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T R O U B L E D C O M P A N Y R E P O R T E R
Monday, May 11, 2020, Vol. 24, No. 131
Headlines
1934 BEDFORD: Bnai Jacob Objects to Creditor's Plan & Disclosures
2178 ATLANTIC: Noteworthy & 2178 Atlantic Say Plan Unconfirmable
512 NORTH AVE: U.S. Trustee Objects to Disclosure Statement
6365 FOURTH AVENUE: June 30 Auction of Bronx Properties Set
790 WARWICK: Shellpoint Says Claim Fully Secured
950 MEAT & GROCERY: Hires Platzer Swergold as Counsel
ACHAOGEN INC: Unsecureds Get Cash in Committee-Backed Plan
AMAZING ENERGY: Seeks to Hire Heller Draper as Counsel
AMAZING ENERGY: Seeks to Hire Wheeler & Wheeler as Counsel
AMPLE HILLS: Hires Daniel Scouler of Scouler Kirschhein as CRO
AMPLE HILLS: Seeks to Hire Herrick Feinstein as Legal Counsel
AMPLE HILLS: Seeks to Hire Stretto as Administrative Advisor
ANGEL'S TOUCH: Has Until June 6 to File Plan & Disclosures
ARCHDIOCESE OF SANTA FE: Taps David V. Walters as Estate Broker
AURORA COMMERCIAL: LBHI to Assume Discovery Obligations' Costs
AVIS BUDGET: S&P Rates New $400MM Senior Secured Notes 'BB-'
BALTIMORE 24 INVESTORS: Hires Cohen Dowd as Special Counsel
BARBEE EQUIPMENT: Proposes Bailey and Oliver as Counsel
BAY CIRCLE: NRCT Unsecureds to Get 100% in Trustee's Plan
BELLEAIR RESERVE: $138K Sale of Gnouy Park Property to Goings OK'd
BES LLC: Amended Plan of Reorganization Confirmed by Judge
BIORESTORATIVE THERAPIES: Hires K&L Gates as Special Counsel
BLUE WATER: Court Approves Disclosure Statement
BOMBARDIER RECREATIONAL: S&P Lowers ICR to 'BB-'
BVI HOLDINGS: S&P Alters Outlook to Negative, Affirms 'B' ICR
CAA HOLDINGS: S&P Downgrades ICR to 'B'; Outlook Stable
CADIZ INC: Reports $20.5 Million Net Loss for First Quarter
CAMBIUM LEARNING: Fitch Affirms B LongTerm IDR, Outlook Stable
CARBO CERAMICS: Seeks to Hire FTI Consulting as Financial Advisor
CARBO CERAMICS: Seeks to Hire KPMG LLP as Tax Consultant
CARBO CERAMICS: Seeks to Hire Perella Weinberg as Investment Banker
CARVANA CO: Reports $183.6 Million Net Loss for First Quarter
CIT GROUP: Egan-Jones Withdraws BB+ Senior Unsecured Ratings
CJ AUTO: De Lage Landen Objects to Disclosure & Plan
CLEVELAND STREET: Hires Judith A. Descalso as Bankruptcy Counsel
COMMERCIAL VEHICLE: S&P Alters Outlook to Neg., Affirms 'B' ICR
CORE & MAIN: S&P Downgrades ICR to 'B'; Outlook Stable
CORVALLIS FEED: $1.35M Sale of Personal Property to Bailey Approved
CPI CARD: Posts $2.42 Million Net Income in First Quarter
CREATIVE HAIRDRESSERS: May 22 Auction of All Assets Set
DASH GROUP: June 11 Plan Confirmation Hearing Set
DELEK US: Moody's Rates New $200MM Incremental Term Loan 'B1'
DIEBOLD NIXDORF: All Four Proposals Approved at Annual Meeting
DIEBOLD NIXDORF: Posts $93.4 Million Net Loss in First Quarter
DILLARD'S INC: Fitch Affirms 'BB' LongTerm IDR, Outlook Negative
EASTERN POWER: S&P Affirms 'BB-' Senior Secured Debt Rating
ELK PETROLEUM: Unsecureds to be Paid from EPA Warrants & GUC Trust
ENVISION HEALTHCARE: S&P Upgrades ICR to 'CCC'; Outlook Negative
EVEREADY SERVICES: $90K Cash Sale of Assets to CSMC Approved
EVERGREEN SKILLS: S&P Cuts ICR to 'D' on Missed Interest Payments
EVOLUTIONARY GENOMICS: Plante & Moran Raises Going Concern Doubt
EXACTECH INC: S&P Cuts ICR to 'CCC+'; Ratings on Watch Negative
FILTRATION GROUP: S&P Alters Outlook to Negative, Affirms 'B' ICR
FIVE STAR: Lowers Net Loss to $17.2 Million in First Quarter
FORD MOTOR: Fitch Cuts LongTerm IDR to 'BB+', Outlook Negative
FOXWOOD HILLS: Case Summary & Unsecured Creditor
FRE 355 INVESTMENT: Taps Binder & Malter as Legal Counsel
GATES GLOBAL: S&P Alters Outlook to Negative, Affirms 'B+' ICR
GI DYNAMICS: Posts $2.8 Million Net Loss in First Quarter
GIGA WATT: Trustee's Sale of Vehicles for $6K Approved
GLOBAL EAGLE: Regains Compliance with Nasdaq Bid Price Rule
GNIRBES INC: Seeks to Hire Ackerman Rodgers as Accountant
GT REALTY: 501 Atlantic Buying Freeport Property for $1 Million
H-CYTE INC: Frazier & Deeter LLC Raises Going Concern Doubt
HERTZ CORP: DBRS Lowers LongTerm Issuer Rating to CC
HOOD LANDSCAPE: Weeks Auction of Assets Approved
HOPE COMMUNITY ACADEMY, MN: S&P Alters Rev Bond Outlook to Neg.
INTERNATIONAL FOOD: Seeks Approval to Hire Consultant
J. CREW GROUP: S&P Downgrades ICR to 'D' on Bankruptcy Filing
JDUB'S BREWING: Brewery Intends to Continue Operating
JEFFERIES FINANCE: Fitch Alters Outlook on 'BB' LT IDR to Negative
JOHN VARVATOS: Men's Designer Brand Ends Up in Chapter 11
KHAN AVIATION: Trustee Hires Bose McKinney as Special Counsel
KRAFT HEINZ: S&P Rates New Senior Unsecured Notes 'BB+'
LAMB WESTON: Moody's Rates $400MM Senior Unsecured Notes 'Ba2'
LAST FRONTIER: June 8 Plan Confirmation Hearing Set
LEVEL SOLAR: Unsecureds to Recover 10%, Liquidating Trust's Share
LIQUID COLLECTIVE: Case Summary & 9 Unsecured Creditors
LITHIA MOTORS: S&P Alters Outlook to Negative, Affirms 'BB+' ICR
LSB INDUSTRIES: Incurs $19.5 Million Net Loss in First Quarter
MAGEE BENEVOLENT: May 15 Plan Confirmation Hearing Set
MAGELLAN HEALTH: S&P Places 'BB+' ICR on CreditWatch Positive
MAUSER PACKAGING: S&P Rates New $150MM Senior Secured Notes 'B'
MILLMAC CORP: Has Until June 15 to File Plan & Disclosures
MITCHAM INDUSTRIES: Moss Adams LLP Raises Going Concern Doubt
MJJW PORTFOLIO: Hires Hackworth Law as Special Counsel
MRC GLOBAL: S&P Downgrades ICR to 'B-'; Outlook Negative
MURPHY OIL: Fitch Alters Outlook on 'BB+' IDR to Negative
MYSTIC TRANSPORTATION: Hires Coan Lewendon as Counsel
NCL CORP: S&P Rates Senior Secured Notes BB; Rating on Watch Neg.
NEPHROS INC: Incurs $1.1 Million Net Loss in First Quarter
NEUROMETRIX INC: Incurs $657K Net Loss for Quarter Ended March 31
NEW BRAUNFELS: Voluntary Chapter 11 Case Summary
NFP CORP: S&P Rates $300MM Senior Secured Debt 'B'
NORWEGIAN CRUISE LINE: Ponders Bankruptcy, Seeks New Funding
NORWEGIAN CRUISE LINE: Raises $2.2-Bil After Going Concern Warning
NOVABAY PHARMACEUTICALS: Appoints Andrew D. Jones as CFO
NOVABAY PHARMACEUTICALS: Incurs $1.6M Net Loss in First Quarter
ODYSSEY LOGISTICS: S&P Cuts Issue-Level Rating to 'B-'
OMNI BAY COLONY: Hires Texas Ranch as Real Estate Broker
OMNIA PARTNERS: S&P Affirms 'B' ICR Despite Economic Uncertainty
OPTION CARE: Widens Net Loss to $20 Million in First Quarter
OUTERSTUFF LLC: Moody's Cuts PDR to Ca-PD/LD on Missed Payment
OWENS & MINOR: Incurs $11.3 Million Net Loss in First Quarter
PBF HOLDING: Fitch Rates New Senior Secured Notes 'BB/RR2'
PBF HOLDING: Moody's Rates Sr. Secured Notes 'Ba2', Outlook Neg.
PENUMBRA BRANDS: Voluntary Chapter 11 Case Summary
PEOPLES COMMUNITY: Seeks to Hire Osipov Bigelman as Counsel
PREMIER PETROLEUM: Seeks to Hire Armistead Law as Attorney
PREMIER PETROLEUM: Seeks to Hire Craig M. Geno as Attorney
PURPLE LINE: Fitch Cuts 2016A-D Bonds to BB, On Watch Negative
RAVN AIR GROUP: Seeks to Hire Blank Rome as Co-Counsel
RAVN AIR GROUP: Seeks to Hire Keller Benvenutti as Lead Counsel
RAVN AIR GROUP: Seeks to Hire Stretto as Administrative Advisor
RAZZANO PERSONAL: Seeks to Hire Barry A. Friedman as Counsel
RELIANCE INTERMEDIATE: DBRS Confirms BB Issuer Rating, Trend Stable
ROCHESTER DRUG: Asks May 22 Hearing on All Assets Bid Procedures
ROCKPORT DEVELOPMENT: Case Summary & 20 Top Unsecured Creditors
SALUBRIO: Seeks to Tap M B Lawhon Law Firm as HIPAA Expert Counsel
SAND CASTLE: 2.3% Recovery for Unsecureds in Stalking Horse Bid
SORENSON MEDIA: June 25 Plan Confirmation Hearing Set
SOUTH COAST BEHAVIORAL: Trustee Extends Service of M&M Consulting
STANLEY C. CHESTNUT: $820K Sale of NC Properties to J&N Approved
STAR DETECTIVE: Seeks to Hire Porter Law as Legal Counsel
STUART BRYAN: Has Until May 18 to File Plan & Disclosures
SUNOPTA INC: Reports $1.34 Million Net Income for First Quarter
SVENHARD'S SWEDISH: Seeks to Hire Cera LLP as Special Counsel
TANYA E. TUCKER: $720K Sale of St. Petersburg Property Approved
THERMASTEEL INC: Taps Creekmore Law as Special Litigation Counsel
TIME DEFINITE: Seeks to Hire Soriano Law as Special Counsel
TITAN INTERNATIONAL: Moody's Cuts CFR to Caa3 & Sec. Rating to Ca
TITAN INTERNATIONAL: Posts $27.5M Net Income in First Quarter
TMS CONTRACTORS: Class 4A Pearland Conduit Creditors to Recover 80%
TNS INC: S&P Alters Outlook to Negative, Affirms 'B' ICR
TOUCHPOINT GROUP: Cherry Bekaert LLP Raises Going Concern Doubt
TRC FARMS: Has Until May 23 to File Plan and Disclosure Statement
TWIN RIVER: S&P Retains 'B+' Issuer Credit Rating On Watch Neg.
UNITED EMERGENCY: June 10 Hearing on Disclosures and Confirmation
VALERITAS HOLDINGS: June 4 Plan & Disclosures Hearing Set
VBI VACCINES: Incurs $8.36 Million Net Loss in First Quarter
VCHP WICHITA: Hires Agentis PLLC as Bankruptcy Counsel
VIDANGEL INC: Studios Object to Trustee's Amended Disclosures
VILLAGE EAST: Seeks to Hire Kaplan Johnson as Legal Counsel
WATSON GRINDING: Hires Cummings & Houston as Accountant
WEEKS HOLDINGS: Aims to Hike Renters to Fund Plan
WELDED CONSTRUCTION: Objectors Oppose to Disclosure Statement
WESTERN HOST: Municipio de San Juan Objects to Disclosure & Plan
WISE ESPRESSO: Has Until Aug. 17 to Confirm Plan & Disclosure
WITTER HARVESTING: Unsecureds to Get $2K Quarterly for 5 Years
WOMEN'S CENTER FT. LAUDERDALE: Unsecureds to Recover 100% in Plan
WOMEN'S CENTER HYDE PARK: Unsecureds to Get Full Payment Under Plan
WPB HOSPITALITY: Hires Sender & Smiley as Mediator
YARBROUGH HOSPITALITY: Hires Michael K. Daniels as Counsel
[*] S&P Revises Outlook on 13 US Banks to Neg. on Economic Downturn
[^] BOND PRICING: For the Week from May 4 to 8, 2020
*********
1934 BEDFORD: Bnai Jacob Objects to Creditor's Plan & Disclosures
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Congregation Bnai Jacob objects to the proposed Disclosure
Statement of explaining the Chapter 11 plan filed by creditor 1934
Bedford Avenue, LLC for debtor 1934 Bedford, LLC.
Congregation Bnai Jacob is a secured creditor holding a duly filed
and perfected mortgage claim upon the Debtor's in excess of
$2,000,000 as of March 1, 2020. Congregation Bnai Jacob is the
largest creditor in this case other than the first mortgage claim
held by the creditor which filed a competing Plan.
Congregation Bnai Jacob in its objection points out that:
* The Creditor's time is predicated on the Creditor submitting a
bid based on its purported claim of $23,000,000 as of the sale
date. The Creditor acknowledges that it is subject to the
objections of the Debtor and yet proposes this suspect claim to
constitute a valid offer.
* The Creditor's Plan appears to leapfrog onto the Debtor’s
Plan. It is safer for the Debtor to be permitted to proceed under
its strong rights as set forth in the Contract of Sale without the
pressure imposed upon the Debtor if there were to be an
interruption in moving ahead with the Contract of Sale.
* The Objectant objects to the Creditor’s Disclosure Statement
and its Plan and respectfully requests that the Debtor’s Plan be
approved and the Court should approve the direction to be
undertaken by the debtor in proceeding with a private sale without
interference by the Creditor.
A full-text copy of Congregation Bnai Jacob's supplemental
objection to plan and disclosure dated April 17, 2020, is available
at https://tinyurl.com/yat3jyuy from PacerMonitor at no charge.
Attorney for Congregation Bnai Jacob:
Leo Fox, Esq.
630 Third Avenue – 18th Floor
New York, New York 10017
Tel: (212) 867-9595
E-mail: leo@leofoxlaw.com
About 1934 Bedford LLC
1934 Bedford LLC operates and develops a multi-unit building in
Brooklyn, New York.
An involuntary petition for relief under Chapter 11 of the
Bankruptcy Code was filed by creditors Simply Brooklyn Realty, HTC
Construction Management, Inc., HTC Plumbing, Inc. against Bedford
(Bankr. E.D.N.Y. Case No. 19-44751) on Aug. 2, 2019. On Sept. 12,
2019, Bedford consented to the entry of an order for relief under
Chapter 11 of the Bankruptcy Code.
Wayne Greenwald, P.C. is the Debtor's counsel.
The Creditors are represented by Rosenberg Musso & Weiner LLP.
2178 ATLANTIC: Noteworthy & 2178 Atlantic Say Plan Unconfirmable
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Noteworthy Foreclosure LLC, a secured creditor and party in
interest, and 2178 Atlantic Realty, LLC, current record owner of
2178 Atlantic Avenue, Brooklyn, New York, object to final approval
of the Disclosure Statement and to confirmation of the Second
Amended Plan of Reorganization filed by debtor 2178 Atlantic Avenue
HDFC.
The Objectors claim that:
* The proposed Plan is not confirmable. It is black letter law,
and common sense, that approval of the adequacy of the Disclosure
Statement is inappropriate where it describes a plan of
reorganization so fatally flawed that confirmation is impossible.
* In addition to failing to provide the Missing Financial
Information, the Debtor has failed to disclose how the Debtor will
be able to pay Habitat in six months as required under its proposed
Commitment Letter.
* The feasibility analysis utterly fails to provide any
information, much less adequate information, that the Debtor will
be able to pay its obligations after it emerges from the protection
of this Court.
* The Debtor provides no evidence that it will be able to
refinance the Habitat Loan. The Debtor's statement that this
obligation will be largely repaid with a tax refund from the City
of New York on account of real estate taxes paid on account of the
Property from 2005 to 2020 is mere fluff as it provides no detail
as to how much of the Habitat Loan is expected to be paid off from
the anticipated tax refund.
* The Debtor failed to provide post-confirmation projections
with respect to its income and expenses, and a statement showing
sufficient cash flow to fund and maintain both the contemplated
operations and obligations under the Plan as well as its ability to
pay off or refinance the Habitat Loan in six months.
* If a debtor proposes to stay in business by owning the
Property, bankruptcy courts generally require detailed financial
information about the reorganized debtor to determine that the plan
is feasible. The plan proponent must provide evidence that the
income and expense projections under the plan are objective,
credible and likely to be met.
A full-text copy of Noteworthy and 2178 Atlantic Realty's objection
to disclosure statement dated April 17, 2020, is available at
https://tinyurl.com/yb9rz4ow from PacerMonitor at no charge.
Attorneys for 2178 Atlantic Realty and Noteworthy Foreclosure:
ROBINSON BROG LEINWAND GREENE GENOVESE & GLUCK P.C.
875 Third Avenue, 9th Floor
New York, New York 10022
Tel: 212-603-6300
About 2178 Atlantic Ave HDFC
Based in Brooklyn, N.Y., 2178 Atlantic Ave HDFC filed a voluntary
petition under Chapter 11 of the Bankruptcy Code (Bankr. E.D.N.Y.
Case No. 19-47287) on Dec. 4, 2019, listing under $1 million in
both assets and liabilities.
512 NORTH AVE: U.S. Trustee Objects to Disclosure Statement
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William K. Harrington, the United States Trustee for Region 2,
objects to the adequacy of the information contained in 512 North
Ave. LLC's Disclosure Statement and objects to the confirmation of
Debtor's Plan of Reorganization.
The United States Trustee points out that the Debtor's Disclosure
Statement does not establish the ability of the proposed purchaser
to fund either the purchase of the Debtor's property or the ability
to finance the build-out of the property which is the focus of
Debtor's reorganization efforts.
The United States Trustee asserts that the Disclosure Statement
identifies a potential purchaser of the Bridgeport property Ashlar
Construction, LLC; however, the Disclosure Statement does not
contain information which would support that entity having the
wherewithal to both purchase the property and finance its build-out
into the rental space hinted at in the Disclosure Statement.
The United States Trustee objects to confirmation of the Debtor's
proposed Plan as it is not proposed in good faith being
fundamentally unfair to creditors and favorable only to the
insiders of former owner 500 North, the present Debtor, and its
insider.
According to United States Trustee, it is unclear due to an
uninformative Disclosure Statement how Barrett could be compelled
to provide capital contributions to insure the funding and
resolution of the Plan's proposed payments or that any monies
borrowed by him could be timely repaid and allow for the proposed
build-out which would allow Debtor to receive rental income.
The United States Trustee complains that the Debtor's prepetition
business history does not and cannot exist. The prepetition
history of the former owner of the 512 North Avenue property (500
North Ave., LLC) is one where it invariably avoided the payment of
on-going obligations including payments of taxes and its
mortgage(s). Once confirmed, the Plan has very little in the way
of safeguards to insure the continued performance of either
on-going or Plan obligations by Barrett or the Debtor.
The United States Trustee challenges the existence of the so called
"new value exception" within the Courts of the Second Federal
Judicial Circuit. He also challenges that the very modest
"investment" proposed to be contributed by Barrett on or before the
Effective Date of the Plan is significant or substantial enough,
given the Debtor's circumstances, should the Bankruptcy Court find
the so called "new value exception" to the "absolute priority rule"
is appropriately employed by the Debtor.
About 512 North Ave
512 North Ave LLC, a privately held company in Rocky Hill, Conn.,
sought protection under Chapter 11 of the Bankruptcy Code (Bankr.
D. Conn. Case No. 19-22139) on Dec. 24, 2019. At the time of the
filing, the Debtor had estimated assets of between $500,000 and $1
million and liabilities of between $1 million and $10 million.
Neubert, Pepe & Monteith, P.C., is the Debtor's legal counsel.
6365 FOURTH AVENUE: June 30 Auction of Bronx Properties Set
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Judge Robert D. Drain of U.S. Bankruptcy Court for the Southern
District of New York authorized the bidding procedures of 6365
Fourth Avenue Corp. and 11 Forest Avenue Corp. in connection with
the sale to Motek Homes, LLC of the following real properties: (i)
located at 1131 Forest Avenue, Bronx, New York for $475,000; and
(ii) located at 940 East 228th Street, Bronx, New York for
$410,000, subject to higher and better bids.
The Sale Procedures Hearing was held on May 1, 2020.
The notice of the contemplated Sales and Auction will be advertised
(i) in print and online media through Newsday newspaper Sunday
Edition, Newsday.com and its affiliated website for no less than 45
days’ prior to the Bid Deadline set forth in the Bidding
Procedures, (ii) in online media through www.LoopNet.com for no
less than 45 days prior to the Bid Deadline, and (iii) posting
conspicuous Auction Sale signs on the Properties.
All inquiries related to the Properties, Bidding Procedures, and
the Auction will be directed to the Debtors' counsel, Kirby Aisner
& Curley LLP.
The salient terms of the Bidding Procedures are:
a. Bid Deadline: June 26, 2020 at 12:00 p.m.
b. Initial Bid: (i) $485,000 for 1131 Forest Property, and
(ii) $410,000 for 940 East Property
c. Deposit: 10% of the Initial Overbid
d. Auction: If any Qualified Bids are received in accordance
with the Bidding Procedures, the Debtor will conduct an Auction,
which will be transcribed or recorded, at 10:00 a.m. (ET) on June
30, 2020, at the offices of the Debtors' counsel, Kirby Aisner &
Curley LLP, 700 Post Road, Suite 237, Scarsdale, New York, or such
other location designated by the Debtors and timely communicated to
all entities entitled to attend the Auction. The Debtors reserve
the right to conduct the Auction remotely via Zoom if an in-person
Auction is inadvisable due to any Executive Orders from the Office
of the Governor of the State of New York, as currently in place due
to the COVID-19 pandemic, in which case Zoom instructions will be
timely provided to all who made Qualified Bids.
e. Bid Increments: $5,000 for both Properties
f. Sale Hearing: July 14, 2020 at 10:00 a.m.
g. Sale Objection Deadline: Seven days prior to the Sale
Hearing before 5:00 p.m. (EST)
h. Motek Homes will be deemed a Qualified Bidder for the
Properties.
All of the rights, title, and interests of the Seller in and to the
Properties, or any portion thereof, to be acquired will be sold,
conveyed, transferred, and assigned free and clear of all Liens,
Claims, Interests, and Encumbrances.
The counsel to the Debtors will file with the Bankruptcy Court a
report of Qualified Bids no later than June 26, 2020 at 5:00 p.m.
(ET), which report will indicate, inter alia, whether the Debtors
intend to go forward with the Auction.
Notwithstanding the possible applicability of Bankruptcy Rules
6004(h), 7062, 9014 or otherwise, the terms and conditions of the
Order will be immediately effective and enforceable upon its entry,
sufficient cause having been shown.
The Debtors will serve the Order along with the Bidding Procedures
upon: (i) the Office of the U.S. Trustee; (ii) all taxing
authorities; (iii) counsel to the Buyer; (iv) all known creditors
of the Debtor; (v) all entities known or reasonably believed to
have asserted a lien, claim, interest, or encumbrance in any of the
Properties (to the attention of an officer or general counsel,
together with the underlying motion), (vi) all parties who have
previously expressed an interest in acquiring any of the Debtors'
Properties; and (v) all parties that have requested notice pursuant
to Bankruptcy Rule 2002 within three business days of entry of the
Order.
A copy of the Bidding Procedures and PSAs is available at
https://tinyurl.com/y6ufwrgv from PacerMonitor.com free of charge.
About 6365 Fourth Avenue Corp.
6365 Fourth Avenue Corporation filed a voluntary Chapter 11
petition (Bankr. S.D. N.Y. Case No. 19-23948) on Nov. 4, 2019, and
is represented by Erica R. Aisner, Esq., at Kirby Aisner & Curley
LLP. The Debtor reported under $1 million in both assets and
liabilities.
790 WARWICK: Shellpoint Says Claim Fully Secured
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NewRez LLC d/b/a Shellpoint Mortgage Servicing as servicer for The
Bank of New York Mellon f/k/a The Bank of New York as Trustee for
the Certificate holders of CWMBS, Inc., CHL Mortgage Pass-Through
Trust 2004-HYB5, Mortgage Pass-Through Certificates, Series
2004-HYB5 ("Shellpoint"), submitted an objection to the adequacy of
790 Warwick LLC's Disclosure Statement dated March 9, 2020.
Shellpoint objects to the Disclosure Statement to the extent that
it informs creditors that Shellpoint's loan is partially secured --
as it is Shellpoint's position that its lien remains fully secured.
Shellpoint objects to the Disclosure Statement to the extent that
it indicates that the Debtor is not liable for sums borrowed from
Shellpoint, despite allegedly purchasing the Premises.
Shellpoint objects to the Disclosure Statement as it is not clear
the nature of the funds and timing as to when Yakubov llc will
purchase the Premises.
Shellpoint objects to the Disclosure Statement's proposed value for
the Premises of $260,000.
Shellpoint objects to the Disclosure Statement as Shellpoint is not
waiving any part of its claim, where it be secured or unsecured --
as to be determined by the Court.
Finally, Shellpoint objects to the Debtor's disclosure that it has
attempted "to make a generous offer to [Shellpoint] to settle the
outstanding amounts and satisfy the note(s) issued by [Shellpoint]
to no avail." Contrary to this statement, Shellpoint has
requested, in writing, the "general offer" from the Debtor, but no
writing has been conveyed to date.
Attorneys for Shellpoint:
Michael T. Rozea, Esq.
Hill Wallack LLP
575 Lexington Ave.
Fourth Floor, Suite 4057
New York, NY 10022
About 790 Warwick
790 Warwick LLC, filed a Chapter 11 bankruptcy petition (Bankr.
E.D.N.Y. Case No. 19-47439) on Dec. 11, 2019, disclosing under $1
million in both assets and liabilities. The Debtor is represented
by Ilevu Yakubov, partner of the Law Office of Ilevu Yakubov.
950 MEAT & GROCERY: Hires Platzer Swergold as Counsel
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950 Meat & Grocery Inc., seeks authority from the U.S. Bankruptcy
Court for the Southern District of New York to employ Platzer
Swergold Levine Goldberg Katz & Jaslow, LLP, as counsel to the
Debtor.
950 Meat & Grocery requires Platzer Swergold to:
a. assist and advise the Debtor regarding the administration
of the bankruptcy case;
b. represent the Debtor before the Court and advise the Debtor
of pending litigation, hearings, motions, and of the
decisions of the Court;
c. assist and analyze all applications, orders and motions
filed with the Court by third parties in these case and
advise the Debtor;
d. attend all hearings conducted pursuant to § 341(a) of the
Bankruptcy Code and represent the Debtor at all
examinations;
e. communicate with creditors;
f. assist the Debtor in preparing applications and orders in
support of positions taken by the Debtor, as well as
prepare witnesses and review documents in this regard;
g. confer with any accountants, brokers and consultants
retained by the Debtor and/or any other party-in-interest;
h. assist the Debtor in its negotiations with creditors or
third parties concerning the terms of any proposed plan(s)
of reorganization;
i. prepare and draft plan(s) of reorganization and disclosure
statement(s); and
j. assist the Debtor in performing such other services as may
be in the interest of the Debtor and perform all other
services required by the Debtor.
Platzer Swergold will be paid at these hourly rates:
Clifford A. Katz $645
Teresa Sadutto-Carley $480
Mark Levine $270
Paralegals $225
Platzer Swergold will also be reimbursed for reasonable
out-of-pocket expenses incurred.
Clifford A. Katz, partner of Platzer Swergold Levine Goldberg Katz
& Jaslow, LLP, assured the Court that the firm is a "disinterested
person" as the term is defined in Section 101(14) of the Bankruptcy
Code and does not represent any interest adverse to the Debtor and
its estates.
Platzer Swergold can be reached at:
Clifford A. Katz, Esq.
PLATZER SWERGOLD LEVINE
GOLDBERG KATZ & JASLOW, LLP
475 Park Avenue South, 18th Floor
New York, NY 10016
Tel: (212) 593-3000
About 950 Meat & Grocery
950 Meat & Grocery Inc. owns and operates a supermarket in
Paterson, NJ.
950 Meat & Grocery Inc., based in Paterson, NJ, filed a Chapter 11
petition (Bankr. S.D.N.Y. Case No. 20-10616) on Feb. 27, 2020. In
the petition signed by Kent Tavera, president, the Debtor was
estimated to have $1 million to $10 million in both assets and
liabilities. The Hon. Stuart M. Bernstein oversees the case.
Clifford A. Katz, Esq., at Platzer Swergold Levine Goldberg Katz &
Jaslow, LLP, serves as bankruptcy counsel to the Debtor.
ACHAOGEN INC: Unsecureds Get Cash in Committee-Backed Plan
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Debtor Achaogen, Inc., and its Official Committee of Unsecured
Creditors have proposed a Chapter 11 Plan of Liquidation for the
Debtor.
During the course of the Debtor's bankruptcy case, the Debtor sold
substantially all of the estate assets, which included among other
things the Debtor's global plazomicin business, for cash and a
royalty stream from those assets (the "Royalty Stream"). Certain
Estate Assets, however, including the Debtor's interest in the
C-Scape program assets, have yet to be sold or otherwise disposed
of.
In order to maintain operations while it conducted a bankruptcy
sales process, the Debtor required access to debtor-in-possession
financing. Silicon Valley Bank ("SVB") agreed to provide a $25
million senior secured debtor-in-possession financing facility, $15
million of which would be a roll-up of SVB's prepetition secured
debt (the "DIP Facility"). The DIP Facility provided liquidity
that the Debtor believed was necessary to conclude the sale
processes on an expedited basis and wind down the Debtor's
affairs.
The Committee informally objected to the DIP Facility. Over the
course of several months, the Debtor, SVB and the Committee
negotiated a resolution to the Committee's informal objections,
which resolution was memorialized in the final order approving the
DIP Facility entered on Sept. 24, 2019. Among other things, the
DIP Order provided for a split of proceeds of Estate Assets between
SVB and the Committee.
