to skyrocket to $1.1 billion in December 2019 from $116 million in December 2008. The company generated modest free cash flow in 2019 but its credit facility borrowings still increased by $76 million since cash was generated by its joint venture projects. Cash collections remain a priority in 2020, but the magnitude will continue to be influenced by working capital inefficiencies and potential settlements on aged receivables. However, the outcome of negotiations and litigation remains uncertain as demonstrated by an adverse jury verdict in the case related to construction of the Alaskan Way Viaduct Replacement Project (SR 99) that resulted in a $167 million charge in 4Q19. Tutor Perini's operating performance will be supported by its $11.2 billion backlog of orders. However, its quarterly operating performance will remain volatile depending on the timing of projects and work stoppages and delays which have begun to occur in New York and California related to the coronavirus, as well as potential adjustments as it collects on its aged receivables. Its free cash flow is also likely to remain volatile and uncertain. The company's inability to consistently generate free cash flow has resulted in its outstanding debt increasing to about $834 million (adjusted debt of $1.2 billion) in December 2019 from $736 million in December 2017 while its credit metrics have modestly weakened. Its leverage ratio rose to 4.5x (Debt/EBITDA) and its interest coverage (EBITA/Interest Expense) declined to 2.5x as of December 2019, while its funds from operations as a percent of outstanding debt (FFO/Debt) remained weak at only 10%. Tutor Perini's SGL-4 liquidity rating reflects its weak near-term liquidity based on the risk it is unable to refinance its $200 million of convertible notes prior to December 17, 2020 which will pull forward the maturity of its $350 million revolver to that date. It also reflects the risks inherent in the engineering & construction industry and the potential adverse impacts from work stoppages and delays and economic weakness caused by the coronavirus. The company had an unrestricted cash balance of $194 million as of December 2019, but this included about $150 million of its portion of joint venture cash balances that are only available for joint venture-related uses. The company also had $236 million of availability under its committed bank credit facility, which had $114 million of borrowings outstanding. Therefore, the company's total liquidity (excluding JV cash) was about $270 million, but has declined substantially from $445 million in December 2017. The negative outlook reflects the risk Tutor Perini is unable to refinance its $200 million of convertible notes prior to December 17, 2020, or has to replace this low-cost debt (2.875%) with more expensive financing. It also incorporates the risks of a much weaker operating performance due to work stoppages and delays and economic weakness caused by the coronavirus. Upward pressure on Tutor's ratings is unlikely in the intermediate term given its looming debt maturity, track record of inconsistent free cash flow and its exposure to competitive industry dynamics and fixed price contracts. Positive rating pressure could develop if the company refinances its convertible notes and extends it debt maturities, materially strengthens its liquidity position, substantially reduces its unbilled receivables, sustains funds from operations at more than 15% of its outstanding debt and consistently generates free cash flow. Tutor Perini could face a downgrade if it doesn't refinance its convertible notes and extend its debt maturities or its consolidated EBITA margin declines below 4.0%, or it sustains funds from operations below 12% of outstanding debt or a leverage ratio above 5.5x. Downward rating pressure could also develop if its liquidity continues to weaken. Tutor Perini Corporation is headquartered in Sylmar, California and provides general contracting, construction management and design-build services to public and private customers primarily in the United States. Tutor Perini's revenues for the trailing twelve months ended December 31, 2019 was $4.45 billion and its backlog was $11.2 billion. The company reports its results in three segments: Civil (40% of 2019 revenues; 54% of backlog) is engaged in public works construction including the repair, replacement and reconstruction of highways, bridges and mass transit systems; Building (39%; 25%), which handles large projects in the hospitality and gaming, sports and entertainment, education, transportation and healthcare markets; Specialty Contractors (21%; 21%) provides mechanical, electrical, plumbing and heating installation services. The principal methodology used in these ratings was Construction Industry published in March 2017. UNIVERSAL FIBER: Moody's Lowers CFR to Caa1, Outlook Negative ------------------------------------------------------------- Moody's Investors Service has downgraded Universal Fiber Systems, LLC's Corporate Family Rating to Caa1 from B3, first lien senior secured rating to B3 from B2, and second lien senior secured rating to Caa3 from Caa2. The outlook remains negative. Rating actions: Issuer: Universal Fiber Systems, LLC Corporate Family Rating, downgraded to Caa1 from B3; Probability of Default Rating, downgraded to Caa1-PD from B3-PD; Senior Secured First Lien Revolving Credit Facility, downgraded to B3 (LGD3) from B2 (LGD3); Senior Secured First Lien Term Loan, downgraded to B3 (LGD3) from B2 (LGD3); Senior Secured Second Lien Term Loan, downgraded to Caa3 (LGD6) from Caa2 (LGD6); Outlook: Issuer: Universal Fiber Systems, LLC Outlook, remains negative RATINGS RATIONALE The rating downgrade reflects the heightened risk of the company breaching its financial covenant, maximum allowable Total Leverage Ratio of 5.75x. Universal Fiber's Total Leverage Ratio was at 5.63x for the quarter ending September 30, 2019. Moody's expects the declining demand on nylon fibers from the commercial carpet industry in North America and the COVID-19 pandemic will negatively affect its earnings and its ability to comply with the financial covenant in 2020. While making amendments to its credit agreement remains an option, the turbulent capital markets have raised uncertainty of the company reaching an agreement with its lenders in a time manner. Additional funding from H.I.G Capital, which owns Universal Fiber, may be needed to cure any shortfall in EBITDA and comply with the financial covenant. The rapid and widening spread of the coronavirus outbreak, deteriorating global economic outlook, falling oil prices, and asset price declines are creating a severe and extensive credit shock across many sectors, regions and markets. The combined credit effects of these developments are unprecedented. The synthetic fiber sector has been affected by the shock given its sensitivity to consumer demand and sentiment. More specifically, the weaknesses in Universal Fiber's credit profile have left it vulnerable to shifts in market sentiment in these unprecedented operating conditions and the company remains vulnerable to the outbreak continuing to spread. Moody's regards the coronavirus outbreak as a social risk under its ESG framework, given the substantial implications for public health and safety. The action reflects the impact on Universal Fiber of the breadth and severity of the shock, and the broad deterioration in credit quality it has triggered. The company's Caa1 CFR also reflects the company's small business scale, supplier, and customer concentration, limited operational diversity and high leverage. The commercial carpet is the largest end market for Universal and has experienced a decline in demand in North America where customers have switched to using luxury vinyl tile in the last several years. Universal Fibers' sales volume and EBITDA declined in the first 9 months of 2019 versus the prior-year period. Its debt/EBITDA, including Moody's adjustments, crept up to about 7.0x at the end of September 2019, versus 6.2x at the end of 2018. At the same time, the rating is supported by its ability to offer customized fiber products to meet high performance standards in applications such as commercial and automotive carpets, apparels, industrial and military goods. Solid niche market positions, long-term customer relations and efficient small lot production has supported EBITDA margin. The negative outlook reflects the secular decline in commercial carpet in North America and continued weakness in Universal Fiber's earnings, which in turn will narrow the company's headroom under its financial maintenance covenant in its first-lien term loan agreement. Moody's could downgrade the rating, if the company's earnings and cash flow continue to deteriorate and the risk of breaching its financial maintenance covenant doesn't