/raid1/www/Hosts/bankrupt/TCR_Public/200417.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, April 17, 2020, Vol. 24, No. 107
Headlines
20/20 GLOBAL: Pinnacle Accountancy Raises Going Concern Doubt
A.P. BECK-ANDOVER: $942K Sale of Andover Property Approved
AAR CORP: S&P Affirms 'BB+' Issuer Credit Rating; Outlook Stable
AGILE GROUP: S&P Alters Outlook to Negative, Affirms 'BB' ICR
ALASKA UROLOGICAL: U.S. Trustee Appoints Creditors' Committee
ALLPRO MANUFACTURING: Unsecureds Get Share of Profits for 5 Years
API HOLDINGS: S&P Downgrades ICR to 'B-'; Outlook Stable
ARADIGM CORP: $3.2M Sale of All Assets to Grifols Approved
ARRO CORP: $9.3M Sale of All Assets to Mount Franklin Approved
ARUBA INVESTMENTS: S&P Alters Outlook to Stable, Affirms 'B-' ICR
ASPEN JERSEY: S&P Alters Outlook to Negative, Affirms 'B-' ICR
AURORA COMMERCIAL: LBHI Settlement Gives Recovery for Unsecureds
BASIM ELHABASHY: $1.1M Sale of Boca Raton Homestead Denied
BLACKHAWK NETWORK: Moody's Alters Outlook on B2 CFR to Negative
BLUEFOCUS INTELLIGENT: Fitch Affirms B+ LT IDRs, Outlook Stable
BOJANGLES' INC: S&P Alters Outlook to Negative, Affirms 'B' ICR
BRINKER INTERNATIONAL: S&P Cuts ICR to B+; Ratings on Watch Neg.
BROADVISION INC: U.S. Trustee Unable to Appoint Committee
CALLAWAY GOLF: S&P Lowers ICR to 'B+' on Expected Lower Sales
CANNABICS PHARMACEUTICALS: Reports Q2 Net Loss of $868K
CAPITAL TRUST: S&P Lowers 2019A Custodial Receipts Rating to 'CCC'
CARBO CERAMICS: U.S. Trustee Appoints Creditors' Committee
CASINO REINVESTMENT: Moody's Affirms Parking Fee Bonds at Ba2
CEN BIOTECH: Incurs $5.65 Million Net Loss in 2019
CENTURY ALUMINUM: Moody's Cuts CFR to Caa1, Outlook Negative
CLAAR CELLARS: Authorized to Use Cash Collateral to Pay Expenses
CLEVELAND-CLIFFS INC: Moody's Rates $400MM Secured Notes 'Ba3'
COASTAL LIVING: Voluntary Chapter 11 Case Summary
CONSOL ENERGY: Moody's Cuts CFR to B2, Outlook Negative
COSTELLO INDUSTRIES: Plan Confirmed; Unsecureds Get 34%
CPI CARD: S&P Affirms CCC+ Issuer Credit Rating; Outlook Negative
CRESCENT ASSOCIATES: Second Amended Plan Confirmed by Judge
CYCLO THERAPEUTICS: WithumSmith+Brown Raises Going Concern Doubt
DGI TRADING USA: U.S. Trustee Unable to Appoint Committee
DHANANI GROUP: S&P Alters Outlook to Negative, Affirms 'B' ICR
DIGITAL ROOM: S&P Places 'B-' ICR on CreditWatch Negative
EARTH FARE: A&G Real Estate Completes Sales of 10 Store Leases
ECO-STIM ENERGY: Case Summary & 30 Largest Unsecured Creditors
EVERI PAYMENTS: S&P Rates New $125MM Term Loan 'B+'
EYEMART EXPRESS: S&P Lowers ICR to 'B-' on Store Closures
FIRST AMERICAN PAYMENT: S&P Cuts ICR to 'B-'; Outlook Negative
FRANK DISPENZA: U.S. Trustee Appoints Creditors' Committee
FRONTIER COMMUNICATIONS: Has Plan to Cut Debt by $10 Billion
GEMINI HDPE: S&P Alters Outlook to Negative on Counterparty Risk
GENCANNA GLOBAL: Mark Zoolalian Represents Gary Shell
GENCANNA GLOBAL: Rose Grasch Represents Claimholders
GEORGE BASHEN: $850K Sale of Houston Homestead to Greenranger OK'd
GOLDEN NUGGET: S&P Downgrades ICR to 'B-'; Outlook Negative
GTT COMMUNICATIONS: S&P Downgrades ICR to 'CCC+'; Outlook Negative
HADDAD RESTAURANT: U.S. Trustee Unable to Appoint Committee
HANNON ARMSTRONG: Fitch to Rate $350MM Unsecured Notes 'BB+'
HEALTHLYNKED CORP: RBSM LLP Raises Going Concern Doubt
HIGH RIDGE: $113M Sale of All Non-Debtor Assets to Ranir Approved
HIGH RIDGE: Sale of Substantially All Assets to TCP HRB Approved
HORNBECK OFFSHORE: Reaches Deal for Filing of Prepack Case
HY-POINT FAMILY: Southern Financial Objects to Disclosure Statement
ICAHN ENTERPRISES: Moody's Alters Outlook on Ba3 CFR to Negative
ICONIX BRAND: Has $101.9M Net Loss for Year Ended Dec. 31
INTERIM HEALTHCARE: $225K Sale of All Assets to Mercy Approved
IRB HOLDING: S&P Downgrades ICR to 'B'; Outlook Negative
JEFFERIES FINANCE: Moody's Alters Outlook on Ba3 CFR to Negative
JONATHAN R. SORELLE: Seeks to Extend Exclusivity Period to Aug. 7
KEYSTONE FILLER: June 19 Disclosure Statement Hearing Set
KRYSTAL COMPANY: May 7 Auction of All Assets Set
LA MERCED: OSP's Request to Compel Sale of Mortgage Property Okayed
LAKE ROAD WELDING: May 27 Plan & Disclosure Hearing Set
LENNAR CORP: Moody's Alters Outlook on Ba1 CFR to Stable
LIVEXLIVE MEDIA: Management, Employees Cut Salaries During Outbreak
LONESTAR RESOURCES: Fitch Cuts Sr. Secured Rating to 'CCC+/RR1'
LONESTAR RESOURCES: Moody's Cuts CFR to Caa3 & Unsec. Rating to Ca
LONESTAR RESOURCES: Reports $111.6 Million Net Loss for 2019
LONGVIEW POWER: Faegre Drinker Represents Term Lender Group
LONGVIEW POWER: Files Prepack Chapter 11, Blames COVID-19
MARGARET SCHMIDT: $4.25M Sale of Assisted Living Assets to CV OK'd
MARK ALLEN KRIEGER: $98K Sale of Bucks of Brouilletts Creek Okayed
MCIG INC: Reports $645K Net Loss for Third Quarter
METHANEX CORP: S&P Lowers ICR to 'BB' on Weak Economic Conditions
MIAMI AIR INTERNATIONAL: US Trustee Appoints Creditors' Committee
MOUNTAINEER GAS: Fitch Affirms 'BB+' LongTerm IDR, Outlook Stable
MTE HOLDINGS: Rosner, Weycer Represent Halliburton, Sierra
MW HORTICULTURE: U.S. Trustee Unable to Appoint Committee
NATIONAL QUARRY: Nexsen Pruet Represents Truliant, MidCountry
NAVISTAR INT'L: Moody's Alters Outlook on B2 CFR to Negative
NEWELL BRANDS: Fitch Lowers LT IDR to BB, Outlook Negative
NUCLEAR IMAGING: Pa. Court Upholds Denial of Petitions for Refund
NUTRIBAND INC: Incurs $2.7 Million Net Loss in Fiscal 2019
NXT ENERGY: Instructs AVG to Pay $250,000 Loan in Cash
NXT ENERGY: Records Fourth Quarter Net Loss of C$1.78 Million
ODYSSEY MARINE: Warren Averett LLC Raises Going Concern Doubt
PACIFIC ETHANOL: RSM US LLP Raises Going Concern Doubt
PATRIOT SCIENTIFIC: Incurs $101K Net Loss for Feb. 29 Quarter
PAYAM NAWAB: $599K Sale of Ocean City Property to Casey Approved
PG&E CORPORATION: Noteholders Group Update List for 3rd Time
PIONEER ENERGY: Davis Polk, Haynes Update on Noteholder Group
POSTMEDIA NETWORK: Moody's Cuts CFR to Caa3, Outlook Negative
PRIORITY PAYMENT: Moody's Cuts CFR to Caa1 & Sr. Sec. Rating to B3
PULTEGROUP INC: Moody's Alters Outlook on Ba1 CFR to Stable
Q BIOMED INC: Incurs $5.94 Million Net Loss in First Quarter
QUECHAN INDIAN: Fitch Alters Outlook on 'B' IDR to Negative
RENAISSANCE INNOVATIONS: Administrator Unable to Appoint Committee
REVLON INC: Incurs $157.7 Million Net Loss in 2019
RICKEY CONRADT: U.S. Trustee Unable to Appoint Committee
RING CONTAINER: S&P Downgrades ICR to 'B-'; Outlook Negative
ROCKIES EXPRESS: S&P Lowers ICR to 'BB+'; Outlook Negative
RUDY'S BARBERSHOP: U.S. Trustee Appoints Creditors' Committee
RUSTY GOLD: Case Summary & 20 Largest Unsecured Creditors
S&D LONGHORN: $5.5M Property Sale to Pay Non-Insiders in Full
SAHBRA FARMS: Shelly Materials Claim Deducted from Mining Royalties
SALUBRIO LLC: U.S. Trustee Unable to Appoint Committee
SEANERGY MARITIME: L1 Capital Global Has 6.5% Stake as of April 9
SEANERGY MARITIME: Underwriters Exercise Over-Allotment Option
SENVION GMBH: Chapter 15 Case Summary
SEQUA CORP: Fitch Lowers LT IDR to 'CCC+', Outlook Negative
SHAPE TECHNOLOGIES: S&P Downgrades ICR to 'CCC+'; Outlook Negative
SHRI VITTHAL: Unsec. Creditors Will Be Paid 10% Over 5 Years
SIX FLAGS: Moody's Rates New Senior Secured Notes 'Ba2'
STEAK N SHAKE: Moody's Cuts CFR & Senior Secured Rating to 'Ca'
TAMARACK AEROSPACE: $80.5K Sale of Aircraft to Aero Approved
TENAX THERAPEUTICS: Cherry Bekaert LLP Raises Going Concern Doubt
TENSAR CORP: S&P Places 'B-' ICR on CreditWatch Negative
TITAN INTERNATIONAL: Albert Febbo to Retire as Director
TOLL BROTHERS: Moody's Alters Outlook on Ba1 CFR to Stable
TRENT RIVER: Court Asked to Hold Hearing on Committee Appointment
URS HOLDCO: S&P Lowers ICR to 'B-'; Ratings on CreditWatch Negative
VERRA MOBILITY: S&P Alters Outlook to Stable, Affirms 'B+' ICR
VINSICK FOODS: Needs More Time to Formulate Chapter 11 Plan
VISKASE COS: S&P Downgrades ICR to 'CCC' on Refinancing Risk
WAYNE BENNETT: Rep's $840K Sale of Kihei Property to Burney Okayed
WENDY'S CO: S&P Alters Outlook to Negative, Affirms 'B' ICR
WESCO AIRCRAFT: S&P Alters Outlook to Negative, Affirms 'B-' ICR
WESTJET AIRLINES: Fitch Cuts LT IDR to 'B+', Outlook Negative
WHITING PETROLEUM: U.S. Trustee Appoints Creditors' Committee
WINSTEAD'S COMPANY: U.S. Trustee Unable to Appoint Committee
WORLDS INC: M&K CPAS, PLLC Raises Going Concern Doubt
YUMA ENERGY: Case Summary & 20 Largest Unsecured Creditors
YUMA ENERGY: Files for Chapter 11 to Pursue Liquidation
[*] EPIC Insurance Launches Restructuring Services Operation
[*] S&P Alters Outlook on Illinois Public Universities to Negative
[*] S&P Alters Outlook on Non-Profit 501(c)3 Organizations to Neg.
[^] BOOK REVIEW: Mentor X
*********
20/20 GLOBAL: Pinnacle Accountancy Raises Going Concern Doubt
-------------------------------------------------------------
20/20 Global, Inc., filed with the U.S. Securities and Exchange
Commission its annual report on Form 10-K, disclosing a net income
of $4,803 on $0 of revenue for the year ended Dec. 31, 2019,
compared to a net income of $61,202 on $0 of revenue for the year
ended in 2018.
The audit report of Pinnacle Accountancy Group of Utah states that
The Company has recently been forced to discontinue its only
revenue stream, which raises substantial doubt about its ability to
continue as a going concern.
The Company's balance sheet at Dec. 31, 2019, showed total assets
of $1,215,133, total liabilities of $563,230, and a total
stockholders' equity of $651,903.
A copy of the Form 10-K is available at:
https://is.gd/ikU8MI
20/20 Global, Inc., engages in the distribution of fresh produce in
North America. The company supplies apples, onions, potatoes,
seasonal vegetables, and citrus products. It also offers
transportation solutions to the food industry. The company was
founded in 1993 and is based in Heyburn, Idaho.
A.P. BECK-ANDOVER: $942K Sale of Andover Property Approved
----------------------------------------------------------
Judge Elizabeth D. Katz of the U.S. Bankruptcy Court for the
District of Massachusetts authorized A.P. Beck-Andover Realty,
LLC's sale of the real property located at 6-8 Windsor Street,
Andover, Massachusetts, as more fully described by Deed dated Sept.
29, 2009 recorded at Essex Northern District Registry of Deeds,
Book 11783, Page 65, to AHHC Realty, LLC for $941,500, pursuant to
the terms of their Purchase and Sale Agreement.
The sale is free and clear of all liens, claims, interests and
encumbrances with the same to attach to the proceeds of the sale.
The closing agent will disburse on behalf of the Chapter 11 Debtor
first, the amount owed for standard closing costs including but not
limited to tax stamps, recording fees, and the Debtor s share of
property taxes, water and sewer obligations if any, costs of
closing documents including Secretary of State fees including
annual fees to Secretary of State to obtain Certificate of Good
Standing and to reinstate corporate status.
Second, that the broker be paid his commission from the closing.
The closing agent will disburse the balance of the proceeds after
closing expenses and broker's fee, to pay in full the payoff figure
of The Savings Bank, $798,763 through March 12, 2020 with a per
diem of $165. Said amount will be paid in the following manner:
$773,763 to be paid directly to The Savings Bank and $25,000 to be
held in escrow by The Savings Bank s counsel pending further Court
order or agreement, which represents the legal fees questioned by
the Debtor until The Savings Bank's allowed claim has been
determined.
After the disbursing agent has paid the closing costs, broker s
fees, and The Savings Bank, the US Trustee s quarterly fee
attributable to the expenses related to the closing, including the
fee based on the mortgage and the attachment, be paid out of the
proceeds of the closing.
After the disbursing agent has paid the closing costs, broker's
fees, the secured creditors, and the US Trustee's quarterly fee;
the Debtor's Chapter 11 Counsel be paid her fees and costs from the
closing, as allowed by the Court, after the filing of a fee
application by Debtor's Counsel. The Debtor's Counsel's fee will
be held by Counsel in her Client Trust Account until the Court
allows the fee application.
The closing agent will disburse to NPA Associates, LLC formerly
held by Citizen's Bank the net balance of the proceeds after
closing expenses, broker's fees, the allowed claim of The Savings
Bank, the US Trustee's quarterly fee, and the Debtor's Chapter 11
Counsel's fees, the remaining amount not to exceed $135,000.
The 14-day period of FRBP 6004(h) be waived.
About A.P. Beck-Andover Realty
A.P. Beck-Andover Realty, LLC, a single asset real estate as
defined in 11 U.S.C. Section 101(51B), filed a petition seeking
relief under Chapter 11 of the Bankruptcy Code (Bankr. D. Mass.
Case No. 18-41696) on Sept. 11, 2018. In the petition signed by
Adam P. Beck, manager, the Debtor was estimated to have $1 million
to $10 million in assets and liabilities. The Ann Brennan Law
Offices represents the Debtor.
AAR CORP: S&P Affirms 'BB+' Issuer Credit Rating; Outlook Stable
----------------------------------------------------------------
S&P Global Ratings affirmed its 'BB+' issuer credit rating on AAR
Corp.
AAR's earnings will likely decline because of the coronavirus. AAR
derives about 60%-65% of its revenue from the commercial aerospace
aftermarket and generates the remainder from its government work.
"We expect the company's government work to remain relatively
stable unless there are specific operational issues due to the
coronavirus. However, we anticipate that the demand for AAR's
commercial aftermarket businesses will weaken as the airlines
ground planes because of the declining volume of consumer travel.
This includes both the commercial MRO and parts trading and
distribution businesses. The commercial segment includes exposure
to air cargo, which could fare better, given less commercial belly
cargo. The company has started taking actions to cut its costs and
preserve cash, including by reducing its workforce. While we expect
AAR's credit metrics to weaken due to the coronavirus, they are
currently strong for the rating. If the company maintains a
conservative financial policy, we expect that its credit metrics
will remain appropriate for the current rating during fiscal year
2021, which begins on June 1, 2020. Our previous forecast assumed
that the company would complete $150 million of acquisitions per
year, which we view as unlikely in the current environment. We now
expect AAR to have debt to EBITDA in the 2.0x-2.4x range and funds
from operations (FFO) to debt of 36%-40% in fiscal year 2021," S&P
said.
Environmental, social, and governance (ESG) credit factors for this
credit rating change:
-- Health and safety
S&P's stable outlook on AAR Corp. reflects its expectation that the
company's credit metrics will likely weaken because of the
coronavirus but remain appropriate for the current rating. It now
expects the company to have debt to EBITDA of 2.0x-2.4x and FFO to
debt of 36%-40% in fiscal year 2021.
"We could lower our rating on AAR in the next 12 months if its debt
to EBITDA increases to more that 3x and its FFO to debt drops below
30% for a sustained period. This could occur if the effects of the
coronavirus pandemic are significantly worse than we expect and the
company pursues a more aggressive financial policy," S&P said.
"Although unlikely, we could raise our rating on AAR in the next 12
months if it commits to maintain FFO to debt of more than 45% and
debt to EBITDA of less than 2x despite its dividends, share
repurchases, and acquisitions. This could occur if the company's
earnings are not materially affected by the coronavirus and it
limits its acquisitions," the rating agency said.
AGILE GROUP: S&P Alters Outlook to Negative, Affirms 'BB' ICR
-------------------------------------------------------------
S&P Global Ratings revised its rating outlook on Agile Group
Holdings Ltd. to negative from stable. At the same time, S&P
affirmed its 'BB' long-term issuer credit rating on Agile and the
'BB' long-term issue rating on the company's senior unsecured
notes.
"The negative outlook reflects our view that Agile's deleveraging
efforts may not improve materially over the next six to 12 months
because of low earnings growth and aggressive investments in and
outside property development," S&P said.
"We revised the outlook on Agile to negative because the company's
execution of its property development business expansion is slower
than we expect. That has resulted in weaker earnings, despite
aggressive debt-funded acquisitions over the past two years. We
believe Agile's margin could remain weighed down by rising land
costs and policy curbs in Hainan's housing market, which had
provided significant margin uplift in the past. As such, Agile's
debt-to-EBITDA ratio may not improve significantly over the next 12
months, after deteriorating to 6.4x in 2019, from 4x in 2018," S&P
said.
In addition, contracted sales execution may remain challenging this
year owing to the COVID-19 outbreak. The company's first-quarter
sales hit only 13% of its Chinese renminbi (RMB) 120 billion
target. The sell-through rate for the rest of the year remains
uncertain given the pandemic. Agile has adequate saleable resources
of RMB220 billion for 2020. However, some of its tourism projects
in Hainan and Yunnan and those in lower-tier cities could face
slower sales recovery. S&P estimates Agile's 2020 contracted sales
will be RMB115 billion-RMB120 billion.
"That said, we believe that the reacceleration of revenue growth
and margin recovery this year will support Agile's credit profile
and deleveraging. The company's increasingly diversified business,
particularly its property management and environmental segments,
will contribute to higher earnings as they expand. That may partly
offset slower growth in its property development business, as
revenue recognition from its projects still risk falling below our
expectations. We estimate that Agile has locked in about 60% of
revenue recognition for 2020. We project revenue from its property
development business will increase by 10%-15% and revenue from its
non-property development business will rise by 50%-60%," S&P said.
"We also expect Agile's margin to rebound in 2020 because we
believe that the contribution from its Clearwater Bay project in
Hainan will recover this year. We anticipate the contribution from
Hainan to increase to 10%, compared with about 6% in 2019, as more
homebuyers meet home purchase requirements. They were tightened in
April 2018, with homebuyers required to provide proof of social
security payments of at least two years in the province. As of
end-2019, Agile still has RMB80 billion-RMB100 billion of saleable
resources in the Clearwater Bay project, which should support sales
with high gross margins of over 60% in the next three to five
years," the rating agency said.
Further earnings growth in 2020 could come from increasing
contributions from its jointly controlled entities. S&P anticipates
Agile's proportionate debt-to-EBITDA ratio will improve to about
5.2x, from its estimate of 5.8x for 2019.
"We expect Agile to control its debt growth in 2020, through lower
capital expenditure (capex) and increased recycling of balance
sheet assets. This is in line with the company's plan to improve
operating and capital efficiency. We estimate Agile will incur
RMB35 billion-RMB38 billion in land acquisitions and other
businesses, equivalent to about 40% of cash proceeds from sales.
The company may also continue to seek capital injections in
existing projects, or raise capital on its multiple business
platforms," S&P said.
"In our view, Agile's liquidity is still sound. This is despite the
decline in the company's ratio of unrestricted cash to short-term
debt to 0.8x in 2019, from 1x in 2018. Agile has diverse funding
channels, both onshore and offshore, to meet funding and
refinancing needs, given its long track record in capital markets
and solid banking relationships. That said, a ratio below 1x for a
prolonged period may indicate a weaker debt maturity profile
compared with similarly rated peers," S&P said.
The negative outlook on Agile reflects S&P's view that the
company's deleveraging efforts may be weaker than it expects, such
that the company's leverage does not improve materially over the
next six to 12 months. S&P believes the company's deleveraging is
highly reliant on a recovery in gross margins and an acceleration
of revenue growth as contributions from its Hainan project and
non-property segments increase. The rating agency also believes the
company's continued investments in and outside property development
could hamper its control on debt growth.
"We could downgrade Agile if the company's revenue growth or margin
recovery is weaker than we expect, or if the company fails to
control its debt growth due to higher capex. This could lead to a
deviation from its deleveraging plan. An indication would be the
consolidated and proportionate debt-to-EBITDA ratio not improving
to below 5x in 2020," S&P said.
"We could revise the outlook to stable if Agile can significantly
improve its margin and grow its revenue while tightening its
financial discipline, such that its consolidated and proportionate
debt-to-EBITDA ratio improves to sustainably below 5x," the rating
agency said.
ALASKA UROLOGICAL: U.S. Trustee Appoints Creditors' Committee
-------------------------------------------------------------
The Office of the U.S. Trustee on April 13, 2020, appointed a
committee to represent unsecured creditors in the Chapter 11 case
of Alaska Urological Institute P.C.
The committee members are:
(1) Ingrid Klinkhart
Yuit Communications
1407 W. 31st Street, Suite 400
Anchorage, AK 99503
(907) 230‐0415
(2) Liwei Zhang dba Alliance Physics Solutions
405 South Bonnie Ave.
Pasadena, CA 91106
(626) 757‐8197
Official creditors' committees serve as fiduciaries to the general
population of creditors they represent. They may investigate the
debtor's business and financial affairs. Committees have the right
to employ legal counsel, accountants and financial advisors at a
debtor's expense.
About Alaska Urological Institute
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.
Based in Anchorage, Alaska Urological Institute filed a Chapter 11
petition (Bankr. Alaska Case No. 20-00086) on March 25, 2020. In
its petition, the Debtor estimated $10 million to $50 million in
assets and $1 million to $10 million in liabilities. The petition
was signed by William R. Clark, president, shareholder.
Cabot Christianson, Esq., at the Law Office of Cabot Christianson,
P.C., serves as Debtor's bankruptcy counsel.
ALLPRO MANUFACTURING: Unsecureds Get Share of Profits for 5 Years
-----------------------------------------------------------------
Debtor Allpro Manufacturing, Inc., filed with the U.S. Bankruptcy
Court for the Southern District of Texas, Houston Division, a Plan
of Reorganization and a Disclosure Statement on April 2, 2020.
The allowed general unsecured creditors will be paid as much of
what they are owed as possible and will be mailed Allpro
Manufacturing, Inc.'s previous year's financial statement each year
for five years, during the term of the five-year Plan. Each year,
if the Reorganized Debtor made a profit, after income taxes, and
after making all secured plan payments and normal overhead
payments, the Reorganized Debtor will pay to the allowed unsecured
creditors their pro rata share of 50% of the net profit for the
previous year, in 12 monthly payments beginning on September 15th
of the year in which the financial statement is mailed to these
creditors.
Each year, during the term of the five-year Plan, the Reorganized
Debtor will repeat the 12-month payment plan to the allowed
unsecured creditors if the Reorganized Debtor made a net profit the
previous year as reflected in the previous year's financial
statement. This payout will not exceed five years, and at the end
of the five-year Plan term, the remaining balance owed, if any, to
the allowed unsecured creditors shall be discharged.
Equity interest holders are parties who hold an ownership interest
in Allpro Manufacturing, Inc. The shareholder is Cary Ostera, the
100% owner. The shareholder will retain his interest in the
Reorganized Debtor but will not receive dividends during the term
of the plan of reorganization.
During the two years prior to the date on which the bankruptcy
petition was filed, the Debtor operated the company. After the
effective date of the order confirming the Plan, it will continue
to operate the company.
This Plan of Reorganization under chapter 11 of the Bankruptcy Code
proposes to pay creditors of Allpro Manufacturing, Inc. from future
income.
A full-text copy of the Disclosure Statement dated April 2, 2020,
is available at https://tinyurl.com/w7x3wjy from PacerMonitor at no
charge.
The Debtor is represented by:
MARGARET M. MCCLURE
909 Fannin, Suite 3810
Houston, Texas 77010
Tel: (713) 659-1333
Fax: (713) 658-0334
E-mail: Margaret@mmmcclurelaw.com
About Allpro Manufacturing
Houston-based Allpro Manufacturing, Inc. makes custom lead products
including lead roof fishings, fittings, pipe, castings, shielding
and other specialty products. It conducts business under the name
Lead Products Co.
Allpro Manufacturing filed a voluntary Chapter 11 petition
(Bankr.S.D. Tex. Case No. 19-33368) on June 17, 2019. In the
petition signed by Cary Ostera, president, the Debtor disclosed
$760,101 in assets and $1,136,156 in liabilities. Judge Jeffrey P.
Norman oversees the case. The Law Office of Margaret M. McClure is
the Debtor's counsel.
API HOLDINGS: S&P Downgrades ICR to 'B-'; Outlook Stable
--------------------------------------------------------
S&P Global Ratings lowered its issuer credit and first-lien debt
ratings on components and subsystems manufacturer API Holdings III
Corp. to 'B-' from 'B'. The '3' recovery rating (rounded estimate:
60%) on the first-lien debt is unchanged.
"Credit ratios are expected to improve, but remain weaker than our
previous expectations over the next two years. We expected
leverage to be very high in 2019 due to costs associated with the
acquisition by AEA Investors, but revenue and earnings are below
our forecast. We previously expected debt to EBITDA to be 6.2x-6.6x
in 2020 before improving to 5.5x-6x in 2021. We now expect leverage
to be 7.5x-8x and 6.5x-7x in 2020 and 2021, respectively. The lower
revenues and earnings are due to order fulfillment issues. In
addition to lower EBITDA, credit ratios are weaker because of
higher debt levels resulting from API fully drawing its $50 million
revolver to provide liquidity as a precautionary action during the
coronavirus pandemic. These funds are sequestered as a contingency
and are not required for operations," S&P said.
The stable outlook reflects S&P's expectation that although debt to
EBITDA will be 7.5x-8x in 2020, it will improve over time, and the
company has no near-term liquidity issues.
"Although unlikely in the next 12 months, we could raise the rating
if debt to EBITDA falls comfortably below 7x and we expect it to
remain there. This could be the result of stronger-than-expected
revenue growth and margin improvement as the company works to
improve profitability," S&P said.
"Although unlikely in the next 12 months, we could lower the rating
if we no longer believe the company's capital structure is
sustainable and believe the company might pursue some type of
distressed exchange. This could occur if the company is unable to
win new business or faces challenges that result in weaker margins
that severely affect earnings, cash flow, and liquidity," the
rating agency said.
ARADIGM CORP: $3.2M Sale of All Assets to Grifols Approved
----------------------------------------------------------
Judge William J. Lafferty, III of the U.S. Bankruptcy Court for the
Northern District of California authorized Aradigm Corp.s' sale of
substantially all assets to Grifols, S.A., subject to overbid.
The aggregate purchase price for the Purchased Assets will be:
(i) $3,247,000, cash;
(ii) Waiver of the Buyer's right to payment on account of the
proof of claim for an amount of at least $19.95 million, filed on
March 15, 2019, and identified as Claim No. 4 in the Bankruptcy
Case;
(iii) Waiver of Grifols Worldwide Operations Ltd.'s right to
payment on account of the proof of claim for an amount of at least
$11,785,899, filed on March 15, 2019, and identified as Claim No.
5;
(iv) The Milestone Payments; and
(v) The Royalties.
The Motion is denied insofar as it asks approval of the Break-Up
Fee.
The salient terms of the Bidding Procedures are:
a. Bid Deadline: March 20, 2020 at 5:00 p.m. (PDT)
b. Initial Bid: $3.6 million
c. Deposit: 10% of the cash component of the proposed purchase
price
d. Auction: The Debtor will conduct an Auction for its assets,
which will take place at the office of the Debtor's counsel, Jeffer
Mangels Butler & Mitchell, LLP, located at Two Embarcadero Center,
Fifth Floor, San Francisco, California, on March 25, 2020,
commencing at 10:00 a.m. (PT), or such other time and date as
ordered by the Court.
e. Bid Increments: $100,000
f. Sale Hearing: March 27, 2020 at 10:30 a.m. (PT)
The Order will take effect immediately upon entry.
A hearing on the Motion was held on March 5, 2020 at 3:00 p.m.
About Aradigm Corporation
Aradigm Corporation -- http://www.aradigm.com/-- is an emerging
specialty pharmaceutical company focused on the development and
commercialization of products for the treatment and prevention of
severe respiratory diseases. Over the last decade, the company
invested a large amount of capital to develop drug delivery
technologies, particularly the development of a significant amount
of expertise in respiratory (pulmonary) drug delivery as
incorporated in its lead product candidate that recently completed
two Phase 3 clinical trials, Linhaliq inhaled ciprofloxacin,
formerly known as Pulmaquin. The company is headquartered in
Hayward, Calif.
Aradigm Corporation sought Chapter 11 protection (Bankr. N.D. Cal.
Case No. 19-40363) on Feb. 15, 2019. In the petition signed by
John M. Siebert, executive chairman and interim principal executive
officer, the Debtor was estimated to have $10 million to $50
million in both assets and liabilities.
The case is assigned to Judge William J. Lafferty.
The Debtor tapped Jeffer, Mangels, Butler & Mitchell LLP as
bankruptcy counsel; Sheppard Mullin Richter & Hampton LLP as
special patent counsel; and EMA Partners, LLC as investment banker.
ARRO CORP: $9.3M Sale of All Assets to Mount Franklin Approved
--------------------------------------------------------------
Judge Janet S. Baer of the U.S. Bankruptcy Court for the Northern
District of Illinois authorized Arro Corp.'s sale of all or
substantially all of its assets to Mount Franklin Foods, LLC for
$9.3 million cash, plus the Assumed Liabilities.
The sale is free and clear of all Interests of any kind or nature
whatsoever. For purposes of clarification, any employee medical
claims which are incurred prior to the Closing (regardless of when
such claims are presented for payment) will be claims against the
bankruptcy estate of the Debtor, and not the Buyer, and the Buyer
will be responsible only for such claims which are incurred after
the Closing. All such Interests of any kind or nature whatsoever
(other than Permitted Encumbrances) will attach (effective upon the
transfer of the Sale Property to the Buyer) to the proceeds of the
Purchase Price.
The Sale Hearing was held on March 5, 2020.
To the extent not resolved during the Sale Hearing, the Assignment
Objections are continued for adjudication to March 12, 2020 at
10:00 a.m.
Notwithstanding anything contained in the Order or the Asset
Purchase Agreement to the contrary, the Sale Property will
specifically exclude the following assets secured by liens in favor
of the following parties: (a) two Skyjack Aerial Models 3226,
Associated Material Handling industries (the Debtor's Bankruptcy
Schedule D, item 2.2); (b) one Enersys model 184590-17, Atlas
Toyota Material Handling, LLC (the Debtor's Bankruptcy Schedule D,
item 2.3); and (c) three Enersys models El 3-HL-4YE, Atlas Toyota
Material Handling, LLC (the Debtor's Bankruptcy Schedule D, item
2.4).
Pursuant to sections 105(a) and 365 of the Bankruptcy Code, as set
forth, in the Sale Procedures Order and subject to and conditioned
upon the terms of the Asset Purchase Agreement and the Closing of
the Sale, the Debtor's assumption and assignment to the Buyer, and
the Buyer's assumption on the terms set forth in the Asset Purchase
Agreement, of the Assumed Executory Contracts/Leases is approved.
Within ten business days following the Closing Date, the Debtor
will file with the Court a notice setting forth those Assumed
Executory Contracts/Leases actually assumed and assigned to the
Buyer pursuant to the terms of the Asset Purchase Agreement and the
Order.
The Order will be effective and enforceable immediately upon entry,
and any stay of orders provided for in Bankruptcy Rules 60040(h),
6006(d) and any other provision of the Bankruptcy Code or
Bankruptcy Rules will not apply.
Upon Closing, the Debtor is authorized and directed to pay
Livingstone, and Livingstone is entitled to receive, on a final
allowed basis, a broker commission at Closing pursuant to the
Livingstone Engagement Agreement and the Livingstone Retention
Order, in an
amount to be calculated by the Debtor at Closing after consultation
with the Constituent Parties.
All other proceeds from the Sale are to be held by BMO Harris Bank
NA, subject to further Order of Court.
The Debtor is authorized to return all security deposits received
from bidders other than the Prevailing Bidder and the Back-Up
Bidder.
The Asset Purchase Agreement of the Back-Up Bid will remain binding
and in full force and effect in accordance with the Sales
Procedures Order. In the event the Buyer defaults in the
performance of its obligations under the Asset Purchase Agreement
then, in such event, in accordance with the Approved Bidding
Procedures, the Seller: (a) is authorized to close on the Back-Up
Bid without further order of Court, and (b) the Seller will give
notice of the closing on the Back-Up Bid to any party who filed an
Assignment Objection. In such event, the terms and conditions of
the Order will apply to such Back-Up Bid and a closing therein will
take place in accordance with the Sales Procedures Order.
A copy of the Agreement is available at https://tinyurl.com/u9w9stl
from PacerMonitor.com.
About Arro Corporation
Arro Corporation -- https://arro.com/ -- provides food contract
manufacturing, processing, logistics and warehousing services. It
offers custom dry, liquid blending, reprocessing, bulk handling and
processing services.
Arro Corporation sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. N.D. Ill. Case No. 19-35238) on Dec. 13,
2019. At the time of the filing, the Debtor disclosed assets of
between $10 million and $50 million and liabilities of the same
range. Judge Janet S. Baer oversees the case.
Adam P. Silverman, Esq., at Adelman & Gettleman, Ltd., is the
Debtor's legal counsel. Livingstone Partners LLC serves as the
Debtor's investment banker.
On Dec. 23, 2019, the Office of the U.S. Trustee appointed an
official committee of unsecured creditors. The committee selected
Goldstein & McClintock LLLP as its counsel and Conway Mackenzie,
Inc. as its financial advisor.
ARUBA INVESTMENTS: S&P Alters Outlook to Stable, Affirms 'B-' ICR
-----------------------------------------------------------------
S&P Global Ratings affirmed its issuer credit rating on Aruba
Investments Inc. (d/b/a Angus Chemical Co.) at 'B-' and affirmed
all issue-level ratings on the company's secured and unsecured
debt. The rating agency revised its outlook to stable from
positive.
Aruba Investments volumes will be affected by the global
recessionary environment as the result of the coronavirus.
"We have revised our assumptions down for both 2020 and 2021 for
Aruba Investments, given its exposure to some key end markets we
expect to be negatively affected by the COVID-19 pandemic and its
trickle effects on the economy. Previously we expected Aruba to
show mid-single-digit revenue growth, driven by strong double-digit
growth in its life sciences business. Although we expect life
sciences to remain positive, we note the company's exposure to the
automotive sector via synthetic rubber and metal working fluids, a
sector that has seen plant closures worldwide given the spread of
coronavirus. In addition, we believe the company's paint and
coatings portion of the business will be hit due to lower demand
and consumption as the result of negative GDP growth, which S&P
Global Ratings expects to be down at least 1.3% in 2020. Offsetting
the declines, is that approximately 55% of Aruba's products are
expected to be used by customers in the key recession-resistant
growth end markets such as pharmaceuticals. At this point, our
economists forecast U.S. real GDP to drop by at least 1.3% in 2020.
Given the dynamic situation, we have revised our global macro
assumptions lower several times to date. Aruba maintains adequate
liquidity, and its closest maturity is its revolver coming due in
November 2021, which we would expect the company to refinance
before the end of 2020. The company term loans come due in 2022 and
its unsecured notes in 2023. Aruba's highly leveraged credit
metrics we view metrics weaker than a 'B' category rated company
such as PQ Corp.," S&P said.
The stable outlook on Aruba reflects S&P's expectation that the
coronavirus will have a mixed impact on the end markets the company
serves. S&P also believes that some of the company's key end
markets such as automotive and coatings and electronics will lead
to weakened operating performance for 2020 as the result of the
coronavirus and global recessionary environment. S&P's base-case
expectations is that debt to EBITDA will remain above 6x in 2020
and FFO to debt will be between 9%-10% over the next 12 months and
that the company will deal with reduced demand in key end markets,
slightly offset by improvements in its life sciences business.
"We could take a negative rating action over the next year if we
believe debt to EBITDA would increase above 8x for consecutive
quarters, which is a level we would consider approaching
unsustainable. Debt to EBITDA could approach these levels if EBITDA
margins dropped significantly from our 2020 expectations, roughly a
1,000 basis point (bp) decrease from our 2020 base-case
expectations. This would likely be the result if the company's end
markets perform worse than we expect due to more significant
impacts from the coronavirus or if the company experiences any
operating issues at its plants. In addition, if the November 2021
revolver maturity becomes current we could take a negative rating
action," S&P said.
"We could raise the ratings by one notch over the next 12 months if
the company is able to maintain debt to EBITDA to below 6.0x on a
sustained basis. Debt to EBITDA could approach these levels if
EBITDA margins improve by over 500 bps from our 2020 base-case
expectations. These improvements would likely be the result of the
company being able to weather the macroeconomic storm caused by
coronavirus greater than we expected," the rating agency said.
ASPEN JERSEY: S&P Alters Outlook to Negative, Affirms 'B-' ICR
--------------------------------------------------------------
S&P Global Ratings affirmed all of its ratings on U.S.-based
enterprise software solutions provider Aspen Jersey Topco LLC
(Aptos), including the 'B-' issuer credit rating, and revised its
outlook to negative from stable.
Aptos' retail exclusive focus leaves the company vulnerable from
the knock-on effects of the coronavirus pandemic and a prolonged
economic downturn. S&P Global Ratings has revised its U.S. real GDP
growth expectations for 2020 to negative 0.5%-0% because of
disruption from the spread of the coronavirus. S&P thinks these
conditions will present an additional burden for many companies
operating in the retail industry, some who were already facing
profitability and liquidity challenges, pre-pandemic. Although the
severity and longevity of the pandemic is uncertain, Aptos is
particularly vulnerable to demand destruction over the next several
months because it caters exclusively to this end market.
"Although Aptos ERP software performs mission critical functions
for these customers, we see a significant risk in the company's
shorter-cycle revenue streams, such as professional service and
hardware. We also believe these conditions would likely erode
Aptos' ability to sustain growth in its software business over the
horizon of our base case forecast," S&P said.
The negative outlook reflects S&P's belief that macroeconomic
weakness related to the pandemic will likely depress demand for
Aptos products, which could lead to significantly weaker levels of
revenue and profitability than the rating agency previously
expected. As a result of these conditions, S&P sees a growing risk
of Aptos sustaining significantly weaker credit metrics including
negative free cash flow over the next 12 months.
"We could lower the rating if prolonged business disruptions or a
continued decline in earnings increase leverage toward the 10x area
or if FOCF turns negative with limited prospects for improvement,"
S&P said.
"We could revise our outlook to stable if Aptos is able to generate
positive free operating cash flow and maintain average leverage
below 9x through the economic downturn and top-line pressure by
improving operational efficiencies," the rating agency said.
AURORA COMMERCIAL: LBHI Settlement Gives Recovery for Unsecureds
----------------------------------------------------------------
Debtors Aurora Commercial Corp. (ACC) and Aurora Loan Services LLC
(ALS) filed a Joint Plan of Liquidation and an accompanying
Disclosure Statement on March 31, 2020.
The Debtors are subsidiaries of Lehman Brothers Holdings Inc. and
prior to LBHI's bankruptcy, were part of LBHI's loan origination
and servicing business. The Debtors have been in the process of
winding down their operations since 2012 with the assistance of
LBHI. Since the Petition Date, the Debtors have made substantial
progress towards identifying and resolving all potential Claims
against their Estates.
The Plan incorporates the LBHI Settlement which benefits the
Debtors' Estates and Holders of Allowed Claims because it (i)
avoids protracted litigation between the Debtors and LBHI over the
validity, amount, and priority of LBHI's Claims against the Debtors
and whether the amounts owed to the Debtors under the LBHI Loan can
be set-off against amounts the Debtors owe LBHI, (ii) ensures a
greater recovery for Holders of Allowed ACC General Unsecured
Claims, (iii) provides for the assumption of certain liabilities
(such as the Iron Mountain Contracts), and (iv) ensures adequate
funding of the Estates to consummate the Plan and complete their
winddown and dissolution.
Provided that Class 6A ACC General Unsecured Claims votes in favor
of the Plan and the LBHI Settlement is effectuated, except to the
extent that a Holder of an Allowed ACC General Unsecured Claim
agrees to less favorable treatment, each Holder of an Allowed ACC
General Unsecured Claim shall receive, in full and final
satisfaction, settlement, and release, and in exchange for such
Allowed ACC General Unsecured Claim, its pro rata share of ACC
Available Cash. If Class 6A does not vote in favor of the Plan,
the LBHI Settlement will not be effectuated, and Distributions to
Holders of ACC General Unsecured Claims will be diluted by the
value of any Allowed LBHI Claims.
Each holder of a Class 6B ALS General Unsecured Claims will
receive, in full and final satisfaction, settlement, and release,
and in exchange for such Allowed ALS General Unsecured Claim, its
Pro Rata share of ALS Available Cash.
As to Class 8A ACC Interests, on the Final ACC Distribution Date,
all remaining Available ACC Cash after all Distributions to Holders
of Claims in Class 1A–6A are made, if any, will be paid to LBHI.
Upon receipt of such Distribution to LBHI on account of its ACC
Interests, such ACC Interests will be canceled.
As to Class 8B ALS Interests, on the Final ALS Distribution Date,
all ALS Interests will be deemed automatically cancelled, released
and extinguished without further action by the Liquidating Debtors
or the Plan Administrator, and Holders of ALS Interests shall not
receive or retain any property under the Plan on account of such
Interests.
As of Feb. 28, 2020, ACC's assets consist of cash and short-term
investments in the amount of approximately $2.38 million, the LBHI
Loan of $69 million, and the intercompany receivables due from ALS,
which include approximately $550,000 in postpetition receivables
and approximately $23.12 million in prepetition receivables, which
were generated from ACC’s funding of ALS's operations.
Upon the occurrence of the Effective Date of the Plan, in exchange
for LBHI's waiver of the LBHI Claims and the Secured LBHI Claims
and LBHI's assumption of the Iron Mountain Contracts and payment of
the related Cure Amount, LBHI shall receive the LBHI Release, and
both the LBHI Loan and the LBHI Services Agreement will be
terminated.
A full-text copy of the Liquidating Plan dated March 31, 2020, is
available at https://tinyurl.com/wehjjl4 from PacerMonitor at no
charge.
The Debtors are represented by:
ALBERT TOGUT
KYLE J. ORTIZ
BRIAN F. MOORE
AMANDA C. GLAUBACH
TOGUT, SEGAL & SEGAL LLP
One Penn Plaza, Suite 3335
New York, New York 10119
Tel: (212) 594-5000
About Aurora Commercial Corp.
Aurora Commercial Corp. is a wholly-owned subsidiary of Lehman
Brothers Holdings Inc. that offers banking, loan servicing, and
investor services.
Aurora Commercial and its subsidiary Aurora Loan Services LLC
sought protection under Chapter 11 of the Bankruptcy Code (Bankr.
S.D.N.Y. Lead Case No. 19-10843) on March 24, 2019. At the time of
the filing, Aurora Commercial estimated assets of $50 million to
$100 million and liabilities of less than $50,000.
The Debtors tapped Togut, Segal & Segal LLP as their legal counsel,
and Prime Clerk, LLC as their claims and noticing agent.
The Office of the U.S. Trustee appointed a committee of unsecured
creditors on Aug. 13, 2019. The committee is represented by Pierce
McCoy, PLLC.
BASIM ELHABASHY: $1.1M Sale of Boca Raton Homestead Denied
----------------------------------------------------------
Judge Erik P. Kimball of the U.S. Bankruptcy Court for the Southern
District of Florida denied Basim Elhabashy's proposed sale of the
real property located at 1501 SW 4th Avenue, Boca Raton, Florida,
legally described as Lot 15 Block 1, in ESTOVILLE, according to the
Plat thereof as Recorded in Plat Book 34 page 164 if the Public
Records of Palm Beach County, Florida, to Daniel Neuman and
Katherine Roule for $1,104,000.
A hearing on the Motion was held on March 5, 2020.
The Debtor proposed to sell the Homestead free and clear of all
Liens.
The Debtor's counsel, Jordan L. Rappaport, Esq., will serve a copy
of the Order on all parties in interest and file a certificate of
service with the clerk of Court.
Basim Elhabashy sought Chapter 11 protection (Bankr. S.D. Fla.
Case
No. 18-15440) on May 7, 2018. Jordan L. Rappaport, Esq., serves
as
counsel to the Debtor.
BLACKHAWK NETWORK: Moody's Alters Outlook on B2 CFR to Negative
---------------------------------------------------------------
Moody's Investors Service affirmed Blackhawk Network Holdings,
Inc.'s ratings, including the B2 Corporate Family Rating and B2-PD
Probability of Default Rating. Concurrently, Moody's also affirmed
the company's first lien and second lien credit facilities ratings
at B1 and Caa1 respectively. The outlook was changed to negative.
The negative outlook reflects the risk that Blackhawk will
experience a material decline in 2020 operating performance due to
the economic downturn arising from the coronavirus outbreak. The
negative impacts include lower discretionary spending, weaker
consumer sentiment because of unemployment, related retail store
closures, and reduced business spending. Moody's projects
Blackhawk's credit metrics, in particular leverage to deteriorate
in 2020 as a result of these operating challenges. The affirmation
of the ratings reflects Moody's expectation that the company will
maintain good liquidity, supported by large cash balances and
revolver availability. Blackhawk's leading global processing
network, increasingly diversified revenue base and digital card
offering, which will likely see higher demand in the near term,
also support the rating.
Affirmations:
Issuer: Blackhawk Network Holdings, Inc.
Probability of Default Rating, Affirmed B2-PD
Corporate Family Rating, Affirmed B2
Senior Secured First Lien Bank Credit Facility, Affirmed B1 (LGD3)
Senior Secured Second Lien Bank Credit Facility, Affirmed Caa1
(LGD6) from (LGD5)
Outlook Actions:
Issuer: Blackhawk Network Holdings, Inc.
Outlook, Changed To Negative From Stable
RATINGS RATIONALE
Blackhawk's B2 CFR reflects its high leverage of 6.8x as of the
last twelve months ended September 7, 2019. The company has a
concentrated business profile, which is reliant on gift cards with
partner concentration risk in the retail industry facing various
challenges related to the coronavirus outbreak as well as secular
headwinds. Moody's expects Blackhawk's revenue and earnings to
decline in 2020 from lower consumer and business spending, leading
to an increase in leverage to above 8x debt-to-EBITDA and negative
free cash flow. Moody's projects that Blackhawk's revenue and
earnings will start recovering in Q4 2020 (in this quarter the
company generates about 45% of its annual revenue) and that the
company will maintain good liquidity with a large cash balance and
revolver availability. Blackhawk's liquidity will help the company
to manage through lower earnings in the second and third quarters.
Blackhawk's ratings are supported by its leading market position as
one of the largest third-party distributors of gift cards globally
and its highly scalable and global processing network. Moody's
expects Blackhawk's operating performance will continue to be
supported by long-term contracts with distribution partners, such
as Kroger, Albertsons/Safeway and Giant Eagle and long-standing
relationships with leading content providers across a variety of
retail categories, including Apple and Amazon. A lack of near-term
maturities also provides support to the rating.
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 Blackhawk's credit profile,
including its exposure to global economies have left it vulnerable
to shifts in market sentiment in these unprecedented operating
conditions and Blackhawk 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. Its action reflects the
impact on Blackhawk of the breadth and severity of the shock, and
the broad deterioration in credit quality it has triggered.
The rating also incorporates governance considerations, in
particular Blackhawk's aggressive financial policies under
private-equity ownership, including debt-funded acquisitions and
tolerance for high leverage.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if Blackhawk maintains its market
position as one of the largest third-party distributors of gift
cards globally while reducing adjusted debt-to-EBITDA to 4.5x on a
sustained basis and demonstrating a sustained commitment to
conservative financial policies.
The ratings could be downgraded if Moody's expects the impact from
coronavirus on consumer and business spending to be more prolonged
and steeper than currently anticipated. Any deterioration in
Blackhawk's liquidity will also put pressure on the ratings.
The principal methodology used in these ratings was Business and
Consumer Service Industry published in October 2016.
Blackhawk Network Holdings, Inc. reported around $2.4 billion of
total operating revenues in the LTM ended September 7, 2019. Based
in Pleasanton, CA, Blackhawk operates a physical and digital gift
card as well as prepaid payments network. In June 2018, Blackhawk
was acquired by Silver Lake Partners and P2 Capital Partners for
roughly $3.5 billion in enterprise value.
BLUEFOCUS INTELLIGENT: Fitch Affirms B+ LT IDRs, Outlook Stable
---------------------------------------------------------------
Fitch Ratings has affirmed China-based BlueFocus Intelligent
Communications Group Co., Ltd.'s Long-Term Foreign- and
Local-Currency Issuer Default Ratings at 'B+'. The Outlook is
Stable.
The Stable Outlook reflects Fitch's expectation that BlueFocus has
sufficient rating headroom to accommodate the disruptions to its
business operations amid the coronavirus outbreak. Fitch expects
the company's domestic advertising and outbound businesses to be
relatively intact against the demand slowdown due to the outbreak,
while its traditional public relations and overseas operations will
be pressured. BlueFocus' FFO leverage has improved to 1.7x-2.0x
following the conversion of the majority of its convertible bonds
into equity in 2019. However, the company's small scale, low
geographical diversity, reliance on short-term loans and relatively
weak EBITDA margin continue to constrain its ratings.
KEY RATING DRIVERS
Disruptions from COVID-19: Fitch expects BlueFocus's revenue growth
to slow to low-single digits in 2020 (2019: 22%) on a drop in
offline PR events, subdued overseas operations and shrinking
customer advertising budgets amid the pandemic before rebounding to
the low teens in 2021. Fitch expects a gradual recovery in the
traditional PR business in 2H20 as the outbreak is subsiding in
China, but its overseas business is likely to face significant
disruptions, at least in 2020.
Fitch expects the overall impact from COVID-19 to subside starting
2H20 in light of its steady domestic digital advertising and
outbound businesses, which derive their revenue mainly from online
games and e-commerce advertisers. Online games have been relatively
resilient against the coronavirus outbreak, evident from Tencent
Holdings Limited's (A+/Stable) robust game revenue stream.
Declining EBITDA Margin: Fitch expects BlueFocus' operating EBITDA
margin to narrow to 3.2%-3.3% in 2020-2021 (2019 estimate: 4.6%),
driven by a margin squeeze in traditional PR and advertising
revenue in 2020 and an increase in low-margin outbound revenue.
Fitch believes domestic advertising margins will be pressured by
the continued stiff competition in China's advertising industry and
the stronger bargaining power of online media platforms, despite
the strong growth prospects of digital advertising in China in the
medium term. Outbound revenue has gross margins of just 1.1%-1.3%
and therefore greater contribution from this business will dilute
overall margins.
Adequate Rating Headroom: Fitch expects BlueFocus' FFO leverage to
worsen to 2.8x-2.9x in 2020-2021 (2019 estimate: 1.7x), driven by
lower EBITDA generation and rising working-capital outflows caused
by prolonged receivable days amid COVID-19. However, leverage will
be well below 5.0x, the threshold above which it may consider a
negative rating action. The company improved its leverage as most
of its CNY1.4 billion convertible bonds were converted into equity
by end-2019. Fitch estimates gross debt to decline to below CNY2
billion by end-2019 (2018: CNY3.5 billion).
Reliance on Short-Term Loans: BlueFocus' ratings reflect the low
visibility of its cash conversion. The company is highly dependent
on rolling over short-term bank loans to fund working capital due
to the financial pressure on its PR and advertising customers amid
the challenges from the pandemic. However, with modest capex and
discipline in receivables collection, the company may revert to
neutral or modestly positive post-dividend free cash flow (FCF) in
the medium term.
Higher Leverage on US Subsidiary: Should a proposed share exchange
with US-based Legacy Acquisition Corp. (Legacy) proceed, Fitch
would proportionately consolidate the 44.8%-owned entity due to the
presence of significant minorities. Fitch would expect BlueFocus'
proportionately consolidated FFO leverage to worsen to 3.5x-3.6x in
2020-2021, which would still be below the negative guideline of
5.0x. its forecast for proportionately consolidated FFO interest
coverage would also worsen to 3.7x-3.9x, above the negative
guideline of 2.5x.
Legacy plans to provide USD90 million to fund the acquisition of
the minority interests in two of BlueFocus' subsidiaries. BlueFocus
would access up to USD152 million in cash in Legacy's trust
account, assuming no external Legacy shareholders exercise their
rights and ask for redemption. BlueFocus entered into the agreement
in August 2019 to inject its entire stake in four overseas
subsidiaries and 82% of a China-based subsidiary into Legacy, which
will be renamed Blue Impact after the completion, for a 44.8% stake
in the company.
ESG - Governance: Fitch has lowered the ESG Relevance Score
assigned to BlueFocus' Management Strategy to '4' from '5' under
the agency's Environmental, Social and Governance framework, while
maintaining the ESG Relevance Score on Financial Transparency at
'4'. The management strategy score of '4' reflects BlueFocus'
improved execution in migrating to a digital advertising business
model from a traditional PR model, contributing to performance that
was better than its expectations in 2019. The financial
transparency score of '4' reflects the lack of consistency in the
company's financial reporting framework, which reduces
financial-performance visibility.
DERIVATION SUMMARY
BlueFocus' smaller scale, lower geographical diversity and weaker
margins continue to weigh on the ratings and drive its much lower
ratings compared with that of leading global advertising holding
companies with investment-grade ratings, such as WPP plc (WPP,
BBB+/Negative) and Interpublic Group of Companies, Inc. (IPG,
BBB+/Negative). However, BlueFocus has a better financial risk
profile with Fitch's forecast of 2020 FFO leverage of 2.8x,
compared with WPP's 4.5x and IPG's 3.1x.
WPP is on a Negative Outlook because the company is undertaking a
wide-scale reorganization to address its weakened operational
performance, and Fitch expects the restructuring to take time to
deliver its benefits. Fitch recently revised IPG's Outlook to
Negative from Stable to reflect the significant uncertainty
surrounding advertising markets' near-term performance in light of
the coronavirus pandemic and a lack of rating headroom at the
current level to accommodate the anticipated disruption to IPG's
operating model.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within its Rating Case for the Issuer
- Revenue growth to slow to low-single digits in 2020 before
rebounding to the low teens in 2021 (2019: 22%)
- Operating EBITDA margin to narrow to 3.2%-3.3% in 2020-2021
(2019 estimate: 4.6%)
- Annual capex at around CNY60 million-80 million in 2020-2021
- Dividend payout ratio of around 20% in 2020-2021
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- An upgrade is unlikely in the foreseeable future. Factors
constraining its ratings - weak margins and free cash flow, small
scale and low geographical diversity of operations - are not likely
to meaningfully ease without significant investments that may
weaken its financial profile.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- Substantial weakening of the market positions of its key
products and services
- Significant M&A that negatively affects the operations or the
business profile
- Sustained negative cash flow from operations or FCF
- FFO leverage sustained above 5.0x (2020-2021 forecast
2.8x-2.9x)
- FFO interest coverage sustained below 2.5x (2020-2021 forecast:
4.9x)
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Non-Financial Corporate
issuers have a best-case rating upgrade scenario (defined as the
99th percentile of rating transitions, measured in a positive
direction) of three notches over a three-year rating horizon; and a
worst-case rating downgrade scenario (defined as the 99th
percentile of rating transitions, measured in a negative direction)
of four notches over three years. The complete span of best- and
worst-case scenario credit ratings for all rating categories ranges
from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are
based on historical performance.
LIQUIDITY AND DEBT STRUCTURE
Adequate Liquidity: BlueFocus had readily available cash of CNY1.3
billion at end-September 2019, compared with short-term debt of
CNY1.3 billion. The company also obtained regulatory approval to
issue up to CNY417 million in receivable-based asset-backed
securities. Fitch believes continued support from local banks
should help BlueFocus to manage its liquidity headroom.
BOJANGLES' INC: S&P Alters Outlook to Negative, Affirms 'B' ICR
---------------------------------------------------------------
S&P Global Ratings revised it outlook on franchisor and operator
Bojangles' Inc. to negative from stable and affirmed all its
ratings, including its 'B' issuer credit rating on the company.
"We project significant same-store sales declines as consumers
practice social distancing and decrease expenditures for food
bought away from home. Bojangles' dining rooms are closed, but the
company is able to continue operating drive-thru and delivery
services. We expect sharp declines in traffic over the next several
weeks to months, as consumers adapt to social distancing and travel
less, reducing consumption of food away from home. We recognize
that Bojangles' is modestly shielded from these impacts as an
operator and franchisor of quick service restaurants, given that it
generates roughly 85% of operated revenue through off-premise
dining on a normal day. While this will allow the company to
continue generating sales over the near term, we anticipate fewer
customers commuting to work will have a material impact on
breakfast sales, which are typically 38% of the daypart mix," S&P
said.
The negative outlook reflects S&P's view that there is substantial
uncertainty in Bojangles' performance for fiscal 2020 given
material headwinds associated with the coronavirus outbreak and an
uncertain pace of sales recovery.