The Royalty Stream, any remaining proceeds of the sales of the
Estate Assets, any proceeds resulting from the collection and
liquidation of the remaining Estate Assets and any proceeds of
Third Party Claims will be used to make payments, to Holders of
Allowed Claims in the order of priority under Section 507 of the
Bankruptcy Code, including Allowed Administrative Claims (including
Professional Fee Claims), and Allowed Claims in Class 1, Class 2
and Class 3. The Plan Trustee shall make Distributions to Allowed
Class 4 General Unsecured Claims from the GUC Cash; provided that
such Distributions will be subject to the satisfaction of the
Distribution Reserve.
By order entered on May 1, 2019, the Court approved the Bidding
Procedures for the purpose of soliciting the highest and best
offers to purchase all or substantially all of the Debtor's assets.
In accordance with the Bidding Procedures, the Debtor commenced an
auction for substantially all of its assets on June 3, 2019. Cipla
USA Inc. was the successful bidder for the Debtor's global rights
to ZEMDRI (Plazomicin) and related assets and liabilities other
than the Greater China Assets with a bid of (i) cash consideration
in the amount of $4.65 million and (ii) non-cash consideration
comprised of (1) the assumption of certain contractual liabilities
and (2) two forms of additional contingent consideration. One form
of such contingent consideration, which includes non-contingent
guaranteed minimum payments equaling $2.7 million over the next 10
years, consists of 10% of net sales of plazomicin greater than $40
million per year in all countries (other than Greater China) for
the period beginning on Closing (as such term is defined in the
Cipla Plazomicin Sale Agreement) and ending at such time that any
Person (other than the Purchaser or its Affiliates) has received
FDA approval for an Abbreviated New Drug Application or an FDA
AP-rated 505(b)(2) NDA using ZEMDRI (Plazomicin). A second form of
contingent consideration relates to royalty payments of 12.5% which
the Debtor will be entitled to receive from Cipla, calculated on
cash actually received by Cipla, for certain stockpiling sales in
2019, 2020, and 2021 pursuant to a yet-to-be-awarded government
contract (the application for which is due June 21, 2019), provided
such contract is actually awarded.
A full-text copy of the Disclosure Statement dated March 30, 2020,
is available at https://tinyurl.com/schcx3m from PacerMonitor.com
at no charge.
Counsel for the Debtor:
Domenic E. Pacitti
Sally Veghte
KLEHR HARRISON HARVEY BRANZBURG LLP
919 Market Street, Suite 1000
Wilmington, Delaware 19801-3062
- and -
Morton Branzburg
KLEHR HARRISON HARVEY BRANZBURG LLP
1835 Market Street, Suite 1400
Philadelphia, Pennsylvania 19103
- and -
Arik Preis
Mitchell P. Hurley
AKIN GUMP STRAUSS HAUER & FELD LLP
One Bryant Park, Bank of America Tower
New York, New York 10036-6745
- and -
Derek C. Abbott
Andrew R. Remming
Matthew O. Talmo
Paige N. Topper
MORRIS, NICHOLS, ARSHT & TUNNELL LLP
1201 Market Street, 16th Floor
Wilmington, Delaware 19899-1347
- and -
Richard L. Wynne
Erin N. Brady
HOGAN LOVELLS US LLP
1999 Avenue of the Stars, Suite 1400
Los Angeles, California 90067
About Achaogen Inc.
South San Francisco, California-based Achaogen, Inc. --
http://www.achaogen.com/-- is a biopharmaceutical company focused
on the discovery, development, and commercialization of innovative
antibacterial treatments against multi-drug resistant
gram-negative
infections.
Achaogen sought protection under Chapter 11 of the Bankruptcy Code
(Bankr. D. Del. Lead Case No. 19-10844) on April 25, 2019. In the
petition signed by CEO Blake Wise, the Debtor disclosed assets of
$91.61 million and liabilities of $119.96 million as of Jan. 31,
2019.
The case is assigned to Judge Brendan Linehan Shannon.
The Debtor tapped Hogan Lovells US LLP as its bankruptcy counsel;
Morris, Nichols, Arsht & Tunnell LLP as co-counsel; Meru LLC as
financial advisor; Cassel Salpeter & Co., LLC as investment banker;
and Kurtzman Carson Consultants LLC as claims, noticing and
solicitation agent.
Andrew Vara, acting U.S. trustee for Region 3, appointed a
committee of unsecured creditors on April 23, 2019. The committee
retained Akin Gump Strauss Hauer & Feld LLP and Klehr Harrison
Harvey Branzburg LLP as its legal counsel, and Province, Inc. as
its financial advisor.
AMAZING ENERGY: Seeks to Hire Heller Draper as Counsel
------------------------------------------------------
Amazing Energy MS, LLC, and its debtor-affiliates seek authority
from the United States Bankruptcy Court from the Southern District
of Mississippi to employ Heller, Draper, Patrick, Horn & Manthey,
LLC, as their counsel.
Services Heller Draper will render are:
a. advise the Debtors with respect to rights, powers and
duties as Debtors and Debtors-in-Possession in the continued
operation and management of the businesses and property, and
compliance with, including the preparation of documents and
reports, the Chapter 11 Operating Guidelines and Reporting
Requirements for Region 5;
b. prepare and pursue confirmation of a plan of reorganization
and approval of a disclosure statement;
c. prepare on behalf of the Debtors all necessary
applications, motions, answers, proposed orders, other pleadings,
notices, schedules and other documents, and reviewing all financial
and other reports to be filed;
d. advise the Debtors concerning and preparing responses to
applications, motions, pleadings, notices and other documents which
may be filed by other parties;
e. appear in Court to protect the interests of the Debtors
before this Court;
f. represent the Debtors in connection with obtaining
post-petition financing;
g. advise the Debtors concerning and assisting in the
negotiation and documentation of financing agreements and related
transactions;
h. investigate the nature and validity of liens asserted
against the property of the
Debtors, and advising the Debtors concerning the enforceability of
said liens;
i. investigate and advise the Debtors concerning, and taking
such action as may be necessary to collect, income and assets in
accordance with applicable law, and the recovery of property for
the benefit of the Debtors' estates;
j. advise and assist the Debtors in connection with any
potential property dispositions;
k. advise the Debtors concerning executory contract and
unexpired lease assumptions, assignments and rejections and lease
restructuring, and recharacterizations;
l. assist the Debtors in reviewing, estimating and resolving
claims asserted against the Debtors' estates;
m. commence and conduct litigation necessary and appropriate
to assert rights held by the Debtors, protect assets of the
Debtors' chapter 11 estates or otherwise further the goal of
completing the Debtors' successful reorganization; and
n. perform all other legal services for the Debtors which may
be necessary and proper in these cases.
Heller Draper's hourly billing rates are:
Douglas S. Draper $475
Leslie A. Collins $425
Greta M. Brouphy $400
Michael Landis $350
Paralegals $125
Heller Draper received via wire transfer on April 6, 2020, from
Jilpetco, Inc. the retainer amount of $40,000.
Heller Draper is a "disinterested person" as that term is defined
in section 101(14) of the Bankruptcy Code, as modified by section
1107(b) of the Bankruptcy Code.
The firm can be reached through:
Douglas S. Draper, Esq.
Heller, Draper, Patrick,
Horn & Manthey, LLC
650 Poydras Street, Suite 2500
New Orleans, LA 70130
Phone: (504) 299-3300
Email: ddraper@hellerdraper.com
About Amazing Energy
Amazing Energy MS, LLC, Amazing Energy Holdings, LLC, and Amazing
Energy, LLC, concurrently filed voluntary petitions for relief
under Chapter 11 of the Bankruptcy Code (Bankr. S.D. Miss. Case
Nos. 20-01243, 20-1245 & 20-01244) on April 6, 2020. The petitions
were signed by Willard G. McAndrew III, chief executive officer.
At the time of filing, Amazing Energy MS and Amazing Energy
Holdings estimated $1 million to $10 million in both assets and
liabilities. Amazing Energy, LLC, estimated $10 million to $50
million in assets and $1 million to $10 million in liabilities.
David A. Wheeler, Esq. at WHEELER & WHEELER, PLLC, and Douglas S.
Draper, Esq. at HELLER, DRAPER, PATRICK, HORN & MANTHEY, LLC,
represent the Debtors as their counsel.
AMAZING ENERGY: Seeks to Hire Wheeler & Wheeler as Counsel
----------------------------------------------------------
Amazing Energy MS, LLC, and its debtor-affiliates seek authority
from the United States Bankruptcy Court from the Southern District
of Mississippi to employ Wheeler & Wheeler, PLLC, as their
counsel.
Services Wheeler will render are:
a. advise the Debtors on the local rules and court procedures
for U.S.B.C. for the Southern District of Mississippi;
b. provide meeting facilities and support staff to assist the
Debtors and counsel while in Mississippi;
c. facilitate filing pleadings with the U.S.B.C. for the
Southern District of Mississippi Clerk of Court; and
d. render such other legal and advisory services as may be
reasonably requested by the Debtors in connection with this
engagement.
Wheeler's hourly rates are:
David Wheeler $350
Paraprofessional $ 75
Wheeler agreed to a $5,000 retainer from Debtors that was funded by
Jilpetco, Inc. prior to the filing.
Wheeler is a "disinterested person" as that term is defined in
section 101(14) of the Bankruptcy Code, as modified by section
1107(b) of the Bankruptcy Code, according to court filings.
The firm can be reached through:
David A. Wheeler, Esq.
WHEELER & WHEELER, PLLC
185 Main Street
Biloxi, MS 39530
Tel: 228-374-6720
E-mail: david@wheelerattys.com
About Amazing Energy
Amazing Energy MS, LLC, Amazing Energy Holdings, LLC, and Amazing
Energy, LLC, concurrently filed voluntary petitions for relief
under Chapter 11 of the Bankruptcy Code (Bankr. S.D. Miss. Case
Nos. 20-01243, 20-1245 & 20-01244) on April 6, 2020. The petitions
were signed by Willard G. McAndrew III, chief executive officer.
At the time of filing, Amazing Energy MS and Amazing Energy
Holdings estimated $1 million to $10 million in both assets and
liabilities. Amazing Energy, LLC, estimated $10 million to $50
million in assets and $1 million to $10 million in liabilities.
David A. Wheeler, Esq. at WHEELER & WHEELER, PLLC, and Douglas S.
Draper, Esq. at HELLER, DRAPER, PATRICK, HORN & MANTHEY, LLC,
represent the Debtors as their counsel.
AMPLE HILLS: Hires Daniel Scouler of Scouler Kirschhein as CRO
--------------------------------------------------------------
Ample Hills Holdings, Inc. and its debtor-affiliates seek approval
from the U.S. Bankruptcy Court for the Eastern District of New York
to hire Daniel Scouler of Scouler Kirschhein, LLC to serve as their
chief restructuring officer.
Services to be rendered by Mr. Scouler are:
a. work with the Debtors' management to perform financial
reviews of the Debtors, including, but not limited to, a review and
assessment of financial information and the reliability of the
underlying financial systems, including, without limitation, the
Debtors' liquidity and projected short and long-term cash flows;
b. evaluate the Debtors' business plan and forecasted
financial statements;
c. review and analyze a potential size and terms of
debtor-in-possession financing and use of cash collateral necessary
to fund the Debtors' through a chapter 11 sales process or
reorganization;
d. develop sale and marketing procedures and lead the sale
process, including seeking and identifying higher and better offers
for the Debtors pursuant to a section 363 asset sale, as further
set forth in the Sale Motion;
e. prepare financial forecasts, engaging in liquidity
planning, and identifying ways to potentially reduce costs and
develop other strategies to maximize value for the Debtors'
creditors and all stakeholders;
f. assess the potential benefit to the creditors and other
parties in interest of the Debtors consummating a plan of
reorganization;
g. manage and direct the progress of the chapter 11 bankruptcy
process, including appearances before the Court on behalf of the
Debtors;
h. communicate and negotiate with potential buyers, creditors
and other parties in interest.
i. conduct ongoing, routine communications with the Debtors'
lenders and other creditors including periodic reviews of the
Debtors' performance and progress towards achieving its strategic
objections;
j. perform such other services relating to the Debtors'
Chapter 11 Cases as may be reasonably requested by the Debtors,
their Board of Directors, the CEO, or their attorneys.
The billing rates for professionals who may be assigned to
this engagement are as follows:
Daniel Scouler $495 per hour
Daniel Jr., Scouler $400 per hour
Joseph Grewe $400 per hour
Staff $250 per hour
Daniel Scouler, principal of Scouler Kirchhein, assured the Court
that the firm is a "disinterested person" as the term is defined in
Section 101(14) of the Bankruptcy Code and does not represent any
interest adverse to the Debtor and its estates.
Scouler Kirchhein can be reached at:
Daniel Scouler
SCOULER KIRCHHEIN, LLC
225 West Wacker Drive, Suite 1550
Chicago, IL 60606
Tel: (312) 977-1000
Fax: (312) 977-1009
About Ample Hills Holdings
Ample Hills Holdings, Inc. -- https://www.amplehills.com/ -- is a
Brooklyn-based producer, distributor, and retailer of ice cream and
related merchandise. It currently operates 10 retail stores and
kiosks, which are primarily located in the metropolitan New York
area, and a factory in the Red Hook neighborhood of Brooklyn.
On March 15, 2020, Ample Hills Holdings and its affiliates sought
Chapter 11 protection (Bankr. E.D.N.Y. Case No. 20-41559). In the
petition signed by Phillip Brian David Smith, CEO, Ample Hills
Holdings was estimated to have $1 million to $10 million in assets
and $10 million to $50 million in liabilities.
The Hon. Nancy Hershey Lord is the case judge.
The Debtors tapped Herrick Feinstein, LLP as legal counsel, and SSG
Capital Advisors, LLC as investment banker. Bankruptcy Management
Solutions, Inc., doing business as Stretto, is the claims agent.
AMPLE HILLS: Seeks to Hire Herrick Feinstein as Legal Counsel
-------------------------------------------------------------
Ample Hills Holdings, Inc. and its debtor-affiliates seek approval
from the U.S. Bankruptcy Court for the Eastern District of New York
to hire Herrick, Feinstein LLP, as their legal counsel.
Ample Hills require Herrick to:
a. advise the Debtors with respect to their powers and duties
as debtors and debtors in possession in the continued management of
their properties and operation of their businesses;
b. attend meetings and negotiating with representatives of
creditors and other parties in interest and advising and consulting
on the conduct of the cases, including all the legal and
administrative requirements of operating in Chapter 11;
c. take all necessary action to protect and preserve the
Debtors' estates, including the prosecution of actions on behalf of
the Debtors' estates, the defense of any actions commenced against
those estates, negotiations concerning litigation in which the
Debtors may be involved, and objections to claims filed against the
estates;
d. prepare on the Debtors' behalf motions, applications,
answers, orders, reports, and papers necessary to the
administration of the estates;
e. prepare and negotiate on the Debtors' behalf any chapter 11
plans, disclosure statements, and any related agreements and/or
documents, and taking any necessary action on behalf of the Debtors
to obtain confirmation of any such plan(s);
f. advise the Debtors in connection with any sale of assets,
auctions, or other
transactions;
g. perform other necessary legal services and providing other
necessary legal advice to the Debtors in connection with these
chapter 11 cases; and
h. appear before this Court, any appellate court, and the
United States Trustee, and protecting the interests of the Debtors'
estates before such courts and the United States Trustee.
The firm's hourly rates are:
Partners $500-$800
Counsel $465-$800
Associates $360-$570
Paraprofessionals/Specialists $300-$620
On March 12, 2020, the Debtors provided Herrick with a $30,906
payment for filing fees for the Chapter 11 Cases
Stephen B. Selbst, Esq., member of the firm of Herrick, assured the
court that the firm is a "disinterested person" as the term is
defined in Section 101(14) of the Bankruptcy Code.
Herrick Feinstein can be reached at:
Stephen B. Selbst
Herrick Feinstein LLP
2 Park Avenue
New York, NY 10016
Tel: (212) 592-1400
Fax: (212) 592-1500 (fax)
Email: sselbst@herrick.com
About Ample Hills Holdings
Ample Hills Holdings, Inc. -- https://www.amplehills.com/ -- is a
Brooklyn-based producer, distributor, and retailer of ice cream and
related merchandise. It currently operates 10 retail stores and
kiosks, which are primarily located in the metropolitan New York
area, and a factory in the Red Hook neighborhood of Brooklyn.
On March 15, 2020, Ample Hills Holdings and its affiliates sought
Chapter 11 protection (Bankr. E.D.N.Y. Case No. 20-41559). In the
petition signed by Phillip Brian David Smith, CEO, Ample Hills
Holdings was estimated to have $1 million to $10 million in assets
and $10 million to $50 million in liabilities.
The Hon. Nancy Hershey Lord is the case judge.
The Debtors tapped Herrick Feinstein, LLP as legal counsel, and SSG
Capital Advisors, LLC as investment banker. Bankruptcy Management
Solutions, Inc., doing business as Stretto, is the claims agent.
AMPLE HILLS: Seeks to Hire Stretto as Administrative Advisor
------------------------------------------------------------
Ample Hills Holdings, Inc. and its debtor-affiliates seek approval
from the U.S. Bankruptcy Court for the Eastern District of New York
to hire Stretto as their administrative advisor.
The administrative services to be rendered by Stretto are:
a. assist with legal noticing, claims management and
reconciliation, plan solicitation, balloting, disbursements, and
tabulation of votes, and prepare any related reports in support of
confirmation of a Chapter 11 plan;
b. prepare an official ballot certification and, if necessary,
testify in support of the ballot tabulation results;
c. assist with the preparation of any amendments to the
Debtor's schedules of assets and liabilities and statements of
financial affairs and gather data in conjunction therewith;
d. provide a confidential data room, if requested;
e. manage and coordinate any distributions pursuant to a
Chapter 11 plan; and
f. provide such other processing, solicitation, balloting and
other administrative services.
Stretto will be paid based upon its normal and usual hourly billing
rates and will be reimbursed for work-related expenses incurred.
Robert Klamser, managing director of Stretto, assured the court
that the firm is a "disinterested person" as the term is defined in
Section 101(14) of the Bankruptcy Code.
Stretto can be reached at:
Robert Klamser
Stretto
410 Exchange, Suite 100
Irvine, CA 92606
Tel: (800) 634-7734
About Ample Hills Holdings
Ample Hills Holdings, Inc. -- https://www.amplehills.com/ -- is a
Brooklyn-based producer, distributor, and retailer of ice cream and
related merchandise. It currently operates 10 retail stores and
kiosks, which are primarily located in the metropolitan New York
area, and a factory in the Red Hook neighborhood of Brooklyn.
On March 15, 2020, Ample Hills Holdings and its affiliates sought
Chapter 11 protection (Bankr. E.D.N.Y. Case No. 20-41559). In the
petition signed by Phillip Brian David Smith, CEO, Ample Hills
Holdings was estimated to have $1 million to $10 million in assets
and $10 million to $50 million in liabilities.
The Hon. Nancy Hershey Lord is the case judge.
The Debtors tapped Herrick Feinstein, LLP as legal counsel, and SSG
Capital Advisors, LLC as investment banker. Bankruptcy Management
Solutions, Inc., doing business as Stretto, is the claims agent.
ANGEL'S TOUCH: Has Until June 6 to File Plan & Disclosures
----------------------------------------------------------
In a motion, An Angel's Touch, LLC, filed a motion seeking an
extension of the deadline to file a plan and disclosure statement
from April 6, 2020 to June 6, 2020.
The Bankruptcy Court ruled that "cause" exists to approve the
extension of time because: (1) the coronavirus is negatively
impacting Debtor's counsel's practice and ability to complete the
plan and disclosure statement before the deadline and (2) because
the IRS and the Debtor are working on, but have yet been unable to
determine, the amount of the IRS's secured and priority claims,
which must be determined for the completion of the Debtor's plan.
Judge Robert H Jacobvitz has ordered that the deadline for the
Debtor to file a Plan and Disclosure Statement is extended to June
6, 2020.
Attorneys for the Debtor:
Daniel A. White
Benjamin A. Jacobs
ASKEW & WHITE, LLC
1122 Central Ave. SW, Ste. 1
Albuquerque, NM 87102
Tel: (505) 433.3097
Fax: (505) 717.1494
E-mail: dwhite@askewwhite.com
bjacobs@askewwhite.com
About An Angel's Touch
An Angel's Touch LLC, which provides non-emergency transportation
services, sought protection under Chapter 11 of the Bankruptcy
Code
(Bankr. D.N.M. Case No. 19-11394) on June 11, 2019. In the
petition signed by its managing member, Nichole Jones, the Debtor
was estimated to have assets of less than $500,000 and debts of $10
million. Judge Robert H. Jacobvitz is assigned to the case. Askew
& Mazel, LLC, serves as Debtor's counsel.
ARCHDIOCESE OF SANTA FE: Taps David V. Walters as Estate Broker
---------------------------------------------------------------
The Roman Catholic Church of the Archdiocese of Santa Fe seeks
approval from the U.S. Bankruptcy Court for the District of New
Mexico to employ David V. Walters, associate broker with Coldwell
Banker Legacy, as the Debtor's real estate broker for the Debtor's
real property located at 3700 Alamogordo NW, Albuquerque, NM
87120.
The broker will provide these services in connection with the sale
of the Debtor's real property:
(a) assist the Debtor in locating qualified buyers;
(b) if requested, assist potential buyers in preparing offers
and locating financing;
(c) assist the Debtor in monitoring pre-closing and closing
procedures; and
(d) unless otherwise waived by the buyer, prior to accepting
an offer to purchase; request from the County Assessor the
Estimated Property Tax Levy with respect to the property,
specifying the listed price as the value of the property to be used
in the estimate, and provide a copy of the assessor's response in
writing to the prospective buyer(s) or the buyer's broker.
The Debtor agrees to pay the broker a sales commission of 6% of
sales price plus New Mexico gross receipts tax.
The Debtor authorizes the broker to share compensation with a
cooperating brokerage firm that procures a buyer at 3% of selling
price.
David V. Walters, an associate broker with Coldwell Banker Legacy,
disclosed in court filings that the firm is a "disinterested
person" within the meaning of Section 101(14) of the Bankruptcy
Code.
The firm can be reached through:
David V. Walters
COLDWELL BANKER LEGACY
6767 Academy Road NE
Albuquerque, NM 87109
Telephone: (505) 828-1000
Facsimile: (505) 821-0399
E-mail: DaveWalters10@Comcast.net
About The Roman Catholic Church of the Archdiocese of Santa Fe
The Roman Catholic Church of the Archdiocese of Santa Fe --
https://www.archdiosf.org/ -- is an ecclesiastical territory or
diocese of the southwestern region of the United States in the
state of New Mexico. At present the Archdiocese of Santa Fe covers
an area of 61,142 square miles. There are 93 parish seats and 226
active missions throughout this area.
The Roman Catholic Church of the Archdiocese of Santa Fe sought
Chapter 11 protection (Bankr. D. N.M. Case No. 18-13027) on Dec. 3,
2018, to deal with child abuse claims.
The archdiocese reported total assets of $49,184,579 and total
liabilities of $3,700,000 as of the bankruptcy filing.
Judge David T. Thuma oversees the case.
The archdiocese tapped Elsaesser Anderson, Chtd. and Walker &
Associates, P.C., as bankruptcy counsel; Stelzner, Winter,
Warburton, Flores, Sanchez & Dawes, P.A as special counsel; and
King Industries Corporation as accountant.
AURORA COMMERCIAL: LBHI to Assume Discovery Obligations' Costs
--------------------------------------------------------------
Debtors Aurora Commercial Corp. (ACC) and Aurora Loan Services LLC
(ALS) filed the First Amended Disclosure Statement for the Joint
Plan of Liquidation dated April 21, 2020.
The Plan incorporates the LBHI Settlement which benefits the
Debtors' Estates and Holders of Allowed Claims because it provides
for LBHI to assume the costs of the Debtors' discovery obligations
in the chapter 11 cases of LBHI and coordinated adversary
proceedings of Lehman Brothers Holdings, Inc. v. 1st Advantage
Mortgage, L.L.C., et al., Case No. 16-01019 (SCC).
ALS's assets consist of cash and short-term investments in the
amount of approximately $73,000. ALS's liabilities consist of
approximately $550,000 in post-petition payables and approximately
$23.12 million in prepetition payables, due to ACC for ACC’s
funding of ALS's operations.
After adjustment for claims that have been expunged and disallowed,
the Debtors estimate the claims filed against the Debtors to be
approximately $32,000, plus any claims that are allowed after any
appeals are concluded. The estimate of Claims after accounting for
the Intercompany Claims is approximately $23.2 million.
A full-text copy of the First Amended Disclosure Statement dated
April 21, 2020, is available at https://tinyurl.com/y7pz6t35 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.
AVIS BUDGET: S&P Rates New $400MM Senior Secured Notes 'BB-'
------------------------------------------------------------
S&P Global Ratings assigned its 'BB-' issue-level rating and '2'
recovery rating to Avis Budget Car Rental LLC's and Avis Budget
Finance Inc.'s proposed $400 million senior secured notes due 2025
and placed the issue-level rating on CreditWatch with negative
implications. The notes will be guaranteed by parent Avis Budget
Group Inc. The '2' recovery rating indicates S&P's expectation that
lenders would receive substantial (70%-90%; rounded estimate: 70%)
recovery in the event of a payment default. Avis Budget will use
the proceeds from these notes for general corporate purposes.
At the same time, S&P is revising its rounded recovery estimate on
the company's existing rated secured debt to 70% from 85% to
reflect the increased amount of secured debt in the company's
capital structure.
S&P's ratings on Avis Budget remain on CreditWatch, where it placed
them with negative implications on March 16, 2020, due to the steep
decline in airport travel related to the coronavirus pandemic. The
company generates the majority of its revenue at airports globally
and thus relies on airline passenger travel to support its demand.
To offset the steep decline in air travel and the demand for its
vehicles, the company is reducing costs and its fleet by cancelling
orders for new vehicles and attempting to sell its existing
vehicles. However, S&P expects the company to be negatively
affected by weak used car prices, which will lead to higher vehicle
costs (when used car prices are weak, this is reflected in higher
depreciation expense). S&P expects air passenger travel to begin to
recover gradually later this year and continue improving into
2021.
"In resolving the CreditWatch, we will focus on the challenges
facing the car rental industry, including reduced capital spending
levels, the effects of declining used car prices on asset sales,
gaining wider access to the asset-backed market, and maintaining
adequate liquidity. We would likely lower our ratings on Avis
Budget if we believe the company's operations, credit metrics, and
liquidity will take longer to recover than we currently expect,"
S&P said.
ISSUE RATINGS--RECOVERY ANALYSIS
Key analytical factors
-- In its simulated default scenario, S&P assumes a severe
disruption in the travel industry decreases the company's revenue
from car rentals and leads to a default in 2024. S&P also assumes
the collateralized fleet funding programs remain intact and that
the outstanding letters of credit under the revolving credit
facility are undrawn.
-- S&P believes that if Avis Budget defaulted its extensive
network of rental locations and the public's need to rent vehicles
would ensure its business model remains viable. Therefore, its
lenders would achieve the greatest recovery value through a
reorganization rather than a liquidation.
-- S&P used a discrete asset valuation (DAV) approach to estimate
the company's enterprise valuation at emergence because nearly all
of its assets are pledged to specific debt facilities. To calculate
the DAV, S&P applies an 85% realization rate to the net value of
Avis Budget's vehicles and a lower realization of 40% on its net
property and equipment.
-- If it were to default, S&P assumes Avis Budget would preserve
the majority of its highly desirable on-airport locations and
therefore would only reject a small portion (10%) of its operating
leases.
Simplified waterfall
-- Enterprise value (net of 3% admin. expense): $13.4 billion
-- Valuation split (domestic/international): 70%/30%
-- Priority claims (domestic fleet debt): $8,095 million
-- Total collateral value available to non-vehicle secured debt:
$1,731 million
-- Secured first-lien debt claims (revolver, term loan, and new
secured notes): $2,503 million
-- Recovery expectations: 70%-90% (rounded estimate: 70%)
-- Total value available to unsecured notes: $369 million
-- Total unsecured debt claims/pari passu (deficiency) claims:
$2,319 million/$772 million
-- Recovery expectations: 10%-30% (rounded estimate: 10%)
Note: All debt amounts include six months of prepetition interest.
Collateral value equals asset pledge from obligors after priority
claims plus equity pledge from nonobligors after nonobligor debt.
Other valuation assumptions include LIBOR of 250 basis points at
default.
BALTIMORE 24 INVESTORS: Hires Cohen Dowd as Special Counsel
-----------------------------------------------------------
Biltmore 24 Investors SPE, LLC, and its debtor-affiliates seek
authority from the U.S. Bankruptcy Court for the District of
Arizona to employ Cohen Dowd Quigley, as special counsel to the
Debtors.
Biltmore 24 Investors requires Cohen Dowd to:
a. assist the Debtors in connection with negotiating,
documenting, and finalizing a purchase and sale agreement
with Emerald Equities, LLC, and litigation attendant to
finalizing that sale agreement; and
b. assist the Debtors in connection with other ordinary course
of business transactions made as part of the Debtors'
efforts to move toward reorganization.
Cohen Dowd will be paid at the hourly rates of $235 to $525.
Cohen Dowd will also be reimbursed for reasonable out-of-pocket
expenses incurred.
J. Neil Stuart, a partner at Cohen Dowd Quigley, assured the Court
that the firm is a "disinterested person" as the term is defined in
Section 101(14) of the Bankruptcy Code and does not represent any
interest adverse to the Debtors and their estates.
Cohen Dowd can be reached at:
J. Neil Stuart, Esq.
COHEN DOWD QUIGLEY
2425 E Camelback Rd., Suite 1100
Phoenix, AZ 85016
Tel: (602) 252-8400
About Biltmore 24 Investors SPE
Biltmore 24 Investors SPE, LLC, based in Phoenix, AZ, and its
debtor-affiliates sought Chapter 11 protection (Bankr. D. Ariz.
Lead Case No. 20-04130) on April 21, 2020.
In the petitions signed by Bruce Gray, manager, Biltmore 24
Investors' estimated assets of $10 million to $50 million, and
estimated liabilities of $50 million to $100 million; Gray Blue Sky
Scottsdale, Gray Guarantors I, Gray Guarantors II, estimated assets
of $50 million to $100 million, and estimated liabilities of $100
million to $500 million; Gray Guarantors III estimated assets of
$10 million to $50 million estimated liabilities of $50 million to
$100 million.
MICHAEL W. CARMEL, LTD., serves as bankruptcy counsel to the
Debtors.
BARBEE EQUIPMENT: Proposes Bailey and Oliver as Counsel
-------------------------------------------------------
Barbee Equipment, Inc., seeks authority from the U.S. Bankruptcy
Court for the Western District of Arkansas to employ Bailey and
Oliver Law Firm, as counsel to the Debtor.