dissipate, or if leverage exceeds 8.0x and free cash flow turns negative. Moody's would consider changing the outlook back to stable, if the company is able to amend its financial maintenance covenant or improve the headroom under the covenant. Rating upgrade requires the company to improve its earnings and generate positive free cash flow generation, and leverage, as adjusted by Moody's, stays below 7.0x on a sustainable basis. The principal methodology used in these ratings was Chemical Industry published in March 2019. Universal Fiber Systems, LLC manufactures solution-dyed and natural synthetic fibers used primarily in commercial carpet, automotive, specialty apparel, military and industrial end markets. The company has facilities in the United States, China, Thailand, Poland and the United Kingdom. Universal Fiber generated $263 million of revenues in 2018. H.I.G. Capital acquired the company from Sterling Group in 2015. VALERITAS HOLDINGS: Bankruptcy Court Approves Zealand Pharma Sale ----------------------------------------------------------------- Valeritas Holdings, Inc., a medical technology company and maker of the V-Go(R) Wearable Insulin Delivery device, on March 20, 2020, disclosed that the U.S. Bankruptcy Court for the District of Delaware (the "Court") approved the sale of substantially all of the business to Zealand Pharma A/S (NASDAQ: ZEAL) ("Zealand"), a Denmark-based biotechnology company. The transaction is expected to be completed during the first week of April, subject to the satisfaction of applicable closing conditions. Zealand submitted the previously announced stalking horse bid on February 9, 2020. Under the terms of the executed asset purchase agreement filed with the Court, the total consideration includes $23 million of cash and the assumption of certain liabilities related to the ongoing business. The agreement contemplates that Zealand, at close, would continue the Company's commercially-focused operations and retain the majority of Valeritas employees. Among other things, the continued employment will help ensure a seamless transition of the business to Zealand ownership and the continued production and distribution of V-Go(R). "We are pleased to receive the Court's approval of the sale of our business to Zealand, a company that is committed to continuing the commercialization of V-Go(R)," said John Timberlake, President and Chief Executive Officer of Valeritas. "Under new ownership, our team will be well positioned to continue to work hard to improve the health of and simplify the lives of people with diabetes. I want to take this opportunity to thank our employees for their loyalty and dedication to the Valeritas mission and to serving our patients and prescribers during this process." In addition, the Court on March 20 approved a global settlement among the Company, its prepetition lenders, and the Official Committee of Unsecured Creditors that will facilitate a consensual exit from Chapter 11 and provide a pathway for a possible recovery for the Company's unsecured creditors. Valeritas and its subsidiaries filed voluntary Chapter 11 cases on February 9, 2020 to accomplish the sale of the Company's assets in the most efficient manner as part of a competitive bidding process. Additional information about the proceeding, including access to Court documents, can be found at www.kccllc.net/valeritas. The Company cautions that trading in its securities during the pendency of the Chapter 11 proceedings is highly speculative and poses substantial risks. Trading prices for the Company's securities may bear little or no relationship to the actual recovery, if any, by holders of the Company's securities in the Chapter 11 proceedings. Based upon the current proceeds available from the asset sale to Zealand, after payment to the Company's postpetition lenders and the other secured lenders and the payment of other liabilities, there will not be any proceeds available for distribution to the holders of the Company's common stock. DLA Piper LLP (US) is serving as legal counsel to Valeritas, Lincoln International is serving as investment banker, and PricewaterhouseCoopers LLP is serving as financial advisor. About Valeritas Holdings Valeritas Holdings, Inc. (OTCPK: VLRXQ) -- https://www.valeritas.com/ -- is a commercial-stage medical technology company focused on improving health and simplifying life for people with diabetes by developing and commercializing innovative technologies. Valeritas' flagship product, V-Go Wearable Insulin Delivery device, is a simple, affordable, all-in-one basal-bolus insulin delivery option for adult patients requiring insulin that is worn like a patch and can eliminate the need for taking multiple daily shots. V-Go administers a continuous preset basal rate of insulin over 24 hours, and it provides discreet on-demand bolus dosing at mealtimes. It is the only basal-bolus insulin delivery device on the market today specifically designed keeping in mind the needs of type 2 diabetes patients. Headquartered in Bridgewater, New Jersey, Valeritas operates its R&D functions in Marlborough, Massachusetts. Valeritas Holdings, Inc. and three affiliates sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 20-10290) on Feb. 9, 2020. Valeritas Holdings disclosed $49.2 million in total assets and $38.2 million in total debt as of Sept. 30, 2019. Judge Laurie Selber Silverstein oversees the cases. The Debtors tapped DLA Piper LLP (US) as legal counsel; Lincoln International as investment banker; PricewaterhouseCoopers LLP as financial advisor; and Kurtzman Carson Consultants LLC as claims agent. VERIFONE SYSTEMS: Moody's Cuts CFR to B3, Outlook Stable -------------------------------------------------------- Moody's Investors Service downgraded Verifone Systems, Inc.'s Corporate Family Rating to B3 from B2 and Probability of Default Rating to B3-PD from B2-PD. The company's senior secured credit facility rating was downgraded to B3 from B2. The rating outlook remains stable. The downgrade of the CFR reflects sustained elevated leverage and limited cash flow generation as the company continues restructuring activities, and potential additional near-term pressures from COVID-19. RATINGS RATIONALE Verifone's credit profile is constrained by limited revenue growth and elevated leverage (Moody's adjusted total leverage of 6.9x at fiscal 2019 year-end, adding back one-time items but not pro forma for unrealized cost savings). The competitive environment in the systems business is highly intense, with deflationary pressures and economic model transition to integrated payments reducing hardware economics. The company has made progress on the restructuring plan but execution risk remains elevated. Near-term free cash flow generation is limited due to restructuring and other non-recurring costs. The credit profile is supported by the company's leading market position and installed base, and the stability of the services business which is largely recurring in nature and benefits from differentiated capabilities. EBITDA margin has increased due to restructuring and Moody's expect it to increase further as cost savings are fully realized. Once restructuring costs abate, free cash flow generation potential is meaningful. Moody's expect fiscal 2020 financial performance to be impacted by COVID-19 as retailers may push out systems upgrades, and project a mid-single-digit total revenue decline before giving effect to acquisitions. The company has entered into agreements to acquire two services businesses for total cash consideration of $129 million, which will be accretive to growth and free cash flow but will reduce liquidity. Leverage may decline over time as cost savings are achieved and growth potentially rebounds in F'2021, but will likely remain at levels that Moody's considers high for the business profile. Verifone's liquidity is adequate with cash balances of $179 million as of FQ1 2020 which will be reduced to about $50 million following the completion of two pending acquisitions. Moody's projects free cash flow in F'2020 of about $45 million. Liquidity is supported by a $250 million revolving credit facility due 2023 which is subject to a springing first lien net leverage test with cushion allowing for borrowings of more than half of the committed amount as of FQ1 2020. The stable outlook reflects expectation of EBITDA growth due to cost savings and leverage decline to about 6x in F'2020, with adequate liquidity. The ratings could be upgraded if Verifone demonstrates consistent revenue and EBITDA growth, and if leverage is sustained below 5x with solid liquidity. The ratings could be downgraded if EBITDA declines, free cash flow to debt is sustained below single digits, or liquidity weakens. Following the 2018 leveraged buyout Verifone is controlled by the private equity firm Francisco Partners, and its