"We could lower the rating if we expected sales and EBITDA recovery
would take longer than anticipated, leading to debt to EBITDA
sustained above 7x. We would also lower the rating if it appeared
the company would face liquidity constraints or covenant issues,"
S&P said.
"We could revise our outlook to stable if our expectations for
Bojangles' performance improved such that we believed it would
generate positive free cash flow to resume normalized operations
and EBITDA would recover so leverage were sustained below 7x. This
would likely require an improvement in the macroeconomic
environment," the rating agency said.
BRINKER INTERNATIONAL: S&P Cuts ICR to B+; Ratings on Watch Neg.
----------------------------------------------------------------
S&P Global Ratings lowered its issuer credit rating on Dallas-based
Brinker International Inc. to 'B+' from 'BB-'.
Concurrently, S&P is lowering the rating on the 2023 notes to 'B+'
from 'BB-'. The 'BB-' rating on the 2024 notes is unchanged,
reflecting S&P's revision of the recovery rating to '2' from '3'.
The downgrade reflects S&P's view that Brinker's operating results
will experience significant pressure over the near term from the
spread of the coronavirus.
The casual dining segment of the restaurant industry is highly
susceptible to near-term disruption given a core underpinning of
its value proposition, in-person dining, has largely been
eliminated by social distancing measures.
"Furthermore, we believe a surge in unemployment, shrinking
discretionary income, and diminished consumer confidence will
result in a slow rebound in casual dining sales. An extended period
of crowd avoidance could result in a protracted recovery for the
restaurant industry. The CreditWatch Negative listing reflects our
ongoing assessment of the company's ability to demonstrate a
gradual recovery over the coming months given the continued
uncertainty around the severity and length of the operation
disruption. We think a trajectory of improvement will be important
for the company to maintain sufficient liquidity given the
anticipated level of cash burn and expected limited financial
flexibility under its covenants despite a recent amendment," S&P
said.
The negative CreditWatch reflects uncertainty around the length of
the coronavirus outbreak and its lingering effects on consumer
behavior that may cause worse-than-expected operating results. S&P
expects to resolve the CreditWatch after it learns more about the
effect of the coronavirus on Brinker's financial results and its
ability to bolster its liquidity position.
"We could lower our rating on Brinker if its recovery in operating
performance is delayed, resulting in sustained challenged cash flow
generation and elevated leverage. We could also lower the rating if
Brinker cannot refinance its revolving credit facility in a timely
and economic manner," S&P said.
BROADVISION INC: U.S. Trustee Unable to Appoint Committee
---------------------------------------------------------
The Office of the U.S. Trustee disclosed in a court filing that no
official committee of unsecured creditors has been appointed in the
Chapter 11 case of BroadVision, Inc..
About BroadVision
BroadVision, Inc. -- https://broadvision.com/ -- develops, markets,
and supports enterprise portal applications that enable companies
to unify their e-business infrastructure and conduct interactions
and transactions with employees, partners, and customers through a
personalized self-service model.
BroadVision, Inc., based in Redwood City, CA, filed a Chapter 11
petition (Bankr. D. Del. Case No. 20-10701) on March 30, 2020. In
the petition signed by Pehong Chen, president, chief executive
officer and interim chief financial officer, Debtor disclosed
$4,447,000 in assets and $2,489,000 in liabilities. The Hon.
Christopher S. Sontchi oversees the case. DLA Piper LLP(US) serves
as bankruptcy counsel to the Debtor. Epiq Corporate Restructuring,
LLC, is claims and noticing agent.
CALLAWAY GOLF: S&P Lowers ICR to 'B+' on Expected Lower Sales
-------------------------------------------------------------
S&P Global Ratings lowered all of its ratings on Callaway Golf Co.
by one notch to 'B+' and placing them on CreditWatch with negative
implications.
"The downgrade reflects our belief that Callaway Golf Co. will
sustain leverage above our high-3x downgrade threshold as a result
of lower profitability caused by the COVID-19 pandemic. Callaway
ended 2019 with total S&P Global Ratings-adjusted leverage in the
low-3x area, and we had previously expected it would improve to the
mid- to high-2x area in 2020. However, the COVID-19 pandemic has
led to an unprecedented wave of temporary store closures for
Callaway's retail customers, and consumers are pulling back on
discretionary purchases such as golf equipment and apparel. A
recent National Golf Foundation survey of frequent golfers who were
planning to purchase equipment found that over 50% now plan to
delay their purchase. We also expect Callaway's retail customers
will delay inventory purchases until they have more clarity on how
long their stores will be closed. We believe that store closures
and lower consumer spending will result in a significant spike in
leverage for Callaway in 2020, well above our high-3x downgrade
threshold. Although we expect Callaway's revenue and EBITDA to
recover much of the lost ground in 2021, we believe a global
recession and decline in consumer spending will prevent Callaway
from returning EBITDA to pre-pandemic levels over the next 24
months. Therefore, we are lowering our issuer credit rating on
Callaway to 'B+' from 'BB-'," S&P said.
The CreditWatch placement with negative implications reflects the
potential for a lower rating over the next few months after S&P
assesses the impact of retail store closures and lower consumer
spending on Callaway's sales, cash flow, and liquidity.
"We will resolve the CreditWatch placement once golf retailers such
as Dick's Sporting Goods Inc. and Golf Galaxy reopen their
brick-and-mortar stores and we have more clarity on the magnitude
of the second- and third-quarter revenue and EBITDA declines.
However, given the uncertainty around the duration of the
coronavirus outbreak, including the potential for it to recur after
the summer, the ratings could remain on CreditWatch for longer than
the 90 days that CreditWatch placements typically indicate," S&P
said.
CANNABICS PHARMACEUTICALS: Reports Q2 Net Loss of $868K
-------------------------------------------------------
Cannabics Pharmaceuticals Inc. filed with the Securities and
Exchange Commission its Quarterly Report on Form 10-Q reporting a
net loss of $867,865 on $1,310 of net revenue for the three months
ended Feb. 29, 2020 compared to net income of $3.73 million on
$2,320 of net revenue for the three months ended Feb. 28, 2019.
For the six months ended Feb. 29, 2020 the Company reported a net
loss of $6.01 million on $3,064 of net revenue compared to net
income of $3.07 million on $5,625 of net revenue for the six months
ended Feb. 28, 2019.
As of Feb. 29, 2020 the Company had $3.57 million in total assets,
$419,642 in total current liabilities, and $3.15 million in ttoal
stockholders' equity.
As of Feb. 29, 2020, the Company had $586,972 in cash compared to
$265,982 on Aug. 31, 2019. The Company expects to incur a minimum
of $1,000,000 in expenses during the next twelve months of
operations. The Company estimates that these expenses will be
comprised primarily of general expenses including overhead, legal
and accounting fees, research and development expenses, and fees
payable to outside medical centers for clinical studies.
The Company used cash in operations of $1,404,877 for the six
months ended Feb. 29, 2020 compared to cash used in operations of
$1,406,474 for the six months ended Feb. 28, 2019. The negative
cash flow from operating activities for the six months ended
Feb. 28, 2020 is primarily attributable to the Company's net loss
from operations of $6,010,061, offset by depreciation of $103,960,
a decrease in accounts payables and accrued liabilities of $19,232,
a decrease of $85,417 in account receivables and prepaid expenses
and an increase in changes in fair value of a financial asset,
consisting of the Company's shares held in Seedo, of $4,363,000 ,
capital gain of $80,521 and stock issued for services in a total of
$72,120.
The Company had cash flow from investing activities of $1,806,307
during the six months ended Feb. 29, 2020, compared to cash flow
used in investing of $2,306,571 for the six months ended Feb. 28,
2019. The reason for the increase in cash flow from investing
activities is due to the Company's realization of some of held for
trade investments in in total of $1,806,307 and its purchase of
fixed assets in the aggregate amount of $14,900.
Cannabics said, "We will have to raise funds to pay for our
expenses. We may have to borrow money from shareholders, issue
equity or enter into a strategic arrangement with a third party.
There can be no assurance that additional capital will be available
to us. We currently have no arrangements or understandings with
any person to obtain funds through bank loans, lines of credit or
any other sources. Since we have no such arrangements or plans
currently in effect, our inability to raise funds for our
operations will have a severe negative impact on our ability to
remain a viable company."
A full-text copy of the Form 10-Q is available for free at:
https://is.gd/ux5bA5
About Cannabics
Headquartered in Bethesda, Maryland, Cannabics Pharmaceuticals Inc.
is dedicated to the development and licensing of advanced and
sophisticated cannabinoid-based treatments and therapies. The
Company's main focus is development and marketing of various new
and innovative therapies and biotechnological tools aimed at
providing relief from diverse ailments that respond to active
ingredients sourced from the cannabis plant. These advanced tools
include innovative delivery systems for cannabinoids, personalized
medicine therapies and procedures based on cannabis originated
compounds and bioinformatics tools.
Weinstein International C.P.A. (Isr), in Jerusalem, Israel, the
Company's independent accounting firm, issued a "going concern"
qualification in its report dated Nov. 29, 2019, citing that the
Company has not established a source of revenue sufficient to cover
its operating costs. As of Aug. 31, 2019, the Company has incurred
losses since inception. These and other factors raise substantial
doubt about the Company's ability to continue as a going concern.
CAPITAL TRUST: S&P Lowers 2019A Custodial Receipts Rating to 'CCC'
------------------------------------------------------------------
S&P Global Ratings lowered its ratings on series 2019A custodial
receipts related to Capital Trust Agency, Fla.'s senior-living
revenue bonds, due July 1, 2054, issued for the American Eagle
Portfolio project, to 'CCC' from 'BBB-' and subsequently placed it
on CreditWatch with negative implications.
This rating action follows S&P's lowering the rating on the
underlying securities.
The rating on the custodial receipts reflects the rating on the
underlying securities and S&P's expectation of the likelihood of
certificateholders receiving interest-and-principal payments when
due on the certificates.
As noted in S&P's analysis on Capital Trust Agency, Fla. and AE
Delaware Holding Co. (Brookdale), "In our opinion, potentially
severe and ongoing impacts associated with the COVID-19 pandemic
exacerbate the above factors. Thus, the ratings also reflect the
uncertainty that the transaction will meet its debt service
payments on a timely basis resulting from health and safety
concerns--which S&P considers a social risk under our
environmental, social, and governance factors--and the associated
high potential for the adverse economic and financial conditions
resulting from COVID-19 to impair the owner's capacity and
willingness to honor these obligations on time and in full. The
CreditWatch placement with negative implications reflects our
expectation that increased operational costs and reductions in
revenue as a result of the COVID-19 pandemic, and the associated
economic downturn, could impair the pool's ability to make timely
debt service payments on the bonds while covering the increased
costs of protecting residents and staff."
Changes to the rating on these securities could result from, among
other things, changes to the ratings on the underlying securities.
Environmental, social, and governance factors relevant to the
rating action are health and safety.
CARBO CERAMICS: U.S. Trustee Appoints Creditors' Committee
----------------------------------------------------------
The Office of the U.S. Trustee on April 14, 2020, appointed a
committee to represent unsecured creditors in the Chapter 11 cases
of CARBO Ceramics, Inc. and its affiliates.
The committee members are:
1. KTJ 251, LLC
400 Water Street, Ste. 200
Excelsior, MN 55331
David Scott 952-294-1255
dave@oppidan.com
2. Chemline, Inc.
5151 Natural Bridge Ave.
St. Louis, MO 63115
Jeff DePlanty
314-254-2700
jdeplanty@chemline.net
3. Thermafoam LLC
1240 Hwy 77 N.
Hillboro, TX 76645
Mike Power
214-499-2455
mpower@thermafoam.com
4. Beaver Steel Services
1200 Arch Street
Carnegie, PA 15106
Todd Davis
412-780-0240
ToddD@BeaverSteel.com
5. Bulk Chemical Services
1355 Terrell Mill Road
Building 1460, Suite 150
Marietta, GA 30067
Seth Spurlock
404-350-8404
sspurlock@bcschem.com
6. Capro Industries
3128 E. Harcourt Street
Compton, CA 90221
Jules Teffaha 310-808-9500
jules@capro.net
7. Drives Plus, LLC
121 Tremon Street
Gordon, GA 31031
Dennis Harrison
478-628-1203
ennis.harrison@drivesplus.net
Official creditors' committees serve as fiduciaries to the general
population of creditors they represent. They may investigate the
debtor's business and financial affairs. Committees have the right
to employ legal counsel, accountants and financial advisors at a
debtor's expense.
About CARBO Ceramics
CARBO Ceramics Inc. -- https://carboceramics.com/ -- is a global
technology company providing products and services to the oil and
gas, industrial, and environmental markets. CARBO offers oilfield
ceramic technology products, base ceramic proppant, and frac sand
proppant for use in the hydraulic fracturing of oil and natural gas
wells.
Asset Guard Products Inc., a subsidiary of CARBO, offers products
intended to protect operators' assets, minimize environmental
risks, and lower lease operating expenses through spill prevention,
containment, and countermeasure systems for the oil and gas
industry.
StrataGen, Inc., another subsidiary, offers fracture consulting and
data services and provides a suite of stimulation software
solutions used for designing fracture treatments and for on-site
real-time analysis to assist E&P companies in the efficient
completion of wells and enhancement of oil and natural gas
production.
CARBO Ceramics Inc. and its subsidiaries sought protection under
Chapter 11 of the Bankruptcy Code (Bankr. S.D. Texas Lead Case No.
20-31973) on March 29, 2020. At the time of the filing, Debtors
disclosed assets of between $100,000,001 and $500 million and
liabilities of the same range.
Judge Marvin Isgur oversees the cases.
Debtors tapped Vinson & Elkins LLP as bankruptcy counsel; Okin
Adams LLP as special counsel; Perella Weinberg Partners L.P. and
Tudor Pickering, Holt & Co. as investment banker; FTI Consulting,
Inc. as financial advisor; Ernst & Young LLP, KPMG LLP, and Weaver
and Tidwell L.L.P. as accountants and tax advisors. Prime Clerk,
the claims agent, maintains this website
https://dm.epiq11.com/case/crc/info.
CASINO REINVESTMENT: Moody's Affirms Parking Fee Bonds at Ba2
-------------------------------------------------------------
Moody's Investors Service has affirmed the Casino Reinvestment
Development Agency, NJ's Luxury Tax Revenue Bonds at Baa2; the
outlook has been revised to stable from positive. Moody's has also
affirmed CRDA's Hotel Room Fee Revenue Bonds at Ba2 with a stable
outlook. Finally, Moody's has affirmed CRDA's Parking Fee Revenue
Bonds at Ba3 with a negative outlook.
RATINGS RATIONALE
The affirmation of the Baa2 luxury bond rating reflects the
security's narrow pledge but adequately resilient trend in luxury
tax revenues. The rating also takes into account a cash funded debt
service reserve fund and satisfactory debt service coverage.
The affirmation of the Ba2 hotel bond rating also reflects a narrow
security pledge but with weaker trends and a more limited security
provided by a surety from Ambac Assurance Corporation for the debt
service reserve fund, which would be needed under stressed
projections.
The affirmation of the Ba3 parking bond rating also reflects a
narrow security pledge with a very weak trend and dangerously low
coverage ratios. The rating does take into account the cash-funded
debt service reserve fund which, even should debt service coverage
temporarily dip below one times, should be sufficient to cover any
shortfalls for the foreseeable future.
The rapid and widening spread of the coronavirus outbreak,
deteriorating global economic outlook, falling oil prices, and
financial market 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. Its action reflects the impact of the crisis on all three
CRDA special tax ratings. In late March, the governor of New Jersey
(A3 negative) ordered all casinos in the state closed. This has
largely, albeit temporarily, eliminated the revenue streams
dedicated to these bonds. While Moody's still expects a recovery
later in the year, coverage levels will sharply decline and a tap
of the debt service reserve funds is possible.
Favorably, money has already been set aside to cover the majority
of 2020 debt service for all three bonds.
RATING OUTLOOK
The stable outlook on the luxury bonds reflects its expectation
that the recent strengthening in the casino and entertainment
sector will lead to improved debt service coverage in the long-run
but will be interrupted by the pandemic. The timeline for a full
recovery is still unclear at this time.
The stable outlook on the hotel bonds reflects its expectation that
recent signs of strength in casino revenue numbers will translate
into stabilized hotel revenues in the long-run but will be
interrupted by the pandemic. The timeline for a full recovery is
still unclear at this time.
The negative outlook on the parking bonds reflects the sharp
declines in coverage to a barely sum-sufficient level and the
material possibility that coverage will dip below one times. This
was the case even before the pandemic, which has only exacerbated
the situation.
FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGS
- Reopening of the casinos and post-quarantine stabilization in
Atlantic City's (Ba3 stable) tourism and casino economy (all)
- Improved debt service coverage (all)
- Increase in luxury tax revenues (Luxury)
- Increase in hotel fee revenues (Hotel)
- Stabilization or increase in parking fee revenues (Parking)
FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGS
- Sustained closure of the casinos beyond current expectations
- Deterioration in Atlantic City's tourism and casino economy
(all)
- Further permanent casino or hotel closures (all)
- Reduced debt service coverage (all)
- Reduction in luxury tax revenues (Luxury)
- Decrease in hotel fee revenues (Hotel)
- Decrease in parking fee revenues (Parking)
- Reliance on debt service reserve funds to pay debt service
(all)
LEGAL SECURITY
The luxury bonds are secured by a senior lien on gross revenues
from a luxury tax levied on three activities within Atlantic City:
hotel rooms, alcohol by the drink, and entertainment. There is a
debt service reserve fund, cash-funded, at the lesser of 10% of
principal, maximum annual debt service, or 125% of debt service.
The hotel bonds are secured by a senior lien on a $3 per diem fee
imposed on each occupied hotel room in Atlantic City casinos,
whether paid or complimentary. There is a debt service reserve
fund, surety-funded, at the lesser of 10% of principal, maximum
annual debt service, or 125% of debt service.
The parking bonds were secured by three streams of economically
related revenues, one of which has now expired: two separate
pledges of parking fees levied on vehicles at Atlantic City
casinos, and a now expired portion of a gross revenue tax levied on
the casinos (Investment Alternative Tax, or IAT). There is a debt
service reserve fund, cash-funded, at more than maximum annual debt
service.
PROFILE
The Casino Reinvestment Development Authority is a component unit
of the State of New Jersey (A3 negative) established in 1984 to
collect and distribute certain taxes and fees paid by the then 12
Atlantic City Casinos for development projects in Atlantic City,
Southern, and Northern New Jersey. After 2011, all available
revenues and assets were directed by statute to be invested in the
Atlantic City tourism district. Gaming revenues in Atlantic City
declined by 54% between 2006 and 2015 but have been rebounding.
Four of the city's 12 casinos closed in 2014 and another closed in
2016. HardRock (the former Trump Taj Mahal) and Ocean (the former
Revel) opened in June 2018, bringing the number of casinos back up
to 9.
CEN BIOTECH: Incurs $5.65 Million Net Loss in 2019
--------------------------------------------------
CEN Biotech, Inc., filed with the Securities and Exchange
Commission its Annual Report on Form 10-K reporting a net loss of
$5.65 million for the year ended Dec. 31, 2019, compared to a net
loss of $7.53 million for the year ended Dec. 31, 2018.
As of Dec. 31, 2019, the Company had $7.30 million in total assets,
$32.83 million in total liabilities, and a total shareholders'
deficit of $25.53 million.
Mazars USA LLP, in New York, New York, the Company's auditor since
2018, issued a "going concern" qualification in its report dated
April 14, 2020 citing that the Company has incurred significant
operating losses and negative cash flows from operations since
inception. The Company also had an accumulated deficit of
$41,310,172 at Dec. 31, 2019. The Company is dependent on
obtaining necessary funding from outside sources, including
obtaining additional funding from the sale of securities in order
to continue their operations. The COVID-19 pandemic has hindered
the Company's ability to raise capital. These conditions raise
substantial doubt about its ability to continue as a going
concern.
The Company has not generated positive cash flows from operating
activities. During the fiscal year ended Dec. 31, 2019, the
Company used $869,350 in operating activities compared to
$1,724,001 during the fiscal year ended Dec. 31, 2018. The
decrease between the two periods related primarily to a decrease in
our overall net loss and increase in current operational
liabilities.
The Company's use of cash flow for investing activities during the
fiscal year ended Dec. 31, 2019 totaling $190,000 compared to the
prior period of $105,439. During the twelve months ended Dec. 31,
2019, the Company's use of cash flows for investing activities were
comprised primarily of advances to CEN Ukraine of $190,000. By
comparison, for the twelve months ended Dec. 31, 2018, the
Company's use of cash flows for investing activities were comprised
primarily of advances to CEN Ukraine of $100,000, which were made
to fund the operations of CEN Ukraine.
Cash flow provided by financing activities during the fiscal year
ended Dec. 31, 2019 totaled $1,059,914 compared to the prior period
of $1,747,655. During the fiscal year ended Dec. 31, 2019, the
Company received $1,065,914 through issuance of loans and
convertible promissory notes payable to investors to fund its
working capital requirements. During 2019, the Company repaid
$6,000 of its debts. During the fiscal year ended Dec. 31, 2018,
the Company received $2,170,887 through issuance of loans and
convertible promissory notes payable to investors to fund its
working capital requirements. During 2018, the Company repaid
$423,232 of its debts.
CEN has no committed source of debt or equity financing. The
Company's executive team and Board are seeking additional financing
from their business contacts, but no assurances can be given that
such financing will be obtained or, if obtained, on what terms.
A full-text copy of the Form 10-K is available for free at:
https://is.gd/Ljxrcn
About CEN Biotech
Headquartered in Ontario, Canada, CEN Biotech, Inc. --
http://www.cenbiotechinc.com/-- is focused on the manufacturing,
production and development of products within the cannabis
industry, including the LED lighting technology and hemp products.
The Company intends to explore the usage of hemp, which it intends
to cultivate for usage in industrial, medical and food products.
CENTURY ALUMINUM: Moody's Cuts CFR to Caa1, Outlook Negative
------------------------------------------------------------
Moody's Investors Service downgraded the Corporate Family Rating of
Century Aluminum Company to Caa1 from B3, the Probability of
Default Rating to Caa1-PD from B3-PD, and the rating of the $250
million senior secured notes due in 2021 to Caa2 from Caa1. The
Speculative Grade Liquidity rating is downgraded to SGL-4 from
SGL-3. The outlook is negative.
"The ratings downgrade reflects Moody's expectations of further
deterioration in Century's credit profile due to the impact of the
coronavirus outbreak on the global aluminum demand, prices and
regional premiums, which have declined materially since the
beginning of 2020," said Botir Sharipov, Vice President and lead
analyst for Century Aluminum.
Downgrades:
Issuer: Century Aluminum Company
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 Caa2 (LGD4)
from Caa1 (LGD4)
Outlook Actions:
Issuer: Century Aluminum Company
Outlook, Changed To Negative From Stable
RATINGS RATIONALE
Century's Caa1 Corporate Family Rating reflects its modest size,
relatively high cost position and its exposure to the volatile
global aluminum market fundamentals, which have deteriorated
significantly as a result of the pandemic. The high sensitivity of
Century's earnings and cash flows to incremental changes in alumina
and aluminum prices are constraining factors for the company's
credit rating. The rating is also constrained by the refinancing
risk for the company's $250 million June 2021 senior secured notes
given the currently challenging market environment, weak debt
protection metrics and the expected negative free cash flow. The
rating also considers the stability of Century's aluminum offtake,
most of which is under contract with Glencore plc (Baa1, stable),
which also owns 42.9% of Century's outstanding common stock.
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 aluminum
sector is particularly affected by the shock given the global
overcapacity and the sector's sensitivity to the automotive,
aerospace and general manufacturing end-markets demand, and overall
market sentiment. More specifically, the weaknesses in Century's
credit profile following the turbulent aluminum market environment
seen in 2018 that, in part due to the lag impact of alumina prices,
also translated into weak debt protection metrics in 2019, have
left it more 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.
After a challenging 2018 that saw alumina prices soar to multi-year
highs and negatively impact Century's financial performance, its
credit metrics began improving towards the end of 2019 as alumina
prices fell below $300/ton while LME aluminum prices averaged about
$1,750/ton. The company generated $20 million in Moody's-adjusted
EBITDA in Q4 and $7 million in positive free cash flow in 2H2019.
However, as the coronavirus spread, first in China and then
globally, aluminum prices fell materially, averaging approximately
$1,690/ton in Q1 with a more precipitous recent fall to below
$1,450/ton. Although alumina, natural gas and electricity prices in
the US and Iceland have also dropped materially and will improve
Century's operating costs, these declines will only partially
mitigate the impact of sharply lower aluminum prices and regional
Midwest and European Duty Paid premiums. Considering the aluminum
and alumina pricing lag and spot prices and as such, assuming 2020
average price of $1,570/ton for aluminum and $250/ton for alumina,
as well as certain SG&A expense reductions, Moody's estimates that
Century's 2020 EBITDA will be in the range of $15-25 million and
that 2020 adjusted debt/EBITDA will remain above 20x. Moody's also
expects the company be free cash flow negative in 2020. Credit
metrics are expected to improve moderately in 2021.
The negative outlook reflects the uncertainty related to Century's
ability to refinance its upcoming senior secured bond maturities
and the risk that the coronavirus outbreak will have a greater
negative impact on the company's liquidity profile and credit
metrics than currently anticipated.
Century faces a number of ESG risks, typical for a primary aluminum
producer, including the risks related to carbon dioxide emissions
by its smelters, stringent environmental regulations governing
third party coal-fired plants that supply some of the company's
energy requirements as well as its highly unionized workforce,
which represents about 65% of the total workforce.
The downgrade of the Speculative Grade Liquidity rating to SGL-4
reflects approaching maturities of secured debt instruments,
including the $250 million senior secured notes due June 2021 and
December 2020 expiration of the $175 million US asset backed
revolving credit facility, which matures in May 2023 or six months
before the maturity of senior secured notes. The SGL-4 rating also
reflects the reduced availability under the revolving credit
facilities following the partial drawdown and lower expected
borrowing base given the sharp decline in aluminum prices and
regional premiums. The company ended 2019 with $39 million in cash
and cash equivalents but increased its cash position with the
recent $90 million debt drawdown which has reduced the total
availability under its $50 million Icelandic and $175 million U.S.
revolving credit facilities to about $70 million. The ABL has a
springing financial covenant that requires the company to maintain
a fixed charge coverage ratio of at least 1x when availability is
less than or equal to $17.5 million. The $50 million revolving
credit facility to its Iceland subsidiary, Nordural Grundartangi
ehf expires in November 2022.
The Caa2 rating on the senior secured notes reflects their weaker
position in the capital structure behind the company's $175 million
ABL (unrated). The secured notes benefit from a second priority
lien on all domestic assets, stock of domestic subsidiaries, and
65% of stock of foreign subsidiaries. Because the company does not
currently have domestic first lien funded debt other than the ABL,
the secured notes effectively have a first lien claim on the
domestic assets not pledged to the ABL.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS:
The ratings upgrade is unlikely in the near-term but would be
considered should the company demonstrate a sustainable EBIT margin
of at least 2%, EBIT/interest of 1.5x and leverage, measured as
adjusted debt/EBITDA ratio, of below 5.5x. Moody's would consider
revising the ratings outlook to stable if the company refinances
its upcoming secured debt maturities and aluminum market evidences
an improvement in demand and aluminum prices.
The rating could be downgraded should, on a sustained basis, the
EBIT margin and EBIT/Interest remain negative, liquidity
deteriorate or access to the ABL be reduced due to an imbalance
between the size of the facility and the borrowing base. The
ratings could also be downgraded if uncertainty increases over the
company's ability to refinance its upcoming senior secured bond
maturities.
The principal methodology used in these ratings was Steel Industry
published in September 2017.
Headquartered in Chicago, Illinois, Century is a primary aluminum
producer in North America and Iceland with ownership interests in
four aluminum production facilities. The company also produces
carbon anodes at its Century Vlissingen facility in the
Netherlands. Revenues for the twelve months ended December 31, 2019
were $1.84 billion. Glencore plc and its affiliates own 42.9% of
Century's outstanding common stock.
CLAAR CELLARS: Authorized to Use Cash Collateral to Pay Expenses
----------------------------------------------------------------
Bankruptcy Judge Whitman L. Holt issued a memorandum opinion on his
decision authorizing Debtors Claar Cellars LLC and RC Farms LLC to
use cash collateral.
Claar Cellars LLC and RC Farms LLC are related but nonconsolidated
debtors. Claar and RC are both owned by the Whitelatch family and
are part of a commercial enterprise that operates approximately 130
acres of vineyards, producing wines from the White Bluffs region of
Washington.
Pursuant to a grape purchase agreement executed in 1997 and since
amended several times, Claar is obligated to repay RC for the
grapes Claar receives. This economic arrangement has historically
functioned in a fashion similar to a revolving demand note whereby
a sum due RC is computed when Claar takes delivery of grapes and
that sum is reduced as RC seeks repayment from Claar, which
historically has roughly been on an "as needed" basis to enable RC
to pay its separate expenses.
As of the Jan. 9, 2020 petition dates for both debtors, RC asserts
that it holds a secured claim of approximately $329,000 against
Claar. After the petition dates, RC filed (then amended) a UCC-1
financing statement to protect its asserted security interest. RC
contends this act is permitted under Bankruptcy Code sections
362(b)(3) and 546(b) in order to perfect or otherwise maintain lien
rights arising under Washington state law.
Before their bankruptcy filings, Claar and RC both owed secured
debts to HomeStreet Bank. HomeStreet's prepetition collateral
includes various personal property owned by both debtors as well as
real property owned by RC and by the nondebtor Whitelatch trust.
HomeStreet's collateral includes "cash collateral" held by each
debtor entity.
After the bankruptcy filings, both debtors moved the court to
authorize the nonconsensual use of cash collateral pursuant to
Bankruptcy Code section 363(c)(2)(B). The motions sought authority
for the debtors to spend HomeStreet's cash collateral during the
2020 calendar year based on separate budgets containing monthly
line-item expenditures (with permitted variances and roll-forward
capacity as detailed in the interim and final orders). In general
terms, HomeStreet's cash collateral would be used (i) by RC to
produce a 2020 grape crop and to maintain its real property, (ii)
by Claar to continue to preserve, market, and sell bulk and bottled
wine inventory, and (iii) by both debtors to fund expenses arising
from these bankruptcy cases.
One line item crossing the two budgets represented proposed
payments from Claar to RC on account of "vintage grapes." Per the
revised budgets presented to the court at the final cash collateral
hearing, Claar proposes to make seven monthly payments to RC during
2020, resulting in an aggregate transfer of $163,235 on account of
RC's asserted prepetition secured claim -- which represents just
under 50% of the total claimed amount. Claar proposes to address
the remainder of RC's claim in the plan or claims-allowance
process. RC's budget and testimony at the hearing established that
RC would be unable to operate its business postpetition (i.e.,
unable to complete the 2020 grape crop and maintain its real
estate) if RC did not receive the budgeted postpetition payments.
HomeStreet objected to the proposed use of cash collateral for two
main reasons. HomeStreet first argued that the debtors were not
adequately protecting HomeStreet's petition date interests in the
two debtors' property as required by Bankruptcy Code section
363(e). HomeStreet's second main objection to the use of cash
collateral focuses on Claar's proposed payments totaling $163,235
to RC. HomeStreet argues that these payments would improperly
satisfy a prepetition debt outside the context of a confirmed
bankruptcy plan.
The court has analyzed Claar's proposed periodic postpetition
payments to RC using a heightened standard based on the "insider,"
or at least related, status of the debtors. And, because these
debtors have not been substantively consolidated, the court has
further analyzed the consequences of the proposal solely from the
perspective of the Claar estate as a standalone entity. The court
concludes that the proposed payments are a "use" of Claar cash that
can potentially be approved under Bankruptcy Code section
363(b)(1). Based on the facts and circumstances of this particular
case, that approval is warranted for several reasons.
Among other things, it is clear that RC possesses a secured claim
of some amount against Claar and RC has articulated a colorable
basis under which it may be oversecured. In fact, RC's potential
oversecured status seems likely since the broad language of the
Washington statute providing the lien rights in question gives RC a
lien on Claar's inventory and accounts receivable generally,
regardless whether the inventory or accounts receivable are
traceable to the delivered grapes, and there is no dispute that the
value of Claar's inventory and accounts receivable exceeds the
entire amount of RC's asserted claim. Either way, because RC has at
least some interest in Claar's property, RC is entitled to adequate
protection of that interest under Bankruptcy Code section 363(e).
"Periodic cash payments" are a specifically contemplated form of
adequate protection in the Bankruptcy Code.36 Thus, by making such
payments to RC, Claar complies with one of its legal obligations
and, in the likely event that whatever secured claim RC ultimately
has against Claar is oversecured, this reduces Claar's exposure for
postpetition interest under Bankruptcy Code section 506(b) with
each periodic payment. These effects of the periodic payments on
the Claar estate therefore advance "significant Code-related
objectives."
Claar's payments to RC are essential to RC's continued viability,
which, in turn, permits the court to approve the RC estate pledging
Taylor Flats as additional collateral to adequately protect
HomeStreet. After all, if RC cannot pay its anticipated
postpetition obligations, the court likely would conclude that the
RC case should be converted to chapter 7. And if this is the
inevitable result, the court likely would conclude that an
otherwise unencumbered asset of the RC estate worth as much as $1.7
million should not be used to collateralize HomeStreet's claims
against the Claar estate. Thus, the reciprocal arrangement resolves
problems facing both debtors and benefits all parties by allowing
RC to remain operative, allowing Claar to fulfill its obligations
to HomeStreet, and allowing HomeStreet to receive adequate
protection of its interests (providing such adequate protection is
plainly a "significant Code-related objective").
At day's end, section 363(b)(1) provides some of the most powerful
and flexible authority contained in the Bankruptcy Code. These
debtors have proposed a "use" of Claar's property that benefits
Claar's estate (and HomeStreet), does not contravene any other
section of the Bankruptcy Code, and falls squarely within the
universe of "interim" distributions endorsed in the Supreme Court's
decision in Czyzewski v. Jevic Holding Corporation. Because that
proposed use of property is lawfully permitted and warranted by the
facts and circumstances of these cases, the court grants the
debtors' request as part of approving the debtors' use of cash
collateral at the conclusion of a final hearing.
A copy of the Court's Memorandum Opinion dated March 13, 2020 is
available at https://bit.ly/2R3WtC8 from Leagle.com.
Claar Cellars LLC, Debtor, represented by Roger William Bailey,
Bailey & Busey LLC, Toni Meacham, Toni Meacham, Attorney at Law &
Steven H. Sackmann, Sackmann Law Office.
US Trustee, U.S. Trustee, represented by Gary W. Dyer , U S
Trustee's Office.
Unsecured Creditors Committee, Creditor Committee, represented by
Kevin ORourke , Southwell and O'Rourke.
About Claar Cellars LLC and
RC Farms LLC
Claar Cellars LLC -- https://www.claarcellars.com/ -- is a
family-owned estate winery. It offers a selection of wines,
including Riesling, Cabernet Sauvignon, Merlot, Chardonnay,
Sauvignon Blanc, Syrah, Sangiovese, and newly planted Pinot Gris,
Viognier, Malbec and Petite Sirah.
Claar Cellars and its affiliate, RC Farms LLC, sought protection
under Chapter 11 of the Bankruptcy Code (Bankr. E.D. Wash. Lead
Case No. 20-00044) on Jan. 9, 2020. At the time of the filing,
the
Debtors each had estimated assets of between $10 million and $50
million and liabilities of between $1 million and $10 million.
Judge Whitman L. Holt oversees the cases.
The Debtors are represented by Steven H. Sackmann, Esq., at
Sackmann Law, PLLC; Toni Meacham, Esq., Attorney at Law; and Roger
W. Bailey, Esq., at Bailey & Busey, PLLC.
CLEVELAND-CLIFFS INC: Moody's Rates $400MM Secured Notes 'Ba3'
--------------------------------------------------------------
Moody's Investors Service assigned a Ba3 rating to Cleveland Cliffs
$400 million guaranteed senior secured note issue. All other
ratings remain unchanged including the SGL-2 speculative grade
liquidity rating. The outlook is negative.
Proceeds will be used to enhance liquidity and for general
corporate purposes, including repayment of amounts drawn under the
asset-based revolver to partially fund the acquisition of AK
Steel.
Assignments:
Issuer: Cleveland-Cliffs Inc.
Senior Secured Regular Bond/Debenture, Assigned Ba3 (LGD3)
RATINGS RATIONALE
Cliffs B1 CFR reflects the company's cushion within the B1 rating
category to absorb the increase in debt from the assumption of AK
Steel's obligations. Improved operating performance, liability
management and debt reduction and the strengthened debt protection
metrics are factors contributing to the cushion in the rating. The
acquisition provides Cliffs with a captive source of sales for its
iron ore pellets as AK Steel is one of its largest customers.
Cliffs will also continue to have third party sales. Additionally,
the ability to supply HBI to the electric arc furnace steel
producers (account for roughly 70% of steel produced in the US and
will continue to increase), in replacement of imported pig iron,
upon completion of the HBI plant will contribute to increased
market share.
However, as the acquisition of AK Steel did not close until
mid-March, Cliffs first quarter results will show the normal
seasonality impact from the inability to ship pellets due to
locks/lakes freezing. Consequently, revenues and earnings will be
quite modest and working capital requirements will build on
increased inventory levels. Given the increasing impact of the
coronavirus the automotive industry has curtailed production since
approximately mid-March. and this will negatively impact AK Steel's
performance in the second quarter and subsequently. However, there
will likely be a near-term need for AK Steel and other Cliffs'
customers to replenish depleted iron ore supplies. Moody's expects
light vehicle sales in the US to fall at least 15% in 2020. In
response to weakening in economic conditions and steel demand, AK
Steel's Dearborn Works facility has been idled while Cliffs iron
ore mining at Northshore Mining and Tilden have also been idled to
better balance production against demand levels. Completion of the
HBI plant has also been delayed to conserve liquidity within
Cliffs.
Cliffs' debt protection metrics are expected to contract sharply
over the quarter to June and beyond and leverage to increase
meaningfully. Should the second half of 2020 not evidence some
improving trends this deterioration would be exacerbated. The
company's good liquidity position allows the company to tolerate
the weakened operating performance. However, should automotive
production not resume within the next two months, the ratings could
be negatively impacted.
The negative outlook reflects the challenging environment given the
impact on manufacturing and the US economy of the coronavirus. The
outlook also reflects the weak steel environment as well as the
need to improve AK Steel's EBITDA/ton. The challenging environment
for the steel industry can have repercussions on iron ore suppliers
should demand requirements be reduced. The outlook also
incorporates the operating and integration risks associated with
the acquisition of AK Steel.
The SGL-2 Speculative Grade Liquidity rating reflects the company's
good liquidity position as evidenced by Cliffs cash position of
roughly $353 million at December 31, 2019 although given the
expected cash burn in the first quarter of 2020 on seasonal
effects, cash at March 31, 2020 is expected to be lower. Liquidity
is also supported by a $2 billion asset based revolving credit
facility, which expires the earlier of March 13, 2025 or 91 days
before the maturing of existing debt greater than $100 million. The
facility contains a 1:1 fixed charge coverage requirement should
availability be less than the greater of 12.5% of the Line Cap
(lesser of the maximum amount of the ABL and the borrowing base)
and $100 million. Moody's estimates that approximately $700 million
was drawn as partial financing for the acquisition of AK Steel.
Proceeds from the note issue are expected to be applied to reduce
this borrowing, thereby enhancing availability under the facility.
The Ba3 rating on the guaranteed senior secured notes reflects
their superior position in the capital structure and the
significant level of unsecured debt beneath. The senior guaranteed
unsecured (B2) notes have a slightly more favorable position
relative to the senior unsecured notes whose B3 rating reflects
their junior position in the capital structure.
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 steel and
mining sectors have been significantly affected by the shock given
the sensitivity to end market demand in sectors such as automotive,
oil & gas, industrial and general manufacturing among others.
Moody's regards the coronavirus outbreak as a social risk under its
ESG framework, given the substantial implications for public health
and safety.
The mining industry faces numerous environmental risks across the
totality of a company's operations. Companies in the US are subject
to numerous regulations, which are likely to become increasingly
complex and stringent. Changes in regulations can increase costs,
extend project timelines, and add uncertainty to the level of
reserves that can be economically mined. All operations, including
changes to existing operations require numerous permits and
licenses. The risks flow through the entire process from extracting
the ore, processing the ore into metal, transporting the mineral or
metal and the end use (e.g. -- iron ore for the production of
steel).
The steel industry also faces numerous environmental risks, the
most critical being carbon transition risk. AK Steel and companies
who produce steel using the blast furnace process (use primarily
coal and iron ore to produce steel) have higher greenhouse gas
emissions and face greater challenges than producers who use the
electric arc furnace production method, which has a greater
percentage of scrap (recycled steel) in the raw material mix. AK
Steel's third generation Advanced High- Strength Steel product
development provides ability to mitigate against this market
erosion and contribute to a reduction in greenhouse has emissions.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
An upgrade to the CFR would require the combined company to
demonstrate the ability to sustain leverage, as measured by the
debt/EBITDA ratio of no more than 3.5x through various price
points, (CFO-dividends)/Debt of at least 25% and maintain good
liquidity.
The CFR could be downgraded should leverage remain elevated at or
above 4x, (CFO-dividends)/debt be less than 15% and liquidity
tighten. The rating could also be downgraded should automotive
production not resume within the next two months. Cliffs metrics
are expected to be below the downgrade triggers in the near-term.
Headquartered in Cleveland, Ohio, Cleveland-Cliffs is the largest
iron ore producer in North America with approximately 21.2 million
equity tons of annual capacity and with the acquisition of AK Steel
a mid-tier integrated steel producer. For the twelve months ended
December 31, 2019 Cliffs had revenues of $2 billion. Proforma for
the acquisition, revenues would have been $8.4 billion.
The principal methodology used in this rating was Steel Industry
published in September 2017.
COASTAL LIVING: Voluntary Chapter 11 Case Summary
-------------------------------------------------
Debtor: Coastal Living Villas, Inc.
21432 Prestancia Dr.
Mokena, IL 60448
Case No.: 20-03089
Business Description: Coastal Living Villas, Inc. is a Single
Asset Real Estate (as defined in 11 U.S.C.
Section 101(51B)). The Company previously
sought bankruptcy protection on Dec. 17,
2019 (Bankr. M.D. Fla. Case No. 19-11854).
Chapter 11 Petition Date: April 15, 2020
Court: United States Bankruptcy Court
Middle District of Florida
Debtor's Counsel: Paul DeCailly, Esq.
PAUL DECAILLY
PO Box 490
Indian Rocks Beach, FL 33785
Tel: (727) 824-7709
E-mail: pdecailly@dlg4me.com
Debtor's
Real Estate
Broker: TAM-BAY REALTY, LLC
Total Assets: $3,328,388
Total Liabilities: $5,626,723
The petition was signed by Jack Fugett, president.
The Debtor filed an empty list of its 20 largest unsecured
creditors.
A copy of the petition is available for free at PacerMonitor.com
at:
https://is.gd/TvfbO2
CONSOL ENERGY: Moody's Cuts CFR to B2, Outlook Negative
-------------------------------------------------------
Moody's Investors Service downgraded long-term ratings for CONSOL
Energy Inc. including the Corporate Family Rating to B2 from B1,
based on expectations for deterioration in earnings and cash flow
generation in 2020. The rating outlook is negative.
"CONSOL Energy is moving aggressively to respond to a very
challenging environment and preserve liquidity, but Moody's expects
financial performance will weaken and covenant compliance could be
a challenge in the coming quarters," said Ben Nelson, Moody's Vice
President -- Senior Credit Officer and lead analyst for CONSOL
Energy, Inc.
Downgrades:
Issuer: CONSOL Energy Inc.
Corporate Family Rating, Downgraded to B2 from B1
Probability of Default Rating, Downgraded to B2-PD from B1-PD
Gtd Senior Secured 1st Lien Revolver, Downgraded to B1 (LGD3) from
Ba3 (LGD3)
Gtd Senior Secured 1st Lien Term Loan A , Downgraded to B1 (LGD3)
from Ba3 (LGD3)
Gtd Senior Secured 1st Lien Term Loan B , Downgraded to B1 (LGD3)
from Ba3 (LGD3)
Senior Secured Regular Bond/Debenture, Downgraded to Caa1 (LGD5)
from B2 (LGD5)
Outlook Actions:
Issuer: CONSOL Energy Inc.
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 coal sector
has been one of the sectors most significantly affected by the
shock given its sensitivity to industrial demand and sentiment.
Moody's regards the coronavirus outbreak as a social risk under its
ESG framework, given the substantial implications for public health
and safety. Its action reflects the impact on CONSOL's exposure to
the breadth and severity of the shock.
Moody's expects a very challenging year for the thermal coal
industry in 2020. Domestic demand for thermal coal has been
challenged in recent months by a mild winter season and
historically low natural gas prices, which reduced volumes with the
company's traditional customers and intensified competition in the
region. The export market for thermal coal weakened significantly
in 2019 and remains weak in 2020, which, combined with weaker
volumes from domestic customers, has further intensified
competition in Northern Appalachia and depressed pricing by
redirecting coal back into the domestic market. Overlaid with these
concerns is the global Coronavirus outbreak and expectation for an
unprecedented shock to the global economy in the second quarter of
2020. Moody's expects a sharp decline in the demand for electricity
in the United States and, therefore, the demand for thermal coal in
CONSOL's region. The severity of the decline and pace of the
eventual recovery remain highly dependent on an unresolved public
health situation, and the specific measures taken to address it.
Coal production has received a critical infrastructure designation
by the U.S. Department of Homeland Security, but the ability to
operate mining operations depends on local circumstances, including
demand for coal and health and safety conditions of individual
mining operations.
CONSOL has responded aggressively in recent weeks, including: (i)
taking health and safety-related actions that resulted in temporary
suspension of production at certain operations; (ii) shoring up
liquidity by extending a securitization arrangement, executing a
sale-leaseback on mining equipment, and securing a commitment for
further sale-leasebacks; (iii) reducing debt through open-market
repurchases; and (iv) withdrawing guidance due to rising
uncertainty. With three mining operations within one mining complex
in Pennsylvania, CONSOL's limited operational diversity heightens
its focus on the company's response and plans. CONSOL idled the
Bailey mine due to the discovery of Coronavirus at this operation,
restarted the operation after taking necessary health and safety
measures, and subsequently idled the higher-cost Enlow Fork mine
due to weak market conditions.
Before the global outbreak of coronavirus, Moody's expected that
CONSOL's management-adjusted EBITDA would fall to about $275-325
million in 2020 -- a significant decline from $406 million in 2019.
Moody's expects that EBITDA will fall short of these estimates
based on significant deterioration in anticipated demand for
electricity resulting from the measures implemented to control the
Coronavirus and expected impact on the economy. Based on
expectations for cash interest in the range of $60 million and
lower capital spending than management's previous guidance for
$125-$145 million, Moody's expects that the company will need to
take additional actions to avoid cash burn in 2020. Moody's expects
that adjusted financial leverage will move above 3.0x, including an
adjustment for the 25% ownership interest in the PAMC by CONSOL
Coal Resources and its standard analytical adjustments.
Moody's also believes that investor concerns about the coal
industry's ESG profile are intensifying and coal producers will be
increasingly challenged by access to capital issues in the early
2020s. An increasing portion of the global investment community is
reducing or eliminating exposure to the coal industry with greater
emphasis on moving away from thermal coal. The aggregate impact on
the credit quality of the coal industry is that debt capital will
become more expensive over this horizon, particularly in the public
bond markets, and other business requirements, such as surety
bonds, which together will lead to much more focus on individual
coal producers' ability to fund their operations and articulate
clearly their approach to addressing environmental, social, and
governance considerations -- including reducing net debt in the
near-to-medium term. CONSOL reported about $725 million of debt and
$527 million of surety bonds to support reclamation-related items
at December 31, 2019.
CONSOL's B2 CFR is supported by a solid contract position and
aggressive efforts to preserve liquidity. Management estimates that
95% of expected production volume is contracted for 2020 and 43%
for 2021 - assuming the midpoint now-withdrawn volume guidance
(25.5 million tons). CONSOL's business position is also enhanced by
its low-cost longwall mines, relatively stable customer base, and
good access to export markets for both thermal and metallurgical
coals. Despite the company's good business position, CONSOL is
fairly concentrated compared to other coal companies with reliance
on a single mining complex with three active coal mines for the
majority of its earnings and cash flow. CONSOL also has meaningful
legacy liabilities consistent with many rated coal companies,
though it has reduced this position significantly following the
sale of certain assets and managing cash servicing costs.
FACTORS THAT WOULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The negative outlook reflects expectations for potential cash burn
and potential covenant violations in 2020. The outlook could be
stabilized with expectations for a better cushion of compliance
under financial maintenance covenants, due to an amendment or
improved market conditions, and clear ability to generate free cash
flow. Moody's could upgrade the rating with better visibility into
the demand for thermal coal, expectations for at least $50 million
of free cash flow sustained on an annual basis, and adjusted
financial leverage sustained below 3.0x, and good liquidity to
support operations. Moody's could downgrade the rating with
expectations for adjusted financial leverage above 4.0x, material
cash burn extending beyond the third quarter of 2020, substantive
deterioration in liquidity, or further intensification of ESG
concerns that call into question the company's ability to handle
upcoming financing requirements.
The SGL-3 reflects adequate liquidity to support operations over
the next 12-18 months. The company had $80 million of cash on the
balance sheet and $330 million of availability under a $400 million
revolving credit facility due 2023 at December 31, 2019. The
company retired about $50 million of debt in the first quarter of
2020 with no material change to liquidity. Availability under the
revolving credit facility is reduced by $70 million of letters of
credit to support various obligations. The credit agreement also
contains financial maintenance covenants, including Net
Debt/EBITDA, Gross First Lien Debt/EBITDA, and Fixed Charge
Coverage ratio tests. Moody's expects that the cushion of
compliance under these covenants will narrow considerably in the
second quarter of 2020. The SGL analysis does not take into
consideration potential covenant-related waivers or amendments and
could be lowered to SGL-4 if a potential breach is not addressed
proactively.
Environmental, social, and governance factors have a material
impact on CONSOL's credit quality. The company is exposed to ESG
issues typical for a company in the coal mining industry, including
increasing global demand for renewable energy that is detrimental
to demand for coal, especially in the United States and Western
Europe. From an environmental perspective the coal mining sector is
also viewed as: (i) very high risk for air pollution and carbon
regulations; (ii) high risk for soil and water pollution, land use
restrictions, and natural and man-made hazards; and (iii) moderate
risk for water shortages. Social issues include factors such as
community relations, operational track record, and health and
safety issues associated with coal mining, such as black lung
disease. CONSOL is highly exposed to thermal coal. Moody's believes
that thermal coal carries greater ESG-related risks than
metallurgical coal. Specific risks for CONSOL Energy include
meaningful exposure to thermal coal and potential negative
political actions in areas served by the company. CONSOL's actions
and commentary since becoming an independent company have been more
oriented toward debt reduction that many other coal companies,
including a reduction in balance sheet debt by nearly 30% since
late 2017.
The principal methodology used in these ratings was Mining
published in September 2018.
CONSOL Energy Corporation is a leading global pure-play coal
producer operating the Pennsylvania Mining Complex ("PAMC") located
in the Northern Appalachia coal basin. The company generated $1.4
billion in revenues in 2019.
COSTELLO INDUSTRIES: Plan Confirmed; Unsecureds Get 34%
-------------------------------------------------------
Judge Gregory L. Taddonio has entered an order finally approving
the Disclosure Statement and confirming the Chapter 11 Small
Business Plan of Reorganization filed by debtor Costello
Industries, Inc.
The Debtor has filed a Chapter 11 plan of reorganization. The
Debtor expects to continue operations as a publishing/printing
business with a single location in Tarentum, PA.
The Plan proposes to treat claims as follows:
* Class 2 Mintaka Financial, LLC and Canon Financial Services,
Inc. Class 2 secured claims will be considered fully satisfied via
surrender of collateral. Class 2 will retain its liens on all
collateral. Class 2 is not impaired by the Plan.
* Class 3 Priority Unsecured Creditors. Class 3 priority
unsecured claims will be paid in full at interest over 60 months.
Class 3 is not impaired by the Plan.
* Class 4 First National Bank of Pennsylvania. Class 4 claim of
First National Bank of Pennsylvania will be controlled by
Stipulation and Agreed Order Regarding Consent Motion for Approval
of Amendment to Note approved by the Court on Jan. 30, 2020. Class
4 is notimpaired by the Plan.
* Class 5 General Unsecured Creditors. The General Unsecured
Creditors of the Debtor will receive approximately 34% of their
Allowed Claims pursuant to the Plan. Class 5 is impaired by the
Plan.
* Class 6 Equity Security Holders. The equity security holders
will not change as result of the Plan and Thomas and Francine
Costellowill continue to own 100% of the Debtor. Class 6 is not
impaired by the Plan.
A copy of the Disclosure Statement dated Feb. 13, 2020, is
available at https://tinyurl.com/y7wowb9a
A full-text copy of the Plan Confirmation Order dated April 2,
2020, is available at https://tinyurl.com/qqbelvt from PacerMonitor
at no charge.
About Costello Industries
Costello Industries, Inc., filed a Chapter 11 bankruptcy petition
(Bankr. W.D. Pa. Case No. 19-23365) on Aug. 26, 2019, disclosing
under $1 million in both assets and liabilities. The Debtor is
represented by Christopher M. Frye, Esq., at Steidl and Steinberg,
P.C.
CPI CARD: S&P Affirms CCC+ Issuer Credit Rating; Outlook Negative
-----------------------------------------------------------------
S&P Global Ratings affirmed its 'CCC+' issuer credit rating on CPI
Card Group Inc. and its 'CCC+' issue-level rating on its $435
million term loan facility ($312.5 million outstanding as of Dec.
31, 2019). S&P's '4' recovery rating on the facility remains
unchanged.
At the same time, S&P is assigning its 'B' issue-level rating and
'1' recovery rating to the company's new $30 million senior credit
facility.
"The affirmation reflects our view that CPI's capital structure
remains unsustainable given its high debt leverage, limited cash
flow generation, and the need to substantially improve its
operating performance to repay its 2022 debt maturities. We
forecast that the company's adjusted leverage will remain elevated
at more than 8.0x in 2020. We also forecast that the company will
generate negative free operating cash flow (FOCF) this year and use
cash on its balance sheet to fund the shortfall," S&P said.
The negative outlook reflects S&P's view that a prolonged economic
downturn could cause CPI's adjusted leverage to remain elevated and
lead it to continue generating negative free cash flow over the
next 12 months, which would increase its refinancing risk.
"We could lower our ratings on CPI if its operating performance
deteriorates and we believe a default or debt restructuring is
inevitable. We could also lower our ratings if the company's cash
generation declines such that there is material risk of non-payment
of its debt service obligations, including interest and
amortization payments," S&P said.
A positive rating action would be predicated on a substantial
improvement in CPI's operating performance, market share gains, and
increased demand through new product innovation such that the
company generates at least $10 million of reported free operating
cash flow and is able to refinance its capital structure at par,"
the rating agency said.
CRESCENT ASSOCIATES: Second Amended Plan Confirmed by Judge
-----------------------------------------------------------
Judge Julia Brand has entered findings of fact, conclusions of law
and order confirming the Chapter 11 Plan of Reorganization of
debtor Crescent Associates, LLC.
The Debtor has satisfied each and every requirement of 11 U.S.C.
Sections 1129(a) and 1129(b) necessary for this Court to confirm
the Plan. The Plan complies with the provisions of Section
1123(b)(1) of the Bankruptcy Code in that the Plan either impairs
or leaves any class of claims, whether secured or unsecured, or of
interests, unimpaired under the Plan.
The Debtor and Reorganized Debtor shall be, and are hereby,
authorized and empowered to execute any and all documents and take
such other actions as may be necessary to implement the provisions
of the Plan.
A full-text copy of the order dated March 31, 2020, is available at
https://tinyurl.com/t8bld48 from PacerMonitor at no charge.
General Counsel for the Debtor:
ROBERT M. YASPAN
JOSEPH G. McCARTY
DEBRA R. BRAND
LAW OFFICES OF ROBERT M. YASPAN
21700 Oxnard Street, Suite 1750
Woodland Hills, California 91367
Telephone: (818) 905-7711
Facsimile: (818) 501-7711
About Crescent Associates
Crescent Associates, LLC, based in Los Angeles, California, filed a
petition seeking relief under Chapter 11 of the Bankruptcy Code
(Bankr. C.D. Cal. Case No. 18-20654) on Sept. 12, 2018. The Hon.
Julia W. Brand oversees the case. In the petition signed by Edward
Friedman, managing member, the Debtor disclosed $4,350,100 in
assets and $5,214,026 in liabilities. Robert M. Yaspan, Esq., at
the Law Offices of Robert M. Yaspan, serves as bankruptcy counsel
to the Debtor. Turner Friedman Morris & Cohan, LLP, is special
counsel.
CYCLO THERAPEUTICS: WithumSmith+Brown Raises Going Concern Doubt
----------------------------------------------------------------
Cyclo Therapeutics, Inc., filed with the U.S. Securities and
Exchange Commission its annual report on Form 10-K, disclosing a
net loss of $7,532,533 on $1,007,198 of revenues for the year ended
Dec. 31, 2019, compared to a net loss of $4,255,033 on $1,011,477
of revenues for the year ended in 2018.
The audit report of WithumSmith+Brown, PC states that the Company
has suffered recurring losses from operations and has a significant
accumulated deficit. In addition, the Company continues to
experience negative cash flows from operations. These factors raise
substantial doubt about the Company’s ability to continue as a
going concern.
The Company's balance sheet at Dec. 31, 2019, showed total assets
of $4,113,228, total liabilities of $3,177,246, and a total
stockholders' equity of $935,982.
A copy of the Form 10-K is available at:
https://is.gd/sPezUm
Cyclo Therapeutics, Inc., a biotechnology company, develops
cyclodextrin-based products for the treatment of diseases. Its
lead drug candidate is Trappsol Cyclo, an orphan drug for the
treatment of Niemann-Pick Type C disease. The company also sells
cyclodextrins and related products to the pharmaceutical,
nutritional, and other industries, primarily for use in diagnostics
and specialty drugs. It has a collaboration with the Chattanooga
Center for Neurologic Research. The company was formerly known as
CTD Holdings, Inc. and changed its name to Cyclo Therapeutics, Inc.
in October 2019. Cyclo Therapeutics, Inc., was founded in 1990 and
is based in Gainesville, Florida.
DGI TRADING USA: U.S. Trustee Unable to Appoint Committee
---------------------------------------------------------
The Office of the U.S. Trustee on April 13, 2020, disclosed in a
court filing that no official committee of unsecured creditors has
been appointed in the Chapter 11 case of DGI Trading USA, Inc.
About DGI Trading USA Inc.
DGI Trading USA, Inc. -- http://www.dgitradingusa.com/-- is a
supplier of wholesale construction & mining equipment & parts, with
its principal place of business at 326 Main Street in Carrolton,
Kentucky.
DGI Trading USA sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. W.D. Tex. Case No. 20-50418) on February
26, 2020. The petition was signed by Ryan Spann, its president.