Barbee Equipment requires Bailey and Oliver to:
(a) provide legal advice with respect to the powers, rights,
and duties of the Debtor in the continued management and
operation of its business;
(b) provide legal advice and consultation related to the legal
and administrative requirements of operating this
Subchapter V bankruptcy case, including to assist the
Debtor in complying with the procedural requirements of
the Office of the U.S. Trustee;
(c) take all necessary actions to protect and preserve the
Debtor's Estate, including prosecuting actions on the
Debtor's behalf, defending any action commenced against
the Debtor, and representing the Debtor's interests in any
negotiations or litigation in which the Debtor may
be involved, including objections to the claims filed
against the Debtor's Estate;
(d) prepare on behalf of your Applicant any necessary
pleadings including Applications, Motions, Answers,
Orders, Complaints, Reports, or other documents necessary
or otherwise beneficial to the administration of the
Debtor's Estate;
(e) represent the Debtor's interests at the Meeting of
Creditors, pursuant to § 341 of the Bankruptcy Code, and
at any other hearing scheduled before this Court related
to the Debtor;
(f) assist and advise your Applicant in the formulation,
negotiation, and implementation of a Chapter 11 Plan and
all documents related thereto;
(g) assist and advise the Debtor with respect to negotiation,
documentation, implementation, consummation, and closing
of corporate transactions, including sales of assets,
in this Chapter 11 bankruptcy case;
(h) assist and advise the Debtor with respect to the use of
any cash or other collateral and obtaining Debtor-in-
Possession financing and negotiating, drafting, and
seeking approval of any documents related thereto;
(i) review and analyze all claims filed against the Debtor's
Bankruptcy Estate and to advise and represent the Debtor
in connection with the possible prosecution of objections
to claims;
(j) assist and advise the Debtor concerning any executor
contract and unexpired leases, including assumptions,
assignments, rejections, and renegotiations;
(k) coordinate with other professionals employed in the case
to rehabilitate the Debtor's affairs; and
(l) perform all other bankruptcy related legal services for
the Debtor that may be or become necessary during the
administration of this case.
Bailey and Oliver will be paid at the hourly rate of $250.
On Nov. 19, 2019, the Debtor paid Bailey and Oliver a retainer in
the amount of $1,750. After applying all payments received from
the Debtor, which total $3,250, the Debtor does not owe Bailey and
Oliver any amount for legal services rendered prior to the Petition
Date.
Bailey and Oliver will also be reimbursed for reasonable
out-of-pocket expenses incurred.
Charles W. Pearce, partner of Bailey & Oliver Law Firm, assured the
Court that the firm is a "disinterested person" as the term is
defined in Section 101(14) of the Bankruptcy Code and does not
represent any interest adverse to the Debtor and its estates.
Bailey and Oliver can be reached at:
Charles W. Pearce, Esq.
Bailey & Oliver Law Firm
3606 W. Southern Hills Blvd. Suite 200
Rogers, AR 72758
Tel: (479) 202-5200
Fax: (479) 957-9057
E-mail: cpearce@baileyoliverlawfirm.com
About Barbee Equipment
Barbee Equipment, Inc., filed a Chapter 11 bankruptcy petition
(Bankr. W.D. Ark. Case No. 20-70738) on March 19, 2020, disclosing
under $1 million in both assets and liabilities. The Debtor is
represented by Charles W. Pearce, Esq., at Bailey & Oliver Law
Firm.
BAY CIRCLE: NRCT Unsecureds to Get 100% in Trustee's Plan
---------------------------------------------------------
Chapter 11 Trustee Ronald L. Glass filed a Disclosure Statement for
Second Amended Plan of Liquidation for NRCT, LLC, a debtor
affiliate of Bay Circle Properties, LLC, et al.
The Debtor's assets consist of cash in the approximate amount of
$1,909,301, investments in two Asia funds with an approximate value
of $1,159,684, and real property with a value of at least
$3,850,000.
This is a liquidating plan whereby Allowed Administrative Claims,
Allowed Priority Claims and Allowed general Unsecured Claims, which
claims exclude Nilhan Financial's claim in the amount of
$13,953,776, will be paid on the Effective Date. If a final
judgment is entered against Debtor in the Contribution Action, then
the Liquidating Agent will sell Debtor's assets in an amount
sufficient to pay Allowed Claims pursuant to the terms of the Plan.
If the Court's order sustaining the Objection as it relates to
Nilhan Financial's claim against NRCT is reversed on appeal such
that the Nilhan Financial Claim is an Allowed Claim, then the
Liquidating Agent will sell Debtor's assets to pay Allowed Claims
pursuant to the terms of the Plan.
Class 3 Administrative Convenience Unsecured Class will be paid in
full with interest between the Effective Date and the Distribution
Date.
Class 4 The Nilhan Financial Claim Class currently has no allowed
claims. On April 3, 2020, the Court entered its Order sustaining
the Objection to the Nilhan Financial Claim in the scheduled amount
of $13,953,776. If the Court's April 3, 2020 Order is not appealed
or is affirmed on appeal, there will be no Allowed Claims in Class
4. If the Court's April 3, 2020 Order is appealed and is reversed
on appeal such that the Nilhan Financial Claim is an Allowed Claim,
then the Liquidating Agent will sell Debtor's Assets and make
Distributions to the Holder of the Allowed Class 4 Claim as and
when Debtor's Assets are sold, up to the lesser of the Allowed
amount of the Claim and the liquidation value of the Assets.
Holders of Allowed Equity Class Claims will retain their Equity
Interests in the Debtor and all associated rights in accordance
with Debtor’s written operating agreements. Provided that all
Allowed Administrative Claims, Allowed Priority Claims and all
Allowed Claims in Classes 1, 2, 3 and 4 are paid in full, Holders
of Allowed Equity Class Claims and Allowed Equity Claims will
receive a pro rata distribution of any Assets remaining in Debtor's
Estate as and when Debtor's assets are sold and liquidated to
cash.
The Plan will be funded through Cash on hand, and liquidation of
Debtor's assets as provided in the Plan.
A full-text copy of the Second Amended Liquidating Plan dated April
21, 2020, is available at https://tinyurl.com/ya5ggtuj from
PacerMonitor at no charge.
Attorneys for the Chapter 11 Trustee:
Frank W. DeBorde
Lisa Wolgast
Morris, Manning & Martin, LLP
1600 Atlanta Financial Center
3343 Peachtree Road NE
Atlanta, Georgia 30326
Tel: (404) 233-7000
E-mail: fwd@mmmlaw.com
lwolgast@mmmlaw.com
About Bay Circle Properties, et al.
Bay Circle Properties, LLC, DCT Systems Group, LLC, Sugarloaf
Centre, LLC, Nilhan Developers, LLC, and NRCT, LLC, own 16
different real properties including significant undeveloped
acreage. The properties also include office and warehouse
buildings, retail shopping centers and free standing single tenant
buildings.
Bay Circle Properties, et al., filed Chapter 11 bankruptcy
petitions (Bankr. N.D. Ga. Case Nos. 15-58440 to 15-58444) on May
4, 2015. The Chapter 11 cases are jointly administered. In the
petition signed by Chuck Thakkar, manager, Bay Circle estimated $1
million to $10 million in assets and liabilities.
The Debtors tapped John A. Christy, Esq., J. Carole Thompson
Hord,Esq., and Jonathan A. Akins, Esq., at Schreeder, Wheeler &
Flint, LLP, as bankruptcy attorneys. The Debtors engaged RG Real
Estate, Inc., as real estate broker.
Ronald L. Glass was appointed as Chapter 11 trustee for the
Debtors. The trustee tapped Morris, Manning & Martin, LLP as his
bankruptcy counsel; GlassRatner Advisory & Capital Group, LLC as
his financial advisor; and Nelson Mullins Riley & Scarborough LLP
as special counsel.
BELLEAIR RESERVE: $138K Sale of Gnouy Park Property to Goings OK'd
------------------------------------------------------------------
Judge Catherine Peek McEwen of the U.S. Bankruptcy Court for the
Middle District of Florida authorized Bellair Reserve Holdings,
LLC's sale of the unimproved parcel of real property located on
Lakeview Drive in Pinellas County, Florida more particularly
described as Block 2, Lot 1, Gnouy Park as Recorded in Plat Book
14, Page 60 of the Public Records of Pinellas County, Florida, to
Dawn L. Going and Michael L. Going upon the terms and conditions
set forth in their Feb. 2, 2020 Contract for Purchase and Sale -
2020, for $138,188.
A hearing on the Motion was held on April 23, 2020 at 2:00 p.m.
The closing agent is directed to disburse a sum equal to 70% of the
proceeds of sale to Bayway Investment Fund, L.P. in full
satisfaction of its encumbrances of record in the Public Records of
Pinellas County, Florida against this parcel of property only; and
Triton Ventures, LLC. in full satisfaction of its encumbrances of
record in the Public Records of Pinellas County, Florida against
the parcel of property only.
The remaining net proceeds of sale, after payment of closing costs
and ad valorem taxes, will be disbursed to the Debtor.
The disputed encumbrances of the City of Tarpon Springs recorded in
the Public Records of Pinellas County, Florida will attach to the
remaining net proceeds of sale.
All closing documents should be filed with the Court within seven
days of closing, or with the next monthly operating report,
whichever is earlier.
About Bellair Reserve Holdings
Bellair Reserve Holdings, LLC sought Chapter 11 protection (Bankr.
M.D. Fla. Case No. 8:20-bk-01160-CPM) on Feb 11, 2020. In the
petition signed by Torrey K. Cooper, manager member, the Debtor was
estimated to have assets of $1 million to $10 million and debt of
$500,001 to $1 million. The case is assigned to Judge Catherine
Peek McEwen. The Debtor tapped David W. Steen, Esq., at David W.
Steen, P.A., as counsel.
BES LLC: Amended Plan of Reorganization Confirmed by Judge
----------------------------------------------------------
Judge Paul Baisier of the U.S. Bankruptcy Court for the Northern
District of Georgia, Atlanta Division, has entered an order denying
the objection of Swift Financial, LLC to confirmation of Chapter 11
Plan, approving the Disclosure Statement and confirming the First
Amended Plan of Reorganization filed by Debtor BES LLC.
All provisions of the Plan shall bind Debtor, all entities
receiving property under the Plan, and all creditors and interest
holders whether or not the claims or interests of such creditors or
interest holders are impaired under the Plan and whether or not
such creditors or interest holders have accepted the Plan.
A full-text copy of the order dated April 21, 2020, is available at
https://tinyurl.com/ycu2q3kx from PacerMonitor at no charge.
The Debtor is represented by:
PAUL REECE MARR, P.C.
Paul Reece Marr
300 Galleria Parkway, N.W., Suite 900
Atlanta, Georgia 30339
Tel: (770) 984-2255
Attorneys for Swift Financial:
HAYS POTTER & MARTIN, LLP
James W. Hays
3945 Holcomb Bridge Road, Suite 300
Peachtree Corners, Georgia 30092
Tel: (770) 934-8858
About BES LLC
BES LLC, doing business as Black Electric Service, sought
protection under Chapter 11 of the Bankruptcy Code (Bankr. N.D. Ga.
Case No. 19-57615) on May 15, 2019. At the time of the filing, the
Debtor had estimated assets of less than $500,000 and liabilities
of less than $1 million. The case has been assigned to Judge Paul
Baisier. Paul Reece Marr P.C. is the Debtor's legal counsel.
BIORESTORATIVE THERAPIES: Hires K&L Gates as Special Counsel
------------------------------------------------------------
BioRestorative Therapies, Inc., seeks approval from the U.S.
Bankruptcy Court for the Eastern District of New York to hire K&L
Gates LLP, as special intellectual properties counsel.
The professional services that K&L Gates will render consist of the
representation of the Debtor in this Chapter 11 in the specialized
area of preparing and prosecuting patent applications and other
intellectual property in the United States and other areas of the
world, including Israel, Europe, Japan, and Australia.
K&L Gates will be paid based upon its normal and usual hourly
billing rates.
K&L Gates will also be reimbursed for reasonable out-of-pocket
expenses incurred.
William E. Kuss, a partner with K&L Gates, assured the Court that
the firm is a "disinterested person" as the term is defined in
Section 101(14) of the Bankruptcy Code and does not represent any
interest adverse to the Debtors and their estates.
K&L Gates can be reached at:
William E. Kuss, Esq.
K&L GATES LLP
K&L Gates Center, 210 Sixth Avenue
Pittsburgh, PA 15222-2613
Phone: 412-355-6323
Email: william.kuss@klgates.com
About BioRestorative Therapies
BioRestorative Therapies, Inc. -- http://www.biorestorative.com/--
is a life science company focused on stem cell-based therapies. It
develops therapeutic products and medical therapies using cell and
tissue protocols, primarily involving adult stem cells.
BioRestorative Therapies sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. E.D.N.Y. Case No. 20-71757) on March 20,
2020. At the time of the filing, Debtor had estimated assets of
between $50 million and $100 million and liabilities of between $10
million and $50 million. Debtor is represented by Certilman Balin
Adler & Hyman, LLP.
BLUE WATER: Court Approves Disclosure Statement
-----------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Florida
conducted a hearing on March 20, 2020 to consider approval of the
First Amended Disclosure Statement for debtor Blue Water
Powerboats, Inc., filed by plan proponent Joanne Pollio.
The Court finds that the Disclosure Statement contains "adequate
information" regarding the Pollio Plan. Judge Mindy A. Mora
ordered that the disclosure statement is approved.
The hearing to consider confirmation of the Pollio Plan will be on
June 10, 2020 at 2:30 p.m. in United States Bankruptcy Court
Courtroom A, 8th Floor 1515 North Flagler Drive West Palm Beach,
Florida 33401.
The deadline for serving the Disclosure Statement Approval Order,
the Disclosure Statement, Plan, and Ballot(s) will be on May 1,
2020.
The deadline for objections to claims will be on May 1, 2020.
The deadline for objections to confirmation will be on May 27,
2020.
The deadline for filing ballots accepting or rejecting plan will be
on May 27, 2020.
About Blue Water Powerboats
Blue Water Powerboats, Inc., is a recreational boating lessor that
rents boats on a half-day to daily basis to consumer individuals
at
its offices in Riviera Beach, Florida.
Blue Water Powerboats sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. S.D. Fla. Case No. 18-21113) on Sept. 10,
2018. At the time of the filing, the Debtor was estimated to have
assets of less than $50,000 and liabilities of less than $500,000.
Judge Mindy A. Mora oversees the case. The Debtor tapped David
Lloyd Merrill, Esq., at The Associates, as its legal counsel.
The Debtor's president, Mark Pollio, is subject to an affiliated
bankruptcy case, Case No. 18-21115.
BOMBARDIER RECREATIONAL: S&P Lowers ICR to 'BB-'
------------------------------------------------
S&P Global Ratings lowered its long-term issuer credit rating on
Bombardier Recreational Products Inc. (BRP) to 'BB-' from 'BB'. S&P
also lowered its issue-level rating on BRP's asset-based loan (ABL)
to 'BB+' from 'BBB-'. The '1' recovery rating is unchanged.
In addition, S&P assigned a 'BB-' issue-level rating to the
proposed incremental term loan of US$600 million. Due to a higher
level of senior secured debt, S&P revised the existing term loan
recovery rating to '4' from '3' and lowered the issue-level rating
on the term loan to 'BB-' from 'BB'.
"Earnings are likely to be hit significantly in fiscal 2021 from
the pandemic and ensuing recession. The downgrade reflects our view
that the social distancing restrictions following the coronavirus
pandemic and less customer traffic at dealerships will lead to a
significant drop in sales for BRP this year. At the same time, a
weakening global economy will lead to lower consumer spending on
discretionary products given the rising risk of unemployment,
wealth erosion, and economic uncertainty, which would continue to
pressure BRP's revenues," S&P said.
"In addition, the company's temporary shutdown of its production
facilities could lead to escalated costs, causing further pressure
on EBITDA generation. Therefore, we expect BRP's top line to
decline by about 30% and adjusted EBITDA to decline by about 50% in
fiscal 2021. Based on these factors and the company's proposed term
loan issuance, we expect adjusted gross debt to EBITDA to increase
to about 7.5x in fiscal 2021. In our previous forecasts, we had
expected the company to maintain its gross adjusted leverage at
about 2.5x," S&P said.
S&P acknowledges a high degree of uncertainty about the rate of
spread and peak of the coronavirus.
"Some government authorities estimate the pandemic will peak
between June and August, and we are using this assumption in
assessing the economic and credit implications. S&P Global
Economics believes measures to contain COVID-19 have pushed the
global economy into recession and caused a surge of defaults among
nonfinancial corporate borrowers. As the situation evolves, we will
update our assumptions and estimates accordingly," S&P said.
"Cost reductions could somewhat mitigate deterioration in credit
measures. The company took cost reduction measures which we assume
to result in about C$450 million of savings through a hiring
freeze, reduced work hours, and salary reductions. At the same
time, its conscious effort to pull back capital investments, which
we assume to be lower by about C$250 million, could partially
offset the significant impact from top-line declines in its cash
flow. We believe an economic rebound in fiscal 2022 could lead to
improvement in consumer discretionary spending," the rating agency
said.
Lower costs and improving conditions along with BRP's strong
product offering and relatively strong market share in the
recreational vehicle industry should lead to double-digit top-line
and EBITDA growth and reduce leverage to about 5.0x.
Sufficient liquidity will cover the cash flow deficit over the next
12 months. BRP enters the crisis with ample liquidity and no
near-term debt maturities. The ABL matures in 2024 and the term
loan in 2027.
"BRP will use the proposed debt issuance of US$600 million to repay
the fully drawn ABL of about C$700 million; post transaction, we
expect it to have about C$755 million in cash on its balance sheet.
The company will face material intra-year working capital swings in
the next few quarters as it adjusts its production capacity to
declining demand while sharing inventory between dealerships and
its own balance sheet. We forecast the intra-year working capital
swing will be funded from cash on hand," S&P said.
Environmental, social, and governance (ESG) factors relevant to the
rating action:
-- Health and safety factors: The COVID-19 pandemic has led to
social restrictions as consumers follow stay-at-home guidelines.
The negative outlook reflects the uncertainty about the extent of
the pandemic's effect and the length and depth of the recession on
the company's operating performance given the discretionary nature
of BRP's product offering. S&P believe this could pressure EBITDA
generation and keep leverage measures elevated above 5.0x through
fiscal 2022.
"We could lower the ratings in the next 12 months if we expect
adjusted debt to EBITDA to remain elevated above the mid 5.0x area
through fiscal 2022. Such a scenario could occur if the recession
is protracted, leading to lower discretionary spending such that
revenues and EBITDA are weaker than forecast. At the same time, we
would expect the company's liquidity to weaken, reflecting lower
cash flow generation and increased funding of working capital," S&P
said.
"We could revise the outlook to stable if we expect the company's
adjusted debt to EBITDA to approach the mid 4.0x area over the next
12 months. This could occur as the uncertainties of the pandemic
and recession abate, thus improving the company's EBITDA generation
and leading to meaningfully higher positive free operating cash
flow (FOCF) generation, thus supporting its deleveraging strategy,"
S&P said.
BVI HOLDINGS: S&P Alters Outlook to Negative, Affirms 'B' ICR
-------------------------------------------------------------
S&P Global Ratings revised its outlook on BVI Holdings Mayfair Ltd.
to negative from stable and affirmed all of its ratings on the
company, including its 'B' issuer credit rating and its 'B'
issue-level rating on its secured debt.
"We forecast that BVI's adjusted leverage will increase above our
rating threshold of 7x and its cash flow will turn negative due to
the temporary suspension of elective medical procedures, including
ophthalmological surgeries, in the second and third quarters of
2020," S&P said.
"Despite the significant effects of cataract disease on a patient's
quality of life and--in some cases--the risk of blindness if
ophthalmological surgery is delayed, we expect that a large portion
of certain medical procedures will be delayed due to the
coronavirus pandemic in the second and third fiscal quarters of
2020. While we foresee some increase in the volume of procedures in
the fourth quarter of 2020 as patients that were delayed reschedule
their surgeries, the pace of the recovery will depend on the
surgeons' and facilities' capacity to perform additional
procedures," S&P said.
S&P expects this to materially affect BVI's earnings and cash flow
in 2020. For example, S&P's updated base-case forecast assumes a
10%-15% revenue decline (on a pro-forma basis, including full year
of PhysIOL contribution) and a 300 basis points (bps)-400 bps
contraction in the company's adjusted EBITDA margin. Although it
believes BVI has some flexibility to cut costs, especially for
travel and marketing, S&P understands that the company is
prioritizing the maintenance of its manufacturing capacity and
building inventory levels in anticipation of a rapid post-pandemic
recovery.
"Assuming a reduction in the company's EBITDA and an increase in
its working capital needs, we project that it will generate
negative discretionary cash flow in 2020. We also expect its S&P
Global-adjusted leverage to increase materially above our rating
threshold of 7x this year. However, once governments relax their
restrictions on movement and most medical procedures are allowed
resume, we believe the company will be able to restore its sales
volumes in the second half of 2020 and in 2021, which will reduce
its leverage and enable it to generate positive cash flow in 2021,"
S&P said.
"We estimate that BVI's current liquidity position should be
sufficient to weather the pandemic's effects over the next few
quarters. As of April 30, 2020, the company had about $86 million
of cash on its balance sheet following a full draw on its EUR65
million revolving credit facility. We estimate that BVI's annual
cash taxes, capital expenditures and working capital needs amount
to about $30 million and assume that its 2020 EBITDA will be more
than sufficient to cover its interest expense. The company has a
springing covenant on its revolver that is tested when it draws on
more than 35% of the facility's commitment. Despite the expected
decline in its EBITDA in the coming quarters, we believe the
company has sufficient capacity under the required 8.6x leverage
ratio to remain compliant," S&P said.
The longer the coronavirus pandemic persists the more likely the
company's volumes will stay suppressed. If the pandemic persists
for longer than S&P currently expects, the rating agency sees some
risk to its current base-case projection that BVI's adjusted
leverage will decrease to about 7x and it will generate a free cash
flow-to-debt ratio of about 3% in 2021. For example, lingering
patient fears about entering health care facilities may delay some
procedures even beyond the official end of the stay-at-home orders.
In addition, the ongoing economic recession may reduce the
affordability of some of the company's higher-end products, such as
its premium intraocular implant lenses (IOLs), which health care
insurance plans do not typically reimburse and patients usually pay
for out of pocket.
Environmental, social, and governance (ESG) credit factors for this
credit rating change:
-- Health and safety
The negative outlook reflects the risk that BVI's credit measures
and cash flow generation will remain weak for an extended period of
time if the pandemic lasts longer than S&P currently expects.
"We could lower our rating on BVI if its leverage increases
materially above 7x and its cash deficits in 2020 are higher than
we currently forecast and there are limited prospects for
improvement in 2021, which would most likely occur because of a
prolonged delay in elective procedures globally," S&P said.
"We could revise our outlook on BVI to stable if, despite the
global headwinds, we become confident that it will reduce its
leverage to 7x and improve its adjusted free cash flow-to-debt
ratio to about 3% in 2021 as the current uncertainty around the
coronavirus' impact on industry demand dissipates," the rating
agency said.
CAA HOLDINGS: S&P Downgrades ICR to 'B'; Outlook Stable
-------------------------------------------------------
S&P Global Ratings lowered its issuer credit rating on CAA Holdings
LLC (CAA)to 'B' from 'B+' and its issue-level rating on the
company's first-lien term loan facility to 'B' from 'B+'. S&P's '3'
recovery rating on the term loan remains unchanged.
"The downgrade reflects our view that CAA's adjusted metrics will
remain above our mid-5.0x downside threshold for the 'B+' rating
over the next 12 months. Due to the coronavirus pandemic, major
studios have indefinitely suspended the production of almost all TV
and film projects. The outbreak has also led to the cancellation or
postponement of multiple live events, including sports, music
concerts, and festivals. The majority of CAA's represented talent
are being directly affected by these disruptions because they are
not receiving compensation. This, in turn, prevents CAA from
collecting its agent commissions, which leads us to anticipate that
its credit metrics will be materially weaker than we previously
expected in fiscal year 2020," S&P said.
The stable outlook reflects S&P's view that CAA will maintain
sufficient liquidity to service all of its debt obligations,
including generating a FOCF-to-debt ratio of at least 5% over the
next 12 months. The outlook also reflects S&P's view that volume of
productions and live events, including sports and music, will
gradually return to pre-pandemic levels toward the end of fiscal
year 2020 into 2021, which will further improve the company's
credit measures over the next 12 months.
"We could lower our rating on CAA if the resumption of TV, film,
and live event production is materially slower than we currently
expect, leading to a sustained slowdown in the company's revenue
and earnings well into fiscal year 2021. This could reduce CAA's
FOCF-to-debt ratio below 5% on a sustained basis, which would
indicate elevated liquidity risks," S&P said.
"We could raise our ratings on CAA if its adjusted leverage
declines and remain below the mid-5.0x area supported by a return
to positive industry growth trends, including increased content
creation that drives revenue growth. As part of our upgrade
scenario, we would also expect the company to adopt a financial
policy or leverage tolerance that indicates it will maintain
leverage below the mid-5.0x area," the rating agency said.
CADIZ INC: Reports $20.5 Million Net Loss for First Quarter
-----------------------------------------------------------
Cadiz Inc. reported a net loss and comprehensive loss applicable to
common stock of $20.51 million on $114,000 of total revenues for
the three months ended March 31, 2020, compared to a net loss and
comprehensive loss applicable to common stock of $7.26 million on
$109,000 of total revenues for the three months ended March 31,
2019.
As of March 31, 2020, the Company had $74.07 million in total
assets, $93.76 million in total liabilities, and a total
stockholders' deficit of $19.68 million.
Cadiz said, "As we have not received significant revenues from our
development activities to date, we have been required to obtain
financing to bridge the gap between the time water resource and
other development expenses are incurred and the time that revenue
will commence. Historically, we have addressed these needs
primarily through secured debt financing arrangements and private
equity placements.
"As we continue to actively pursue our business strategy,
additional financing will continue to be required. The covenants
in the term debt do not prohibit our use of additional equity
financing and allow us to retain 100% of the proceeds of any equity
financing. We do not expect the loan covenants to materially limit
our ability to finance our water development activities.
"At March 31, 2020, we had no outstanding credit facilities other
than the Senior Secured Debt."
Cash used in operating activities totaled $4.4 million and $4.0
million for the three months ended March 31, 2020 and 2019,
respectively. The cash was primarily used to fund general and
administration expenses related to the Company's water development
efforts.
Cash used in investing activities totaled $4.7 million for the
three months ended March 31, 2020, and $165,000 for the three
months ended March 31, 2019. The 2020 period included additions to
the Company's interests in SoCal Hemp JV LLC, well development and
professional water quality and structural testing of a five-mile
segment of pipeline.
Cash provided by financing activities totaled $3.9 million for the
three months ended March 31, 2020, compared with cash provided of
$7.9 million for the three months ended March 31, 2019. Proceeds
from financing activities for both periods reported are related to
the issuance of shares under at-the-market offerings.
A full-text copy of the Quarterly Report is available for free at
the Securities and Exchange Commission's website at:
https://is.gd/PSLAvj
About Cadiz
Founded in 1983 and headquartered in Los Angeles, California, Cadiz
Inc. -- http://www.cadizinc.com-- is a natural resources
development company dedicated to creating sustainable water and
agricultural opportunities in California. The Company owns
approximately 45,000 acres of land with high-quality, naturally
recharging groundwater resources in three areas of Southern
California’s Mojave Desert. These properties are located in
eastern San Bernardino County situated in close proximity to major
highway, rail, energy and water infrastructure, including the
Colorado River Aqueduct, which is the primary transportation route
for water imported into Southern California from the Colorado
River.
Cadiz reported a net loss and comprehensive loss of $29.53 million
for the year ended Dec. 31, 2019, compared to a net loss and
comprehensive loss of $26.27 million for the year ended Dec. 31,
2018. As of Dec. 31, 2019, the Company had $76.72 million in total
assets, $158.84 million in total liabilities, and a total
stockholders' deficit of $82.12 million.
Cadiz said in its Annual Report for the period ended Dec. 31, 2019,
that limitations on the Company's liquidity and ability to raise
capital may adversely affect it. "Sufficient liquidity is critical
to meet the Company's resource development activities. Although the
Company currently expects its sources of capital to be sufficient
to meet its near-term liquidity needs, there can be no assurance
that its liquidity requirements will continue to be satisfied. If
the Company cannot raise needed funds, it might be forced to make
substantial reductions in its operating expenses, which could
adversely affect its ability to implement its current business plan
and ultimately impact its viability as a company."
CAMBIUM LEARNING: Fitch Affirms B LongTerm IDR, Outlook Stable
--------------------------------------------------------------
Fitch Ratings has affirmed the Long-Term Issuer Default Rating of
Cambium Learning Group, Inc. at 'B'. Fitch has affirmed the 'B'
IDRs of co-borrowers VKidz Holding, Corp. and Cambium Assessment,
Inc. Fitch has also affirmed the first lien credit facilities at
'BB'/'RR1' and the second lien term loan at 'CCC+'/'RR6'. The
Rating Outlook is Stable.
The ratings and Stable Outlook reflect Cambium's high
Fitch-calculated pro forma total leverage (total debt with equity
credit/EBITDA) of roughly 6.3x at year-end 2019 and Fitch's
expectations that headwinds in the assessment business owing to
mandated K-12 school closures will weigh on operating results over
the near term. However, it also incorporates the underlying
stability in the Cambium assessment business, which is supported by
multi-year contracts and Fitch's belief that the business will
normalize in the 2020-2021 school year once the coronavirus
pandemic threat passes and schools can broadly reopen.
Fitch notes that there is a high degree of uncertainty owing to the
length of the coronavirus pandemic and the required school
closures, which will differ by district and geography, and the
potential postponement or cancellation of the summative state
assessments for the 2020-2021 school year. Cambium could benefit
from the provision of interim summative assessments and increased
sell-through of its legacy Cambium digital learning products as
teachers, schools and districts pivot to increased digital
learnings solutions, possibly providing an offset for any near-term
declines in assessment revenues. Fitch recognizes that the
coronavirus pandemic will likely negatively affect federal, state
and local budgets, which may lead to reduced or delayed aggregate
spending on education. However, Fitch believes that the coronavirus
pandemic will likely accelerate K-12 adoption of digital learning
products and budgets will be increasingly directed toward digital.
KEY RATING DRIVERS
Coronavirus Pandemic: Fitch expects that Cambium Assessment will
face headwinds resulting from the postponement and/or potential
cancellation of the spring K-12 school assessment testing. The
ultimate impact to full-year 2020 results is somewhat uncertain
owing to the length of the coronavirus pandemic and Fitch's
expectations that required school closures could differ by district
and geography. Fitch recognizes the possibility that incremental
assessments could be conducted in the fall upon return to school.
In addition, Cambium's core digital supplemental products (Learning
A-Z, Explore Learning, Voyager Sopris and VKidz) are currently
seeing increased new customer sign-ups (+360K and 10x the normal
sign-ups) as students and teachers are relying more heavily on
digital learnings during the required shutdown period.
Increased customer conversion could provide an offset to potential
top-line weakness at Cambium Assessment. Fitch recognizes that the
coronavirus pandemic will likely negatively affect federal, state
and local budgets, which may lead to reduced or delayed aggregate
spending on education. Cambium could be somewhat insulated from
these budgetary pressures owing to its concentration in the digital
learning category and the potential increased reliance on
supplemental digital learning tools following the pandemic.