governance structure is typical for financial sponsor ownership. Operating strategy has involved substantial restructuring and employee base turnover, while financial policy reflects elevated leverage and modest free cash flow. Moody's view the operating and financial strategy as relatively aggressive for financial sponsor ownership. Downgrades: Issuer: Verifone Systems, Inc. Probability of Default Rating, Downgraded to B3-PD from B2-PD Corporate Family Rating, Downgraded to B3 from B2 Senior Secured Bank Credit Facility, Downgraded to B3 (LGD3) from B2 (LGD3) Outlook Actions: Issuer: Verifone Systems, Inc Outlook, Remains Stable The principal methodology used in these ratings was Business and Consumer Service Industry published in October 2016. With revenues of $1.6 billion in fiscal 2019 ended October, Verifone is a leading provider of point of sale electronic payments systems and services. The rapid and widening spread of the coronavirus outbreak, deteriorating global economic outlook, falling oil prices, and asset price declines are creating a severe and extensive credit shock across many sectors, regions and markets. The combined credit effects of these developments are unprecedented. Moody's expects that credit quality around the world will continue to deteriorate, especially for those companies in the most vulnerable sectors that are most affected by prospectively reduced revenues, margins and disrupted supply chains. At this time, the sectors most exposed to the shock are those that are most sensitive to consumer demand and sentiment, including global passenger airlines, lodging and cruise, autos, as well as those in the oil & gas sector most negatively affected by the oil price shock. Lower-rated issuers are most vulnerable to these unprecedented operating conditions and to shifts in market sentiment that curtail credit availability. Moody's will take rating actions as warranted to reflect the breadth and severity of the shock, and the broad deterioration in credit quality that it has triggered. VOYAGER AVIATION: Fitch Places 'BB-' LT IDR on Watch Negative ------------------------------------------------------------- Fitch Ratings placed Voyager Aviation Holdings, LLC's Long-Term Issuer Default Rating of 'BB-' and related issue-level ratings on Rating Watch Negative given increasing coronavirus-related risks. These actions are being taken in conjunction with a global aircraft leasing sector review conducted by Fitch, covering 10 publicly rated firms. The ratings were withdrawn with the following reason: Bonds were Redeemed. KEY RATING DRIVERS The Rating Watch Negative reflects the unprecedented decline in global air traffic as a result of the coronavirus pandemic, which could lead to widespread lease deferrals/defaults, airline bankruptcies, aircraft repossessions and impairments absent abatement of the virus in the near- to intermediate-term and/or material sovereign intervention. Fitch previously revised the global aircraft leasing sector outlook to Negative from Stable on March 16, 2020. Fitch's updated 'Global Economic Outlook' published on March. 19, 2020 cuts the agency's baseline global growth forecast for 2020 to 1.3% from 2.5% previously, while noting the increasing potential for an outright growth decline in the event more pervasive lockdown measures are rolled out across all the G7 countries. However, Fitch's base case scenario assumes that the health crisis will ease in 2H20, which should allow for a sharp bounce-back as activity reverts to normal levels, inventories are rebuilt, and some consumer and capital spending is re-profiled. Recent aggressive macro policy responses - with emergency interest rate cuts, massive central bank liquidity injections, macro-prudential easing, credit guarantee schemes and substantive fiscal stimulus - should also start to boost growth from 2H20, helping the level of GDP to revert to close to its pre-virus path over the medium term. Fitch believes Voyager has limited capitalization headroom to withstand impairments, a weaker near-term liquidity position (particularly in the event of materially reduced cash flows from leases), and high lessee concentrations with the meaningful exposure to less liquid, albeit young, current technology widebody aircraft such as Boeing 777-300ERs. Voyager's ratings are sensitive to pandemic-driven declines in air traffic which last well into or beyond 2H20, and particularly sensitive to underlying lessee credit quality and/or aircraft value deteriorations in the interim. While there are limited mitigating factors in the current environment, Fitch acknowledges that initial data indicates that the daily number of new coronavirus cases in China has fallen very sharply, while air traffic in the country has correspondingly begun to increase, albeit not yet toward pre-coronavirus levels. This dynamic suggests a potential recovery path for global air traffic should similar measures be employed in other countries and regions. Fitch also notes the increasing potential for government support for the airline industry, although the magnitude and timing of any such support are not yet fully known, nor is how evenly any such support will be distributed amongst airlines. Finally, lower oil prices could serve to reduce a key expense item for airlines, but in many instances, this is offset by associated hedges and/or currency fluctuations. At Sept. 30, 2019, Voyager's fleet consisted of 18 aircraft with a net book value of $1.9 billion, comprised of widebodies, including A330-300, B777-300ER and B747-8F freighters. The weighted average age was 4.6 years and the weighted average remaining lease term was 7.4 years, which compares favorably to other aircraft lessors. However, the portfolio is fairly concentrated by customer and geography, as Voyager had only seven customers across five countries. The top lessees in 3Q19 included, Philippine Airlines, Turkish Airlines, AirBridgeCargo and Air France. Voyager tends to lease to well established and/or flagship carriers which may have higher propensity for receiving government support, somewhat mitigating the company's high customer and geographic concentrations and exposure to widebody aircraft. As an example, Fitch's concerns about lease exposure to Alitalia (5.3% of 3Q19 lease revenue) diminished as the Italian government effectively took control of, and announced EUR600 million of additional funding for, the airline. Despite its long-dated contracted lease stream and consistently positive operating cash flow generation, the company's profitability is weak given relatively high overhead due to small scale, elevated depreciation due to the young age of the aircraft and high interest expenses. Fitch expects Voyager will report losses in 2019 driven by impairment charges and losses related to the disposal of aircraft in 3Q19. Voyager's leverage, measured as debt to tangible equity, was 3.6x as of Sept. 30, 2019, unchanged from YE 2018 but down from 4.3x at YE 2017. The company's leverage declined over the past two years as Voyager repaid debt associated with the 12 sold aircraft and now is more in line with the company's target leverage range. At Sept. 30, 2019, Voyager had a weak liquidity position with $76 million of cash on hand and an estimated $80 million of annual cash generated from operations which provided approximately 1.0x coverage of $155 million of debt maturities over the next 12 months. Fitch believes the company's weak liquidity position provides minimal cushion and creates greater rating sensitivity to potential lease payment deferrals driven by the COVID-19 induced shock to the airline industry. The senior secured debt ratings are equalized with Voyager's IDR given the heavily secured funding profile and reflect average recovery prospects for secured debtholders under a stress scenario. The senior unsecured debt rating is one notch below Voyager's IDR given the subordination of these obligations, the lack of an unencumbered asset pool, and below average recovery prospects under a stress scenario. The IDR and ratings on the senior unsecured notes issued by Voyager Finance Co. are supported by the guarantee from Voyager and are therefore equalized with the IDR of Voyager and those of senior unsecured debt of the company, respectively. RATING SENSITIVITIES Voyager's ratings could be downgraded in a scenario where pandemic-driven declines in air traffic, and/or airline insolvencies are expected to last well into or beyond 2H20. The magnitude of rating actions under such a scenario would be influenced by the extent to which Voyager's liquidity coverage ratio (defined as cash on hand, borrowing capacity on committed facilities and expected operating cash flows over the next 12 months to debt maturities over the next 12 months) falls below 1.0x, or its leverage is in excess of 4.5x. Fitch could resolve Rating