DGI Trading disclosed total assets of $5,036,815 as of Feb. 24,
2020, and estimated liabilities of $1 million to $10 million.
The Hon. Ronald B. King is the case judge.
The Debtor hired Raymond W. Battaglia, Esq., at The Law Offices of
Ray Battaglia, PLLC, as its legal counsel.
DHANANI GROUP: S&P Alters Outlook to Negative, Affirms 'B' ICR
--------------------------------------------------------------
S&P Global Ratings revised its outlook on Houston-based restaurant
operator Dhanani Group Inc. (Dhanani) to negative from stable and
affirmed all of its ratings on the company, including its 'B'
issuer credit rating.
S&P believes the current conditions will materially weaken Dhanani
Group Inc.'s operating performance.
"We expect the company to experience a sharp decline in its traffic
over at least the next several weeks, though we believe that
quick-service restaurant (QSR) operators are somewhat less exposed
to the effects of the pandemic because take-out offerings account
for a higher percentage of their sales. We expect Dhanani to report
same-store sales declines in the mid-20% to mid-30% range for its
Burger King operations due to social distancing mandates, with a
more moderate decline at its Popeyes operations because of the
brand's strong momentum entering the crisis. We believe the
company's consolidated same-store sales will likely decline by the
low-double-digit percent area in fiscal year 2020, which would
reduce its EBITDA margin and increase its leverage. We believe the
company's performance will recover gradually in 2021 and return to
2019 levels," S&P said.
The negative outlook reflects the heightened uncertainty regarding
the duration of the coronavirus pandemic and its effect on
Dhanani's revenue, profitability and liquidity.
"We could lower our rating on Dhanani if its operating performance
is materially weaker than we expected such that we believe it will
sustain leverage above the mid-6x area through 2021. We could also
lower the rating if a prolonged pandemic leads it to generate
persistently negative cash flow, increasing the likelihood for a
liquidity shortfall or covenant violation," S&P said.
"We could revise our outlook on Dhanani to stable if it
demonstrates consistent traction toward improving its sales as its
customer traffic normalizes and it sustains leverage of less than
6.5x. This could occur if the effects of the coronavirus outbreak
begin to moderate and the company is able to manage its costs in
the interim to limit the deterioration in its profitability," the
rating agency said.
DIGITAL ROOM: S&P Places 'B-' ICR on CreditWatch Negative
---------------------------------------------------------
S&P Global Ratings placed its ratings on Digital Room Holdings Inc.
(DRI), including its 'B-' issuer credit rating, on CreditWatch with
negative implications.
The CreditWatch placement reflects DRI's vulnerability to declining
demand for customized print, soft promotional, and packaging
products by small and midsize businesses due to containment efforts
and social distancing measures in the U.S. to limit the spread of
COVID-19. The CreditWatch placement also reflects overall economic
challenges and the uncertainty related to COVID-19's impact on
economic activity and the subsequent recovery. As of April 10,
2020, S&P expects the biggest economic impact will come in the
first half of 2020. S&P expects U.S. GDP will decline more than 12%
in the second quarter and contract 1.3% for the year.
To resolve the CreditWatch placement, S&P will evaluate new
information regarding the spread of COVID-19 and its impact on
DRI's operating performance, cash flow, leverage, and margin of
covenant compliance. S&P expects to update its CreditWatch
placement over the next 90 days.
"We could lower the issuer credit rating if we expect DRI's
liquidity will deplete due to the company generating negative FOCF
over the next few quarters. This could result from the company's
inability to cut costs enough to offset declining order volumes. We
could also lower the rating if we believe DRI would be unable to
attain a covenant amendment if needed, perhaps due to
underperformance by the company, or lenders' unwillingness to amend
covenants for borrowers facing temporary distress," S&P said.
"We could affirm the 'B-' ratings once we have more certainty
regarding COVID-19's impact on DRI's operating performance. We
would have to be convinced that revenues will rebound by the end of
2020, DRI's efforts to reduce costs will limit sustained declines
in operating cash flows, and its FOCF to debt would return to the
low- to mid-single-digit area," the rating agency said.
EARTH FARE: A&G Real Estate Completes Sales of 10 Store Leases
--------------------------------------------------------------
A&G Real Estate Partners (A&G) on April 13, 2020, disclosed that it
has completed sales of 10 store leases and negotiated lease
termination agreements on nine other locations from the bankrupt
Earth Fare natural and organic specialty grocery chain. All told,
the court-approved transactions contributed more than $6 million to
the estate of Earth Fare, which filed for Chapter 11 bankruptcy
reorganization on Feb. 4 in the U.S. Bankruptcy Court in
Wilmington, Del.
With the final leasehold sale to winning bidders closing on April
10, A&G brokered the sale of leases for four Florida locations to
Southeastern Grocers' Winn-Dixie chain (Boynton Beach,
Jacksonville, Lakewood Ranch and Viera); three locations (Athens,
Ga., Asheville, N.C., and Roanoke, Va.) to an investor group that
includes one of Earth Fare's founders and several of the chain's
former executives; two locations to Whole Foods Markets (South
Asheville, N.C., and Chattanooga, Tenn.); and one to Aldi
(Tallahassee, Fla.). The investor group also acquired Earth Fare's
trade name and other intellectual property.
The leases sold were for sites averaging 26,000 square feet and
ranging in size from 21,000 square feet to 38,000 square feet.
Lease termination agreements were facilitated by A&G with landlords
for sites in Gainesville, Ocala and Palm Beach Gardens, Fla;
Columbia and Rock Hill, S.C; Charlotte, N.C.; Williamsburg, Va.;
Carmel, Ind.; and Portage, Mich.
The Melville, N.Y.-based A&G worked under the direction of Earth
Fare's Chief Restructuring Officer Chuck Goad of FTI Consulting
after being retained just days before the bankruptcy filing in
early February. Bids for the leases were due on March 16, which
resulted in a successful sale hearing before the court on March 24.
With the exception of the two sites acquired by Whole Foods that
closed last week, all of the lease sales were completed before the
end of March.
"We completed this process in less than 60 days amid one of the
biggest public health and economic crises in U.S. history," noted
A&G Senior Managing Director Joseph McKeska, a 28-year veteran of
the retail grocery sector. "Leases for the remaining 38 locations
we were handling were rejected and returned to the landlords in
late-March, freeing the estate from having to pay April rents on
those sites. Considering all of the obstacles faced during this
unusually difficult period, we were pleased with the results of
this fast-track sale."
"In an extraordinarily challenging environment for retail real
estate, the results of this process were far better than we
expected," said Mr. Goad. "Joe McKeska and the A&G team were great
to work with. They were very responsive and made the entire
process smooth, from reaching out to interested parties, responding
to diligence requests, handling negotiations, keeping parties
informed and getting deals closed."
About A&G Real Estate Partners
A&G -- http://www.agrep.com/-- is a team of seasoned commercial
real estate professionals and subject matter experts that delivers
strategies designed to yield the highest possible value for
clients' real estate. Key areas of expertise include real estate
strategy, lease restructurings, dispositions, due diligence,
valuations, and facilitation of growth opportunities. Utilizing
its marketing knowledge, reputation and advanced technology, A&G
has advised prominent corporations and non-profits in both healthy
and distressed situations. Founded in 2012, A&G is headquartered
in Melville, N.Y., with offices throughout the country.
About Earth Fare
Founded in 1975 in Asheville, N.C., Earth Fare, Inc. --
http://www.earthfare.com/-- is a natural and organic food retailer
with locations across 10 states. It offers groceries and wellness
and beauty products.
Earth Fare and its affiliate, EF Investment Holdings, Inc., sought
protection under Chapter 11 of the Bankruptcy Code (Bankr. D. Del.
Lead Case No. 20-10256) on Feb. 4, 2020. At the time of the
filing, the Debtors each disclosed assets of between $100 million
and $500 million and liabilities of the same range.
Judge Karen B. Owens oversees the cases.
The Debtors tapped Young Conaway Stargatt & Taylor, LLP as legal
counsel; FTI Consulting, Inc. as financial and restructuring
advisor; and Epiq Corporate Restructuring, LLC as claims,
solicitation and balloting agent. Malfitano Advisors, LLC provides
disposition advisory services to the Debtors.
The U.S. Trustee for Region 3 appointed five creditors to serve on
the official committee of unsecured creditors in the Chapter 11
cases of Earth Fare, Inc. and EF Investment Holdings, Inc. The
Committee retained Pachulski Stang Ziehl & Jones LLP, as counsel,
and Alvarez & Marsal North America, LLC, as financial advisor.
ECO-STIM ENERGY: Case Summary & 30 Largest Unsecured Creditors
--------------------------------------------------------------
Two affiliates that concurrently filed voluntary petitions for
relief under Chapter 11 of the Bankruptcy Code:
Debtor Case No.
------ --------
Eco-Stim Energy Solutions, Inc. 20-32167
FDBA Vision Global, Inc.
FDBA EcoStim International, Inc.
FDBA FracRock International, Inc.
1773 Westborough Dr.
Suite 110
Katy, TX 77449
EcoStim, Inc. 20-32169
FDBA FracRock, Inc.
1773 Westborough Dr.
Suite 110
Katy, TX 77449
Business Description: Eco-Stim Energy Solutions, Inc. is an
oilfield service and technology company
offering pressure pumping and well
completion services and field management
technologies to oil and gas producers
drilling in the U.S. and international
unconventional shale markets. In addition
to conventional pumping equipment, EcoStim
offers its clients completion techniques
that can dramatically reduce horsepower
requirements, emissions and surface
footprint.
Chapter 11 Petition Date: April 16, 2020
Court: United States Bankruptcy Court
Southern District of Texas
Judge: Hon. David R. Jones
Debtors' Counsel: Brian A. Kilmer, Esq.
KILMER CROSBY & QUADROS PLLC
712 Main St.
Ste. 1100
Houston, TX 77002
Tel: 713-300-9662
Email: bkilmer@kcq-lawfirm.com
Eco-Stim Energy's
Estimated Assets: $1 million to $10 million
Eco-Stim Energy's
Estimated Liabilities: $10 million to $50 million
EcoStim, Inc.'s
Estimated Assets: $1 million to $10 million
EcoStim, Inc.'s
Estimated Liabilities: $1 million to $10 million
The petitions were signed by Alexander Nickolatos, CEO.
A copy of Eco-Stim Energy's petition containing, among other items,
a list of the Debtor's 30 largest unsecured creditors is available
for free at PacerMonitor.com at:
https://is.gd/mgr9Lt
A copy of EcoStim, Inc.'s petition containing, among other items, a
list of the Debtor's 30 largest unsecured creditors is available
for free at PacerMonitor.com at:
https://is.gd/zYoqcx
EVERI PAYMENTS: S&P Rates New $125MM Term Loan 'B+'
---------------------------------------------------
S&P Global Ratings assigned its 'B+' issue-level and '2' recovery
ratings to U.S.-based gaming and payments equipment and software
provider Everi Payments Inc.'s proposed $125 million term loan due
in May 2024. The '2' recovery rating indicates S&P's expectation
for substantial recovery (70%-90%; rounded estimate: 80%) for
lenders in the event of a payment default.
Everi plans to use the proceeds for general corporate purposes,
specifically to bolster its liquidity position. The company will
add approximately $118 million cash to the balance sheet after
paying fees and expenses associated with the transaction. Everi
faces an extraordinarily challenging operating environment stemming
from the temporary closures of casinos across the U.S. amid the
COVID-19 pandemic, weakening credit measures and raising liquidity
pressure.
Pro forma for the proposed term loan issuance, S&P estimates Everi
had about $180 million cash available--net of cash for settlement
receivables and liabilities, $10 million in installment payments
for the Atrient acquisition, the January 2020 redemption of $84.5
million in aggregate principal of its unsecured notes, and the full
draw of its $35 million revolving credit facility.
"We believe the company's liquidity sources, including the proposed
debt issuance, provide sufficient liquidity runway in tandem with
other cost-cutting measures such as recent cash payroll reductions
to cover its daily cash burn. This includes fixed operating costs
and debt service until casinos reopen and operations improve. We
assume casinos will remain closed through the second quarter and
slowly ramp up operations beginning in the third quarter," S&P
said.
"We placed our ratings on Everi on CreditWatch on March 20, 2020,
with negative implications. In the event Everi completes the debt
financing as planned, we expect to resolve the CreditWatch and
affirm the issuer credit rating with a negative outlook. If the
company obtains commitments for this new term loan, existing
secured lenders' recovery prospects will be impaired by the
incremental secured debt. As a result, we expect to revise the
recovery rating to '2' from '1' and lower the issue-level rating on
Everi's secured debt one notch to 'B+' from 'BB-'," the rating
agency said.
ISSUE RATINGS – RECOVERY ANALYSIS
Key analytical factors
-- S&P's simulated default scenario contemplates a default in
2023, reflecting a significant decline in cash flow as a result of
prolonged economic weakness that reduces consumer spending on
gaming, an extended gaming replacement cycle, and meaningful
spending on new equipment.
-- S&P assumes Everi's revolver is 85% drawn at default.
Simplified waterfall
-- Emergence EBITDA: $146 million
-- EBITDA multiple: 5.5x
-- Gross recovery value: $802 million
-- Net recovery value after administrative expenses (5%): $762
million
-- Obligor/nonobligor valuation split: 100%/0%
-- Estimated secured claims at default: $913 million
-- Value available for secured claims: $762 million
-- Recovery range: 90%-100% (rounded estimate: 80%)
-- Estimated unsecured debt and pari passu secured deficiency
claims: $462 million
-- Value available for unsecured claims: $0
-- Recovery range: 0%-10% (rounded estimate: 0%)
All debt amounts include six months of prepetition interest.
EYEMART EXPRESS: S&P Lowers ICR to 'B-' on Store Closures
---------------------------------------------------------
S&P Global Ratings lowered its ratings on optical retailer Eyemart
Express Holdings LLC, including the issuer-credit rating to 'B-'.
"The downgrade reflects our expectation that credit metrics will
deteriorate in 2020. Eyemart has temporarily closed its stores in
response to the coronavirus pandemic. As a result, we lowered our
forecast for the company based on our performance expectations,
which includes a double-digit decline in revenue. We expect
leverage will exceed our mid-6x downgrade threshold before
returning to appropriate levels in 2022. We currently expect the
brunt of store closures and social distancing during the second
quarter of 2020 with a rebound in the second half of the year given
the nondiscretionary nature of the company's eye care services and
products," S&P said.
The negative outlook reflects the risk of further performance
deterioration and potential for the company to exceed the maximum
leverage covenant under the revolver if store closures extend
beyond S&P's current expectation.
"We could lower our rating on Eyemart if we believe the company's
capital structure is unsustainable due to weaker-than-expected
revenue and cash flow or if we believe it will be difficult for the
company to extend the maturity on its revolver. We could also lower
the rating if we think the company is at risk of breaching its
financial covenants without receiving a waiver or amendment from
its lenders under adequate terms," S&P said.
"We could revise the outlook to stable if we gain confidence that
the company is able maintain sufficient headroom under its
financial covenants and address the revolver maturity.
Additionally, we would need to see a path to sustainable sales and
profit growth," the rating agency said.
FIRST AMERICAN PAYMENT: S&P Cuts ICR to 'B-'; Outlook Negative
--------------------------------------------------------------
S&P Global Ratings lowered its issuer credit rating on First
American Payment Systems L.P. to 'B-' from 'B'. The outlook is
negative.
"We are also lowering our issue-level rating on the company's
secured term loan and revolving credit facility to 'B-' from 'B';
the recovery rating remains '3'," S&P said.
"The downgrade reflects our view that a sharp reduction in consumer
discretionary spending from state lockdowns and quarantine status
in response to COVID-19 pandemic will lead to severe revenue and
EBITDA declines and leverage well exceeding current level over the
coming year. We estimate that company's leverage amounted to about
5.2x as of Dec. 31, 2019. Based on our assumption of a slow
recovery of market dynamic toward the second half of the year, we
also estimate that the company's free cash flow will turn negative
over the coming quarters increasing its reliance on revolver usage.
The company's liquidity position includes roughly $40 million of
capacity under its revolving credit facility due 2025, and minimal
cash on hand as of Sept. 30, 2019. The credit facilities require a
maintenance financial covenant of 6.75x that remains static and we
estimate there is adequate cushion over next few quarters that will
allow a draw," S&P said.
The negative outlook reflects S&P's view that uncertain market
conditions could lead to persistent negative free cash flows and
deteriorating liquidity position such that the rating agency would
view the company's capital structure unsustainable in the coming
year.
"We could lower the rating over the next year if the current market
environment worsens beyond our expectations such that liquidity is
not sufficient over the next 12 months. This would likely be the
result of a prolonged macroeconomic downturn that lasts into the
second half of 2020 or beyond. At that point, we would question the
sustainability of the capital structure," S&P said.
"We could revise the outlook to stable if free cash flow improved
significantly into positive territory or if the economy improved
significantly," the rating agency said.
FRANK DISPENZA: U.S. Trustee Appoints Creditors' Committee
----------------------------------------------------------
The U.S. Trustee for Region 2 on April 14, 2020, appointed a
committee to represent unsecured creditors in the Chapter 11 case
of Frank and Rachel Dispenza.
The committee members are:
(1) Gary A. Kravitz
8440 W. Rivershore Drive
Niagara Falls, New York 14304
Telephone: (716) 998-6633
Email: doc.kravitz@yahoo.com
(2) Wolf's Nursery Inc.
6083 Fisk Road
Lockport, New York 14094
Attn: Jason L. Wolf, V.P.
Telephone: (716) 625-8153
Facsimile: (716) 625-7963
Email: wolfsnursery@gmail.com
(3) Joel Maerten
6627 Bear Ridge Road
Lockport, New York 14094
Telephone: (716) 807-4603
Email: wvfc86@gmail.com
Official creditors' committees serve as fiduciaries to the general
population of creditors they represent. They may investigate the
debtor's business and financial affairs. Committees have the right
to employ legal counsel, accountants and financial advisors at a
debtor's expense.
About Frank and Rachel Dispenza
Frank and Rachel Dispenza sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. W.D.N.Y. Case No. 20-10462) on March 17,
2020. The Debtors are represented by Arthur Baumeister, Esq.
FRONTIER COMMUNICATIONS: Has Plan to Cut Debt by $10 Billion
------------------------------------------------------------
Frontier Communications Corporation (NASDAQ: FTR) and its
subsidiaries have sought Chapter 11 bankruptcy protection with a
bankruptcy-exit plan that would cut debt by $10 billion.
Frontier had total assets of $17.43 billion against total
liabilities of $21.86 billion as of Feb. 29, 2020.
Frontier Communications announced that, together with its
subsidiaries, it has entered into a Restructuring Support Agreement
("RSA") with bondholders representing more than 75% of Frontier's
approximately $11 billion in outstanding unsecured bonds.
The RSA contemplates agreed-upon terms for a pre-arranged financial
restructuring plan that leaves unimpaired all general unsecured
creditors and holders of secured and subsidiary debt. Under the
RSA, the Bondholders have, subject to certain terms and conditions,
agreed to support implementation of a Plan that is expected to
reduce the Company's debt by more than $10 billion and provide
significant financial flexibility to support continued investment
in its long-term growth.
Frontier expects to continue providing quality service to its
customers without interruption and work with its business partners
as usual throughout the court-supervised process. The Company has
sufficient liquidity to meet its ongoing obligations. Under the
RSA, trade vendors will be unimpaired for both pre- and
post-petition obligations.
"We are undertaking a proactive and strategic process with the
support of our Bondholders to reduce our debt by over $10 billion
on an expedited basis. We are pleased that constructive engagement
with our Bondholders over many months has resulted in a
comprehensive recapitalization and restructuring. We do not expect
to experience any interruption in providing services to our
customers," said Robert Schriesheim, Chairman of the Finance
Committee of the Board of Directors. "With a recapitalized balance
sheet, we will have the financial flexibility to reposition the
Company and accelerate its transformation by allocating capital
resources and adding talent to enhance our service offerings to our
customers while optimizing value for our stakeholders. Under the
RSA, our trade vendors will be paid for goods and services provided
both before and after the filing date."
"With this agreement with our Bondholders, we can now focus on
executing our strategy to drive operational efficiencies and
position our business for long-term growth," said Bernie Han,
President and Chief Executive Officer. "At the same time, the
COVID-19 pandemic continues to impact the entire business
community, and our team is focused on ensuring the health and
safety of our employees and customers. The services we provide to
our customers keeps them connected, safe and informed, and I would
like to thank our team for their continued dedication, especially
in light of the current environment."
In conjunction with the proposed financial restructuring, Frontier
received commitments for $460 million in debtor-in-possession
("DIP") financing. Following Court approval, the Company's
liquidity will total over $1.1 billion comprising the DIP financing
and the Company's more than $700 million cash on hand. This
liquidity, combined with cash flow generated by the Company's
ongoing operations, is expected to be available and sufficient to
meet Frontier's operational and restructuring needs. The DIP
financing agreement provides for the additional financing to
convert to a revolving exit facility upon emergence.
In addition, the Company intends to proceed with the sale of its
Washington, Oregon, Idaho, and Montana operations and assets to
Northwest Fiber for $1.352 billion in cash, subject to certain
closing adjustments, on or around April 30, 2020, and will seek
Court approval to complete the transaction on an expedited basis.
In conjunction with the Chapter 11 filing, Frontier will file a
number of customary first day motions with the Bankruptcy Court.
These motions will allow the Company to continue to operate in the
normal course of business without interruption or disruption to its
relationships with its customers, vendors and employees. The
Company expects to receive Court approval for these requests.
Terms of RSA
Under the Restructuring Support Agreement, the Consenting
Noteholders have agreed, subject to certain terms and conditions,
to support a financial restructuring of the existing debt of,
existing equity interests in, and certain other obligations of the
Company Parties, pursuant to the Plan to be filed in cases
commenced under chapter 11 of the Bankruptcy Code.
The Plan will be based on the restructuring term sheet attached to
and incorporated into the Restructuring Support Agreement which,
among other things, contemplates:
* the Company Parties obtaining confirmation of the Plan, which
shall be on terms consistent with the Restructuring Support
Agreement and the Term Sheet, no later than 120 calendar days after
the Petition Date;
* the Company Parties using commercially reasonable efforts to
obtain commitments on the best available terms for a senior secured
superpriority debtor-in-possession financing facility (the "DIP
Facility"), with an option for conversion into an Exit Facility on
the Plan effective date, on terms and conditions (including as to
principal amount) reasonably acceptable to the Company Parties and
reasonably acceptable to the Consenting Noteholders, as of the
relevant date, holding greater than 50.1% of the aggregate
outstanding principal amount of the Company's senior unsecured
notes and debentures that are subject to the Restructuring Support
Agreement (the "Required Consenting Noteholders");
* one or more third-party debt facilities, to be entered into on
the Plan Effective Date, in an amount reasonably sufficient to
facilitate Plan distributions and ensure incremental liquidity on
the Plan Effective Date, and otherwise be on terms and conditions
(including as to amount) reasonably acceptable to the Company
Parties and reasonably acceptable to the Required Consenting
Noteholders;
* to the extent not converted into an Exit Facility, full
satisfaction in cash on the Plan Effective Date of all DIP Facility
claims;
* issuance by one or more of the Company Parties of takeback
debt, in a principal amount of $750 million, subject to downward
adjustment and certain other terms set forth in the Term Sheet,
including, but not limited to:
-- an interest rate (a) no more than 250 basis points higher
than the interest rate of the next more junior secured debt
facility to be entered into on the Plan Effective Date if the
Takeback Debt is secured on a third lien basis or (b) no more than
350 basis points higher than the interest rate of the most junior
secured debt facility to be entered into on the Plan Effective Date
if the Takeback Debt is unsecured;
-- a maturity no less than one year outside of the
longest-dated debt facility to be entered into on the Plan
Effective Date, subject to an outside maturity date of eight years
from the Plan Effective Date;
-- (i) to the extent the Second Lien Notes are reinstated
under the Plan, providing the Takeback Debt will be third lien
debt, or (ii) to the extent the Second Lien Notes are paid in full
in cash during the pendency of the Chapter 11 Cases or under the
Plan, providing the Company Parties and the Required Consenting
Noteholders will agree on whether the Takeback Debt will be secured
or unsecured, subject to certain conditions; and
-- all other terms including, without limitation, covenants
and governance, shall be reasonably acceptable to the Company
Parties and the Required Consenting Noteholders; provided that such
terms shall not be more restrictive than those in the indenture for
the Second Lien Notes.
* subject to acceptance of the Plan by the holders of the Senior
Notes, a cash payment (the "Incremental Payments") on the Plan
Effective Date to each holder of the Senior Notes (to the extent of
the available amount of unrestricted balance sheet cash in excess
of $150 million on the Plan Effective Date as projected 30 days
prior to the anticipated Plan Effective Date, subject to
adjustments set forth in the Term Sheet ("Excess Cash"));
* cash interest payments for the Company's $850 million secured
revolving credit facility maturing on February 27, 2024 and, to the
extent not already satisfied in full during the Chapter 11 Cases
from the proceeds of the DIP Facility, satisfaction in full on the
Plan Effective Date of all Revolver claims;
* cash interest payments for (i) the Company's $1,740 million
senior secured Term Loan B facility (the "Term Loan B") maturing on
June 15, 2024, and (ii) the Company's $1.650 billion aggregate
principal amount of 8.000% First Lien Secured Notes due 2027 (the
"First Lien Notes"), as applicable, at non-default rate during the
Chapter 11 Cases, which shall not include any make-whole payments,
until repayment or reinstatement of such indebtedness;
* upon mutual agreement among the Company Parties and the
Required Consenting Noteholders, for the $1,600 million aggregate
principal amount of 8.500% Second Lien Secured Notes due 2026 (the
"Second Lien Notes" and, together with the First Lien Notes, the
"Secured Notes"), (i) cash interest payment at non-default rate
during the Chapter 11 Cases, which shall not include any make-whole
payments, until repayment or reinstatement of the Second Lien Notes
or (ii) payment of accrued non-default rate interest on the Plan
Effective Date, which shall not include any make-whole payments,
and no cash interest payment during the Chapter 11 Cases;
* to the extent not already satisfied in full during the Chapter
11 Cases from the proceeds of the DIP Facility, (i) satisfaction in
full of all Term Loan B claims and all Secured Notes claims on the
Plan Effective Date, or (ii) solely in the event the Company
Parties cannot procure financing on terms acceptable to the Company
Parties and the Required Consenting Noteholders to repay in full
the Term Loan B or the Secured Notes, as applicable, reinstatement
of all Term Loan B claim and all Secured Notes claims, as
applicable, pursuant to section 1124 of the Bankruptcy Code on the
Plan Effective Date;
* cash interest payments at non-default rate during the Chapter
11 Cases for the secured and unsecured notes of the Company's
subsidiaries and, on or as soon as reasonably practicable following
the Plan Effective Date, reinstatement of such notes pursuant to
section 1124 of the Bankruptcy Code;
* cash payment in full of all general unsecured claims (other
than Parent Litigation Claims (as defined below)), if applicable,
that are not Senior Notes claims or subsidiary unsecured notes
claims, reinstatement of such claims pursuant to section 1124 of
the Bankruptcy Code or other such treatment rendering such claims
unimpaired, in each case, as reasonably acceptable to the Company
Parties and the Required Consenting Noteholders;
* litigation-related claims against the Company that would be
subject to the automatic stay (except those subject to the police
and regulatory exception) (the "Parent Litigation Claims") will be
unimpaired, provided that the Parent Litigation Claims will be
allowed in an amount that does not exceed existing insurance
coverage plus $25 million;
* cash payment in full of all administrative expense claims,
priority tax claims, other priority claims, and other secured
claims or other such treatment rendering such claims unimpaired,
including reinstatement pursuant to section 1124 of the Bankruptcy
Code or delivery of the collateral securing any such secured claim
and payment of any interest required under section 506(b) of the
Bankruptcy Code;
* a motion, promptly after the commencement of the Chapter 11
Cases, filed by the Company Parties to assume the Purchase
Agreement (the "Purchase Agreement"), dated as of May 28, 2019,
among the Company, Frontier Communications ILEC Holdings LLC, and
Northwest Fiber, LLC, as amended, restated, amended and restated,
or otherwise modified from time to time, and close the sale of the
Company's operations and associated assets in Washington, Oregon,
Idaho and Montana, subject to certain terms and conditions in the
Purchase Agreement, as soon as reasonably practicable;
* on or as soon as reasonably practicable following the Plan
Effective Date, receipt by the holders of the Senior Notes, in full
satisfaction of their claims, their pro rata share of (a) 100% of
the common equity (the "New Common Stock") of the Company or an
entity formed to indirectly acquire substantially all of the assets
and/or stock of the Company as may be contemplated by the
Restructuring (the "Reorganized Company"), subject to dilution by
the Management Incentive Plan, (b) the Takeback Debt and (c) any
surplus cash remaining after payments of the Incremental Payments;
* on the Plan Effective Date, reservation of a pool (the
"Management Incentive Plan Pool") of 6% (on a fully diluted basis)
of the New Common Stock for a post-emergence management incentive
plan (the "Management Incentive Plan") for management employees of
the Reorganized Company, which will contain terms and conditions as
determined at the discretion of the board of directors of the
Reorganized Company after the Plan Effective Date; provided that up
to 50% of the Management Incentive Plan Pool may be allocated prior
to the Plan Effective Date as emergence grants ("Emergence Awards")
to individuals selected to service in key senior management
positions after the Plan Effective Date; provided, further, that
the Emergence Awards will have terms and conditions that are
acceptable to the Company Parties and the Required Consenting
Noteholders;
* no distribution for existing equity interests; and
* in the event the Required Consenting Noteholders and the
Debtors determine that the New Common Stock should be listed on a
recognized U.S. stock exchange, commercially reasonable efforts by
the Reorganized Company to have the New Common Stock listed on a
recognized U.S. stock exchange as promptly as reasonably
practicable on or after the Plan Effective Date, and prior to any
such listing, commercially reasonable efforts to qualify its shares
for trading in the pink sheets.
About Frontier Communications
Frontier Communications Corporation (NASDAQ: FTR) offers a variety
of services to residential and business customers over its
fiber-optic and copper networks in 29 states, including video,
high-speed internet, advanced voice, and Frontier Secure digital
protection solutions.
Frontier Communications Corporation and 103 related entities sought
Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 20-22476) on
April 14, 2020.
Kirkland & Ellis LLP is serving as legal advisor, Evercore is
serving as financial advisor and FTI Consulting, Inc. is serving as
restructuring advisor to the Company.
Prime Clerk is the claims agent, maintaining the page
http://www.frontierrestructuring.com/and
https://cases.primeclerk.com/ftr
GEMINI HDPE: S&P Alters Outlook to Negative on Counterparty Risk
----------------------------------------------------------------
S&P Global Ratings affirmed the 'BB' issue-level ratings on Gemini
HDPE LLC (Gemini), and revised the outlook to negative from stable.
S&P's recovery rating remains unchanged.
Gemini HDPE LLC (Gemini or the project) is a high-density
polyethylene (HDPE) facility located in La Porte, Texas. The
project produces a wide range of HDPE products but primarily
focuses on bimodal-grade HDPE with superior properties allowing
usage in applications that command a price premium over
commodity-HDPE grades. Gemini sells the HDPE products in the North
American market.
"Our rating on Gemini is primarily linked to the lowest credit
quality of either Ineos Group Holdings S.A. or Sasol Financing Pty
Ltd., which is a subsidiary of Sasol Ltd. because each of these
entities guarantees on a several, but not joint basis, 50% of
Gemini's debt service and all other obligations. We recently
downgraded Sasol Ltd. to 'BB' from 'BBB-' with a negative outlook.
The downgrade is a result of significantly lower oil and chemical
prices combined with falling demand given that global disruptions
linked to the coronavirus have led to S&P Global Ratings to
significantly reduce its earnings forecasts for Sasol Ltd. through
fiscal year 2021, which led to assessing re-assessment of the
company's financial risk upward. The negative outlook reflects our
view that weaker-than-expected oil and chemical prices, and
continued volatility and poor visibility in commodity prices,
demand evolution, and weaker closing rand exchange rates could
result in a covenant breach or other event, which could lead us to
assess Sasol's liquidity as less than adequate. We recently
affirmed our 'BB' issuer credit rating on INEOS Group Holdings
S.A., on April 8, 2020, and revised the outlook to negative from
stable due to the fallout from the pandemic, and the resulting
recessionary environment that will likely translate to higher
leverage and weakening credit metrics across the INEOS group. We
see a risk that the creditworthiness of the wider INEOS group could
weaken within the next 12 months or so," S&P said.
The negative outlook reflects the likelihood that S&P may lower the
issue-level ratings on Gemini HDPE within the next 24 months if it
lowers the rating on either Sasol Ltd. or INEOS.
"We could lower the rating on Gemini's debt if either Sasol's or
INEOS' credit profile further deteriorates and shows weak recovery
toward the end of 2020 or in 2021, leading to a downgrade of either
counterparty or if either guarantor failed to honor its respective
guarantees when required," S&P said.
"We could consider revising our outlook on Gemini to stable if the
corporate credit quality on both Sasol Ltd. and INEOS Groups
Holdings stabilizes due to deleveraging from material operating and
sales improvements, or asset sales or equity fundraising by both
entities," the rating agency said.
GENCANNA GLOBAL: Mark Zoolalian Represents Gary Shell
-----------------------------------------------------
Pursuant to Rule 2019 of the Federal Rules of Bankruptcy Procedure,
attorney Mark Zoolalian provided notice that it is representing
Gary Shell in the Chapter 11 cases of GenCanna Global USA, Inc., et
al.
This is a supplement to the previously filed Rule 2019 statement
[Doc 244]. To wit, in addition to those creditors previously listed
[Doc 244], Mark Zoolalian has been further retained as counsel by:
Gary Shell, 1172 Richmond Rd, Loop 2, Lancaster, KY 40444, with
legal representation and services related to this proceeding to be
performed under Attorney's normal terms and rates. The Debtor(s),
Gencanna Global USA, Inc., owes Creditor under the terms of an
Occupancy Agreement / Lease, to which Debtor(s) and Creditor are
parties.
The Firm can be reached at:
Mark Zoolalian, Esq.
400 South Main St.
Nicholasville, KY 40356
Telephone: (859) 296-0776
E-mail: markzoolalian@hotmail.com
A copy of the Rule 2019 filing, downloaded from PacerMonitor.com,
is available at https://is.gd/qRXSej
About GenCanna Global USA
GenCanna Global USA, Inc. -- https://www.gencanna.com/ -- is a
vertically-integrated producer of hemp and hemp-derived CBD
products with a focus on delivering social, economic and
environmental impact through seed-to-scale agricultural
production.
GenCanna Global USA was the subject of an involuntary Chapter 11
proceeding (Bankr. E.D. Ky. Case No. 20-50133) filed on Jan. 24,
2020. The involuntary petition was signed by alleged creditors
Pinnacle, Inc., Crawford Sales, Inc., and Integrity/Architecture,
PLLC.
On Feb. 6, 2020, GenCanna Global USA consented to the involuntary
petition and on Feb. 5, 2020, two affiliates, GenCanna Global Inc.
and Hemp Kentucky LLC, filed their own voluntary Chapter 11
petitions.
Laura Day DelCotto, Esq., at DelCotto Law Group PLLC, represents
the petitioners.
The Debtors tapped Benesch Friedlander Coplan & Aronoff, LLP and
Dentons Bingham Greenebaum, LLP as legal counsel; Huron Consulting
Services, LLC as operational advisor; and Jefferies, LLC, as
financial advisor. Epig is the claims agent, which maintains the
page https://dm.epiq11.com/GenCanna.
The Office of the U.S. Trustee appointed a committee of unsecured
creditors on Feb. 18, 2020. The committee tapped Foley & Lardner
LLP as its bankruptcy counsel, and DelCotto Law Group PLLC as its
local counsel.
GENCANNA GLOBAL: Rose Grasch Represents Claimholders
----------------------------------------------------
Pursuant to Rule 2019 of the Federal Rules of Bankruptcy Procedure,
the law firm of Rose Grasch Camenisch Mains PLLC submitted a
verified statement to disclose that it is representing CIRCA
Coalinga, LLC and Christopher Macaluso in the Chapter 11 cases of
GenCanna Global USA, Inc., et al.
RGCM is simultaneously representing the following parties with
respect to their claims and/or rights against the Debtor, GenCanna
Global USA, Inc., and any other debtor in these
jointly-administered cases:
CIRCA Coalinga, LLC
1951 Mercantile Lane
Coalinga, CA 93210
Christopher Macaluso
4433 Josiah Way
Lexington, KY 40515
RGCM represents the Claimholders in their capacities as creditors
of the Debtor and, in the case of Mr. Macaluso, as owner of shares
and Warrant Shares of the Debtor.
Each of the Claimholders has requested that RCGM serve as their
counsel in connection with these jointly-administered Chapter 11
cases, and each of the Claimholders is aware of, and has not
objected to, RGCM's dual representation of the other in this
matter.
The undersigned and RGCM have no instruments whereby they are
empowered to act on behalf of the Claimholders they represent.
The undersigned and RGCM do not own any interest in the
Claimholders or their claims against the Debtors in the
above-captioned proceeding.
RGCM may undertake additional representations of other individuals
or entities in these jointly-administered cases, and does hereby
reserve the right to modify or supplement this Statement as
necessary.
Counsel for Claimholders can be reached at:
ROSE GRASCH CAMENISCH MAINS PLLC
J. Wesley Harned, Esq.
326 South Broadway
Lexington, KY 40508
Telephone: (859) 721-2100
Email: wes.harned@rgcmlaw.com
A copy of the Rule 2019 filing, downloaded from PacerMonitor.com,
is available at https://is.gd/FJqyKU
About GenCanna Global USA
GenCanna Global USA, Inc. -- https://www.gencanna.com/ -- is a
vertically-integrated producer of hemp and hemp-derived CBD
products with a focus on delivering social, economic and
environmental impact through seed-to-scale agricultural
production.
GenCanna Global USA was the subject of an involuntary Chapter 11
proceeding (Bankr. E.D. Ky. Case No. 20-50133) filed on Jan. 24,
2020. The involuntary petition was signed by alleged creditors
Pinnacle, Inc., Crawford Sales, Inc., and Integrity/Architecture,
PLLC.
On Feb. 6, 2020, GenCanna Global USA consented to the involuntary
petition and on Feb. 5, 2020, two affiliates, GenCanna Global Inc.
and Hemp Kentucky LLC, filed their own voluntary Chapter 11
petitions.
Laura Day DelCotto, Esq., at DelCotto Law Group PLLC, represents
the petitioners.
The Debtors tapped Benesch Friedlander Coplan & Aronoff, LLP and
Dentons Bingham Greenebaum, LLP as legal counsel; Huron Consulting
Services, LLC as operational advisor; and Jefferies, LLC, as
financial advisor. Epig is the claims agent, which maintains the
page https://dm.epiq11.com/GenCanna.
The Office of the U.S. Trustee appointed a committee of unsecured
creditors on Feb. 18, 2020. The committee tapped Foley & Lardner
LLP as its bankruptcy counsel, and DelCotto Law Group PLLC as its
local counsel.
GEORGE BASHEN: $850K Sale of Houston Homestead to Greenranger OK'd
------------------------------------------------------------------
Judge Marvin Isgur of the U.S. Bankruptcy Court for the Southern
District of Texas authorized George Steven Bashen's short sale of
his homestead located at 622 Voss Rd., Houston, Texas to
Greenranger, LLC for $850,000, pursuant their One to Four Family
Residential Contract (Resale).
The sale is free and clear of all liens, with all liens attaching
to the net proceeds in priority order. No payments will be made to
the Internal Revenue Service, Frost Bank or Unity National Bank.
Any property taxes, broker fees and settlement costs will be paid
at closing and all net proceeds will be remitted to the Bank of New
York Mellon, et al c/o Carrington Mortgage Services, LLC.
The 14-day stay of the Order pursuant to Bankruptcy Rule 6004(h)
will not apply, and the relief granted is effective immediately
upon entry.
A copy of the Contract is available at https://tinyurl.com/vj4cj8y
from PacerMonitor.com free of charge.
The bankruptcy case is In re George Steven Bashen (Bankr. S.D. Tex.
Case No. 18-37391-H1-11).
GOLDEN NUGGET: S&P Downgrades ICR to 'B-'; Outlook Negative
-----------------------------------------------------------
S&P Global Ratings lowered its issuer credit rating on Golden
Nugget Inc. to 'B-' from 'B'. S&P also lowered the issue-level
ratings on the first-lien facilities to 'B' from 'B+' and the
senior unsecured and subordinated notes to 'CCC' from 'CCC+'. The
recovery ratings are unchanged.
"The downgrade reflects our view that the coronavirus pandemic
related restaurant and casino shutdowns and a weak economic outlook
will result in a dramatic decline in revenue, substantial cash
burn, and elevated leverage for Golden Nugget Inc.," S&P said.
The negative outlook reflects substantial risk to Golden Nugget's
operations from coronavirus to the extent shutdowns continue for a
significant period or its recovery from the crisis is very weak.
This could limit the company's ability to return credit measures to
sustainable levels in 2021.
"We could lower the rating if we no longer expect a slow rebound to
materialize (which would provide Golden Nugget the ability to
comfortably service its interest payments), leading us to view the
capital structure as unsustainable. For instance, if we expect
leverage to remain 8x or more through end of 2021 and cash flow to
remain flat to negative, we could lower the ratings. We would also
lower the rating if we expect cash burn to accelerate such that
liquidity comes under pressure," S&P said.
"We could revise the outlook to stable if leverage is on track to
return to about 8x or less in 2021 and we expect free cash flow
will be positive. This could occur if revenues rebound meaningfully
and S&P Global Ratings' adjusted EBITDA margins return to the 20%
area. We anticipate a revision to stable would likely require
greater clarity regarding when restaurants and casinos will
reopen," the rating agency said.
GTT COMMUNICATIONS: S&P Downgrades ICR to 'CCC+'; Outlook Negative
------------------------------------------------------------------
S&P Global Ratings lowered all of its ratings on U.S.-based GTT
Communications Inc., including its issuer credit rating, to 'CCC+'
from 'B-' because S&P believes its capital structure may be
unsustainable over the longer term.
"The downgrade reflects our view that GTT's leverage will remain
elevated due to the economic impact of the coronavirus pandemic.
We believe that weaker economic conditions could push the company's
adjusted leverage above 8.0x, from 7.1x as of the end of fiscal
year 2019, if its enterprise customers reduce their telecom
spending and its small and midsize business (SMB) customers scale
back their spending or go out of business. We believe it will be
difficult for GTT to deleverage organically with its current
capital structure and view it as dependent on the favorable sale of
its infrastructure division, which we now consider less likely
given current market conditions. In our view, these factors could
cause the company to undertake a debt restructuring to right-size
its capital structure, which we would view as equivalent to a
default if it offers its lenders less than they were originally
promised," S&P said.
The negative outlook reflects the high degree of uncertainty around
the recession's ultimate effect on GTT's operating and financial
performance, which could lead S&P to lower its rating if it
believes a default or restructuring is likely in the next 12
months.
"We could lower our rating on GTT if we believe it will face a
near-term liquidity shortfall or engage in a distressed exchange in
the next 12 months. This could occur if the impending economic
downturn is more severe than we project," S&P said.
"Although unlikely over the next year, we could raise our rating on
GTT if its top-line performance improves and its EBITDA expands
modestly such that its leverage approaches 7.0x with prospects for
further improvement over the longer term. Furthermore, we would
need to believe the company will not pursue a distressed exchange
that we would view as tantamount to a default before raising our
rating," the rating agency said.
HADDAD RESTAURANT: U.S. Trustee Unable to Appoint Committee
-----------------------------------------------------------
The Office of the U.S. Trustee on April 13, 2020, disclosed in a
court filing that no official committee of unsecured creditors has
been appointed in the Chapter 11 case of Haddad Restaurant Group,
Inc.
About Haddad Restaurant Group
Haddad Restaurant Group, Inc., operates a Plaza III Restaurant
located in Overland Park, Kansas.
Haddad Restaurant Group filed a Chapter 11 petition (Bankr. D. Kan.
Case No. 20-20282) on Feb. 24, 2020. At the time of the filing,
Debtor had estimated assets of less than $50,000 and liabilities of
between $500,001 and $1 million. Judge Robert D. Berger oversees
the case. Evans & Mullinix, P.A., is the Debtor's legal counsel.
HANNON ARMSTRONG: Fitch to Rate $350MM Unsecured Notes 'BB+'
------------------------------------------------------------
Fitch Ratings has assigned a rating of 'BB+(EXP)' to the $350
million of five-year unsecured notes issued jointly by HAT Holdings
I LLC and HAT Holdings II LLC, which are the indirect subsidiaries
of Hannon Armstrong Sustainable Infrastructure Capital (HASI;
Long-Term Issuer Default Rating BB+/Stable). The notes will be
guaranteed by HASI. Proceeds from the proposed issuance are
expected to be used to repay a portion of secured debt outstanding
on the credit facility and for general corporate purposes.
KEY RATING DRIVERS
The rating on the unsecured notes is expected to be equalized with
HASI's Long-Term IDR as it ranks equally with the outstanding
unsecured notes. The rating also reflects the availability of an
unencumbered asset pool, which suggests average recovery prospects
for debtholders under a stressed scenario.
Pro forma for the $350 million offering, Fitch estimates that
unsecured debt (at par) would increase to approximately 59% of
total debt outstanding; up from 47% at Dec. 31 2019 (YE19). Fitch
views the increase favorably, as it enhances the firm's funding
flexibility, and expects the firm continue to be opportunistic with
regard to future unsecured issuance.
HASI had $31 million of borrowings outstanding on its secured
revolving credit facility at YE19 and no term debt maturities until
Sept. 1, 2022 when $150 million of convertible notes come due. The
impact of the proposed debt issuance on HASI's leverage ratio is
expected to be minimal, as the firm continued to access the equity
markets in 1Q20 via its at-the-market program. HASI's leverage was
1.51x at YE19, and would be expected to increase to 1.57x, pro
forma for the issuance, after accounting for $150 million of equity
raised in the ATM program in 1Q20 and assuming $31 million of
revolver borrowings are repaid with debt proceeds.
Leverage is expected to remain below the firm's leverage target of
up to 2.5x. While HASI does not have a defined leverage limit by
asset class, consolidated leverage factors in the portfolio mix and
an assessment of the credit, liquidity, and price volatility of
each investment. Fitch believes HASI's leverage target is
appropriate for the portfolio risk and ratings and expects HASI to
maintain appropriate headroom to the target to account for
potential increases in mezzanine debt or common equity securities.
The global spread of the coronavirus and the implementation of
strict social distancing guidelines across the U.S. are expected to
push the economy toward a recession. While Fitch believes HASI is
relatively well positioned, it is expected to experience some
deterioration in credit and operating performance, given direct
exposure to consumers in residential solar projects, exposures to
non-government entities in energy efficiency projects, exposure to
variability in commodity prices, and due to expected delays in
certain construction projects. A spike in non-accrual levels or
write-down in equity investments and/or material deterioration in
operating performance could lead to negative rating action,
particularly if it leads to a meaningful increase in leverage.
HASI's rating remains supported by its established, albeit niche,
market position within the renewable energy financing sector,
experienced management team, diversified investment portfolio,
strong credit track record and a fairly conservative underwriting
culture. They also reflect its adherence to leverage targets that
are commensurate with the risk profile of the portfolio,
demonstrated access to public equity markets, and long-term
relationships with its customers.
Rating constraints include modest scale, dependence on access to
the capital markets to fund portfolio growth and a limited ability
to retain capital due to dividend distribution requirements as a
REIT. Additionally, HASI's planned opportunistic shift in the
company's portfolio mix toward higher-risk mezzanine debt and
common equity exposures is viewed with caution by Fitch.
The Stable Outlook reflects Fitch's expectation for broadly
consistent operating performance, the continuation of strong asset
quality trends, the management of leverage in a manner that is
consistent with the risk profile of the portfolio and an
improvement in the funding profile with the opportunistic issuance
of additional unsecured debt.
RATING SENSITIVITIES
The unsecured debt rating is linked to the Long-Term IDR and would
be expected to move in tandem. However, a meaningful decline in the
amount of unsecured debt in the capital structure, in favor of
secured borrowings, and/or a meaningful decline in unencumbered
assets could result in the unsecured debt rating being notched down
from the IDR.
Factors that could, individually or collectively, lead to positive
rating action include the ability to demonstrate franchise
resilience in an increasingly competitive environment and through
the impending economic recession, the maintenance of fairly low
leverage that is consistent with the risk profile of the portfolio,
enhanced liquidity, and further improvement in funding flexibility.
An upgrade would also be contingent on the maintenance of strong
credit performance on the portfolio as a whole and consistent core
operating performance.
Factors that could, individually or collectively, lead to negative
rating action include a sustained increase in leverage above 2.5x
and/or a material shift in HASI's risk profile, including a
material increase in mezzanine debt and/or equity investments
without a commensurate decline in leverage. A spike in non-accrual
levels or write-down in equity investments, material deterioration
in operating performance, weaker funding flexibility, including a
decline in the proportion of unsecured funding, and/or weaker core
earnings coverage of dividends would also be negative for ratings.
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.
HASI has an ESG Relevance Score of 4 for Exposure to Social Impact
due to its exposure to shift in social and consumer preferences
considering the company's mission to financing solutions to climate
change, which is relevant to the rating in conjunction with other
factors.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Financial Institutions
issuers have a best-case rating upgrade scenario (defined as the
99th percentile of rating transitions, measured in a positive
direction) of three notches over a three-year rating horizon; and a
worst-case rating downgrade scenario (defined as the 99th
percentile of rating transitions, measured in a negative direction)
of four notches over three years. The complete span of best- and
worst-case scenario credit ratings for all rating categories ranges
from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are
based on historical performance.
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF
RATING
The principal sources of information used in the analysis are
described in the Applicable Criteria.
PUBLIC RATINGS WITH CREDIT LINKAGE TO OTHER RATINGS
HAT Holdings I LLC and HAT Holdings II LLC are the indirect
subsidiaries of Hannon Armstrong Sustainable Infrastructure Capital
(HASI; Long-Term IDR BB+/Stable).
HEALTHLYNKED CORP: RBSM LLP Raises Going Concern Doubt
------------------------------------------------------
HealthLynked Corp. filed with the U.S. Securities and Exchange
Commission its annual report on Form 10-K, disclosing a net loss of
$5,528,599 on $4,018,818 of patient service revenue (net) for the
year ended Dec. 31, 2019, compared to a net loss of $5,790,835 on
$2,259,002 of patient service revenue (net) for the year ended in
2018.
The audit report of RBSM LLP states that the Company has suffered
recurring losses from operations, generated negative cash flows
from operating activities, has an accumulated deficit and has
stated that substantial doubt exists about Company's ability to
continue as a going concern.
The Company's balance sheet at Dec. 31, 2019, showed total assets
of $2,546,554, total liabilities of $5,389,234, and a total
shareholders' deficit of $2,842,680.
A copy of the Form 10-K is available at:
https://is.gd/8bA7L0
HealthLynked Corp. operates a cloud-based patient information
network and record archiving system. The company operates
HealthLynked Network, which enables patients and doctors to keep
track of medical information via Internet in a cloud based system.
It enables patients to enter a detailed online personal medical
history, including past surgical history, medications, allergies,
and family medical history; and provides online scheduling function
for patients to book appointments with providers. The company also
offers obstetrical and gynecological medical services to patients.
HealthLynked Corp. was incorporated in 2014 and is based in Naples,
Florida.
HIGH RIDGE: $113M Sale of All Non-Debtor Assets to Ranir Approved
-----------------------------------------------------------------
Judge Brendan L. Shannon of the Bankruptcy Court for the District
of Delaware authorized High Ridge Brands Co., and debtor affiliates
to cause the Non-Debtor Sellers to sell substantially all oral care
assets to Ranir, LLC for $113 million cash, subject to adjustment,
plus assumption of the Assumed Liabilities.
The sale is pursuant to the terms and conditions of the Asset
Purchase Agreement and any related documents and agreements to the
transactions set forth in the Purchase Agreement including, without
limitation, that Transition Services Agreement, by and among (i)
Debtors High Ridge Brands, Co., Freshcorp, Inc., Children Oral
Care, LLC, and Dr. Fresh, LLC ("Sellers); (ii) non-Debtors Better
Alliance Ltd., Dean Spirit Ltd., and Grosvenor Consumer Products
Ltd. ("Non-Debtor Sellers"); and (iii) the Purchaser.
The Sale Hearing was held on Feb. 26, 2020.
The Sale is free and clear of all Claims and Interests of any kind
or nature whatsoever, with such Claims and Interests will attach to
the proceeds of the Sale.
The Debtors are authorized, but not directed, to distribute the net
cash proceeds of the Sale to the Purchased Assets to the DIP Agent,
as agent for the account of DIP Lenders, an amount up to the
outstanding DIP Obligations.
For cause shown, the Order will take effect immediately and will
not be stayed pursuant to Bankruptcy Rules 6004(h), 6006(d), 7062,
9014, or otherwise, but will be effective and enforceable
immediately upon entry, and the stays provided in Bankruptcy Rules
6004(h) and 6004(d) are expressly waived and will not apply.
Accordingly, the Debtors and the Purchaser are authorized and
empowered to close the Sale immediately upon entry of the Order
subject to the terms of the Purchase Agreement.
A copy of the APA is available at https://tinyurl.com/w898m3c from
PacerMonitor.com free of charge.
About High Ridge Brands
Headquartered in Stamford, Connecticut, High Ridge Brands --
http://www.highridgebrands.com/-- is one of the largest
independent branded personal care companies in the United States by
unit volume, with a mission to craft extraordinary experiences for
savvy consumers. Today, High Ridge Brands has a portfolio of over
thirteen trusted brands, serving primarily North American skin
cleansing, hair care and oral care markets, including Zest(R),
Alberto VO5(R), REACH(R), Firefly(R), Dr. Fresh(R), Coast(R), White
Rain(R), LA Looks(R), Zero Frizz(R), Rave(R), Salon Grafix(R),
Binaca(R) and Thicker Fuller Hair(R). In addition, the Company has
relationships with leading entertainment properties through which
it has a portfolio of licenses such as Star Wars, Batman,
Spiderman, Hello Kitty, and Transformers. The Company operates an
asset-light model, outsourcing its manufacturing needs, and has
approximately 140 employees.
The Debtors sought Chapter 11 protection (Bankr. D. Del. Case No.
19-12689) on Dec. 18, 2019. The Debtor affiliates include High
Ridge Brands Holdings, Inc., HRB Midco, Inc., HRB Buyer, Inc., High
Ridge Brands Co., Golden Sun, Inc., Continental Fragrances, Ltd.,
Freshcorp, Inc., Children Oral Care, LLC, and Dr. Fresh, LLC.
Judge Brendan Linehan Shannon is assigned to the cases.
Young Conaway Stargatt & Taylor, LLP, is the Debtors' counsel.
Debevoise & Plimpton LLP is corporate, finance and litigation
counsel to the Debtors. PJT Partners LP is the Debtors' investment
banker.
HIGH RIDGE: Sale of Substantially All Assets to TCP HRB Approved
----------------------------------------------------------------
Judge Brendan L. Shannon of the Bankruptcy Court for the District
of Delaware authorized High Ridge Brands Co., and debtor affiliates
to sell assets of High Ridge Brands Co. and Continental Fragrances,
Ltd. associated with their business of selling and distributing
hair care and skin care products to TCP HRB Acquisition, LLC.
The sale is pursuant to the terms and conditions of the Transition
Services Agreement.
The Auction was held on Feb. 20 to 21, 2020. The Sale Hearing was
held on Feb. 26, 2020.
The Sale is free and clear of all Claims and Interests of any kind
or nature whatsoever, with such Claims and Interests will attach to
the proceeds of the Sale.
Pursuant to sections 105(a) and 365 of the Bankruptcy Code, and
subject to and conditioned upon the terms of the Purchase
Agreement, the Closing of the Sale and payment of the applicable
Cure Amounts by the Purchaser, the Debtors' assumption and
assignment to the Purchaser, and the Purchaser's assumption on the
terms set forth in the Purchase Agreement, of the Assumed Contracts
is approved.
The Debtors are authorized, but not directed, to distribute the net
cash proceeds of the Sale of the Purchased Assets to the DIP Agent,
as agent for the account of DIP Lenders, an amount up to the
outstanding DIP Obligations.
For cause shown, the Order will take effect immediately and will
not be stayed pursuant to Bankruptcy Rules 6004(h), 6006(d), 7062,
9014, or otherwise, but will be effective and enforceable
immediately upon entry, and the stays provided in Bankruptcy Rules
6004(h) and 6004(d) are expressly waived and will not apply.
Accordingly, the Debtors and the Purchaser are authorized and
empowered to close the Sale immediately upon entry of the Order
subject to the terms of the Purchase Agreement.
Notwithstanding the deadlines set forth in the Bidding Procedures
Order, the Closing Date may occur after 14 or 35 calendar days from
the Auction in accordance with Section 1.4 of the Purchase
Agreement.
About High Ridge Brands
Headquartered in Stamford, Connecticut, High Ridge Brands --
http://www.highridgebrands.com/-- is one of the largest
independent branded personal care companies in the United States by
unit volume, with a mission to craft extraordinary experiences for
savvy consumers. Today, High Ridge Brands has a portfolio of over
thirteen trusted brands, serving primarily North American skin
cleansing, hair care and oral care markets, including Zest(R),
Alberto VO5(R), REACH(R), Firefly(R), Dr. Fresh(R), Coast(R), White
Rain(R), LA Looks(R), Zero Frizz(R), Rave(R), Salon Grafix(R),
Binaca(R) and Thicker Fuller Hair(R). In addition, the Company has
relationships with leading entertainment properties through which
it has a portfolio of licenses such as Star Wars, Batman,
Spiderman, Hello Kitty, and Transformers. The Company operates an
asset-light model, outsourcing its manufacturing needs, and has
approximately 140 employees.
The Debtors sought Chapter 11 protection (Bankr. D. Del. Case No.
19-12689) on Dec. 18, 2019. The Debtor affiliates include High
Ridge Brands Holdings, Inc., HRB Midco, Inc., HRB Buyer, Inc., High
Ridge Brands Co., Golden Sun, Inc., Continental Fragrances, Ltd.,
Freshcorp, Inc., Children Oral Care, LLC, and Dr. Fresh, LLC.
Judge Brendan Linehan Shannon is assigned to the cases.
Young Conaway Stargatt & Taylor, LLP, is the Debtors' counsel.
Debevoise & Plimpton LLP is corporate, finance and litigation
counsel to the Debtors. PJT Partners LP is the Debtors' investment
banker.
HORNBECK OFFSHORE: Reaches Deal for Filing of Prepack Case
----------------------------------------------------------
Hornbeck Offshore Services, Inc. (NYSE:HOS,OTCQB:HOSS) on April 14,
2020, disclosed that the Company and certain of its subsidiaries
have entered into a restructuring support agreement (the
"Restructuring Support Agreement") with secured lenders holding
approximately 83% of the Company's aggregate secured indebtedness
and unsecured noteholders holding approximately 79% of the
Company's aggregate unsecured notes outstanding related to a
balance sheet restructuring of the Company expected to be
implemented through a voluntary pre-packaged Chapter 11 case in the
United States Bankruptcy Court for the Southern District of Texas
in the coming weeks with a targeted completion date prior to the
end of the second quarter of 2020.