Assessment Increases Cash Flow Visibility: Fitch continues to view
the AST Assessment acquisition positively as it expands the
company's platform into the student assessment market. The
acquisition will roughly double the company's revenues and EBITDA
and provide for additional cash flow stability. Student assessments
are federally mandated and adopted on a state-by-state basis and
contract lengths typically span multiple years. AST has a very high
customer retention rate and there are no recompetes until 2021. AST
has a roughly 20% market share of the summative assessment market
(estimated total addressable market of approximately $1.2 billion).
The company competes with Pearson and DRC but has 2x the number of
state contracts for grades three through eight Math and English
Language Assessments than the next largest peer.
High Leverage: Fitch estimates pro forma total leverage of 6.3x at
year-end 2019, this excludes changes in deferred revenue. Fitch
believes that management is focused on its strategy to expand the
business both organically (by leveraging Cambium's established
sales team) and through acquisitions to expand capabilities and
penetration in the K-12 education segment. Fitch believes that
incremental acquisitions could slow deleveraging capacity, despite
the company's expanding FCF.
Strong Sector Tailwinds: With the general raising of K-12
educational standards and the adoption of Common Core or some
variant, there is an increased need for supplemental and more
personalized learning to improve assessment results and student
outcomes. Fitch expects a growing amount of school, district and
state funding to be allocated towards digital. Cambium, with its
presence in the digital supplemental instructional market, is
poised to benefit from the transition to digital in the K-12
education market. Fitch notes that the digital assessment market
provides for a less significant growth opportunity (total digital
assessment market will grow at a 4% CAGR for 2017A through 2020E),
but does recognize the opportunity to improve penetration of
Cambium's assessment products over the longer term.
Adequate Liquidity: Cambium has sufficient liquidity supported by
roughly $63 million in balance sheet cash and $33 million in
revolving credit facility availability. Cambium's business is
subject to seasonality owing to the buying cycle for education
products, which historically resulted in cash generation occurring
in the second half of the fiscal year. The AST acquisition helps
smooth seasonality as the most of its revenues are earned during
the school spring testing cycle (Q1 and Q2) and as such reduce the
company's reliance on its revolver to fund seasonal fluctuations in
cash flow. Fitch continues to expect positive FCF generation over
the rating horizon and believes that Cambium's liquidity is
sufficient to fund any near-term shortfalls owing to the
postponement or cancellation of spring summative assessments and
the seasonality of the legacy Cambium digital learning products.
Recession Resistant: Fitch believes that the digital assessment and
supplemental instructional market is somewhat insulated from
fluctuations in the general economy. K-12 spending is supported by
diversified funding sources (federal 10%, state 45% and local 45%).
Student summative assessments are federally mandated for grades
three and above in Math and English Language Arts under the 2015
Every Student Succeeds Act. Notably, Cambium on a stand-alone basis
experienced robust growth through the last recessionary period and
digital bookings have grown at a CAGR of roughly 20% from $25
million in 2008 to $200 million in 2019. Fitch believes that even
during a period of state and local budget pressure, schools and
districts will allocate a growing proportion of funding to digital
learning solutions.
DERIVATION SUMMARY
Cambium is highly levered and is smaller than the larger and more
diversified education peers, such as McGraw-Hill Global Education
Holdings, LLC (B+/Negative Outlook) and Houghton Mifflin Harcourt
Company (B/Stable). Cambium is more narrowly focused on providing
K-12 digital supplemental education materials. However, Cambium
will benefit from rising K-12 education standards and the
increasing use of digital supplemental instructional products
outside of the classroom. Cambium has higher margins than peers
owing to its concentration to digital. Fitch views the AST
acquisition positively as it increases the company's scale and
diversification and the digital assessment business provides better
visibility into cash flows owing to the longer contract lengths
(state level funding). Cambium is similarly levered to the core
curriculum publishers on an FFO-adjusted leverage basis.
KEY ASSUMPTIONS
- Results reflect the AST acquisition which closed in December
2019. Fitch assumes that Cambium Assessment revenues decline by
roughly 10% in 2020 owing to the coronavirus pandemic and postponed
/ cancelled state summative assessments. Increased growth in
digital supplemental learning products provide somewhat of an
offset. Assessment revenues normalize in 2021 reflecting the
contractual nature of these revenues and the expectation that the
coronavirus does not cause any incremental closures in the
2020-2021 school year;
- Thereafter, total revenues grow in the low-single digit range
reflecting growth in assessment and digital supplemental products.
Cambium Assessment growth is supported by contract wins and no
upcoming recompetes until 2021. Fitch assumes somewhat slower
supplemental digital learning product growth owing to budgetary
pressures;
- EBITDA margins contract in 2020 reflecting inability to
completely offset top-line declines with cost reduction measures.
EBITDA margins also reflect the mix shift and Cambium Assessment's
overall lower profitability. Thereafter, modest EBITDA expansion
reflects growth in digital products and realization of cost
synergies offset somewhat by increased marketing and research and
development investments;
- Capex in a range of $20 million-$25 million annually to support
integration and continued investments, but declines as a percentage
of revenues (roughly 4%-5%) due to Cambium Assessment's lower
capital intensity;
- Minimal cash taxes;
- Positive FCF generation;
- No near-term incremental acquisition activity;
- No debt reduction other than term loan amortization;
- Total leverage (total debt with equity credit/EBITDA),
excluding changes in deferred revenues, remains elevated
in excess of 7x in 2020 declining to closer to 6.0x by 2022.
Recovery Considerations
- The recovery analysis assumes that Cambium would be
considered a going concern in bankruptcy and that the
company would be reorganized rather than liquidated.
Fitch has assumed a 10% administrative claim;
- Fitch estimates an adjusted distressed enterprise valuation
of roughly $607 million using a 6.0x multiple and roughly
$112 million in going-concern EBITDA. Cambium's going-concern
EBITDA assumes a decline in assessments owing to a global
pandemic, which results in school closures. It also considers
increased competition in the digital supplemental K-12
instructional market and pressure on state and local budget
funding results in customer losses and slowing digital product
growth. Additionally, margins are depressed by the company's
need to reinvigorate its product sales and marketing. Fitch's
estimate of going-concern EBITDA of $112 million, represents
roughly a 20% decline from pro forma cash adjusted EBITDA of
$137 million (including deferred revenues and anticipated
cost savings following the vKidz and AST acquisition).
- Fitch assumes that Cambium will receive a going-concern
recovery multiple of 6.0x. The estimate considers several
factors including the company's relatively smaller scale and
product focus in the assessment and digital supplemental
K-12 segment. The estimate also considers that HMH and
Pearson have traded at a median EV/EBITDA of 12.2x and
10.9x, respectively. During the last financial recession,
Pearson traded at about 8.0x EV/EBITDA, while neither
McGraw-Hill nor HMH were public at the time. In 2014,
Cengage emerged from bankruptcy with a $3.6 billion
valuation, equating to an emergence multiple of 7.7x. The
most recent textbook publishing transaction occurred in
February 2019 with Pearson's announced sale of its K-12
business for $250 million or 9.5x operating profit
(EBITDA was not disclosed). In March 2013, Apollo Global
Management LLC acquired McGraw-Hill from S&P Global,
Inc. for $2.5 billion, or a multiple of estimated EBITDA
of approximately 7x. Notably, the 6x going-concern
recovery multiple is below the recent transactions,
including Cambium's acquisition of vKidz for $98 million
representing an 11x multiple of cash adjusted EBITDA
and acquisition of AST for roughly 7.5x.
- Fitch assumes a fully drawn revolver in its recovery
analysis since credit revolvers are tapped as companies
are under distress. Fitch assumes a full draw on Cambium's
$50 million revolver.
- Fitch estimates strong recovery prospects for the first lien
credit facilities and rates them 'BB'/'RR1', or three notches
above Cambium's 'B' IDR. Fitch estimates limited recovery
prospects for the second lien term loan and rates it
'CCC+'/'RR6', two notches below Cambium's IDR.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- Fitch does not expect an upgrade in the near-term given
Cambium's already high total leverage and uncertainties
surrounding the impact of the coronavirus;
- Over the longer-term, total leverage (total debt with equity
credit/EBITDA) below 5.5x and further reductions in business
segment and product concentration, could provide positive
momentum.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- Total leverage exceeds 7.0x on a sustained basis driven by
operational issues or additional debt-funded M&A;
- FCF margin remains below 5%.
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
Cambium has good liquidity supported by roughly $63 million in
balance sheet cash and a $33 million in revolving credit
availability ($50 million facility) as of March 31, 2020. Cambium's
business is subject to seasonality owing to the buying cycle for
education products, which historically resulted in cash generation
occurring in the second half of the fiscal year. The AST
acquisition will help smooth seasonality as the most of its
revenues are earned during the school spring testing cycle (Q1 and
Q2) and as such reduce the company's reliance on its revolver to
fund seasonal fluctuations in cash flow.
The majority of Cambium's standalone capex consist of content and
software investments. Fitch expects capital expenditures in a range
of $20 million-$25 million over the rating horizon to support an
elevated level of investment as well as integration activities.
Notably, capex as a percentage of revenues will decline to 4%-5%
due to the lower capital intensity of the AST assessment business.
Higher capex and cash interest will pressure FCF. However, Fitch
expects pro forma positive FCF generation over the rating horizon.
Cambium's debt amortization is modest at just 1% of the first lien
term loan ($6 million annually).
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.
CARBO CERAMICS: Seeks to Hire FTI Consulting as Financial Advisor
-----------------------------------------------------------------
CARBO Ceramics Inc. and its debtor-affiliates seek authority from
the United States Bankruptcy Court for the Southern District of
Texas to employ FTI Consulting, Inc. as their financial advisor.
Services FTI will render are:
a. support the preparation of first day motions and develop
procedures and processes necessary to implement such motions;
b. assist with developing accounting and operating procedures
to segregate prepetition and post-petition business transactions;
c. assist with the development or review of the Debtors'
business plan, as requested;
d. work with the Debtors to develop chapter 11
communications;
e. review or assist with the development of the Debtors'
13-week cash flow forecast and regular variance reporting;
f. assist in the identification of executory contracts and
unexpired leases and performing the cost/benefit evaluations with
respect to the assumption or rejection of each, as needed;
g. prepare the Debtors with respect to financial disclosures
that will be required by the Court;
h. assist with the review, classification, and quantification
of claims against the estate under the plan of reorganization;
i. assist with bankruptcy reporting requirements (e.g.,
Statements of Financial Affairs and Schedules of Assets and
Liabilities, Monthly Operating Reports, etc.);
j. render general financial advice, financial analytics and
modeling as directed by the Debtors' management;
k. assist in the development and analysis of various strategic
alternatives available to the Debtors;
l. assist in the development of a plan of reorganization and
disclosure statement;
m. assist in determining potential creditor recoveries under
alternative scenarios;
n. assist in analyzing and developing strategies to address
the Debtors' existing obligations;
o. assist with sizing and securing DIP financing, as needed;
p. assist with evaluating the Debtors' cash flows under a
variety of scenarios;
q. attend meetings, presentations and negotiations as may be
requested by the Debtors;
r. assist with claims reconciliation and objections;
s. assist with fresh-start accounting planning and
implementation;
t. provide court testimony, as needed; and
u. provide other services as requested by the Debtors.
FTI's will be paid as follows:
Senior Managing Directors $920 - $1,295
Managing Directors/Senior
Directors/Directors $690 - $905
Senior Consultants/Consultants $370 - $660
Administrative/Paraprofessionals $150 - $280
David Rush, senior managing director of FTI, attests that the firm
is a "disinterested person," as defined under 11 U.S.C. Sec.
101(14) and as required for employment under 11 U.S.C. Sec.
327(a).
The firm can be reached through:
David Rush
FTI Consulting, Inc.
1301 McKinney St., Suite 3500
Houston, TX 77010
Tel: 713-353-5400
Fax: 832-383-7570
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.
CARBO CERAMICS: Seeks to Hire KPMG LLP as Tax Consultant
--------------------------------------------------------
CARBO Ceramics Inc. and its debtor-affiliates seek authority from
the United States Bankruptcy Court for the Southern District of
Texas to employ KPMG LLP to provide tax compliance, tax provision,
and tax consulting services effective as of March 29, 2020.
KPMG will provide these services:
a. Tax Compliance Services
i. Prepare federal and state tax returns and supporting
schedules for Debtors' 2019 and 2020 tax year(s);
ii. Prepare tax returns for any state or local
jurisdictions and additional legal entities not identified in
Attachment A of engagement letter dated April 2, 2019;
iii. Perform preliminary engagement planning activities
related to the tax returns specified above for the immediately
succeeding tax year; and
iv. If necessary and appropriate, KPMG will meet with
CARBO's independent auditor during the course of the engagement to
discuss KPMG's services and any preliminary findings.
b. Tax Provision Services for years ending December 31, 2019,
2020 and 2021
i. Review necessary year end and quarterly tax and
financial information and schedules;
ii. Review temporary and permanent differences;
iii. Review income tax provision;
iv. Review tax related balance sheet accounts and footnote
disclosures; and
v. Assist Debtors in their efforts to work with its
independent auditors to draft income tax provision work papers.
c. Tax Consulting Services
i. General Tax Consulting Services
(1) General tax consulting services for matters that
may arise, including, but not limited to United States federal,
state, local and international matters for which the Debtors seek
KPMG's advice, both written and oral.
ii. Accounting Tax Method Services
(1) Provide tax accounting method services to assist the
Debtors in assessing the impacts of and compliance with the final
Section 263A Regulations which specify producers (and resellers) of
tangible property (except those specifically excluded) that must
include in inventory the direct costs, indirect costs, and
allocable mixed service costs associated with production and
purchasing of inventory; and
(2) If necessary, and upon the Debtors' request, KPMG
will include the filing of tax accounting method changes on Form(s)
3115, Application for Change in Accounting Method, including the
computation of the Internal Revenue Code (IRC) 481(a) adjustment to
comply with the new regulations.
iii. Tax Restructuring Services
(1) Analysis of any Section 382 issues, including a
sensitivity analysis to reflect the Section 382 impact of the
proposed and/or hypothetical equity transactions pursuant to the
restructuring and analysis of Section 382(1)(5) and (1)(6);
(2) Analysis of “net unrealized built-in gains and
losses” and Notice 2003-65 as applied to the ownership change, if
any, resulting from or in connection with the restructuring;
(3) Analysis of Debtors' tax attributes including net
operating losses, tax basis in assets, and tax basis in stock of
subsidiaries;
(4) Analysis of cancellation of debt (“COD”) income,
including the application of Section 108 and consolidated tax
return regulations relating to the restructuring of
non-intercompany debt and any contemplated
capitalization/settlement of intercompany debt;
(5) Analysis of the application of the attribute
reduction rules under Section 108(b) and Treasury Regulation
Section 1.1502-28, including a benefit analysis of Section
108(b)(5) and 1017(b)(3)(D) elections;
(6) Analysis of the tax implications of any internal
reorganizations and proposal of restructuring alternatives;
(7) Cash tax modeling;
(8) Analysis of the tax implications of any dispositions
of assets and/or subsidiary stock pursuant to the restructuring;
(9) Analysis of potential bad debt and retirement tax
losses;
(10) Analysis of any potential cash repatriation
planning;
(11) Analysis of any proof of claims from tax
authorities, if the restructuring is pursuant to a bankruptcy
reorganization;
(12) Analysis of the tax treatment of bankruptcy related
costs, if the restructuring is pursuant to a bankruptcy
reorganization;
(13) Tax advisory services related to any potential
merger/acquisition with third parties, including due diligence and
structuring;
(14) Any other tax consulting related to the
restructuring; and
(15) Analysis of the state and local tax implications of
the foregoing.
KPMG will charge these discounted hourly rates:
Tax Compliance Services/
Tax Provision Services
Tax Specialists $730 - $800
Partners $620 - $710
Senior Managers $560 - $610
Managers $440 - $570
Senior Associates $320 - $430
Associates $240 - $260
Para-Professionals $140 - $210
General Tax Consulting Services/
Tax Accounting Method Services
Tax Specialists $876 - $960
Partners $744 - $852
Senior Managers $672 - $732
Managers $528 - $684
Senior Associates $384 - $516
Associates $288 - $312
Para-Professionals $168 - $252
Tax Restructuring Services
Partners $1,035 - $1,185
Senior Managers $900
Managers $840
Senior Associates $645
Associates $390
Para-Professionals $315
Howard Steinberg, a partner at KPMG, assured the court that the
firm is a "disinterested person" as the term is defined in Section
101(14) of the Bankruptcy Code.
KPMG LLP can be reached at:
Howard Steinberg
KPMG LLP
811 Main Street
Houston, TX 77002
Tel: +1 713 319 2000
Fax: +1 713 319 2041
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.
CARBO CERAMICS: Seeks to Hire Perella Weinberg as Investment Banker
-------------------------------------------------------------------
CARBO Ceramics Inc. and its debtor-affiliates seek authority from
the United States Bankruptcy Court for the Southern District of
Texas to employ Perella Weinberg Partners LP as their investment
banker.
The firm will provide these services:
a. General Investment Banking Services
i. familiarize Perella with the business, operations,
properties, results of operations, cash flows, financial condition
and prospects of the Debtors;
ii. review the Debtors' financial condition and outlook and
the state of the industries in which the Debtor has historically
operated and is seeking to operate;
iii. analyze the Debtors' financial liquidity and evaluate
alternatives to improve such liquidity;
iv. evaluate the Debtors' debt capacity and alternative
capital structures;
v. assist in the review of the Debtors' business plan and
model and assist the Debtors' Board of Directors in critically
analyzing considerations related to the execution of the Debtors'
recently announced strategic transformation and modifications of or
adjustments to such strategy, including potential strategic
transactions related thereto or any other potential alternatives
thereto, and the structure and financeability or feasibility
thereof;
vi. participate in negotiations among the Debtors and their
creditors, suppliers, lessors and other interested parties with
respect to any of the transactions contemplated by the Engagement
Letter;
vii. advise the Debtors and negotiate with lenders with
respect to potential waivers or amendments of various credit
facilities; and
viii. provide such other advisory services as are customarily
provided in connection with the analysis and negotiation of any of
the transactions contemplated by the Engagement Letter, as
requested and mutually agreed upon.
b. Restructuring Services
i. analyze various restructuring scenarios and the
potential impact of those scenarios on the value of the Debtors and
the recoveries of those stakeholders impacted by the
restructuring;
ii. provide strategic advice with regard to restructuring
or refinancing the Debtors' obligations;
iii. provide financial advice and assistance to the Debtors
in developing a restructuring;
iv. in connection therewith, provide financial advice and
assistance to the Debtors in structuring any new securities to be
issued under a restructuring; and
v. assist the Debtors and/or participate in negotiations
with entities or groups affected by the restructuring.
c. Financing Services
i. provide financial advice to the Debtors in structuring
and effectuating financing, identify potential investors and, at
the Debtors' request, contact and solicit such investors; and
ii. assist in the arranging of financing, including
identifying potential sources of capital, assisting in the due
diligence process, and negotiating the terms of any proposed
financing, as requested.
d. Sale Services
i. provide financial advice to the Debtors in structuring,
evaluating, and effecting a sale of the Debtors, prepare marketing
materials, identify potential acquirers and, at the Debtors'
request, contact and solicit potential acquirers; and
ii. assist in arranging and executing a sale of the
Debtors, including identifying potential buyers or parties in
interest, assisting in the due diligence process, and negotiating
the terms of any proposed sale, as requested.
e. Asset Sale Services
i. provide financial advice to the Debtors in structuring,
evaluating and effecting a sale of all or a portion of the Debtors'
assets, prepare marketing materials, identify potential acquirers
and, at the Debtors' request, contact and solicit potential
acquirers; and
ii. assist in arranging and executing a sale of all or a
portion of the Debtors' assets, including identifying potential
buyers or parties in interest, assisting in the due diligence
process, and negotiating the terms of any proposed sale, as
requested.
Perella will be compensated for its services as follows:
Financial Advisory Fee
A quarterly financial advisory fee equal to $250,000 payable in
advance beginning on the date of the signing of the Engagement
Letter and every three month anniversary thereafter for the
duration of the engagement under the Engagement Letter.
Restructuring Fee
In the event of a Restructuring, a fee equal to 2.0% of the
principal amount of any debt obligations exchanged, refinanced,
paid down, materially modified, restructured, expunged or
discharged, payable promptly upon consummation of a Restructuring;
provided, however, that if a debt obligation is refinanced or
repaid in full with the net proceeds of a Financing for which
Perella receives a Financing Fee, then no Restructuring Fee shall
be due on the principal amount of such debt obligation so
refinanced or repaid in full.
Financing Fee
In the event of a Financing, a fee equal to 5% of any equity
capital (excluding any equity raised from the Company's
at-the-market program), 3% of any convertible debt, and 1% of any
non-convertible debt raised, payable promptly upon consummation of
a Financing.
Sale Fee
In the event of a Sale, a fee equal to the greater of 1.5% of the
Transaction Value or $1,250,000, payable promptly upon each
consummation of a Sale (excluding, for the avoidance of doubt, an
Excluded Sale).
Asset Sale Fee
In the event of an Asset Sale, a fee equal to 1.5% of the
Transaction Value associated with the sale of any Target Assets,
payable promptly upon each consummation of an Asset Sale; provided,
that, in no event shall the aggregate Asset Sale Fees that become
payable hereunder be less than $1,250,000, 50% of which shall be
payable upon consummation of the first Asset Sale of a Target Asset
(and, if applicable, no additional Asset Sale Fees will be due and
payable at the second Asset Sale consummation until the aggregate
Asset Sale Fees that would have been payable yield such amount),
and the remaining 50% of which shall become payable at the earlier
to occur of (i) consummation of the final Asset Sale (following
which all three Target Assets will have been sold) and (ii) March
31, 2019.
Lance Gilliland, managing director at Perella, attests that his
firm is a "disinterested person" as defined by section 101(14) of
the Bankruptcy Code.
The firm can be reached through:
Lance Gilliland
Perella Weinberg Partners LP
767 Fifth Avenue
New York, NY 10153
Phone: +1 212-287-3200
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.
CARVANA CO: Reports $183.6 Million Net Loss for First Quarter
-------------------------------------------------------------
Carvana Co. reported a net loss of $183.6 million on $1.10 billion
of net sales and operating revenues for the three months ended
March 31, 2020, compared to a net loss of $82.59 million on $755.23
million of net sales and operating revenues for the three months
ended March 31, 2019.
As of March 31, 2020, the Company had $2.24 billion in total
assets, $2.22 billion in total liabilities, and $13.22 million in
total stockholders' equity.
"During this unprecedented time, our number one priority is the
health and safety of our employees and customers. This quarter we
implemented Touchless Delivery to offer the safest and easiest
experience to buy a car," said Ernie Garcia, founder and CEO of
Carvana. "As the pioneers of online car buying we're proud to be
leading our industry as shifts in customer behavior accelerate."
As of March 31, 2020 and Dec. 31, 2019, the short-term revolving
facilities had total capacity of $1,875.0 million and $1,600.0
million, an outstanding balance of $812.2 million and $568.8
million, and unused capacity of $1,062.8 million and $1,031.2
million, respectively.
The Company also had $87.1 million and $137.7 million of committed
funds for future construction costs of four IRCs with unfinished
construction as of March 31, 2020 and Dec. 31, 2019, respectively.
In addition, the Company had $49.0 million and $13.5 million of
total unpledged beneficial interests in securitizations as of March
31, 2020 and Dec. 31, 2019, respectively.
Additionally, on April 1, 2020, the Company completed a registered
direct offering of approximately 13.3 million shares of the
Company's Class A common stock and received net proceeds from the
offering of approximately $599.5 million.
As of March 31, 2020 and Dec. 31, 2019, the Company's outstanding
principal amount of indebtedness, including finance leases, was
$1.8 billion and $1.5 billion, respectively.
For the three months ended March 31, 2020, net cash used in
operating activities was $168.5 million, a decrease of $46.1
million compared to net cash used in operating activities of $214.5
million for the three months ended March 31, 2019. The decrease in
the Company's net cash used in operating activities was primarily
due to decreased cash used to purchase finance receivables, as well
as changes in working capital during each period, primarily vehicle
inventory and accounts receivable. These decreases in use of cash
were partially offset by increased net loss as a result of
increased selling, general and administrative expenses and a
decrease in net cash inflows associated with the change in accounts
payable and accrued liabilities.
The Company's primary use of cash for investing activities is
purchases of property and equipment to expand its operations. Cash
used in investing activities was $88.7 million and $43.2 million
during the three months ended March 31, 2020 and 2019,
respectively, an increase of $45.5 million. The increase primarily
relates to the increase in purchases of property and equipment,
specifically related to the construction of new IRCs and vending
machines. Constructing new IRCs and vending machines allows the
Company to recondition more vehicles and reach additional
customers. To finance these investments the Company has entered
into various financing transactions, such as sale-leasebacks.
Cash flows from financing activities primarily relate to the
Company's short and long-term debt activity and proceeds from
equity issuances which have been used to provide working capital
and for general corporate purposes, including paying down its
short-term revolving facilities. Cash provided by financing
activities was $283.7 million and $276.1 million during the three
months ended March 31, 2020 and 2019, respectively, an increase of
$7.7 million. The change primarily relates to increased proceeds
from long-term debt net of payments driven by increased proceeds on
sale-leaseback arrangements on four IRCs currently under
construction during the three months ended March 31, 2020.
A full-text copy of the Quarterly Report is available for free at
the Securities and Exchange Commission's website at:
https://is.gd/z5ARTE
About Carvana
Founded in 2012 and based in Tempe, Arizona, Carvana Co. --
http://www.carvana.com-- is a holding company that was formed as
a Delaware corporation on Nov. 29, 2016. Carvana is an e-commerce
platform for buying and selling used cars. The Company owns and
operates Carvana.com, which enables consumers to quickly and easily
shop vehicles, finance, trade-in or sell their current vehicle to
Carvana, sign contracts, and schedule as-soon-as-next-day delivery
or pickup at one of Carvana's patented, automated Car Vending
Machines.
Carvana reported a net loss of $364.6 million in 2019, a net loss
of $254.74 million in 2018, and a net loss of $164.32 million in
2017. As of Dec. 31, 2019, the Company had $2.05 billion in total
assets, $1.86 billion in total liabilities, and $191.94 million in
total stockholders' equity.
* * *
As reported by the TCR on May 24, 2019, S&P Global Ratings affirmed
its 'CCC+' issuer credit rating on Carvana Co. to reflect the
company's improved liquidity after it raised $480 million by
issuing about $230 million of common stock and a $250 million
add-on to its existing senior unsecured notes due 2023.
CIT GROUP: Egan-Jones Withdraws BB+ Senior Unsecured Ratings
------------------------------------------------------------
Egan-Jones Ratings Company, on April 22, 2020, withdrew its 'BB+'
foreign currency and local currency senior unsecured ratings on
debt issued by CIT Group Incorporated.
CIT Group Inc. is a financial holding company and bank holding
company incorporated in Delaware and headquartered in New York
City.
CJ AUTO: De Lage Landen Objects to Disclosure & Plan
----------------------------------------------------
De Lage Landen Financial Services, Inc. (DLL) objects to the
Disclosure Statement and confirmation of the Chapter 11 Plan of
Reorganization of debtor CJ Auto Used Parts, LLC.
DLL objects to Debtor's Disclosure Statement because it fails to
provide adequate information regarding the value of the Retained
Excavator, indicating only that it is worth at most $60,000.00.
DLL objects to the Disclosure Statement and the Plan because it
treats DLL as partially unsecured. DLL asserts that until such
time as it recovers possession of the Retained Excavator, it is
oversecured and is entitled to recover interest and attorney's fees
as part of its claim. DLL objections to the payment of its claim
over seven years.
DLL further objects to the extend that the Plan violates the
absolute priority rule. The Plan contemplates a possible auction
of the equity interest of James Douglas rather than the current
equity holder.
A full-text copy of DLL's objection dated April 21, 2020, is
available at https://tinyurl.com/y9lr38pw from PacerMonitor at no
charge.
DLL is represented by:
Byron L. Saintsing
SMITH DEBNAM NARRON DRAKE SAINTSING & MYERS, LLP
Post Office Box 176010
Raleigh, North Carolina 27619
Telephone:(919)250-2000
Facsimile:(919)250-2100
E-mail: Bsaintsing@smithdebnamlaw.com
About CJ Auto Used Parts
CJ Auto Used Parts, LLC, sought Chapter 11 protection (Bankr.
E.D.N.C. Case No. 19-04737) on Oct. 14, 2019, estimating less than
$1 million in assets and liabilities. The case has been assigned
to Judge Stephani W. Humrickhouse. John G. Rhyne, Esq., is the
Debtor's legal counsel.
CLEVELAND STREET: Hires Judith A. Descalso as Bankruptcy Counsel
----------------------------------------------------------------
Cleveland Street Beach Lofts, LLC, seeks authority from the United
States Bankruptcy Court for the Southern District of California to
hire employ the Law Office of Judith A. Descalso as its general
bankruptcy counsel.
Services the firm will render are:
(a) advise and consult with Debtor concerning questions
arising in the conduct of the administration of the estate and
concerning Debtor's rights and remedies regarding the estate's
assets and the claims of creditors and other parties in interest;
(b) represent the Debtor on behalf of the estate before this
Court, including assisting in the preparation of pleadings, reports
and orders, as required for the orderly administration of this
estate;
(c) assist in the preparation of applications of employment
and preparation and review of fee applications and, where
appropriate, filing objections to the fee applications of other
professionals;
(d) provide advise in regard to the Debtor's reorganization,
including the evaluation and, if appropriate, the development and
preparation of a Disclosure Statement and Plan of Reorganization to
effectuate the Debtor's reorganization and any post-confirmation
motions;
(e) provide such other reasonable and related services within
the scope of engagement as may be requested by the Debtor from time
to time.
The firm's normal hourly billing rates are:
Judith A. Descalso, Esq. $470
Associates $400
Paraprofessionals $75 to $170
The firm received the sum of $11,724 as an initial retainer in this
matter, of which $3,500 was drawn upon pre-petition and $1,717 was
paid for the Ch. 11 filing fee, leaving a balance of $6,507.
Ms. Descalso assures the court that her firm is disinterested
person within the meaning of 11 USC Sec. 101(14).
The firm can be reached through:
Judith A. Descalso, Esq.
LAW OFFICE OF JUDITH A. DESCALSO
960 Canterbury Place, Suite 340
Escondido, CA 92025-3870
Phone: (760) 745-8380
Fax: (760) 860-9800
Email: jad@jdescalso.com
About Cleveland Street Beach Lofts
Cleveland Street Beach Lofts is a Single Asset Real Estate debtor
(as defined in 11 U.S.C. Section 101(51B)), whose principal assets
are located at 314 N Cleveland St Oceanside, CA 92054-2529.
Cleveland Street Beach Lofts, LLC, filed a voluntary petition under
chapter 11 of title 11, United States Code, (Bankr. S.D. Cal. Case
No. 20-01448) on March 15, 2020. In the petition signed by James
Simcoe, manager, the Debtor estimated $1 million to $10 million in
both assets and liabilities. Judith A. Descalso, Esq. at the LAW
OFFICE OF JUDITH A. DESCALSO represents the Debtor as counsel.