Watch Negative if the health crisis eases in or before 2H20 and is met with a general resumption of air travel and broader economic activity returning towards pre-coronavirus levels, combined with maintenance of liquidity coverage approaching 1.0x, and leverage below 4.5x. The extent to which there is, or is not, material sovereign intervention in the global airline industry, or financial markets more broadly, could also potentially influence the resolution of the Rating Watch. The ratings of the senior secured debt are primarily sensitive to changes in Voyager's IDR and secondarily to the relative recovery prospects of the instruments. The ratings of the unsecured debt are primarily sensitive to changes in Voyager's IDR. A meaningful increase in the proportion of unsecured funding and the creation of an unencumbered asset pool, which results in a meaningful improvement in recovery prospects for unsecured creditors, could result in an upgrade of the unsecured debt rating. ESG CONSIDERATIONS Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of 3 - ESG issues are credit neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. WASHINGTON PRIME: S&P Cuts ICR to 'CCC+' on Operating Performance ----------------------------------------------------------------- S&P Global Ratings lowered its issuer credit rating on Washington Prime Group Inc. to 'CCC+' from 'BB-'. The outlook is negative. S&P also lowered its issue-level ratings on the company's unsecured debt to 'B-' from 'BB' and the preferred stock rating to 'CC' from 'B-' The '2' recovery rating on the unsecured debt is unchanged. "The downgrade reflects our view that Washington Prime is at risk for a covenant breach in the second quarter of 2020. While we acknowledge there is still much uncertainty surrounding the duration of coronavirus' impact on the U.S., we believe that its effect on WPG's challenged 'B' malls--which were already undergoing a continued secular decline--will prove highly unfavorable. Moreover, we expect small shop tenants within the company's open air portfolio to struggle and request rent deferrals and concessions. The result will be significant EBITDA declines for an uncertain length of time. As such, we expect continued deterioration in headroom for Washington Prime's tightest covenant--the total indebtedness to total assets ratio--so much so that the company could be at risk of breaching this covenant should retail stores remain closed for an extended period, causing EBITDA to decline substantially and impairing asset values. As of Dec. 31, 2019 ,the company had just 5.1% headroom on this covenant. We note, however, that WPG has adequate headroom under its other remaining covenants, with sufficient fixed-charge coverage," S&P said. The negative outlook reflects S&P's expectation that thinning cushion on the company's debt leverage ratio covenant caused by significant EBITDA declines could lead to a potential breach in the second quarter of 2020 if stores remain closed for an extended period. In S&P's view, the company's capital structure is unsustainable given operating challenges. S&P expects Washington Prime's operating performance to be challenged by retail disruption associated with the coronavirus for an unknown period of time, which could span several months or more. "We could lower our ratings over the next 12 months if it becomes clear that a covenant breach is inevitable, perhaps due to the expected inability to obtain covenant relief or if a sustained decline in operating performance severely affects asset valuations, such as from the continued closure of nonessential retail stores for far greater than currently anticipated. We would also lower our ratings if we believe the company would consider a debt restructuring, which we consider distressed," S&P said. "While unlikely in the next year, we could consider revising the outlook to stable if retail disruption abates quicker than anticipated, such that EBITDA does not decline materially in the second quarter and headroom under the company's leverage covenant remains stable or improves through the elimination of some secured debt and the stabilization of tier 1 properties. At this time, we would also need to see evidence that bankruptcies and liquidations of tenants will not accelerate materially as longer term consequences of current retailer distress and a potential recession in 2020. Moreover, we would need more clarity on the company's debt refinancing prospects," the rating agency said. WESTERN MIDSTREAM: Fitch Lowers LT IDR & Sr. Unsec. Rating to 'BB+' ------------------------------------------------------------------- Fitch Ratings downgraded Western Midstream Operating, LP's (WES; aka Western Gas Partners, LP) Long-term Issuer Default Rating and senior unsecured ratings to 'BB+' from 'BBB-' and placed the ratings of the partnership on Rating Watch Negative. The senior unsecured notes have a Recovery Rating of 'RR4'. The downgrade reflects the deterioration in WES's credit quality following Fitch's negative rating action of its owner and major counterparty, Occidental Petroleum Corporation (OXY; BB+/RWN). WES's counterparty risk is significantly heightened, as WES is now predominately exposed to non-investment grade counterparties. The ratings take into account WES's significant dependence on OXY and its performance is largely driven by OXY's balance sheet. OXY's rating serves as cap on WES's rating. Fitch believes that for 2020 and 2021 WES gathering & processing operations in the DJ basin and non-core regions outside the Permian will remain challenged by the declining drilling activities of its producer customers under an adverse commodities price environment, particularly following OXY's significant reduction in capex from $5.2 billion-$5.4 billion to $3.5 billion-$3.7 billion. The Rating Watch mainly reflects the concern that WES will operate with leverage above the negative rating sensitivity of 4.5x beyond 2020 without undertaking meaningful steps to improve its balance sheet. While Fitch recognizes the operational headwind faced by WES due to curtailed production by E&P producer customers under the current commodities price environment, Fitch notes that WES has the financial levers including capex and distribution reduction to maintain leverage below 4.5x in the forecast years. It is unclear at this point whether WES will use such measures to enhance its balance sheet and free cashflow. Fitch intends to resolve the Watch when there is more clarity by WES on its financial policy in the near term. KEY RATING DRIVERS Elevated Leverage: Fitch forecasts WES's leverage (total debt/adjusted EBITDA) to be 4.6x-4.8x at YE 2020 and to trend above 5.0x for 2021, driven by deteriorating volume and operating performance in regions outside the Permian. Fitch previously expected WES's leverage to be elevated in 2020 but improve below the negative rating sensitivity of 4.5x by YE20. There was already less visibility of volume growth for WES's core businesses in the Permian and Denver-Julesburg (DJ) Basin under OXY's production development plans following the ownership change for WES. The recent capex reductions by OXY will further hamper WES's growth in 2020 and 2021, particularly in the DJ basin, in Fitch's view. Despite the operational headwind, WES currently has the financial flexibility, which includes significant reduction in its capex and distribution level, in order to strengthen its balance sheet and to operate with leverage below 4.5x. Operational Headwinds: Fitch believes that for WES segments outside the Permian will continue to be challenged driven by capital reduction by E&P producer customers under the unfavorable commodity price environment. WES's major counterparty, OXY, recently announced it will reduce 2020 capex by 32%, to $3.5 billion-$3.7 billion. Fitch views that OXY's capital reduction will have a greater impact on WES's (DJ) segment, leading to EBTIDA erosion in the DJ basin for 2020 and 2021. As of February 2020, WES is expected to generate 38% of its 2020 EBTIDA in the DJ basin. Additionally, Fitch also forecasts performance in other non-core regions, which comprises ~11% of WES 2020 EBITDA, to decline through 2021. Counterparty Credit Risk: Fitch notes that WES's counterparty credit quality has significantly worsened following the negative rating action at OXY. WES is now predominately exposed to non-investment grade counterparties, as Fitch expects OXY to remain a major customer that accounts for approximately 70% of revenues for WES in 2020. Since WES is dependent on OXY for its cash flows and future growth, OXY's operational and financial health have a strong bearing on the credit profile of WES. Given the customer concentration risk, deterioration in OXY's credit quality will be deleterious to WES's credit profile, and the rating of OXY serves as a cap on the rating of