The Restructuring Support Agreement contemplates a $75 million
debtor-in-possession term loan facility provided by existing
creditors and permitted use of existing cash on hand and cash
generated from operations to support the business during the
financial restructuring process, which will enable the Company to
operate in the ordinary course of business without disruption to
its customers, vendors and workforce. The Restructuring Support
Agreement provides for payment in full of all vendors and
employees.
In addition, pursuant to the reorganization contemplated by the
Restructuring Support Agreement, the Company will achieve long term
enterprise benefits including (i) a significant de-levering of its
capital structure; (ii) post-emergence access to $100 million of
new equity capital through a common stock rights offering,
fully-backstopped by existing creditors and (iii) the ability to
arrange additional post-emergence financings for certain purposes,
including strategic initiatives.
The parties to the Restructuring Support Agreement agreed to other
customary terms and conditions including certain transfer
restrictions, releases of all claims and interests that are treated
in the plan of reorganization, and termination rights upon the
occurrence of certain events, including the failure of the Company
to achieve certain milestones, which milestones may be extended
with the consent of the holders of a requisite amount of secured
and unsecured indebtedness and the Company.
The Company expects the pre-packaged Chapter 11 reorganization to
be completed very quickly with the support of its creditors. Both
prior to and subsequent to the expected Chapter 11 filing, the
Company will have sufficient liquidity to continue operations, meet
all operational payment obligations and support its business, and
will continue to operate in the ordinary course of business without
disruption to its customers, vendors and workforce. The Company
remains focused on executing on its strategic priorities and is
committed to maintaining safe, efficient and responsive operations
during the reorganization with its vessels available and service
delivery continuing as normal.
Commenting on the Company's plans, Todd M. Hornbeck, Chairman,
President and CEO stated, "The COVID-19 pandemic and the recent
drop in oil prices due to an acute global supply-demand imbalance
have significantly impacted the industries we serve, making an
already challenging environment for the Company even more
difficult. The shared objectives of the Company and our creditors
are to meaningfully reduce the Company's financial leverage on a
consensual basis and source new capital to position the Company for
future growth. I want to thank our secured lenders and unsecured
noteholders for joining together with us on a game plan for an
expedited court-supervised financial restructuring process. This
consensual approach to reorganization and recapitalization is in
the best long-term interest of our Company, as it will enable us to
take advantage of new opportunities while continuing to support our
customers, retain our employees and pay our vendors."
As previously reported, on March 31, 2020, the Company entered into
agreements pursuant to which requisite majorities of the Company's
secured lenders and unsecured noteholders agreed to forbear from
exercising certain of their rights and remedies with respect to
certain defaults by the Company. Pursuant to the Restructuring
Support Agreement, these forbearances are extended
contemporaneously to the relevant dates in the Restructuring
Support Agreement.
Kirkland & Ellis LLP, Winstead PC and Jackson Walker LLP are
serving as legal counsel to the Company, Guggenheim Securities, LLC
is acting as financial advisor, Portage Point Partners, LLC is
serving as restructuring advisor and Stretto is serving as claims
and noticing agent.
Hornbeck Offshore Services is a leading provider of technologically
advanced, new generation offshore service vessels primarily in the
Gulf of Mexico and Latin America.
HY-POINT FAMILY: Southern Financial Objects to Disclosure Statement
-------------------------------------------------------------------
Secured Creditor Southern Financial Group, LLC, objects to the
Disclosure Statement filed by debtor Hy-Point Family Limited
Partnership.
The Secured Creditor complains that the Plan fails to address the
fundamental issues of the value and lack of marketability of the
real estate assets. The Disclosure Statement does not address how
a capital infusion will address the fundamental issues with the
real estate's marketability.
The Secured Creditor also notes that:
* Regarding the capital infusion, in the March 12, 2020 Order,
the Court observed that while on its face any influx of capital
into a bankrupt debtor would seem like a good thing, the Court is
unsure how exactly this infusion of cash will benefit any
reorganization.
* The Disclosure Statement contains no business plan, no
statistics, and no real explanation about what will be different
under the proposed plan of reorganization. The Disclosure Statement
lacks any plan for how the Debtor will address reality. Therefore,
the Court should not approve the Disclosure Statement.
A full-text copy of the order dated March 31, 2020, is available at
https://tinyurl.com/shdeu7h from PacerMonitor at no charge.
Attorney for Southern Financial:
Zachary D. Prendergast
ROBBINS KELLY PATTERSON & TUCKER
7 West Seventh Street, Suite 1400
Cincinnati, OH 45202
Tel: 513-721-3330
Fax: 513-721-5001
E-mail: zprendergast@rkpt.com
About Hy-Point Family Limited Partnership
Hy-Point Family Limited Partnership, filed a Chapter 11 bankruptcy
petition (Bankr. W.D. Ky. Case No. 20-30489) on Feb. 12, 2020.
Proposed counsel to the Debtor:
James R. Irving
Gina M. Young
DENTONS BINGHAM GREENEBAUM LLP
3500 PNC Tower
101 South Fifth Street
Louisville, Kentucky 40202
Telephone: (502) 587-3606
Facsimile: (502) 540-2215
E-mail: james.irving@dentons.com
gina.young@dentons.com
ICAHN ENTERPRISES: Moody's Alters Outlook on Ba3 CFR to Negative
----------------------------------------------------------------
Moody's Investors Service has affirmed Icahn Enterprises LP's Ba3
corporate family rating, Ba3-PD probability of default rating and
Ba3 guaranteed senior unsecured debt ratings. The outlook on the
ratings was changed to negative from stable.
Issuer: Icahn Enterprises LP
Corporate Family Rating, affirmed at Ba3
Probability of Default Rating, affirmed at Ba3-PD
Backed Senior Unsecured Notes, affirmed at Ba3
Outlook Actions
Issuer: Icahn Enterprises LP
Outlook, changed to Negative from Stable
RATING RATIONALE
Its rating action reflects the impact the declines in the market
value of IEP's energy, automotive and investment segments will have
on IEP's market value-based leverage (MVL) and cash flow. IEP's MVL
ended 2019 with just under 30% but it now expects it will remain
well above 30% for the remainder of 2020 as the consumer demand
toll of the coronavirus is reflected in the valuations of
subsidiaries and the mark-to-market based declines of its
investment segment.
The outlook change also considers the negative impact the global
coronavirus pandemic and oil price shocks will have on the level of
cash flow IEP receives from its operating segments, specifically
its energy segment. Moody's is concerned about the significant
dividends IEP receives from CVR Energy which if reduced in 2020
will put more dependence on holding company liquidity for debt
service.
Offsetting the risks from the decline in the value of IEP's major
operating subsidiaries are IEP's solid liquidity profile, limited
refinancing risk and portfolio level hedges. At the end of 2019,
pro forma for refinancing and investment in the Funds, the company
had over $1.5 billion in cash and about $5 billion in liquid
securities within its Investment Funds segment to support operating
companies in the event of a prolonged downturn. The company has
maintained a net short notional exposure against broad equity
market movements that provides some protection against investment
losses. IEP completed about $3 billion in refinancing transactions
earlier last year and into 2020 that have extended and staggered
its debt maturity profile.
Although continued market turbulence would weaken IEP's market
value-based leverage (MVL), it presents the company with the
opportunity to push its activist agenda and increase its stake in
potential targets.
Over the outlook period, Moody's will monitor the impact of weaker
consumer demand on the financial performance of IEP's significant
segments, the composition and valuations underlying the holdings
within the Investment Funds as well as IEP's ability to maintain
adequate liquidity.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The outlook on IEP's ratings could be returned to stable if there
is a sustained reduction in MVL below 30%; or there is a shift in
the investment portfolio towards less concentrated positions of
higher credit quality; the dividend capacity improves for
subsidiaries outside the energy segment.
Conversely, IEP's ratings could be downgraded if there is a
significant deterioration in valuations or credit strength of the
operating subsidiaries or Investment Funds; or if there is an
increase in net debt or decline in liquidity of the holding company
or in the Investment Funds segment; or a key-man issue that
threatens IEP's performance.
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. Moody's regards the
coronavirus outbreak as a social risk under its ESG framework,
given the substantial implications for public health and safety.
Its action reflects the impact on IEP of the breadth and severity
of the shock, and the deterioration in credit quality it has
triggered.
The principal methodology used in these ratings was Investment
Holding Companies and Conglomerates published in July 2018.
ICONIX BRAND: Has $101.9M Net Loss for Year Ended Dec. 31
---------------------------------------------------------
Iconix Brand Group, Inc., filed with the U.S. Securities and
Exchange Commission its annual report on Form 10-K, disclosing a
net loss of $101,916,000 on $148,984,000 of licensing revenue for
the year ended Dec. 31, 2019, compared to a net loss of $89,669,000
on $187,689,000 of licensing revenue for the year ended in 2018.
The audit report of BDO USA, LLP states that the Company has
suffered recurring losses and has certain debt agreements which
require compliance with financial covenants. The COVID 19 pandemic
is expected to have a material adverse effect on the Company's
results of operation, cash flows and liquidity, including
compliance with future debt covenants. These conditions raise
substantial doubt about the Company's ability to continue as a
going concern.
The Company's balance sheet at Dec. 31, 2019, showed total assets
of $506,060,000, total liabilities of $727,958,000, and a total
stockholders' deficit of $256,359,000.
A copy of the Form 10-K is available at:
https://is.gd/JJGIUf
Iconix Brand Group, Inc., a brand management company, owns,
licenses, and markets a portfolio of consumer brands across the
women's, men's, and home industries in the United States and
internationally. Iconix Brand Group, Inc. was founded in 1978 and
is based in New York, New York.
INTERIM HEALTHCARE: $225K Sale of All Assets to Mercy Approved
--------------------------------------------------------------
Judge Jerry A. Brown of the U.S. Bankruptcy Court for the Eastern
District of Louisiana authorized Interim Healthcare of Southeast
Louisiana, Inc.'s sale of all or substantially all of current and
after-acquired assets, including equipment, inventory, goods,
general intangibles, certain contracts, shares in the Debtor's
subsidiaries including a 100% interest in Interim Healthcare
Hospice, Inc., and licenses, to Mercy Health Services, LLC for
$225,000.
Julia Burden is designated as the Back-Up Bidder, based upon a
Qualified Bid in the amount of $200,000.
The Debtor is granted the authority to transfer and convey the
Assets to the Buyer, with the transactions contemplated in the APA
to close by April 3, 2020.
The sale is free and clear of any and all alleged interests in the
Assets.
The Good Faith Deposits of all Potential Bidders will be returned
to such Potential Bidder, except the Good Faith Deposit of the
Buyer and the Back-Up Bidder, which will be held as credit toward
the purchase price for the Buyer or the Back-Up Bidder.
The Debtor, the Buyer, and any clerk of Court, recorder of
mortgages or conveyances, the City of New Orleans, the Louisiana
Secretary of State, and any recorder of UCC-1 Financing Statements
are ordered and directed to execute and deliver all documents and
to take all other actions as may be necessary or appropriate to
perform the obligations set forth in the Motion without further
application to or Order from the Court.
The Debtor is authorized and directed, through its authorized
representative, Richard K. Blum and Kingsley Group, to close the
sales of the Sale Assets and the Debtor's counsel is authorized to
receive proceeds of the sale, and reasonable and customary closing
costs, fees, taxes, if any, which Net Proceeds are to be held in
escrow, pending the Debtor's proposal of its Plan of
Reorganization, the Confirmation Order and pending further order of
the Court.
The Debtor, through its authorized representative, Richard K. Blum
and Kingsley Group, is authorized to immediately consummate the
sales of the Sale Assets and the stay pursuant to Federal Rules of
Bankruptcy Procedure 7062 and 6004(h) be and is waived.
The counsel for the Debtor will serve a copy of the Order on the
required parties who will not receive notice through the ECF System
pursuant to the Federal Rules of Bankruptcy Procedure and the Local
Bankruptcy Rules and file a certificate of service to that effect
within three days.
About Interim Healthcare of Southeast Louisiana
Interim Healthcare of Southeast Louisiana, Inc., is a home health
care services provider based in Covington, Louisiana.
The Debtor filed for Chapter 11 bankruptcy protection (Bankr. E.D.
La. Case No. 19-13127) on November 19, 2019. The Hon. Jerry A.
Brown oversees the case.
In its petition, the Debtor was estimated to have $1 million to $10
million in both assets and liabilities. The petition was signed by
Julia Burden, president and chief executive officer.
The Debtor is represented by Joseph Patrick Briggett, Esq., at
Lugenbuhl, Wheaton, Peck, Rankin & Hubbard.
IRB HOLDING: S&P Downgrades ICR to 'B'; Outlook Negative
--------------------------------------------------------
S&P Global Ratings downgrading Atlanta-based IRB Holding Corp.
(Inspire Brands) to 'B' from 'B+'.
At the same time, S&P is lowering its issue-level rating on the
company's senior secured credit facilities to 'B' from 'B+' and its
issue-level rating on the company's senior unsecured notes to
'CCC+' from 'B-' and is removing all of its ratings on the company
from CreditWatch, where it placed them with negative implications
on March 19, 2020. S&P's '3' recovery rating on the secured debt
and '6' recovery rating on the unsecured debt remain unchanged.
The downgrade reflects Inspire's very high leverage due to the
deterioration in its revenue stemming from the efforts to contain
the spread of the coronavirus, including social distancing, and the
related economic weakness.
"We expect the company's revenue to decline by the low double-digit
percent area and anticipate that its profitability will deteriorate
significantly this year because of the restaurant restrictions,
altered consumer behavior, and ensuing weak economy related to the
pandemic. This will lead Inspire Brands, which has taken an
aggressive approach over the last several years as it acquired a
portfolio of restaurant concepts, to report very highly leveraged
credit measures. We now expect the company's leverage to exceed 10x
(compared with our previous expectation of about 7x) this year
based on our assumption that its results will be heavily affected
by the pandemic through the second quarter before improving in the
second half of 2020, though we believe its volumes will remain
below 2019 levels. In our view, the recovery trajectory for the
casual dining sector will be slow as economic uncertainty lingers,
which could lead to an extended period of weak performance.
Therefore, we are revising our comparable ratings analysis modifier
on Inspire to negative from neutral," S&P said.
The negative outlook reflects the heightened uncertainty regarding
the effects of the coronavirus and the impending recession on
Inspire's competitive standing and financial condition. A prolonged
pandemic that leads to an extended slowdown in customer traffic and
consumer spending may introduce additional execution risk and could
affect the company's ability to recover operationally.
"We could lower our rating on Inspire if we no longer expect a
rapid improvement in its credit metrics in 2021 and it fails to
realize the expected synergies from its recent acquisitions. If,
for instance, we expect the company's debt to EBITDA to remain
above 8.5x in 2021, we could lower our ratings. We could also lower
our ratings if its liquidity deteriorates because a prolonged
disruption stemming from the coronavirus leads to sustained
negative cash flow," S&P said.
"We could revise our outlook on Inspire to stable if its operating
conditions improve such that we expect its debt to EBITDA to return
to 8.5x or less in 2021 and believe it will maintain adequate
liquidity with consistent good cash flow generation," the rating
agency said.
JEFFERIES FINANCE: Moody's Alters Outlook on Ba3 CFR to Negative
----------------------------------------------------------------
Moody's Investors Service has affirmed Jefferies Finance LLC's Ba3
corporate family rating, Ba2 long-term senior secured ratings, B2
long-term senior unsecured rating, and Ba1 long-term senior secured
priority revolving credit facility rating. The outlook was changed
to negative from stable, reflecting the impact of the economic
dislocation related to the coronavirus outbreak, which Moody's
expects will lead to losses on the company's underwriting
commitments, credit losses on its loan portfolio, heightened
liquidity needs, and depressed syndication volumes.
Affirmations:
Issuer: Jefferies Finance LLC
Corporate Family Rating, Affirmed Ba3
Senior Secured Priority Revolving Credit Facility, Affirmed Ba1
Senior Secured Term Loan, Affirmed Ba2
Senior Secured Regular Bond/Debenture, Affirmed Ba2
Senior Unsecured Regular Bond/Debenture, Affirmed B2
Outlook Actions:
Issuer: Jefferies Finance LLC
Outlook, Changed To Negative From Stable
RATINGS RATIONALE
The ratings affirmation reflects the company's adequate liquidity
profile, which is appropriately positioned to meet JFIN's
outstanding underwriting commitments and commitments under
revolving agreements to borrowers. JFIN also has no significant
debt maturities in the next two years, which reduces its near term
liquidity needs. In addition, JFIN has solid capitalization as
measured by tangible common equity to tangible managed assets,
which stood at approximately 18.1% at November 30, 2019[1] and
provides protection to creditors against unexpected losses.
Nevertheless, Moody's expects the economic dislocation as a result
of the coronavirus to lead to lower syndication volumes and higher
loan losses. Furthermore, the current market environment will
likely lead to difficulty in syndicating many of the loans which
JFIN committed to underwrite before the pandemic struck. These
factors will combine to pressure liquidity and earnings, driving
the negative outlook.
The rapid and widening spread of the coronavirus outbreak and
rapidly shifting oil prices have led to a severe and extensive
credit shock across many sectors, regions and markets, which
Moody's expects will impact negatively JFIN's credit profile.
Moody's regards the coronavirus outbreak as a social risk under its
environmental, social and governance framework, given the
substantial implications for public health and safety.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Given the negative outlook and JFIN's structural exposure to the
leverage finance markets, there is no upward pressure on the
ratings. However, consistently strong profitability and evidence of
more granular underwriting commitments over the cycle could lead to
upward pressure on the ratings.
The ratings could be downgraded if JFIN's liquidity position
significantly deteriorates. Negative ratings pressure could also
emerge if the current economic downturn lasts beyond the first half
of 2020, causing losses for an extended period.
Changes in priority and thickness of capital structure tranches may
lead to changes of instrument ratings.
The principal methodology used in these ratings was Finance
Companies Methodology published in November 2019.
JONATHAN R. SORELLE: Seeks to Extend Exclusivity Period to Aug. 7
-----------------------------------------------------------------
Jonathan R. Sorelle, M.D., PLLC and The Minimally Invasive Hand
Institute, LLC asked the U.S. Bankruptcy Court for the District of
Nevada to extend the period during which they have the exclusive
right to file a Chapter 11 plan of reorganization and solicit
acceptances to Aug. 7 and Oct. 7, respectively.
The companies seek an extension to avoid premature formulation of a
Chapter 11 plan; allow for the retention of experts and potentially
a chief restructuring officer; and ensure the plan that is
eventually formulated will take into account all the interests of
the companies and their creditors.
Due to the unforeseen market events that caused the
debtor-in-possession lender to withdraw funding, the companies have
been forced to revisit their reorganization strategy. The
companies are currently reformulating a plan of reorganization and
are contemplating the retention of a chief restructuring officer to
assuage the concerns of the U.S. trustee.
During the initial exclusivity period, two separate complaints were
filed in the companies' bankruptcy cases (Stephen Rohrbacher v.
Jonathan R. Sorelle, et al., Adversary Proceeding 20-01042-MKN and
Kirk Schoeb v. Jonathan R. Sorelle, et al., Adversary Proceeding
20-01039-MKN). There is also a pending appeal for the state court
judgment in Stephen Rohrbacher v. Jonathan R. Sorelle, M.D.,
Jonathan R. Sorelle MD PLLC, Minimally Invasive Hand Institute LLC,
Case No. A-17-758908-C. Further, a proof of claim seeking $15
million of damages was also recently filed.
The companies said these developments have complicated the
formulation of a plan of reorganization and further justify the
extension requested.
About Jonathan R. Sorelle, M.D., PLLC
Jonathan R. Sorelle, M.D., PLLC, The Minimally Invasive Hand
Institute, LLC and Jonathan R. Sorelle, filed voluntary petitions
for relief under Chapter 11 of the Bankruptcy Code (Bankr. D. Nev.
Case Nos. 19-17870, 19-17871 and 19-17872, respectively) on Dec.
12, 2019. The Debtors each listed less than $1 million in both
assets and liabilities. The Debtors tapped Brownstein Hyatt Farber
Schreck, LLP as their legal counsel, and Inouye CPA LLC as their
accountant.
KEYSTONE FILLER: June 19 Disclosure Statement Hearing Set
---------------------------------------------------------
On March 30, 2020, Robert Chernicoff filed with the U.S. Bankruptcy
Court for the Middle District of Pennsylvania a Disclosure
Statement and Plan for Debtor Keystone Filler and Mfg. Co.
On March 31, 2020, Judge Robert N. Opel, II ordered that:
* June 19, 2020, at 09:30 AM in the US Courthouse, Courtroom #3,
3rd Floor, 240 West 3rd Street, Williamsport, PA 17701 is the
hearing to consider approval of the Disclosure Statement.
* May 5, 2020, is fixed as the last day for filing and serving
written objections to the Disclosure Statement.
A full-text copy of the order dated March 31, 2020, is available at
https://tinyurl.com/sj64qvc from PacerMonitor at no charge.
The Debtor is represented by:
Robert E Chernicoff
Cunningham and Chernicoff PC
2320 North Second Street
Harrisburg, PA 17110
About Keystone Filler & Mfg. Co.
Keystone Filler and Mfg. Co. is a manufacturer of carbon-based
products made from finely-ground coal. Keystone Filler and Mfg. Co.
sought protection under Chapter 11 of the Bankruptcy Code(Bankr.
M.D. Pa. Case No. 19-02014) on May 9, 2019. At the time of the
filing, the Debtor was estimated to have assets of $1 million to
$10 million and liabilities of $1 million to $10 million. The case
is assigned to Judge Robert N. Opel II. Cunningham, Chernicoff &
Warshawsky, P.C., is the Debtor's counsel.
KRYSTAL COMPANY: May 7 Auction of All Assets Set
------------------------------------------------
Judge Paul W. Bonapfel of the U.S. Bankruptcy Court for the
Northern District of Georgia authorized the bidding procedures of
The Krystal Co. and its affiliates in connection with the auction
sale of all or substantially all of their assets.
The salient terms of the Bidding Procedures are:
a. Bid Deadline: May 5, 2020 at 5:00 p.m. (ET)
b. Initial Bid: In the event that there is a Stalking Horse
Purchaser, the aggregate consideration proposed by the Qualifying
Bidder must equal or exceed the sum of the amount of (A) any
Stalking Horse Purchase Price, (B) any break-up fee approved by the
Court, (C) any Expense Reimbursement approved by the Court, and (D)
$250,000.
c. Deposit: An amount equal to the greater of $1 million and
10% of the purchase price
d. Auction: The Auction, if necessary, will be held on May 7,
2020 at 10:00 a.m. (ET) at the offices of counsel to the Debtors,
King & Spalding LLP, 1180 Peachtree Street, Atlanta GA 30309.
e. Bid Increments: $250,000
f. Sale Hearing: May 13, 2020 at 11:00 a.m. (ET)
g. Sale Objection Deadline: May 12, 2020 at 5:00 p.m. (ET)
h. Closing: No later than May 29, 2020
The sale will be free and clear of all claims, liens and
encumbrances.
The form of Sale Notice is approved. No later than three business
days after entry of the Bidding Procedures Order, the Debtors will
serve the Bidding Procedures Order and Bidding Procedures upon the
Sale Notice Parties.
The Assumption and Assignment Procedures set forth in the Motion
regarding the assumption and assignment of the Assigned Contracts
proposed to be assumed by the Debtors and assigned to the
Successful Bidder are approved.
On April 7, 2020, or as soon as practicable thereafter, subject to
consultation with the Consultation Parties, the Debtors will (i)
file with the Court and serve the Cure Notice on all Contract
Counterparties, and (ii) serve the Cure Notice. The objection
deadline is April 27, 2020 at 5:00 p.m. (ET).
Notice of the Motion as provided therein will be deemed good and
sufficient notice of such Motion and the requirements of Bankruptcy
Rule 6004(a), the Bankruptcy Local Rules for the Northern District
of Georgia and the Complex Case Procedures are satisfied by such
notice.
The terms and conditions of the Order will be immediately effective
and enforceable upon its entry.
A copy of the Bidding Procedures is available at
https://tinyurl.com/v2cdymd from PacerMonitor.com free of charge.
About The Krystal Company
Founded in Chattanooga, Tenn., in 1932, The Krystal Company --
http://www.krystal.com/-- is a quick-service restaurant chain with
locations in the Southeastern United States. It is known for its
small, square hamburgers, served fresh and hot off the grill on the
iconic squarebun at approximately 320 restaurants in nine states.
Krystal's Atlanta-based Restaurant Support Center serves a team of
7,500 employees.
The Krystal Company, and affiliates Krystal Holdings, Inc. and
K-Square Acquisition Co., LLC, sought Chapter 11 protection (Bankr.
N.D. Ga. Case No. No. 20-61065) on Jan. 19, 2020.
The Debtors tapped King & Spalding LLP as legal counsel; Scroggins
& Williamson, P.C. as conflicts counsel; Piper Jaffray as
investment banker; and Kurtzman Carson Consultants, LLC as claims
agent. Alvarez & Marsal provides interim management to the
Debtors.
LA MERCED: OSP's Request to Compel Sale of Mortgage Property Okayed
-------------------------------------------------------------------
Judge Enrique S. Lamoutte of the U.S. Bankruptcy Court for the
District of Puerto Rico granted the request of OSP Consortium, LLC,
a Secured Creditor of La Merced Limited Partnership SE, to compel
the sale of the Mortgage Property.
The Mortgaged Property is described in the Registry of Property in
the Spanish language as follows:
--- URBANA: Predio de terreno radicado en la URBANIZACION
ELEONOR ROOSEVELT, radicada en el Barrio Hato Rey del término
municipal de Rio Piedras, hoy San Juan, Puerto Rico, con una cabida
de TRES MIL TRESCIENTOS CATORCE PUNTO VEINTICINCO (3,314.25) metros
cuadrados. En lindes por el NORTE, en ciento veintinueve (129) pies
nueve (9) pulgadas con la Avenida A; por el SUR, en igual medida
con terrenos de la Asociación de Miembros de la Policía Insular;
por el ESTE, en doscientos setenta y cinco (275) pies ocho y tres
cuartos (8 ¾) pulgadas, con la Calle "T"; y por el OESTE, en igual
medida con la Calle “H”. ---------
--- Enclava en dicho terreno un edificio todo de concreto, de
dos (2) plantas, dedicado a una escuela privada.
-----------------------------------------------------
--- Finca número trece mil cuatrocientos cincuenta y tres
(13,453), inscrita alfolio cuatro (4) del tomo mil cuatrocientos
sesenta y seis (1466) de Rio Piedras Norte, en el Registro de la
Propiedad de Puerto Rico, Segunda Sección de San Juan. --------
The transfer of the Mortgaged Property will be free and clear of
liens.
The factual allegations are not in controversy as shown by the
Debtor's motion to continue the confirmation hearing. The Court's
order continuing the confirmation hearing did not set aside the
stipulation reached by the parties and approved by the Court.
Notwithstanding, the Order does not prevent the parties from
reaching a further agreement.
About La Merced LP
La Merced Limited Partnership, S.E., is a single asset real estate,
as defined in 11 U.S.C. Section 101(51B)). Based in San Juan,
Puerto Rico, La Merced LP filed a voluntary petition under Chapter
11 of the Bankruptcy Code (Bankr. D.P.R. Case No. 18-06858) on Nov.
27, 2018. In the petition signed by Luz Celenia Castellano,
administrator, the Debtor disclosed $6,088,228 in liabilities.
Judge Enrique S. Lamoutte Inclan is the case judge. Nelson Robles
Diaz Law Offices, PSC, led by founding partner Nelson Robles Diaz,
is the Debtor's counsel.
LAKE ROAD WELDING: May 27 Plan & Disclosure Hearing Set
-------------------------------------------------------
On March 31, 2020, debtor Lake Road Welding, INC. dba LRW
Fabricators filed the Combined Plan of Reorganization and
Disclosure Statement.
On April 2, 2020, Judge Harlin DeWayne Hale conditionally approved
the Disclosure Statement and established the following dates and
deadlines:
* May 20, 2020, is fixed as the last day for filing written
acceptances or rejections of the Debtor’s proposed Chapter 11
Plan.
* May 20, 2020, at 5:00 p.m. is fixed as the last day and time
for filing and serving written objections to final approval of the
Debtor’s Disclosure Statement; or confirmation of the Debtor’s
proposed Chapter 11 plan.
* May 27, 2020, at 2:00 p.m. by the Honorable Harlin D. Hale,
1100 Commerce Street, 14 Floor, Courtroom #3, Dallas, TX 75242 is
the hearing to consider final approval of the Debtor’s Disclosure
Statement and to consider the confirmation of the Debtor’s
proposed Chapter 11 Plan.
A full-text copy of the order dated April 2, 2020, is available at
https://tinyurl.com/rlyp2yh from PacerMonitor at no charge.
The Debtor is represented by:
Areya Holder Aurzada
HOLDER LAW
901 Main Street, Suite 5320
Dallas, TX 75202
Telephone: (972) 438-8800
E-mail: areya@holderlawpc.com
About Lake Road Welding Co.
Lake Road Welding Co. provides structural steel fabrication and
industrial and commercial applications from Wichita Falls, Texas.
Lake Road Welding filed a voluntary Chapter 11 bankruptcy petition
(Bankr. N.D. Tex. Case No. 19-70239) on Aug. 22, 2019. In the
petition signed by Jerry Morgan, president, the Debtor was
estimated to have $500,000 to $1 million in assets and $1 million
to $10 million in liabilities. Judge Harlin DeWayne Hale oversees
the case. Areya Holder, Esq., at Holder Law, is the Debtor's legal
counsel.
LENNAR CORP: Moody's Alters Outlook on Ba1 CFR to Stable
--------------------------------------------------------
Moody's Investors Service changed the outlook for Lennar
Corporation to stable from positive. In the same rating action,
Moody's affirmed the company's Ba1 Corporate Family Rating, Ba1-PD
Probability of Default Rating, and the Ba1 rating on its senior
unsecured notes. The SGL-1 Speculative Grade Liquidity Rating is
maintained.
The change in the outlook to stable from positive reflects the view
that it is unlikely that Moody's will raise ratings for Lennar in
the near term as economic conditions weaken broadly. The immense
slowing in the US economy caused by the widespread coronavirus
pandemic is affecting the homebuilding industry. Moody's expects
that rising unemployment, declining consumer confidence, and
reduced wealth, given stock market losses, will cause many
potential homebuyers to delay, perhaps indefinitely, purchases of
homes. Moody's expects new home sales to decline significantly in
2020, with the most pronounced weakening occurring in Q2, followed
by modest sequential improvements in the second half of the year.
If economic conditions stabilize in 2021, as expected by Moody's
Macroeconomic Board, and employment conditions firm up, Moody's
foresees the homebuilding industry recovering steadily given
supportive underlying fundamentals, including lack of oversupply,
low interest rates supporting affordability, and favorable
demographic trends. The stable outlook reflects Moody's expectation
that Lennar will operate conservatively amid the weak environment
caused by the coronavirus by substantially reducing land spend and
new speculative home construction, conserving liquidity, and
continuing to repay debt.
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 homebuilding
industry is affected by the shock given its sensitivity to consumer
demand and sentiment and to unemployment levels. Moody's regards
the coronavirus outbreak as a social risk under its ESG framework,
given the substantial implications for public health and safety.
The following rating actions were taken:
Affirmations:
Issuer: Lennar Corporation
Probability of Default Rating, Affirmed Ba1-PD
Corporate Family Rating, Affirmed Ba1
Commercial Paper, Affirmed NP
Senior Unsecured Regular Bond/Debenture, Affirmed Ba1 (LGD4)
Outlook Actions:
Issuer: Lennar Corporation
Outlook, Changed to Stable from Positive
RATINGS RATIONALE
The company's Ba1 Corporate Family Rating is supported by: 1) its
status as one of the two largest homebuilders in the US with the
greatest revenue ($21 billion) and tangible equity base ($12.6
billion), and the associated benefits of size and scale; 2)
Lennar's strong market position and broad reach across homebuilding
markets nationally and locally; 3) the capability to deliver
quickly through debt repayment with its strong cash flow; 4)
healthy gross margins and robust earnings generation; and 5)
governance considerations, including a financial strategy that
focuses on deleveraging.
At the same time, Lennar's credit quality is constrained by: 1) a
high proportion of homes constructed on spec (which Moody's
estimates to be about half of all homes in production), and an
owned land supply of about 4 years (or nearly 70% of total land
supply) exposed to a risk of impairments; 2) cost pressures faced
by the industry that impact gross margin; 3) shareholder friendly
actions including share repurchases and dividends; 4) a track
record of investments in new and different asset classes and
structures and acquisitions; 5) exposure to cyclicality of the
industry and a possibility of protracted revenue declines and
meaningful impairments.
Lennar's SGL-1 Speculative Grade Liquidity Rating reflects Moody's
expectation that the company will maintain a very good liquidity
profile over the next 12 to 15 months. Liquidity is supported by
Lennar's $785 million of unrestricted cash at February 29, 2020,
Moody's expectation of strong cash flow, maintenance of substantial
availability under the company's $2.5 billion senior unsecured
revolving credit facility expiring in April 2024, and significant
headroom under its financial maintenance covenants.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Factors that could lead to an upgrade include:
- Stability of economic and homebuilding industry conditions
- Maintenance of strong credit metrics, including homebuilding
debt to book capitalization below 35% and EBIT interest
coverage in the high single digits on a sustained basis.
- Maintenance of a very good liquidity position, including
strong free cash flow generation
- A demonstrated commitment to attaining and maintaining an
investment grade rating, both to Moody's and to the debt
capital markets.
- A demonstrated ability to withstand a financial shock
without sinking to low speculative grade rating levels.
Factors that could lead to a downgrade include:
- The company begins generating net losses
- Major impairment charges were to loom
- Free cash flow was to turn sharply negative
- Debt leverage was to approach 50%
- Liquidity weakens
The principal methodology used in these ratings was Homebuilding
and Property Development Industry published in January 2018.
Founded in 1954 and headquartered in Miami, Florida, Lennar is one
of the country's two largest homebuilders. The company builds
first-time, move-up, and active adult homes primarily under the
Lennar brand name. Lennar's Financial Services segment provides
mortgage financing, title insurance, and closing services primarily
for buyers of Lennar's homes. Lennar's Multifamily segment is a
nationwide developer of multifamily rental properties. Lennar's
Other segment includes fund investments retained upon sale of
Rialto asset and investment management platform, and strategic
investments in technology companies. For the LTM period ended
February 29, 2020, Lennar generated homebuilding revenues of $21
billion and consolidated net income of $2.0 billion.
LIVEXLIVE MEDIA: Management, Employees Cut Salaries During Outbreak
-------------------------------------------------------------------
LiveXLive Media, Inc., disclosed in a Form 8-K filed with the
Securities and Exchange Commission that in light of the recent
Covid-19 situation, the Company is affirming its financial guidance
for its fiscal year ended March 31, 2020 as follows: revenue
between $38-$40 million, adjusted operating loss between $12-$14
million, CapEx between $2-$3 million and live streaming up to 40
live festivals and events.
During the period of ongoing Covid-19 coronavirus pandemic and
government actions taken in response, the Company continues to
evaluate its business and operations as they evolve in light of the
Covid-19 uncertain environment. As a result, the Company has
instituted certain actions with the main objectives of (i)
retaining its employee base, (ii) keeping the Company in the
strongest financial position possible and (iii) delivering the best
music service to its fans, brands and bands. While the Company
cannot determine the full extent of Covid-19's impact on its
business at the present time, it is monitoring the ever-changing
situation closely and will be prepared to discuss the business in
greater detail in the near future, including its 2020 year-end
earnings results conference call scheduled for June 2020.
On April 7, 2020, the Company's executive officers and other senior
management, desiring to demonstrate confidence in the Company and
to assist the Company's near term objectives in light of the
ongoing epidemic, agreed to accept a reduction in their monthly
base salaries in exchange for shares of the Company's common stock
that will vest in full in early calendar year 2021. This
compensation adjustment is anticipated to be in place through the
first fiscal quarter ending June 30, 2020, subject to further
review by the Company's board of directors and executive
management. During this period, the Company's chief executive
officer, president, chief financial officer and other executive
officers agreed to accept 50% of their monthly base salaries with
Vesting Shares, and forego any cash bonuses that maybe owed to them
with respect to the Company's fiscal year ended March 31, 2020,
with any such bonuses to be paid in Vesting Shares. In addition,
the remaining employees of the Company will receive between 10% to
25% reductions in their monthly base salaries, to be paid in lieu
in Vesting Shares, for the same quarterly period as indicated
above, subject to further review by the Board and executive
management. Such Vesting Shares will be subject to the Board's
final approval.
About LiveXLive Media
Headquartered in West Hollywood, CA, LiveXLive --
http://www.livexlive.com/-- is a global digital media company
focused on live entertainment. The Company operates LiveXLive, a
live music video streaming platform; and Slacker Radio, a streaming
music pioneer; and also produces original music-related content.
LiveXLive is the first 'live social music network', delivering
premium livestreams, digital audio and on-demand music experiences
from the world's top music festivals and concerts, including Rock
in Rio, EDC Las Vegas, Hangout Music Festival, and many more.
LiveXLive also gives audiences access to premium original content,
artist exclusives and industry interviews. Through its owned and
operated Internet radio service, Slacker Radio (www.slacker.com),
LiveXLive delivers its users access to millions of songs and
hundreds of expert-curated stations.
LiveXLive reported a net loss of $37.76 million for the year ended
March 31, 2019, compared to a net loss of $23.33 million for the
year ended March 31, 2018. As of Dec. 31, 2019, the Company had
$55 million in total assets, $56.89 million in total liabilities,
and a total stockholders' deficit of $1.90 million.
BDO USA, LLP, in Los Angeles, California, the Company's auditor
since 2018, issued a "going concern" opinion in its report dated
June 21, 2019, on the Company's consolidated financial statements
for the year ended March 31, 2019, citing that the Company has
suffered recurring losses from operations and has a working capital
deficiency. These factors raise substantial doubt about the
Company's ability to continue as a going concern.
LONESTAR RESOURCES: Fitch Cuts Sr. Secured Rating to 'CCC+/RR1'
---------------------------------------------------------------
Fitch Ratings has downgraded Lonestar Resources US, Inc. and
Lonestar Resources America, Inc. to 'CC' from 'CCC+'. The senior
secured revolver issued by Lonestar Resources America, Inc. was
downgraded to 'CCC+'/'RR1' from 'B+'/'RR1' and the senior unsecured
debt issued by Lonestar Resources America, Inc. was downgraded to
'C'/'RR5' from 'B'/'RR2'.
LONE's downgrade and ratings reflect Fitch's expectation that the
capital structure may be untenable as forecast FCF is unlikely to
be sufficient to materially reduce liquidity and refinancing risks,
particularly in the current challenged capital market environment,
raising the likelihood that the company may look to restructure its
debt over the next 12-18 months. Additional considerations include
the need to obtain technical default waivers on its financial
maintenance covenants, the risk of a lower borrowing base and the
potential of the requirement to make deficiency payments. The
prospective restructuring could take the form of either a
bankruptcy filing or an out-of-court restructuring, which Fitch
would likely consider a distressed debt exchange. LONE has a strong
hedge profile with the majority of its expected production hedged
through 2021 at attractive prices. This is supportive to its
borrowing base and could provide a potential near-term cash
liquidity source.
KEY RATING DRIVERS
Untenable Capital Structure: LONE's debt/EBITDA leverage was
approximately 4.8x at YE 2019, and Fitch forecasts FCF to be flat
to slightly negative. As of April 6, 2020, there was only $21.6
million of availability on the revolver, and Fitch does not expect
a material reduction of the revolver borrowings through the 2021
forecast period. The revolver is due November 2023, but springs to
July 2022 if the senior unsecured notes are still outstanding.
Financial capital markets are essentially closed for most high
yield energy issuers and it could be challenging for LONE to
address its revolver given lack of FCF and relatively high
leverage. Levers that can be employed by LONE include monetizing
hedges or asset sales, which could provide current liquidity but
would need to be balance against the impact of price risk and
borrowing base implications. Another prospective option is a
restructuring.
Borrowing Base Redetermination to Reduce Liquidity: At Dec. 31,
2019, LONE had $3.1 million in cash on the balance sheet, as of
April 6, 2020, availability under the revolver was $21.6 million.
LONE's next revolver borrowing base redetermination will take place
on May 1, 2020. Given the severely depressed global energy price
environment, Fitch believes that negative redetermination of LONE's
borrowing base may lead to a deficiency that they will have to
prepay over the following six months, but the current hedge
position help moderate this risk. In their 2019 annual report,
LONE's management expresses substantial doubt regarding their
ability to continue as a going concern in the face of these
liquidity concerns.
Financial Maintenance Covenant Breach: At Dec. 31, 2019, LONE
failed to satisfy the consolidated current ratio covenant under
their revolving credit facility, triggering an event of default.
While they received a waiver for this breach, LONE does not expect
to be able to comply with this covenant over the next twelve
months. Failure to reach an agreement with lenders or find
alternative financing may result in the acceleration of revolver
repayment, which may cause default and acceleration of the 11.25%
senior notes due 2023. Fitch believes alternative liquidity options
such as incremental debt or equity issuance, or asset sales are
unlikely to be viable financial alternatives.
Two-Year Hedge Coverage Supports Development: On March 12, 2020,
LONE announced their recent increases to their hedge book through
2021. With 7,452 boepd of crude oil swapped at an average price of
$57.09 per barrel and 20,000 MMBtu per day of natural gas swapped
at an average price of $2.55 per MMBtu, LONE has substantially all
of their production covered for 2020 at prices that far exceed the
current spot and strip. Further reducing their price risk, LONE has
established substantial hedges for oil (7,000 boepd at
$50.40/barrel) and natural gas (27,500 MMBtu per day at $2.36 per
MMBtu) through 2021. Fitch expects their robust hedge book to
protect LONE's development capex from near-term price weakness.
Small, Liquids-Oriented Asset Base: LONE's acreage position is
located within the crude and condensate areas of the Eagle Ford
with production averaging 15,187 boepd for the YE2019 (down from
18,100 boepd at Sept. 30, 2019) was comprised of 73% liquids (up
from 67% at Sept 30, 2019) realizing LLS-based pricing which tends
to trade at a premium to WTI. LONE's acreage is largely held by
production (93%, YE19) and operated (84%, YE19), increasing capex
flexibility. Due to their small size, LONE has operated with high
annual production growth rates (around 35% in 2019, year-over-year)
and while robust unit economics (netback of $15.40/boe at Sept. 30,
209) and hedge book offer protection to development spending, Fitch
expects growth and capex to be moderated by the current commodity
price weakness.
DERIVATION SUMMARY
LONE is small relative to U.S. onshore E&P peers, with production
of 15.2 mboe/d at Dec. 31, 2019 compared with production of 66.8
mboe/d for Magnolia Oil & Gas Corp. (MGY; B/Stable), 141.1 mboe/d
for Comstock Resources, Inc. (CRK; B/Negative), 80.3 mboe/d for
Extraction Oil & Gas, Inc. (XOG; B-/Rating Watch Negative [RWN]),
and 53.6 mboe/d for Great Western Petroleum, LLC (GWOC; B-/RWN).
LONE's recent historical operational momentum and favorable well
results has placed it on a relatively strong growth trajectory,
with yoy production growth of around 35% in 2019.
LONE also has a relatively competitive cost position, achieving
unhedged cash netbacks of approximately $18.10/boe at Sept. 30,
2019, driven in a large part by strong realized prices. While below
the cash netbacks realized by GWOC ($19.60/bbl at Sept. 30, 2019),
it is in-line with XOG ($15.40/bbl at Sept. 30, 2019).
LONE experiences substantially lower financial flexibility to
peers, with more than 90% of their revolver drawn at April 6, 2020,
compared with MGY (0% revolver draw) and XOG (55% revolver draw).
This lower financial flexibility is evident in LONE's recent and
expected financial covenant breach and possible borrowing base
deficiency given sufficiently negative redetermination.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Its Rating Case for the Issuer
-- WTI prices of $32.00, $42.00, $50.00 and $52.00 per barrel in
2020, 2021, 2022 and 2023, respectively;
-- Henry Hub prices of $1.85, $2.10, $2.25 and $2.50 per Mcf in
2020, 2021, 2022 and 2023, respectively;
-- Capital spending and production growth in 2020 protected by
robust hedge coverage with capex and production flat in 2021, with
modest increase in 2022;
-- Modest reduction in revolver borrowings from proceeds of
Pirate asset sale in 2020.
KEY RECOVERY RATING ASSUMPTIONS
The recovery analysis assumes that LONE would be reorganized as a
going-concern in bankruptcy rather than liquidated. Fitch has
assumed a 10% administrative claim.
Going-Concern (GC) Approach
The GC EBITDA assumption of $100 million takes into account a
prolonged commodity price downturn (as described by Fitch's stress
price deck) causing lower than expected production and cash flow.
An EV multiple of 4x EBITDA is applied to the GC EBITDA to
calculate a post-reorganization enterprise value. The choice of
this multiple considered the following factors:
The historical bankruptcy case study exit multiples for peer
companies ranged from 2.8x-7.0x, with an average of 5.6x and median
of 6.1x;
Fitch uses a multiple of 4x compared with the historical bankruptcy
case study exit multiple because of the company's small size and
cash flow uncertainty at Fitch's stress case price deck relative to
peers.
Liquidation Approach
The liquidation estimate reflects Fitch's view of transactional and
asset-based valuations, such as recent transactions for the Eagle
Ford basin on a $/acre basis. This data was used to determine a
reasonable sales price for the company's assets.
The company's main driver of value is its acreage in the Western
and Central regions of the Eagle Ford. LONE also has acreage in its
more prospective Eastern region, which has been ascribed a lower
valuation by Fitch.
The senior secured revolver is drawn over 100%, consistent with
current borrowings (over 90%) as of April 6, 2020, and industry
peers who have preemptively drawn the full balance.
The allocation of value in the liability waterfall results in
recovery corresponding to 'RR1' recovery for the first lien
revolver ($290 million) and a recovery corresponding to 'RR5' for
the senior unsecured notes ($250 million).
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- Successful refinancing/amendment of the revolving credit
facility to resolve covenant and liquidity shortfalls.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- A default or default-like process begins;
- A formal payment standstill period.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Non-Financial Corporate
issuers have a best-case rating upgrade scenario (defined as the
99th percentile of rating transitions, measured in a positive
direction) of three notches over a three-year rating horizon; and a
worst-case rating downgrade scenario (defined as the 99th
percentile of rating transitions, measured in a negative direction)
of four notches over three years. The complete span of best- and
worst-case scenario credit ratings for all rating categories ranges
from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are
based on historical performance.
LIQUIDITY AND DEBT STRUCTURE
Expected Liquidity Erosion: Fitch expects deterioration in LONE's
available liquidity as the current low commodity price environment
increases negative redetermination risk on their more than 90%
drawn revolver, which may result in borrowing base deficiency.
However, Fitch believes LONE's hedge book will provide some
borrowing base support and lead to a relatively cash flow neutral
profile.
Heightened Refinancing Risk: While LONE's only maturities are
delayed until 2023, Fitch believes there is heightened event risk
that the company may look to address its liquidity position or
capital structure to alleviate their constrained financial
flexibility considering recent and expected future covenant
breaches.
LONESTAR RESOURCES: Moody's Cuts CFR to Caa3 & Unsec. Rating to Ca
------------------------------------------------------------------
Moody's Investors Service downgraded Lonestar Resources America
Inc. Corporate Family Rating to Caa3 from Caa1, Probability of
Default Rating to Caa3-PD from Caa1-PD, and senior unsecured notes
to Ca from Caa2. The Speculative Grade Liquidity rating was
downgraded to SGL-4 from SGL-3. The outlook is negative.
"The downgrade of Lonestar Resources' ratings reflects Moody's
concerns over the company's weak liquidity position, the decline in
demand for oil & gas and low commodity prices," stated James
Wilkins, Moody's Senior Analyst.
Downgrades:
Issuer: Lonestar Resources America Inc.
Probability of Default Rating, Downgraded to Caa3-PD from Caa1-PD
Speculative Grade Liquidity Rating, Downgraded to SGL-4 from SGL-3
Corporate Family Rating, Downgraded to Caa3 from Caa1
Senior Unsecured Notes, Downgraded to Ca (LGD5) from Caa2 (LGD5)
Outlook Actions:
Issuer: Lonestar Resources America Inc.
Outlook, Changed to Negative from Stable
RATINGS RATIONALE
The downgrade of Lonestar's CFR to Caa3 and negative outlook
reflects the potential impact of lower commodity prices on
Lonestar's cash flows and liquidity and Moody's expectation that if
oil & gas demand remains low for an extended period, limited
industry storage could curtail Lonestar's ability to sell all its
produced volumes.
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 Lonestar's credit profile have left it vulnerable
to shifts in market sentiment in these unprecedented operating
conditions and Lonestar 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.
Its action reflects the impact on Lonestar of the breadth and
severity of the oil demand and supply shocks, and the broad
deterioration in credit quality it has triggered.
The SGL-4 Speculative Grade Liquidity Rating reflects Moody's
expectation that Lonestar will have weak liquidity through mid-2021
as a result of low commodity prices limiting its cash flow,
potentially insufficient unused capacity following the borrowing
base redetermination and the lack of cushion under the financial
covenants. The company generated negative free cash flow over the
past four years as it has grown production volumes. An increase in
reserves could help to offset the downward pressure on the
borrowing base from lower commodity prices, but may not be
sufficient for the company to maintain adequate availability.
Lonestar's liquidity is supported by its modest cash balance ($3.1
million as of December 31, 2019), cash flow from operations and
revolving credit facility due November 15, 2023. The revolving
credit facility borrowing base was $290 million at year-end 2019
and the company had $42.6 million of additional availability after
accounting for $247 million of drawings and $0.4 million of letters
of credit. Lonestar will remain reliant on its revolving credit.
The revolving credit facility has two financial covenants -- a
maximum leverage covenant (4.0x) and a minimum current ratio of 1x.
The company was not in compliance with the current ratio at
year-end 2019, but had entered into a waiver agreement so that it
was not in default under the agreement. However, there is no
assurance that the company will be able to continue to renegotiate
the covenant levels or obtain further waivers.
Lonestar's CFR also reflects the company's high leverage (Moody's
expects retained cash flow to debt below 20% in 2020), small-scale
operations (despite the recent acquisitions), large percentage of
undeveloped acreage that will require significant capital spending
to develop, limited operating history, and relatively high
leverage. The company's scale still remains small compared to peers
and the single basin (Eagle Ford) focus further constrains its
rating. The company benefits from its oil-weighted production,
reserve profile, and hedge position. The company has hedges on over
93% of oil and over 88% of natural gas expected volumes through
2021, and the company will likely continue to put additional hedges
in place on a rolling basis.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be downgraded if Lonestar's liquidity position
deteriorates and interest coverage weakens with EBITDA/interest
trending to below 2.75x. While not likely in the near term, the
ratings may be upgraded if the company maintains adequate liquidity
and delivers growth in production with RCF/debt above 15% amid a
general recovery in the industry.
The principal methodology used in these ratings was Independent
Exploration and Production Industry published in May 2017.
Lonestar Resources America, Inc., a wholly-owned subsidiary of
Lonestar Resources US Inc. (NASDAQ: LONE) headquartered in Fort
Worth, Texas, is an independent exploration and production company
with operations focused on the Eagle Ford Shale.
LONESTAR RESOURCES: Reports $111.6 Million Net Loss for 2019
------------------------------------------------------------
Lonestar Resources US Inc. filed with the Securities and Exchange
Commission its annual report on Form 10-K, disclosing a net loss
attributable to common stockholders of $111.56 million on $195.15
million of total revenues for the year ended Dec. 31, 2019,
compared to net income attributable to common stockholders of
$11.53 million on $201.17 million of total revenues for the year
ended Dec. 31, 2018.
Lonestar reported a net loss attributable to its common
stockholders of $76.2 million during 4Q19 compared to a net income
of $75.2 million during 4Q18. Excluding, on a tax-adjusted basis,
certain items that the Company does not view as either recurring or
indicative of its ongoing financial performance, Lonestar's
adjusted net loss for 4Q19 was $6.2 million. In particular, the
largest items include a $25.3 million unrealized hedging loss on
financial derivatives ('mark-to-market') and a $48.4 million
impairment on oil and gas properties.
Lonestar reported Adjusted EBITDAX for 4Q19 of $32.6 million,
within guidance of $32.0 - $34.0 million. On a sequential basis,
Adjusted EBITDAX decreased 12%, as the Company only placed 2 gross
/ 2.0 net wells onstream in 4Q19 after placing 4 gross/3.5 net
wells onstream in 3Q19.
Lonestar continues to utilize commodity derivatives to create a
higher degree of certainty in its cash flows and returns while
mitigating financial risk. Lonestar has crude swap volumes of
7,543 Bbls/d for Bal '20, at an average WTI price of $57.09/bbl,
and 7,000 Bbls/d for Cal '21 at an average WTI price of $50.40/bbl.
The Company's crude oil hedges cover greater than 95% of oil
production for Bal '20 and depending on activity, similar levels of
our production in Cal '21. Lonestar also has Henry Hub natural gas
swaps covering 20,000 MMBTU/d at a weighted-average price of $2.55
per MMBTU for Bal '20, and 27,500 MMBTU/d at a weighted-average
price of $2.36 per MMBTU for Cal '21, representing coverage of 65%
and 75% for both periods, respectively. Notably, all of the
Company's current hedges are swaps. Lonestar's hedge book
significantly insulates the Company's future production from
fluctuations in the commodity markets.
Lonestar's Chief Executive Officer, Frank D. Bracken, III,
commented, "2019 marked a year of continued achievement, both
technically and operationally. Continued refinement in our
Geo-Engineered drilling and completion process drove positive
reserve revisions related to new well performance and pushed Proved
reserves to over 100 million barrels of oil equivalent. 2019 saw
oil and gas production grow 36% versus 2018 levels, which provides
the Company enhanced scale which is driving reduced unit costs.
Operating expenses decreased 11% y-o-y on a per unit basis. Our
industry is reeling from the recent price collapse induced by the
Saudi/Russian rift and exacerbated by demand curtailment due to
governmental actions in response to the COVID-19 virus.
Fortunately, Lonestar is highly insulated from this price collapse
with a robust hedge book that insulates virtually all of the
Company's production not only for 2020 but also 2021. The current
mark-to-market of Lonestar's hedge book is approximately $100
million and is a significant financial and strategic asset for the
Company. These hedges allow us to conduct a drilling and
completion program focused on core areas that generate excellent
rates of return at our realized swap prices. This focused program
is allowing Lonestar to capture additional leasehold in its Hawkeye
and Horned Frog areas while also supporting our borrowing base.
While we are already one of the lowest cost operators in the Eagle
Ford Shale, we have taken on many initiatives in response to the
massive drop in commodity prices which are reducing costs
Company-side. Lastly, during this very difficult time, I want to
thank all of our employees who are working tirelessly to maintain
high levels of production and profitability."
As of Dec. 31, 2019, the Company had $720.78 million in total
assets, $330.82 million in total current liabilities, $269.07
million in total long-term liabilities, and total stockholders'
equity of $120.89 million.
BDO USA, LLP, in Dallas, Texas, the Company's auditor since 2013,
issued a "going concern" qualification in its report dated
April 13, 2020 citing that the Company did not satisfy certain
covenants under the Company's revolving credit facility as of Dec.
31, 2019 and does not anticipate maintaining compliance with the
consolidated current ratio covenant over the next twelve months,
which could lead to acceleration of the Company's debt obligations.
These matters raise substantial doubt about the Company's ability
to continue as a going concern.
A full-text copy of the Form 10-K is available for free at:
https://is.gd/6JpicN
About Lonestar Resources
Headquartered in Fort Worth, Texas, Lonestar --
http://www.lonestarresources.com/-- is an independent oil and
natural gas company, focused on the development, production, and
acquisition of unconventional oil, natural gas liquids, and natural
gas properties in the Eagle Ford Shale in Texas, where the Company
has accumulated approximately 72,642 gross (53,831 net) acres in
what it believes to be the formation's crude oil and condensate
windows, as of Dec. 31, 2019.
LONGVIEW POWER: Faegre Drinker Represents Term Lender Group
-----------------------------------------------------------
Pursuant to Rule 2019 of the Federal Rules of Bankruptcy Procedure,
the law firm of Faegre Drinker Biddle & Reath LLP submitted a
verified statement to disclose that it is representing the Ad Hoc
Group of Term Lenders in the Chapter 11 cases of Longview Power,
LLC, et al.
Beginning in February 2020, the Ad Hoc Group of Term Lenders
retained Faegre Drinker to represent them in connection with a
potential restructuring of the Debtors' obligations under the
Prepetition Credit Agreement.
As of April 15, 2020, members of the Ad Hoc Group of Term Lenders
and their disclosable economic interests are:
Cetus Capital III LP
8 Sound Shore Drive Suite 303
Greenwich, CT 06830
* Term B Loan: $10,644,877.11
Cetus Capital VI LP
8 Sound Shore Drive Suite 303
Greenwich, CT 06830
* Term B Loan: $7,934,963.63
Littlejohn Opportunities Master Fund LP
8 Sound Shore Drive Suite 303
Greenwich, CT 06830
* Term B Loan: $5,189,860.55
OFM II LP
8 Sound Shore Drive Suite 303
Greenwich, CT 06830
* Term B Loan: $11,156,568.38
VSS Fund LP
8 Sound Shore Drive Suite 303
Greenwich, CT 06830
* Term B Loan: $4,617,096.00
CION Investment Corporation
3 Park Ave, 36th Floor
New York, NY 10016
* Term B Loan: $7,899,303.77
34th Street Funding LLC
3 Park Ave, 36th Floor
New York, NY 10016
* Term B Loan: $9,845,360.80
DoubleLine Capital LP
333 South Grand Ave, 18th Floor
Los Angeles, CA 90071
* Term B Loan: $9,550,000
Eaton Vance Management
2 International Place
Boston, MA 02110
* Term B Loan: $18,155,762.31
Boston Management and Research
2 International Place
Boston, MA 02110
* Term B Loan: $15,839,887.35
MJX Asset Management LLC
12 E 49th Street, 38th Floor
New York, NY 10017
* Term B Loan: $12,905,638.23
* Equity Interest: 394,540 shares
Seix Investment Advisors LLC
1 Maynard Drive Suite 3200
Park Ridge, NJ 07656
* Term B Loan: $23,073,572.99
Sound Point Capital Management LP
375 Park Avenue, 33rd Floor
New York, NY 10152
* Term B Loan: $21,662,118.33
Trilogy Capital Management LLC
500 Mamaroneck Ave
Harrison, NY 10528
* Term B Loan: $48,349,439.34
* Equity Interest: 4,683,154 shares
Voya Investment Management Co LLC
230 Park Avenue
New York, NY 10169
* Term B Loan: $13,117,933.00
* Equity Interest: 361,772 shares
Counsel represents only the Ad Hoc Group of Term Lenders in
connection with the Prepetition Credit Agreement and does not
represent or purport to represent any entity or entities other than
the Ad Hoc Group of Term Lenders in connection with the Debtors'
Chapter 11 Cases.
Nothing contained in this Verified Statement should be construed as
a limitation upon, or waive of, any rights of the Ad Hoc Group of
Term Lenders to assert, file, and/or amend any claim or proof of
claim filed in accordance with applicable law and any orders
entered in these Chapter 11 Cases.