COMMERCIAL VEHICLE: S&P Alters Outlook to Neg., Affirms 'B' ICR
---------------------------------------------------------------
S&P Global Ratings revised its outlook on New Albany, Ohio-based
commercial vehicle supplier Commercial Vehicle Group Inc. (CVG) to
negative from stable and affirmed its 'B' issuer credit rating. At
the same time, S&P affirmed its 'B' issue rating on the company's
term loan. S&P revised the recovery rating to '3' from '4',
indicating its expectation for meaningful recovery (50%-70%;
rounded estimate: 50%) in the event of a payment default.
"We anticipate weakened credit metrics over the near term, driven
by significant declines in commercial vehicle demand. The impact
of the COVID-19 pandemic and global declines in GDP growth have
exacerbated the anticipated downturn in commercial vehicle demand
this year. Overall, we assume revenue will decline across most of
CVG's end markets. We anticipate EBITDA margin deterioration driven
by lower revenues and likely impairment charges this year. We
expect adjusted leverage to significantly increase in 2020 before
improving as industry demand rebounds," S&P said.
Environmental, social, and governance (ESG) credit factors for this
credit rating change:
-- Health and safety
S&P's negative outlook on CVG reflects its belief the company's
leverage will increase above 9x in 2020. However, the rating agency
expects this ratio will decline below 4x in 2021 and that the
company's FOCF will remain positive.
"We could lower our ratings on CVG over the next 12 months if cash
outflows relating to restructuring significantly affect overall
liquidity. We could also lower our ratings if weak demand takes a
greater than expected toll on CVG's operating performance. For
example, we could lower the ratings if leverage exceeds 5x or FOCF
remains negative for a sustained period," S&P said.
"We could revise our rating outlook to stable in the next 12 months
as earnings improve and we expect the company to return leverage
below 5x through a cyclical downturn. In addition, we expect CVG to
maintain positive cash flow generation, including an FOCF-to-debt
ratio of more than 5% with adequate liquidity. This assumes the
company successfully obtains an amendment to the financial
maintenance covenant in its term loan agreement," the rating agency
said.
CORE & MAIN: S&P Downgrades ICR to 'B'; Outlook Stable
------------------------------------------------------
S&P Global Ratings lowered U.S. water infrastructure distributor
Core & Main L.P.'s issuer credit rating to 'B' from 'B+'. The
issue-level rating on the company's senior secured term loan is
being lowered to 'B' from 'B+'.
At the same time, ratings on the company's $500 million senior
unsecured notes due 2025, as well as on parent company Core & Main
Holding L.P.'s $200 senior payment-in-kind (PIK) toggle notes due
2024, are being lowered to 'CCC+' from 'B-'.
"We lowered the issuer credit rating on Core & Main to 'B' from
'B+' to reflect our view its debt leverage will remain elevated
over the next several quarters. We expect debt leverage will
increase from already high levels due to reduced sales and EBITDA
resulting from COVID-19 recessionary pressures. We project debt
leverage will approach and possibly exceed 8x on a gross basis and
approximately 6.7x net of cash balances, which we consider more in
line with the lower rating. We also expect interest coverage to
decline to about 2.1x," S&P said.
Core & Main will hold very large cash balances and access to
liquidity to meet all obligations during this recession.
Partially offsetting the weaker leverage measures will be a strong
liquidity position with more than $400 million of cash and an
additional $240 million of availability under its revolving credit
facility compared with only very modest capital spending and debt
amortization requirements of less than $50 million. S&P expects
Core & Main will maintain this large liquidity position until such
time as the recessionary pressures recede and demand returns, after
which S&P expects the company would use excess cash to either
reduce debt or fund acquisitions or some combination of both.
"Our stable outlook on Core & Main reflects our view that it will
maintain positive cash flow for the remainder of this year and
relatively large levels of cash (greater than $400 million) and
revolving credit availability (greater than $240 million), despite
anticipated revenues and EBITDA declines and elevated debt leverage
(about 8.0x gross leverage, about 6.7x net of cash held) over the
next several quarters. We also expect the company to maintain
interest coverage of just over 2x during this period. Incorporated
in our stable outlook is our expectation that the company will
refrain from any dividends or material acquisition activity during
this period," S&P said.
"Absent sales declining more than expected (over 10% on an annual
basis) in 2020, we view a downgrade as less likely over the next 12
months given our expectation of positive operating cash flow and
high liquidity levels," the rating agency said.
However, S&P could lower its ratings if:
-- COVID-19 recessionary pressures and other factors reduce sales
greater than expected, resulting in reduced EBITDA that causes
interest coverage to approach 1.5x; and/or
-- Core & Main consumes cash over the next several quarters, due
to large acquisitions or operating losses resulting in reduced
liquidity.
S&P could also lower the rating if Core & Main's private equity
owners pursue more aggressive financial polices such as more
debt-financed distributions that drive leverage to higher levels.
"We are unlikely to raise the rating in the next year unless the
adverse economic impact stemming from the pandemic quickly reverses
by late 2020 and Core & Main's revenues and EBITDA show sharp
improvement going into 2021," S&P said.
An upgrade would be predicated on:
-- Rapid improvement in debt/EBITDA metrics of below 6x on a gross
basis, with little likelihood of re-leveraging due to debt-financed
acquisitions or dividend; and
-- Use of excess cash on hand to reduce current debt balances and
a commitment from owners and management that debt leverage would be
maintained at 6x or less.
CORVALLIS FEED: $1.35M Sale of Personal Property to Bailey Approved
-------------------------------------------------------------------
Judge Benjamin P. Hursh of the U.S. Bankruptcy Court for the
District of Montana authorized Corvallis Feed & Seed, Inc.'s
proposed sale of personal property located in Linn County, Oregon
to Bailey Seed Co., Inc. for the gross sales price of $1.35
million, subject to adjustments.
A telephonic hearing on the Amended Motion was held May 7, 2020.
The sale is free and clear of liens and assign an unexpired lease
of personal property, a Toyota forklift, to the Purchaser who will
assume such lease, all pursuant to the terms set forth in the
Amended Motion.
About Corvallis Feed & Seed
Corvallis Feed & Seed Inc. owns and operates a farm store that
sells pet food and supplies, hardware, electric fencing materials,
livestock supplies, and lawn and garden supplies. The company was
founded in 1940.
Based in Kalispell, Mont., Corvallis Feed & Seed filed a petition
under Chapter 11 of the Bankruptcy Code (Bankr. D. Mont. Case No.
19-60386) on April 26, 2019. In the petition signed by Timothy R.
Birk, president, the Debtor disclosed $1,572,425 in assets and
$2,175,200 in liabilities. Patten, Peterman, Bekkedahl & Green PLLC
is the Debtor's legal counsel.
CPI CARD: Posts $2.42 Million Net Income in First Quarter
---------------------------------------------------------
CPI Card Group Inc. reported net income of $2.42 million on $73.97
million of total net sales for the three months ended March 31,
2020, compared to a net loss of $3.05 million on $66.87 million of
total net sales for the three months ended March 31, 2019.
As of March 31, 2020, the Company had $237.39 million in total
assets, $387.37 million in total liabilities, and a total
stockholders' deficit of $149.98 million.
"Our hearts go out to those who have been impacted by the COVID-19
pandemic," said Scott Scheirman, president and chief executive
officer of CPI. "As this pandemic continues to evolve, the health
and safety of our employees remains paramount. We continue to
follow the safety precautions and other appropriate measures
recommended by the Centers for Disease Control and Prevention. I
want to thank our employees for their dedication and commitment to
continuing to serve our customers through these unprecedented
times. All of CPI's operations remain open and continue to provide
direct and essential support to the financial services industry,
including the production, personalization and fulfillment of debit,
credit, and prepaid cards such as payroll, government benefit, and
health savings account cards. In addition, we have made COVID-19
support-related contributions to organizations in the communities
in which we operate and source materials."
Scheirman added, "We delivered strong results to start the year,
though we did see some impact from the pandemic late in the first
quarter. During the first quarter, our differentiated products and
solutions such as our dual-interface EMV products, including our
Second Wave card, experienced strong demand by our customers. This
drove an 11% year-over-year improvement in the top-line and allowed
us to further leverage our business model, yielding significant
improvement in bottom-line performance in the quarter. We remain
focused on being a partner of choice through the continued
execution of our strategic priorities and, like most companies, we
are taking certain steps to reduce or defer spending as we navigate
through this uncertainty."
As of March 31, 2020, cash and cash equivalents was $46.9 million.
Cash provided by operating activities was $3.2 million and cash
outflows for capital expenditures was $0.9 million in the first
quarter, yielding positive adjusted free cash flow of $2.3 million.
This compares with the first quarter of 2019, when cash used in
operating activities was $10.2 million, capital expenditures were
$2.1 million and adjusted free cash flow was negative $12.3
million. Year over year, adjusted free cash flow increased $14.6
million.
As previously reported, during the first quarter, the Company
entered into a new $30 million Senior Credit Facility and
terminated its revolving credit facility, each effective on March
6, 2020. For the first quarter of 2020, cash provided by financing
activities was $26 million. Total long-term debt principal
outstanding, comprised of the Company's $30 million Senior Credit
Facility and its $312.5 million First Lien Term Loan, was $342.5
million at March 31, 2020. Net of debt issuance costs and
discount, total debt was $333.9 million as of March 31, 2020. The
Company's Senior Credit Facility matures in May 2022 and the First
Lien Term Loan matures in August 2022.
John Lowe, chief financial officer, said, "During the first
quarter, solid execution led to top-line growth, further leveraging
of our business model and margin expansion, which enabled us to
significantly improve our bottom line and generate positive free
cash flow. As the COVID-19 pandemic unfolds, we continue to
provide essential support to our customers and execute on our
strategic plan, while carefully managing our spending."
2020 Strategy and Market Outlook
The Company's vision is to be the partner of choice by providing
market-leading quality products and customer service with a
market-competitive business model. The Company will continue to
execute on its four key strategies:
* Deep customer focus,
* Market-leading quality products and customer service,
* Continuous innovation, and
* Market-competitive business model.
While the Company's strategy remains the same, given the rapidly
evolving nature of the COVID-19 pandemic and its economic impacts,
it is challenging to predict the potential impact this pandemic
will have and, therefore, the Company is withdrawing its market
outlook issued on March 9, 2020.
A full-text copy of the Quarterly Report is available for free at
the Securities and Exchange Commission's website at:
https://is.gd/w3O3j4
About CPI Card
CPI Card Group -- http://www.cpicardgroup.com/-- is a payment
technology company and provider of credit, debit and prepaid
solutions delivered physically, digitally and on-demand. CPI helps
its customers foster connections and build their brands through
innovative and reliable solutions, including financial payment
cards, personalization and fulfillment, and Software-as-a-Service
(SaaS) instant issuance. CPI has more than 20 years of experience
in the payments market and is a trusted partner to financial
institutions and payments services providers. Serving customers
from locations throughout the United States, CPI has a large
network of high security facilities, each of which is registered as
PCI Card compliant by one or more of the payment brands: Visa,
Mastercard, American Express, and Discover.
CPI Card reported a net loss of $4.45 million for the year ended
Dec. 31, 2019, compared to a net loss of $37.46 million for the
year ended Dec. 31, 2018. As of Dec. 31, 2019, the Company had
$213.49 million in total assets, $365.92 million in total
liabilities, and a total stockholders' deficit of $152.43 million.
* * *
As reported by the TCR on April 17, 2020, S&P Global Ratings
affirmed its 'CCC+' issuer credit rating on CPI Card Group Inc.
"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," S&P
said.
In March 2020, Moody's Investors Service affirmed CPI Card Group
Inc.'s Caa1 Corporate Family Rating. The ratings affirmation on
the CFR, PDR and existing term loan rating reflects Moody's
expectation of volume growth in the company's core secure card
business as the replacement cycle of initially issued EMV card
continues, as well as modest conversion to dual interface cards as
they become a larger part of the overall payment card market.
CREATIVE HAIRDRESSERS: May 22 Auction of All Assets Set
-------------------------------------------------------
Judge Thomas J. Catliota of the U.S. Bankruptcy Court for the
District of Maryland authorized Creative Hairdressers, Inc.'s
bidding procedures in connection with the sale of substantially all
assets to HC Salon Holdings, Inc. and the direct and its indirect
Subsidiaries, subject to overbid.
The consideration for the Acquired Assets will be (i) the Assumed
Liabilities, (ii) the credit bid in an amount equal to 90% of the
Obligations (as an offset against, and reduction in the amount of
the Sellers' debt in respect of such Obligations under the DIP
Financing Agreement), and (iii) the amount, paid in cash, equal to
the amount set forth in the Wind Down Budget.
The salient terms of the Bidding Procedures are:
a. Bid Deadline: May 21 2020 at 12:00 p.m. (ET)
b. Initial Bid:
c. Deposit: 10% of the aggregate cash Purchase Price
d. Auction: The Auction, if an auction is necessary, will be
held at 10:00 a.m. (ET) on May 22, 2020. In light of the outbreak
of Coronavirus Disease 2019, no person or entity will be required
to attend the Auction in person. The Auction may be conducted by
telephone conference or remotely via any appropriate video or other
conferencing medium the Debtors may choose in their sole
discretion, such as Zoom, Skype for Business or any other
conferencing system. In advance of the Auction, the Debtors will
provide appropriate notice of the medium they choose to use to
conduct the Auction and provide information so that parties allowed
to participate in the Auction may do so.
e. Bid Increments: $100,000
f. Sale Hearing: May 28, 2020 at 12:00 p.m. (ET)
g. Sale Objection Deadline: May 27, 2020, at 5:00 p.m. (ET)
h. Closing: May 29, 2020
i. The Stalking Horse Purchaser will have the right to credit
bid.
To the extent the Stalking Horse Purchaser seeks payment of the
Expense Reimbursement (not to exceed $200,000), it will file a
notice thereof with a summary report of any times entries of its
counsel and applicable expenses and provide parties in interest
with 14 day to object, in the absence of such objection the Expense
Reimbursement will be deemed approved and will be paid in cash when
and as set forth in the Stalking Horse APA, without the need for
any further order of the Court.
The notice to all counterparties to all contracts expected to be
Designated Contracts is approved. On May 4, 2020, the Debtors will
serve the Order and the Contract Assumption Notice to the Notice
Parties. The Cure Objection Deadline is (i) May 18, 2020 at 5:00
p.m. (ET), or (ii) 5:00 p.m. (ET) on the date that is five calendar
days after the date of service of any Supplemental Contract
Assumption Notice in respect of such Designated Contract. The
Contract Assumption Objection Deadline is (i) May 18, 2020 at 5:00
p.m. (ET), or (ii) 5:00 p.m. (ET) on the date that is five calendar
days after the date of service of any Supplemental Contract
Assumption Notice in respect of such Designated Contract.
Notwithstanding the possible applicability of Bankruptcy Rules
6004, 6006, 7062, 9014 or otherwise, the terms and conditions of
the Order will be immediately effective and enforceable.
A copy of the Bidding Procedures is available at
https://tinyurl.com/yaxpk9xw from PacerMonitor.com free of charge.
About Creative Hairdressers
Creative Hairdressers, Inc., operates over 750 salons nationwide
under the trade names Hair Cuttery, BUBBLES, and Salon Cielo. The
company began in 1974 to create a quality whole-family salon where
stylists could make a good living. Visit http://www.ratnerco.com/
Creative Hairdressers and Ratner Companies, L.C., sought Chapter 11
protection (Bankr. D. Md. Lead Case No. 20-14583) on April 23,
2020. Creative Hairdressers was estimated to have $1 million to
$10 million in assets and $10 million to $50 million in
liabilities.
Debtors tapped Shapiro Sher Guinot & Sandler as legal counsel; Carl
Marks Advisors as strategic financial advisor; A&G Realty Partners
as real estate advisor; and Epiq Bankruptcy Solutions as claims
agent.
DASH GROUP: June 11 Plan Confirmation Hearing Set
-------------------------------------------------
On April 15, 2020, debtor Dash Group Properties, Inc., filed with
the U.S. Bankruptcy Court for the Eastern District of North
Carolina, Raleigh Division, a Disclosure Statement and Plan.
On April 17, 2020, Judge Stephani W. Humrickhouse conditionally
approved the Disclosure Statement and established the following
dates and deadlines:
* June 8, 2020 is fixed as the last day for filing and serving
written objections to the Disclosure Statement.
* June 11, 2020, at 10:30 a.m. in Room 208, 300 Fayetteville
Street, Raleigh, NC 27601 is the hearing on confirmation of the
plan.
* June 8, 2020 is fixed as the last day for filing written
acceptances or rejections of the Plan.
* June 8, 2020 is fixed as the last day for filing and serving
written objections to confirmation of the Plan.
A full-text copy of the order dated April 17, 2020, is available at
https://tinyurl.com/y8td4atx from PacerMonitor at no charge.
About Dash Group Properties
Dash Group Properties, Inc., filed a Chapter 11 petition (Bankr.
E.D.N.C. Case No. 20-01217) on March 18, 2020. The Debtor is
represented by Danny Bradford, Esq., at PAUL D. BRADFORD, PLLC.
DELEK US: Moody's Rates New $200MM Incremental Term Loan 'B1'
-------------------------------------------------------------
Moody's Investors Service assigned a B1 rating to Delek US
Holdings, Inc.'s proposed $200 million incremental term loan due
2025. The net proceeds from the term loan issuance will be used for
general corporate purposes. Delek's existing ratings, including the
Ba3 Corporate Family Rating and B1 rating on the existing senior
secured term loan B, as well as the stable outlook are unchanged.
"The incremental term loan will supplement Delek's liquidity and
support its rating in this period of weak and volatile refining
margins," stated James Wilkins, Moody's Vice President - Senior
Analyst.
Assignments:
Issuer: Delek US Holdings, Inc.
Senior Secured Term Loan, Assigned B1 (LGD4)
RATINGS RATIONALE
The proposed incremental secured term loan, which is pari passu
with the existing term loans, is rated B1. This is one notch below
the Ba3 CFR, reflecting the priority claim of the $1 billion
revolving credit facility, which shares the same collateral as the
term loans, but has a first lien on working capital and a second
lien on fixed assets, whereas the term loans have a first lien
priority claim on fixed assets and a second lien on working
capital. Moody's views the B1 rating assigned as more appropriate
than the Ba3 rating indicated by Moody's Loss Given Default
Methodology given the inherent volatility of the company's trade
payables and lack of material other debt outstanding that is
subordinated to the term loan.
The rapid and widening spread of the coronavirus outbreak,
deteriorating global economic outlook, falling oil and refined
products 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 refining and marketing sector has been one of
the sectors significantly affected by the shock given its
sensitivity to demand as well as oil and refined products prices.
Moody's regards the coronavirus outbreak as a social risk under its
ESG framework, given the substantial implications for public health
and safety.
Delek's Ba3 CFR reflects its moderate leverage and a large cash
balance which is indicative of its conservative financial policies
and very good liquidity that can support it through periods of
volatile refining industry profit margins and potentially high RINs
expenses. Its crack spreads have come under severe pressure in 2020
as a result of the deteriorating economic situation brought on by
the coronavirus pandemic that has generally decreased refined
products demand in the US. Additionally, the drop in crude oil
prices has raised its working capital requirements, but not
sufficiently to impair its very good liquidity.
Delek's refining and marketing operations include four refineries
of modest scale that are geographically focused and have a combined
crude oil throughput capacity of 302 thousand barrels per day
(mbpd) (all four refineries can be operated at less than 75 mbpd
allowing them to apply for waivers of RINs requirements). The
refineries are positioned in Texas, Louisiana and Arkansas where
they can benefit from both growing Permian crude oil production and
other locally-sourced crudes that are purchased at a discount to
WTI Cushing prices. The company also benefits from more stable
earnings generated by retail gas station and midstream operations,
through its ownership interests in Delek Logistics Partners, LP (B1
stable). Delek's debt to EBITDA was 3.8x as of December 31, 2019.
Delek's SGL-1 Speculative Grade Liquidity rating reflects very good
liquidity supported by a large cash balance, $0.66 billion
borrowing capacity under its $1 billion ABL revolving credit
facility due 2023 and positive free cash flow generation. The
incremental term loan will add almost $200 million to its
liquidity. The company has kept elevated cash balances ($955
million as of December 31, 2019) and has stated it expects it will
continue to do so. The company had roughly $30 million drawn on its
ABL revolving credit facility and outstanding letters of credit
totaling $310 million as of year-end 2019, which left $660 million
of borrowing capacity to fund potential growth capital expenditures
and working capital needs. (It had unused borrowing capacity
totaling $0.92 billion under the two revolving credit facilities at
Delek and Delek Logistics Partners.) The Delek revolver has a
minimum fixed charge coverage ratio of 1.0x, which is only tested
if excess availability is less than the greater of 10% of the
revolver borrowing base (capped at $1 billion) and $90 million.
Moody's does not expect the covenant to be tested through mid-2021.
The company's liquidity benefits from supply and off-take
agreements covering three refineries with J. Aron that mature on
December 30, 2022. Should Delek or J. Aron elect to terminate the
agreement, Delek would have to invest a substantial amount in
working capital. (The obligation under the supply and off-take
agreements totaled $477 million as of December 31, 2019.)
The stable outlook reflects Moody's expectation that Delek will
maintain at least adequate liquidity through 2021, even as refining
margins are under pressure.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
The ratings could be downgraded if profitability of refining
operations declines or retained cash flow to debt remains below
15%. The ratings could be upgraded if retained cash flow to debt is
sustainable above 25%, refining margins improve such that all
refineries produce free cash flow in trough market conditions and
the company increases scale by adding refineries to its portfolio
or expanding existing operations such that it benefits from larger
scale operations (refineries with throughput capacity greater than
100 mbpd).
The principal methodology used in this rating was Refining and
Marketing Industry published in November 2016.
Delek US Holdings, Inc. (NYSE: DK), headquartered in Brentwood,
Tennessee, is an independent refining and wholesale marketing
company with 302 mbpd of total crude oil throughput capacity at
four refineries with an average Nelson Complexity of 9.5, midstream
assets and retail operations.
DIEBOLD NIXDORF: All Four Proposals Approved at Annual Meeting
--------------------------------------------------------------
At Diebold Nixdorf, Incorporated's Annual Meeting held on May 1,
2020, the Company's shareholders:
(1) elected each of Arthur F. Anton, Bruce H. Besanko,
Reynolds C. Bish, Ellen M. Costello, Phillip R. Cox,
Dr. Alexander Dibelius, Matthew Goldfarb, Gary G.
Greenfield, Gerrard B. Schmid, Kent M. Stahl, and Lauren
C. States as a director to serve one-year terms or until
the election and qualification of a successor;
(2) ratified the appointment of KPMG LLP as the Company's
independent registered public accounting firm for the year
2020;
(3) approved, on an advisory basis, the Company's named
executive officer compensation; and
(4) approved an amendment to the 2017 Equity and Performance
Incentive Plan.
The Company's Board of Directors previously adopted the amendment
to the 2017 Plan based on the recommendation of the Compensation
Committee and subject to the approval of the shareholders at the
Annual Meeting. This amendment authorizes an additional 1,910,000
common shares for issuance under the 2017 Plan.
About Diebold Nixdorf
Diebold Nixdorf, Incorporated (NYSE: DBD) --
http://www.DieboldNixdorf.com/-- automates, digitizes and
transforms the way people bank and shop. The Company's integrated
solutions connect digital and physical channels conveniently,
securely and efficiently for millions of consumers each day. The
company has a presence in more than 100 countries with
approximately 22,000 employees worldwide.
Diebold reported net losses of $344.6 million in 2019, $528.7
million in 2018, and $213.9 million in 2017.
As of March 31, 2020, the Company had $3.84 billion in total
assets, $1.64 billion in total current liabilities, $2.35 billion
in long-term debt, $221.4 million in pensions, post-retirement and
other benefits, $114.6 million in deferred income taxes, $193.7
million in other liabilities, $20.6 million in redeemable
noncontrolling interests, and a total deficit of $710.6 million.
DIEBOLD NIXDORF: Posts $93.4 Million Net Loss in First Quarter
--------------------------------------------------------------
Diebold Nixdorf, Incorporated reported a net loss of $93.4 million
on $910.7 million of net sales for the three months ended March 31,
2020, compared to a net loss of $131.9 million on $1.02 billion of
net sales for the three months ended March 31, 2019.
First quarter revenue decreased 11.4%, in line with company
expectations, reflecting headwinds of approximately $69 million
from currency effects, divestitures and the COVID-19 impact.
Net cash used by operating activities increased $22.8 million. Free
cash use improved 9.3% to $65 million.
Gerrard Schmid, Diebold Nixdorf president and chief executive
officer, said: "From the earliest stages of the COVID-19 crisis,
our primary focus has been protecting the health and well-being of
our employees while delivering value to our customers, a majority
of whom are in essential industries. We have received strong
validation from our clients as we keep their critical channels up
and running. Our performance during the pandemic has fortified our
status as a trusted technology partner with resilient operations."
Schmid continued, "For the quarter, we were pleased with our
financial performance as we delivered stronger-than-expected
orders, revenue in line with our expectations and continued
year-over-year improvements in profitability and cash flow. Our DN
Now initiatives -- centered on enhancing customer relationships,
reducing costs and harvesting working capital -- are clearly
yielding results and have made our business model much more
resilient. We are leveraging the operational rigor developed over
the past two years to implement incremental cost-savings actions
that enable the company to target break-even free cash flow for the
full year -- even under difficult scenarios. Additionally, we have
taken steps to further strengthen our liquidity position to
maintain financial flexibility during the crisis. I am confident
that Diebold Nixdorf is well positioned to persevere in this
environment and emerge as a stronger company."
As of March 31, 2020, the Company had $3.84 billion in total
assets, $1.64 billion in total current liabilities, $2.35 billion
in long-term debt, $221.4 million in pensions, post-retirement and
other benefits, $114.6 million in deferred income taxes, $193.7
million in other liabilities, $20.6 million in redeemable
noncontrolling interests, and a total deficit of $710.6 million.
Net cash used by operating activities was $79.9 for the three
months ended March 31, 2020, an increase in use of $22.8 from $57.1
for the same period in 2019.
Cash flows from investing activities during the three months ended
March 31, 2020 compared to the same period in 2019 were primarily
impacted by a $42.7 decrease in proceeds from divestitures, net of
cash divested as a result of the Portavis GmbH divestiture during
the first quarter of 2020 and the Projective NV divestiture during
the first quarter of 2019. Additionally, the maturities and
purchases of investments primarily relate to short-term investment
activity in Brazil resulted in an $8.8 increase in cash usage. The
Company also reduced its capital expenditures and investments in
certain other assets primarily related to software to be sold when
compared to prior year.
Net cash provided by financing activities was $314.0 for the three
months ended March 31, 2020 compared to the $13.9 usage for the
same period in 2019, which resulted in an increase of $327.9. The
change was primarily a result of the Company drawing down its
entire availability under the Revolving Facility in response to the
uncertainty of the circumstances surrounding the COVID-19 pandemic.
The Company also had $7.7 net borrowings from uncommitted lines of
credit in connection with international projects. During the first
quarter of 2020, the Company paid $65.4 towards its term loans
primarily due to certain mandatory repayment provisions pursuant to
the Credit Agreement compared to the $6.4 during the same period in
the prior year. During the first quarter of 2019, the Company paid
$11.0 for the redemption of shares and cash compensation to Diebold
Nixdorf AG minority shareholders.
A full-text copy of the Quarterly Report is available for free at
the Securities and Exchange Commission's website at:
https://is.gd/Rj3AdY
About Diebold Nixdorf
Diebold Nixdorf, Incorporated (NYSE: DBD) --
http://www.DieboldNixdorf.com/-- automates, digitizes and
transforms the way people bank and shop. The Company's integrated
solutions connect digital and physical channels conveniently,
securely and efficiently for millions of consumers each day. The
company has a presence in more than 100 countries with
approximately 22,000 employees worldwide. Diebold reported net
losses of $344.6 million in 2019, $528.7 million in 2018, and
$213.9 million in 2017.
DILLARD'S INC: Fitch Affirms 'BB' LongTerm IDR, Outlook Negative
----------------------------------------------------------------
Fitch Ratings has affirmed the Long-Term Issuer Default Rating for
Dillard's, Inc. at 'BB'. The Rating Outlook is Negative. Fitch has
also upgraded the ratings on its recently amended credit facility
to 'BBB-'/'RR1' from 'BB'/'RR4'. The upgrade on the facility
follows the company's amendment on April 30, 2020 with the credit
facility now secured by certain inventory and deposit accounts.
The ratings and Negative Outlook reflect the significant business
interruption from the coronavirus pandemic and the implications of
a downturn in discretionary spending that Fitch expects could
extend well into 2021. Fitch anticipates a sharp decline in EBITDA
to under $50 million in 2020 from $392 million in 2019 on a revenue
decline of over 20% to $5 billion. Adjusted leverage is expected to
be over 2x in 2021, assuming revenue declines in the low-teens and
EBITDA of approximately $300 million or around 30% lower compared
to 2019 levels. Leverage could return below 2x in 2022 assuming a
sustained topline recovery. A more protracted or severe downturn
could lead to further actions.
Should Fitch's projections come to fruition, Dillard's has
sufficient liquidity to manage operations through this downturn.
Dillard's had a cash balance of $277 million as of Feb. 1, 2020,
and $779 million available under its $800 million credit facility,
net of letters of credit outstanding. The company has minimal
near-term debt maturities with the next debt maturity of $45
million in January 2023.
KEY RATING DRIVERS
Coronavirus Pandemic: Fitch expects the impact on revenues for 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. It will also depend on the economic
conditions exiting the pandemic, including unemployment and
household income trends, the impact of government support of
business and consumers, and the impact the crisis will have on
consumer behavior.
Fitch has assumed a scenario where discretionary retailers in the
U.S. are essentially closed through mid-May with sales expected to
be down 80%-90% despite some sales shifting online, with a slow
rate of improvement expected through the summer. Given an increased
likelihood of a consumer downturn, discretionary sales could
decline in the mid-to-high single digits through the holiday
season. Fitch anticipates significant growth in 2021 against a weak
2020, but expects total 2021 sales could remain 8%-10% below 2019
levels. Fitch has forecasted that department store sales, which
have been on a secular decline, will fare worse with 2021 sales
projected to decline in the low to mid-teens. Given the typical
timing of a consumer downturn (four to six quarters), revenue
trends could accelerate somewhat exiting 2021, with 2022 projected
as a modest growth year.
Assuming this scenario, Fitch expects Dillard's revenue to decline
over 20% in 2020 with EBITDA decline to under $50 million from $392
million in 2019. In 2021, Fitch expects revenue to decline in the
low teens and EBITDA to decline around 30% compared to 2019
levels.
Sector Challenges Weigh on Business: Dillard's is the sixth largest
department store chain in the U.S. in terms of sales, with 2019
retail revenue of $6 billion, 257 stores, and 28 clearance centers
in 29 states concentrated in the southeast, central and
southwestern U.S.
While most U.S. brick-and-mortar retailers are battling competitive
incursion from online and value-oriented players, sales weakness is
most pronounced for mid-tier apparel and accessories retailers.