WES. Growth Uncertainties under OXY: Uncertainties around future ownership remains an overhanging issue for WES, as OXY remains committed to lower its 57.5% stake in WES to approximately 50% following WES's recent deconsolidation from OXY's balance sheet. There is less visibility around WES's near-term volume growth in its two core regions, the Permian and the DJ basin, since the ownership changes for WES. It remains unclear how OXY's recent capital reduction plan will impact WES's operation in the Permian, although the strategic, operational alignment between OXY and WES in the Permian remains intact given the good fit between legacy Anadarko's and WES's assets in the basin. OXY reeling back legacy Anadarko's historic focus on the DJ basin may materially impede WES's future growth. WES also stated to grow the company more independently through third party volume, but Fitch believes such growth will now be much slower, as upstream customers are becoming increasingly capital disciplined with their production spending under the adverse commodities price environment. Asset and Contract Profile: Fitch believes that WES will generate close to 98% of its gross margin from fee-based and fixed price contracts in 2020, and WES had limited exposure to direct commodity price exposure historically. Additionally, WES is also diversified geographically, underpinned by Minimum Volume Commitments (MVC) and Cost-of-Service (COS) contracts that each provide stable cash flow, relative to the more standard requirements-contracts prevalent in the gathering industry. For FY19, approximately 65% of WES's natural-gas throughput was protected by either minimum-volume commitment with associated deficiency payments. For the same period, approximately 78% of its crude-oil, NGLs, and produced-water throughput were supported by either minimum-volume commitment with associated deficiency payments, or cost-of-service commitments. As of YE19, WES also had a long-term weighted average contract life of more than eight years collectively for its gas, crude, and water businesses. Additionally, WES also has a portfolio of equity investments, including ownership interests in long haul pipelines in the Permian, which should continue to provide stable cash flow in the near term. Fitch believes that the Permian will continue to be the cornerstone of growth for WES. DERIVATION SUMMARY With respect to WES, the best comparable among the gathering and processing-focused entities is EnLink Midstream, LLC (ENLC; BB+/Negative). Both companies have similar degree of geographic diversification (moderate diversification) and customer concentration. WES's YE19 leverage (debt/EBITDA) of 4.6x-4.8x is better than ENLC's, which Fitch projects to be above 5.0x. EQM Midstream Partners, LP (EQM; BB/Negative) is a G&P company whose ratings are capped by its major E&P customer EQT Corporation (EQT; BB/Negative). In the case of EQT-EQM and OXY-WES, Fitch believes that the G&P company's vulnerability to default is presently virtually equal to the E&P company's' vulnerability to default. Fitch monitors such relationships closely, because midstream side businesses and/or the approach of contract expirations could lead to a notching of the G&P company from the E&P company. KEY ASSUMPTIONS - Fitch commodities price deck of Henry Hub prices at $1.85/mcf in 2020 and $2.1 in 2021; WTI oil price of $38 in 2020, and $45 in 2021; - Declining throughput volume and operating performance in segments outside of Permian through 2021; - Customers abide by their contracts with WES, and do not seek amendments which detract from medium-term cash flow stability, or otherwise lead to insufficient EBITDA to keep leverage at policy; - 2020 Leverage of 4.6x-4.8x; - 2020 Total capex below management's 4Q19 earnings call guided $875-950 million; - Distribution remains level throughout the forecast years; - Rating case does not assume a significant change in the financial policy due to potential ownership changes. RATING SENSITIVITIES Developments That May, Individually or Collectively, Lead to Positive Rating Action - Leverage (Debt/Adj. EBITDA) at or below 4.5x and distribution coverage ratio above 1.1x on a sustained basis, provided gross margin is expected to remain above 90% fee based or fixed price would likely lead to Positive Rating Action; - Asset and business line expansion leading to a more diversified cash flow profile; - Positive rating action at OXY. Developments That May, Individually or Collectively, Lead to Negative Rating Action - Leverage at or above 5.5x and distribution coverage ratio below 1.1x on a sustained basis, driven by financial policy or significantly lower EBITDA and cash flow would result in negative rating action; - Negative rating action at OXY; - Material unfavorable changes in sponsor support and contract mix; - Negative change in law (either new laws, or rulings on old laws) which cause volumetric declines and pushes profitability lower and leverage higher on a sustained basis; - Adoption of a growth funding strategy which does not include a significant equity (inclusive of retained earnings) component. LIQUIDITY AND DEBT STRUCTURE Manageable Liquidity: As of Dec. 31, 2019, WES had approximately $100 million in cash and $380 million in outstanding borrowings and $4.6 million in outstanding letters of credit. The outstanding revolver borrowings were subsequently repaid by the senior note's issuance in January 2020. Fitch expects that liquidity will remain adequate over the near term. The nearest debt maturity for WES is its $500 million senior unsecured notes due in 2021. In December 2019, WES extended the maturity date of the RCF from February 2024 to February 2025. The credit facility requires that WES maintain a consolidated leverage ratio at or below 5.0x, or a consolidated leverage ratio of 5.5x with respect to quarters ending in the 270-day period immediately following certain acquisitions. WES is currently in compliance with this covenant and Fitch expects it will remain so for the balance of its forecast period. ESG CONSIDERATIONS ESG issues are credit neutral or have only a minimal credit impact on the entity(ies), either due to their nature or the way in which they are being managed by the entity(ies). WINDSTREAM HOLDINGS: Enters into Second Amendment to PSA -------------------------------------------------------- Windstream on March 16, 2020, disclosed that on Monday, March 9 it entered into an amendment to its previously announced Plan Support Agreement (the "Amended PSA") expanding the scope of participants who may participate in the "priority" tranche of the rights offering by becoming parties to the Amended PSA and supporting the Company's restructuring process. The previously announced participation cap of $430 million in the priority tranche has been increased to allow additional interested holders to participate in the priority tranche on a pro rata basis. Holders of an additional $667 million of first lien claims signed up to the Amended PSA and may participate in the priority tranche. This brings the total percentage of Windstream's first lien holders supporting the Amended PSA to 94%, along with over 54% of the second lien noteholders. Additionally, today Windstream announced that it entered into a second amendment to the Plan Support Agreement adding 72% of the Midwest Noteholders as additional parties who support Windstream's chapter 11 plan process and the contemplated restructuring transactions. Under the Plan, every Midwest Noteholder shall receive its pro rata share of the Midwest Notes Exit Facility Term Loans, the principal amount of which shall in no event exceed $100 million, plus any interest and fees due and owing under the governing indenture for the Midwest Notes and/or the Final DIP Order to the extent unpaid as of the Plan Effective Date. As previously announced, Windstream intends to file its chapter 11 plan of reorganization, with its proposed new capital structure, with the court for approval as soon as possible with a target of by the end of March. The company expects to emerge from restructuring mid-year, subject to timing of court and regulatory approvals. Windstream voluntarily filed for Chapter 11 reorganization in the U.S. Bankruptcy Court for the Southern District of New York on Feb. 25, 2019. Windstream is continuing to operate in the normal course during the financial restructuring process. About Windstream Holdings Windstream Holdings, Inc., and its subsidiaries provide advanced network communications and technology solutions for businesses across the United States. They also offer broadband, entertainment and security solutions to consumers and small businesses primarily in rural areas in 18 states. Windstream Holding Inc. and its subsidiaries filed for bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 19-22312) on Feb. 25, 