Faegre Drinker reserves the right to amend this Verified Statement
as necessary in accordance with the requirements set forth in
Bankruptcy Rule 2019.
Counsel for the Ad Hoc Group of Term Lenders can be reached at:
FAEGRE DRINKER BIDDLE & REATH LLP
Kaitlin W. MacKenzie, Esq.
222 Delaware Ave., Suite 1410
Wilmington, DE 19801-1621
Telephone: (302) 467-4213
Facsimile: (302) 467-4201
E-mail: kaitlin.mackenzie@faegredrinker.com
- and –
James H. Millar, Esq.
Laura A. Appleby, Esq.
Kyle R. Kistinger, Esq.
New York, NY 10036-2714
Telephone: (212) 248-3140
Facsimile: (212) 248-3141
E-mail: james.millar@faegredrinker.com
laura.appleby@faegredrinker.com
kyle.kistinger@faegredrinker.com
A copy of the Rule 2019 filing, downloaded from PacerMonitor.com,
is available at https://is.gd/ECY9Gs
About Longview Power
Longview Power LLC is a special purpose entity created to
construct, own, and operate a 695 MW supercritical pulverized
coal-fired power plant located in Maidsville, West Virginia, just
south of the Pennsylvania border and approximately 70 miles south
of Pittsburgh. The project is owned 92% by First Reserve
Corporation (First Reserve or sponsor), a private equity firm
specializing in energy industry investments, through its affiliate
GenPower Holdings (Delaware), L.P., and 8% by minority interests.
Longview Power, LLC, filed a Chapter 11 (Bank. D. Del. Lead Case
13-12211) on Aug. 30, 2013. The petitions were signed by Jeffery
L. Keffer, the Company's chief executive officer, president,
treasurer and secretary. The Debtor estimated assets and debts of
more than $1 billion. Judge Brendan Linehan Shannon presides over
the case. Kirkland & Ellis LLP and Richards, Layton & Finger, P.A.,
serve as the Debtors' counsel. Lazard Freres & Company LLC acts as
the Debtors' investment bankers. Alvarez & Marsal North America,
LLC, is the Debtors' restructuring advisors. Ernst & Young serves
as the Debtors' accountants. The Debtors' claims agent is Donlin,
Recano & Co. Inc.
The Debtor disclosed assets of $1.72 billion plus undisclosed
amounts and liabilities of $1.08 billion plus undisclosed amounts.
A committee of unsecured creditors has not been appointed in the
case due to insufficient response to the U.S. Trustee's
communication/ contact for service on the committee.
Judge Brendan Linehan Shannon on March 16, 2015, confirmed the
Debtors' Second Amended Joint Plan of Reorganization. The Plan
incorporates the settlement among the Debtors, First American Title
Insurance Company, and their contractors Amec Foster Wheeler North
America, Kvaerner, and Siemens Energy, Inc.
LONGVIEW POWER: Files Prepack Chapter 11, Blames COVID-19
---------------------------------------------------------
Longview Power LLC has filed for Chapter 11 bankruptcy protection
with a prepackaged reorganization plan as a result of substantially
lessened demand for electricity due to long term power-pricing
pressure caused by cheap natural gas, an unseasonably warm winter,
and the COVID-19 pandemic and resulting economic impact, which
collectively have severely depressed power prices. The Company will
continue to operate in the ordinary course as it quickly
restructures its balance sheet. Over 85% in interest of the
Company's senior secured lenders support the Company's prepackaged
Chapter 11 reorganization plan, which will substantially lessen the
cost and time required for this restructuring.
The current unprecedented low energy prices in PJM has prompted
Longview to take this step to facilitate the efficient transition
of ownership to its senior secured lenders through a restructuring
and deleveraging of its balance sheet to eliminate its now
unsustainable debt burden, and through the plan Longview will enter
into a $40 million new money exit facility. Longview's
reorganization plan provides for the continued payment of all
vendors in the ordinary course of business.
Jeffery Keffer, CEO, stated, "This filing is unfortunate but
necessary given the current depressed power prices, which have
further dropped more recently due to the terrible COVID-19 pandemic
sweeping the nation and dramatic effects of the pandemic on the
economy. We are fortunate to have strong support from our senior
secured lenders who under the plan will become our owners and
provide needed financing. As a result, we are not planning any
changes to our staffing, we expect to pay vendors in the ordinary
course during the Chapter 11 process, and we will continue to
operate as productively as ever. Further, we do not anticipate any
change in the development of the Longview natural gas and solar
projects as the two expansion project entities are not included in
this Chapter 11 bankruptcy filing."
Longview is the most efficient and lowest cost coal-fired power
plant in PJM and one of the most environmentally compliant and
cleanest coal plants globally. The Longview expansion projects with
the existing power facility will create a 2000 MW clean energy
center using diverse fuels to cleanly generate electricity.
Longview expects to continue to serve PJM and millions of its
customers for many years to come.
The Terms of Plan
The Plan provides for a comprehensive restructuring of Longview's
obligations, preserves the going-concern value of its business, and
protects the jobs of more than 140 employees.
According to the explanatory Disclosure Statement, the Plan
provides, among other things, that:
* certain lenders will commit to backstop a $40 million new
money term loan facility to provide reorganized Longview with
sufficient capital to fund their future business and all Holders of
Prepetition Credit Agreement Claims will have the option to fund
their pro rata share of the Exit Facility if they so elect on or
before the Voting Deadline;
* each Holder of an Allowed Prepetition Credit Agreement Claim
will receive its pro rata share of (a) 10% of the New Common
Equity, (b) the subscription rights to participate in the Exit
Facility, and (c) the New Warrants which are exercisable if a
Holder elects to participate in the Exit Facility;
* all outstanding and undisputed General Unsecured Claims
against the Debtors will be unimpaired and unaffected by the
restructuring and will be paid in full in Cash, unless
otherwise agreed to by Holders of General Unsecured Claims;
• all Subordinated Notes Claims and all Interests in Longview
will be discharged, cancelled, released, and extinguished but will
be entitled to releases under the Plan;
* all Administrative Claims, Priority Tax Claims, Other Secured
Claims, and Other Priority Claims will be paid in full in Cash or
receive such other treatment that renders such Claims
unimpaired under the Bankruptcy Code; and
* Longview entities that are not Debtors will be released from
their guarantees under the Prepetition Credit Agreement and the
Subordinated Notes Purchase Agreement.
Through the financial restructuring of Longview's capital
structure, the Plan will improve the Company's financial condition
and overall creditworthiness, provide the Company with the
financial flexibility and stability to grow their business going
forward, and leave General Unsecured Claims unimpaired.
About Longview Power
Longview Power, LLC, together with Longview Intermediate Holdings
C, LLC and its non-debtor affiliates, operates a 710 megawatt
advanced supercritical coal fired power generation facility located
in Maidsville, West Virginia that uses equipment, processes,
designs, and technology developed specifically for use at the
Maidsville site. Longview is a privately owned power company that
was formed in 2003 for the purpose of constructing and operating
the coal-burning Longview Plant in Monongalia County, West
Virginia.
Longview Power, LLC and affiliate Longview Intermediate Holdings C,
LLC sought Chapter 11 protection (Bankr. D. Del. Lead Case No.
20-10951) on April 14, 2020.
Longview Power was estimated to have $100 million to $500 million
in assets and liabilities as of the bankruptcy filing.
The Debtor tapped KIRKLAND & ELLIS LLP as bankruptcy counsel;
RICHARDS, LAYTON & FINGER, P.A., as local counsel; 3CUBED ADVISORY
SERVICES, LLC as restructuring advisor; and HOULIHAN LOKEY, INC. as
financial advisor. DONLIN, RECANO & COMPANY, INC. is the claims
agent.
MARGARET SCHMIDT: $4.25M Sale of Assisted Living Assets to CV OK'd
------------------------------------------------------------------
Judge Michael G. Williamson of the U.S. Bankruptcy Court for the
Middle District of Florida authorized Margaret Schmidt's sale of
Assisted Living of Pasco, Inc., a Florida corporation doing
business as Forest Glen Lodge, and the underlying real property
located at 7435 Plathe Road, New Port Richey, Florida, to CV Forest
Glen Holding, LLC for $4.25 million, pursuant to their Asset
Purchase Agreement.
A hearing on the Motion was held on March 4, 2020, at 9:30 a.m.
Subject to the terms of the APA, the Purchaser will close under the
APA by no later than June 1, 2020, subject to extension for New
Owner Licensing.
The sale is free and clear of any and all Encumbrances, subject to
the payment by the Purchaser of the Purchase Price. Said
Encumbrances will attach to the proceeds of the sale.
At the Closing, the Purchaser will (a) authorize release of the
Deposit to Debtor's bankruptcy counsel, Stichter, Riedel, Blain &
Postler, P.A., (b) pay by wire transfer of immediately available
funds, the Purchase Price less the Deposit.
Following Closing and receipt of the Closing Payment, Stichter,
Riedel will be authorized and will pay creditors of the Debtor from
the Closing Payment, without further order of the Court, the
amounts necessary to consummate the confirmed Plan, as modified.
Payments to creditors by Stichter Riedel will be made within five
business days of receipt of the Closing Payment or as soon
thereafter as a creditor may provide a payoff statement if one is
required.
The sale of the Assets by the Debtor is in contemplation of, a
necessary condition precedent and essential to, and necessary to
consummate and implement the confirmation of the Debtor's plan of
liquidation, as modified in the case and, accordingly, constitutes
a transfer to which Section 1146(a) of the Bankruptcy Code applies.
Any real estate, personal property or other taxes related to the
Assets accruing after the Closing Date will be the responsibility
of the Purchaser. Conversely, any real estate, personal property
or other taxes related to the Assets accruing before the Closing
Date will be the responsibility of the Debtor. Upon the
consummation of the Closing on the purchase of the Assets, any
taxing authorities or governmental agencies having jurisdiction
over the Assets will have no further claim against the Debtor or
the Debtor's estate for taxes (excluding income taxes) accruing
after the Closing Date.
Upon the closing of the Sale, the Purchaser will take title to and
possession of the Assets subject only to the rights of the Debtor
under the APA, Assumed Liabilities, and Permitted Liens, and the
Purchaser specifically will take title free and clear of any
successor liability claim that could be asserted by any creditor or
party in interest.
Margaret Schmidt sought Chapter 11 protection (Bankr. M.D. Fla.
Case No. 16-10622) on Dec. 14, 2016. The Debtor tapped Suzy Tate,
Esq., at Suzy Tate, P.A. as counsel. On Aug. 21, 2017, the Court
confirmed the Debtor's Chapter 11 Plan.
MARK ALLEN KRIEGER: $98K Sale of Bucks of Brouilletts Creek Okayed
------------------------------------------------------------------
Judge Scott W. Dales of the U.S. Bankruptcy Court for the Western
District of Michigan authorized Mark Allen Krieger and Jame Sue
Secondino Krieger to sell their sale of the vacant land, consisting
of approximately 49.31 acres, known as the Bucks of Brouilletts
Creek, in Vermillion County, Indiana, to Matthew J. Sanquenetti for
$98,000.
The sale is free and clear of all liens, claims and interests. BMO
Harris Bank, N.A. and First Financial Bank, N.A. have consented to
the sale on the terms set forth in the Order.
The Debtors will pay from the sale proceeds (i) all real estate
taxes, special assessments and annual fees for prior years and a
pro-rated amount for 2020 through the date of closing; (ii) the
premium for an owners' title insurance policy to be issued in the
name of the Buyer; (iii) closing fees, recording fees, and other
customary sale expenses; and (iv) the cost of the survey.
The sum of $4,900 for potential real estate commission for Indiana
Land and Lifestyle - Mossy Oak Properties and the sum of $2,500 for
the Debtors' attorney’s fees incurred in connection with the
Motion and sale will be escrowed and held in the Debtors'
attorney's trust account pending further order of the Court on a
determination of the extent such fees are properly chargeable
against the Net Proceeds. The United States Trustee, BMO and First
Financial reserve all rights to object to the real estate
commission and the Debtors' attorney fees.
At the closing on the sale, after payment of the items set forth,
including escrow of the amounts for real estate commission and
attorney fees, the title company conducting the closing will remit
the balance of the $98,000 of the sale proceeds to BMO to be
applied to its secured claim in the Bankruptcy case.
Pursuant to the Court's Dec. 18, 2019 Memorandum of Decision and
Order, the Receiver has exclusive authority to market and/or sell
property of the receivership estate and the Debtors do not have the
right or ability to market and/or sell property of the receivership
estate, except for the authority reserved. Nonetheless, by
agreement of the parties only, and without establishing any
precedent for future transactions, the Court approves the sale of
the Property to the Buyer.
If the sale of the Property to the Buyer does not close by March 9,
2020, the Debtors' authority under the Order is rescinded and the
Receiver will thereafter have exclusive authority to market and
sell the Property, and the estate will have no Section 506 (0)
claim against BMO relating to the Property. Notwithstanding that
provision, BMO may extend the March 9, 2020 deadline to close by
Stipulation filed with Court.
The Debtors will sign a state court stipulated order that clarifies
for the state court judge administering the receivership estate
that it is a one-time exception and, that, therefore, the Debtors
have no authority to market and/or sell any other receivership
property.
The 14-day stay period imposed by Bankruptcy Rule 6004(h) is waived
so that the sale contemplated by the Motion may be conducted
promptly after entry of the Order.
Mark Allen Krieger and Jame Sue Secondino Krieger sought Chapter 11
protection (Bankr. W.D. Mich. Case No. 19-02148) on May 15, 2019.
The Debtors tapped Perry G. Pastula, Esq., at Dunn Schouten & Snoap
PC as counsel.
MCIG INC: Reports $645K Net Loss for Third Quarter
--------------------------------------------------
mCig, Inc., filed with the Securities and Exchange Commission its
Quarterly Report on Form 10-Q on April 13, 2020, disclosing
a net loss attributable to controlling interest of $644,664 on
$33,415 of sales for the three months ended Jan. 31, 2020 compared
to a net loss attributable to controlling interest of $750,644 on
$763,084 of sales for the three months ended Jan. 31, 2019.
For the nine months ended Jan. 31, 2020 the Company recorded a net
loss attributable controlling interest of $71,816 on $908,871 of
sales compared to a net loss attributable to controlling interest
of $1.54 million on $1.94 million of sales for the nine months
ended Jan. 31, 2019.
As of Jan. 31, 2020 the Company had $6.08 million in total assets,
$758,713 in total liabilities, and $5.32 million in total equity.
During the nine months ended Jan. 31, 2020 the Company utilized
$262,066 in cash. Its cash on hand as of Jan. 31, 2019 was
$19,766.
Based on the Company's revenues, cash on hand and current monthly
burn rate, the Company believes that its liquidity is sufficient to
fund operations through April 2020.
The Company's operations produced $734,293 in cash by operating
activities for the nine months ended Jan. 31, 2020, as compared to
the use of $1,881,887 for the nine months ended Jan. 31, 2019.
Net cash used by operations consisted primarily of the net loss of
$71,816 offset by non-cash expenses of $208,741 in depreciation and
amortization of intangible assets, $256,500 in stock based
compensation, and $153,365 in minority interest earnings of
subsidiaries, net, offset by $157,193 in the net effect to cash
from non-consolidation of OBITX. Additionally, changes in assets
and liabilities consisted of decreases of $36,928 in accounts
receivable, prepaid expenses of $10,100, inventory of $459,557 and
other receivables of $48,550 with decreases in deferred revenue of
$21,257, $91,630 in accounts payable, and reserve for uncollectable
accounts of $452.
The Company gained $463,965 in investing activities for the nine
months ended Jan. 31, 2020 compared to spending in investing
activities of $310,414 for the nine months ended Jan. 31, 2019. The
Company's investing activities was primarily due to the settlement
of accounts payable, through sale of assets owned.
The Company had net cash used in financing activities of $532,394
while it had net proceeds of $310,414 for the nine months ended
Jan. 31, 2020 and 2019 respectively. The Company's financing
activities consisted of an increase of $85,695 in due to related
party offset by paying off $172,225 in notes payable and the loss
of $445,864 through the proceeds from issuance of stock.
A full-text copy of the Form 10-Q is available for free at:
https://is.gd/WbdLLy
About mCig
Headquartered in Jacksonville, Florida, MCIG, Inc. --
http://www.mciggroup.com/-- operates two distinct divisions:
pharmaceuticals and consumer products. These divisions are
supported by its medical and scientific advisory board, and
state-of-the art production facilities.
mCig reported a net loss attributable to controlling interest of
$3.06 million for the year ended April 30, 2019, compared to a net
loss attributable to controlling interest of $1.08 million for the
year ended April 30, 2018.
Weinstein International CPA, in Tel Aviv, Israel, the Company's
auditor since 2019, issued a "going concern" qualification in its
report dated Nov. 19, 2019 citing that as of April 30, 2019, the
Company has negative cash flow and there are no assurances the
Company will generate a profit or obtain positive cash flow, in
addition the Company has a nominal working capital deficit. These
and other factors raise substantial doubt about the Company's
ability to continue as a going concern.
METHANEX CORP: S&P Lowers ICR to 'BB' on Weak Economic Conditions
-----------------------------------------------------------------
S&P Global Ratings lowered the issuer credit rating on Methanex
Corp. to 'BB' from 'BB+'. S&P has also lowered the issue-level
ratings on the company's senior unsecured debt to 'BB' from 'BB+'.
The recovery ratings remain '3'.
"The downgrade follows Methanex's significantly weaker operating
performance in 2019 and our expectation that EBITDA and credit
metrics will weaken further in 2020. Methanex's average realized
methanol prices declined by about 27% to $295 per tonne in 2019,
compared with average 2018 levels of $405 per tonne. Given the
recessionary conditions in 2020 driven by the coronavirus pandemic,
we believe that demand from traditional chemical applications, such
as formaldehyde and acetic acid will weaken, because these are
typically tied to GDP and industrial production growth.
Additionally, roughly 45% of global methanol demand is derived from
energy-related applications such as methanol-to-olefin (MTO)
facilities, which are significantly less economical in the current
depressed oil price environment. Given our expectation for $30
Brent crude oil prices in 2020, we believe that MTO facilities in
China will be further disadvantaged on weaker olefin prices and
compared to facilities that use naphtha or natural gas based
inputs," S&P said.
The negative outlook reflects S&P's expectation that the global
macroeconomic recession in 2020 will lead to a material drop in
methanol demand and pricing, thus stressing EBITDA and credit
measures. Additionally, methanol prices will likely weaken further
from 2019 levels given S&P's expectation that 2020 Brent crude oil
prices will be $30 per barrel, a material drop from 2019 levels. In
its base case scenario, S&P forecasts that FFO to debt will be weak
for the rating in 2020, dropping to around 10%, before seeing
improvement in 2021 to more appropriate levels. At the current
rating, S&P would expect the company to maintain weighted-average
FFO to debt in the 12% to 20% range. The rating agency believes the
company will look to preserve cash flows and prioritize maintaining
its liquidity position in the downturn, as exhibited by its
decision to defer spending on its Geismar 3 facility.
"We could lower our ratings on Methanex by one notch in the next 12
months if realized methanol prices decline to at, or below 2009
levels of around $225 per tonne, for an extended period. We believe
this could be driven by prolonged weakness in global industrial
production, and depressed operating rates for MTO facilities, which
had previously been expected to be a key driver for methanol
demand. Specifically, we would consider lowering our rating if
depressed methanol prices and lower than expected operating rates
led to EBITDA margins declining by 150 basis points compared to our
base case scenario. In such a scenario, we would expect the
company's FFO to debt to remain well below 12% in 2020, with
limited prospects for material improvement in 2021. We could also
consider lowering our rating if the EBITDA cushion under the
company's covenants is tighter than we project and we do not
believe the company would be successful in obtaining covenant
relief. Lastly, we could consider a lower rating if financial
policies are more aggressive than we expect, with the company
restarting growth spending on the Geismar 3 facility in a manner
that weakens credit measures," S&P said.
"We could consider revising our outlook on Methanex within the next
12 months if methanol prices rebound quicker than we expect,
causing the company's revenues and EBITDA margins to exceed our
base case expectations by 10% and at least 150 basis points (bps),
respectively. We believe this could be driven by a significant
improvement in oil prices, which would likely improve the
affordability and operating rates at MTO facilities, or a quicker
recovery in GDP and industrial production. In our upside scenario,
we believe EBITDA and cash flows would strengthen from trough
levels quicker than we project, leading to FFO to debt improving to
the 12% to 20% range on a sustainable basis. Before revising our
outlook, we would need to be more certain that Methanex would
manage capital spending at the Geismar 3 facility so that it does
not strain its liquidity position or stall any improvement in
credit measures," the rating agency said.
MIAMI AIR INTERNATIONAL: US Trustee Appoints Creditors' Committee
-----------------------------------------------------------------
The U.S. Trustee for Region 21 on April 14, 2020, appointed a
committee to represent unsecured creditors in the Chapter 11 case
of Miami Air International, Inc.
The committee members are:
1. Michael Morrissey
Engine Lease Finance Corporation
Building 156 Shannon Free Zone
Shannon, Co. Clare, Ireland
Tel: +353 (0)61 291730
Fax: +353 (0)61 361785
E-mail: Michael.morrissey@elfc.com
2. Margaret Epstein Wilmington Trust Co., solely as Trustee
Aercap Global Aviation Trust
10250 Constellation Blvd., Suite 1500
Los Angeles, CA 90067
Tel: 310-557-4944
E-mail: Mepstein@aercap.com
3. Deena Barcus
Vice-President of Finance
Air Culinaire Worldwide, LLC
5830 W. Cypress Street, Suite B & C
Tampa, FL 33607
Tel: 813-449-6001
Fax: 813-449-6045
E-mail: d.barcus@airculinaire.com
Official creditors' committees serve as fiduciaries to the general
population of creditors they represent. They may investigate the
debtor's business and financial affairs. Committees have the right
to employ legal counsel, accountants and financial advisors at a
debtor's expense.
About Miami Air International
Miami Air International, Inc., based in Miami, FL, filed a Chapter
11 petition (Bankr. S.D. Fla. Case No. 20-13924) on March 24, 2020.
In the petition signed by Annette Eckerle, authorized officer, the
Debtor was estimated to have $1 million to $10 million in assets
and $10 million to $50 million in liabilities. The Hon. Jay A.
Cristol oversees the case. Paul J. Battista, Esq., at Genovese
Joblove & Battista, P.A., serves as bankruptcy counsel.
MOUNTAINEER GAS: Fitch Affirms 'BB+' LongTerm IDR, Outlook Stable
-----------------------------------------------------------------
Fitch Ratings has affirmed the Long-Term Issuer Default Rating of
Mountaineer Gas Company at 'BB+' with a Stable Rating Outlook.
Fitch has also affirmed MGC's senior unsecured debt ratings at
'BBB-'/'RR1'.
MCG's ratings primarily reflect a challenging regulatory
environment in West Virginia, the utility's small scale of
operations and private equity ownership. MGC's ongoing pipe
replacement program will keep capex elevated throughout the
forecast period. Fitch considers the infrastructure replacement and
expansion program cost-recovery rider to be a credit positive as it
partly alleviates regulatory lag. Despite the large capex program,
Fitch expects MGC's financial profile to remain supportive of
existing ratings over 2020-2023. Fitch does not expect the ongoing
global coronavirus pandemic to have a material impact on MGC's
ratings.
KEY RATING DRIVERS
Challenging Regulatory Environment: Fitch considers the regulatory
environment in West Virginia to be challenging. The Public Service
Commission of West Virginia does not allow revenue decoupling or
weather normalization, contributing to sometimes volatile cash
flows and credit metrics. MGC's 9.75% authorized return on equity
is in line with industry averages. However, the WVPSC's use of a
historical test year with an average rate base valuation
methodology in rate case decisions causes significant regulatory
lag and makes it difficult for the company to earn its allowed ROE.
Regulatory lag is partially mitigated by the IREP cost-recovery
rider, which provides a timelier recovery of costs related to
system expansion and pipe replacement.
Small Scale of Operations: MGC's ratings are limited by the
utility's small scale of operations. Over the last three years,
Operating EBITDA and funds flow from operations have each averaged
less than $35 million per year, making MGC one of the smallest
stand-alone investor-owned utilities rated by Fitch. Small changes
in revenue or expenses can have a material impact on financial
metrics, causing the utility to be more vulnerable to external
shocks. Such changes in revenue are not unlikely given the
regulatory environment in West Virginia, which does not allow
revenue decoupling or weather normalization.
Private Equity Ownership: MGC's ratings are also limited by the
utility's private equity ownership. MGC's holding company,
Mountaineer Gas Holdings Limited Partnership, is owned by private
equity funds ultimately owned by iCON Infrastructure LLP and IGS
Utilities LLC. Fitch considers private equity ownership to present
an increased level of credit risk due to the typically more
aggressive dividend payout policy, weaker financial flexibility and
less transparent corporate governance compared with a publicly
traded company. However, MGC's owners have provided support through
equity infusions and a lower dividend payout as the utility
undergoes its large capex plan.
2019 Rate Case Settlement: Fitch considers MGC's recent rate case
outcome to be relatively constructive. On Dec. 26, 2019, the WVPSC
adopted a rate settlement that allowed MGC to implement a $13.4
million gas distribution base rate increase, which was then reduced
by about $1.0 million of refunds related to the Tax Cut and Jobs
Act. The rate order also included a reduction to the IREP
cost-recovery rider of $5.2 million. The 9.75% ROE authorized by
the commission was in line with MGC's previous rate case, and the
new rates took effect on Jan. 1, 2020.
In this rate order, the WVPSC calculated rate base and depreciation
using the terminal value of plant assets in the test year, matching
the more constructive method used by the IREP rider. Previously,
the WVPSC calculated rate base and depreciation using a 13-month
average balance, which resulted in more regulatory lag. MGC filed
its rate case with the WVPSC on March 6, 2019 and requested a net
rate increase of approximately $13.1 million, consisting of a base
rate increase of $19.3 million and a reduction to the IREP
cost-recovery rider of $6.2 million.
Supportive, But Volatile, Credit Metrics: Fitch expects MGC's
financial profile to remain supportive of the ratings throughout
the forecast period. However, the company's small size, large
seasonal working capital needs and exposure to the effects of
weather could result in significant swings in credit metrics, both
on a seasonal basis and year-to-year. In 2019, leverage was
significantly weaker due to an abnormally mild winter. Assuming a
return to normal weather, Fitch expects FFO leverage and total debt
with equity credit/operating EBITDA to average approximately 4.7x
and 4.8x, respectively, through 2023.
Elevated Capex Program: Fitch expects MGC's capex to remain
elevated over the next several years, driven largely by the
replacement of aging infrastructure, primarily bare steel pipe. The
IREP cost-recovery rider helps to alleviate concerns related to the
large capex plan.
Group Structure Complexity: MGC has an Environmental, Social and
Governance Relevance Score of 4 for Group Structure and Financial
Transparency, as private-equity backed entities typically have less
structural and financial disclosure transparency than publicly
traded issuers. This has a negative impact on the credit profile
and is relevant to the rating in conjunction with other factors.
DERIVATION SUMMARY
MGC has a weaker business risk profile than the following peer
entities: The Berkshire Gas Company (BGC; A-/Stable), Connecticut
Natural Gas Corporation (CNG; A-/Stable) and The Southern
Connecticut Gas Company (SCG; A-/Stable). This is largely due to
West Virginia's challenging regulatory environment. BGC, CNG and
SCG operate in relatively balanced regulatory environments in
Massachusetts and Connecticut and benefit from full revenue
decoupling. MGC's ratings have limited upside due to the
combination of the utility's small scale, private equity ownership
and lack of a weather normalization or revenue decoupling
mechanism. Unlike MGC, which is a stand-alone utility, BGC, CNG and
SCG benefit from being owned by AVANGRID, Inc. (BBB+/Stable), which
is a large parent consisting of eight regulated electric and
natural gas distribution utilities.
MGC's credit metrics are weaker than its peers and are expected to
remain elevated throughout the forecast period as it executes its
capex program. Fitch expects MGC's FFO leverage and total debt with
equity credit/operating EBITDA to average approximately 4.7x and
4.8x, respectively, through 2023, considerably higher than peers
BGC, CNG and SCG.
KEY ASSUMPTIONS
Fitch's Key Assumptions within its rating case for the issuer
include:
-- Rate cases filed in 2021 and 2023, with incremental rates
going into effect on Jan. 1, 2022 and Jan. 1, 2024;
-- Normal weather;
-- Capex between $53 million and $59 million over the forecast
years 2020 through 2023;
-- Equity infusions of $15 million in 2020 and 2023 to help fund
capex and maintain MGCs regulated capital structure; and
-- Additional long-term debt of $40 million in 2021.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to a
positive rating action/upgrade:
-- A positive rating action is not likely, given the challenging
regulatory environment in West Virginia, small scale of operations
and private equity ownership.
-- Implementation of revenue decoupling and/or other regulatory
measures sufficient to provide a greater level of stability and
predictability to MGC's credit metrics.
-- FFO leverage expected to remain below 5.0x on a sustained
basis.
Factors that could, individually or collectively, lead to a
negative rating action/downgrade:
-- FFO leverage expected to exceed 6.0x on a sustained basis.
-- A materially more aggressive financial policy implemented by
MGC's private equity owners.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Non-Financial Corporate
issuers have a best-case rating upgrade scenario (defined as the
99th percentile of rating transitions, measured in a positive
direction) of three notches over a three-year rating horizon; and a
worst-case rating downgrade scenario (defined as the 99th
percentile of rating transitions, measured in a negative direction)
of four notches over three years. The complete span of best- and
worst-case scenario credit ratings for all rating categories ranges
from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are
based on historical performance.
LIQUIDITY AND DEBT STRUCTURE
Adequate Liquidity: Fitch considers MGC's liquidity to be adequate,
primarily supported by a $100 million unsecured committed revolving
credit facility that expires Nov. 26, 2024. The RCF includes an
accordion feature that could expand the size to $200 million to
account for the possibility of unusually high natural gas prices
and sales volumes that could occur during an abnormally cold winter
heating season. Fitch expects the RCF to provide sufficient
liquidity to support working capital needs and expects the company
to extend the facility prior to maturity or enter into another
facility with substantially similar terms. MGC had $32.5 million of
borrowings outstanding under the RCF as of Dec. 31, 2019, leaving
$67.5 million of availability.
The seasonal nature of MGC's natural gas distribution business
leads to larger sales volumes during the winter months, often
requiring the company to temporarily finance rising natural gas
inventories and customer receivables with short-term borrowings
under its RCF. Short-term borrowings typically peak in late
December and are paid down by the end of the first quarter.
The credit facility includes financial covenants requiring MGC to
maintain a minimum EBITDA interest coverage ratio of 2.0x and a
maximum debt-to-capitalization ratio of 65%.
Long-term debt maturities are manageable. MGC does not have any
long-term debt scheduled to mature until Dec. 20, 2027, when $40
million of 4.2% senior unsecured bonds comes due.
SUMMARY OF FINANCIAL ADJUSTMENTS
No financial statement adjustments were made that depart materially
from those contained in the published financial statements of the
relevant rated entity.
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF
RATING
The principal sources of information used in the analysis are
described in the Applicable Criteria.
ESG CONSIDERATIONS
MGC has an ESG Relevance Score of 4 for Group Structure and
Financial Transparency as private-equity backed entities typically
have less structural and financial disclosure transparency than
publicly traded issuers. This has a negative impact on the credit
profile, and is relevant to the rating in conjunction with other
factors.
Except for the matters discussed, the highest level of ESG credit
relevance, if present, 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.
MTE HOLDINGS: Rosner, Weycer Represent Halliburton, Sierra
----------------------------------------------------------
Pursuant to Rule 2019 of the Federal Rules of Bankruptcy Procedure,
the law firms of Weycer Kaplan Pulaski & Zuber, P.C. and The Rosner
Law Group LLC submitted a verified statement that they are
representing Halliburton Energy Services, Inc. and Sierra Hamilton
LLC in the Chapter 11 cases of MTE Holding LLC, et al.
As of April 13, 2020, the creditors and their disclosable economic
interests are:
Aggregate Lien Amount
---------------------
Halliburton Energy Services, Inc. $819,096.23
Sierra Hamilton LLC $1,240,755.54
Unless otherwise noted, the amounts listed above are exclusive of
pre-petition and post-petition interest and attorneys' fees. In
addition to the M&M Lien Creditors' claims listed above, subject to
further amendment and/or supplementation, the Subject Creditors
have various rights under their respective contracts with the
Debtors and may hold contingent and/or unliquidated claims against
the Debtors arising from the contracts under which the Subject
Creditors provided materials and/or services to Debtors, including
inter alia, wherein the Debtors agreed to defend, indemnify, and/or
hold harmless the Subject Creditors from and against certain
claims, demands, and causes of action.
Each creditor has received full disclosure of WKPZ's representation
of multiple creditors and has been informed of the possible
implications of multi-creditor representation. Each creditor has
consented to multi-creditor representation by WKPZ in these Chapter
11 cases.
WKPZ and the Subject Creditors reserve the right to amend and/or
supplement this Statement, including as set forth in Rule 2019(d).
Counsel for Halliburton Energy Services, Inc. and Sierra Hamilton,
LLC can be reached at:
THE ROSNER LAW GROUP LLC
Frederick B. Rosner, Esq.
Scott J. Leonhardt, Esq.
824 North Market Street, Suite 810
Wilmington, DE 19801
Telephone: (302) 777-1111
Email: rosner@teamrosner.com
leonhardt@teamrosner.com
- and –
WEYCER, KAPLAN, PULASKI & ZUBER, P.C.
Jeff Carruth, Esq.
3030 Matlock Rd., Suite 201
Arlington, TX 76015
Telephone: (713) 341-1158
Facsimile: (866) 666-5322
E-mail: jcarruth@wkpz.com
A copy of the Rule 2019 filing, downloaded from PacerMonitor.com,
is available at https://is.gd/Rl4Ok1
About MTE Holdings
MTE Holdings LLC is a privately held company in the oil and gas
extraction business. MTE sought protection under Chapter 11 of
the
Bankruptcy Code (Bankr. D. Del. Case No. 19-12269) on Oct. 22,
2019. In the petition signed by its authorized representative,
Mark A. Siffin, the Debtor disclosed debts of less than $500
million. Judge Karen B. Owens has been assigned to the case. The
Debtor tapped Kasowitz Benson Torres LLP as its bankruptcy counsel;
Morris, Nichols, Arsht & Tunnell, LLP as its local counsel; and
Stretto as its claims and noticing agent.
MW HORTICULTURE: U.S. Trustee Unable to Appoint Committee
---------------------------------------------------------
The U.S. Trustee, until further notice, will not appoint an
official committee of unsecured creditors in the Chapter 11 case of
MW Horticulture Recycling Facility, Inc., according to court
dockets.
About MW Horticulture Recycling Facility
MW Horticulture Recycling Facility, Inc. is a family-owned and
operated horticulture recycling waste management company with
locations in Lee County, along with a landscape supply and garden
depot.
MW Horticulture Recycling filed for Chapter 11 bankruptcy
protection (Bankr. M.D. Fla. Case No. 19-12193) on Dec. 31, 2019.
In the petition signed by Mark D. Houghtaling, president, the
Debtor was estimated to have under $50,000 in assets and $1 million
to $10 million in liabilities. Judge Caryl E. Delano oversees the
case.
Richard Johnston, Jr., at Johnston Law, PLLC, is Debtor's
bankruptcy counsel. Debtor tapped Barry S. Mittelberg, P.A., and
Roetzel Andress, P.A. as special counsel; and CycleLogic
Environmental Marketing & Consultation as consultant.
NATIONAL QUARRY: Nexsen Pruet Represents Truliant, MidCountry
-------------------------------------------------------------
In the Chapter 11 cases of National Quarry Services, Inc., the law
firm of Nexsen Pruet, PLLC submitted a verified disclosure under
Rule 2019 of the Federal Rules of Bankruptcy Procedure, to disclose
that it is representing Truliant Federal Credit Union and
MidCountry Leasing Company.
Christine L. Myatt is an attorney with the law firm of Nexsen
Pruet, PLLC, 701 Green Valley Road, Suite 100, Greensboro, NC
27408; Telephone: (336) 373-1600; Facsimile: (336) 273-5357.
Nexsen Pruet currently represents the following creditors in this
proceeding:
a. Truliant Federal Credit Union
3200 Truliant Way
Winston-Salem, NC 27103
b. MidCountry Leasing Company
7825 Washington Avenue South, Suite 900
Bloomington, MN 55439
Reserving the right to assert additional claims or to file Proofs
of Claim in any amount as such claims are discovered, the nature of
each of the foregoing entity's currently known claims and/or
interests are as follows:
a. Truliant Federal Credit Union has a claim arising from a
promissory note and deed of trust executed by Debtor as
more particularly set forth in Truliant Federal Credit
Union's claim filed in this case.
b. MidCountry Leasing Company has a claim arising from an
executed promissory note and deed of trust by Debtor as
more particularly set forth in MidCountry Leasing
Company's claim in this case.
Nexsen Pruet has fully disclosed to each of the foregoing Clients
the possibility that the interests of each as secured creditors,
and/or as creditors holding unsecured priority claims, and/or as
creditors holding general unsecured claims, may potentially
conflict. Each person and entity has consented to this joint
representation, after full disclosure.
Nexsen Pruet claims no interest or amounts with respect to this
case, but, instead, represents the Clients named herein and their
claims and/or interests.
Counsel for Truliant Federal Credit Union and MidCountry Leasing
Companycan be reached at:
Christine L. Myatt, Esq.
NEXSEN PRUET, PLLC
701 Green Valley Road, Suite 100
Post Office Box 3463
Greensboro, NC 27402
Telephone: (336) 387-5124
E-mail: cmyatt@nexsenpruet.com
A copy of the Rule 2019 filing, downloaded from PacerMonitor.com,
is available at https://is.gd/hXuCTi
About National Quarry Services and
National Quarry Services
National Quarry Services, Inc. --
https://nationalquarryservice.com/
-- is a full-service rock drilling and blasting company.
National Quarry Services and its affiliate NQS Equipment Leasing
Company sought protection under Chapter 11 of the Bankruptcy Code
(Bankr. M.D.N.C. Lead Case No. 20-50070) on Jan. 23, 2020. At the
time of the filing, the Debtors each had estimated assets of
between $1 million and $10 million and liabilities of between $10
million and $50 million.
Judge Benjamin A. Kahn oversees the cases.
The Debtors tapped James C. Lanik, Esq., at Waldrep, LLP, as their
legal counsel.
William Miller, the U.S. bankruptcy administrator for the Middle
District of North Carolina, appointed three creditors to serve on
the official committee of unsecured creditors in the Debtor's
Chapter 11 case.
NAVISTAR INT'L: Moody's Alters Outlook on B2 CFR to Negative
------------------------------------------------------------
Moody's Investors Service affirmed the ratings of Navistar
International Corp., including the corporate family rating at B2
and senior unsecured rating at B3, and also affirmed the rating of
its major operating subsidiary, Navistar, Inc. with senior secured
at Ba2 and the industrial revenue bonds at B1. The Speculative
Grade Liquidity rating is unchanged at SGL-3. The outlook is
changed to negative from stable.
The following rating actions were taken:
Affirmations:
Issuer: Navistar International Corp.
Corporate Family Rating, Affirmed B2
Probability of Default Rating, Affirmed B2-PD
Senior Unsecured Regular Bond/Debenture, Affirmed B3 (LGD5)
Issuer: Navistar, Inc.
Senior Secured Bank Credit Facility, Affirmed Ba2 (LGD2)
Issuer: Cook (County of) IL
Senior Unsecured Revenue Bonds, Affirmed B1 (LGD3)
Issuer: Illinois Finance Authority
Senior Unsecured Revenue Bonds, Affirmed B1 (LGD3)
Outlook Actions:
Issuer: Navistar International Corp.
Outlook, Changed to Negative from Stable
Issuer: Navistar, 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 construction
and related industries are some of the sectors that will be
significantly affected by the shock given their sensitivity to
global economic activity and sentiment. Navistar is vulnerable to
shifts in market sentiment in these unprecedented operating
conditions and remains at risk of the outbreak continuing to
spread. Moody's regards the coronavirus outbreak as a social risk
under its ESG framework, given the substantial credit implications
of public health and safety. Its action reflects the expected
impact on Navistar of the breadth and severity of the shock, and
the broad deterioration in credit quality it has triggered.
Navistar's ratings, including the B2 CFR reflect the company's
position as the third-leading competitor in the North American
market for medium and heavy trucks, and the consistent progress
Navistar has made in strengthening its operating performance and
competitive position. This progress is reflected in the following
(with financial metrics reflecting Moody's standard adjustments):
1) consistent market share gains; 2) a steady decline in warranty
expenses from almost $900 million in 2012 to less than $300 million
in 2019; 3) free cash flow of about $400 million in 2019; 4)
improvement in EBITA margin from 1.2% in 2015 to 5.8% in 2019; and
5) a decline in debt-to-EBITDA from 14.3x to 5.6x over the past
five years.
Navistar's operational progress is also evident in the considerable
success achieved through the North American engineering and
cost-sharing joint-venture with TRATON AG (formerly Volkswagen
Truck & Bus). TRATON acquired a 16.6% ownership interest in
Navistar in 2017, and in January 2020 offered to acquire the
remaining shares of Navistar in a transaction valuing the company
at $3.5 billion. While this bid might not be accepted by Navistar,
or could be withdrawn in the aftermath of the coronavirus outbreak,
it is another reflection of the company's improving competitive
position in North America.
In addition to strengthening its manufacturing operations, Navistar
has also maintained the balance sheet health and portfolio quality
of its captive finance operation, Navistar Financial Corporation
(NFC). NFC provides wholesale floorplan financing for approximately
72% of Navistar's dealer floorplan, and also provides retail
financing to customers on a limited basis. Leverage at NFC is low
with debt-to-equity at a modest 3.75 to 1 at January 2020, and
portfolio quality is has remained strong with
charge-offs-to-average assets remaining consistently below 1%.
The negative outlook reflects the significant deterioration that
will likely occur in Navistar's operating performance and credit
metrics during 2020 as a result of both the coronavirus outbreak
and the already-anticipated cyclical slowdown in North American
truck demand. Moody's estimates that Navistar's 2020 revenues could
fall by 25% and that free cash flow could approach a negative $500
million.
Navistar's industrial operations have adequate liquidity in the
form of $1.0 billion in cash at January 2020. With no debt
maturities until 2024, this cash position provides ample coverage
for a cash burn that could approach $500 million during 2020. The
company does not have a bank revolving credit facility, other than
its $125 million ABL facility that is generally used for issuing
letters of credits.
NFC has approximately $650 million in asset-backed-securitization
facilities maturing during the coming twelve months, compared with
about $500 million in committed facilities available to cover these
maturities. The maturing ABS obligations are self-liquidating from
collections on the underlying receivables. However, NFC requires
ongoing access to capital in order to continue providing wholesale
loans to dealers and retail loans to select customers. The company
should be able to raise the necessary capital in the ABS market due
to the consistently high quality of its receivable portfolio. In
addition, the excess cash liquidity at Navistar's industrial
operations could help to fill a potential funding gap at NFC.
Nevertheless, Moody's views the ongoing gap between NFC's maturing
ABS obligations ($650 million at January 2020) and available
capacity under its borrowing facilities ($500 million at January
2020) as an area of potential vulnerability in the company's
overall liquidity profile.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Navistar's rating could be downgraded if the company is not on
track to restoring 2019-level financial metrics by 2021. Factors
that would contribute to a downgrade include: 1) a cash burn that
exceeds $500 million during 2020; 2) market share erosion in key
product segments; and, 3) any weakening in the liquidity profile of
Navistar and NFC.
Prospects for an upgrade during the next twelve months are modest.
Nevertheless, an operating performance that is on a clear
trajectory to achieve the following metrics could support an
upgrade: EBITA margins above 7%, debt to EBITDA sustained below 5x
and EBITA/Interest above 3x.
Navistar's principal environmental risk is its exposure to
increasingly burdensome emissions regulations covering its truck
and buses. The company continues to make the investments necessary
to remain in compliance with these regulations. The major social
risk facing the company emanates from the economic stress resulting
from the coronavirus. The company's governance practices have
enabled it to pursue successful operating strategies and prudent
financial policies.
Navistar International Corp. is one of the largest manufacturers in
the US and Canadian market for buses, medium, severe service, and
heavy-duty trucks. The company generated approximately $10.5
billion in revenues (excluding financial services) during the
twelve months ending January 31, 2020.
The methodologies used in these ratings was Manufacturing
Methodology published in March 2020 and Captive Finance
Subsidiaries of Nonfinancial Corporations published in August 2019.
NEWELL BRANDS: Fitch Lowers LT IDR to BB, Outlook Negative
----------------------------------------------------------
Fitch Ratings has downgraded Newell Brands Inc.'s Long-Term Issuer
Default Rating to 'BB' from 'BB+'. The Rating Outlook is Negative.
At the same time, Fitch has withdrawn its Short-Term Issuer Default
and CP ratings of 'B', as Newell no longer maintains a CP program.
The downgrade and Negative Outlook reflect elevated leverage (total
debt/EBITDA) of 4.4x following the completion of its asset
divestiture program and ongoing topline challenges in a number of
its categories. The ratings also reflect significant business
interruption from the global coronavirus pandemic and potential for
a downturn in discretionary spending that Fitch expects could
extend well into 2021, which in turn could derail further
deleveraging. Fitch expects that EBITDA could trend in the $1.1
billion to $1.2 billion range in 2020 and 2021, versus $1.33
billion reported in 2019 and management's expectations of flat
EBITDA in 2020 prior to the coronavirus pandemic. Total debt/EBITDA
could approach 5.0x in 2020 before returning to 4.5x in 2022,
primarily on debt reduction. A more protracted or severe downturn
could lead to further rating actions.
The ratings were withdrawn with the following reason: Newell no
longer maintains a CP program.
KEY RATING DRIVERS
Operational Challenges Continue: Newell's core sales declined 1.9%
in 2019, with growth in baby and writing, home fragrance, and
connected home and security (collectively 45% of revenue); in 2018
only connected home and security showed positive growth. The
remaining businesses, food and commercial businesses (23% of net
sales), appliances and cookware (17.4% of revenue) and outdoor and
recreation (14.5% of revenue), remain challenged due to lack of
innovation and execution issues. Fitch expects that turning around
these businesses could take a few quarters, and it expected core
sales to decline 2% in 2020 and 2021 prior to the recent disruption
from the coronavirus pandemic and slowdown in discretionary
spending as discussed below.
Newell's learning and development category (30.4% of 2019 revenue;
51% of segment EBIT) declined by 0.8% in 2019 (positive 1% on a
core sales basis), driven by softening trends in the writing
business related to softening sales of slime-related adhesive
products that was offset by growth in international sales. This
segment includes baby and parenting sales of $1.1 billion and
writing revenue of $1.9 billion.
The food and commercial category (23.1% of 2019 revenue; 28% of
segment EBIT) declined 6.6% (4.4% on a core revenue basis), with
higher declines in the commercial business, volume declines at
certain major retailers and softness in the food storage/preserving
categories. Food sales were approximately $840 million, and
commercial sales were $1.4 billion in 2019.
The home and outdoor category (29.1% of 2019 revenue; 15% of
segment EBIT prior to corporate expenses) declined 4.2% in 2019 (or
1.4% on a core sales basis) due to the exit of 75 underperforming
Yankee Candle retail stores, a product recall in the outdoor and
recreation business and the loss of a key U.S retail distributor.
Home fragrance was $1 billion, outdoor and recreation was $1.4
billion and connected home and security was $377 million in 2019.
The appliance and cookware category (17.4% of 2019 revenue of $9.7
billion; 6% of segment EBIT) declined 7.0% in 2019 (5.1% on a core
sales basis) due to loss of domestic market share to competitors.
Coronavirus Pandemic: Fitch expects the impact on revenues to the
consumer discretionary sector from the coronavirus pandemic to be
unprecedented, as mandated or proactive temporary closures of
retail stores in "non-essential" categories severely depresses
sales. Numerous unknowns remain, including the length of the
outbreak; the timeframe for a full reopening of retail locations
and the cadence at which it is achieved; and the economic
conditions exiting the pandemic, including unemployment and
household income trends, the impact of government support of
businesses and consumers and the impact the crisis will have on
consumer behavior. Fitch increasingly expects a downturn in
discretionary spending that could extend well into 2021. As a
result, Fitch expects Newell's sales could decline in the high
single digits in 2020 and that 2021 revenue could be 7% below 2019
levels.
The impact to each of Newell's business segments could vary. For
example, in the near term, the Home Fragrance business ($1 billion
in revenue in 2019) is expected to be adversely impacted given the
temporary closures of 475 Yankee Candle retail stores. Conversely,
the small appliances and cookware category could hold up relatively
well given the large-scale restaurant closures stemming from the
pandemic, but it could weaken if consumer discretionary spending
declines through 2020 and into 2021.
EBITDA Could Trend Towards the Low $1 Billion Mark: Newell's
ongoing 2019 EBITDA was $1.3 billion, with an EBITDA margin of
approximately 13.8%. This compares to $2.5 billion in EBITDA with
17% plus margins in 2017 prior to its asset sales. The company has
discussed a several-hundred basis point (bp) improvement
opportunity in gross margin and operating costs based on industry
benchmarking, with a long-term target of driving sales growth in
the low single digits and operating margin improvement of 50 bps
annually. Given the ongoing sales challenges in a number of
categories and investments required to support these brands, Fitch
sees little upside over the next couple of years. This in
combination with the recent disruption in discretionary spending
could lead to EBITDA declines towards $1.1 billion to $1.2
billion.
Leverage Remains Elevated: Newell's 2019 gross debt/EBITDA was
4.4x, given $1.3 billion in ongoing EBITDA. Fitch expects leverage
could increase towards 5.0x in 2020 given a decline in
discretionary consumer spending before returning the mid-4.0x level
in 2022, assuming a recovery exiting 2021. Debt reduction could
modestly support Newell's leverage profile over the next three
years, assuming around $150 million to $200 million average FCF is
applied to Newell's debt balance of nearly $6 billion.
Divestitures Complete: Given integration issues with Jarden
following its 2016 acquisition, Newell had announced an Accelerated
Transformation Plan in January 2018 to produce approximately $10
billion of after-tax proceeds from divestitures. The company had
expected to divest eight business representing approximately 35% of
net sales, including three large industrial and commercial product
assets (Waddington, Consumer & Commercial Solutions and Process
Solutions) and five noncore consumer businesses (Team Sports,
Beauty, U.S. Playing Cards, Jostens and Pure Fishing). The plan
would result in an approximate $9 billion portfolio of seven large
consumer-facing divisions (appliances and cookware, writing,
outdoor and recreation, baby, food, home fragrance and safety and
security).
In August 2019, the company announced its decision to no longer
pursue the sale of its Commercial Products business (which includes
its Rubbermaid Outdoor, closet, refuse, garage and cleaning
businesses). The company stated that it based its decision on the
strength of the brand, its competitive positioning in a growing
category and track record of cash flow, revenue and margin growth.
In November 2019, the company announced it would no longer pursue
the sale of its Mapa/Spontex and Quickie businesses. The decision
to keep these businesses was based on their financial profiles
relative to expected sales proceeds.
Divestitures in 2018: In 2018, Newell sold five businesses - The
Waddington Group, Rawlings, The Goody business, Pure Fishing and
Jostens - with combined 2017 revenue of $2.6 billion, or close to
50% of businesses targeted for sale, and received $5.1 billion in
net proceeds.
Divestitures in 2019: In 2019, Newell sold three businesses -
Process Solutions, Rexair and U.S. Playing Cards - with combined
2018 revenue of $875 million and received $955 million in net
proceeds.
The company completed its divestiture program in December 2019,
netting a total of $6.1 billion in after-tax proceeds from its
asset sale program. The company paid down approximately $5 billion
in debt over 2018 and 2019 and completed $1.5 billion in share
buybacks in 2018 with proceeds from the asset sale.
Newell has an Environmental, Social and Governance Relevance Score
of 4 for 'Financial Transparency'; this has a negative impact on
the credit profile and is relevant to the rating in conjunction
with other factors. This reflects a number of factors, including:
material weaknesses in internal control over financial reporting in
its 2018 and 2019 10Ks, related to tax accounting with regard to
its divestiture program; an SEC subpoena in January 2020 related to
the impairment of goodwill and other intangibles in 2018; and
difficulty in ascertaining the company's ongoing EBITDA given a
number of reclassifications of continuing versus discontinued
operations over 2018 and 2019.
DERIVATION SUMMARY
Newell's downgrade and Negative Outlook reflect elevated leverage
(total debt/EBITDA) of 4.4x following the completion of its asset
divestiture program and ongoing topline challenges in a number of
its categories. The ratings also reflect the significant business
interruption from the coronavirus pandemic and the potential of a
downturn in discretionary spending that Fitch expects could extend
well into 2021, which in turn could derail further deleveraging.
Fitch expects that EBITDA could trend in the $1.1 billion to $1.2
billion range in 2020 and 2021, versus $1.33 billion reported in
2019. Total debt/EBITDA could approach 5.0x in 2020 before
returning to 4.5x in 2022, primarily on debt reduction. A more
protracted or severe downturn could lead to further rating
actions.
Hasbro's 'BBB-' ratings reflect the company's elevated leverage
profile following the acquisition of Entertainment One Ltd. (eOne)
for $4 billion plus transaction expenses. As of YE 2019, pro forma
gross debt/EBITDA was approximately 4.7x and is expected to trend
to the mid-3.0x range within 24 months post-acquisition close on
synergy achievement. The Negative Outlook reflects concerns that
gross debt/EBITDA could be sustained above 3.5x. Therefore, the
ratings could be stabilized with greater confidence that a
combination of good organic growth, synergy achievement and debt
reduction could yield gross debt/EBITDA below 3.5x, as appropriate
for the 'BBB-' rating.
Spectrum's 'BB' IDR reflects the company's diversified portfolio
across products and categories, strong brand portfolio, financial
discipline evidenced by its public commitment to maintain net
leverage (net debt/EBITDA) at or below 3.5x over the long term,
expectations for stable to low single-digit organic revenue growth,
solid profitability (with an EBITDA margin of approximately 15% pro
forma from the divestitures of the Global Batteries and Global
Autocare divisions) and historically consistent FCF. These positive
factors are offset by strong competition, profit margin pressures
across three of its four core segments, the company's acquisitive
nature historically and potentially greater overall business
cyclicality due to the increased contribution from Hardware and
Home Improvement to total company EBITDA following divestitures.
ACCO Brands Corporation's IDR of 'BB' reflects the company's
leverage around 3.0x gross debt to EBITDA. The ratings are
constrained by secular challenges in the office products industry
in North America, Europe and Australia. The company has taken steps
over the last few years to manage costs given pressures on U.S.
organic growth and has executed well on diversifying its customer
base toward higher growth, higher-margin channels in North America,
as well as acquisitions in international markets. This has led to
EBITDA in the $250 million-$300 million range and FCF generation of
$100 million-$150 million annually over the 2016-2019 period.
Mattel's 'B-' IDR reflects execution risk in stabilizing revenue
and growing EBITDA from depressed levels. Mattel continues to face
revenue pressures involving its Fisher-Price, Thomas and Friends
and American Girl segments, which collectively generated
approximately $1.4 billion or around 30% of total gross revenue in
2019. EBITDA in 2019 was approximately $450 million, up materially
from 2017-2018 but around half of the $900 million range reported
as recently as 2015-2016. FCF turned materially negative in 2016,
and continued EBITDA declines led gross leverage (debt/EBITDA) to
peak around 11.0x in 2017-2018. The Positive Outlook reflects
increasing confidence that Mattel's cost-reduction program and
sales initiatives could yield stabilizing topline results and
EBITDA improving above $500 million, at which point Mattel could
generate sustainably positive FCF as cash restructuring expenses
subside.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within its Rating Case for the Issuer
-- Revenue declining to the low-$9 billion range in 2020/2021
from $9.7 billion in 2019, assuming a slowdown in discretionary
spending extends well into 2021.
-- Operating EBITDA around $1.1 billion to $1.2 billion in 2020
and 2021, down by low- to mid-teens versus reported EBITDA of $1.3
billion in 2019.
-- Capex remaining flat at around $250 million annually and
dividends at around $390 million annually.
-- FCF (after dividends) expected to be around $250 million to
$300 million in 2020, reflecting some working capital benefit and
approximately $100 million in 2021 and 2022.
-- Total debt/EBITDA increasing to approximately 5.0x in 2020
from 4.4x in 2019 before returning to 4.5x in 2022. The company's
upcoming debt maturities include approximately $300 million due in
August 2020, $440 million in 2021 and $250 million in 2022, which
could be partially paid down with FCF and revolver borrowings;
alternatively, the company could seek external financing.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- A stabilization case would require Newell to meet Fitch's
revised projections that include EBITDA of $1.2 billion in
2021/2022 and total debt/EBITDA returning to under 4.5x from a
projected 5.0x in 2020.
-- A positive rating action could result from sales growing
positive in the low single digits, in turn driving EBITDA back
towards $1.3 billion with EBITDA margins in the mid-teens. The
company would also need to generate positive FCF on a sustained
basis and continue to pay down debt, such that leverage was under
4.0x.
Factors that could, individually or collectively, lead to negative
rating action/upgrade:
-- A negative rating action could result from lower-than-expected
debt reduction, due to either weaker FCF generation or a change in
financial policy or a more protracted or severe downturn leading to
reduced confidence in Newell's ability to return to top line and
profitability growth in 2022 such that adjusted debt/EBITDAR is
sustained above 4.5x.
International scale credit ratings of Non-Financial Corporate
issuers have a best-case rating upgrade scenario (defined as the
99th percentile of rating transitions, measured in a positive
direction) of three notches over a three-year rating horizon and a
worst-case rating downgrade scenario (defined as the 99th
percentile of rating transitions, measured in a negative direction)
of four notches over three years. The complete span of best- and
worst-case scenario credit ratings for all rating categories ranges
from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are
based on historical performance.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Non-Financial Corporate
issuers have a best-case rating upgrade scenario (defined as the
99th percentile of rating transitions, measured in a positive
direction) of three notches over a three-year rating horizon; and a
worst-case rating downgrade scenario (defined as the 99th
percentile of rating transitions, measured in a negative direction)
of four notches over three years. The complete span of best- and
worst-case scenario credit ratings for all rating categories ranges
from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are
based on historical performance.
LIQUIDITY AND DEBT STRUCTURE
Adequate Liquidity: As of Dec. 31, 2019, Newell maintained $349
million cash on hand and a $1.25 billion unsecured revolving credit
facility that expires in December 2023. Net availability under the
RCF was approximately $1.2 billion (after netting out outstanding
letters of credit and $25 million in CP outstanding). In addition,
Newell has a $600 million account receivable securitization
facility that matures in October 2022; as of Dec. 31, 2019, there
were no borrowings under this facility.
Fitch projects FCF (after dividends) of $250 million to $300
million in 2020, reflecting some working capital benefit, and FCF
of approximately $100 million in 2021 and 2022. The company's
upcoming debt maturities include approximately $300 million due in
August 2020, $440 million in 2021 and $250 million in 2022, which
could be partially paid down with FCF and revolver borrowings;
alternatively, the company could seek external financing.