While leading players such as Nordstrom, Kohl's, and Macy's have
been able to largely offset decline in in-store sales through the
growth in their e-commerce businesses, retailers are forced to
invest heavily in omnichannel platforms, which have driven down
EBITDA margins and reduced cash flow. Successful retailers in the
space are investing in the omnichannel model, rightsizing their
store footprint, and have a differentiated product and service
offering, including a well-developed value message, to draw
customers in. Financially and operationally stronger department
stores should be able to at least maintain their share of the
apparel and accessories space over the longer term. These companies
are expected to benefit from store closings and restructuring
activity from cash-constrained specialty apparel players and
department stores, which could further accelerate in a downturn
environment.
Dillard's ratings reflect the company's below-industry-average
sales productivity (as measured by sales psf), operating
profitability with EBITDA margin in the mid-single-digits, and
geographical concentration relative to its higher-rated department
store peers. Operational challenges in the mid-tier department
store sector and exposure to oil-dependent states of Texas,
Louisiana and Oklahoma (28% of stores) caused the company's comps
to decline meaningfully from positive 1% in 2014 to negative 2% in
2015 and negative 5% in 2016 before flattening out in 2017 and
turning positive at 2% in 2018. Comp sales declined 1% in 2019.
Overall, retail sales have declined 7% while EBITDA is down over
50% in 2019 (with EBITDA margin at 6.2% versus 12.1%) since 2014.
Dillard's has improved its merchandise assortment towards more
upscale brands, better in-store execution and strong inventory
control. The company has been able to add strong brands to its
portfolio over the last several years due to its focus on a
non-promotional strategy, which is a differentiating factor within
its peer group.
DERIVATION SUMMARY
The rating downgrades and outlook revisions for department stores
reflect the significant business interruption from the coronavirus
and the implications of a downturn in discretionary spending that
Fitch expects could extend well into 2021. Kohl's, Nordstrom,
Macy's and Dillard's are expected to have sufficient liquidity to
manage operations through this downturn, should Fitch's projections
come to fruition.
Dillard's U.S. department store peers include Nordstrom, Inc.,
Kohl's, Macy's, Inc. and J.C. Penney Company, Inc.
Dillard's (BB/Negative): Fitch anticipates a sharp decline in
EBITDA to under $50 million in 2020 from $392 million in 2019 on a
revenue decline of over 20% to $5 billion. Adjusted leverage is
expected to be over 2x in 2021, assuming sales declines in the low
teens and EBITDA of approximately $300 million or around 30% lower
compared to 2019 levels.
Dillard's ratings reflect the company's below-industry-average
sales productivity (as measured by sales psf), operating
profitability and geographical concentration relative to its larger
department store peers, Kohl's, Nordstrom and Macy's. The ratings
consider Dillard's strong liquidity and minimal debt maturities,
with adjusted debt/EBITDAR expected to return to the 2x range in
2021.
Nordstrom (BBB-/Negative): Fitch anticipates a sharp increase in
adjusted leverage to 7.0x in 2020 from 3.0x in 2019, based on
EBITDA declining to approximately $550 million from $1.6 billion on
a revenue decline of over 20% to $12 billion. Adjusted leverage is
expected to decline to the mid-3.0x range in 2021, assuming sales
declines of around 10% and EBITDA declines of about 20% in 2021
from 2019 levels. Leverage could return to under 3.5x in 2022,
assuming a sustained top-line recovery.
Nordstrom's ratings reflect its position as a market share
consolidator in the apparel, footwear and accessories space, with
its differentiated merchandise and high level of customer service
enabling the company to enjoy strong customer loyalty. The company
has a well-developed product offering across a diverse portfolio of
full line department stores, off-price Nordstrom Rack locations and
multiple online channels.
Kohl's (BBB-/Negative): Fitch anticipates a sharp increase in
leverage to 8.0x in 2020 from 2.3x in 2019. This reflects EBITDA
declining to approximately $0.5 billion from $2 billion on a sales
decline of 20% to just under $16 billion, the full drawdown on its
$1.5 billion credit facility and recent $600 million bond issuance.
Adjusted leverage is expected to be high-3x in 2021, assuming
revenue declines of around 15% and EBITDA declines of around 40% in
2021 from 2019 levels and paydown of revolver borrowings. Leverage
could decline to under 3.5x in 2022 assuming a sustained topline
recovery.
Kohl's ratings reflect its position as the second largest
department store in the U.S. and Fitch's expectation that the
company should be able to able to accelerate market share gains
post the discretionary downturn. Kohl's, Nordstrom and Macy's
continue to invest aggressively in their businesses while
maintaining healthy cash flow. These retailers have well developed
omnichannel strategies, with online sales contributing close to 25%
of total revenue (over 30% at Nordstrom), which should benefit
their top-line as retail sales continue to move online. Kohl's
off-mall real estate footprint provides some insulation from mall
traffic challenges.
Macy's (BB+/Negative): Fitch anticipates leverage increasing to
over 11.0x in 2020 from 2.9x in 2019, based on EBITDA declining to
approximately $325 million from $2 billion on a revenue decline of
nearly 25% to $19.2 billion. Adjusted leverage is expected to be
around 4x in 2021, assuming revenue declines of around 15% and
EBITDA declines of around 40% in 2021 from 2019 levels.
Macy's ratings continue to reflect its position as the largest
department store chain in the U.S. and Fitch's view of a prolonged
timeframe for the company's operating trajectory to stabilize on a
lower EBITDA base, given weak mall traffic and heightened
competition from alternate channels that include online and
off-price.
J.C. Penney (C): Fitch expects J.C. Penney's EBITDA could turn
materially negative in 2020 in the range of negative $400 million.
While the company ended 2019 with over $1.8 billion in liquidity
(cash and revolver), the significant disruption from the
coronavirus have led to heightened liquidity and therefore
restructuring concerns given the projected cash burn. In an 8-K
filing on April 15, 2020, J. C. Penney disclosed that it elected
not to make the approximately $12 million interest payment due and
payable on April 15, 2020 with respect to its 6.375% senior notes
due 2036.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within its Rating Case for the Issuer
Fitch's projections prior to disruption related to coronavirus
are:
-- Comps to be flat to modestly negative over the next three
years.
-- EBITDA to remain in the high $300 million range, with EBITDA
margin in 6% range.
-- FCF of approximately $150 million to $160 million annually.
FCF was expected to be largely directed towards share
buybacks.
-- Adjusted debt/EBITDAR to remain in the mid-1x range.
Fitch's revised projections reflecting the significant business
interruption from coronavirus and the ramifications for a likely
downturn in discretionary spending extending well into 2021 are:
-- Fitch expects Dillard's revenue to decline over 20% in 2020
with EBITDA declining to under $50 million from $392 million
in 2019, assuming store closures through mid-May and a slow
recovery in customer traffic for the remainder of the year.
While 2021 revenue and EBITDA should significantly rebound
from depressed 2020 levels, Fitch expects 2021 revenue of
approximately $5.6 billion and EBITDA of around $280 million
to be approximately 12% and 30% below 2019 levels given its
expectations of a likely downturn in discretionary spending
that could extend well into late 2021. Fitch's revenue
expectations reflect its views that retail discretionary
spending will decline 40% in first half 2020, be down
mid-to-high single digits in second half 2020, and sales in
2021 will be down 8%-10% from 2019 levels, with declines
in department store sales more material on a relative basis.
-- Beginning 2022, Dillard's could resume low-single digit
topline and EBITDA growth.
-- FCF is expected to be negative by approximately $150 million
in 2020, largely due to a near $350 million reduction in
EBITDA, somewhat mitigated by lower cash taxes and reduced
capex. FCF in 2021 could turn positive as EBITDA improves.
-- Adjusted debt/EBITDAR, which was 1.6x in 2019 is expected
to increase sharply in 2020 on minimal EBITDA, before
declining to the mid-2x in 2021 on EBITDA swings.
-- Dillard's ended 2019 with $277 million of cash and
investments and $779 million available on its $800
million unsecured revolver. Fitch anticipates Dillard's
has sufficient liquidity to weather the current
operating climate, should Fitch's rating case assumptions
come to fruition.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- A stabilization case would require Dillard's to meet Fitch's
revised projections that include EBITDA increasing to
approximately $300 million in 2021 and close to $325 million
in 2022, with adjusted debt/EBITDAR moderating to mid-2x in
2021 and under 2x in 2022.
-- An upgrade could result in the event that Dillard's generates
low single-digit positive comparable store sales gains and
EBITDA in excess of $500 million, with adjusted debt/EBITDAR
in the mid-1x.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- A negative rating action could result from a more protracted
or severe downturn and reduced confidence in Dillard's
ability to return to top line and profitability growth in
2022 such that EBITDA remains below $300 million and
adjusted debt/EBITDAR is sustained above mid-2x.
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
In spite of the significant decline in EBITDA over the past few
years, Dillard's credit metrics remain strong with adjusted
debt/EBITDAR in the 1.5x range over the last few years. Dillard's
has sufficient liquidity to manage operations through this
downturn. Dillard's ended with a cash balance of $277 million as of
Feb. 1, 2020, and $779 million available under its $800 million
credit facility, net of letters of credit outstanding. The company
has minimal near-term debt maturities with the next debt maturity
of $45 million in January 2023.
On April 30, 2020, the company amended its $800 million credit
facility to be secured by certain deposit accounts of the company
and certain inventory and deposit accounts of certain subsidiaries.
The borrowing base is deemed an amount equal to i) 90% multiplied
by the appraised value multiplied by eligible inventory, minus (ii)
the aggregate amount of all availability reserves. The commitment
remains at $800 million with a $200 million accordion option with
the same maturity date of Aug. 9, 2022. So long as availability
exceeds $100 million and no event of default occurs and is
continuing, there are no financial covenant requirements under the
amended credit agreement versus the prior unsecured credit facility
where Dillard's was expected to maintain leverage (total
debt/EBITDA) ratio of less than 3.5x. Based on Fitch's EBITDA
projections, Dillard's would have breached the covenant in the
second quarter of 2020.
Annual capex in 2019 was slightly lower than 2018 at approximately
$100 million, and was used for store updates (in the more
productive areas of the store), modest new store openings and
online growth initiatives. Net of new store openings, Dillard's has
closed 11 stores in the last six years, with overall square footage
down over 10% over the last 10 years.
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.
Dillard's $800 million senior secured revolver is rated
'BBB-'/'RR1', indicating outstanding (91%-100%) recovery prospects.
The senior unsecured notes are rated 'BB'/'RR4', indicating average
(31%-50%) recovery prospects. The $200 million in capital
securities due 2038 are rated two notches below the IDR at
'B+'/'RR6', reflecting their structural subordination. Dillard's
owns 90% of its retail sf, all of which is unencumbered.
SUMMARY OF FINANCIAL ADJUSTMENTS
-- EBITDA adjusted to exclude stock-based compensation;
-- Operating lease expense capitalized by 8x to calculate
historical and projected adjusted debt.
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
The highest level of ESG credit relevance, if present, is a score
of 3. This means ESG issues are credit-neutral or have only a
minimal credit impact on the entity(ies), either due to their
nature or to the way in which they are being managed by the
entity(ies).
EASTERN POWER: S&P Affirms 'BB-' Senior Secured Debt Rating
-----------------------------------------------------------
S&P Global Ratings affirmed its 'BB-' rating on Eastern Power LLC's
senior secured facilities. The '3' recovery rating is unchanged,
indicating S&P's expectations for meaningful recovery (50%-70%;
rounded estimate: 55%) in a default scenario.
Eastern is a project-financed portfolio of six merchant assets
totaling 3.7 gigawatts (GW). These plants service PJM (American
Electric Power, AEP, and Commonwealth Edison, ComEd, zones) and New
York Independent System Operator (NYISO, Zone J
The ratings affirmation primarily reflects S&P's expectation that
NY Zone J capacity prices will be higher than previously
anticipated and that the project will sell Gowanus and Narrows and
pay down an additional net $150 million on the term loan B in 2025.
While partially offset by a reduction in S&P's PJM capacity price
assumptions, metrics are in line with 'BB-' peers.
The stable outlook reflects Eastern Power's reliance on predictable
capacity payments for most of its cash flow over the next few
years, S&P's expectations for sound operational performance, and
debt outstanding on the term loan at refinancing of around $525
million (after the assumed Gowanus and Narrows residual asset
sale). S&P expects robust DSCRs near and above 2x until refinancing
in 2025 when DSCRs drop to 1.32x minimum in its analysis. the
rating agency further expects stable operational performance and
robust cash sweeps or voluntary prepayments that accelerate paydown
on the term loan.
"We would likely lower the rating if expected debt service coverage
fell below 1.2x on a sustained basis in the post-refinancing
period. This could stem from operational issues that lower
availability and increase maintenance costs, lower-than-expected
capacity prices in NYISO Zone J over the next few years, sooner
than expected implementation of NY NOx limits for peakers, or
higher debt outstanding at refinancing," S&P said.
"While unlikely at this time, an upgrade would likely require
significantly lower debt at maturity, DSCRs over 1.5x on a
sustained basis (including the refinancing period), cash flow
visibility beyond the current 3 year cleared capacity period, and
no expectation of future upsizing," the rating agency said.
ELK PETROLEUM: Unsecureds to be Paid from EPA Warrants & GUC Trust
------------------------------------------------------------------
Debtor Elk Petroleum Inc. (EPI) filed with the U.S. Bankruptcy
Court for the District of Delaware a Disclosure Statement with
respect to Plan of Liquidation dated April 21, 2020.
The Global Settlement Agreement and the Global Settlement Order
contain the agreement of significant parties-in-interest in the
Chapter 11 Case to the terms of this EPI Plan and certain
distributions provided thereunder. The Global Settlement Agreement
and the Global Settlement Order also provide a path for (i) EPI to
address its Claims and the EPI Preferred Interest, (ii) liquidate
its assets, including its interests in the Grieve Entities and
Madden, and (iii) Distribute the net proceeds through the EPI
Liquidating Plan in accordance with the Global Settlement Agreement
and the Global Settlement Order.
The EPI Plan effectuates a liquidation of the Debtor. Under the EPI
Plan, all of the Debtor’s assets will be transferred to a
newly-created EPI Liquidating Trust. The EPI Plan incorporates the
Bankruptcy Court-approved settlement between the Debtor and each of
its non-debtor subsidiaries, the AB Parties, Riverstone, BSP, and
the Holders of EPI Preferred Interests. Creditors with Allowed
Claims against the Debtor and Holders of Allowed EPI Preferred
Interests in the Debtor will receive Distributions on account of
such Claims or Preferred Interests out of available assets of the
Debtor’s estate, subject to the priorities of the Bankruptcy Code
and, to the extent applicable, subject to and in accordance with
the terms of the Global Settlement Order, the Global Settlement
Agreement, and the EPI Plan.
All assets of the Debtor, aside from the EPA Warrants, which
include all of the Debtor’s litigation claims and interests in
all non-debtor subsidiaries, will be liquidated or retained for the
benefit of creditors and Holders of Allowed EPI Preferred
Interests, under the supervision of the EPI Liquidating Trustees,
as set forth in the EPI Plan and the EPI Liquidating Trust
Agreement.
EPI’s litigation claims will be vested in the EPI Liquidating
Trust and prosecuted or otherwise liquidated under the supervision
of the EPI Liquidating Trustees in accordance with the terms of the
EPI Plan and the EPI Liquidating Trust. Similarly, EPI’s
non-debtor Affiliates with ongoing operations, the Grieve Entities
and Madden, will be liquidated or otherwise disposed of and the net
proceeds of such liquidation or disposition, if any will be
available to the EPI Liquidating Trust or EPI for Distributions in
accordance with the EPI Plan, the Global Settlement Agreement, and
the Global Settlement Order.
Class 3 — General Unsecured Claims. The Debtor estimates that
Allowed General Unsecured Claims will total approximately $60
million, as of the EPI Effective Date. Except to the extent that a
Holder of an Allowed Class 3 General Unsecured Claim agrees to a
less favorable treatment, each Holder of an Allowed Class 3 General
Unsecured Claim shall receive its Pro Rata share of (i) the EPA
Warrants and (ii) the GUC Liquidation Trust Distribution, in
accordance with the terms of the Global Settlement Agreement and
Global Settlement Order.
Thereafter, except to the extent that a Holder of an Allowed Class
3 General Unsecured Claim agrees to a less favorable treatment,
each Holder of an Allowed Class 3 General Unsecured Claim shall
receive its Pro Rata share of the Class 3 Distribution.
Class 7 consists of all EPI Interests, other than EPI Preferred
Interests. The Holders of the Class 7 EPI Interests shall have
their EPI Interests extinguished as of the EPI Effective Date and
shall receive no distributions under this EPI Plan.
The source of all distributions and payments under this EPI Plan
shall be the Liquidating Trust Assets and the proceeds thereof,
including, without limitation, the Debtor’s Cash on hand and
proceeds from the sale or other disposition of the remaining
property of the Debtor and its non-Debtor subsidiaries and
prosecution of Causes of Action, as set forth in and subject to the
terms of the Global Settlement Agreement.
A full-text copy of the disclosure statement dated April 21, 2020,
is available at https://tinyurl.com/yasjtem3 from PacerMonitor at
no charge.
Special Counsel for the Debtor:
CHIPMAN BROWN CICERO & COLE, LLP
William E. Chipman, Jr.
Mark L. Desgrosseilliers
Hercules Plaza
1313 North Market Street, Suite 5400
Wilmington, Delaware 19801
Telephone: (302) 295-0191
Facsimile: (302) 295-0199
E-mail: chipman@chipmanbrown.com
desgross@chipmanbrown.com
About Elk Petroleum
Elk Petroleum Inc. -- https://www.elkpet.com/ -- is an oil and gas
company specializing in enhanced oil recovery (EOR).
Elk Petroleum and its affiliates sought protection under Chapter 11
of the Bankruptcy Code (Bankr. D. Del. Lead Case No. 19-11157) on
May 22, 2019. At the time of the filing, Elk Petroleum estimated
assets of between $1 million and $10 million and liabilities of
less than $50,000. The petition was signed by Scott M.
Pinsonnault, chief restructuring officer.
The Debtors tapped Norton Rose Fulbright US LLP and Womble Bond
Dickinson (US) LLP as legal counsel; Ankura Consulting Group, LLC,
as restructuring advisor; Seaport Global Securities LLC as
investment banker; Opportune LLP as valuation analysis provider;
and Bankruptcy Management Solutions, Inc., as claims and noticing
agent.
Andrew Vara, acting U.S. trustee for Region 3, appointed a
committee of preferred equity security holders on June 19, 2019.
The equity committee tapped Morris, Nichols, Arsht & Tunnell LLP as
its legal counsel, and Teneo Capital Llc as its financial advisor
and investment banker.
No official committee of unsecured creditors has been appointed in
the Debtors' cases.
ENVISION HEALTHCARE: S&P Upgrades ICR to 'CCC'; Outlook Negative
----------------------------------------------------------------
S&P Global Ratings raised its issuer credit rating on Envision
Healthcare Corp. to 'CCC' from 'SD' (selective default). S&P raised
the rating on the senior unsecured notes due in 2026 (the subject
of the recent exchange offer) to 'CC' from 'D'. The recovery rating
remains '6'.
S&P lowered its issue-level rating on the company's first-lien
secured debt due in 2025 to 'CCC' from 'B' with a '3' recovery
rating, reflecting its expectation of 50%-70% recovery (rounded
estimate: 50%) in the event of a default, and removing this debt
from CreditWatch with negative implications, where S&P placed it
April 6, 2020.
S&P assigned its 'CCC' issue-level rating and '3' recovery rating
to the company's new first-lien senior secured term loan due in
2025, reflecting its expectations of 50%-70% recovery (rounded
estimate: 50%) in the event of a default.
The upgrade of Envision to 'CCC' reflects the completion of the
distressed exchange and significant risks over the next 12 months
given the unprecedented business disruption related to the COVID-19
pandemic.
"Since mid-March, sharp declines across its business are tied to
directives to delay all nonurgent medical procedures, which we
expect to result in significant revenue and EBITDA contraction and
cash shortfalls in the second and third quarters of 2020. Envision
remains very highly leveraged with the relatively small reduction
in debt from the distressed exchange. We now see risk Envision
could have insufficient liquidity to overcome the trough in
business given an expected slow recovery that may take several
quarters at best. This would lead to an uncertain timeframe for the
business to be self-sufficient without external sources of
liquidity. Moreover, we see significant uncertainty around how any
lasting impact on the health delivery system from the pandemic will
affect its prospects," S&P said.
Envision's business level is very depressed by the delay in
elective procedures as well as patient fears of going to the
emergency room (ER) even when necessary. In late March, the company
reported it temporarily closed about a third of its ambulatory
surgery centers, with 65%-75% declines in its ambulatory surgery
centers that remained open; a 25%-30% drop in ER visits; and
significant declines in both anesthesia cases (55%-65%) and
radiology readings (15%-20%).
"While the near-term decline has been extensive, we expect business
to improve as certain delayed procedures become essential. We think
the recovery could be slow given the logistical complexity of
restarting these businesses and many people hesitating to seek care
viewed as discretionary while the COVID-19 virus remains an ongoing
public health threat," S&P said.
"We believe Envision's capacity to weather the next 12 months and
be in a position to sustain its significant debt burden is
questionable given its near-term liquidity needs, uncertainty
regarding the speed and strength of the recovery, and the extent to
which it can cut costs," the rating agency said.
(ESG) credit factors for this rating change:
-- Health and safety
The negative outlook reflects the risk Envision's liquidity could
be further constrained in the second half of 2020, depending on the
severity of the coronavirus pandemic, and the risk the company
cannot remain in compliance with its financial covenants, leading
to risk of a restructuring. It also reflects risk the company could
launch additional transactions that S&P would view as tantamount to
a distressed exchange.
"We could downgrade Envision if liquidity, including monies
received from various stimulus bills, becomes even more constrained
such that we believe it may not be able to meet its operating and
fixed-charge expenses over the next six months. We could also
downgrade the company if it proceeds with another distressed
exchange," S&P said.
"We could revise the outlook to stable if it becomes more certain
Envision has sufficient liquidity to withstand the impact of the
pandemic, giving us greater confidence that the capital structure
could be sustainable over the next year," S&P said.
EVEREADY SERVICES: $90K Cash Sale of Assets to CSMC Approved
------------------------------------------------------------
Judge Harlin DeWayne Hale of the U.S. Bankruptcy Court for the
Northern District of Texas authorized Eveready Services, Inc.'s
sale of assets, consisting mainly of the racking and related moving
equipment and its list of customers, to CSMC, LLC for $90,000,
cash.
The sale is free and clear of all liens, interests, claims and
encumbrances, except for the liens that secure 2020 ad valorem
taxes which will remain attached to the Assets.
At Closing, all proceeds will be paid to Debtor to be held in the
DIP account subject to further Order of the Court. All liens for
2020 ad valorem taxes will attached to the proceeds.
The sale is final and will be effective and enforceable immediately
upon entry and will not be stayed pursuant to Bankruptcy Rule
6004(g).
About Eveready Services
Eveready Services, Inc., provides specialized logistics services to
interior designers and their craftspeople, suppliers and clientele.
The services offered include delivery, installation, art handling
and installation, receiving, storage, shipping and household
transfer.
Eveready Services sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. N.D. Tex. Case No. 20-30225) on Jan. 23,
2020. At the time of the filing, the Debtor was estimated to have
assets of between $50,000 and $100,000 and liabilities of between
$1 million and $10 million. The Debtor is represented by Eric A.
Liepins, P.C.
EVERGREEN SKILLS: S&P Cuts ICR to 'D' on Missed Interest Payments
-----------------------------------------------------------------
S&P Global Ratings lowered its issuer credit rating on Evergreen
Skills Lux S.ar.l (doing business as Skillsoft) to 'D' from 'CCC-'
and all of its issue-level ratings on its debt to 'D'.
On May 1, 2020, Skillsoft announced that it entered into
forbearance agreements with its senior debt and AR facility
lenders. S&P lowered its ratings on Skillsoft to 'D' because it
expects the company to pursue a debt restructuring following the
company's missed interest payments for the quarter ended April 30,
2020. The company's debt facilities comprise $1.3 billion of
first-lien debt, $670 million of second-lien debt, an $80 million
revolver, and a $75 million AR facility.
EVOLUTIONARY GENOMICS: Plante & Moran Raises Going Concern Doubt
----------------------------------------------------------------
Evolutionary Genomics, Inc. filed with the U.S. Securities and
Exchange Commission its annual report on Form 10-K/A, disclosing a
net loss (attributable to common stockholders) of $1,062,519 on
$122,686 of service and grant revenue for the year ended Dec. 31,
2019, compared to a net loss (attributable to common stockholders)
of $1,340,984 on $114,814 of service and grant revenue for the year
ended in 2018.
The audit report of Plante & Moran, PLLC states that the Company
has not generated significant revenue and suffered recurring losses
from operations, which raise substantial doubt about its ability to
continue as a going concern.
The Company's balance sheet at Dec. 31, 2019, showed total assets
of $4,242,637, total liabilities of $1,006,768, and $333,725 in
total stockholders' deficit.
A copy of the Form 10-K/A is available at:
https://is.gd/0LOLcR
Evolutionary Genomics, Inc. engages in the research and
identification of positively selected genes in humans, animals, and
commercial crops. The company develops Adapted Traits Platform, a
technology platform to identify genes for enhancing crop plant
traits, such as yield, sugar content, biomass, drought tolerance,
and pest/disease resistance. It serves governmental organizations,
non-profit foundations, and commercial entities. The company was
incorporated in 1990 and is based in Castle Rock, Colorado.
EXACTECH INC: S&P Cuts ICR to 'CCC+'; Ratings on Watch Negative
---------------------------------------------------------------
S&P Global Ratings lowered its issuer credit rating on orthopedic
implant manufacturer Exactech Inc. to 'CCC+' from the 'B-' and its
issue-level rating on its first-lien debt to 'CCC+' from 'B-' and
placed all of its ratings on the company on CreditWatch with
negative implications. S&P's '3' recovery rating on the first-lien
debt remains unchanged.
Disruption due to the coronavirus pandemic will significantly
reduce the company's sales, EBITDA, and cash flow generation and
lead it to generate a cash flow deficit for the fifth consecutive
year.
"We believe that Exactech's top line, profitability, and cash flow
generation will decline due to the pandemic because of its exposure
to orthopedic products. In mid-March, the Centers for Medicare and
Medicaid Services (CMS) recommended that non-elective procedures be
delayed to limit the spread of the coronavirus and to conserve
personal protective equipment. In addition, the majority of U.S.
states have instructed their citizens to shelter at home. We expect
these measures to reduce the volume of orders for the company's
products, especially in the second and third quarters, because we
expect a large percentage of orthopedic procedures to be delayed,"
S&P said.
The expected decline in Exactech's EBITDA will cause its leverage
to temporarily spike in 2020.
"While we believe the demand for the company's products will likely
return to more normalized levels once the virus is contained, its
demand will also depend on the available surgical and hospital
capacity as well as patient behavior. More importantly, we now
expect Exactech to reach its cash flow breakeven point at least a
year later than we previously thought, which indicates that
continued deficits will burden its already constrained liquidity.
Although the company can scale back on some discretionary capital
expenditure (capex) to preserve cash, we still believe it will
generate a cash flow deficit in 2020-2021, further constraining its
liquidity position," S&P said.
Exactech's liquidity will tighten due to the projected decline in
its EBITDA while it maintains negligible headroom for further
EBITDA deterioration under its financial covenant requirements.
"We expect Exactech to control its costs amid the volume softness
and estimate that about 60% of its cost structure is variable.
However, the company is also subject to fixed charges such as
certain labor costs and interest expense. Despite Exactech's $48
million of cash on hand as of the end of March 2020, including the
recent full draw on its revolver, we expect its liquidity to
tighten given the projected decline in its volume and
profitability," S&P said.
In addition, the company does not have a significant cushion under
its springing financial covenant, which is triggered when its
outstanding revolver balance exceeds 35% of the facility's
capacity. As of March 31, 2020, the company had already fully drawn
on its $50 million revolver. S&P estimates that Exactech's EBITDA
would need to decline by more than 30% from its 2019 levels to
cause it to breach the covenant.
Environmental, social, and governance (ESG) factors relevant to the
rating action:
-- Health and safety
The CreditWatch placement reflects the heightened risk of a
near-term liquidity crisis stemming from the company's continued
cash flow deficits and tightening covenant cushion. S&P intends to
resolve the CreditWatch placement once it has more clarity around
the coronavirus' effects on Exactech's business prospects and the
company addresses the risk of a liquidity crisis.
FILTRATION GROUP: S&P Alters Outlook to Negative, Affirms 'B' ICR
-----------------------------------------------------------------
S&P Global Ratings revised the outlook on U.S.-based filtration
products manufacturer Filtration Group Corp. (FGC) to negative from
stable and affirmed the 'B' issuer credit and issue-level ratings.
Weak auto, industrial, and oil and gas (O&G) end markets will cause
FGC's revenue to decline in 2020. Extended closures of customers'
factories have reduced sales of FGC's automotive emission control
products (about 18% of 2019 revenues) thus far in 2020.
"We expect challenges in restarting the supply chain and low demand
for light vehicles will further dampen demand through the remainder
of the year. Industrial air and hydraulic end markets (20%) that
are tied to industrial output will also likely be weak as we
project U.S. real GDP will fall by 5.2% in 2020. Product demand for
oil and gas applications (10%), including the filtering of jet
fuel, will also be soft in 2020," S&P said.
The negative outlook reflects the high degree of uncertainty in the
economic environment and the potential for a lower rating over the
next 12 months if weak end-market demand or operating performance
cause credit measures or free cash flow to be weaker than S&P
expects.
"We could lower our rating on FGC if we expect adjusted debt to
EBITDA will be sustained above 7.5x. This could occur if the end
market demand or operating performance are weaker than we expect in
our base case," S&P said.
"We could revise the outlook to stable if it is likely that
adjusted debt to EBITDA will remain below 7.5x and the company will
continue to generate significant free cash flow. This could occur
if the macroeconomic environment stabilizes over the next 12
months," the rating agency said.
FIVE STAR: Lowers Net Loss to $17.2 Million in First Quarter
------------------------------------------------------------
Five Star Senior Living Inc. (Nasdaq: FVE) reported a net loss of
$17.21 million on $297.44 million of total rvenues for the three
months ended March 31, 2020, compared to a net loss of $33.21
million on $355.52 million of total revenues for the three months
ended March 31, 2019. Net loss for the first quarter of 2020
decreased approximately $16.0 million compared to the same period
in 2019, primarily due to a decrease of $53.4 million in rent in
connection with the Restructuring Transactions, partially offset by
a loss of $22.9 million on the termination of the Company's leases
in connection with the Restructuring Transactions.
As of March 31, 2020, the Company had $346.75 million in total
assets, $83.96 million in total current liabilities, $62.18 million
in total long-term liabilities, and $200.61 million in total
shareholders' equity.
As of March 31, 2020, the Company had $36.6 million of unrestricted
cash and cash equivalents. As of March 31, 2020 and Dec. 31, 2019,
the Company had current assets of $148.6 million and $143.4
million, respectively, and current liabilities of $84.0 million and
$164.3 million, respectively.