2019. The Debtors had total assets of $13,126,435,000 and total debt of $11,199,070,000 as of Jan. 31, 2019. The Debtors tapped Kirkland & Ellis LLP and Kirkland & Ellis International LLP as counsel; PJT Partners LP as financial advisor and investment banker; Alvarez & Marsal North America LLC as restructuring advisor; and Kurtzman Carson Consultants as notice and claims agent. The U.S. Trustee for Region 2 appointed an official committee of unsecured creditors on March 12, 2019. The committee tapped Morrison & Foerster LLP as its legal counsel, AlixPartners, LLP, as its financial advisor, and Perella Weinberg Partners LP as investment banker. WYNDHAM HOTELS: Moody's Places Ba1 CFR on Review for Downgrade -------------------------------------------------------------- Moody's Investors Service placed the ratings of Wyndham Hotels & Resorts on review for downgrade including its Ba1 Corporate Family Rating, Ba1-PD Probability of Default Rating, Baa3 senior secured rating, and Ba2 senior unsecured rating. At the same time, Moody's downgraded the company's Speculative Grade Liquidity rating to SGL-2 from SGL-1. "The review for downgrade is prompted by earnings pressure Wyndham Hotels will face in 2020 as travel restrictions being put in place across the US related to the spread of the COVID-19 coronavirus cause significant declines in occupancy and revenue per available room," stated Pete Trombetta, Moody's lodging and cruise analyst. "Wyndham Hotels' leverage will increase to well above its downgrade trigger of 4.0x, but the company's liquidity is adequate to get the company through this period of earnings pressure," added Trombetta. Downgrades: Issuer: Wyndham Hotels & Resorts Speculative Grade Liquidity Rating, Downgraded to SGL-2 from SGL-1 On Review for Downgrade: Issuer: Wyndham Hotels & Resorts Corporate Family Rating, Placed on Review for Downgrade, currently Ba1 Probability of Default Rating, Placed on Review for Downgrade, currently Ba1-PD Senior Secured Bank Credit Facility, Placed on Review for Downgrade, currently Baa3 (LGD3) Senior Unsecured Regular Bond/Debenture, Placed on Review for Downgrade, currently Ba2 (LGD5) Outlook Actions: Issuer: Wyndham Hotels & Resorts Outlook, Changed To Rating Under Review From Stable RATINGS RATIONALE The rapid and widening spread of the coronavirus outbreak, deteriorating global economic outlook, falling oil prices, and asset price declines are creating a severe and extensive credit shock across many sectors, regions and markets. The combined credit effects of these developments are unprecedented. The lodging sector has been one of the sectors most significantly affected by the shock given its sensitivity to consumer demand and sentiment. More specifically, the weaknesses in Wyndham Hotels' credit profile, including its exposure to increased travel restrictions for US citizens which represents a majority of the company's revenue and earnings have left it vulnerable to shifts in market sentiment in these unprecedented operating conditions and Wyndham Hotels remains vulnerable to the outbreak continuing to spread. Moody's regards the coronavirus outbreak as a social risk under its ESG framework, given the substantial implications for public health and safety. The action reflects the impact on Wyndham Hotels of the breadth and severity of the shock, and the broad deterioration in credit quality it has triggered. Wyndham Hotels Ba1 Corporate Family Rating benefits from its large scale as one of the largest hotel companies in the world with more than 9,300 hotels and 831,000 rooms across 20 different brands. The company also benefits from its franchise-based business model which generates stable and recurring earnings. Approximately 90% of the company's EBITDA is generated from royalty fees (including fees from Wyndham Destinations). Wyndham Hotels is constrained by its high leverage which will exceed the company's downgrade trigger of 4.0x over at least the next year which is high for a Ba1 rated company per Moody's Business and Consumer Services methodology, and its modest brand concentration as two of the company's 20 brands -- the Super 8 and Days Inn brands -- account for about 40% of its total hotel rooms (all metrics include Moody's standard adjustments) The review will focus on Wyndham Hotels' ability to reduce expenses and take other actions to preserve liquidity during this period of significant earnings decline, the pace of declining occupancy and RevPAR in the US, and the impact on leisure travel over the next two years as people feel more comfortable with traveling again. Its current assumption is that its lodging companies' systemwide RevPAR is weakest in the second quarter, down more than 60%, with some recovery in the third and fourth quarters resulting in total earnings decline for the year of at least 40% for most lodging companies. Wyndham Hotels currently has $735 million of availability under its $750 million revolving credit facility, but Moody's will assess the potential severity and duration of the drop in occupancy, and the effects on the company's metrics and liquidity. Wyndham Hotels & Resorts is one of the largest hotel companies in the world with more than 9,300 hotels and 831,000 rooms across 20 different brands. The company generated net revenues of about $1.4 billion in 2019 (net of reimbursements). The principal methodology used in these ratings was Business and Consumer Service Industry published in October 2016. YS GARMENTS: S&P Downgrades ICR to B-; Outlook Negative ------------------------------------------------------- S&P Global Rating lowered the rating on YS Garments LLC (d/b/a Next Level Apparel) to 'B-' from 'B'. S&P also lowered the issue-level rating on Next Level's debt to 'B-', reflecting the issuer downgrade. "We believe Next Level is vulnerable to a decline in demand for its products over the next few months, and that its covenant cushion will narrow. The acceleration of the COVID-19 pandemic drove many organizations to cancel events over at least the next several weeks, reducing demand for wearable promotional products and the blank apparel Next Level supplies to the industry. We estimate Next Level's leverage was under 4x at the end of 2019, a moderate cushion to our 5x downgrade threshold. However, if the pandemic continues to accelerate as forecast and event cancellations continue, we believe demand will significantly decline, possibly spiking leverage above our downgrade threshold. In addition, the company's leverage covenant steps down to 4.75x in the second quarter ended June 2020, and 4.5x at the end of December 2020. We believe the cushion will be very tight in the second quarter, given our expectation for a significant decline in consumer spending during the quarter, when we expect the majority of the disruption impact." Despite the expected drop in demand and tight covenant cushion, Next Level's liquidity is otherwise adequate," S&P said. The negative outlook reflects the possibility of a downgrade if event cancellations continue for a prolonged period and demand for promotional products falls significantly, reducing Next Level's EBITDA. "We could lower the ratings on Next Level if we believe its capital structure becomes unsustainable because of a significant drop in demand that leads to negative free cash flow, a covenant violation, and liquidity problems," S&P said. "We could revise the outlook to stable if the pandemic situation in the U.S. stabilizes such that Next Level begins to show positive sales momentum and we believe it will remain compliant with its covenants. We could raise ratings back to 'B' if we have confidence leverage will be sustained comfortably below 5x with adequate covenant cushion," S&P said. YUMA ENERGY: Raises Going Concern Doubt, Bankruptcy Among Options ----------------------------------------------------------------- Yuma Energy, Inc. (NYSE American: YUMA) on March 20, 2020, provided an update on the Company's financial status and ability to restructure its liabilities and capital structure. As previously disclosed, in September 2019, YE Investment, LLC, an affiliate of Red Mountain Capital Partners, LLC ("Red Mountain"), purchased all of the Company's outstanding senior secured bank indebtedness and related liabilities under the Company's senior credit facility (the "Credit Facility"). The Credit Facility was then modified to reduce the outstanding principal balance from approximately $32.8 million, plus accrued and unpaid interest and expenses, to approximately $1.4 million (the "Modified Note"). In September 2019, Yuma entered into a Restructuring and Exchange Agreement (the "Restructuring Agreement") with Red Mountain and affiliates, which was to result in the i) exchange of the Modified Note for a new convertible note that would be convertible into Yuma common stock, and ii) conversion of the Company's