Recovery Considerations
Fitch does not employ a waterfall recovery analysis for issuers
assigned ratings in the 'BB' category. The further up the
speculative grade continuum a rating moves, the more compressed the
notching between the specific classes of issuances becomes.
Newell's capital structure is unsecured, including its revolver and
notes. As a result, Fitch has assigned 'BB'/'RR4' ratings across
Newell's capital structure, indicating average (31%-50%) recovery
prospects.
SUMMARY OF FINANCIAL ADJUSTMENTS
Stock-based compensation, restructuring and restructuring-related
costs, acquisition amortization and impairment, transactions and
related costs, other items. Adjusted depreciation and amortization
(D&A) to reflect the company's reported normalized D&A. Debt
factoring for Accounts Receivable (A/R) Securitization program.
NUCLEAR IMAGING: Pa. Court Upholds Denial of Petitions for Refund
-----------------------------------------------------------------
In the cases captioned Jeffrey M. Mandler and Nuclear Imaging
Systems, Inc., Petitioners, v. Commonwealth of Pennsylvania,
Respondent; and Jeffrey M. Mandler and Cardiovascular Concepts,
P.C., Petitioners, v. Commonwealth of Pennsylvania, Respondent,
Nos. 483 F.R. 2014, 484 F.R. 2014 (Pa. Cmmw.), the Commonwealth
Court of Pennsylvania has affirmed the Board of Finance and
Revenue's August 27, 2014 orders denying the petitions of taxpayers
Jeffrey M. Mandler, Nuclear Imaging Systems, Inc., and
Cardiovascular Concepts, P.C. for refund of the $180,168.46 they
remitted to the Pennsylvania Department of Revenue on July 31, 2013
to satisfy employer withholding liens.
The two issues before the Court were: (1) whether Taxpayers waived
their appeal because their brief does not comply with the
Pennsylvania Rules of Appellate Procedure (Rules); and (2) whether
Taxpayers satisfied their burden of proving entitlement to the
refunds.
Pursuant to Pennsylvania Rule of Appellate Procedure (Rule)
1571(f), Taxpayers and the Commonwealth of Pennsylvania submitted a
joint Stipulation of Facts. According to the Stipulation, Mandler
owned NIS and CVC, Pennsylvania corporations with principal places
of business in Malvern, Pennsylvania. Pursuant to Sections 316(a)
and 320 of the Tax Reform Code of 1971 (Code), 72 P.S. sections
7316.1(a), 7320, Taxpayers were employers responsible for
withholding their employees' payroll taxes in trust for the
Commonwealth. On August 4, 2000, NIS and CVC commenced voluntary
reorganization bankruptcy proceedings in the United States
Bankruptcy Court for the Eastern District of Pennsylvania, pursuant
to Chapter 11 of the Bankruptcy Code. On Sept. 18, 2000, the
Bankruptcy Court ordered the joint administration of NIS's and
CVC's bankruptcy actions. On Oct. 6, 2000, Revenue filed proofs of
claim with the Bankruptcy Court seeking, among other taxes, NIS's
and CVC's Pennsylvania employer withholding taxes.
From Oct. 29, 2000 to Sept. 1, 2001, Revenue issued 10 assessment
notices to NIS and Mandler for their Taxes for consecutive tax
periods from Jan. 1, 1999 to June 30, 2001, plus interest and
penalties, in the total amount of $110,331.60. Between Oct. 29,
2000 and June 3, 2001, Revenue issued nine assessment notices to
CVC and Mandler for their Taxes for consecutive tax periods from
Jan. 1, 1999 to March 31, 2001, plus interest and penalties, in the
total amount of $70,486.89.
On April 17, 2001, Taxpayers entered into an Amended Stipulation of
Settlement and Order to resolve certain creditor claims, and to
allow the sale of NIS's and CVC's assets to Integral Nuclear
Associates, LLC (Integral) pursuant to an April 11, 2001 Asset
Purchase Agreement (as amended by the Settlement Order), which
would facilitate reorganization. Thereunder, Integral agreed to
purchase certain of NIS's and CVC's assets out of bankruptcy, and
to issue a "promissory note made payable to [Taxpayers] to fund
payments to state taxing authorities." On May 1, 2001, Integral's
counsel sent United Savings Bank, inter alia, $66,215.49 to be held
in an interest-bearing state tax escrow account.
On June 8, 2001, Taxpayers filed a proposed Second Amended Joint
Plan of Reorganization in which they suggested in Section 4.2.B:
"[Taxpayers] shall distribute $66,000[.00] to state taxing
authorities. These claims are estimated at $300,000[.00]. . . .
Mandler shall make monthly payments to [Taxpayers] to pay any
deficiency." Revenue objected to the Proposed Plan.
On August 20, 2001, the Bankruptcy Court converted NIS's and CVC's
bankruptcy actions to Chapter 7 liquidation proceedings.
Thereafter, Revenue filed amended proofs of claim seeking the
Taxes.
On Jan. 7, 2002, Integral's counsel instructed United Savings Bank
to close out the state tax escrow account and forward the proceeds
thereof to Bankruptcy Trustee Christine Shubert. Revenue did not
receive any of the escrowed funds.
During 2002 and 2005, Revenue filed liens against Taxpayers in the
Chester County Common Pleas Court. On May 18, 2005, Trustee issued
her amended Chapter 7 Proposed Distribution of Property, pursuant
to which the Trustee paid Revenue $1,043.29 relative to claims
against CVC and $755.49 for claims against NIS on August 3, 2005.
Those payments were not made in satisfaction of the Taxes or
Taxpayers' other state tax debts. On April 13, 2006, Trustee
certified that the estate was fully administered -- all bankruptcy
estate money had been distributed to creditors and the bankruptcy
estate accounts had zero balances.
By July 30, 2013 letter, Revenue notified Taxpayers' counsel that
their lien payoff figure was $180,168.46. Taxpayers remitted
$180,168.46 to Revenue on July 31, 2013. On August 20, 2013,
Revenue asked the Chester County Common Pleas Court to mark
Taxpayers' liens satisfied.
However, on Nov. 13, 2013, Taxpayers filed the Refund Petitions
with Revenue's Board of Appeals seeking return of their
$180,168.46, arguing that the Taxes had already been paid from the
escrow account. On Jan. 23, 2014, the BOA denied the Refund
Petitions. On April 4, 2014, Taxpayers appealed to the Board.
The Board conducted hearings on Dec. 19, 2013. On August 27, 2014,
the Board denied the Refund Petitions. On Sept. 24, 2014, Taxpayers
appealed to the Court.
According to the Commonwealth Court, Taxpayers' claim that the
Chapter 7 bankruptcy proceeding relieved them of their liability
for the Taxes because the escrowed funds were "for the sole purpose
of paying the [Taxes] . . ." is meritless. The Court acknowledges
that, pursuant to the Settlement Order, Integral agreed to, and
paid into an escrow account, monies "to fund payments to state
taxing authorities." However, neither the Settlement Order nor the
May 1 and June 12, 2001 escrow letters, or any other record
document, specifies that the escrowed funds were set aside for the
express purpose of satisfying the Taxes. A taxpayer's bare
assertions are generally insufficient proof in tax cases.
The Commonwealth Court further notes that the record likewise
belies Taxpayers' assertion that "adequate cash funds had been set
aside by [the Settlement Order] to pay to [Revenue] the [Taxes]. .
. ." It is evident from the Proposed Plan that Taxpayers knew they
owed more than $300,000 in various state taxes and, based on the
amended proofs of claim, they were aware that more than $180,000.00
thereof was owed to Revenue for the Taxes. Notwithstanding, only
$66,215.49 was placed into the state tax escrow account, which was
clearly inadequate to satisfy Taxpayers' liability for the Taxes.
In addition, there is no record evidence that Revenue was aware
that the escrowed funds existed. According to the Commonwealth
Court, Taxpayers did not point to any record notifying Revenue
about the escrowed funds. The May 1 and June 12, 2001 escrow
letters are neither addressed nor copied to Revenue, and Revenue
was not a party to the Settlement Order. A settlement agreement is
essentially a contract that is binding on the parties thereto, and
is governed by contract law principles. Here, the Settlement Order
declared: "Nothing in this [Settlement Order] may be relied upon or
is intended for the benefit of any party other [than] those who
have executed this [Settlement Order] below." Therefore,
notwithstanding Taxpayers' claims to the contrary, neither the
Settlement Order nor any other record document informed Revenue
about the escrowed funds.
According to the Commonwealth Court, pursuant to Section
523(a)(1)(A) of the Bankruptcy Code and Sections 316(a) and 320 of
the Code, regardless of when or whether Revenue claimed the Taxes,
the record reflects that Taxpayers collected the Taxes, Taxpayers
were aware that they owed them, and Taxpayers were at all times
liable for them. Moreover, Taxpayers were cognizant of Revenue's
ongoing attempts to collect the Taxes. Revenue filed proofs of
claim for the Taxes on Oct. 6, 2000 relative to Taxpayers' Chapter
11 reorganization cases, and amended proofs of claim relative to
their Chapter 7 liquidation proceedings in September and November
2001. From October 2000 to September 2001, Revenue issued
assessment notices to Taxpayers for the Taxes. Revenue also filed
liens for the Taxes in 2002 and 2005. In 2013, Revenue sought and
Taxpayers paid the outstanding liens. Taxpayers did not prove based
on the record before the Court that Revenue intentionally or
negligently misrepresented any material fact that induced Taxpayers
to act to their detriment or that any lack of due diligence by
Revenue prejudiced Taxpayers.
A copy of the Court's Opinion dated March 2, 2020 is available at
https://bit.ly/3bKNs98 from Leagle.com.
Bruce Torrans Royal , Petriello & Royal, L.L.C., Charles L. Potter,
Jr. -- cpotter@tuckerlaw.com -- Tucker Arensberg, P.C., for
Petitioners, Jeffrey M. Mandler and Cardiovascular Concepts, P.C.
Karen Marie Gard , Office of Attorney Litigation Unit, Elizabeth
Kinsella , Pennsylvania Office of Attorney General, for Respondent,
Commonwealth of Pennsylvania.
Nuclear Imaging Systems, Inc. and Cardiovascular Concepts, P.C.
filed for chapter 11 bankruptcy protection (Bankr. E.D. Pa. Case
Nos. 00-19698 and 00-19697) on August 4, 2000. On August 20, 2001,
the Bankruptcy Court converted the cases to chapter 7 liquidation.
NUTRIBAND INC: Incurs $2.7 Million Net Loss in Fiscal 2019
----------------------------------------------------------
Nutriband Inc. filed with the Securities and Exchange Commission
its Annual Report on Form 10-K reporting a net loss of $2.72
million on $370,647 of revenue for the year ended Jan. 31, 2020
compared to a net loss of $3.33 million on $245,285 of revenue for
the year ended Jan. 31, 2019.
As of Jan. 31, 2020, the Company had $2.19 million in total assets,
$2.02 million in total current liabilities, and $175,433 in total
stockholders' equity.
For the year ended Jan. 31, 2020, the Company used $894,470 in its
operations. The principal adjustment to the Company's net loss of
$2,721,627 were stock-based compensation of $252,700, derivative
expense of $767,650 a loss on change in fair value of derivatives
of $88,876 an increase in accounts payable and accrued expenses of
$720,150, a decrease in prepaid expenses of $82,558, depreciation
and amortization of $72,188, offset by a decrease in customer
deposits of $71,225.
For the year ended Jan. 31, 2019, the Company used cash of
$1,105,466 in operations. The principal adjustments to the
Company's net loss of $3,331,240 were stock-based compensation of
$1,763,950, an increase in accounts payable and accrued expenses of
$273,352, a decrease in prepaid expenses of $57,778 and
depreciation and amortization of $36,616 and an increase in
expenses paid on the Company's behalf by an officer of $24,300.
For the year ended Jan. 31, 2020, the Company had no cash flow from
investing activities. For the year ended Jan. 31, 2019, the
Company's cash flow from investing activities consisted of a
$400,000 payment in connection with the acquisition of 4P
Therapeutics and $4,163 for the purchase of equipment.
For the year ended Jan. 31, 2020, the Company had cash flows from
financing activities of $430,250 primarily $175,000 from
non-interest bearing loan from a minority stockholder and gross
proceeds of $250,000 from the sale of convertible debt in the
principal amount of $270,000 and warrants to purchase common
stock.
For the year ended Jan. 31, 2019, the Company's cash flows from
financing activities of $1,983,888 consisted primarily of
$1,500,000 from the sale of common stock and $500,000 from the
exercise of warrants.
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 13, 2020 citing that the
Company has suffered recurring losses from operations and has
limited revenues. These factors raise substantial doubt about the
Company's ability to continue as a going concern.
A full-text copy of the Form 10-K is available for free at:
https://is.gd/dg3rz1
About Nutriband Inc.
Nutriband Inc. -- http://www.nutriband.com/-- is primarily engaged
in the development of a portfolio of transdermal pharmaceutical
products. Its lead product under development is its abuse
deterrent fentanyl transdermal system which the Company is
developing to provide clinicians and patients with an
extended-release transdermal fentanyl product for use in managing
chronic pain requiring around the clock opioid therapy combined
with properties designed to help combat the opioid crisis by
deterring the abuse and misuse of fentanyl patches.
NXT ENERGY: Instructs AVG to Pay $250,000 Loan in Cash
------------------------------------------------------
NXT Energy Solutions Inc. has directed Alberta Green Ventures
Limited Partnership to deliver US$250,000 in cash or other
immediately available funds to NXT and has revoked its previous
direction to deliver common shares in the capital of the Company
for cancelation as repayment of amounts owing by AGV under the
previously announced loan arrangement. NXT and AGV were unable to
reach agreement on a new price of the shares under the Share
Settlement within a framework required for regulatory approvals
which has given rise to the demand for repayment in cash.
About NXT Energy
NXT Energy Solutions Inc. is a Calgary-based technology company
whose proprietary SFD survey system utilizes quantum-scale sensors
to detect gravity field perturbations in an airborne survey method
which can be used both onshore and offshore to remotely identify
areas with exploration potential for traps and reservoirs. The SFD
survey system enables the Company's clients to focus their
hydrocarbon exploration decisions concerning land commitments, data
acquisition expenditures and prospect prioritization on areas with
the greatest potential. SFD is environmentally friendly and
unaffected by ground security issues or difficult terrain and is
the registered trademark of NXT Energy Solutions Inc. NXT Energy
Solutions Inc. provides its clients with an effective and reliable
method to reduce time, costs, and risks related to exploration.
NXT Energy reported a net loss and comprehensive loss of C$6.96
million for the year ended Dec. 31, 2018, compared to a net loss
and comprehensive loss of C$8.97 million for the year ended Dec.
31, 2017. As of Sept. 30, 2019, the Company had C$33.99 million in
total assets, C$4.16 million in total liabilities, C$29.83 million
in shareholders' equity.
The Company's independent accounting firm KPMG LLP, in Calgary,
Canada, 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's current
and forecasted cash position is not expected to be sufficient to
meet its obligations for the 12 months period beyond the date that
these financial statements have been issued. These conditions,
along with other matters, indicate the existence of a material
uncertainty that casts substantial doubt about the Company's
ability to continue as a going concern.
NXT ENERGY: Records Fourth Quarter Net Loss of C$1.78 Million
-------------------------------------------------------------
NXT Energy Solutions Inc. announced the Company's financial and
operating results for the year ended Dec. 31, 2019.
Key financial and operational highlights include:
* In September 2019, the Company completed its Nigerian SFD
survey for approximately US$8.9 Million with PE Energy
Limited, a Nigerian oil and gas service company. PE had a
contract with the Nigerian National Petroleum Company, to
provide 5,000-line kilometers of SFD surveys in Nigeria.
* The Company has received a total of US$8.4 million in
payments from PE for the SFD survey in Nigeria, including
US$1.9 million in the Q4-19 and an additional US$0.47
million in the first quarter of 2020. The final payment for
contracted holdbacks amounting to approximately US$0.5
million is expected to be paid to the Company upon the
conclusion of negotiations for additional work under the
current contract framework.
* Related to the completed Nigerian SFD survey, the Department
of Petroleum Resources, a department under the Federal
Republic of Nigeria's Ministry of Petroleum Resources
responsible for the sustainable development of Nigeria's oil
and gas resources, provided written confirmation of their
recommendation in favour of NXT's SFD technology based on
the recent survey results. They noted specifically: "in
line with federal government aspiration to increase its Oil
and Gas reserves base at a considerable reduced cost, risk
and optimize exploration cycle, the SFD technology is hereby
adopted and recommended to be deployed as an independent
data exploration tool for hydrocarbon exploration to
identify and rank prospect-level leads to focus exploration
efforts in the Nigerian Oil and Gas industry".
* NXT received confirmation of a patent granted from the
European Patent Office. This brings the total number of
countries granting the patent to 44. The final step is for
the validation process of the SFD technology patent in
select European countries.
* In December 2019, the Company completed a C$1,250,000
targeted issuer bid, repurchasing and retiring 4,166,667
common shares in the capital of the Company representing
approximately 6.08% of the total outstanding Common Shares
as of Nov. 14, 2019, at a price of C$0.30 per Common.
* Common share purchase warrants held by Alberta Green
Ventures Limited Partnership have expired as of Oct. 31,
2019.
* In February 2019, NXT entered into a Co-operative Agreement
with AGV, for AGV to propose up to three SFD surveys for
cooperation with the Company within two years. The Co-
operative Agreement is based on a cost-plus formula and a
gross overriding royalty interest in oil and gas production
arising on lands subject to the surveys. The Company
received a US$100,000 non-refundable deposit for this Co-
operative Agreement in Q2-19 and at least one of the three
SFD surveys must be completed by June 30, 2020.
* In Q3-2019, the Company advanced US$250,000 to AGV for the
purpose of furthering the shared objectives of NXT and AGV
under the Co-operation Agreement. On April 13, 2020, NXT
elected to receive and directed AGV to deliver US$250,000 as
repayment of the Principal Amount.
* Cash and short-term investments at Dec. 31, 2019 were
$6.64 million.
* There was $11.98 million of survey revenues recorded in
YE-19.
* Operating activities provided $4.08 million of cash during
YE-19 and net cash used for financing activities was $1.39
million.
* Net income of $3.77 million was recorded for YE-19,
including amortization expense of $1.78 million.
* Net income per common share for YE-19 was $0.06 basic and
$0.06 diluted.
* General and administrative costs for YE-19 as compared to
YE-18 have been reduced by $0.50 million or 13% mostly due
to a reduction in business development costs, lower
headcount and costs and certain expenditures being
recognized as direct survey costs, offset by higher
professional fees and information technology costs.
* Operating activities provided $1.29 million of cash during
Q4-19 and net cash used for financing activities was $1.35
million.
* A net loss of $1.78 million was recorded for Q4-19,
including amortization expense of $0.49 million.
* Net loss per common share for Q4-19 was ($0.03) basic and
(0.03) diluted.
* General and administrative costs for Q4-19 as compared to
Q4-18 have increased by $0.05 million or 6%, mostly due to
an increase in business development offset by a reduction in
headcount.
Message to Shareholders
George Liszicasz, president, and CEO of NXT, commented, "I am
pleased to report to our shareholders that the Company was
profitable and had positive cash flow from operations in 2019.
Last week we reported on the successful drilling of one of the SFD
recommendations located onshore within Nigeria. We now can report
on new findings with respect to our 2017 SFD Gulf of Mexico survey
over the 2.1 bid-round offshore blocks. A lead area, indicated by
SFD as prospective, has now been drilled by third parties and the
results confirm that it is a commercial discovery with early
estimates of volumes greater than 200 million barrels of oil
equivalent (MMBOE). Additionally, and perhaps more importantly,
from a capital expenditure allocation perspective, another seismic
prospect, considered non-prospective by NXT, was drilled as part of
the same campaign and was declared unsuccessful. The announcements
concerning these drilling activities was reported by
internationally recognized upstream data providers starting late
2019. The SFD data for the 2.1 bid-round offshore blocks was
submitted to and has been available from the National Hydrocarbon
Commission (CNH) of Mexico since mid-2018. These results highlight
the value of adding SFD® to an upstream work program and evidences
the efficacy of our geophysical method in recommending prospects
with potential for hydrocarbon traps. Drilling activities over SFD
recommendations are ongoing in numerous countries and NXT shall
provide further updates as warranted.
"In the first quarter of 2020, NXT finalized the first phase of its
survey over the Queen Charlotte Fault located offshore British
Columbia. The purpose of the continuing QCF study is to identify
seismically active areas and to differentiate subsurface stress
states in deep water settings. The Company is in the process of
evaluating the acquired SFD data.
"In the month before travel restrictions were brought on by the
novel coronavirus (2019-nCoV/COVID-19), my team and I completed a
broad scale international market business development effort which
included a signed memorandum of understanding with an independent
oil company with interests in East-Central Africa. Though
currently there are several challenges facing our world and
industry, NXT is focused on minimizing the risks associated with
them and continues to advance further discussions for SFD survey
opportunities within Nigeria, East-Central Africa, Mexico, and Asia
via video conferences.
"On behalf of our Board of Directors and the entire team at NXT, I
want to thank all of our shareholders for their continued support
in these trying times."
About NXT Energy
NXT Energy Solutions Inc. is a Calgary-based technology company
whose proprietary SFD survey system utilizes quantum-scale sensors
to detect gravity field perturbations in an airborne survey method
which can be used both onshore and offshore to remotely identify
areas with exploration potential for traps and reservoirs. The SFD
survey system enables the Company's clients to focus their
hydrocarbon exploration decisions concerning land commitments, data
acquisition expenditures and prospect prioritization on areas with
the greatest potential. SFD is environmentally friendly and
unaffected by ground security issues or difficult terrain and is
the registered trademark of NXT Energy Solutions Inc. NXT Energy
Solutions Inc. provides its clients with an effective and reliable
method to reduce time, costs, and risks related to exploration.
NXT Energy reported a net loss and comprehensive loss of C$6.96
million for the year ended Dec. 31, 2018, compared to a net loss
and comprehensive loss of C$8.97 million for the year ended Dec.
31, 2017. As of Sept. 30, 2019, the Company had C$33.99 million in
total assets, C$4.16 million in total liabilities, C$29.83 million
in shareholders' equity.
The Company's independent accounting firm KPMG LLP, in Calgary,
Canada, 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's current
and forecasted cash position is not expected to be sufficient to
meet its obligations for the 12 months period beyond the date that
these financial statements have been issued. These conditions,
along with other matters, indicate the existence of a material
uncertainty that casts substantial doubt about the Company's
ability to continue as a going concern.
ODYSSEY MARINE: Warren Averett LLC Raises Going Concern Doubt
-------------------------------------------------------------
Odyssey Marine Exploration, Inc., filed with the U.S. Securities
and Exchange Commission its annual report on Form 10-K, disclosing
a net loss of $10,439,961 on $3,072,987 of total revenue for the 12
months period ended Dec. 31, 2019, compared to a net loss of
$5,172,436 on $3,275,753 of total revenue for the year ended in
2018.
The audit report of Warren Averett, LLC states that the Company has
incurred significant losses and they may be unsuccessful in raising
the necessary capital to fund operations and capital expenditures.
These conditions raise substantial doubt about the Company's
ability to continue as a going concern.
The Company's balance sheet at Dec. 31, 2019, showed total assets
of $5,329,720, total liabilities of $58,627,136, and a total
stockholders' deficit of $53,297,416.
A copy of the Form 10-K is available at:
https://is.gd/Zo1Rxc
Odyssey Marine Exploration, Inc., together with its subsidiaries,
engages in deep-ocean exploration activities worldwide. The
Company was founded in 1986 and is headquartered in Tampa,
Florida.
PACIFIC ETHANOL: RSM US LLP Raises Going Concern Doubt
------------------------------------------------------
Pacific Ethanol, Inc., filed with the U.S. Securities and Exchange
Commission its annual report on Form 10-K, disclosing a net loss
(attributed to Pacific Ethanol, Inc.) of $88,949,000 on
$1,424,881,000 of net sales for the year ended Dec. 31, 2019,
compared to a net loss (attributed to Pacific Ethanol, Inc.) of
$60,273,000 on $1,515,371,000 of net sales for the year ended in
2018.
The audit report of RSM US LLP states that the Company has suffered
recurring losses from operations and has limited additional
liquidity available. This raises substantial doubt about the
Company's ability to continue as a going concern. Management
The Company's balance sheet at Dec. 31, 2019, showed total assets
of $612,495,000, total liabilities of $385,450,000, and a total
stockholders' equity of $227,045,000.
A copy of the Form 10-K is available at:
https://is.gd/lDVoID
Pacific Ethanol, Inc., produces and markets low- carbon renewable
fuels in the United States. Pacific Ethanol, Inc., was founded in
2003 and is headquartered in Sacramento, California.
PATRIOT SCIENTIFIC: Incurs $101K Net Loss for Feb. 29 Quarter
-------------------------------------------------------------
Patriot Scientific Corporation filed its quarterly report on Form
10-Q, disclosing a net loss of $101,280 on $0 of revenue for the
three months ended Feb. 29, 2020, compared to a net loss of
$184,078 on $0 of revenue for the same period in 2019.
At Feb. 29, 2020, the Company had total assets of $1,044,588, total
liabilities of $305,679, and $738,909 in total stockholders'
equity.
At February 29, 2020, the Company has an accumulated deficit of
$62,083,667, and has incurred recurring losses and used significant
amounts of cash in its operations. As of February 29, 2020, the
Company had cash and cash equivalents of approximately $749,000 and
working capital of approximately $704,000.
The Company said, "Historically, we have been a licensing company
and have entered into a number of agreements in our pursuit of
unlicensed users of our intellectual property.
"On November 4, 2019, we announced that the Supreme Court of the
United States denied our petition for a writ of certiorari with
respect to patent litigation previously before the United States
Court of Appeals for the Federal Circuit that alleged infringement
of the US 5,809,336 patent (the "'336 patent") against multiple
defendants. As result of this adverse decision, we have halted all
licensing efforts as we evaluate the future direction of the
Company and a potential new line of business. Currently, we do not
have any potential sources of revenue and our joint venture,
Phoenix Digital Solutions, LLC ("PDS") has not generated
significant license revenues since September 2013.
"In addition, there are a number of uncertainties associated with
our financial projections that could increase or expedite our
projected expenses, which could negatively impact our cash on hand.
Additionally, we do not expect to generate any revenue over the
foreseeable future and we will be required to seek additional
financing to continue our operations. We will also require
additional financing to develop or acquire new lines of business.
We have no current arrangements with respect to any additional
financing. Consequently, there can be no assurance that any
additional financing on commercially reasonable terms, or at all,
will be available when needed. Further, any additional equity
financing, if secured, may involve substantial dilution to our then
existing stockholders.
"One opportunity we are evaluating is the potential of establishing
a company that develops a data capturing platform that could be
implemented throughout the drug development process utilizing
blockchain technologies in collaboration with Artius Bioconsulting
LLC ("Artius"), under an agreement signed on April 12, 2019.
During the quarter ended November 30, 2019, Artius completed and
submitted their feasibility report to us and we are currently
evaluating next steps. However, there are no assurances that we
will be successful in developing this blockchain based business.
Further, in the event the next steps in the development of a
blockchain-based business are undertaken, it is expected that
significant additional funding from external sources will be
required. If we are unable to develop or acquire new lines of
business, such as those involving blockchain technologies, and/or
we are unable to raise additional capital, we will be forced to
liquidate the Company in a dissolution under Delaware law or seek
protection under the provisions of the U.S. Bankruptcy Code. We
currently anticipate, based on current operations, that our cash on
hand will not satisfy our operational and capital requirements
through twelve months from the date of filing on this Form 10-Q.
"The above matters raise substantial doubt regarding our ability to
continue as a going concern."
A copy of the Form 10-Q is available at:
https://is.gd/uk7dry
Patriot Scientific Corporation focuses on commercializing
microprocessor technologies through broad and open licensing. The
company was founded in 1987 and is based in Carlsbad, California.
PAYAM NAWAB: $599K Sale of Ocean City Property to Casey Approved
----------------------------------------------------------------
Judge Lori S. Simpson of the U.S. Bankruptcy Court for the District
of Maryland authorized Payam Nawab's private sale of the real
property located at 36 Canal Side MEWS W #36BQ, Ocean City,
Maryland to Stephen Casey for $599,000, pursuant to the terms set
forth
in their Contract of Sale.
The title company or closing agent for the sale of the Ocean City
Property is authorized to pay all liens securing the Ocean City
Property plus all costs of closing and any escrow fees, title
premiums, closing costs, unpaid property taxes and any other fees
and costs of sale and to remit the balance of the net sales
proceeds to the Sellers, Borzou Biabani and Payam Nawab, in equal
shares.
The Order is effective immediately and will not be subject to a
14-day stay as provided in Bankruptcy Rule 6004(h).
Payam Nawab sought Chapter 11 protection (Bankr. D. Md. Case No.
14-23775) on Sept. 4, 2014. On Jan. 8, 2016, the Court entered an
Order confirming Debtor's the Chapter 11 Plan of Reorganization.
On Aug. 14, 2019, the Court appointed Terrence Riley of Vantage
Resort Realty-52 as Real Estate Agent.
PG&E CORPORATION: Noteholders Group Update List for 3rd Time
------------------------------------------------------------
In the Chapter 11 cases of PG&E Corporation and Pacific Gas and
Electric Company, et al., the law firm of Akin Gump Strauss Hauer &
Feld LLP submitted a third amended verified statement under Rule
2019 of the Federal Rules of Bankruptcy Procedure, to disclose an
updated list of unsecured noteholders that it is representing.
In or around February 2019, the Ad Hoc Committee engaged Akin Gump
Strauss Hauer & Feld LLP to represent it in connection with the
chapter 11 cases of the Utility and PG&E Corporation. On March 5,
2019, the Ad Hoc Committee filed the Verified Statement of the Ad
Hoc Committee of Senior Unsecured Noteholders Pursuant to
Bankruptcy Rule 2019 [Docket No. 744].
On July 18, 2019, the Ad Hoc Committee filed the First Amended
Verified Statement of the Ad Hoc Committee of Senior Unsecured
Noteholders Pursuant to Bankruptcy Rule 2019 [Docket No. 3083].
On October 21, 2019, the Ad Hoc Committee filed the Second Amended
Verified Statement of the Ad Hoc Committee of Senior Unsecured
Noteholders Pursuant to Bankruptcy Rule 2019 [Docket No. 4369].
This Statement amends and replaces the Second Amended Statement.
As of April 13, 2020, members of the Ad Hoc Committee and their
disclosable economic interests are:
Apollo Global Management LLC
9 West 57th Street 43rd Floor
New York, NY 10019
* $336,425,000 in Senior Utility Notes
* $85,000,000 in Utility Revolver Loans
* $83,000,000 in DIP Term Loans
* $100,000,000 in Wildfire Subrogation Claims
Aurelius Capital Management, LP
535 Madison Avenue 31st Floor
New York, NY 10022
* $89,902,000 in Senior Utility Notes
Canyon Capital Advisors LLC
2000 Avenue of the Stars 11th Floor
Los Angeles, CA 90067
* $600,044,000 in Senior Utility Notes
* $129,037,343.93 in Utility Revolver Loans
* $102,748,595.72 in Utility L/C Reimbursement
* $58,557,367.00 in HoldCo Revolver Loans
* $45,000,000 in HoldCo Term Loans
Capital Group
333 South Hope Street 55th Floor
Los Angeles, CA 90071
* $390,025,000 in Senior Utility Notes
* $37,985,000 in Utility L/C Reimbursement
CarVal Investors, LLC
461 Fifth Avenue
New York, NY 10017
* $82,727,000 in Senior Utility Notes
* $35,000,000 in Utility Revolver Loans
* $100,000,000 in Utility L/C Reimbursement
Castle Hook Partners LP
250 West 55th Street
New York, NY 10019
* $107,250,000 in Senior Utility Notes
* $10,000,000 in Utility Revolver Loans
* 3,333,841 shares of PG&E Stock
Citadel Advisors LLC
520 Madison Avenue
New York, NY 10022
* $741,190,000 in Senior Utility Notes
* $174,972,513.80 in Utility Revolver Loans
* 5,395,315 shares of PG&E Stock
Davidson Kempner Capital Management LP
520 Madison Avenue 30th Floor
New York, NY 10022
* $945,184,000 in Senior Utility Notes
* $327,931,000 in Utility Revolver Loans
* $25,000,000 in Utility L/C Reimbursement
* $2,666,000 in Trade Claims
Diameter Capital Partners LP
24 West 40th Street 5th Floor
New York, NY 10018
* $156,290,000 in Senior Utility Notes
* $104,541,717 in Utility Revolver Loans
* $17,000,000 in Bilateral Utility Loan
* $33,865,078 in Trade Claims
Elliott Management Corporation
40 West 57th Street
New York, NY 10019
* $1,722,605,000 in Senior Utility Notes
Farallon Capital Management, L.L.C.
One Maritime Plaza Suite 2100
San Francisco, CA 94111
* $855,880,000 in Senior Utility Notes
* $260,120,000 in Utility Revolver Loans
* $28,000,000 in DIP Term Loans
* $86,340,000 in Trade Claims
* $1,140,000 in Wildfire Subrogation Claims
Fidelity Management & Research
801 Boylston Street
Boston, MA 02116
* $712,822,000 in Senior Utility Notes
Fir Tree Partners
55 West 46th Street 29th Floor
New York, NY 10036
* $89,800,000 in Senior Utility Notes
LMR Partners LLP
363 Lafayette Street
New York, NY 10012
* $76,409,000 in Senior Utility Notes
Marathon Asset Management
One Bryant Park 38th Floor
New York, NY 10036
* $24,250,000 in Senior Utility Notes
* $22,698,939 in Utility Revolver Loans
* $41,724,692 in HoldCo Revolver Loans
* $39,023,409 in HoldCo Term Loans
Oak Hill Advisors, L.P.
1114 6th Avenue 27th Floor
New York, NY 10036
* $162,500,000in Senior Utility Notes
Oaktree Capital Management, L.P.
333 South Grand Avenue 28th Floor
Los Angeles, CA 90071
* $167,223,000 in Senior Utility Notes
* $24,458,189 in Utility Revolver Loans
* $10,000,000 in Utility Term Loans
* $3,750,000 in DIP Term Loans
Pacific Investment Management Company LLC
650 Newport Center Drive
Newport Beach, CA 92660
* $3,170,343,000 in Senior Utility Notes
* $230,000,000 in Utility Term Loans
* $1,065,340,000 in DIP Term Loans
P. Schoenfeld Asset Management LP
1350 Avenue of the Americas 21st Floor
New York, NY 10019
* $153,471,000 in Senior Utility Notes
Sculptor Capital Investments, LLC
9 West 57th Street 39th Floor
New York, NY 10019
* $493,120,670,000 in Senior Utility Notes
* $20,000,000 in DIP Term Loans
* $105,000,000 in Utility L/C Reimbursement
* 216,800 shares of PG&E Stock
* Short Positions in 2,168 Call Option Contracts on PG&E Stock
2,168 Put Option Contracts on PG&E Stock
Senator Investment Group LP
510 Madison Avenue Suite 28
New York, NY 10022
* $88,286,000 in Senior Utility Notes
* $25,000,000 in Utility Revolver Loans
Silver Rock Financial LP
12100 Wilshire Blvd. Suite 1000
Los Angeles, CA 90025
* $46,329,000 in Senior Utility Notes
Taconic Capital Advisors LP
280 Park Avenue 5th Floor
New York, NY 10017
* $133,810,000 in Senior Utility Notes
* $50,000,000 in Utility Revolver Loans
* $25,000,000 in Utility L/C Reimbursement
Third Point LLC
390 Park Avenue
New York, NY 10022
* $605,953,000 in Senior Utility Notes
* $10,000,000 in Utility Revolver Loans
Varde Partners, Inc.
901 Marquette Avenue South
Minneapolis, MN 55402
* $696,827,000 in Senior Utility Notes
* $372,285,106.67 in Utility Revolver Loans
* $5,000,000 in Utility L/C Reimbursement
Nothing contained in this Statement (or Exhibit A) should be
construed as a limitation upon, or waiver of, any rights of any
member of the Ad Hoc Committee to assert, file and/or amend their
claims in accordance with applicable law and any orders entered in
these chapter 11 cases.
Akin Gump reserves the right to amend and/or supplement this
Statement in accordance with the requirements set forth in
Bankruptcy Rule 2019.
Counsel to the Ad Hoc Committee of Senior Unsecured Noteholders of
Pacific Gas and Electric Company can be reached at:
AKIN GUMP STRAUSS HAUER & FELD LLP
Michael S. Stamer, Esq.
Ira S. Dizengoff, Esq.
David H. Botter, Esq.
Abid Qureshi, Esq.
One Bryant Park
New York, NY 10036
Telephone: (212) 872-1000
Facsimile: (212) 872-1002
E-mail: mstamer@akingump.com
idizengoff@akingump.com
dbotter@akingump.com
aqureshi@akingump.com
Ashley Vinson Crawford, Esq.
580 California Street, Suite 1500
San Francisco, CA 94104
Telephone: (415) 765-9500
Facsimile: (415) 765-9501
E-mail: avcrawford@akingump.com
A copy of the Rule 2019 filing, downloaded from PacerMonitor.com,
is available at https://is.gd/gt5WGP
About PG&E Corporation
PG&E Corporation (NYSE: PCG) -- http://www.pgecorp.com/-- is a
Fortune 200 energy-based holding company, headquartered in
SanFrancisco. 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.
The Office of the U.S. Trustee appointed an official committee of
unsecured 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.
PIONEER ENERGY: Davis Polk, Haynes Update on Noteholder Group
-------------------------------------------------------------
In the Chapter 11 cases of Pioneer Energy Services Corp., et al.,
the law firms of Davis Polk & Wardwell LLP and Haynes and Boone,
LLP submitted an amended verified statement under Rule 2019 of the
Federal Rules of Bankruptcy Procedure, to disclose an updated list
Ad Hoc Group of Noteholders that they are representing.
In or around June 2019, the Ad Hoc Group of Noteholders engaged
Davis Polk to represent it in connection with the Members' holdings
of Prepetition Senior Notes. In or around February 2020, the Ad Hoc
Group of Noteholders engaged Haynes and Boone to act as co-counsel
in these Chapter 11 Cases.
The Ad Hoc Group of Noteholders filed the Verified Statement of
Davis Polk & Wardwell LLP and Haynes and Boone, LLP Pursuant to
Federal Rule of Bankruptcy Procedure 2019, dated March 3, 2020
[Docket No. 86]. The Ad Hoc Group of Noteholders submits this
Amended Statement to amend information disclosed in the Original
Statement.
Counsel only represents the Ad Hoc Group of Noteholders. Counsel
does not represent or purport to represent any other entity or
entities in connection with the Chapter 11 Cases. In addition, the
Ad Hoc Group of Noteholders does not claim or purport to represent
any other entity and undertakes no duties or obligations to any
entity.
The Members of the Ad Hoc Group of Noteholders, collectively,
beneficially own or manage approximately (i) $142,591,000.00 in
aggregate principal amount of Prepetition Senior Notes, (ii)
$794,000.00 in aggregate principal amount of secured term loans
under that certain Term Loan Agreement, dated as of November 8,
2017, by and among Pioneer, as the borrower, the lenders party
thereto and Wilmington Trust, National Association, as
administrative agent, and (iii) 10,770 shares of the common stock
of Pioneer, as set forth on Exhibit A hereto.
As of April 14, 2020, members of the Ad Hoc Group of Noteholders
and their disclosable economic interests are:
CREDIT SUISSE ASSET MANAGEMENT, LLC
11 Madison Ave
New York, NY 10010
* $52,946,000.00 in aggregate principal amount of Prepetition
Senior Notes
DW PARTNERS, LP
590 Madison Ave, 13th Floor
New York, NY 10022
* $26,550,000.00 in aggregate principal amount of Prepetition
Senior Notes
J.P. MORGAN SECURITIES LLC
500 Stanton Christiana Rd
Newark, DE 19713
* $13,209,000.00 in aggregate principal amount of Prepetition
Senior Notes
STRATEGIC INCOME MANAGEMENT
1200 Westlake Ave N, Suite 713
Seattle, WA 98109
* $25,886,000.00 in aggregate principal amount of Prepetition
Senior Notes
* 10,770 shares of the Common Stock
WHITEBOX ADVISORS LLC
3033 Excelsior Blvd., Suite 500
Minneapolis, MN 55416
* $24,000,000.00 in aggregate principal amount of Prepetition
Senior Notes
* $794,000.00 in aggregate principal amount of Prepetition Term
Loans
Counsel to the Ad Hoc Group of Noteholders can be reached at:
HAYNES AND BOONE, LLP
Charles A. Beckham, Jr., Esq.
Kelli S. Norfleet, Esq.
Martha Wyrick, Esq.
1221 McKinney Street, Suite 2100
Houston, TX 77010
Telephone: (713) 547-2000
Facsimile: (713) 547-2600
E-mail: charles.beckham@haynesboone.com
kelli.norfleet@haynesboone.com
martha.wyrick@haynesboone.com
- and -
DAVIS POLK & WARDWELL LLP
Damian S. Schaible, Esq.
Natasha Tsiouris, Esq.
Erik Jerrard, Esq.
Xu Pang, Esq.
450 Lexington Avenue
New York, NY 10017
Telephone: (212) 450-4000
Facsimile: (212) 701-5800
E-mail: damian.schaible@davispolk.com
natasha.tsiouris@davispolk.com
erik.jerrard@davispolk.com
xu.pang@davispolk.com
A copy of the Rule 2019 filing, downloaded from PacerMonitor.com,
is available at https://is.gd/1SzsQQ and https://is.gd/C7xHPT
About Pioneer Energy
Pioneer Energy Services (OTC: PESX) -- http://www.pioneeres.com/--
provides well servicing, wireline, and coiled tubing services to
producers primarily in Texas and the Mid-Continent and Rocky
Mountain regions. Pioneer also provides contract land drilling
services to oil and gas operators in Texas, Appalachia and Rocky
Mountain regions and internationally in Colombia. Pioneer is
headquartered in San Antonio, Texas.
Pioneer Energy Services Corp. and nine related entities sought
Chapter 11 protection (Bankr. S.D. Tex. Lead Case No. 20-31425) to
effectuate its prepackaged plan of reorganization that will cut
debt by $260 million.
Pioneer Energy disclosed $689,693,000 in assets and $576,545,000 in
liabilities as of Sept. 30, 2019.
The Hon. David R. Jones is the case judge.
Paul, Weiss, Rifkind, Wharton & Garrison LLP and Norton Rose
Fulbright US LLP are serving as legal counsel to Pioneer, Lazard is
acting as financial advisor and Alvarez & Marsal is serving as
restructuring advisor. Epiq Corporate Restructuring, LLC, is the
claims agent.
Davis Polk & Wardwell LLP and Haynes and Boone, LLP are acting as
legal counsel for the ad hoc group of Senior Unsecured Noteholders
and Houlihan Lokey is acting as financial advisor.
POSTMEDIA NETWORK: Moody's Cuts CFR to Caa3, Outlook Negative
-------------------------------------------------------------
Moody's Investors Service downgraded Postmedia Network Inc.'s
corporate family rating to Caa3 from Caa1, senior secured first
lien notes to B3 from B2, and speculative grade liquidity rating to
SGL-4 from SGL-3. At the same time, Moody's downgraded Postmedia's
probability of default rating to Caa3-PD from Caa1-PD and appended
a Limited Default designation. The outlook was changed to negative
from stable.
The limited default "LD" designation appended to Postmedia's PDR
reflects a waiver of payments on its first lien notes maturing
2023, including the interest payment due April 30th in exchange for
new notes. The contractual arrangement between Postmedia and its
lenders constitutes a default under Moody's definition.
"The downgrade reflects weak liquidity with a high dependence on
government subsidies following an accelerated decline in
advertising revenues amid widespread business closures due to the
coronavirus outbreak," said Whitney Leavens, Analyst at Moody's.
Downgrades:
Issuer: Postmedia Network Inc.
Corporate Family Rating, Downgraded to Caa3 from Caa1
Probability of Default Rating, Downgraded to Caa3-PD /LD from
Caa1-PD
Speculative Grade Liquidity Rating, Downgraded to SGL-4 from SGL-3
Senior Secured Regular Bond/Debenture, Downgraded to B3 (LGD2) from
B2 (LGD2)
Outlook Actions:
Issuer: Postmedia Network Inc.
Outlook, Changed to Negative from Stable
RATINGS RATIONALE
Postmedia (Caa3 CFR) is constrained by: (1) weak liquidity; (2)
high business risk given steep, sustained revenue declines in its
traditional newspaper business; (3) competitive pressure in its
digital media segment given low barriers to entry and dominant
global players; and (4) its expectation that Postmedia's leverage
will remain high. The company benefits from: (1) its leading
position in the Canadian newspaper market with well-known brands;
and (2) track record for achieving cost reductions that keep pace
with falling revenues.
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. Postmedia is
affected by the shock given its sensitivity to the general business
environment, leaving 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
which has led to business closures, resulting in weakening
near-term business prospects for Postmedia.
Postmedia has weak liquidity (SGL-4). Cash on hand as of November
2019 totaled about $14 million. During the twelve months ended
February 2021, Moody's expects Postmedia will receive over $40
million in government disbursements, consisting of about $22
million associated with the Canada Emergency Wage Subsidy and close
to $20 million in journalism tax credits, offsetting Moody's
estimate of negative free cash flow generation. As of February
2020, Postmedia had full availability under its C$15 million asset
backed revolving credit facility due January 2021 but Moody's does
not consider the revolver as an additional source of liquidity
because it is current. Postmedia has limited alternative liquidity
generating potential as individual asset proceeds must be allocated
toward debt repayment.
The negative outlook reflects Moody's view of a risk of further
distressed exchanges and/or debt restructuring.
Governance considerations include the company's history of
distressed exchanges; however, Postmedia has clear and transparent
reporting and a track record of pursuing material debt reduction
even as topline growth has contracted in recent years.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be downgraded if the company restructures its
debt.
The ratings could be upgraded if operating performance recovers and
liquidity becomes adequate in an improved operating environment.
The principal methodology used in these ratings was Media Industry
published in June 2017.
Postmedia Network Inc., headquartered in Toronto, is the largest
publisher of daily newspapers in Canada. Publications include
National Post, Toronto Sun, Vancouver Sun, Montreal Gazette, Ottawa
Citizen, Calgary Herald, Edmonton Journal, and Windsor Star.
PRIORITY PAYMENT: Moody's Cuts CFR to Caa1 & Sr. Sec. Rating to B3
------------------------------------------------------------------
Moody's Investors Service downgraded Priority Payment Systems
Holdings, LLC's Corporate Family Rating to Caa1 from B3 and
Probability of Default Rating to Caa1-PD from B3-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 high leverage, limited
cash flow generation and near-term pressures resulting from the
coronavirus outbreak.
RATINGS RATIONALE
Priority's credit profile is constrained by high leverage, weak
liquidity and low free cash flow generation. As of December 2019,
Moody's adjusted total leverage was about 8x. The decline in
continuity merchant revenues has run its course, and the company's
business lines are executing in Q4 2019 and Q1 2020. However, the
coronavirus outbreak is likely to have a significant adverse impact
on Consumer revenues in Q2 2020 as SME acquiring volumes decline.
Moody's regards the coronavirus outbreak as a social risk under the
ESG framework. A highly variable cost structure and corporate cost
reductions will support margins, but EBITDA will decline and
leverage will further increase. Moody's expects free cash flow to
be modestly negative in Q2, further pressuring liquidity. Moody's
estimates Priority's total liquidity (cash and available revolver)
at over $15 million at the end of Q1, which should be sufficient to
sustain the company through the difficult Q2. A sequential rebound
of Consumer revenues into Q3 and Q4 would support the credit
profile.
In March 2019, Priority completed an amendment of its credit
facilities which reset covenants, pricing and amortization. Moody's
expects Priority to be in compliance with covenants in Q1, and to
be able to draw on the revolver during Q2 if necessary. However, at
the end of Q2 the company likely will not be in compliance with its
total leverage financial covenant, due to the decline in EBITDA as
a result of the coronavirus outbreak. Priority is currently
actively pursuing strategic alternatives for reducing leverage and
enhancing liquidity, which include potential asset divestitures
and/or equity investments. If the company is able to execute such a
transaction and reduce leverage in the near term, it could result
in a material improvement in its credit profile.
Priority's liquidity is considered weak (liquidity rating of
SGL-4), with an estimated $15 million of total liquidity (cash and
available revolver) at the end of Q1 and modestly negative free
cash flow in Q2, and a likely covenant default at the end of Q2
absent a waiver or amendment. A return to positive free cash flow
in the second half of 2020 and a completion of a deleveraging
transaction would result in improved liquidity.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The stable outlook is predicated upon an improvement in EBITDA and
free cash flow generation in the second half of 2020 following the
expected difficult second quarter. The ratings could be upgraded if
Priority completes a material deleveraging transaction such as an
asset sale or an equity investment that improves liquidity and
reduces the probability of default, or if EBITDA returns to growth
and free cash flow to debt is sustained in the low single digits.
The ratings could be downgraded if liquidity further weakens, an
improvement in performance does not materialize in the second half
of 2020 or the probability of default increases.
Downgrades:
Issuer: Priority Payment Systems Holdings, LLC
Corporate Family Rating, Downgraded to Caa1 from B3
Probability of Default Rating, Downgraded to Caa1-PD from B3-PD
Senior Secured Bank Credit Facility, Downgraded to B3 (LGD3) from
B2 (LGD3)
Outlook Actions:
Issuer: Priority Payment Systems Holdings, LLC
Outlook, Remains Stable
The principal methodology used in these ratings was Business and
Consumer Service Industry published in October 2016.
With revenues of about $375 million in 2019 pro forma for
acquisitions, Priority is a merchant acquirer and payment solutions
provider.
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.
PULTEGROUP INC: Moody's Alters Outlook on Ba1 CFR to Stable
-----------------------------------------------------------
Moody's Investors Service changed the outlook for PulteGroup, Inc.
to stable from positive. Moody's also affirmed the company's Ba1
Corporate Family Rating, Ba1-PD Probability of Default Rating, and
the Ba1 rating on its senior unsecured notes. Pulte's SGL-1
Speculative Grade Liquidity Rating is maintained.
The change in the outlook to stable from positive reflects the view
that it is unlikely that Moody's will raise the rating for Pulte in
the near term as economic conditions weaken broadly. The immense
slowing in the US economy caused by the widespread coronavirus
pandemic is affecting the homebuilding industry. Moody's expects
that rising unemployment, declining consumer confidence, and
reduced wealth, given stock market losses, will cause many
potential homebuyers to delay, perhaps indefinitely, purchases of
homes. Moody's expects new home sales to decline significantly in
2020, with the most pronounced weakening occurring in Q2, followed
by modest sequential improvements in the second half of the year.
If economic conditions stabilize in 2021, as expected by Moody's
Macroeconomic Board, and employment conditions firm up, Moody's
foresees the homebuilding industry recovering steadily given
supportive underlying fundamentals, including lack of oversupply,
low interest rates supporting affordability, and favorable
demographic trends. Reflected in the outlook is the expectation
that during the weak environment caused by the coronavirus Pulte
will maintain its disciplined financial policy and very good
liquidity, and operate conservatively including from the
perspective of land spend.
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 homebuilding
industry is affected by the shock given its sensitivity to consumer
demand and sentiment and to unemployment levels. Moody's regards
the coronavirus outbreak as a social risk under its ESG framework,
given the substantial implications for public health and safety.
The following rating actions were taken:
Affirmations:
Issuer: PulteGroup, Inc.
Probability of Default Rating, Affirmed Ba1-PD
Corporate Family Rating, Affirmed Ba1
Senior Unsecured Regular Bond/Debenture, Affirmed Ba1 (LGD4)
Outlook Actions:
Issuer: PulteGroup, Inc.
Outlook, Changed To Stable From Positive
RATINGS RATIONALE
Pulte's Ba1 Corporate Family Rating is supported by its: 1)
excellent gross margin that ranks among the strongest of the rated
homebuilders; 2) demonstrated declining debt leverage despite share
repurchase activity; 3) large scale and broad geographic footprint,
balanced product mix and price point diversity; 4) robust tangible
equity base, strong cash flow generation and very good liquidity
providing considerable financial flexibility; 5) positive
governance characteristics, including a conservative financial
strategy.
Pulte's credit quality is constrained by: 1) the company's
shareholder friendly activities, including share repurchases and
dividends; 2) land, labor and building materials cost pressures
faced by the industry that impact gross margins; 3) owned land
position of about four years that is exposed to a risk of
impairment charges; and 4) industry cyclicality and sensitivity of
operations to changes in underlying demand.
Pulte's SGL-1 Speculative Grade Liquidity Rating reflects Moody's
expectation of a very good liquidity profile over the next 12 to 15
months. Liquidity is supported by the company's $1.2 billion of
unrestricted cash at December 31, 2019, its strong cash flow from
operations, availability under its $1.0 billion senior unsecured
revolving credit facility that matures in June 2023, and
substantial headroom under the revolver's financial maintenance
covenants.
FACTORS THAT WOULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Factors that could lead to an upgrade include:
- Stability of economic and homebuilding industry conditions
- Demonstration of sustained strong credit metrics, including
homebuilding debt to book capitalization below 35% and EBIT
interest coverage in the high single digits
- Maintenance of a very good liquidity profile, including
generating strong free cash flow
- Demonstration of a commitment to attaining and maintaining an
investment grade rating, both to Moody's and to the debt capital
markets
- An ability to withstand a serious financial shock without
having its key credit metrics sinking to low speculative grade
levels
Factors that could lead to a downgrade include:
- Generation of bottom line net losses
- Major impairment charges
- Adjusted debt leverage approaching 50%
- A weakening in the company's liquidity profile
The principal methodology used in these ratings was Homebuilding
and Property Development Industry published in January 2018.
Founded in 1950 and headquartered in Atlanta, Georgia, Pulte is the
country's third largest homebuilder by revenue and homes sold, with
operations in 42 markets and 23 states. Through its brand portfolio
that includes Centex, Pulte Homes, Del Webb, DiVosta Homes, John
Wieland Homes and Neighborhoods, and American West, the company is
one of the industry's most diversified homebuilders. In 2019,
Pulte's homebuilding revenues and consolidated net income were $10
billion and $1 billion, respectively.
Q BIOMED INC: Incurs $5.94 Million Net Loss in First Quarter
------------------------------------------------------------
Q Biomed Inc. filed with the Securities and Exchange Commission its
Quarterly Report on Form 10-Q reporting a net loss of $5.94 million
for the three months ended Feb. 29, 2020 compared to a net loss of
$2.37 million for the three months ended Feb. 28, 2019.
As of Feb. 29, 2020 the Company had $1.23 million in total assets,
$6.46 million in total liabilities, and a total stockholders'
deficit of $5.23 million.
Q Biomed stated, "We have not yet established an ongoing source of
revenues and must cover our operating through debt and equity
financings to allow us to continue as a going concern. We had
approximately $0.7 million in cash as of February 29, 2020. Our
ability to continue as a going concern depends on the ability to
obtain adequate capital to fund operating losses until we generate
adequate cash flows from operations to fund our operating costs and
obligations. If we are unable to obtain adequate capital, we could
be forced to cease operations.
"We depend upon our ability, and will continue to attempt, to
secure equity and/or debt financing. We cannot be certain that
additional funding will be available on acceptable terms, or at
all. Our management determined that there was substantial doubt
about our ability to continue as a going concern within one year
after the condensed consolidated financial statements were issued,
and management's concerns about our ability to continue as a going
concern within the year following this report persist."
A full-text copy of the Form 10-Q is available for free at:
https://is.gd/ZxvqNp
About Q BioMed Inc.
Q BioMed Inc. -- http://www.QBioMed.com-- is a biotech
acceleration and commercial stage company. The Company is focused
on licensing and acquiring undervalued biomedical assets in the
healthcare sector. Q BioMed is dedicated to providing these target
assets the strategic resources, developmental support, and
expansion capital needed to ensure they meet their developmental
potential, enabling them to provide products to patients in
need.
Q BioMed reported a net loss of $10.28 million for the year ended
Nov. 30, 2019, compared to a net loss of $9.27 million for the year
ended Nov. 30, 2018.
Marcum LLP, in New York, NY, the Company's auditor since 2015,
issued a "going concern" qualification in its report dated
Feb. 28, 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.
QUECHAN INDIAN: Fitch Alters Outlook on 'B' IDR to Negative
-----------------------------------------------------------
Fitch Ratings has affirmed the Quechan Indian Tribe's Issuer
Default Rating at 'B'. In addition, Fitch has affirmed Quechan's
tribal economic development bonds at 'BB-'/'RR2'. The Rating
Outlook is Negative.
The Rating Outlook revision to Negative from Positive reflects the
uncertainty related to the operating pressures resulting from the
coronavirus pandemic and the greater probability of a downgrade in
the near term. Fitch expects the tribe to maintain leverage levels
consistent with a 'B' IDR through the disruption; however, its
reliance on a single geographic region that is tied to tourism
increases the likelihood of a weaker recovery in gaming demand
relative to broader U.S. regional gaming.
Quechan's credit profile entered the disruption with meaningful
headroom at the 'B' IDR level thanks to its conservative leverage
of 1.5x. The tribe also has appropriate liquidity to weather the
near-term cash burn from its property closures, which includes
sufficient cash balances at the casino and tribal level. Quechan's
near-term maturities are manageable, as is the risk related to its
3.0x leverage covenant. However, the 1.25x debt service covenant
could get tight during 2020. In the event debt service coverage
falls below 1.5x, it would trigger a daily trustee-controlled flow
of funds to the benefit of the TED bondholders. Payments into a
bond reserve account are senior to term loan debt service and
distributions to the tribe.
Previously, the Positive Rating Outlook reflected the de-leveraging
path and improved liquidity of the tribe. With the closures of the
tribe's casinos, the tribe has an adequate amount of cash on hand
to service its debt, essential maintenance capex and a level of
tribal distributions consistent with historical levels. Fitch
projects Quechan's gross leverage will increase above 2.0x during
fiscal 2020 but ultimately remain below the 3.0x downgrade
sensitivity at the 'B' IDR level.
Fitch could revise the Rating Outlook to Stable when the extent and
duration of the impact on the gaming industry becomes clearer, and
Fitch gains more confidence in the tribe's ability to maintain
leverage below 3.0x.
KEY RATING DRIVERS
Solid Credit Metrics: Quechan's leverage was 1.5x as of Dec. 31,
2019, down from 2.1x as of December 2018 and 2.8x at year-end 2017.
Fitch expects leverage to increase above 2.0x in 2020 due to the
coronavirus disruption, but the tribe's manageable debt
amortization and recovery in EBITDA beginning in 2021 will improve
the credit profile. The tribe's 2017 refinancing of their capital
structure increased financial flexibility and resulted in the tribe
developing a stronger cash position.
Improved Liquidity: Liquidity has been improving at both the casino
level and tribal level. The tribe's reserves heading into the
coronavirus disruption provide for about 10 months of governmental
operations excluding per-capita payments. The tribe reduced
per-capita payments to its tribal members in recent years to help
boost liquidity. Fitch will monitor the current council's
willingness to continue to grow, or at least maintain, the tribe's
liquidity as Fitch contemplates future positive rating action.
Available liquidity on the casino side has improved over the past
two years and is adequate for operating needs. The enterprise
generates healthy free cash flow before distributions to the tribe,
and the term loan's covenants limit tribal distributions based on
cash flow.