Katie Potter, president and chief executive officer, made the
following statement regarding the first quarter 2020 results:
"Amidst the COVID-19 pandemic, the health and well-being of our
residents, clients and team members remains Five Star's number one
priority. We are following the operating guidelines and
recommendations of the CDC and federal, state and local regulatory
authorities, and incorporating them into our already comprehensive
infectious disease prevention policies, procedures and protocols.
We also remain focused on improving our operating results and
efficiencies.
"In the first quarter of 2020, we generated approximately $12.4
million of Adjusted EBITDA, grew both revenues and margin in our
rehabilitation and wellness services division, and made progress on
team member recruiting and retention programs as well as
cost-saving initiatives. We have approximately $37.0 million cash
on hand and no borrowings on our $65.0 million revolving credit
facility.
"We expect to continue to make strides on our strategic initiatives
while continuing to prioritize the health and well-being of our
residents, clients and team members."
Restructuring of Business Arrangements with Diversified Healthcare
Trust:
As previously announced, FVE entered into a transaction agreement,
or the Transaction Agreement, with Diversified Healthcare Trust
(Nasdaq: DHC) to restructure FVE's business arrangements pursuant
to which, effective Jan. 1, 2020:
* FVE's then existing five master leases with DHC as well as
FVE's existing management and pooling agreements with DHC
were terminated and replaced with new management agreements
for all of these senior living communities, together with a
related omnibus agreement, the New Management Agreements;
* FVE issued 10,268,158 of its common shares to DHC and an
aggregate of 16,118,849 of its common shares to DHC's
shareholders of record as of Dec. 13, 2019, or together, the
Share Issuances; and
* as consideration for the Share Issuances, DHC provided to
FVE $75.0 million by assuming certain of FVE's working
capital liabilities and through cash payments. Such
consideration, the New Management Agreements and the Share
Issuances are collectively referred to as the Restructuring
Transactions.
Overview and Results for the Quarter Ended March 31, 2020:
* FVE is continuing to monitor the risks related to the COVID-
19 pandemic and the impact to its business and to the senior
living industry as a whole. FVE's highest priority is
maintaining the health and well-being of its residents,
clients and team members. As a result, the Company has,
among other steps:
- restricted access to its senior living communities to
only essential visitors and team members;
- closed its Ageility clinics for in person services;
- enhanced infectious disease prevention and control
policies, procedures and protocols;
- provided additional and enhanced training to team
members at all levels of the organization;
- worked with vendors to ensure adequate supplies and
personal protective equipment are available to our
communities; and
- limited sales and marketing activities.
* Also in connection with the COVID-19 pandemic, FVE is
experiencing occupancy declines, increased labor costs and
increased costs related to medical and sanitation supplies,
and expects these negative trends to continue throughout at
least the second quarter of 2020.
* Combined senior living revenues and management fees for
communities FVE manages on behalf of DHC for the quarter
ended March 31, 2020 decreased to $38.4 million from $270.5
million for the same period in 2019, primarily due to the
conversion of our formerly leased senior living communities
to managed communities as a result of the Restructuring
Transactions, which reduced the number of communities FVE
owned and leased from 190 to 24, while increasing the number
of managed communities to 244 from 76 as compared the same
period in 2019. Senior living revenues at communities FVE
operated continuously since Jan. 1, 2019 was $20.7 million,
which represents a $0.2 million or 0.9% decrease from the
same period in 2019, primarily due to declines in occupancy
and average monthly rates.
* Rehabilitation and wellness services revenue for the first
quarter of 2020 increased to $21.0 million from $10.4
million for the same period in 2019, primarily due to an
increase in the number of outpatient clinics and the impact
of $6.9 million of inpatient clinic revenue at communities
FVE previously leased from DHC during the first quarter of
2019, which was previously eliminated in consolidation
accounting prior to the Restructuring Transactions.
Revenues increased $3.7 million compared to the March 31,
2019 pro forma results, which consider the financial results
as if the Restructuring Transactions had closed on Jan. 1,
2019, and is primarily attributable to the growth of opening
66 net new clinics throughout the second, third and fourth
quarters of 2019.
* Earnings before interest, taxes, depreciation and
amortization, or EBITDA, for the first quarter of 2020 was
$(13.1) million compared to $(22.8) million for the same
period in 2019. Adjusted EBITDA was $12.4 million for the
first quarter of 2020 compared to $2.0 million for the same
period in 2019. EBITDA and Adjusted EBITDA are non-GAAP
financial measures.
* As of March 31, 2020, FVE had unrestricted cash and cash
equivalents of $36.6 million, no amounts outstanding on its
$65.0 million revolving credit facility and $7.4 million
outstanding on a mortgage note.
A full-text copy of the Quarterly Report is available for free at
the Securities and Exchange Commission's website at:
https://is.gd/lyKYt0
About Five Star Senior
Headquartered in Newton, Massachusetts, Five Star Senior Living
Inc. -- http://www.fivestarseniorliving.com/-- is a senior living
and rehabilitation and wellness services company. As of March 31,
2020, FVE operated 268 senior living communities (31,272 living
units) located in 32 states, including 244 communities (28,960
living units) that it managed and 24 communities (2,312 living
units) that it owned or leased. FVE operates communities that
include independent living, assisted living, continuing care
retirement and skilled nursing communities. Additionally, the
Company's rehabilitation and wellness services segment includes
Ageility Physical Therapy SolutionsTM, or Ageility, a division of
FVE, which provides rehabilitation and wellness services within FVE
communities as well as to external customers. As of March 31,
2020, Ageility operated 203 outpatient rehabilitation clinics and
41 inpatient rehabilitation clinics. FVE is headquartered in
Newton, Massachusetts.
Five Star Senior reported a net loss of $19.99 million for the year
ended Dec. 31, 2019, compared to a net loss of $74.08 million for
the year ended Dec. 31, 2018. As of Dec. 31, 2019, the Company had
$345.79 million in total assets, $164.30 million in total current
liabilities, $61.51 million in total long-term liabilities, and
$119.98 million in total shareholders' equity.
FORD MOTOR: Fitch Cuts LongTerm IDR to 'BB+', Outlook Negative
--------------------------------------------------------------
Fitch Ratings has downgraded the Long-Term Issuer Default Ratings
of Ford Motor Company and its subsidiary Ford Motor Credit Company
LLC to 'BB+' from 'BBB-'.
The Rating Outlook for both Ford and Ford Credit is Negative.
KEY RATING DRIVERS
Ratings Downgrade: The downgrade of Ford's Long-Term IDR to 'BB+'
with a Negative Outlook reflects Fitch's significant concerns
regarding the extended period during which Ford's operations in
most global regions outside China have been shut down and
expectations that once its operations are restarted, the company
will be facing a much weaker global macroeconomic environment than
previously envisioned. With this extended downturn, Fitch estimates
Ford will not return to a financial profile consistent with the
prior rating by the end of 2021. In addition, although Ford's
recent issuance of $8.0 billion in senior unsecured notes has
relieved the company of near-term liquidity concerns, it will leave
the company with higher leverage over the longer term, along with a
substantial maturity wall in 2023 when the first $3.5 billion
tranche of the new notes comes due.
At the time of Fitch's last rating action in March 2020, Fitch
expected that Ford's North American operations would be shut down
completely for a month and then ramp to 50% of previously expected
output for another month before normalizing toward the latter half
of 2020. Fitch also assumed that Ford's European production would
be shut down for six weeks before normalizing in the latter half of
the year. Currently, Ford's North American production remains shut
down and appears unlikely to restart before mid-May 2020 at the
earliest, while most of its operations in Continental Europe are
beginning a phased reopening during the week of May 4, 2020. As
such, Ford's operations outside China will have been completely
shut down for roughly a month longer than Fitch had previously
expected.
Fitch had also previously expected a quicker bounce-back in
production levels following the shutdown period than is now likely.
Fitch had expected Ford's production to largely normalize in the
latter half of 2020 and return to the pre-pandemic trend-line for
production in 2021. Based on the depth of the pandemic-induced
global recession, Fitch now expects a much slower return to the
pre-pandemic run rate, which Fitch now expects will occur in 2022.
The Negative outlook reflects Fitch's continued concerns that the
effects of the recession on Ford's credit profile could be even
more severe than currently expected, especially as North American
production has yet to restart. Fitch could consider a further
negative rating action if Ford's operations remain shut down for
several more months or if sales in the latter half of 2020 remain
severely depressed. On the other hand, Fitch could consider
revising the Outlook to Stable if post-pandemic sales levels are
solid and the company demonstrates an ability to consistently
generate positive FCF.
Heaviest Cash Outflows Are Complete: Due to the working capital
position of the North American auto manufacturers, it is typical
for them to burn substantial levels of cash when their operations
are disrupted. This is because the manufacturers generally receive
cash from vehicle sales shortly after the vehicles are released
from plants, but they typically pay their suppliers on a roughly
45-day lag. Ford noted on its first quarter 2020 earnings call that
the outflow from supplier payables during the shutdown would be
about a $13 billion use of cash, but that it would move beyond this
by early May. Once it cycles past the working capital-related
outflow, cash burn will be considerably lower, and the company
should start generating cash once production resumes.
Fitch currently estimates that FCF for the full year will be an
outflow of roughly $8.5 billion, although this is based on the
company's North American plants restarting in the latter half of
May 2020. This figure also incorporates capex running at about $6.5
billion for the year and the company spending about $1.0 billion on
the global redesign during the year. Fitch assumes that dividends
will remain suspended through 2020.
Fitch's forecast does not consider a potential balance sheet unwind
at Ford Credit as a result of significantly lower vehicle sales. In
a period of much lower sales, Ford Credit could potentially become
highly cash generative, which could be an additional source of cash
for Ford. However, the level of cash it could generate would depend
on the ongoing performance of Ford Credit's underlying asset
portfolio in a recessionary environment.
Liquidity Preservation Actions: Liquidity remains healthy despite
the substantial cash usage into May. In March 2020, Ford fully drew
on its revolvers, including the full $13.4 billion on its corporate
credit facility and the full $2.0 billion on its supplemental
credit facility. In addition, the company suspended its regular
dividend, which would have amounted to roughly $600 million per
quarter, to further conserve cash. The company also cut its planned
capex for the year by $500 million and deferred portions of its
executives' salaries. In April 2020, Ford issued a total of $8.0
billion in senior unsecured notes in three tranches to further
bolster its liquidity. Following the notes issuance, Fitch believes
Ford has sufficient liquidity to withstand a prolonged period of
weak vehicle sales and production. However, the company's decision
to issue long-term debt will result in it carrying higher leverage
than previously anticipated once production levels have
normalized.
Fitch expects Ford will look to begin repaying its revolver
borrowings once its plants in North America and Europe are largely
up and running and the company begins generating positive FCF.
Several members of Ford's executive leadership team have deferred
at least a portion of their salaries until the company has repaid
$7.0 billion of the revolver borrowings.
Global Redesign to Continue: Fitch expects Ford to continue with
its global redesign plan, although the pace could slow a bit.
Although difficult to quantify, Fitch continues to expect the
progress achieved so far, particularly in Europe, will help the
company weather the global downturn, although the shutdowns will
have a severe impact on the company's performance in all regions.
Ford spent $172 million in cash related to redesign actions in the
first quarter of 2020, and it expects to spend between $700 million
and $1.2 billion in cash on the redesign for the full year 2020.
Pre-Pandemic Financial Performance Challenged: Fitch had concerns
about Ford's financial performance prior to the onset of the
coronavirus pandemic. Ford's performance over the course of 2019
was below Fitch's expectations, driven largely by launch issues
surrounding the Ford Explorer, a key vehicle for the company in
North America, as well as ongoing warranty issues. Positively, the
company's operations in Europe and China were beginning to gain
traction from the company's global redesign initiatives prior to
the coronavirus outbreak, with Europe's EBIT (according to the
company's calculations) breaking even for the year, up from a $398
million loss in 2018, and China reducing its EBIT loss (also
according to company figures) by 50% to a still-substantial $771
million loss. However, challenges in North America led to the
company producing breakeven automotive FCF for the year, excluding
cash charges related to the redesign and including $3.0 billion in
dividends received from Ford Credit.
ESG Considerations:
Ford has an ESG Relevance Score of 4 for Management Strategy due to
the complexity and costs of the company's global redesign strategy,
which has a negative impact on the credit profile, and is relevant
to the ratings in conjunction with other factors.
KEY RATING DRIVERS - FORD MOTOR CREDIT COMPANY, LLC
IDRs and Senior Debt: The downgrade of Ford Motor Credit Company,
LLC's ratings to 'BB+' from 'BBB-' and the maintenance of the
Negative Rating Outlook are driven by the downgrade and the
maintenance of the Negative Rating Outlook for Ford. Ford Credit's
ratings and Outlook are linked to those of Ford, as Fitch considers
Ford Credit a core subsidiary of Ford. This view is supported by
the high percentage of Ford vehicle sales financed by Ford Credit
and the strong operational and financial linkages between the two
companies. Ford Credit also has a support agreement with Ford,
which requires Ford to make capital contributions to Ford Credit if
its leverage ratio (defined as net debt to equity) were to be
higher than 11.5x. Ford Credit's ratings also reflect its
consistent operating performance, historic peer superior asset
quality, and adequate liquidity.
Ford's asset quality metrics were solid in 2019 and 1Q20, despite
the onset of the global coronavirus pandemic in mid-March, with
stable delinquency and charge-offs rates compared to 2018. However,
the magnitude and duration of the global economic impact related to
the coronavirus pandemic is highly uncertain and will likely result
in a sharp increase in credit losses in coming months. Ford Credit
recently announced several credit managements options for existing
customers affected by the coronavirus, including payment deferrals,
due date changes, and lease-end extensions. Through April 26, 2020,
approximately 10% of Ford Credit's contracts had been extended.
While Fitch believes forbearance programs should help mitigate
defaults for those borrowers that are temporarily displaced, it
could also delay the losses for those that will remain unemployed
for an extended period and distort traditional delinquency to
charge-off flow patterns.
The shutdown of used vehicle auctions across the country and a more
uncertain economic environment will pressure used vehicle prices
for some period of time, resulting in lower recoveries on defaulted
loans and declines in lease residual values, which, when combined
with higher loss rates, will pressure Ford Credit's earnings over
the near term. Likewise, a prolonged decline in new auto sales
would result in a decline in new loan originations and a
contraction of Ford Credit's loan portfolio. While a decline in
loan originations would be supportive of Ford Credit's liquidity
position, it would also pressure near-term earnings. Ford Credit's
total managed receivables declined $5.3 billion in 1Q20, or 3.5%,
from Dec. 31, 2019 and is expected to decline further due to
declines in new auto sales at Ford.
Fitch believes that Ford Credit has sufficient liquidity available
to address its 2020 total debt maturities (both secured and
unsecured debt) as of March 31, 2020. Liquidity included cash,
available capacity on credit facilities adjusted for the recent
facility draw by Ford, and projected cash flow collections on loans
and lease receivables. Short-term debt as a percentage of total
debt, decreased in 1Q20 to 9.1% from 10.2% at 1Q19. While Fitch
recognizes the motivation to fund short-term, given lower funding
costs, overreliance on short-term funding adds to refinancing and
liquidity risk during times of market stress. Fitch would view
lower usage of short-term funding by Ford Credit favorably.
Unsecured debt as a percentage of total debt was 58.2% at 1Q20,
which has been stable over the past few years. Fitch views Ford
Credit's utilization of unsecured funding favorably as it provides
flexibility in times of stress and provides a larger pool of
unencumbered assets benefiting unsecured creditors. However, Fitch
expects unsecured funding access to be strained over the near and
medium term given challenges at the parent and Ford Credit may look
to refinance upcoming unsecured debt maturities with less expensive
secured debt funding.
Leverage, measured as total debt to tangible equity, was 10.1x at
1Q20, up from 9.6x at 1Q19. Ford Credit focuses on a managed
leverage ratio, which nets cash, cash equivalents, marketable
securities (excluding marketable securities related to insurance
activities) and accounting derivative adjustments from debt and
equity. Managed leverage measured 9.2x at 1Q20, which was up from
8.8x at 1Q19, and slightly above management's target range of
8.0x-9.0x (although the support agreement allows for up to 11.5x).
The increase in leverage was largely a function of a decline in
tangible equity due to the adoption of the Current Expected Credit
Losses accounting standard, increases in credit loss reserves
driven by the coronavirus pandemic and a dividend payment to the
parent. Fitch expects Ford Credit to reduce leverage within its
target range in 2020 by managing distributions to the parent.
Fitch believes Ford Credit's higher leverage relative to other
captives and stand-alone finance & leasing companies is reflective
of its higher quality loan/lease portfolio, which has shown
superior credit performance relative to many of its captive peers.
Fitch would view a sustained increase in Ford Credit's leverage
outside of its target negatively.
Ford Credit's unsecured debt ratings are equalized with the
Long-Term IDR and reflect the proportion of unsecured debt in the
capital structure and the expectation for average recovery
prospects under a stress scenario.
The downgrade of Ford Credit's Short-Term IDR to 'B' from 'F3'
reflects the rating actions on Ford and the rating linkage between
the Short-Term IDR and the Long-Term IDR.
Ford Credit's commercial paper rating remains equalized with the
company's Short-Term IDR.
DERIVATION SUMMARY
Ford's business profile is similar to other large global volume
auto manufacturers. From a revenue perspective, it is larger than
its two Detroit Three competitors, General Motors Company and Fiat
Chrysler Automobiles N.V. Compared with GM and FCA, Ford's
operations are more globally diversified, with significant
operations in most major auto markets. However, from a brand
perspective, Ford is less diversified than Volkswagen AG, FCA or
GM, focusing primarily on its global Ford brand and, to a much
lesser extent, its Lincoln luxury brand, which is only available in
North America and China. However, the company sells a wide range of
vehicles under the Ford brand globally, ranging from small economy
passenger cars to heavy trucks in certain global markets. Ford has
a particularly strong market share in the highly profitable North
American pickup and European light commercial vehicle segments.
Ford's credit profile has recently been weaker than that of global
auto manufacturers in the 'BBB' category, such as GM and VW. Ford's
operating and FCF margins have been lower and gross leverage has
been higher than similarly rated global auto manufacturers.
However, Ford has one of the global industry's strongest liquidity
positions, providing it with significant financial flexibility.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Its Rating Case for the Issuer:
-- Ford's North American operations restart in the latter half of
May 2020 and its European operations begin a phased restart in
early May 2020;
-- Automotive net revenue declines by about 20% in 2020 on weak
market conditions in North America and Europe;
-- Once operating conditions normalize, the company begins to
repay its revolver borrowings with excess cash;
-- The common dividend is suspended until the company repays its
revolver borrowings;
-- Capex in 2020 runs at $6.5 billion and remains near that level
until operations begin to normalize;
-- Automotive FCF burn in 2020 is over $8.5 billion for the full
year, but nears breakeven in 2021, with positive FCF in later
years;
-- The company continues with its global redesign initiatives,
which is included in Fitch's FCF forecasts;
-- Ford Credit caps its assets at $155 billion, allowing it to
make substantial distributions to Ford over the next several
years.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Fitch does not expect Ford's ratings to be considered for an
upgraded until the global macro environment has normalized;
-- Sustained North American automotive EBIT margin of 6.0%;
-- Sustained global automotive EBIT margin near 3.0%;
-- Sustained FCF margin near 1.5%, excluding restructuring
costs;
-- Sustained FFO leverage near 2.0x, excluding restructuring
costs.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- During the operational slowdown, and following the drawdown of
the revolvers, an extended decline in cash below $15 billion;
-- Sustained global automotive EBIT margin near 1.5% in a more
normalized operating environment;
-- Sustained negative FCF, excluding restructuring costs, in a
more normalized operating environment;
-- Sustained FFO leverage near 3.0x, excluding restructuring
costs, in a more normalized operating environment.
RATING SENSITIVITIES
FORD CREDIT
Factors that could, individually or collectively, lead to negative
rating action/downgrade are largely dependent on Ford's ratings and
Outlook, given the rating linkage. A material increases in
leverage, an inability to access funding for an extended period of
time, consistent and sustained operating losses and/or significant
deterioration in the credit quality of the underlying loan and
lease portfolio, or material impairment of the liquidity profile
could become constraining factors on the parent and subsidiary
ratings.
Factors that could, individually or collectively, lead to positive
rating action/upgrade are largely dependent on Ford's ratings and
Outlook, given the rating linkage. Ford Credit's ratings are
expected to move in tandem with its parent, although any change in
Fitch's view on whether Ford Credit remains core to its parent,
based on an assessment of its size, ownership, and strategic
alignment with Ford, could change this rating linkage. Fitch cannot
envisage a scenario where Ford Credit would be rated higher than
the parent.
The unsecured debt rating is primarily sensitive to changes in the
Long-Term IDR and is expected to move in tandem. However, a
material increase in the proportion of secured funding could result
in the unsecured debt rating being notched down from the IDR.
The Short-Term IDR is primarily sensitive to changes in the
Long-Term IDR.
The commercial paper rating is sensitive to changes in Ford
Credit's Short-Term IDR and, therefore, would be expected to move
in tandem.
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.
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
Strong Liquidity Position: Ford's strong automotive liquidity
position continues to be a key consideration in its ratings. Fitch
expects Ford's automotive liquidity will provide it with
substantial financial flexibility as it continues to navigate the
global downturn caused by coronavirus pandemic. Ford had over $34
billion in automotive cash and marketable securities as of March
31, 2020 (excluding Fitch's adjustments for not readily available
cash), after fully drawing the $15 billion available on its
corporate credit facilities. Pro-forma for the April 2020 issuance
of $8.0 billion in senior unsecured notes, Ford would have had over
$42 billion in cash and marketable securities, although the company
noted in its first quarter 2020 earnings release that as of April
24, 2020, its actual cash balance was $35 billion due to cash burn
through the first several weeks of April. Fitch estimates that its
liquidity position will be sufficient to carry it through to YE
2020 without any further production or financing actions.
According to Fitch's Corporate Rating Criteria, when analyzing a
corporate issuer with a captive finance subsidiary, Fitch
calculates an appropriate target debt-to-equity ratio for the
finance subsidiary based on its asset quality, funding and
liquidity. If the finance subsidiary's target debt-to-equity ratio,
based on Fitch's calculations, is lower than the actual ratio,
Fitch assumes that the parent injects additional equity into the
finance subsidiary to bring the debt-to-equity ratio down to the
appropriate target level. Fitch then considers the effect of this
equity injection in its analysis of the parent's credit profile.
Fitch has revised its target debt-to-equity ratio to 4.0x from a
prior 5.0x, and below the actual ratio of 10.1x, as a result of the
downgrade of Ford's Long-Term IDR. As a result of its analysis,
Fitch has assumed that Ford makes a $16.5 billion equity injection
into Ford Credit, funded with available cash, to bring Ford
Credit's debt-to-equity ratio down to 4.0x. The resulting
adjustment reduces Fitch's calculation of Ford's readily available
automotive cash, but the company's metrics remain supportive of its
'BB+' Long-Term IDR.
In addition to the captive-finance adjustment, according to its
criteria, Fitch has treated an additional $800 million of Ford's
automotive cash as "not readily available" for purposes of
calculating net metrics. This is based on Fitch's estimate of the
amount of cash needed to cover typical seasonality in Ford's
automotive business. However, even after excluding the amounts from
its liquidity calculations, Fitch views Ford's automotive liquidity
position as strong.
Debt Structure: Following the drawdown on its credit facilities,
Ford's automotive debt structure consists primarily of the revolver
borrowings, nearly $19.0 billion in senior unsecured notes, $1.5
billion in delayed draw term loan borrowings and $1.5 billion in
remaining borrowings outstanding under the U.S. Department of
Energy's Advanced Technology Vehicles Manufacturing incentive
program.
SUMMARY OF FINANCIAL ADJUSTMENTS
Based upon its Criteria for Rating Non-Financial Corporates, Fitch
has assumed a hypothetical equity injection from Ford to Ford
Credit.
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
Ford has an ESG Relevance Score of 4 for Management Strategy due to
the complexity and costs of the company's global redesign strategy,
which has a negative impact on the credit profile, and is relevant
to the ratings in conjunction with other factors.
Except for the matters discussed, the highest level of ESG credit
relevance, if present, is a score of 3. This means ESG issues are
credit-neutral or have only a minimal credit impact on the
entity(ies), either due to their nature or to the way in which they
are being managed by the entity(ies).
FOXWOOD HILLS: Case Summary & Unsecured Creditor
------------------------------------------------
Debtor: Foxwood Hills Property Owners Association, Inc.
800 Hickory Trail
Westminster, SC 29693
Business Description: Foxwood Hills Property Owners Association,
Inc. is an organization of owners of Foxwood
Hills (a lake front community of primary and
vacation homes nestled in the northwest
corner of Oconee County, SC). Foxwood Hills
is located on Lake Hartwell in the foothills
of the Blue ridge Mountains. Members enjoy
fishing, boating and hiking as well as
community amenities such as tennis,
basketball, getting good workout in the
fitness room or just lounging by the salt
water pool. For more information, visit
http://www.foxwoodhills.netfor more
information.
Chapter 11 Petition Date: May 8, 2020
Court: United States Bankruptcy Court
District of South Carolina
Case No.: 20-02092
Judge: Hon. Helen E. Burris
Debtor's Counsel: Julio E. Mendoza, Jr., Esq.
NEXSEN PRUET, LLC
1230 Main Street
Suite 700
Columbia, SC 29201
Tel: 803-540-2026
E-mail: rmendoza@nexsenpruet.com
Debtor's
Claims &
Noticing
Agent: AMERICAN LEGAL CLAIM SERVICES, LLC
Total Assets: $4,253,427
Total Liabilities: $219,780
The petition was signed by Gregory B. Sheperd, president.
The Debtor listed Total Environmental Solutions, Inc. as its sole
unsecured creditor holding a claim of $65,000.
A copy of the petition is available for free at PacerMonitor.com
at:
https://is.gd/F4E2rm
FRE 355 INVESTMENT: Taps Binder & Malter as Legal Counsel
---------------------------------------------------------
FRE 355 Investment Group, LLC, seeks authority from the United
States Bankruptcy Court for the Northern District of California to
hire Binder & Malter, LLP, as general reorganization counsel.
FRE 355 requires Binder to:
(a) assist the Debtor in protecting and preserving the
interests of secured and unsecured creditors, maximizing the value
of estate property, and administering that property throughout the
case;
(b) advise the Debtor of its powers and responsibilities under
the Bankruptcy Code;
(c) advise the Debtor generally as general bankruptcy counsel;
(d) develop, through discussion with parties in interest,
legal positions and strategies with respect to all facets of this
case, including analyzing administrative and operational
issues;
(e) prepare motions, applications answers, orders, memoranda,
reports, and papers in connection with representing the interests
of the Debtor;
(f) participate in the resolution of issues related to a plan
of reorganization and the development, approval and implementation
of such plan; and
(g) render such other necessary advice and services that the
Debtor may require in connection with this case.
On July 24, 2019, the Debtor's Managing Member, Melvin Vaughn paid
the Debtor the sum of $25,000.00 as a pre-petition retainer. The
initial check for that retainer bounced however and was replaced by
funds wired to Applicant on August 6, 2019; on July 31, 2019 the
Debtor’s Managing Member paid to Applicant the sum of $84,027 as
an
additional retainer.
Michael W. Malter, a partner at Binder & Malter, LLP, attests that
his does not hold or represent any interest adverse to the Debtor
or its estate and is disinterested as that term is used in the
Bankruptcy Code.
The counsel can be reached through:
Michael W. Malter, Esq.
Binder & Malter, LLP
2775 Park Avenue
Santa Clara, CA 95050
Tel: (408) 295-1700
Fax:: (408) 295-1531
E-mail: Michael@bindermalter.com
About FRE 355 Investment Group
FRE 355 Investment Group, LLC is a Single Asset Real Estate (as
defined in 11 U.S.C. Section 101(51B)).
FRE 355 Investment Group, LLC, filed a voluntary petition under
Chapter 11 of the Bankruptcy Code (Bankr. N.D. Cal. Case No.
20-50628) on April 13, 2020. In the petition signed by Melvin
Vaugh, managing member, the Debtor estimated $10 million to $50
million in both assets and liabilities. Michael W. Malter, Esq. at
BINDER & MALTER, LLP, represents the Debtor as counsel.
GATES GLOBAL: S&P Alters Outlook to Negative, Affirms 'B+' ICR
--------------------------------------------------------------
S&P Global Ratings revised its outlook on Denver-based manufacturer
of power transmission belts and fluid power products Gates Global
LLC to negative from stable and affirmed its 'B+' issuer credit
rating.
"We expect a significant decline in profit margins will cause
leverage to rise to above 6.5x over the next 12 months as the
ramifications of a global recession prolong an end-market slowdown
which began in 2019. We believe already challenging market
conditions will decelerate further in 2020 as a result of the
COVID-19 pandemic and the corresponding government-mandated
containment measures," S&P said.
"We expect slumping demand will reduce sales volumes and pressure
earnings for Gates over the next 12 months. Under our base-case
scenario, we forecast annual revenue could decline by 10%-15% and
EBITDA margin could contract between 300 to 400 basis points (bps)
in 2020, causing adjusted leverage to rise above 6.5x and FOCF to
debt to trend toward 5.0%. We assume that Gates, similar to
previous downturns, will liquidate its balance sheet, collect
receivables, and taper its capital investment to preserve steady
cash flow generation," the rating agency said.
S&P's negative outlook reflects the risk that a more precipitous
decline in industrial and automotive end markets may constrain
profitability and weaken cash flow generation causing FOCF to debt
to fall below 5% and credit measures to diminish beyond our current
forecast.
S&P could lower its rating on Gates if:
-- The company is unable to generate sufficient positive free cash
flow and maintain free operating cash flow (FOCF) to debt above
5.0%; and
-- EBITDA contracts beyond our current forecast and leverage
remains above 6.5x. This could occur if protracted end market
weakness leads to lower volumes and if the company is unable to
recognize expected cost savings from its restructuring program.
S&P could revise its outlook to stable if:
-- Gates maintains cash flow generation so that FOCF to debt
exceeds 5.0% on a sustained basis; and
-- The profit margin impact of a global recession is less
pronounced and credit measures remain commensurate with its current
ratings, including debt to EBITDA below 6.5x on a sustained basis.
GI DYNAMICS: Posts $2.8 Million Net Loss in First Quarter
---------------------------------------------------------
GI Dynamics, Inc. reported a net loss of $2.84 million for the
three months ended March 31, 2020, compared to a net loss of $2.33
million for the three months ended March 31, 2019.
As of March 31, 2020, the Company had $5.65 million in total
assets, $8.71 million in total liabilities, and a total
stockholders' deficit of $3.06 million.
As of March 31, 2020, the Company's primary source of liquidity is
its cash and restricted cash balances. GI Dynamics is currently
focused primarily on its clinical trials, which will support future
regulatory submissions and potential commercialization activities.
Until the Company is successful in gaining regulatory approvals, it
is unable to sell the Company's product in any market at this time.
Without revenues, GI Dynamics is reliant on funding obtained from
investment in the Company to maintain business operations until the
Company can generate positive cash flows from operations. The
Company cannot predict the extent of future operating losses and
accumulated deficit, and it may never generate sufficient revenues
to achieve or sustain profitability.