Series D Preferred Stock into Yuma Common stock. Finally, in December 2019, the parties entered into an amendment to the Restructuring Agreement and Credit Facility under which Red Mountain provided an additional two-year senior secured delayed-draw term loan for up to $2 million, maturing on September 30, 2022, from which the Company has drawn $850,000 to date. The transactions contemplated by the Restructuring Agreement were subject to stockholder approval pursuant to NYSE American rules and requirements and the Restructuring Agreement included a termination right in the event such stockholder approval was not received by December 31, 2019. At present, Yuma is not in compliance with the various terms of the Restructuring Agreement and related credit arrangements. As a result, no further funds are currently available to Yuma under the facility. The parties have been and continue to negotiate to modify the various agreements and arrive at a mutually agreeable path forward; however, there is no assurance that any transaction or alternate restructuring plan will materialize. Mr. Anthony C. Schnur, Interim Chief Executive Officer and Chief Restructuring Officer of Yuma commented, "Over the past few months, we have been diligently working to complete our financial restructuring and have been reviewing potential transactions to expand our footprint, improve our economics, increase our production volumes, and ultimately, generate positive cash flow. However, certain well failures and the recent significant collapse in oil prices, combined with the uncertainty about the economy caused by the COVID-19 virus, has adversely impacted our ability to complete the restructuring process and appropriately re-capitalize the Company. A Special Committee of the Board of Directors has been established to evaluate strategic or financing alternatives, if any. However, the current unfavorable energy market and volatile economic environment may limit our options at this time. "In the event we are unable to come to a mutually agreeable understanding with Red Mountain regarding the extension/modification of the Restructuring Agreement, Modified Note and related agreements, and/or find other available financing, we may be forced to cease our business plan, sell assets or take other remedial steps, which may include seeking bankruptcy protection." Continuing Uncertainty The Company's audited consolidated financial statements for the year ended December 31, 2018, included a going concern qualification. The risk factors and uncertainties described in our SEC filings for the year ended December 31, 2018, the quarter ended March 31, 2019, the quarter ended June 30, 2019, and the quarter ended September 30, 2019, raise substantial doubt about the Company's ability to continue as a going concern. 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 June 30, 2019, the Company had $63.54 million in total assets, $46.44 million in total current liabilities, $14.69 million in total other noncurrent liabilities, and $2.40 million in total stockholders' equity. 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, has 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. [*] May 6 Bid Deadline Set for Rehab Facility Bankruptcy Sale ------------------------------------------------------------- Hilco Real Estate, LLC on March 2 announced May 6, 2020 as the managed bid deadline for a former luxury addiction treatment/rehabilitation facility in Waelder, Texas, in the Austin-Houston-San Antonio area. Built between 2005-2012, the property and permanent structures of the ranch alone were recently appraised at $4.4 million, exclusive of the substantial personal property, furniture, fixtures and equipment (all of which is included in the sale). This facility formerly operated as Beyond the Storm, a treatment/rehabilitation center that was rated #2 on Addiction Resource's list of "9 Best Alcohol and Drug Detox Centers in the U.S." as it provided lavish detox and treatment services to athletes, executives, and other professionals. This fully furnished, well-equipped facility offers 20 double-occupancy guest suites complete with en suite bathrooms throughout four guest lodges. The facility's main lodge features an enormous granite and stone bar, an indoor dining area that seats over 50 people, a fully equipped professional commercial kitchen, and an expansive covered patio that can easily accommodate groups of over 100 people. Amenities found throughout the main lodge include a regulation professional shuffleboard table, billiards, ping-pong, multiple large flat-screened televisions, an integrated sound system, and a floor-to-ceiling double-sided stone fireplace. Additional property highlights include a state-of-the-art, eight-station sporting clays shooting range, 400-yard pistol and rifle range, stocked fishing pond, workout studio, outdoor swimming pool with hot tub and cabana, versatile conference center, climate-controlled storage facility, shoreside gazebo with climate-controlled partial kitchen and bathroom, welcome center/front office, two firepits, and on-site staff accommodations. The rehabilitation licenses associated with this property are current and have the possibility to be transferred to a purchaser. With its convenient location to three of the 12 largest metropolitan areas in the U.S. (each said city containing their own international airport), the property is also ideally suited for a variety of other uses, including a wedding/special event venue, boutique hotel/resort, multi-use corporate facility/organization retreat, high-end dude ranch, upscale RV park, luxury bed and breakfast, extended-family compound, church camp, or even a personal retreat. Designed as an exclusive, completely private retreat for its guests, the property is set on 70± high-fenced acres, away from the hustle and bustle of nearby Austin, Houston and San Antonio. Offering the best of both worlds, the property achieves a level of serenity that is elusive in today's world yet is situated within an hour's drive from one of the nation's trendiest, fastest growing cities. Known for its outstanding food, great live music venues, superb topography, exceptional recreational activities and friendly locals, it is understandable that, according to Austin's Chamber of Commerce, the city's population growth from 2007 to 2017 was 34.1%, which was 15.3% higher than the overall population growth of Texas and 26.1% higher than the overall population growth of the U.S. In addition to being known as the Live Music Capital of the World, Austin also attracts over 27.4 million domestic visitors every year with world-renowned attractions and events, such as the Austin City Limits Music Festival, South by Southwest and the Circuit of The Americas. Just under 45 miles northwest of the guest ranch, on the outskirts of Austin, the Circuit of The Americas (COTA) racetrack annually attracts over 1 million people from all over the world. Every year this racetrack hosts The United States Grand Prix, the only Formula 1 race in the nation, a sport that has been labeled the most popular annual spring sporting series worldwide. Through tourism and annual operations, COTA has had a cumulative economic impact of $5 billion on Austin's metropolitan area since it began in 2010. Steve Madura, Senior Vice President at Hilco Real Estate, said, "As a fully furnished facility with an impressive host of indoor and outdoor amenities, the possibilities of what the next buyer can do with this property are truly endless." He continued, "The ranch is a special place that is a world away from the hectic pace of life yet is within a short drive to three major U.S. cities, offering world-class cultural, dining, entertainment and transportation options that are second to none. It is no wonder why this area of the country has experienced stratospheric growth over the past ten years." To conclude, Mr. Madura added, "Now as part of the bankruptcy, the ability to acquire this exceptional, turnkey property may just be one of those once-in-a-lifetime opportunities that buyers will not want to pass up!" The managed bid deadline is Wednesday, May 6, 2020 by 5:00 p.m. (CT). Offers must be delivered to the offices of Hilco Real Estate on or before 5:00 p.m. (CT) on the day of the deadline to be considered. Interested buyers can submit their bids via mail to the following address: Hilco Real Estate, 5 Revere Drive, Suite 320, Northbrook, IL 60062, or via email to smadura@hilcoglobal.com. For further information, please contact Steve Madura at (847) 504- 2478 or smadura@hilcoglobal.com. For further information on the property, an explanation of the sale process, sale terms or to obtain access to property due diligence documents, please visit HilcoRealEstate.com or call (855) 755-2300. For more information about this or other properties available for