Limited Geographic Diversification: Quechan has exposure to a
single geographic area that is reliant on seasonal tourism,
although it operates two assets on the California and Arizona
borders. The competitive environment is relatively stable; however,
Quechan's addressable market does not exhibit the same depth as
higher-rated, single-site peers like Morongo, which caters to the
greater Los Angeles market. This risk is partially offset by the
tribe's conservative leverage and increased financial flexibility
following the 2017 refinancing.
Tribal Council Policies: The tribe experienced leadership turnover
in December 2018 when a largely new tribal council was elected,
although the new council president and vice president had served as
members on the previous tribal council. When considering future
positive rating actions, the tribal council's track record of
adherence to conservative financial policies will be a factor. A
track record of political stability will also be viewed positively
with respect to the potential upgrade.
DERIVATION SUMMARY
Fitch believes the tribe's current credit metrics provide
considerable cushion for a downturn while maintaining a mid to high
'B' category IDR. The strong credit metrics are somewhat offset by
the geographic concentration of Quechan's casinos, with the two
assets operating in close proximity to each other in a market with
limited growth catalysts. The tribe's refinancing of its capital
structure in 2017 reduced amortization payments and helped to
increase fund balances at the tribal level. Debt amortization will
continue, albeit at a slower pace, and drive leverage below 2.0x.
KEY ASSUMPTIONS
-- 33% revenue declines in 2020 due to the coronavirus disruption
and subsequent closure of Quechan's casino in March. The negative
impact is mostly felt in calendar second quarter with some recovery
seen in the back half of 2020.
-- 2021 recovery is modest and still 20% below 2019 levels,
reflecting economic uncertainty and the duration of the recovery.
Margins are also slightly pressured relative to 2019 levels.
-- Tribal distributions are generally consistent with historical
levels.
-- Minimal maintenance capex during coronavirus-driven property
closures, returning to more normalized levels following resumption
of operations.
RATING SENSITIVITIES
Developments that May, Individually or Collectively, Lead to
Positive Rating Action
-- Positive rating action could be considered if the tribe
maintains leverage below 2.0x; if tribal cash reserves increase and
are maintained through-the-cycle at the tribe's stated goal of
providing for 25% of annual governmental expenditures, and the Yuma
area's economic conditions continue to improve or remain stable.
Developments that May, Individually or Collectively, Lead to
Negative Rating Action
-- Casino level debt/EBITDA increasing and remaining above 3.0x.
-- A substantial decrease in tribal reserves or a change of
financial policies to maintain lower cash reserves.
-- The tribe failing to maintain prudent fiscal management
policies (i.e. adjusting governmental spending to match casino
distributions and other revenue sources).
-- Liquidity becomes pressured, and it become less confident in
the tribe's cash position to be able to service its debt.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Non-Financial Corporate
issuers have a best-case rating upgrade scenario (defined as the
99th percentile of rating transitions, measured in a positive
direction) of three notches over a three-year rating horizon; and a
worst-case rating downgrade scenario (defined as the 99th
percentile of rating transitions, measured in a negative direction)
of four notches over three years. The complete span of best- and
worst-case scenario credit ratings for all rating categories ranges
from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are
based on historical performance.
LIQUIDITY AND DEBT STRUCTURE
The tribe's liquidity has improved in the past few years, supported
by healthy operational performance, a 2017 refinancing that reduced
debt service payments and prudent financial policies at the tribal
level. The term loan and TED bonds' repayment schedule is
manageable, and the next maturity is in 2022 when the term loan
comes due. The TED bond amortization payments began in 2017 at $2.5
million - $3.0 million per year. Fitch expects excess cash to be
redistributed to the tribe. Capex is expected to be minimal in the
forecast after the tribe recently completed a project at the
Paradise Casino. The tribe's reserves provide for roughly one year
of governmental operations excluding per-capita payments.
RENAISSANCE INNOVATIONS: Administrator Unable to Appoint Committee
------------------------------------------------------------------
The U.S. Bankruptcy Administrator for the Eastern District of North
Carolina disclosed in a filing that no official committee of
unsecured creditors has been appointed in the Chapter 11 case of
Renaissance Innovations, LLC.
About Renaissance Innovations
Renaissance Innovations, LLC, sought protection under Chapter 11 of
the Bankruptcy Code (Bankr. E.D.N.C. Case No. 20-01005) on March 6,
2020. At the time of the filing, Debtor had estimated assets of
between $100,001 and $500,000 and liabilities of between $500,001
and $1 million. Judge Stephani W. Humrickhouse oversees the case.
Travis Sasser, Esq., at Sasser Law Firm, is Debtor's legal counsel.
REVLON INC: Incurs $157.7 Million Net Loss in 2019
--------------------------------------------------
Revlon, Inc., filed with the Securities and Exchange Commission its
Annual Report on Form 10-K reporting a net loss of $157.7 million
on $2.42 billion of net sales for the year ended Dec. 31, 2019,
compared to a net loss of $294.2 million on $2.56 billion of net
sales for the year ended Dec. 31, 2018.
As of Dec. 31, 2019, the Company had $2.98 billion in total assets,
$956.9 million in total current liabilities, $2.90 billion in
long-term debt, $181.2 million in long-term pension and other
post-retirement plan liabilities, $157.5 million in other long-term
liabilities, and a total stockholders' deficiency of $1.22
billion.
At Dec. 31, 2019, the Company had a liquidity position of $278.7
million, consisting of:
(i) $104.3 million of unrestricted cash and cash equivalents;
(ii) $157.7 million in available borrowing capacity under
Products Corporation's Amended 2016 Revolving Credit
Facility (which had $272.4 million drawn at such date);
(iii) $30 million in available borrowing capacity under the
Amended 2019 Senior Line of Credit Facility, which had no
borrowings at such date; and less
(iv) $13.3 million of outstanding checks.
Under the Amended 2016 Revolving Credit Facility, as Revlon
Consumer Products Corporation's consolidated fixed charge coverage
ratio ("FCCR") was greater than 1.0 to 1.0 as of Dec. 31, 2019, all
of the $157.7 million of availability under the Amended 2016
Revolving Credit Facility was available as of such date.
A full-text copy of the Form 10-K is available for free at:
https://is.gd/ANqMPQ
About Revlon
Headquartered in New York, New York, Revlon, Inc. conducts its
business exclusively through its direct wholly-owned operating
subsidiary, Revlon Consumer Products Corporation and its
subsidiaries. Revlon is an indirect majority-owned subsidiary of
MacAndrews & Forbes Incorporated, a corporation beneficially owned
by Ronald O. Perelman. Mr. Perelman is Chairman of Revlon's and
Products Corporation's Board of Directors.
* * *
As reported by the TCR on April 1, 2020, S&P Global Ratings lowered
its issuer credit rating on Revlon Inc. to 'CCC-' from 'CCC+'.
"The downgrade reflects our belief that Revlon Inc.'s operating
performance will significantly deteriorate this year, further
pressuring Revlon's liquidity.
In August 2019, S&P Global Ratings affirmed all of its ratings on
Revlon Inc., including its 'CCC+' issuer credit rating. The
affirmation reflects S&P's expectation that the company's operating
performance will continue to modestly strengthen, albeit at a
slower-than-expected pace, while its leverage remains elevated at
slightly over 10x in fiscal year 2019.
RICKEY CONRADT: U.S. Trustee Unable to Appoint Committee
--------------------------------------------------------
The Office of the U.S. Trustee on April 13, 2020, disclosed in a
court filing that no official committee of unsecured creditors has
been appointed in the Chapter 11 case of Rickey Conradt Inc.
About Rickey Conradt
Rickey Conradt, Inc. is a boutique public insurance adjusting
company specializing in commercial, multi-family, and industrial
property storm, fire, and flood damages insurance claims.
Rickey Conradt, Inc. sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. W.D. Tex. Case No. 20-50612) on March 18,
2020, listing under $1 million in both assets and liabilities.
Judge Craig A. Gargotta oversees the case. James S. Wilkin, P.C.,
represents the Debtor.
RING CONTAINER: S&P Downgrades ICR to 'B-'; Outlook Negative
------------------------------------------------------------
S&P Global Ratings lowered its issuer credit rating on Oakland,
Tenn.-based Ring Container Technologies Group LLC to 'B-' from 'B'.
At the same time, S&P lowered its issue-level rating on the
company's senior secured revolving credit facility and first-lien
term loan to 'B-' from 'B'. S&P's '3' recovery rating on the
facilities remains unchanged.
"The downgrade and negative outlook incorporate our expectation for
a persistent decline in the sales of Ring Container's core products
(particularly its 35-pound edible oil containers, which account for
45% of its consolidated sales), the general uncertainty surrounding
the current macroeconomic environment due to the rapid spread of
the coronavirus, and our expectation that the sizable reduction in
global GDP will lead to deferred spending and changes in consumer
buying patterns. We expect the company's customer volume to decline
materially in the second and third quarters of 2020 following its
decent performance in the first quarter. In addition, we anticipate
that its debt leverage will likely increase to more than 6.5x in
the next few quarters," S&P said.
The negative outlook on Ring Container Technologies Group LLC
reflects the one-in-three chance S&P will downgrade the company if
its liquidity becomes constrained due to significantly
higher-than-expected negative free cash flow generation stemming
from a sharp decline in its operating trends.
"We could lower our rating on Ring if its EBITDA contracts
significantly and causes its free operating cash flow (FOCF)
generation to remain negative for multiple quarters such that its
liquidity materially declines, or if the company's debt leverage
worsens dramatically from current levels and we view its capital
structure as unsustainable," S&P said.
"We could revise our outlook on Ring to stable if the conditions in
its end markets rebound materially and the demand for its key
products returns to near pre-crisis levels. Additionally, we would
expect the company to generate positive free cash flow, sustain
leverage of less than 6.5x, and maintain adequate liquidity such
that our concerns about a potential covenant violation become
remote," the rating agency said.
ROCKIES EXPRESS: S&P Lowers ICR to 'BB+'; Outlook Negative
----------------------------------------------------------
S&P Global Ratings lowered its issuer credit rating on Rockies
Express Pipeline LLC (REX) to 'BB+' from 'BBB-' and removed the
rating from CreditWatch, where S&P placed it with negative
implications on March 17, 2020. The outlook is negative.
"We lowered our forward-looking commodity price assumptions and, as
a result, downgraded several of REX's upstream shipping customers.
In particular, the multi-notch downgrades of EQT, Ascent, and
Gulfport in March 2020 indicate that counterparty credit quality is
materially weaker than what we've assumed in previous reviews. We
note that REX has a long-term, fee-based contract profile that
relies mainly on capacity reservations which limit the pipeline's
direct exposure to commodity prices and volumetric risk. However,
the lower-rated counterparties indicate that our view of the
business has weakened," S&P said.
The negative outlook reflects S&P's view that counterparties on the
east end of Rockies Express Pipeline LLC (REX) are at risk of
further downgrades given numerous negative outlooks amid ongoing
stressed commodity prices. The negative outlook also incorporates
S&P's view that counterparties could seek to renegotiate contracts
and the recontracting effort on the west end of the pipe could be
complicated by the new price environment. S&P expects leverage to
generally remain below 4x under its base-case forecast.
"We could lower the ratings if ratings on material counterparties,
particularly in the Appalachian region, are further downgraded. We
could also consider a negative rating action if shippers are unable
to meet their contractual commitments or if REX is unable to sign
new west-to-east contracts near the DJ basin in the Rockies region,
both of which could contribute to lower utilization, increased
counterparty risk and business risk. We could also lower the rating
if forecast adjusted debt to EBITDA was sustained above 4.5x," S&P
said.
"We could consider a stable outlook if the credit quality of
shippers stabilizes or improves while the company maintains
adjusted debt to EBITDA at current levels. This could also occur if
market fundamentals notably strengthen, resulting in additional
long-term contracts," the rating agency said.
RUDY'S BARBERSHOP: U.S. Trustee Appoints Creditors' Committee
-------------------------------------------------------------
The U.S. Trustee for Region 3 appointed a committee to represent
unsecured creditors in the Chapter 11 cases of Rudy's Barbershop
Holdings, LLC and its affiliates.
The committee members are:
(1) Rogue & Co, LLC
Attn: Samuel Paik
3800 NE 1st Ave- 6th Floor
Miami, FL 33137
Phone: 646-571-1687
E-mail: spaik@luxbp.com
(2) Asana Partners
Attn: Brian McWeeney
10000 Washington Blvd., Suite 07-105
Culver City, CA 90232
Phone 310-421-9174
E-mail: bmcweeney@asanapartners.com
(3) Samis Land Co.
Attn: Mike Norman
208 James St., Suite C
Seattle, WA, 98104
Phone: 206-957-8750
E-mail: miken@samis.com
Official creditors' committees serve as fiduciaries to the general
population of creditors they represent. They may investigate the
debtor's business and financial affairs. Committees have the right
to employ legal counsel, accountants and financial advisors at a
debtor's expense.
About Rudy's Barbershop Holdings
Rudy's Barbershop Holdings, LLC and its affiliates operate 25
barbershops in five major cities, including 15 in Seattle, five in
Los Angeles, three in Portland, and one in Atlanta and New York
City.
On April 2, 2020, Rudy's Barbershop and its affiliates sought
protection under Chapter 11 of the Bankruptcy Code (Bankr. D. Del.
Lead Case No. 20-10746) on April 2, 2020.
At the time of the filing, Rudy's Barbershop had estimated assets
of between $100,000 and $500,000 and liabilities of between $1
million and $10 million.
Debtors hired Chipman Brown Cicero & Cole, LLP as legal counsel;
Glassratner Advisory & Capital Group, LLC as financial advisor; and
Stretto as claims and noticing agent.
RUSTY GOLD: Case Summary & 20 Largest Unsecured Creditors
---------------------------------------------------------
Debtor: Rusty Gold Hydro-Testers, Inc.
DBA Catamount Oilfield Services
DBA R & G Casing and Tubing, Inc.
16185 CR 20
Fort Morgan, CO 80701
Business Description: Rusty Gold Hydro-Testers, Inc., offers a full
line of API tubing, casing, and line pipe to
the oilfield industry.
Chapter 11 Petition Date: April 16, 2020
Court: United States Bankruptcy Court
District of Colorado
Case No.: 20-12629
Judge: Hon. Michael E. Romero
Debtor's Counsel: David M. Rich, Esq.
BUECHLER LAW OFFICE, L.L.C.
999 18th Street, Suite 1230 S
Denver, CO 80202
Tel: 720-381-0045
E-mail: Dave@kjblawoffice.com
Total Assets: $8,944,869
Total Liabilities: $12,808,395
The petition was signed by Clinton Gould, president.
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/Qqmqtt
S&D LONGHORN: $5.5M Property Sale to Pay Non-Insiders in Full
-------------------------------------------------------------
Debtor S&D Longhorn Partners, LLC, filed an Amended Plan of
Reorganization on March 31, 2020.
Class 5a Unsecured Creditors Claims are not impaired. All
creditors holding allowed unsecured claims will be paid in full on
the later of the Effective Date or final determination of their
Allowed Unsecured Claim from the proceeds of the sale of the
Property. All creditors who are deemed by this Plan as insiders
will subordinate their claims to the non-insider unsecured creditor
claims.
Class 5b Allowed Insider Unsecured Creditors will be paid from the
proceeds of the Sale. The Debtor believes a sale at $5,500,000
shall pay all Allowed Non-Insider Unsecured Creditors in full. The
Insider Unsecured Creditors will be paid from proceeds of the Sale.
In the event there are insufficient funds to pay all insider
claims in full then insider claims shall be paid pro rata from the
remaining sales proceeds.
Class 6 Claimants (Current Ownership) are not impaired under the
Plan and shall be satisfied by retaining their interest in Debtor.
The current Operating Agreement will remain in place. However, in
the event that the unsecured creditors in Class 5b do not vote to
accept the Plan, an auction for the stock ownership of the
Reorganized Debtor shall be conducted. The auction will take place
on first business day that is five days after the Confirmation
Order has been entered. The auction will take place that the
offices of counsel for the Debtor, 12770 Coit Road, Suite 1100,
Dallas, Texas 75251 beginning at 10:00 a.m. Any party wishing to
bid on the stock of the Debtor must be present. The auction will
be a cash auction. No credit bidding will be allowed. The winner
of the auction must present good funds to be deposited into the
Debtor in Possession account at the close of the auction. If an
auction is necessary, the old stock certificates will be cancelled
and new stock certificates will be issued at the time of the
auction to the winning bidder.
A fundamental component of this Plan is the sale of the Property.
The confirmation of the Plan will serve as a Court finding that the
Debtor has determined in the exercise of their reasonable business
judgment to sell the property. The Debtor has demonstrated good,
sufficient and sound business reasons and justification for the
sale of the property as requested in the Plan.
The sale of the property, under Section 363(b) and (f) of the
Bankruptcy Code and this Plan is in the best interests of the
Debtor, its estate and its creditors. The consideration to be paid
constitutes adequate and fair value for the property. The sale of
the property was negotiated and entered into in good faith and from
arm's-length positions between the Debtor and the purchaser. The
purchaser of the property is a good faith purchaser as that term is
used in Section 363(m) of the Bankruptcy Code.
A full-text copy of the amended plan dated March 31, 2020, is
available at https://tinyurl.com/s6zqrc9 from PacerMonitor at no
charge.
Attorneys for the Debtor:
Eric A. Liepins
ERIC A. LIEPINS, P.C.
12770 Coit Road, Suite 1100
Dallas, Texas 75251
Tel: (972) 991-5591
Fax: (972) 991-5788
About S&D Longhorn Partners
S&D Longhorn Partners, LLC, owns certain entertainment venue
located in Dallas, Texas more commonly known as the Longhorn
Ballroom. It filed a voluntary Chapter 11 petition (Bankr. N.D.
Tex. Case No. 19-34149) on Dec. 17, 2019. In the petition signed
by Jay LaFrance, managing member, the Debtor disclosed $5,000,000
in assets and $4,966,827 in liabilities. Eric A. Liepins, Esq., at
Eric A. Liepins, P.C., is the Debtor's legal counsel.
SAHBRA FARMS: Shelly Materials Claim Deducted from Mining Royalties
-------------------------------------------------------------------
Debtor Sahbra Farms, Inc. filed the Amended Disclosure Statement
for Plan of Reorganization dated March 31, 2020.
The Plan contemplates that either a sale of the property or a
complete refinancing or recapitalization based on the mining
operation will occur during the next year. In either case,
distributions to creditors will not be based on equestrian or
agriculture operations, which are barely sufficient to produce
break-even financial results with no distributions to creditors.
The Debtor believes that the level of projections and descriptions
of operations and management typically associated with operating
business plans would be superfluous in this case.
Based on valuations, the Appraisal determines that the highest and
best use of the property is for surface mining under the mineral
lease with Shelly Materials, and that the next highest and best use
if mining is not permitted is for residential development.
The Shelly Materials claim, is such a scenario, would be deducted
from mining royalties.
Failure to accomplish recapitalization or refinancing is a
significant risk to creditors if this Plan is confirmed. However,
if the Plan is not confirmed, the chances of unsecured creditors
receiving a meaningful distribution are even lower. For that
reason, the Debtor recommends that all creditors vote to accept the
Plan.
A full-text copy of the Amended Disclosure Statement dated March
31, 2020, is available at https://tinyurl.com/wsstvbv from
PacerMonitor at no charge.
Counsel for the Debtor:
Thomas W. Coffey
Coffey Law LLC
2430 Tremont Avenue
Cleveland, OH 44113
Tel: (216) 870-8866
E-mail: tcoffey@tcoffeylaw.com
About Sahbra Farms
Sahbra Farms Inc. -- a horse breeder in Streetsboro, Ohio -- sought
protection under Chapter 11 of the Bankruptcy Code (Bankr. N.D.
Ohio Case No. 19-51155) on May 16, 2019. In the petition signed by
its president, David Gross, the Debtor disclosed $3,286,476 in
assets and $2,684,224 in debts. The Hon. Alan M. Koschik is the
case judge. The Debtor is represented by Thomas W. Coffey, Esq. at
Coffey Law LLC.
SALUBRIO LLC: U.S. Trustee Unable to Appoint Committee
------------------------------------------------------
The Office of the U.S. Trustee on April 13, 2020, disclosed in a
court filing that no official committee of unsecured creditors has
been appointed in the Chapter 11 case of Salubrio, LLC.
About Salubrio LLC
Salubrio, LLC, which conducts business under the name Brio San
Antonio is a medical diagnostic imaging center in San Antonio,
Texas. It offers patients innovative and timely onsite technology
for musculoskeletal and traumatic brain injury diagnostics.
Salubrio specializes in weight-bearing MRI installed by Esaote USA.
For more information, visit https://salubriomri.com
Salubrio sought protection under Chapter 11 of the Bankruptcy Code
(Bankr. W.D. Texas Case No. 20-50578) on March 11, 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
Ronald B. King oversees the case. Law Offices of Martin Seidler is
Debtor's legal counsel.
SEANERGY MARITIME: L1 Capital Global Has 6.5% Stake as of April 9
-----------------------------------------------------------------
L1 Capital Global Opportunities Master Funds Ltd. disclosed in an
amended Schedule 13G filed with the Securities and Exchange
Commission that as of April 9, 2020, it beneficially owns 7,500,000
shares of common stock of Seanergy Maritime Holdings Corp., which
represents 6.5 percent based on 114,589,939 shares of common stock
outstanding as of April 9, 2020.
David Feldman and Joel Arber are both the directors of L1 Capital
Global Opportunities Master Funds Ltd. As such they each
individually have sole dispositive and voting power.
A full-text copy of the regulatory filing is available for free
at:
https://is.gd/uUtncY
About Seanergy Maritime
Greece-based Seanergy Maritime Holdings Corp. --
http://www.seanergymaritime.com/-- is an international shipping
company that provides marine dry bulk transportation services
through the ownership and operation of dry bulk vessels. Seanergy
provides marine dry bulk transportation services through a modern
fleet of 10 Capesize vessels, with a cargo-carrying capacity of
approximately 1,748,581 dwt and an average fleet age of
approximately 11 years. The Company is incorporated in the
Marshall Islands and has executive offices in Athens, Greece and an
office in Hong Kong.
Seanergy Maritime reported a net loss of US$11.70 million for the
Dec. 31, 2019, a net loss of US$21.06 million for the year ended
Dec. 31, 2018, and a net loss of US$3.23 million for the year ended
Dec. 31, 2017. As of Dec. 31, 2019, the Company had US$282.55
million in total assets, US$252.69 million in total liabilities,
and US$29.86 million in total stockholders' equity.
Ernst & Young (Hellas) Certified Auditors Accountants S.A., in
Athens, Greece, the Company's auditor since 2012, issued a "going
concern" qualification in its report dated March 5, 2020 citing
that the Company has a working capital deficiency and has stated
that substantial doubt exists about the Company's ability to
continue as a going concern. In addition, the Company has not
complied with a certain covenant of a loan agreement with a bank.
SEANERGY MARITIME: Underwriters Exercise Over-Allotment Option
--------------------------------------------------------------
Seanergy Maritime Holdings Corp. disclosed that the underwriters
exercised in full their over-allotment option to purchase an
additional 5,293,500 units at a price of $0.17 per unit in
connection with the public offering previously announced on March
31, 2020. With the full exercise of the over-allotment option, the
Company received in connection with such public offering total
gross proceeds of approximately $6.9 million.
The closing of the over-allotment was successfully completed on
April 14, 2020 concurrently with the closing of the registered
direct offering of 50 million common shares announced on April 9,
2020 pursuant to which the Company received approximately $6.8
million in gross proceeds.
The total gross proceeds from the aforementioned offerings were
approximately $13.7 million, and as of April 14, 2020, the Company
has 119,983,439 common shares outstanding.
Maxim Group LLC acted as sole book-running manager and sole
placement agent for the public offering and registered direct
offering respectively.
About Seanergy Maritime
Greece-based Seanergy Maritime Holdings Corp. --
http://www.seanergymaritime.com/-- is an international shipping
company that provides marine dry bulk transportation services
through the ownership and operation of dry bulk vessels. Seanergy
provides marine dry bulk transportation services through a modern
fleet of 10 Capesize vessels, with a cargo-carrying capacity of
approximately 1,748,581 dwt and an average fleet age of
approximately 11 years. The Company is incorporated in the
Marshall Islands and has executive offices in Athens, Greece and an
office in Hong Kong.
Seanergy Maritime reported a net loss of US$11.70 million for the
Dec. 31, 2019, a net loss of US$21.06 million for the year ended
Dec. 31, 2018, and a net loss of US$3.23 million for the year ended
Dec. 31, 2017. As of Dec. 31, 2019, the Company had US$282.55
million in total assets, US$252.69 million in total liabilities,
and US$29.86 million in total stockholders' equity.
Ernst & Young (Hellas) Certified Auditors Accountants S.A., in
Athens, Greece, the Company's auditor since 2012, issued a "going
concern" qualification in its report dated March 5, 2020 citing
that the Company has a working capital deficiency and has stated
that substantial doubt exists about the Company's ability to
continue as a going concern. In addition, the Company has not
complied with a certain covenant of a loan agreement with a bank.
SENVION GMBH: Chapter 15 Case Summary
-------------------------------------
Chapter 15 Debtor: Senvion GmbH
10 Uberseering (Oval Office)
Hamburg 22297
Federal Republic of Germany
https://www.senvion.com/gmbh/de/
Foreign
Proceeding: Hamburg (Germany) Local Court Order
No. 67g IN 1 113/19 dated July 1, 2019
Chapter 15
Petition Date: April 15, 2020
Court: United States Bankruptcy Court
District of Colorado
Case No.: 20-12621
Foreign
Representative
Counsel's: Glen W Roberts, II
Roberts Moghul & Partners
1345 Avenue of the Americas, 2nd Floor
New York 10105
Tel: 212-300-2899
E-mail: glen@rm.partners
Judge: Hon. Elizabeth E. Brown
Estimated Assets: Unknown
Estimated Debts: Unknown
SEQUA CORP: Fitch Lowers LT IDR to 'CCC+', Outlook Negative
-----------------------------------------------------------
Fitch Ratings has downgraded Sequa Corp.'s Long-Term Issuer Default
Rating to 'CCC+' from 'B-'. Fitch has also downgraded the company's
first-lien term loan and revolver to 'B-'/RR3 from 'B'/RR3 and
second-lien term loan to 'CCC-'/RR6 from 'CCC'/RR6. The Outlook is
Negative.
The downgrade is driven by Fitch's expectation that demand for
Chromalloy products will remain weak into at least mid-2021 due to
the coronavirus pandemic. It also considers the company's
approaching term loan maturity and highly levered capital
structure, limited financial flexibility, volatile cash flows,
moderate execution risk, high degree of competition at the
Chromalloy segment, and the cyclicality of both the aerospace and
construction industries, which contributes to Sequa's sensitivity
to economic downturns.
Other key risks to the rating include continued pressure in the
commercial aviation aftermarket business from other equipment
manufacturers and other players (most of which are larger than
Chromalloy) and other trends in the aftermarket business such as 3D
printing and data analytics − both of which create uncertainty
about the future structure of the business − inventory risk, and
customer concentration and contract exposure.
These negative factors are somewhat offset by the company's cost
cutting and restructuring initiatives, financial and operational
improvements at the Chromalloy segment, the Precoat segment's
leading market position and the company's experienced management
team. Other factors supporting the rating include the technology
incorporated into Chromalloy's products, the support of the main
equity holder, The Carlyle Group, and the strong support for global
defense spending. Fitch considers the expansion of PMA platforms to
be positive, though Fitch expects overall weakness in aftermarket
sales into late 2021 due to significantly lower flight traffic as a
result of the coronavirus pandemic.
KEY RATING DRIVERS
Strained Financial Flexibility, Refinancing Risk: SQA's FCF has
been volatile and mostly negative in recent years, and although the
company has executed on several significant cost cutting
initiatives since 2018, the coronavirus pandemic introduces a high
level of uncertainty regarding margins, cash generation and future
revenue growth. The company's first-lien term loan matures in late
2021 and second-lien term loan matures in 2022. Fitch believes that
if capital markets remained constrained for the medium-to-long
term, it will be difficult or expensive to refinance its
obligations.
Coronavirus Impact: SQA's financial performance will be greatly
affected by the coronavirus pandemic and subsequent sharp drop in
air traffic during 2020. Fitch believes the impact will likely
result in a double-digit drop in Chromalloy sales during the year,
predominantly related to the aerospace OEM end-market. Fitch
believes the aerospace aftermarket will also be hit substantially,
though it is possible that it experiences a delayed decline with a
more prolonged recovery due to lower required maintenance to the
current fleet with fewer flights. Airlines could also bring on
newer aircraft which requires less aftermarket maintenance in the
near term. The energy end-market will likely also be impacted in
2020, but to a lesser extent than aerospace.
Meanwhile, Fitch believes military sales will be generally
unaffected by the pandemic, though the risk of facility closures
exists. The Precoat segment, which made up around 40% of 2019
sales, will also remain a source of relative stability. Fitch
expects Precoat sales to decline in 2020, but rebound to around
2019 levels in 2021 or early 2022.
Increased Leverage: Fitch projects the company's leverage will
increase above 8.0x during 2020 and will remain elevated through
2021. The company's EBITDA generation and leverage will largely
depend on the shape of the recovery of the aerospace end-market,
both aftermarket and OEM. Though leverage is a moderate rating
factor, when combined with the company's first-lien term loan
maturity in late 2021, Fitch considers there to be meaningful
refinancing risk absent additional equity infusion or
restructuring.
Leading Position in Coating Market: Fitch considers Precoat's top
market position to be a leading positive driver for Sequa's rating.
SQA generates the majority of its operating cash flow and EBITDA
through Precoat, despite challenging market conditions since the
recession in 2008-2009. An increase in infrastructure spending
could lead to outperforming Fitch's conservative segment
projections of low-single-digit annual top-line growth between 2018
and 2021.
Strong Management Team: Beginning in June 2015, Sequa commenced a
major overhaul of its top executives and key personnel, replacing
previous management with highly qualified individuals. Fitch
believes the new management in place adds credibility to the
company's ability to cut costs and return to profitability. Many of
the new employees have experience in turnaround situations and the
aerospace industry.
Other Risks and Factors: Other risks incorporated into the rating
include further weakness in the power market, which could severely
affect the company's revenue, EBITDA, and future growth prospects
associated with joint venture programs; continued pressure in the
commercial aviation aftermarket business from OEMs and other
players, most of which are larger than Chromalloy; other trends in
the aftermarket business such as 3D printing and data analytics,
both of which create uncertainty about the future structure of the
business; customer concentration and contract exposure; and the
cyclicality of both the aerospace and construction industries,
which contributes to Sequa's sensitivity to economic downturns.
Other factors supporting the rating include the technology
incorporated into Chromalloy's products; recent new contract
awards; the support of the main equity holder (Carlyle Group); the
currently healthy commercial aviation market; the outlook for
rising defense expenditures in the U.S. and other parts of the
world; and large net operating losses that will shield tax
payments.
DERIVATION SUMMARY
SQA's credit metrics are in line with Fitch's expectations for a
'CCC+' rating. Leverage, cash flow generation and profitability are
in line with similarly rated companies. Fitch expects the company's
metrics could improve marginally over the next few years depending
on the shape of the recovery of the aerospace market. Fitch
considers Precoat's top market position and technological
capabilities to be a leading positive driver for Sequa's rating.
However, Chromalloy faces pressure in the commercial aviation
aftermarket business from OEMs and other like-sized or larger
players, despite its various contract awards over the past few
years. Fitch considers Chromalloy's technology to be supportive of
the rating; however, future innovation by competitors could
severely affect the SQA's credit profile.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within its Rating Case for the Issuer
-- Chromalloy experiences double digit revenue decline in 2020,
particularly as it relates to Aerospace OEM and aftermarket sales,
which will likely experience an L-shaped recovery into 2023; sales
to the military end-market remain somewhat unaffected;
-- Precoat revenue is only marginally affected by the coronavirus
pandemic and rebounds more quickly than Chromalloy;
-- EBITDA margins decline at Chromalloy in 2020 and gradually
return to 2019 levels by around 2022; Precoat margins generally
stable;
-- Capex remains between around 3.5% and 4.0% of sales,
annually;
-- The company maintains a leading market position in the coating
market;
-- Sequa pays minimal cash taxes for the next several years;
-- The company refinances each of its term loans and extend its
revolver ahead of maturity.
Recovery Assumptions:
The recovery analysis assumes that SQA would be considered a going
concern in bankruptcy and that the company would be reorganized
rather than liquidated. A 10% administrative claim is assumed in
the recovery analysis.
Fitch's recovery assumptions are based on the company's modest
contract exposure, the high degree of competition and pressure in
the commercial aftermarket business, particularly from OEMs, as
well as cyclicality in the company's main end-markets. Fitch also
considered Sequa's competitive advantage at Precoat and the high
degree of technology incorporated into Chromalloy's products.
Fitch assumes SQA will receive a going-concern recovery multiple of
5.0x EBITDA under this scenario, which is on the lower end of the
range for the industry. Most of the defaulters observed in the
Industrial and Manufacturing and Aerospace and Defense sectors were
smaller in scale, had less diversified product lines or customer
bases and were operating with leveraged capital structures.
In Fitch's recovery analysis, potential default is assumed to come
from a combination of one or more of: the inability to refinance
SQA's outstanding obligations upon maturity; an economic downturn
leading to material contract cancellations in the construction or
aviation markets; mismanagement of seasonal working capital flows
creating a severe strain on liquidity and limiting the company's
ability to cover cash interest costs or repay term loan
amortization; or heightened competition, particularly by OEM's, or
potential technological advancement by competitors at Chromalloy
leads to significant contract cancellations.
Fitch's GC EBITDA assumptions are generally unchanged from its last
review despite the expected weakness in the aerospace industry over
the next few years. Fitch expects a majority of the GC EBITDA will
be derived from the Precoat business, which has higher margins and
more stability than Chromalloy.
Fitch generally assumes a fully-drawn revolver in its recovery
analyses since credit revolvers are tapped as companies are under
distress. As a result, Fitch has assumed full draw of SQA's $135
million revolver in its analysis, net of outstanding LOCs as of
December 2019.
The 'B-' rating and Recovery Rating of 'RR3' on the first-lien term
loan and revolver are based on Fitch's recovery analysis under a
going concern scenario, which indicates recovery prospects for the
term loan in the range of 51% to 70%. The 'CCC-' rating and 'RR6'
on the second-lien term loan indicate recovery prospects for the
term loan in the range of 0% to 10%.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- FFO Fixed Charge Coverage increases above 1.5x for a sustained
period;
-- Gross leverage declines below 7.5x for a sustained period;
-- The company consistently generates neutral-to-positive FCF
over a sustained period.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- FFO fixed charge coverage ratio fell and remained below 1.0x
for a sustained period;
-- The company loses one or more significant contracts;
-- Company does not generate adequate seasonally adjusted cash to
support operations;
-- Cash restructuring costs significantly impair the company's
FCF generation.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Non-Financial Corporate
issuers have a best-case rating upgrade scenario (defined as the
99th percentile of rating transitions, measured in a positive
direction) of three notches over a three-year rating horizon; and a
worst-case rating downgrade scenario (defined as the 99th
percentile of rating transitions, measured in a negative direction)
of four notches over three years. The complete span of best- and
worst-case scenario credit ratings for all rating categories ranges
from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are
based on historical performance.
LIQUIDITY AND DEBT STRUCTURE
Fitch considers SQA's liquidity to be adequate to cover working
capital fluctuations, debt servicing, and capex. However, Fitch
believes the company's liquidity position is highly sensitive to a
prolonged downturn in the aerospace end-market. Fitch believes the
company has enough cash and revolver availability to manage in the
near-term, but may need to issue either debt or preferred equity to
cover cash shortfall in case of an L-shaped coronavirus recovery.
Fitch considers SQA's financial flexibility to be constrained and
the company's refinancing risk increases as the November 2021 term
loan maturity date nears.
SHAPE TECHNOLOGIES: S&P Downgrades ICR to 'CCC+'; Outlook Negative
------------------------------------------------------------------
S&P Global Ratings lowered its issuer credit rating on Shape
Technologies to 'CCC+' from 'B-'. S&P also lowered its issue-level
ratings on the company's $350 million term loan due in 2025 (which
includes a $300 million term loan and a $50 million incremental
term loan) and $15 million revolving credit facility due in 2023 to
'CCC+' from 'B-'. The '4' recovery rating is unchanged.
"The downgrade reflects Shape Technologies Group Inc.'s elevated
leverage, which we now expect will remain above 10x over the next
12 months. We estimate that S&P Global Ratings-adjusted debt to
EBITDA was elevated above 15x for year ended Dec. 31, 2019. We
believe Shape Technologies' leverage was temporarily elevated
following the partially debt-funded shareholder distribution, on
top of significant operating inefficiencies and cost-overrun
associated with the consolidation of its ultra-high-pressure (UHP)
manufacturing operations. We had previously anticipated the company
would improve leverage close to 8x in 2020, but we now believe
deteriorating end-market conditions will weigh on its ability to
significantly improve profitability, repay its outstanding
borrowings, and reduce leverage. As such, we expect adjusted debt
to EBITDA to remain above 10x over the next 12 months," S&P said.
The negative outlook reflects uncertainty regarding the duration
and magnitude of a global recession, which, if prolonged, could
lead to a greater degradation of sales volumes, resulting in
negative free cash flow and a weaker liquidity position.
"We could lower our rating on Shape Technologies if we believe
there is an increased likelihood of a default in the next 12
months. This could occur if the company is unable to improve
profitability and generate positive free cash flow, leading to
depletion of its cash and greater utilization under its asset-based
lending (ABL) facility," S&P said.
"We could raise our rating on Shape Technologies if demand is
stronger than we expect and the company realizes significant cost
savings from previous initiatives, such that it can significantly
reduce leverage and improve cash flow generation," the rating
agency said.
SHRI VITTHAL: Unsec. Creditors Will Be Paid 10% Over 5 Years
------------------------------------------------------------
Debtor Shri Vitthal, Inc., filed a Second Modified Combined Plan of
Reorganization and Disclosure Statement dated March 31, 2020.
The Class 1 Investors Bank claim will be paid in accordance with
approved cash collateral agreement. The Debtor will pay $1,500 per
month within 3 business days of Debtor's receipt of payment from
7-Eleven until claim paid in full.
Class 2 General Unsecured Claims will be paid 10% over a period of
5 years in monthly installments of $91.17 commencing on the
effective date of the Allowed Claim amount.
A full-text copy of the Second Modified Combined Plan and
Disclosure Statement dated March 31, 2020, is available at
https://tinyurl.com/sefwvlh from PacerMonitor at no charge.
The Debtor is represented by:
Timothy P. Neumann, Esq.
Broege, Neumann, Fischer & Shaver, LLC
25 Abe Voorhees Drive
Manasquan, New Jersey 08736
About Shri Vitthal
Shri Vitthal, Inc., operates a 7-Eleven franchise in Monmouth
County, New Jersey. It sought Chapter 11 protection (Bankr. D.N.J.
Case No. 19-25689) on Aug. 13, 2019. The Hon. Christine M.
Gravelle is the case judge. Timothy P. Neumann, Esq., at BROEGE,
NEUMANN, FISCHER & SHAVER LLC, serves as counsel to the Debtor.
SIX FLAGS: Moody's Rates New Senior Secured Notes 'Ba2'
-------------------------------------------------------
Moody's Investors Service assigned Six Flags Entertainment
Corporation subsidiary's proposed senior secured note a Ba2 rating.
Moody's also affirmed Six Flags' B2 corporate family rating, B2-PD
probability of default rating, B3 senior unsecured notes, and Ba2
rating on the senior secured credit facility issued by its
subsidiary. The outlook remains negative. The speculative grade
liquidity rating was upgraded to SLG-3 from SGL-4.
The net proceeds of the proposed $665 million senior secured note
due 2025 are expected to be used to repay $315 million of the
existing term loan B with approximately $333 million added to the
balance sheet for general corporate purposes. The transaction
strengthens Six Flag's liquidity position and reduces reliance on
its recently upsized $481 million revolving credit facility due
2024. Moody's projects that Six Flags will have sufficient
liquidity to manage through to the start of the 2021 operating
season even if the amusement parks remain closed in 2020. Pro forma
for the transaction, cash on the balance sheet is projected to be
approximately $356 million with access to a $481 million revolver
(with $40 million drawn) for combined liquidity of $776 million
including cash and current revolver availability. Interest expense
is expected to be materially higher as a result of the transaction
and pro forma leverage increases to 5.8x from 5.2x as of Q4 2019.
Six Flags is also pursuing an amendment to its credit agreement to
ensure compliance with its financial leverage covenant. The
improved liquidity and potential amendment to its financial
covenant contributed to the upgrade of Six Flag's SLG to SGL-3 from
SGL-4.
Assignments:
Issuer: Six Flags Theme Parks Inc. (subsidiary of Six Flags
Entertainment Corporation)
$665 million Senior Secured note due 2025, assigned Ba2 (LGD2)
Affirmations:
Issuer: Six Flags Entertainment Corporation
Corporate Family Rating, affirmed at B2
Probability of Default Rating, affirmed at B2-PD
Senior Unsecured Notes, affirmed at B3 (LGD5)
Issuer: Six Flags Theme Parks Inc. (subsidiary of Six Flags
Entertainment Corporation)
Senior Secured Term Loan B, affirmed at Ba2 (LGD2)
Senior Secured Revolving Credit Facility, affirmed at Ba2 (LGD2)
Upgrades:
Issuer: Six Flags Entertainment Corporation
Speculative Grade Liquidity Rating, upgraded to SGL-3 from SGL-4
Outlook actions:
Issuer: Six Flags Entertainment Corporation
Outlook remains Negative
Issuer: Six Flags Theme Parks Inc.
Outlook remains Negative
RATINGS RATIONALE
The B2 CFR reflects the negative impact of the coronavirus outbreak
on Six Flags' ability to operate its parks, which Moody's projects
could substantially impact operating performance and lead to
materially negative free cash flow with over $90 million of cash
burn a quarter if the parks remain closed. While 2020 could be a
very challenging year with a substantial deterioration in Six
Flags' credit metrics, Moody's expects that performance in 2021
would return to levels more in line with prior years. Given the
substantial cash balance and revolver availability, Moody's
projects that Six Flags will have more than enough liquidity even
if the parks are closed over the next year. While interest expense
and debt levels are projected to be higher at the start of the 2021
season due to the transaction, Moody's expects Six Flags will be
focused on debt reduction once the parks open, following the
suspension of its dividend and agreement not to buyback equity.
In the event that the parks open for a material portion of the 2020
season, Six Flags' attendance levels are projected to be below
normal levels as consumers may maintain a degree of social
distancing and avoid large crowds in addition to a weak overall
economic environment. Recent cost saving efforts to support
liquidity while the parks are closed may also slow the rate of
improvement in performance. Pro forma leverage is 5.8x as of Q4
2019 (including Moody's standard adjustments and partnership parks
puts as debt) or 4.9x (including Moody's standard adjustments, but
excluding partnership parks puts as debt) and is expected to rise
substantially if the parks are unable to open by the end of Q3
2020. However, with the re-opening of parks and an economic
recovery, Moody's expects leverage to be approximately 6x by the
end of 2021.
Six Flags benefits from its typically sizable attendance (32.8
million in 2019) and revenue generated from a geographically
diversified regional amusement park portfolio. EBITDA margins and
operating cash flows historically have been strong, and its parks
have high barriers to entry. Six Flags' large portfolio of regional
amusement parks in the US, Canada, and Mexico are less likely to be
impacted by reduced travel activity and offer the possibility that
some of the parks may be able to open earlier than others and
provide a source of cash flow to the company. Six Flags owns the
land under the vast majority of its parks which is a material
positive.
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 amusement park
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 Six Flags' credit profile have
left it vulnerable to shifts in market sentiment in these
unprecedented operating conditions and Six Flags 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.
Its action reflects the impact on Six Flags of the breadth and
severity of the shock, and the broad deterioration in credit
quality it has triggered.
A governance impact that Moody's considers in Six Flags' credit
profile is the change in the financial policy. Six Flags previously
pursued an aggressive financial policy that led to substantial
dividend payments with cash and debt funded stock buybacks, but
Moody's expects the new management team will operate with a more
moderate financial policy with the goal to reduce leverage after
the impact of the coronavirus subsides. Six Flags is a publicly
traded company listed on the New York Stock Exchange.
Six Flags' speculative grade liquidity rating of SGL-3 reflects the
potential for material amounts of negative free cash flow if the
parks remain closed during the upcoming summer season. Six Flags is
projected to have approximately $356 million of cash and a $481
million revolver (upsized from $350 million) due April 2024 with
$40 million drawn and $21 million of LCs outstanding pro forma for
the transaction. Six Flags traditionally spent about 9% of revenue
on capex each year ($144 million spent in 2019), but Six Flags is
expected to reduce capex going forward to support liquidity. The
dividend was also recently suspended to preserve liquidity. Six
Flags is subject to a maximum senior secured leverage ratio of 4x
with additional step downs over time, but is seeking an amendment
to suspend the covenant for the rest of 2020 and delay the step
down of the required leverage ratio.
The negative outlook incorporates Moody's expectation of
significant operating losses and cash usage due to the coronavirus
outbreak's impact on Six Flags' ability to operate its parks.
Prolonged park closures will lead to materially negative free cash
flow and increase leverage levels substantially. Performance is
also projected to be impacted by the loss of international
licensing revenue due to the termination of an international
agreement. If the parks open in the near term, Moody's expects
performance will be weighed down by a weak economic environment and
the potential for consumers to maintain social distancing and avoid
large crowds.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
An upgrade is unlikely as long as the coronavirus limits the
ability to operate Six Flags' amusement parks. The outlook could
change to stable if the parks are opened and Six Flags maintains an
adequate liquidity profile with leverage levels projected to be
maintained below 6x. Expectations that Six Flags would remain in
compliance with its covenants would also be required. An upgrade
could occur if leverage was projected to be maintained below 5x
with a free cash flow to debt ratio of about five percent.
The ratings could be downgraded if Moody's expected sustained
leverage above 6.5x or an EBITDA to interest ratio below 2x.
Elevated concern that Six Flags may not be able to obtain an
amendment to its covenants if needed, may also lead to a
downgrade.
The principal methodology used in these ratings was Business and
Consumer Service Industry published in October 2016.
Six Flags Entertainment Corporation (Six Flags), headquartered in
Grand Prairie, TX, is a regional amusement park company that
currently operates 26 North American theme and waterparks. The park
portfolio includes 23 wholly-owned facilities (including parks near
New York City, Chicago and Los Angeles) - as well as three
consolidated partnership parks - Six Flags over Texas (SFOT), Six
Flags over Georgia (SFOG), and White Water Atlanta. Six Flags
currently owns 53.2% of SFOT and 31% of SFOG/White Water Atlanta.
In addition, the company has international licensing agreements in
Saudi Arabia. The company emerged from chapter 11 bankruptcy
protection in April 2010. Revenue including full consolidation of
the partnership parks was approximately $1.5 billion in FY 2019.
STEAK N SHAKE: Moody's Cuts CFR & Senior Secured Rating to 'Ca'
---------------------------------------------------------------
Moody's Investors Service downgraded Steak n Shake Inc.'s Corporate
Family Rating to Ca from Caa2, Probability of Default Rating to
Ca-PD/LD from Caa2-PD, and senior secured term loan to Ca from
Caa2. In addition, given that Steak n Shake's partial repurchase of
its senior secured term loan is viewed as a distressed exchange and
event of default under Moody's definition of default, Moody's
appended the company's Probability of Default Rating with a LD
(limited default) designation. The rating outlook is negative.
"The downgrade reflects the expectation that Steak n Shake will
face extreme challenges in addressing the March 2021 maturity of
its term loan at par and on economic terms given the material
deterioration in earnings, cash flow and credit metrics driven by
the restrictions and closures across its restaurant base due to the
efforts to contain the spread of the coronavirus " stated Bill
Fahy, Moody's Senior Credit Officer. In response to these operating
challenges and to strengthen liquidity, Steak n Shake is looking to
refinance its term loan and is focusing on reducing all
non-essential operating expenses and discretionary capex. "While
many quick service restaurants (QSR) are still able to provide
service through the drive-thru and delivery, restaurant sales will
still be well below normal operating levels for the typical QSR
restaurant", added Fahy.
Downgrades:
Issuer: Steak n Shake Inc.
Probability of Default Rating, Downgraded to Ca-PD/LD from Caa2-PD
Corporate Family Rating, Downgraded to Ca from Caa2
Senior Secured Bank Credit Facility, Downgraded to Ca (LGD3) from
Caa2 (LGD3)
Outlook Actions:
Issuer: Steak n Shake Inc.
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 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 Steak n Shakes' credit
profile, including its exposure to widespread location closures
have left it vulnerable to shifts in market sentiment in these
unprecedented operating conditions and Steak n Shake 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.
Its action reflects the impact of the breadth and severity of the
shock, and the broad deterioration in credit quality it has
triggered.
Steak n Shake's credit profile is constrained by the company's
already high leverage of over 13 times and an inability to even
partially cover interest expense prior to the impact of COVID19.
Moody's believes this level of leverage is unsustainable. Also,
Steak n Shake is facing earnings pressures from the coronavirus
pandemic. As a result, Moody's believes Steak n Shake will face
significant challenges in refinancing its March 2021 debt maturity
at par and on economic terms. Steak n Shake is also constrained by
its modest scale in terms of revenue, number of restaurants, weak
liquidity, and shareholder focused financial strategy. Steak n
Shake is supported by strong brand awareness in its core markets
and a relentless focus on value that has historically aided same
store sales.
The negative outlook reflects the uncertainty with regards to the
potential length and severity of closures and the ultimate impact
these restrictions and closures will have on Steak n Shakes
liquidity and its ability to successfully address the near-term
maturity of its term loan. The outlook also takes into account the
negative impact on consumers ability and willingness to spend on
eating out until the crisis materially subsides.
Governance is another rating constraint as Steak n Shake is owned
by a private equity firm. Financial strategies are always a key
concern of private equity companies given their higher leverage and
potential for debt financed returns to shareholders 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.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Steak n Shake's ratings could be upgraded with sustained
improvement in liquidity that included the refinancing of its term
on reasonable terms as well as a sustained improvement in operating
performance, credit metrics and liquidity on a sustained basis.
Ratings could be downgraded should Steak n Shake file for
bankruptcy, miss an interest or principal payment or should overall
recovery rate weaken.
Steak n Shake Inc. is the owner, operator and franchisor of Steak n
Shake restaurants which sells premium steakburgers and milk shakes
in about 374 owned and 237 franchised restaurants. Steak n Shake is
a wholly-owned subsidiary of Biglari Holdings Inc. and generated
total revenue of approximately $594 million for the last
twelve-month period ended December 25, 2019.
The principal methodology used in these ratings was Restaurant
Industry published in January 2018.
TAMARACK AEROSPACE: $80.5K Sale of Aircraft to Aero Approved
------------------------------------------------------------
Judge Frederick P. Corbit of the U.S. Bankruptcy Court for the
Eastern District of Washington authorized Tamarack Aerospace Group,
Inc.'s sale of 2001 Cirrus Design SR-22, NIOZW Aircraft to Aero
Montana, LLC for $80,500, nun pro tunc as of Dec. 4, 2019.
The sale and transfer is effective as of Dec. 4, 2019.
About Tamarack Aerospace Group
Tamarack Aerospace Group, Inc. -- https://tamarackaero.com/ -- is
an aerospace engineering and aircraft modification company in
Sandpoint, Idaho. It designs and develops innovative technology
for
business, commercial, and military aircraft, specializing in its
revolutionary Active Winglets.
Tamarack Aerospace Group sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. E.D. Wash. Case No. 19-01492) on June 1,
2019. At the time of the filing, the Debtor was estimated to have
assets of between $10 million and $50 million and liabilities of
the same range. The case is assigned to Judge Frederick P. Corbit.
The Debtor is represented by John D. Munding, Esq., at Munding,
P.S.
TENAX THERAPEUTICS: Cherry Bekaert LLP Raises Going Concern Doubt
-----------------------------------------------------------------
Tenax Therapeutics, Inc., filed with the U.S. Securities and
Exchange Commission its annual report on Form 10-K, disclosing a
net loss of $8,394,363 on $0 of revenue for the year ended Dec. 31,
2019, compared to a net loss of $14,144,049 on $0 of revenue for
the year ended in 2018.
The audit report of Cherry Bekaert LLP states that the Company has
suffered recurring losses from operations and negative cash flows
from operations. These conditions raise substantial doubt about the
Company's ability to continue as a going concern.
The Company's balance sheet at Dec. 31, 2019, showed total assets
of $6,365,271, total liabilities of $2,592,774, and a total
stockholders' equity of $3,772,497.
A copy of the Form 10-K is available at:
https://is.gd/A02Y30
Tenax Therapeutics, Inc., a specialty pharmaceutical company,
focuses on identifying, developing, and commercializing products
for cardiovascular and pulmonary diseases in the United States and
Canada. The company focuses on the development and
commercialization of pharmaceutical products containing
levosimendan, 2.5 mg/ml concentrate for solution for infusion/5ml
vial for use in the reduction of morbidity and mortality in cardiac
surgery patients at risk for developing low cardiac output
syndrome. It is also involved in initiating a Phase 2 clinical
trial of levosimendan for the treatment of patients with pulmonary
hypertension associated with heart failure with preserved ejection
fraction. The company was formerly known as Oxygen Biotherapeutics,
Inc. and changed its name to Tenax Therapeutics, Inc. in September
2014. Tenax Therapeutics, Inc. was founded in 1967 and is
headquartered in Morrisville, North Carolina.
TENSAR CORP: S&P Places 'B-' ICR on CreditWatch Negative
--------------------------------------------------------
S&P Global Ratings placed its ratings on Tensar Corp., including
the 'B-' issuer credit rating, on CreditWatch with negative
implications.
S&P expects to resolve the CreditWatch placement by the end of
July, based on any developments toward refinancing the 2021
obligation and the impact on earnings from the economic slowdown
caused by the pandemic.
Unfavorable capital market conditions pose refinancing risks. S&P
placed the ratings on Tensar on CreditWatch with negative
implications due to the heightened refinancing risk on its $235
million first-lien term loan (outstanding balance of $213.6 million
as of Sept. 30, 2019) coming due July 2021. S&P believes the
recessionary conditions in the U.S. coupled with the challenging
capital market conditions following the coronavirus outbreak could
be impediments in the successful refinancing of these notes, which
will become a current obligation in July of this year.
"We expect to resolve the CreditWatch placement by the end of June
2020, based on our assessment of the refinancing risk and the
impact on earnings from the economic slowdown caused by the
pandemic. We may lower the rating if the company is unable to
refinance the maturity of the first-lien term," S&P said.
Tensar focuses on engineered solutions tied to infrastructure,
commercial, and residential new construction. The company offers
durable polymer grid products used in earthwork construction
applications, such as the stabilization of roadways.
TITAN INTERNATIONAL: Albert Febbo to Retire as Director
-------------------------------------------------------
Albert J. Febbo notified the Board of Directors of Titan
International, Inc. of his decision to retire from the Board and
not to stand for re-election to the Board effective as of the
Company's 2020 annual meeting of stockholders. The Company stated
that Mr. Febbo's decision to retire and not to stand for
re-election to the Board was not due to a disagreement with the
Company regarding its operations, policies or practices. Mr. Febbo
joined the Board in 1993. The Company thanks Mr. Febbo for his
many contributions to the Board and valuable insights and
commitment during his 27 year tenure on the Company's Board and
wishes him the very best in the future.
About Titan
Titan International, Inc. -- http://www.titan-intl.com/-- is a
global manufacturer of off-highway wheels, tires, assemblies, and
undercarriage products. Headquartered in Quincy, Illinois, the
Company globally produces a broad range of products to meet the
specifications of original equipment manufacturers (OEMs) and
aftermarket customers in the agricultural,
earthmoving/construction, and consumer markets.
Titan reported a net loss of $51.52 million for the year ended Dec.
31, 2019, compared to net income of $13.04 million for the year
ended Dec. 31, 2018. As of Dec. 31, 2019, the Company had $1.11
billion in total assets, $850.32 million in total liabilities, $25
million in redeemable non-controlling interest, and $238.98 million
in total equity.
* * *
As reported by the TCR on Aug. 12, 2019, S&P Global Ratings lowered
its issuer credit rating on Titan International Inc. and its
issue-level ratings on the company's senior secured notes to 'CCC+'
from 'B-'. The downgrade reflects Titan's weak operating prospects
given S&P's expectation that soft demand for the company's
agricultural industry products will reduce profitability and eat
into liquidity.
In May 2019, Moody's Investors Service downgraded Titan
International, Inc.'s Corporate Family Rating and Probability of
Default Rating to Caa1 and Caa1-PD, respectively. "The downgrade
reflects a number of challenges Titan is experiencing in early 2019
that negatively impacted the company's top-line and profitability
at a time when liquidity was already pressured following a highly
cash consumptive 2018 and payments related to the Voltyre-Prom put
option settlement - one of which has yet to be fully resolved."
TOLL BROTHERS: Moody's Alters Outlook on Ba1 CFR to Stable
----------------------------------------------------------
Moody's Investors Service changed the outlook for Toll Brothers,
Inc. to stable from positive. At the same time, Moody's affirmed
Toll's Ba1 Corporate Family Rating and Ba1-PD Probability of
Default Rating, and the Ba1 rating on the senior unsecured notes of
Toll Brothers Finance Corp. The company's SGL-1 Speculative Grade
Liquidity Rating is maintained.
The change in the outlook to stable from positive reflects the view
that it is unlikely that Moody's will raise ratings for Toll in the
near term as economic conditions weaken broadly. The immense
slowing in the US economy caused by the widespread coronavirus
pandemic is affecting the homebuilding industry. Moody's expects
that rising unemployment, declining consumer confidence, and
reduced wealth, given stock market losses, will cause many
potential homebuyers to delay, perhaps indefinitely, purchases of
homes. Moody's expects new home sales to decline significantly in
2020, with the most pronounced weakening occurring in Q2, followed
by modest sequential improvements in the second half of the year.
If economic conditions stabilize in 2021, as expected by Moody's
Macroeconomic Board, and employment conditions firm up, Moody's
foresees the homebuilding industry recovering steadily given
supportive underlying fundamentals, including lack of oversupply,
low interest rates supporting affordability, and favorable
demographic trends. The outlook reflects Moody's expectation for
Toll to operate conservatively amid the weak environment caused by
the coronavirus by substantially reducing land spend, pausing share
repurchases, and maintaining very good liquidity.
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 homebuilding
industry is affected by the shock given its sensitivity to consumer
demand and sentiment and to unemployment levels. Moody's regards
the coronavirus outbreak as a social risk under its ESG framework,
given the substantial implications for public health and safety.
The following rating actions were taken:
Affirmations:
Issuer: Toll Brothers Finance Corp.
Senior Unsecured Shelf, Affirmed (P)Ba1
Senior Unsecured Regular Bond/Debenture, Affirmed Ba1 (LGD4)
Issuer: Toll Brothers, Inc.
Probability of Default Rating, Affirmed Ba1-PD
Corporate Family Rating, Affirmed Ba1
Outlook Actions:
Issuer: Toll Brothers Finance Corp.
Outlook, Changed to Stable from Positive
Issuer: Toll Brothers, Inc.
Outlook, Changed to Stable from Positive
RATINGS RATIONALE
The Ba1 Corporate Family Rating for Toll is supported by Moody's
consideration of: 1) the company's position as the sole national
homebuilder with a meaningful focus on the upper-end homebuilding
segment and a widely recognized brand name in the industry; 2)
management's ability to stay ahead of evolving demographics and
adapt to changing markets and the diversity of product categories;
3) a broad geographic reach nationwide; 4) a largely build-to-order
operating strategy, and therefore the lowest cancellation rates in
the industry; and 5) governance considerations, including
conservative financial profile and financial strategy that allows
for significant financial flexibility and incorporates very good
liquidity.
However, the rating also includes Moody's view of: 1) the company's
track record of share repurchases which limits its deleveraging; 2)
cost pressures faced by the industry with respect to land, labor
and building materials; 3) potential impairment risk on owned land,
which comprises about 4.6 years of land supply; 4) risks associated
with the more volatile and capital intensive high-rise and
high-density mid-rise business, although this segment represents
only 4% of revenue; and 5) exposure to protracted declines in
revenues and weakening in credit metrics inherent to the
significant industry cyclicality.
Toll's Speculative Grade Liquidity Rating of SGL-1 reflects Moody's
expectation that the company will maintain a very good liquidity
position over the next 12 to 15 months given its strong cash flow
generative capabilities, availability under its $1.9 billion
revolving credit facility expiring in 2024, lack of debt maturities
until 2022, and substantial covenant compliance headroom. As of
January 31, 2020, Toll had $2.1 billion in liquidity between cash
and revolver availability.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Factors that could lead to an upgrade include:
- Stability of economic and homebuilding industry conditions
- Achievement and maintenance of adjusted homebuilding debt to
book capitalization below 40% together with homebuilding EBIT
coverage of interest sustained in the high single digits
- Maintenance of a very good liquidity position, including strong
free cash flow
- Demonstration of a commitment to attaining and maintaining an
investment grade rating, both to Moody's and to the debt capital
markets
- An ability to withstand a serious financial shock without
having its key credit metrics sinking to low speculative grade
levels
Factors that could lead to a downgrade include:
- Debt leverage approaching 50%
- Cash flow from operations becoming increasingly negative and
liquidity weakening
- An economic downturn in which revenues and net income decline
The principal methodology used in these ratings was Homebuilding
and Property Development Industry published in January 2018.
Toll Brothers, Inc. is a national builder of luxury homes. Toll
serves move-up, empty-nester, active-adult, and second-home buyers
and operates in 50 markets across 24 states. The company builds an
array of luxury residential single-family detached, attached home,
master planned resort-style golf, and urban low-, mid-, and
high-rise communities, principally on land it develops and
improves. Toll also operates its own architectural, engineering,
mortgage, title, land development and land sale, golf course
development and management, home security, and landscape
subsidiaries. The company also operates its own lumber
distribution, house component assembly, and manufacturing
operations. The company develops commercial and apartment
properties through Toll Brothers Apartment Living, Toll Brothers
Campus Living, and develops urban low-, mid-, and high-rise
for-sale condominiums through Toll Brothers City Living. Revenues
and net income in the LTM period ended January 31, 2020 were $7.2
billion and $535 million, respectively.
TRENT RIVER: Court Asked to Hold Hearing on Committee Appointment
-----------------------------------------------------------------
Marjorie Lynch, a bankruptcy administrator, asked the U.S.
Bankruptcy Court for the Eastern District of North Carolina to hold
a hearing to determine whether cause exists to appoint an
unsecured creditors' committee in Trent River Adventures, LLC's
Chapter 11 case.
A court order appointing an unsecured creditors' committee was
issued on April 8 after three creditors of Trent River responded to
the bankruptcy administrator's solicitation indicating their
interest to serve as committee members. On the same day, the court
vacated the order.
In a motion, Ms. Lynch said that the mailing of the solicitations
"was not procedurally correct nor was her recommendation that the
unsecured creditors committee be formed."
Ms. Lynch said she is "not currently aware of any facts that would
support a finding of cause sufficient to meet the standard of
appointment of an unsecured creditors committee."
Any party interested in the formation of an unsecured creditors'
committee must participate in the hearing and must be prepared "to
meet the burden of showing sufficient cause exists to appoint the
committee," according to court filings.
About Trent River Adventures
Trent River Adventures, LLC, a company that owns and operates a
golf course facility in New Bern, N.C., sought protection under
Chapter 11 of the Bankruptcy Code (Bankr. E.D. N.C. Case No.
20-00926) on March 3, 2020. At the time of the filing, Debtor
disclosed assets of between $1 million and $10 million and
liabilities of the same range. Judge Joseph N. Callaway oversees
the case. The Law Offices of Oliver & Cheek, PLLC is Debtor's
legal counsel.
URS HOLDCO: S&P Lowers ICR to 'B-'; Ratings on CreditWatch Negative
-------------------------------------------------------------------
S&P Global Ratings downgraded URS Holdco Inc. to 'B-' from 'B'. At
the same time, S&P placed all of its ratings on the company on
CreditWatch with negative implications.
"We expect a significant decline in United Road's hauled automotive
freight volumes as a result of COVID-19. Around 64% of the
company's revenue is generated from new and 24% from used light
vehicles. We believe a decline in U.S. light vehicle sales and
production in 2020 will result in an increase in United Road's
leverage above 8x this year. Depending on the depth and length of a
U.S. recession, there could be additional downside risk to our
forecast," S&P said.
CreditWatch
S&P expects to resolve the CreditWatch placement once it has
additional information on the timeframe for significantly lower new
and used light vehicle movements as a result of COVID-19. S&P would
likely lower ratings if it expects United Road to experience
near-term liquidity risks or if weaker than expected earnings and
cashflows cause leverage to rise to unsustainable levels.
VERRA MOBILITY: S&P Alters Outlook to Stable, Affirms 'B+' ICR
--------------------------------------------------------------
S&P Global Ratings revised its outlook to stable from positive and
affirmed its 'B+' issuer credit rating on traffic safety and
tolling provider Verra Mobility Corp.
"We expect Verra Mobility Corp.'s leverage will remain above 4x
over the next 12 months. Demand headwinds from COVID-19 have
weighed on our previous base-case expectations such that we now
expect Verra Mobility Corp.'s leverage to remain above 4x over the
next 12 months, up from the low 3x area we had previously
anticipated. As a result, we have revised our outlook to stable.
Verra's commercial segment (61% of 2019 revenues), which is
underpinned by rental car usage trends from both business- and
consumer-related travel, is highly correlated with discretionary
spending. As travel restrictions hurt rental car demand and rising
unemployment weighs on consumer discretionary spending, it is
unclear how quickly travel will rebound even after COVID-19 is
contained. Verra's other business segment, government solutions
(39% of 2019 revenues), will also face COVID-19-related headwinds
as isolation measures result in fewer cars on the road. While we
anticipate reduced volumes in Verra's speed and red light photo
enforcement programs, continuation of the school zone speed camera
installations in New York City may mitigate some pressure," S&P
said.
The stable outlook reflects S&P's expectation that despite
anticipated revenue declines, Verra's stable margins, cost
containment measures, and adequate liquidity will allow it to
manage a temporary period of weak operational performance related
to reduced travel. The stable outlook is also supported by S&P's
expectation that Verra will adhere to its conservative risk culture
amid difficult operating conditions.
"We could lower the rating over the next 12 months if earnings and
free cash flow weaken because of the effects of the coronavirus,
resulting in material deterioration of liquidity. This could occur
if we expect Verra's leverage to remain above 5x or FOCF to debt
becomes depressed in the mid-single-digit percent area," S&P said.
"Although unlikely over the next year, we could raise the rating if
Verra maintains leverage below 4x," the rating agency said.
VINSICK FOODS: Needs More Time to Formulate Chapter 11 Plan
-----------------------------------------------------------
Vinsick Foods Inc. asked the U.S. Bankruptcy Court for the Western
District of Pennsylvania for a 60-day extension of the exclusive
period to file its Chapter 11 plan.
Due to recent events related to the COVID-19 pandemic and the
current economic environment, Vinsick's operations have been
altered. Vinsick is now contemplating the possible closure of at
least one of its remaining locations to facilitate a feasible plan
but requires additional time to consider this important decision.
About Vinsick Foods
Vinsick Foods, Inc., which conducts business under the name Fox's
Pizza, is a business organized and existing within the Commonwealth
of Pennsylvania.
Vinsick Foods filed a Chapter 11 petition (Bankr. W.D. Pa. Case No.
19-23938) on Oct. 7, 2019. At the time of the filing, Debtor had
estimated assets of less than $50,000 and liabilities of between
$100,001 and $500,000. Judge Gregory L. Taddonio oversees the
case. Thompson Law Group, P.C. is Debtor's legal counsel.
VISKASE COS: S&P Downgrades ICR to 'CCC' on Refinancing Risk
------------------------------------------------------------
S&P Global Ratings lowered its issuer credit rating to 'CCC' from
'B-' on Viskase Cos. Inc. and removed all ratings from CreditWatch,
where it placed them with negative implications on Jan. 24, 2020.
The outlook is negative.
At the same time, S&P is lowering its issue-level rating on the
company's senior secured term loan to 'CCC' from 'B-' and removes
the rating from CreditWatch. The recovery rating remains '3',
indicating its expectation of meaningful (50%-70%; rounded
estimate: 55%) recovery for the senior secured loan holders in its
simulated default scenario.
The downgrade reflects the refinancing risk of the company's senior
secured term loan due in January 2021.
"Despite adequate operational expectations for the company in 2020,
we are lowering the rating due to the potential refinancing risk.
The company's capital structure includes a $45 million asset-based
lending (ABL) revolver (full availability as of Sept. 30, 2019) and
a $275 million senior secured term loan ($259 million outstanding
as of Sept. 30, 2019) both due Jan. 30, 2021, and two Europe bank
loans totaling $2.6 million, one due May 15, 2021, and the other
due Oct. 5, 2020. We had previously expected the company to
refinance the senior secured term loan in the first quarter of
2020, but due to market volatility and economic contraction, the
refinancing has been postponed. We anticipate refinancing to be
difficult in the current market and increases the risk of default
for the company," S&P said.
The negative outlook reflects the potential for a lower rating due
to the heightened refinancing risk as the January 2021 maturity
date for the senior secured term loan approaches.
"We could lower our rating on Viskase if the company does not
announce a definitive refinancing plan for its capital structure
and a default becomes inevitable. We could also lower our rating if
the company initiates a distressed exchange or restructuring that
we deem to be tantamount to a default," S&P said.
"We could revise our outlook to stable or raise our rating on
Viskase if the company announces a definitive refinancing plan for
its senior secured term loan while maintaining adequate liquidity
and preserving its capital structure," the rating agency said.
WAYNE BENNETT: Rep's $840K Sale of Kihei Property to Burney Okayed
------------------------------------------------------------------
Judge Hannah L. Blumenstiel of the U.S. Bankruptcy Court for the
Northern District of California authorized Lisa Mitchell,
Representative of the Bankruptcy Estate of Wayne William Bennett,
to sell the real property located at and commonly known as 3200
Wailea Alanui Drive, Apt. 1606, Kihei, Hawaii to Sandra Gibson
Burney for $840,000.
From the sales proceeds at the close of escrow, Mitchell is
authorized to pay the following claims from escrow:
Lienholder Amount
---------- ------
U.S. Bank National Association $340,000 (est.)
GMAC Mortgage Corp. $150,000 (est.)
Commission and escrow fees $60,000 (est.)
Past due HOA arrears $3,381
Property Taxes $2,729
GS Commercial Management, Inc. $15,000
Compass $14,000
--------
TOTAL $585,110
The loans secured by the first and second liens on the Hawaii
Property will be paid in full as of the date of the closing of the
sale, and the sale will be conducted through an escrow and based on
a non-expired contractual payoff statement received directly from
lienholders.
The net proceeds after payments set forth will be remitted to the
client trust account of Kornfield, Nyberg, Bendes, Kuhner & Little,
P.C. to then pay claims as set forth in the Motion, including
payment of approved administrative claims, United States Trustee's
fees and post-confirmation fees and costs.
Ms. Mitchell is authorized to execute any and all documents that
are necessary or appropriate to effectuate or consummate the sale.
No automatic stay of execution pursuant to Rule 62(a) under the
Federal Rules of Civil Procedure or Bankruptcy Rule 6004(h) applies
with respect to the Order.
A hearing on the Motion was held on March 5, 2020 at 10:00 a.m.
The Chapter 11 bankruptcy case is In re Wayne William Bennett
(Bankr. N.D. Cal. Case No. 17-30600), filed on June 23, 2017.
WENDY'S CO: S&P Alters Outlook to Negative, Affirms 'B' ICR
-----------------------------------------------------------
S&P Global Ratings affirmed its 'B' issuer credit rating on
U.S.-based restaurant franchisor and operator The Wendy's Co. and
revised the outlook to negative from stable.
The negative outlook reflects the weakened quick-service restaurant
(QSR) operating environment S&P expects resulting from the
coronavirus pandemic as well as its economist's expectation for a
recession in the U.S. in 2020. S&P has therefore revised its
projections for the company and is now expecting a significant
decline in revenues and profits this year followed by a modest
recovery in 2021.
"We expect significant same-store sales declines as consumers
practice social distancing and traffic is significantly lower. The
outlook revision reflects our view that Wendy's operating
performance will be pressured while it operates drive-thru and
delivery-service only. We believe system sales volume and royalty
fees will be hurt by the spread of the pandemic over the next
several months because it will reduce customer traffic to Wendy's
restaurants both in the U.S. and internationally," S&P said.
"We expect sharp declines in traffic over at least the next several
weeks. We hold this view despite believing that QSR operators are
less exposed to the effects of the pandemic relative to other
restaurant operators, based primarily on higher penetration of
take-out and off-premise services. This coupled with a low- to
mid-single digit basis point EBITDA margin decline will result in a
spike of leverage to over 8x in 2020, returning to around 7x in
2021," S&P said.
The negative outlook reflects the heightened uncertainty regarding
the impact from the coronavirus and impending recession on Wendy's
operating performance and financial condition. A prolonged period
of pandemic with a slowdown in customer traffic and consumer
spending could affect the company's ability to improve
operationally and recover leverage back to recent levels around the
mid-6x area.
"We could lower the rating if we believe Wendy's credit metrics
will remain weak such that we expected leverage to sustain at the
mid-7x area even through fiscal 2021, likely resulting from a
weakening in the company's competitive position. This could occur
if the impact from the coronavirus and subsequent recessionary
macroeconomic environment were more severe and prolonged than we
currently forecast, delaying operating performance improvements
expected next year," S&P said.
"We could revise our outlook on Wendy's to stable if performance
results demonstrated sustained traction toward significantly
improved system sales as customer traffic normalized, resulting in
credit metrics tracking toward our base case projections including
adjusted leverage toward 7x or better," the rating agency said.
WESCO AIRCRAFT: S&P Alters Outlook to Negative, Affirms 'B-' ICR
----------------------------------------------------------------
S&P Global Ratings revised its outlook on Wesco Aircraft Holdings
Inc. to negative from stable and affirmed all of the company's
ratings, including the 'B-' issuer credit rating.
"We expect Wesco's credit metrics to be weaker in 2020 and 2021
than we had previously expected as a result of the coronavirus.
Wesco operates as a parts distributor to aerospace and defense
original equipment manufacturers (OEM) and to the aftermarket. The
significant reduction in global air travel is likely to result in
airlines deferring or cancelling orders causing the commercial
aircraft OEMs to reduce production. A small part of the company's
business, sales to the aftermarket, is also likely to decline due
to lower traffic. Sales to the defense market (about 35% of sales)
should be relatively stable. This will likely lead to lower
earnings and cash flow for the company. Credit metrics will be very
weak in fiscal 2020 (ending Sept. 30, 2020) because of costs
related to the recent merger with Pattonair; however, we now expect
2021 to be weaker as well with debt to EBITDA of 7.5x-8.0x versus
our previous expectation of around 7x," S&P said.
Environmental, Social, and Governance (ESG) Credit Factors for this
Credit Rating change:
-- Health and Safety Factors
The negative outlook reflects S&P's expectation that Wesco's credit
metrics will likely remain weak into 2021 as a result of the
coronavirus pandemic. S&P now expects commercial aircraft OEMs to
reduce build rates and that aftermarket demand will decline because
of decreased air travel, which will weaken the company's earnings
and cash flow. The rating agency expects debt to EBITDA of around
7.5x-8.0x in 2021.
"We could lower the rating on Wesco over the next 12 months if
earnings and free cash flow remain weak because of the effects of
the coronavirus, resulting in a material deterioration in
liquidity. We could also lower the ratings if sustained high
leverage leads us to believe that the company's capital structure
is no longer sustainable over the long term," S&P said.
"We could revise the outlook to stable over the next 12 months if
we expect debt to EBITDA to improve to below 7.5x and free
operating cash flow to debt to remain positive. This would likely
be the result of OEM build rates remaining or returning to near
current levels and a quicker-than-expected recovery in air traffic
that leads to higher aftermarket demand," the rating agency said.
WESTJET AIRLINES: Fitch Cuts LT IDR to 'B+', Outlook Negative
-------------------------------------------------------------
Fitch Ratings has downgraded WestJet Airlines Ltd.'s Long-Term
Issuer Default Rating to 'B+' from 'BB-'. The Rating Outlook is
Negative. The rating action reflects the sharp change in market
conditions due to the impact of the coronavirus pandemic. Fitch
views it unlikely that WestJet will be able to deliver as
previously anticipated in this environment, and also consider
several of their strategic initiatives to be more challenging to
achieve. Fitch also recognizes WestJet's position in Western Canada
where it is exposed to the oil and gas sector as well as FX
headwinds.
KEY RATING DRIVERS
Industry Update:
Fitch has taken negative rating actions across the North American
airline sector. The depth of the decline in traffic related to
coronavirus is causing substantial cash outflows for airlines in
the near term. Looking past the worst of the crisis, it has become
increasingly likely that the economic impact of the virus will
cause a much slower than previously anticipated rebound in air
traffic. The combination of a longer period of depressed airline
traffic with additional debt being raised to manage liquidity will
cause all carriers to operate with weakened credit metrics and
reduced financial flexibility at least through 2021. Airlines are
one of the hardest hit sectors globally. While exogenous shocks
have always posed risks for the sector, the severity of this
disruption is materially different than what was contemplated in
its ratings prior to the outbreak, contributing to the ratings
downgrades.
Fitch has revised its forecasts to include revenues down roughly
90% through the second quarter of the year, more than 50% through
the third quarter and nearly 40% for the fourth quarter. Fitch's
assumptions include the possibility of periodic restrictions on
international travel in the second half of the year driven by
potential resurgence of the virus in the fall or winter. Global
economic impacts of the virus will likely lead to reduced levels of
traffic for longer than previously expected. Its current base case
reflects traffic only slowly recovering towards 2019 levels by the
end of 2021, with a full rebound to 2019 levels only occurring by
2022 or 2023.
WestJet:
The rating downgrade reflects Fitch's expectations that a slower
recovery in demand will push WestJet's credit metrics outside
levels that support a 'BB-' rating during 2020 and remain outside
such levels through 2021. WestJet's rating had been contingent on
its ability to swiftly deliver through FCF generation, which no
longer appears possible given the current environment. Fitch
believes that WestJet should have sufficient liquidity to manage
through the crisis assuming a modest recovery, which begins in the
second half of 2020 which continues into 2021. The Negative Outlook
reflects the still-evolving situation with coronavirus, and the
possibility of a material impact to its credit metrics should a
substantial recovery be delayed beyond 2021. Fitch expects
WestJet's exposure to the energy-centric Western Canadian economy
to be a weight on performance, and it expects FX headwinds to
continue through 2020.
The company's liquidity position remains solid, with a cash balance
of $1.7 billion following a full draw on its US$350 million
revolver. Its sale-and-leaseback strategy continues to move
forward.
The company laid off slightly more than 50% of its staff, which it
plans to rehire under a Government of Canada program which replaces
earnings with a partial government subsidy. The government program
is essentially cash neutral for WestJet for the previously
furloughed employees and defrays remaining wage and salary costs.
Fitch expects some 2020 capex will be delayed until 2021, and the
company has announced that it is working with suppliers on cost
reductions or deferrals.
DERIVATION SUMMARY
WestJet's 'B+' rating is two notches below its primary domestic
competitor, Air Canada, and is in line with American Airlines. The
two-notching difference between WJET and Air Canada reflects
WestJet's higher near-term leverage, and relative size. Those
factors are partially offset by WestJet's favorable cost structure,
liquidity, and its plans to deliver over time.
WestJet's 'B+' rating reflects significantly higher debt following
its purchase by private equity sponsor Onex, and near to
intermediate term execution risks involved with the evolution of
the company's business model. Fitch also recognizes WestJet's
dominant position in Western Canada where it is exposed to the oil
and gas sector as well as FX headwinds.
Somewhat offsetting near-term risks are WestJet's very healthy
liquidity for the rating category, history of profitability,
sizeable market share in a largely duopolistic market, and low-cost
structure. Further, Fitch believes some of the risks from the LBO
are lessened by Onex's relatively conservative approach compared
with other LBOs.
KEY ASSUMPTIONS
Key assumptions in Fitch's rating case include a steep drop in
demand through 2020, with full recovery only occurring by
2022-2023. During 2020, Fitch's base case includes revenues down
roughly 90% through the second quarter of the year, down as much as
50%-60% in the third quarter, and down around 40% for the fourth
quarter. Its base case reflects traffic only slowly recovering
toward 2019 levels by the end of 2021, with a full rebound to 2019
levels only occurring by 2022 or 2023. Jet fuel prices for the year
are assumed at around US$1.50/gallon, and rise to about
US$1.65/gallon in 2021.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- Longer than expected drop in demand due to coronavirus leading
to longer-term impact on the balance sheet/ financial
flexibility;
- Total adjusted debt/EBITDAR remaining above 4.5x;
- FFO fixed charge coverage trending towards 2x;
- Adoption of more aggressive financial policies such as slowing
the planned pace of debt repayment or maintenance of lower
liquidity balances;
- Debt-financed M&A activity.
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- Total adjusted debt/EBITDAR at or below 3.5x (estimated to hit
around 4.5x post acquisition);
- FFO fixed charge coverage at or above 3x;
- EBIT margins increasing towards 10% (providing evidence that
the company's strategic initiatives are being implemented
effectively);
- Maintenance of liquidity above 20% of LTM revenues;
- The company works to re-build its base of unencumbered assets.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Non-Financial Corporate
issuers have a best-case rating upgrade scenario (defined as the
99th percentile of rating transitions, measured in a positive
direction) of three notches over a three-year rating horizon; and a
worst-case rating downgrade scenario (defined as the 99th
percentile of rating transitions, measured in a negative direction)
of four notches over three years. The complete span of best- and
worst-case scenario credit ratings for all rating categories ranges
from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are
based on historical performance.
LIQUIDITY AND DEBT STRUCTURE
Debt Structure: Onex' purchase of WestJet was funded via a new
USD1.955 billion TLB along with CAD542 million in rollover loans
owed to Export Development Canada (EDC), and CAD 1,649 in new
equity. The term loan allows for incremental facilities (either in
the form of term loans or increased sizing on the revolver) subject
to a minimum collateral coverage ratio of 1.25x.
Liquidity: WestJet has over CAD1.65 billion cash and equivalents
currently, after drawing fully on its US$350 million revolving
facility. The company had YE 2019 liquidity of more than 28% of LTM
revenue, which is rather healthy and superior to several peers.
While WestJet has essentially no unencumbered assets given the
collateral pool supporting its TLB, Fitch notes this facility is
overcollateralized and the company could pull some assets out of
the collateral pool in order to issue new debt.
Debt maturities through the early 2020s are manageable, consisting
of principal amortization on the EDC loans and a 1% annual
principal amortization under the TLB, which combined total roughly
CAD89 million per year.
KEY RECOVERY RATING ASSUMPTIONS:
The recovery analysis assumes that WestJet would be reorganized as
a going concern in bankruptcy rather than liquidated. Fitch has
assumed a 10% administrative claim.
Going-Concern (GC) Approach:
The GC EBITDA estimate reflects Fitch's view of a sustainable,
post-reorganization EBITDA level upon which it bases the enterprise
valuation.
The GC EBITDA is marginally below the forecast from two years in
the future from its current stress case reflecting a scenario where
WestJet comes under financial distress because of the coronavirus
crisis, and then experiences more normalized levels of
profitability once the crisis has passed.
An EV multiple of 5.5x EBITDA is applied to the GC EBITDA to
calculate a post-reorganization enterprise value. The choice of
this multiple considered the following factors:
The historical bankruptcy case study exit multiples for peer
companies ranged from 3.1x to 6.8x.
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF
RATING
The principal sources of information used in the analysis are
described in the Applicable Criteria.
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).
WHITING PETROLEUM: U.S. Trustee Appoints Creditors' Committee
-------------------------------------------------------------
The Office of the U.S. Trustee appointed a committee to represent
unsecured creditors in the Chapter 11 cases of Whiting Petroleum
Corporation and its affiliates.
The committee members are:
1. The Bank of New York Mellon Trust Company, N.A.
Attn: Jennifer J. Provenzano
505 Ross Street, 12th Floor
Pittsburgh, PA 15262
Tel: 416-236-3140
Email: jennifer.j.provenzano@bnymellon.com
Counsel: Morgan, Lewis & Bockius, LLP
Glenn E. Siegel, Esq.
101 Park Avenue, 32nd Floor
New York, NY 10178
Tel: 212-238-3148
Email: glenn.siegel@morganlewis.com
- and -
Rachel Jaffe Mauceri, Esq.
1701 Market Street
Philadelphia, PA 19103
Tel: 215-963-5515
Fax: 215-963-5001
Email: rachel.mauceri@morganlewis.com
2. Polar Midstream, LLC
Attn: Brock M. Degeyter
5910 North Central Expressway, Suite 350
Dallas, TX 75206
Tel: 214-462-7705
Fax: 214-306-8047
Email: bdegeyter@summitmidstream.com
Counsel: Akerman LLP
John Mitchell, Esq.
2001 Ross Avenue, Suite 3600
Dallas, TX 75201
Tel: 214-720-4344
Email: john.mitchell@akerman.com
3. JMAC Resources, Inc.
Attn: Jon McCreary
1505 N. Miller St., Suite 260
Wenatchee, WA 98801
Tel: 509-860-5888
Fax: 509-423-7497
Email: jon@jmacresources.com
4. Steel Energy Services, Ltd.
dba Black Hawk Energy Services, Ltd. and
Sun Well Service, Inc.
Attn: Stewart J. Peterson
5265 Ronald Reagan Blvd., Suite 110
Johnstown, CO 80534
Tel: 970-800-9618
Fax: 970-449-7151
Email: stewart.peterson@steelteams.com
5. Atlas Oil Company
Attn: John E. Ortoleva, Jr.
24501 Ecorse Rd.
Taylor, MI 48180
Tel: 313-662-3654
Fax: 313-216-1811
Email: jortoleva@atlasoil.com
Counsel: Cole Schotz, P.C.
Benjamin L. Wallen, Esq.
301 Commerce St., Suite 1700
Fort Worth, TX 76102
Tel: 817-810-5264
Fax: 817-977-5273
Email: bwallen@coleschotz.com
6. BNN Western, LLC
Attn: Matt Sheehy
370 Van Gordon Street
Lakewood, CO 80228
Tel: 913-928-6028
Email: matt.sheehy@tallgrassenergylp.com
Counsel: Sidley Austin LLP
David Kronenberg, Esq.
1501 K Street, N.W.
Washington, D.C. 20005
Tel: 202-736-8000
Fax: 202-736-8711
Email: dkronenberg@sidley.com
7. Jamex Marketing, LLC
c/o James Ballengee
5151 Beltline Rd., Suite 715
Dallas, TX 75254
Tel: 318-469-3084
Email: jballengee@jamexmarketing.com
Counsel: Reese Marketos LLP
Joel Reese, Esq.
750 N. St. Paul St., Suite 600
Dallas, TX 75201
Tel: 214-336-1978
Email: joel.reese@rm-firm.com
Official creditors' committees serve as fiduciaries to the general
population of creditors they represent. They may investigate the
debtor's business and financial affairs. Committees have the right
to employ legal counsel, accountants and financial advisors at a
debtor's expense.
About Whiting Petroleum Corporation
Whiting Petroleum Corporation, a Delaware corporation --
http://www.whiting.com/-- is an independent oil and gas company
that explores for, develops, acquires and produces crude oil,
natural gas and natural gas liquids primarily in the Rocky Mountain
region of the United States. Its largest projects are in the
Bakken and Three Forks plays in North Dakota and Niobrara play in
northeast Colorado. Whiting Petroleum trades publicly under the
symbol WLL on the New York Stock Exchange.
Whiting Petroleum and its affiliates sought protection under
Chapter 11 of the Bankruptcy Code (Bankr. S.D. Texas Lead Case No.
20-32021) on April 1, 2020. At the time of the filing, Debtors
disclosed $7,636,721,000 in assets and $3,611,750,000 in
liabilities. Judge David R. Jones oversees the cases.
Debtors tapped Kirkland & Ellis, LLP, Kirkland & Ellis
International, LLP and Jackson Walker L.L.P. as legal counsel;
Moelis & Company as financial advisor and investment banker;
Alvarez & Marsal as restructuring advisor; and Stretto as claims
and solicitation agent, and administrative advisor.
WINSTEAD'S COMPANY: U.S. Trustee Unable to Appoint Committee
------------------------------------------------------------
The Office of the U.S. Trustee on April 13 disclosed in a court
filing that no official committee of unsecured creditors has been
appointed in the Chapter 11 case of Winstead's Company.
Abut Winstead's Company
Winstead's Company operates 3 Winstead's Restaurant located at (i)
101 Emanuel Cleaver II Blvd., Kansas City, Mo.; (ii) 10711 Roe,
Overland Park, Kansas; and (iii) 4971 W. 135th St., Leawood,
Kansas.
Winstead's Company filed a voluntary petition for relief under
Chapter 11 of the Bankruptcy Code (Bankr. D. Kan. Case No.
20-20288) on Feb. 24, 2020, listing under $1 million in both assets
and liabilities. Judge Robert D. Berger oversees the case. Colin
Gotham, Esq., at Evans & Mullinix, P.A., is the Debtor's legal
counsel.
WORLDS INC: M&K CPAS, PLLC Raises Going Concern Doubt
-----------------------------------------------------
Worlds Inc. filed with the U.S. Securities and Exchange Commission
its annual report on Form 10-K, disclosing a net loss of $1,234,471
on $0 of revenue for the year ended Dec. 31, 2019, compared to a
net income of $1,754,315 on $0 of revenue for the year ended in
2018.
The audit report of M&K CPAS, PLLC states that the Company has
suffered net losses from operations and has a net capital
deficiency, which raises substantial doubt about its ability to
continue as a going concern.
The Company's balance sheet at Dec. 31, 2019, showed total assets
of $1,773,877, total liabilities of $3,218,864, and a total
stockholders' deficit of $1,444,987.
A copy of the Form 10-K is available at:
https://is.gd/F7WCYE
Worlds Inc. designs and develops software, content, and related
technology for the creation of interactive three-dimensional (3D)
Internet Websites. Its 3D Internet sites are designed to enable
visitation by users by providing them with online communities
featuring various content, information content, and interactive
capabilities. The company's technology includes WorldsShaper, a
compositing 3D building tool that integrates pre-existing or custom
content; WorldsServer, a scalable software to control and operate
online virtual communities; WorldsBrowser to access the 3D
environments; WorldsPlayer to view and experience multi-user,
interactive technology; and Worlds Gamma Libraries to compose
sample worlds, textures, models, avatars, actions, sensors, sounds,
motion sequences, and other behaviors. Its technology is used in
various applications, including virtual meeting places, 3D
e-commerce stores, and virtual classrooms. The company was formerly
known as Worlds.com Inc. and changed its name to Worlds Inc. in
February 2011. Worlds Inc. is based in Brookline, Massachusetts.
YUMA ENERGY: Case Summary & 20 Largest Unsecured Creditors
----------------------------------------------------------
Lead Debtor: Yuma Energy, Inc.
1177 West Loop South, Suite 1590
Houston, TX 77027
Business Description: Yuma Energy, Inc. --
http://www.yumaenergyinc.com/-- is an
independent Houston-based exploration and
production company. The Company is focused
on the acquisition, development, and
exploration for conventional and
unconventional oil and natural gas
resources, primarily in the U.S. Gulf Coast,
the Permian Basin of west Texas and
California. The Company has employed a 3-D
seismic-based strategy to build a multi-year
inventory of development and exploration
prospects. Its current operations are
focused on onshore properties located in
southern Louisiana, southeastern Texas and
recently, in the Permian basin of west
Texas. In addition, the Company has non-
operated positions in the East Texas Eagle
Ford and Woodbine, and operated positions in
Kern County in California.
Chapter 11
Petition Date: April 15, 2020
Court: United States Bankruptcy Court
Northern District of Texas
Four affiliates that concurrently filed voluntary petitions for
relief under Chapter 11 of the Bankruptcy Code:
Debtor Case No.
------ --------
Yuma Energy, Inc. (Lead Case) 20-41455
Davis Petroleum Corp. 20-41453
The Yuma Companies, Inc. 20-41454
Yuma Exploration & Production Company, Inc. 20-41456
Debtors' Counsel: H. Joseph Acosta, Esq.
FISHER BROYLES, LLP
Highland Park Place
4514 Cole Avenue, Suite 600
Dallas, Texas 75205
Tel: 214-614-8939
Fax: 214-614-8992
Email: joseph.acosta@fisherbroyles.com
- and -
Lisa Powell, Esq.
FISHER BROYLES , LLP
2925 Richmond Ave., Ste. 1200
Houston, TX 77098
Tel: 713-955-3302
Fax: 512-488-4912
Email: lisa.powell@fisherbroyles.com
Debtors'
Investment
Banker: SEAPORT GORDIAN ENERGY LLC
8115 Preston Road, Suite 415
Dallas, Texas 75225
Debtors'
Financial
Advisor: ANKURA CONSULTING GROUP, LLC
485 Lexington Avenue, 10th Floor
New York, New York 10017
Debtors'
Claims,
Noticing, &
Solicitation
Agent and
Administrative
Advisor: STRETTO
410 Exchange, Suite 100
Irvine, California 92602
https://cases.stretto.com/yumaenergy
Total Assets as of December 31, 2019: $32,290,329
Total Debts as of December 31, 2019: $28,270,794
The petitions were signed by Anthony C. Schnur, chief restructuring
officer.
A copy of Yuma Energy, Inc.'s petition is available for free at
PacerMonitor.com at:
https://is.gd/BQaedn
List of Yuma Energy's 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
1. Jones & Keller, PC Services $301,492
1999 Broadway
Ste 3150
Denver, CO, 80202
2. Drillinginfo, Inc. Suppliers or $75,554
P.O. Box 679093 Vendors
Dallas, TX, 75267-9093
3. IPFS Corporation Unsecured Loan $60,819
P.O. Box 730223 Repayments
Dallas, TX, 75373-0223
4. Netherland, Sewell & Services $41,959
Associates, Inc.
2100 Ross Avenue
Suite 2200
Dallas, TX, 75201
5. BDO USA, LLP Services $31,775
770 Kenmoor SE
Ste 300
Grand Rapids, MI, 49546
6. AXIA Resources Services $31,028
515 Post Oak Blvd
Suite 910
Houston, TX, 77027
7. Marcum LLP Services $27,085
6002 Rogerdale Road
Ste 300
Houston, TX, 77072
8. R. Reese and Associates, PLLC Services $24,337
5225 Katy Fwy
Ste 430
Houston, TX, 77007
9. IHS Global Inc Suppliers or $22,067
P.O. Box 847193 Vendors
Dallas, TX, 75284-7193
10. AFCO Unsecured Loan $20,759
P.O. Box 4795 Repayments
Carol Stream, IL 60197-4795
11. 1177 WLS, LLC $20,544
1177 West Loop South
Ste 675
Houston, TX, 77027
12. Addison Group Services $17,731
7076 Solutions Center
Chicago, IL, 60677-7000
13. P2 Energy Solutions Suppliers or $15,811
P.O. Box 912692 Vendors
Denver, CO, 80291-2692
14. Energy Fishing & Rental, Inc. Suppliers or $15,000
c/o Snow Spence Green Vendors
(Attn: Holly Hamm)
2929 Allen Parkway, Ste. 2800
Houston, TX 77019
15. Blue Cross and Blue Services $13,809
Shield of Texas
Health Care Service Corporation
P.O. Box 650615
Dallas, TX 75265-0615
16. Blue Dog Consulting Group LLC Services $12,800
2727 T810ravis Street
Ste 810
Houston, TX 77006
17. Judith Bagley Services $8,560
Law Offices
P.O. Box 5277
Austin, TX, 78763
18. Opportune LLP Suppliers or $5,765
711 Louisiana St Vendors
Ste 3100
Houston, TX 77002
19. Derick W. Ellis Services $5,164
1020 Hickman Street
Westlake, LA, 70669
20. Secure Networkers Services $3,942
P.O. Box 130748
The Woodlands, TX 77393-0748
YUMA ENERGY: Files for Chapter 11 to Pursue Liquidation
-------------------------------------------------------
Yuma Energy, Inc. (NYSE American: YUMA), together with its
subsidiaries Yuma Exploration and Production Company, Inc., Davis
Petroleum Corp., and The Yuma Companies, Inc. on April 15, 2020,
disclosed that they have filed voluntary Chapter 11 petitions for
relief under the United States Bankruptcy Code in the U.S.
Bankruptcy Court for the Northern District of Texas. During the
first quarter of 2020, Yuma's cash position deteriorated, and its
cash flow from operations is no longer sufficient to cover its
operating costs. The Company plans to continue to operate its
business in the normal course during the court-supervised
bankruptcy process.
The Debtors intend to use the Chapter 11 process to implement the
orderly liquidation of their assets in an effort to maximize values
and recoveries to stakeholders. The Debtors intend to seek
immediate court approval to conduct an auction for substantially
all of their assets, which primarily consist of operating and
non-operating interests in several properties in Louisiana, Texas,
Wyoming and Oklahoma. The auction is expected to occur within the
first 90 days of the bankruptcy filings.
The Debtors may negotiate to obtain a new Debtor-in-Possession
("DIP") financing to provide working capital to support normal
operations and the sale of assets during the Chapter 11 process.
However, it is not certain that these negotiations to obtain DIP
financing will be successfully completed.
Separately, effective on April 10, 2020, Anthony C. Schnur resigned
from his positions as Interim Chief Executive Officer, Interim
Chief Financial Officer, and Chief Restructuring Officer of the
Company. Shortly after with the effectiveness of Mr. Schnur's
resignations, the Company engaged Ankura Consulting Group, LLC
("Ankura") as its financial advisor. Mr. Schnur was recently hired
by Ankura, and Mr. Schnur will oversee the operation of the Debtors
during the bankruptcy process as he provides his services to the
Company through Ankura.
Mr. Schnur commented, "In 2019 and early 2020, we took proactive
steps to recapitalize our Company's financial structure under a
Credit Agreement with our lender YE Investment, LLC ("YE") and a
Restructuring and Exchange Agreement (the "Restructuring
Agreement") with Red Mountain Capital Partners LLC ("Red Mountain")
and certain of its affiliates including YE. Unfortunately, YE
recently notified us that it was terminating the Credit Agreement
due to the Company's failures to make timely interest payments and
to comply with other covenants, and further, that it was also
accelerating all payments due under the Credit Agreement so that
all outstanding principal, accrued interest, fees and other
obligations under the Credit Agreement became immediately due and
payable. Simultaneous with the termination of the Credit
Agreement, Red Mountain notified us that it was terminating the
Restructuring Agreement.
"Our revenues and cash position have eroded to the point of
unsustainability primarily driven by the severe downturn in oil
prices. After much consideration, the Company's Board of Directors
came to the decision that the use of the Chapter 11 liquidation
process was the best path forward to maximize values and
recoveries."
Mr. Schnur continued, "Although I am stepping down from my
executive positions at the Company, I intend to actively oversee
this restructuring process. Also, I want to express my sincere
gratitude to the employees for their continued dedication and hard
work during this time."
Effective as of April 13, 2020, Ankura will be acting as the
financial advisor to the Company, including assuming the role of
Chief Restructuring Officer, responsible for leading the Company
through the bankruptcy process. The decision to retain Ankura was
reached by the Company's Board of Directors, who believe the
selection is in the best interest of all stakeholders of the
Company.
Seaport Gordian Energy LLC, an affiliate of Seaport Global Holdings
LLC has been engaged as the investment banker for the Company, and
FisherBroyles, LLP will serve as legal advisors to the Company.
Please refer to our prior press releases and prior filings with the
Securities and Exchange Commission for more comprehensive
information regarding the agreements and transactions.
Copies of all documents filed in this case can be accessed at no
charge through Stretto, the Debtors' claims & noticing agent (at
https://cases.stretto.com/yumaenergy). For questions, Stretto can
be contacted by email at TeamYumaEnergy@stretto.com or toll-free at
855-303-9310. Stretto cannot give legal or financial advice.
Upon Court approval, cash generated from the Debtors' ongoing
operations will be used to support our business during the
liquidation process. Yuma has filed several customary motions with
the U.S. Bankruptcy Court seeking authorization to operate its
business in the normal course during the Chapter 11 process,
including paying vendors and suppliers under normal terms for goods
and services provided on or after the filing date in the ordinary
course of business. Yuma expects to receive Court approval for all
of these requests.
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, Inc.
Yuma Energy, Inc., a Delaware corporation, 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."
[*] EPIC Insurance Launches Restructuring Services Operation
------------------------------------------------------------
EPIC Insurance Brokers & Consultants, a retail property and
casualty insurance brokerage and employee benefits consultant, on
April 14 disclosed that the firm has launched a Restructuring
Services operation under its Financial Services division to support
the restructuring process for distressed situations with risk
mitigation and risk transfer insurance capital solutions.
Led by Executive Vice President, Philip V. Moyles, Jr., head of
Financial Services, the group will work with restructuring, legal,
accounting and bankruptcy professionals as well as turnaround
investors, to improve liquidity, preserve the business enterprise
and develop and implement programs that address the issues
adversely impacting financial performance.
EPIC's Restructuring Services risk mitigation advisory process
begins by cultivating an in-depth understanding of the objectives
and business imperatives for each restructuring situation. After a
thorough holistic analysis, EPIC develops the strategy and solution
set best suited to mitigate and/or transfer risks and protect
enterprise value.
"It is a pivotal time in our economy, and we've kept our focus on
how we can create value for our clients in this very difficult
environment. We realized we can play a valuable role across the
entire restructuring lifecycle," said Mr. Moyles. "Launching
EPIC's Restructuring Services capabilities under the Financial
Services division was a strategic decision. Our unique
interdisciplinary team has the depth and breadth of experience to
comprehensively assess and clearly identify the areas of risk and
opportunities to drive business enterprise preservation," continued
Mr. Moyles.
About EPIC Insurance Brokers & Consultants
EPIC is a unique and innovative retail property and casualty and
employee benefits insurance brokerage and consulting firm. EPIC has
created a values-based, client-focused culture that attracts and
retains top talent, fosters employee satisfaction and loyalty and
sustains a high level of customer service excellence.
EPIC team members have consistently recognized their company as a
"Best Place to Work" in multiple regions and as a "Best Place to
Work in the Insurance Industry" nationally.
EPIC now has more than 2,600 team members operating from 85 offices
across the U.S., providing Property and Casualty, Employee
Benefits, Specialty Programs and Private Client solutions to EPIC
clients.
With run rate revenues greater than $730 million, EPIC --
http://www.epicbrokers.com/-- ranks among the top 15 retail
insurance brokers in the U.S. Backed and sponsored by Oak Hill
Capital Partners, the company continues to expand organically and
through strategic acquisitions across the country.
[*] S&P Alters Outlook on Illinois Public Universities to Negative
------------------------------------------------------------------
S&P Global Ratings revised the outlook to negative from stable and
affirmed its ratings on the public universities in the state of
Illinois. This action follows the recent outlook revision to
negative on Illinois' (BBB-/Negative) general obligation debt
outstanding. In S&P's opinion, for the rated public universities,
the impact from weaker economic conditions could mean a material
reduction in state funding and appropriations for higher
education.
"Given the outlook revision on the State of Illinois to negative
from stable, reflecting the economic challenges raised by
shelter-in-place and other directives to protect the health and
safety of individuals from the community spread of COVID-19, we
have revised the outlook on Illinois public universities to
negative from stable. We view health and safety issues as a social
risk under our environmental, social, and governance (ESG) factors.
In previous times of fiscal stress, the state has delayed or
reduced appropriations to universities, which we believe could
occur again given our view of the onset of a global recession and
the potential for budgetary stress at the state level," S&P said.
The state of Illinois has had an inconsistent experience with its
budget and performance, although higher education appropriations
had stabilized in the past couple of years. The current state
rating and negative outlook reflect looming fiscal and economic
pressures, stemming from the global COVID-19 pandemic and
subsequent recession. The state's position, with lower reserve
levels and elevated fixed costs (pensions, debt service, and other
postemployment benefits), makes it particularly vulnerable. S&P
believes that this will likely lead to reduced appropriations and
financial performance implications for universities.
"As we assess the implications of reduced appropriations for
universities, it is particularly relevant for the Illinois public
universities that, in our opinion, receive a significant amount of
support for operations and benefits. This pressure would be in
addition to the stress most higher education institutions are
facing during the current environment and the COVID-19 pandemic,
including: loss of auxiliary revenues in the near term; weakened
operating results, the scope of which will be determined by the
duration of COVID-19; and potential declines in fall 2020
enrollments. Most of the regional Illinois public universities we
rate have already experienced several years of persistent
enrollment declines." In addition, the declining investment
performance and endowment market values, and weaker fundraising
could also negatively affect ratings. These factors exacerbate
pressures many of these schools already face, including a weakening
demographic profile with a declining population of potential
college applicants; significant outmigration of students to
out-of-state institutions; and fairly thin balance sheet cushions
to offset operating, investment, and appropriation issues," S&P
said.
As of March 31, 2020, S&P maintained ratings on seven public
universities in the state of Illinois, with ratings ranging from
'A-' to 'BB-'. There are only two credits that S&P Global Ratings
rates above the state rating: Illinois State University and
University of Illinois. Both are rated 'A-'. These universities
have, in S&P's opinion, demonstrated more robust demand profiles,
larger endowments, and more manageable debt burdens, which all
provide support to the ratings.
"Our outlook period is two years for investment-grade ratings and
one year for non-investment grade ratings. The negative outlook on
the universities will be resolved over time, as we complete
individual reviews, and the financial and operating impact from
COVID-19 and the recession can be better estimated," S&P said.
Credit factors that could lead to a negative rating action in the
near term include liquidity challenges, persistent deficits or more
generally, should unforeseen pressures related to the pandemic
materially affect demand, finances, or the ability to make debt
payments. S&P could revise the outlook to stable for institutions
that are able to demonstrate budget controls such that expenses are
managed to offset revenue losses; it would view positively plans
for maintenance of reserve levels and demand.
Illinois Public Universities Rated By S&P Global Ratings
Current Previous
rating Outlook outlook
University of Illinois A- Negative Stable
Illinois State University A- Negative Stable
Southern Illinois University BB+ Negative Stable
Governors State University BB+ Negative Stable
Western Illinois University BB Negative Stable
Northeastern Illinois University BB Negative Stable
Eastern Illinois University BB- Negative Stable
State of Illinois BBB-/Negative
[*] S&P Alters Outlook on Non-Profit 501(c)3 Organizations to Neg.
------------------------------------------------------------------
S&P Global Ratings revised the outlook to negative from stable and
affirmed its ratings on certain U.S. not-for-profit 501(c)3
organizations in the wake of the COVID-19 pandemic and the
uncertainties surrounding the ultimate economic fallout. At the
same time, S&P Global Ratings revised the outlook to stable from
positive on ratings for 501 (c) 3 organizations that previously
carried a positive outlook.
S&P's non-profit sector includes a broad range of credits ranging
from cultural and research organizations to foundations, membership
organizations, service organizations, and also includes several
unique organizations which are classified as 501(c)3. S&P's ratings
on these 501(c) 3 organizations range from 'AAA' to 'BB'. The
outlook revision on the organizations reflects S&P's belief that
they are facing, or could face, challenging economic or fundamental
business conditions that could result in lower ratings over the
next one-two years. While most of S&P's ratings have been
relatively stable over the years, the negative outlook on these
organizations reflects potential pressure on financial operations
driven by current and forecasted economic conditions. For some
organizations, lost revenues are a result of canceled performances
and events, as well as closures of facilities, with uncertainty
around timing of re-opening and how long it will take for
admissions and events revenues to return to pre-COVID-19 levels.
For others, there is a potential loss or delay in payments of
various research grants. This situation is evolving, with
uncertainty around the potential effects during this economic
slowdown.
"Given this and the lack of clarity about the possible duration of
the COVID-19 outbreak, in our opinion, operations could be weaker
than expected. Most of these organizations depend on endowments and
fundraising, and declining investment performance and endowment
market values along with weaker fundraising results could also
negatively affect ratings. S&P believes there will be greater
pressure on those organizations with limited revenue and expense
flexibility, lack of liquidity or balance sheet cushion, and weak
fundraising capabilities," S&P said.
"We believe shelter-in-place and other directives to protect the
health and safety of individuals from the community spread of
COVID-19 present economic challenges. We view the uncertainty on
the timing and duration of the spread of the coronavirus throughout
the country as a health and safety social risk under our
environmental, social, and governance (ESG) factors," S&P said.
A negative outlook is not necessarily a precursor to a rating
change. The negative outlook reflects S&P's anticipation that there
is at least a one-in-three chance that economic conditions worsen
to a degree that affects the organization's ability to maintain
credit characteristics in-line with the current rating level. If
economic activity resumes, however, and credit metrics are upheld,
S&P could revise the outlook to stable. it will review all ratings
individually with respect to an organization's liquidity and debt
structure in addition to the ability to mitigate revenue loss over
time with incremental rating actions possible. S&P could revise the
negative outlook on specific ratings to stable on a case-by-case
basis during the outlook period as the rating agency assesses risk
mitigation. At the same time, S&P could also lower the ratings
during the outlook period.
While S&P expects to know more in the next few months about fiscal
2020 operations, there is still uncertainty around the longevity of
the pandemic and its long-term financial impact. While some of
these organizations have applied for a Small Business
Administration loan under the Paycheck Protection Program, timing
of disbursement and amounts will vary. Some ratings will be more
susceptible to near-term operating pressure associated with
decreased revenues. Significant revenue losses could affect even
organizations that have experienced strong operations historically
and received demonstrated financial support from fundraising and
endowment spend.
"For all credits, an extended COVID-19 duration, and
correspondingly more severe economic fallout, has the potential to
result in diminished revenues and fundraising in the long term,
which could be inconsistent with current rating levels, in our
opinion. It is clear that the current situation is fluid and that
the longer-term implications of COVID-19 might not be manifest in
the short term," S&P said.
"The outlook period is two years for investment-grade ratings and
one year for non-investment grade ratings. The negative outlook for
individual organizations will be resolved over time, as we complete
individual reviews and the financial and operating impact from
COVID-19 can be better estimated. In particular, S&P Global Ratings
will be evaluating, among other things, the impact of lost rental
revenue on fiscal 2020 and fiscal 2021 financial results, if
applicable; fiscal 2021 financial projections; management teams'
strategies for addressing potential revenue declines; and overall
liquidity and financial flexibility. Although we understand
COVID-19 to be a global risk, we could consider incremental
negative rating actions during the outlook period should unforeseen
pressures related to the pandemic materially affect the finances,
balance sheet, or liquidity of the organization. We could revise
the outlook to stable for organizations that are able to
demonstrate their ability to offset or mitigate pressures to
operating incomes during the outlook period. We will also consider
the strength of the organization's liquidity and reserves and
assess their ability to maintain them," S&P said.
CERTAIN 501(c)3 ORGANIZATIONS HAVE BEEN EXCLUDED FROM THIS OUTLOOK
ACTION
After careful review, S&P has excluded certain 501 (c) 3
organizations from this negative outlook action and maintained
stable outlooks for those organizations at this time. Some of the
reasons S&P might have decided to exclude an organization from this
action include, in some combination:
-- Very little debt, or debt that matures in the near term;
-- Overwhelming resources relative to debt, and for the rating;
-- Significant liquidity for the rating;
-- In rare cases, operating revenues that are insulated from, or
thriving under, current economic conditions.
Should unexpected pressures related to the pandemic materially
affect finances, balance sheet, or liquidity over time, S&P could
also consider a negative rating action on these organizations
during the outlook period.
S&P also excluded university foundations (also 501 (c) 3
organizations) from this rating action. S&P considers university
foundation ratings as closely connected to its ratings on colleges
and universities (which are not part of this not-for-profit 501 (c)
3 sector).A list of Affected Ratings can be viewed at:
https://bit.ly/3ceI3ax
[^] BOOK REVIEW: Mentor X
-------------------------
The Life-Changing Power of Extraordinary Mentors
Author: Stephanie Wickouski
Publisher: Beard Books
Hard cover: 156 pages
ISBN: 978-1-58798-700-7
List Price: $24.75
Order this Book: https://is.gd/EIPwnq
Long-time bankruptcy lawyer Stephanie Wickouski at Bryan Cave
impressively tackles a soft problem of modern professionals in an
era of hard data and scientific intervention in her third published
book entitled Mentor X. In an age where employee productivity is
measured by artificial intelligence and resumes are prescreened by
computers, Stephanie Wickouski adds spirit and humanity to the
professional journey.
The title is disarmingly deceptive and book browsers could be
excused for assuming this work is just another in a long line of
homogeneous efforts on mentorship. Don't be fooled; Mentor X is
practical, articulate and lively. Most refreshingly, the book
acknowledges the most important element of human development: our
intuition.
Mrs. Wickouski starts by describing what a mentor is and
distinguishes that role from a teacher, coach, role model, buddy or
boss. Younger professionals may be skeptical of the need for a
mentor, but Mrs. Wickouski deftly disabuses that notion by relating
how a mentor may do nothing less than change the course of a
protege's life. Newbies to this genre need little convincing
afterwards.
One of the book's worthiest contributions is a definition of mentor
that will surprise most readers. Mentors are not teachers, the
latter of which impart practical knowledge. Instead, according to
Mrs. Wickouski, her mentors "showed me secrets that I could learn
nowhere else. They showed me how doors are opened. They showed me
how to be an agent of change and advance innovative and
controversial ideas." What ambitious professional doesn't want more
of that in their life?
The practicality of the book continues as Mrs. Wickouski outlines
the qualities to look for in a mentor and classifies the various
types of mentors, including bold mentors, charismatic mentors, cold
and distant mentors, dissolute mentors, personally bonded mentors,
younger mentors, and unexpected mentors. Mentor X includes charts
and workbooks which aid the reader in getting the most out of a
mentor relationship. In a later chapter, Mrs. Wickouski provides an
enormously helpful suggestion about adopting a mentor: keep an open
mind. Often, mentors will come in packages that differ from our
expectations. They may be outside of our profession, younger, less
educated, etc... but the world works in mysterious ways and Mrs.
Wickouski encourages readers to think about mentors broadly.
In this modern era of heightened workplace ethics, Mrs. Wickouski
articulates the dark side of mentors. She warns about "dementors"
and "tormentors" -- false mentors providing dubious and sometimes
self-destructive advice, and those who abuse a mentor relationship
to further self-interested, malign ends, respectively. She
describes other mentor dysfunctions, namely boundary-crossing,
rivalry, corruption, and a few others. When a mentor manifests such
behaviors, Mrs. Wickouski counsels it's time to end the
relationship.
Mrs. Wickouski tells readers how to discern when the mentor
relationship is changing and when it is effectively over. Those
changes can be precipitated by romantic boundaries crossed,
emergence of rivalrous sentiment, or encouragement of unethical
behavior or corruption. Mrs. Wickouski aptly notes that once
insidious energies emerge, the mentorship is effectively over.
At this point, certain readers may say to themselves, "Okay, I've
got it. Now I can move on." Or, "My workplace has a formal
mentorship program. I don't need this book anymore." Or even,
"Can't modern technology handle my mentor needs, a Tinder of
mentorship, so to speak?"
Mrs. Wickouski refutes that notion. She analyzes how many mentoring
programs miss the mark. In one of the best passages in the book,
Mrs. Wickouski writes, "Assigning or brokering mentors negates the
most critical components of a true mentor–protege relationship:
the individual process of self-awareness which leads a person to
recognize another individual who will give the advice singularly
needed. That very process is undermined by having a mentor assigned
or by going to a mentoring party." She does not just criticize;
she offers a solution with three valuable tips for choosing the
right mentor and five qualities to ascertain a true mentor in the
unlimited sea of possibilities.
Next, Mrs. Wickouski distinguishes between good advice and bad
advice. She punctuates that discussion with many relevant and
relatable examples that are easy to read and colorfully enjoyable.
This section includes interviews with proteges who have had
successful mentorships. The punchline: in the best mentorships, the
parties harmoniously share personal beliefs and values. Also
important, the protege draws inspiration and motivation from the
mentor. The book winds down as usefully as it started: Mrs.
Wickouski interviews proteges, asking them what they would have
done differently with their mentors if they could turn back the
clock. A common thread seems to be that the proteges would have
gone deeper with their mentors -- they would have asked more
questions, spent more time, delved into their mentors' thinking in
greater depth.
The book wraps up lightly by sharing useful and practical
suggestions for maintenance of the mentor relationship. She answers
questions such as, "Do I invite my mentor to my wedding?" and "Who
pays for lunch?"
Mentor X is an enjoyable read and a useful book for any
professional in any industry at, frankly, any point in time.
Advanced individuals will learn much from the other side, i.e., how
to be more effective mentors. Mrs. Wickouski does a wonderful job
of encouraging use of that all knowing aspect of human existence
which never fails us: proper use of our intuition.
About The Author
Stephanie Wickouski is widely regarded as an innovator and
strategic advisor. A nationally recognized lawyer, she has been
named as one of the 12 Outstanding Restructuring Lawyers in the US
by Turnarounds & Workouts and as one of US News' Best Lawyers in
America. She is the author of two other books: Indenture Trustee
Bankruptcy Powers & Duties, an essential guide to the legal role of
the bond trustee, and Bankruptcy Crimes, an authoritative resource
on bankruptcy fraud. She also writes the Corporate Restructuring
blog.
*********
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
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public debt and equity securities about which we report.
Each Tuesday edition of the TCR contains a list of companies with
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Don't be fooled. Assets, for example, reported at historical cost
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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
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Each Friday's edition of the TCR includes a review about a book of
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Monthly Operating Reports are summarized in every Saturday edition
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The Sunday TCR delivers securitization rating news from the week
then-ending.
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Point your Web browser to http://TCRresources.bankrupt.com/and use
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*********
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
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Jhonas Dampog, Marites Claro, Joy Agravante, Rousel Elaine
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Sheryl Joy P. Olano, Psyche A. Castillon, Ivy B. Magdadaro, Carlo
Fernandez, Christopher G. Patalinghug, and Peter A. Chapman, Editors.
Copyright 2020. All rights reserved. ISSN: 1520-9474.
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*** End of Transmission ***