sale, please visit HilcoRealEstate.com. About Hilco Real Estate Hilco Real Estate ("HRE"), a Hilco Global company (HilcoGlobal.com), is headquartered in Northbrook, Illinois (USA). HRE is a national provider of strategic real estate disposition services. Acting as an agent or principal, HRE uses its experience to advise and execute strategies to assist clients in deriving the maximum value from their real estate assets. By leveraging multi-faceted sales strategies and techniques, aggressive repositioning and restructuring experience, a vast and motivated network of buyers and sellers, and substantial access to capital, HRE exceeds expectations even in the most complex transactions. [*] Schulte Roth Reconstitutes SRZ Market Conditions Working Group ------------------------------------------------------------------ In response to current market volatility and COVID-19, law firm Schulte Roth & Zabel (SRZ) has reconstituted its SRZ Market Conditions Working Group from the global financial crisis. The firm also opened its COVID-19 Resource Center at www.srz.com, and as of March 18, the lawyers have published more than 20 SRZ Client Alerts thus far on a range of crisis-related topics. Visit the SRZ COVID-19 Resource Center at https://is.gd/fwr1OY SRZ has the largest practice globally serving alternative investment managers. Alternative investment management encompasses credit and direct lending funds, hedge funds, private equity and real estate funds, activist investing, CLOs and specialty finance. The Working Group consists of a core group of SRZ partners from several specialties and over 100 lawyers overall. The Working Group coordinates with regulators and trade groups on the latest governmental and regulatory actions, and shares market information in real time about the issues and opportunities fund managers are experiencing. "Our Working Group was incredibly effective during the 2008 global financial crisis," said Marc Elovitz, SRZ co-managing partner. "We were able to empower, in real time, over 100 of our lawyers and our entire client base with good information about how alternative investment managers could handle changes in law and current business challenges." "One of our biggest advantages historically is that our entire firm serves the alternative investment management industry, and we are highly integrated," said SRZ co-managing partner David Efron. "Clients trust us for the depth of our bench and advice that is viewed as market-setting." "Watching the market volatility and economic impact of COVID-19, we are preparing clients now to deal with potential liquidity problems and valuation challenges that seem likely to arise as we approach the end of the month," said David Nissenbaum, co-head of the Investment Management Group. "We have dusted off the playbook." "Equally, we are helping clients accelerate their efforts to take advantage of fundraising opportunities that the credit dislocations and market reset are presenting," said Stephanie Breslow, co-head of the Investment Management Group. "Our clients are incredibly nimble investors, and we have the resources ready to help them move quickly." With a great depth of practice, SRZ advises on the formation and operation of a wide array of funds with varying investment strategies, including hedge funds, private equity funds, credit funds, distressed funds, real estate funds, activist funds and hybrid funds, among others. SRZ is consistently placed in the top tiers in rankings, including in Chambers and The Legal 500. SRZ was named one of the "Asset Management Practice Groups of the Year" by Law360. SRZ lawyers provide advice on U.S. and U.K. law to a wide variety of funds and managers located worldwide. Notably, SRZ is one of only a few law firms with a dedicated regulatory and compliance practice within its private funds practice. The lawyers have specialized expertise on the issues private fund managers face in setting up, running and growing their businesses. [^] BOOK REVIEW: BOARD GAMES - Changing Shape of Corporate Power ---------------------------------------------------------------- Authors: Arthur Fleischer, Jr., Geoffrey C. Hazard, Jr., and Miriam Z. Klipper Publisher: Beard Books Softcover: 248 pages List Price: $34.95 Order your personal copy today at http://www.amazon.com/exec/obidos/ASIN/1587981629/internetbankrupt A ruling by the Delaware Supreme Court on January 29, 1985 was a wake-up call to directors of U. S. corporations. On this date, overruling a lower court decision, the Delaware Supreme Court ruled that the nine board members of Chicago company Trans Union Corporation were "guilty of breaching their duty to the company's shareholders." What the board members had done was agree to sell Trans Union without a satisfactory review of its value. The guilty board members were ordered by the Court to pay "the difference between the per share selling price and the 'real' market value of the company's shares." Needless to say, the nine Trans Union directors were shocked at the guilt verdict and the punishment. The chairman of the board, Jerome Van Gorkom, was a lawyer and a CPA who was also a board member of other large, respected corporations. For the most part, it was he who had put together the terms of the potential sale, including setting value of the company's stock at $55.00 even though it was trading at about $38.00 per share. News of the possible sale immediately drove the stock up to $51.50 per share, and was commented on favorably in a "New York Times" business article. Still, Van Gorkom and the other directors were found guilty of breaching their duty, and ordered by Delaware's highest court to pay a sum to injured parties that would be financially ruinous. This was clearly more than board members of the Trans Union Corporation or any other corporation had ever bargained for. It was more than board members had ever conceived was possible without evidence of fraud or graft. The three authors are all attorneys who have worked at the highest levels of the legal field, business, and government. Fleischer is the senior partner of the law firm Fried, Frank, Harris, Schriver & Jacobson at the head of its mergers and acquisitions department. He's also the author of the textbook "Takeover Defenses" which is in its 6th edition. Hazard is a Professor of Law and former reporter for the American Bar Association's special committee on the lawyers' ethics code; while Klipper has been a New York assistant district attorney prosecuting corporate and financial fraud, and also a corporate attorney on Wall Street. Using the Trans Union Corporation case as a watershed event for members of boards of directors, the highly-experienced legal professionals lay out the new ground rules for board members. In laying out the circumstances and facts of a number of cases; keen, concise analyses of these; and finding where and how board members went wrong, the authors provide guidance for corporate directors, top executives, and corporate and private business attorneys on issues, processes, and decisions of critical importance to them. Household International, Union Carbide, Gelco Corp., Revlon, SCM, and Freuhauf are other major corporations whose merger-and-acquisitions activities resulted in court cases that the authors study to the benefit of readers. The Boards of Directors of these as well as Trans Union and their positions with other companies are listed in the appendix. Many other corporations and their board members are also referred to in the text. With respect to each of the cases it deals with, BOARD GAMES outlines the business environment, identifies important individuals, analyzes decisions, and discusses considerations regarding laws, government regulations, and corporate practice. In all of this, however, given the exceptional legal background of the three authors, the book recurringly brings into the picture the legalities applying to the activities and decisions of board members and in many instances, court rulings on these. Passages from court transcripts are occasionally recorded and commented on. Elsewhere, legal terms and concepts -- e. g., "gross nonattendance" -- are defined as much as they can be. In one place, the authors discuss six levels of responsibility for board members from "assure proper result" through negligence up to fraud. Without being overly technical, the authors' legal experience and guidance is continually in the forefront. Needless to say, with this, BOARD GAMES is a work of importance to board members and others with the responsibility of overseeing and running corporations in the present-day, post-Enron business environment where shareholders and government officials are scrutinizing their behavior and decisions. ********* 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 2020. 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 ***