GI Dynamics has incurred operating losses since inception and at
March 31, 2020, had an accumulated deficit of approximately $287
million and a working capital deficit of $1.3 million. The Company
expects to incur significant operating losses for the next several
years. At March 31, 2020, the Company had approximately $3.9
million in cash and restricted cash.
The Company said it will need to restructure the terms of the
Senior Secured Convertible Promissory Note, issued on June 15,
2017, before May 15, 2020 or the 2017 Note will be in default and
subject to a call notice at the discretion of Crystal Amber. If
the 2017 Note terms are restructured or the note is not called, the
Company must raise additional capital before May 31, 2020 in order
to continue to pursue its current business objectives as planned
and to continue to fund its operations. The Company and Crystal
Amber Fund Limited are currently in discussions regarding the 2017
Note maturity extension. The Company is looking to raise
additional funds through any combination of additional equity and
debt financings or from other sources. However, the Company has no
guarantee that the 2017 Note will be restructured or if in default,
will not be called. If the Note is called, the Company has no
guaranteed source of capital that will accommodate repayment of the
2017 Note. If the 2017 Note terms are restructured or the 2017
Note is in default, but not called, the Company anticipates that
operating cash will be exhausted by May 31, 2020 and therefore
additional financing will be required to be able to continue its
operations after this date. There can be no assurance that any
potential financing opportunities will be available on acceptable
terms, if at all. If the Company is unable to raise sufficient
capital on the Company's required timelines and on acceptable terms
to stockholders and the Board of Directors, it could be forced to
reduce or cease operations, including activities essential to
support regulatory applications to commercialize EndoBarrier. GI
Dynamics said that if access to capital is not achieved before May
31, 2020, it will materially harm the Company's business, financial
condition and results of operations to the extent that the Company
may be required to cease operations altogether, file for
bankruptcy, or undertake any combination of the foregoing.
In addition, if the Company does not meet its payment obligations
to third parties as they become due, the Company may be subject to
litigation claims and its credit worthiness would be adversely
affected. Even if the Company is successful in defending these
claims, litigation could result in substantial costs and would be a
distraction to management and may have other unfavorable results
that could further adversely impact the Company's financial
condition.
The Company said these factors raise substantial doubt about its
ability to continue as a going concern within one year after the
date that these consolidated financial statements are issued.
A full-text copy of the Quarterly Report is available for free at
the Securities and Exchange Commission's website at:
https://is.gd/hS5Gdk
About GI Dynamics
Founded in 2003 and headquartered in Boston, Massachusetts, GI
Dynamics, Inc. (ASX:GID) is a developer of EndoBarrier, an
endoscopically-delivered medical device for the treatment of type 2
diabetes and the reduction of obesity. EndoBarrier is not approved
for sale and is limited by federal law to investigational use only.
EndoBarrier is subject to an Investigational Device Exemption by
the FDA in the United States and is entering concurrent pivotal
trials in the United States and India.
GI Dynamics reported a net loss of $17.33 million for the year
ended Dec. 31, 2019, compared to a net loss of $8.04 million for
the year ended Dec. 31, 2018. As of Dec. 31, 2019, the Company had
$4.18 million in total assets, $7.38 million in total liabilities,
and a total stockholders' deficit of $3.20 million.
Wolf and Company, P.C., in Boston, Massachusetts, the Company's
auditor since 2019, issued a "going concern" qualification in its
report dated March 26, 2020 citing that the Company has suffered
losses from operations since inception and has an accumulated
deficit and working capital deficiency that raise substantial doubt
about the Company's ability to continue as a going concern.
GIGA WATT: Trustee's Sale of Vehicles for $6K Approved
------------------------------------------------------
Judge Frederick P. Corbit of the U.S. Bankruptcy Court for the
Eastern District of Washington authorized Mark Waldron, the Chapter
11 trustee for Giga Watt Inc., to sell vehicles "as is" with no
warranties for the aggregate sum of $6,000.
The form and manner of service of the Notice of Sale, including
shortened time and limited notice as requested in the Motion, are
approved.
The 14-day stay provided by Rule 6004(h) of the Federal Rules of
Bankruptcy is waived with respect to the sale of the Vehicles
pursuant to the Order. The Order will be valid and fully effective
immediately upon its entry.
About Giga Watt Inc.
Giga Watt Inc., a cryptocurrency mining services provider based in
East Wenatchee, Washington, filed for Chapter 11 protection (Bankr.
E.D. Wash. Case No. 18-03197) on Nov. 19, 2018. In the petition
signed by Andrey Kuzenny, secretary, the Debtor estimated up to
$50,000 in assets and $10 million to $50 million in liabilities.
The case is assigned to Judge Frederick P. Corbit.
Winston & Cashatt, Lawyers, led by shareholder Timothy R. Fischer,
is the Debtor's counsel.
The Office of the U.S. Trustee appointed an official committee of
unsecured creditors on Dec. 19, 2018. The committee tapped DBS Law
as its legal counsel.
On Jan. 23, 2019, the court approved the appointment of Mark D.
Waldron as the Chapter 11 trustee for the Debtor's estate. The
Trustee is represented by CKR Law LLP.
GLOBAL EAGLE: Regains Compliance with Nasdaq Bid Price Rule
-----------------------------------------------------------
Global Eagle Entertainment Inc. received a letter from the Listing
Qualifications staff of The Nasdaq Stock Market LLC on May 1, 2020,
that the Company regained compliance with Nasdaq Listing Rule
5550(a)(2), which requires an issuer to maintain a minimum bid
price of $1 per share.
On April 13, 2020, the Company received a letter from the Staff
notifying the Company that it was not in compliance with Nasdaq
Listing Rule 5550(b)(2) for continued listing on The Nasdaq Capital
Market, as the market value of the Company's listed securities was
less than $35 million for the previous 30 consecutive business
days. Under Nasdaq Listing Rule 5810(c)(3)(C), the Company has a
period of 180 calendar days, or until Oct. 12, 2020, to regain
compliance with the MVLS Rule. To regain compliance, during this
180-day compliance period, the market value of the Company's listed
securities must be $35 million or more for a minimum of 10
consecutive business days. In the event the Company does not
regain compliance with the MVLS Rule prior to the expiration of the
compliance period, it will receive written notification that its
securities are subject to delisting. At that time, the Company may
appeal the delisting determination to a hearings panel.
About Global Eagle
Headquartered in Los Angeles, California, Global Eagle --
http://www.GlobalEagle.com-- is a provider of media, content,
connectivity and data analytics to markets across air, sea and
land. Global Eagle offers a fully integrated suite of media
content and connectivity solutions to airlines, cruise lines,
commercial ships, high-end yachts, ferries and land locations
worldwide.
Global Eagle incurred a net loss of $236.60 million for the year
ended Dec. 31, 2018, compared to a net loss of $357.11 million for
the year ended Dec. 31, 2017. As of Sept. 30, 2019, the Company
had $683.41 million in total assets, $1.02 billion in total
liabilities, and a total stockholders' deficit of $340.34 million.
* * *
As reported by the TCR on April 20, 2020, S&P Global Ratings
lowered all ratings one notch, including the issuer credit rating
on U.S.-based Global Eagle Entertainment Inc. to 'CCC-', to reflect
tightening liquidity, very weak credit metrics in 2020, and
uncertainty around the timing and pace of recovery in travel.
Moody's Investors Service downgraded the corporate family rating of
Global Eagle Entertainment, Inc. to Caa2 from B3, according to a
TCR report dated April 8, 2020. The downgrade of Global Eagle's
CFR to Caa2 reflects Moody's expectations that the company's
revenue and EBITDA will experience declines in the double-digit
percentage range in 2020 leading to very high leverage (Moody's
adjusted debt to EBITDA) and weak liquidity.
GNIRBES INC: Seeks to Hire Ackerman Rodgers as Accountant
---------------------------------------------------------
Gnirbes, Inc., seeks authority from the U.S. Bankruptcy Court for
the Southern District of Florida to employ Ackerman Rodgers, CPA,
PLLC, as accountant to the Debtor.
Gnirbes, Inc. requires Ackerman Rodgers to:
a. prepare tax returns;
b. compile monthly balance sheets and income statements;
c. prepare monthly Debtor in Possession reports required by
the U.S. Trustee's Office, including detailed trial balance
sheets, bank account reconciliations, sorted and coded
check registers, and monthly transactions registers;
d. assist in connection with the Chapter 11 Reorganization;
and
e. provide other accounting and tax services as required.
Ackerman Rodgers will be paid at these hourly rates:
Partners $225
Staffs $95
Ackerman Rodgers will be paid a retainer in the amount of $5,000.
Ackerman Rodgers will also be reimbursed for reasonable
out-of-pocket expenses incurred.
Venita Ackerman, a name partner, assured the Court that the firm is
a "disinterested person" as the term is defined in Section 101(14)
of the Bankruptcy Code and does not represent any interest adverse
to the Debtor and its estates.
Ackerman Rodgers can be reached at:
Venita Ackerman
ACKERMAN RODGERS, CPA, PLLC
1665 Palm Beach Lakes Blvd, Suite 1004
West Palm Beach, FL 33401
Tel: (561) 293-4120
Fax: (561) 899-0395
About Gnirbes Inc.
Gnirbes Inc. sought protection under Chapter 11 of the Bankruptcy
Code (Bankr. S.D. Fla. Case No. 20-13992) on March 26, 2020. At the
time of the filing, the Debtor was estimated to have assets of less
than $50,000 and liabilities of between $100,001 and $500,000.
Judge Mindy A Mora oversees the case. The Debtor is represented by
Kelley, Fulton & Kaplan, P.L.
GT REALTY: 501 Atlantic Buying Freeport Property for $1 Million
---------------------------------------------------------------
GT Realty Holdings, LLC, asks the U.S. Bankruptcy Court for the
Eastern District of New York to authorize the sale of the real
property at 501-B Atlantic Ave, Freeport, New York to 501 Atlantic,
LLC for $1,007,000 under its confirmed plan of reorganization.
The Debtor is the prior owner of the Property. As of the Petition
Date, the Property was occupied by Atlantic Auto Body of Freeport,
an affiliate. At the inception of the auto body shop business, the
Debtor was formed to purchase the Property, as required to obtain
financing.
Celtic Bank Corp. financed the purchase with a mortgage asserted in
the amount of $1.9 million. Jimmy and Mike Realty Corp., the
former owner provided a $250,000 purchase money subordinate
mortgage. In connection with the financing of the acquisition of
the Property, the Debtor, Celtic Bank and Jimmy and Mike Realty
Corp. entered into a written Subordination Agreement in which Jimmy
and Mike Realty Corp. agreed that it would receive no repayment on
account of its subordinate mortgage until Celtic Bank Corp. was
paid in full. As of the Filing date, Peter Titone and Rosalie
Titone, a former interest holder held a $175,000 judgment lien.
The County of Nassau asserted that the Debtor failed to pay real
estate taxes, and sold tax lien certificates to Samuel Hampton, LLC
in exchange for approximately $175,000. Ultimately the Nassau
County Treasurer conveyed the Property to Samuel Hampton when the
Debtor and other parties in interest failed to redeem by payment of
the tax amounts then due.
Samuel Hampton, therefore, took title to the Property for a
fraction of its value.
The case was filed primarily to recovery the Property as a
fraudulent conveyance under the Bankruptcy Code.
To implement its strategy, the Debtor filed a complaint against
Samuel Hampton. The parties then successfully engaged in
settlement negotiations, which resulted in a settlement agreement
that formed the basis for the Debtor's June 21, 2019 Chapter 11
Plan. By order dated July 31, 2019, the court entered an order
confirming the Plan.
Under the Plan, Samuel Hampton agreed to transfer the Property back
to the Debtor, and the Debtor agreed to simultaneously sell the
Property to a designee in the Bankruptcy Court. Samuel Hampton is
entitled to the first $220,000 of the sale proceeds. The remainder
will be distributed to creditors in their order of priority.
Post-confirmation, the Debtor retained Signature Realty to market
and sell the Property. Despite the broker's efforts during the
summer and fall of 2019, the best legitimate offer made was less
than $800,000, far less than the appraised value.
The Debtor conferred with Celtic Bank and Samuel Hampton, and the
parties collectively agreed to proceed with an auction by Maltz
Auctions, Inc.
On March 12, 2020, Maltz conducted an auction sale. The winning
bid was made by Siyen S. Khaimov in the amount of $1.27 million
plus a $76,200 buyer’s premium for a total purchase price of
$1,346,200. The same day, the Winning Bidder signed a "Formal
Acceptance of Bid and Terms of Sale." The closing date was April
27, 2020.
Shortly thereafter, citing coronavirus issues, the Winning Bidder
requested that the sale be disregarded. Maltz's auction procedures
did not obligate the second highest bidder to close, and the second
highest bidder was unwilling to close without a steep purchase
price discount down to about $800,000. That was unacceptable to
the Debtor and Celtic Bank.
With the consent of the parties, Maltz contacted the Winning Bidder
and negotiated a $100,000 purchase price reduction, $50,000
non-refundable deposit increase, bringing the total deposit to
$187,200. Closing was adjourned to May 4, 2020.
Shortly thereafter, the Winning Bidder then retained counsel. The
counsel indicated that the Winning Bidder entered into the
Amendment without a lawyer and that the Winning Bidder was now
renewing his demand to avoid the sale altogether.
Upon the advice and consent of the Debtor, Celtic Bank and Samuel
Hampton, Maltz and the Winning Bidder agreed to a further purchase
price reduction to $950,000 (plus Maltz's buyer's premium of
$57,000) for a total sales price of $1,007,000. In the Second
Amendment, the Winning Bidder assigned his bid to the Purchaser.
The Winning Bidder is a non-insider unrelated to the Debtor, Celtic
Bank or any parties interest herein. He has represented that he is
the sole owner of the Purchaser.
By the application, therefore, the Debtor asks an order approving
the Sale to the Purchaser under the Sale Agreement, the Amendment
and the Second Amendment, and a scheduling order in connection
therewith, shortening time in connection therewith so as to
facilitate a closing as early as May 8, 2020.
Of the $950,000 of sale proceeds after auction fees, the Debtor
projects that at closing, approximately $$270,273 will be disbursed
for post-petition real estate taxes and closing costs, $220,000
will be paid to Samuel Hampton, $125,000 will be set aside for
administrative claims, $1,303 will be due to the Office of the
United States Trustee and the remaining $$335,972 will be paid to
pro-rata to general unsecured creditors totaling $2,122,589, for a
projected distribution of approximately 16%.
Since the Sale was authorized under Plan and confirmation order in
July 2019, and since the Application has the advance support of all
material parties, the Debtor submits that a prompt closing of the
Sale would benefit all parties and prejudice no one. The Debtor
requests, therefore, that the Court waive the 14-day stay of orders
under section 363 of the Code under Bankruptcy Rule 6004(h).
A copy of the Agreement is available at
https://tinyurl.com/y7ffx9c6 from PacerMonitor.com free of charge.
About GT Realty Holdings
GT Realty Holdings LLC, a privately-held company engaged in
activities related to real estate, sought protection under Chapter
11 of the Bankruptcy Code (Bankr. E.D.N.Y. Case No. 18-75679) on
Aug. 21, 2018. In the petition signed by Christopher Gebbia,
managing member, the Debtor disclosed $2,504,320 in assets and
$2,604,914 in liabilities. Judge Louis A. Scarcella presides over
the case. Backenroth Frankel & Krinsky, LLP is the Debtor's legal
counsel.
H-CYTE INC: Frazier & Deeter LLC Raises Going Concern Doubt
-----------------------------------------------------------
H-CYTE, Inc. filed with the U.S. Securities and Exchange Commission
its annual report on Form 10-K, disclosing a net loss of
$29,807,878 on $8,346,858 of revenues for the year ended Dec. 31,
2019, compared to a net loss of $4,394,149 on $7,883,115 of
revenues for the year ended in 2018.
The audit report of Frazier & Deeter, LLC states that the Company
has negative working capital, has an accumulated deficit, has a
history of significant operating losses and has a history of
negative operating cash flow. Additionally, the Company has closed
clinic operations and experienced significant losses related to
COVID-19 in 2020. 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 $3,270,612, total liabilities of $6,670,861, and a total
stockholders' deficit of $9,460,742.
A copy of the Form 10-K is available at:
https://is.gd/8jntP1
H-CYTE, Inc. operates primarily as a medical biosciences company.
It develops and implements treatment options in regenerative
medicine to treat chronic lung disease. H-CYTE, Inc. is
headquartered in Tampa, Florida.
HERTZ CORP: DBRS Lowers LongTerm Issuer Rating to CC
----------------------------------------------------
DBRS, Inc., on April 29, 2020, downgraded the ratings of The Hertz
Corporation, including Hertz's Long-Term Issuer Rating to CC from
CCC (high). The Company's ratings remain Under Review with Negative
Implications.
Previously, on April 27, 2020, DBRS downgraded the ratings of Hertz
Corporation, including Hertz's Long-Term Issuer Rating to CCC
(high) from B (high).
KEY RATING CONSIDERATIONS
The rating action and the maintenance of the Under Review with
Negative Implications consider Hertz's recent announcement that on
April 27, 2020, the Company did not make certain payments in
accordance with its Amended and Restated Master Motor Vehicle
Operating Lease and Servicing Agreement Series 2013-G1 (Operating
Lease), pursuant to which Hertz leases vehicles used in its
day-to-day United States rental car fleet operations from its
special-purpose vehicle finance subsidiary. The filing noted that
if such payments are not made by the end of the grace period on May
4, 2020, and a sufficient amount of Hertz's Senior Credit Lenders
and VFN Noteholders do not agree to waive any resulting default or
forbear from exercising remedies, Hertz could be materially and
negatively impacted. DBRS Morningstar sees the missed payment as
reflecting the Company's strained liquidity position and the
limited options the Company has to preserve its liquidity. As such,
the rating action and the ratings reflect the increasing likelihood
of an adverse impact on Hertz's senior unsecured noteholders,
including the potential that Hertz could file for bankruptcy
protection.
Despite its approximately $1.0 billion in liquidity, as of March
26, 2020, and only a moderate level of corporate debt coming due in
2020, the exceptional decline in travel volumes at airports and
off-airport locations are severely impacting Hertz's revenues and
cash flows. DBRS Morningstar views the Company's interest and lease
expenses, along with the potential need for future incremental
credit enhancement for its asset-backed securitizations (ABS) and
other working capital needs as placing significant pressure on the
Company's existing liquidity.
The impact of the Coronavirus Disease (COVID-19) is severely
pressuring Hertz's bottom line and liquidity position. As guidance
to the impact of the coronavirus on Hertz's future credit
fundamentals, DBRS Morningstar utilizes the moderate scenario as
described in DBRS Morningstar's Sovereign Group's commentary
"Global Macroeconomic Scenarios: Implications for Credit Ratings".
In this scenario, DBRS Morningstar assumes some success in the
containment of the virus within the second quarter and then a
gradual relaxation of restrictions, enabling economies to begin a
gradual economic recovery in the third quarter. Within this
scenario, DBRS Morningstar sees the recovery in the global travel
industry as being very slow across both leisure and business
travel, which will result in meaningful headwinds through 2020 for
rental car companies. Indeed, these headwinds will impact the
Company's second and third quarters, which are typically when it
generates the majority of its revenues, further pressuring the
bottom line. DBRS Morningstar notes that coronavirus-related
headwinds also continue to severely pressure Hertz's global vehicle
rental volumes and fleet utilization rates, as well as used vehicle
values.
During the review, DBRS Morningstar will focus on Hertz's ability
to offset the pressure on its liquidity position as well as the
impact of the current environment on its financial performance.
DBRS will consider the Company's actions, including any waivers and
concessions granted to Hertz by its creditors, reducing the size of
the fleet, managing costs, and reducing capital expenditures.
Additionally, the review will consider the impact of any potential
European or U.S. governmental support for the rental car industry.
The Under Review with Negative Implications status is generally
resolved with a rating action within three months. However, if
heightened market uncertainty and volatility persists, DBRS
Morningstar may extend the Under Review status for a longer period
of time.
RATING DRIVERS
Given the Under Review with Negative Implications, an upgrade in
the near term is unlikely. Meanwhile, if the Company's liquidity
position were to deteriorate further or were the Company to seek to
restructure its debt with creditors, the ratings would be
downgraded. Conversely, should Hertz receive waivers or other
concessions from its creditors that afford the Company time to
align its fleet to demand while reducing potential liquidity
pressure, the ratings could return back to a Stable trend.
Notes: All figures are in U.S. dollars unless otherwise noted.
HOOD LANDSCAPE: Weeks Auction of Assets Approved
------------------------------------------------
Judge John T. Laney III of the U.S. Bankruptcy Court for the Middle
District of Georgia Hood Landscape & Garden Products, Inc.'s
auction sale of its (i) 50 acres with improvements located at 4236
Hickory Grove Road, Valdosta shown as Parcel No. 0217016 that is
Tract 2, located in Land Lot No. 211, 11th Land District, Lowndes
County, Georgia as shown in the plat of survey prepared by
Southeastern Surveying, Inc., registered land surveyor, dated Nov.
17, 2008, survey revised Sept. 29, 2014 and Plat revised Oct. 1
2014, and recorded in Plat Cabinet 3, Page 1102, Lowndes County
Deed Records, and further described in the Warranty Deed dated June
19, 2015 and recorded in the Lowndes County Clerk's Office on June
24, 2015 in Deed Book 5755, page 264; and (ii) all machinery and
equipment, to be conducted by Weeks Auction Group, Inc.
HLGP is authorized to pay the following claims at the closing of
property sold: Closing costs, Weeks' sales commission, Lowndes
County Tax Commissioner and quarterly fees owed to the U.S.
Trustee's office and to disburse all remaining proceeds to Guardian
Bank up to the amount of Guardian Banks allowed claim. After
payment of 100% of Guardian Bank's allowed claim, all surplus
proceeds will be placed in HLGP's DIP account for the benefit of
HLGP's bankruptcy estate and not disbursed until further order of
the Court.
About Hood Landscape & Garden Products
Hood Landscape & Garden Products, Inc., owns and operates a
landscaping equipment and supply store.
Hood Landscape & Garden Products sought Chapter 11 protection
(Bankr. M.D. Ga. Case No. 19-71344) and its affiliate Hood Farms,
Inc. (Bankr. M.D. Ga. Case No. 19-71345), on Nov. 4, 2019.
In the petitions signed by CEO Leon Hood, Hood Landscape was
estimated to have assets and liabilities in the range of $1 million
to $10 million, and Hood Farms was estimated to have assets in the
range of $500,000 to $1 million and $1 million to $10 million in
debt.
The cases are assigned to Judge John T. Laney III.
The Debtors tapped Thomas D. Lovett, Esq., at Kelley, Lovett,
Blakey & Sanders, P.C. as counsel.
HOPE COMMUNITY ACADEMY, MN: S&P Alters Rev Bond Outlook to Neg.
---------------------------------------------------------------
S&P Global Ratings revised its outlook to negative from stable and
affirmed its 'BB' rating on St. Paul Housing & Redevelopment
Authority, Minn.'s series 2015A charter school lease revenue bonds,
issued for HOPE Community Academy.
"The negative outlook reflects our view of HOPE's aggressive
expansion plans, given the school's weak demand profile, as
demonstrated by its lack of a waitlist and relatively small
enrollment size. We believe that the additional debt burden could
increase HOPE's leverage significantly, leading to a weakened
financial profile if enrollment projections fall short of
expectations, or management is unable to control costs," S&P said.
HOPE has indicated it plans to expand to a high school (grades
9-12) over the next year. Management indicated that the expansion
was in response to HOPE's enrollment capacity, family requests, and
the ability to remain competitive. The facility will be a new
construction at the school's current site. Construction is expected
to begin in the 2020-2021 school year, with the campus expected to
open in 2021-2022. Full enrollment at the high school will be 324
students, bringing total capacity to 1,061 students. S&P
understands that the school plans to issue around $18 million to
$19 million in public debt sometime by fiscal 2021 to finance the
expansion, although this figure still is preliminary.
"In our view the school is exposed to elevated social risk due to
the uncertainty on the duration of the COVID-19 pandemic, and the
unknown effect on fall 2020 enrollment levels and mode of
instruction. We believe HOPE will need to grow enrollment to meet
its likely future debt service payments associated with the new
facility. We view the risks posed by COVID-19 to public health and
safety as a social risk under our ESG factors. Despite the elevated
social risk, we believe the school's environmental and governance
risk are in line with our view of the sector as a whole," S&P
said.
HOPE, in Minnesota, is a public, kindergarten-through-eighth-grade
charter school that specializes in Hmong language and culture,
serving students in East St. Paul and surrounding districts;
approximately 70% of students live on St. Paul's east side. HOPE
offers instruction in English and Hmong and academic development
occurs simultaneously in both languages. HOPE was first
incorporated on May 15, 2000, and charted by University of St.
Thomas on July 3, 2000.
INTERNATIONAL FOOD: Seeks Approval to Hire Consultant
-----------------------------------------------------
International Food Service Purchasing Group, Inc. seeks authority
from the U.S. Bankruptcy Court for the District of Puerto Rico to
tap the services of a consultant to assist in the operation of its
business.
The Debtor proposes to employ Jan Walton and pay the consultant an
hourly fee of $24.
Mr. Walton is disinterested within the meaning of Section 101(14)
of the Bankruptcy Code, according to court filings.
Mr. Walton holds office at:
Jan Walton
700 Burnt Mill Drive
Lake Arrowhead, CA 92378
Tel: 951-314-2167
Email: jwalton@ifscg.us
About International Food Service
Purchasing Group Inc.
International Food Service Purchasing Group Inc. is a non-profit
organization in San Juan, P.R., that provides supply chain analysis
and management services for the restaurant industry.
International Food Service filed a Chapter 11 petition (Bankr.
D.P.R. Case No. 20-01458) on March 20, 2020. In the petition
signed by Charles A. Maxwell, president, Debtor was estimated to
have $1 million to $10 million in both assets and liabilities.
Alexandra Bigas Valedon, Esq., at Modesto Bigas Law Office, is
Debtor’s bankruptcy counsel.
J. CREW GROUP: S&P Downgrades ICR to 'D' on Bankruptcy Filing
-------------------------------------------------------------
S&P Global Ratings lowered its issuer credit rating on U.S.-based
apparel retailer J. Crew Group Inc. to 'D' (default) from 'CCC-'.
At the same time, S&P lowered its issue-level rating on the
company's secured notes to 'D' from 'CCC+' and its issue-level
rating on its term loan to 'D' from 'CC'.
The downgrade follows J. Crew's announcement that it filed
voluntary petitions for reorganization under Chapter 11 of the U.S.
Bankruptcy Code as part of a prearranged restructuring agreement.
The company reached the agreement with lenders representing about
71% of its term loan and 78% of its intellectual property notes.
Under the agreement, the company intends to exchange approximately
$1.65 billion of debt for equity.
JDUB'S BREWING: Brewery Intends to Continue Operating
-----------------------------------------------------
Laura Finaldi, writing for Herald Tribune, reports that JDub's
Brewing Company -- known for beers like Bell Cow milk chocolate
porter and Poolside Kolsch -- has sought bankruptcy protection due
to COVID-19-related losses.
According to the report, Daniel Etlinger, the Tampa-based
bankruptcy attorney representing JDub's, said the brewery, owned by
Jeremy Joerger, has every intention of continuing to operate.
Court documents reveal that the local brewery was significantly
hurt by the pandemic.
Prior to COVID-19, the company was trying to sell or to possibly
merge with another brewery. It took on additional debt to put
itself into a better position for a possible sale.
When Major League baseball spring training was cancelled,
restaurants experienced significant hit and were ordered to close,
business suffered. The brewery closed its taproom on March 20,
2020, as a safety precaution, according to court documents.
"The debtor believes very strongly in its business model and
reputation. However, the significant amount of energy and time the
debtor has been forced to spend dealing with the above-mentioned
concerns has taken its toll on the debtor and therefore
necessitated the instant filing," court documents filed by Etlinger
read.
About JDub's Brewing Company
JDub's Brewing Company, LLC, is a brewery that is famous for beers
like Bell Cow milk chocolate porter and Poolside Kolsch. It is also
where people gather together to listen and to watch live music, to
do yoga, and to hang out.
JDub's Brewing Company sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. M.D. Fla. Case No. 20-02926) on April 6,
2020. The petition was signed by Jeremy Joerger, CEO. At the time
of filing, the company had $697,542 in assets and $1,687,781 in
debt. Judge Michael G. Williamson is assigned to the case. The
company is represented by Daniel Etlinger, Esq. at DAVID JENNIS, PA
D/B/A JENNIS LAW FIRM.
JEFFERIES FINANCE: Fitch Alters Outlook on 'BB' LT IDR to Negative
------------------------------------------------------------------
Fitch Ratings has affirmed the long-term Issuer Default Ratings of
Jefferies Finance LLC and its debt co-issuing subsidiary, JFIN
Co-Issuer Corporation, at 'BB'. The Rating Outlook has been revised
to Negative from Stable. Fitch has also affirmed JFIN and JFIN
Co-Issuer Corporation's super senior debt ratings for the priority
revolving credit facility at 'BB+', senior secured debt ratings at
'BB' and senior unsecured debt ratings at 'BB-'.
KEY RATING DRIVERS
The Rating Outlook revision reflects Fitch's belief that JFIN's
earnings metrics will come under pressure due to lower transaction
volume, as well as the potential for an increase in loan loss
provisions, write-downs of investments or realized losses, which
could result in higher leverage. Fitch also believes JFIN
experienced an increase in revolver draws in recent weeks from
borrowers looking to shore up liquidity in the current uncertain
environment. JFIN's leverage could be further affected should the
firm need to draw on additional capacity under its credit
facilities to fund commitments to borrowers.
The rating affirmations reflect the benefits of JFIN's relationship
with Jefferies Group LLC (BBB/Stable), which provides the firm with
access to underwriting deal flow and the resources of the broader
platform, JFIN's strong and experienced management team and
supportive ownership from Jefferies and Massachusetts Mutual Life
Insurance Company (AA/Stable). Both Jefferies and MassMutual have
provided JFIN with debt funding and incremental equity investments
over time to support business expansion. The rating affirmations
also reflect JFIN's focus on senior lending relationships in the
funded portfolio, absence of material portfolio concentrations,
solid asset quality performance historically, and Fitch's view that
JFIN has sufficient liquidity to fund revolver draws.
Rating constraints include higher than peer leverage, a largely
secured funding profile, potential liquidity and leverage impacts
of meaningful draws on revolver commitments, and sensitivity of
deal flow and syndication capabilities to market conditions. The
ratings also contemplate the aggressive underwriting conditions in
the broadly syndicated market in recent years, including higher
underlying leverage, meaningful EBITDA adjustments, and, in many
cases, the absence of financial covenants. Fitch believes a
sustained slowdown in the economy resulting from the coronavirus
pandemic is likely to translate to asset quality issues more
quickly, given the limited embedded financial cushion in most
portfolio credits and weaker lender flexibility in credit
documentation.
JFIN's leverage, as measured by debt to tangible equity, amounted
to 4.7x as of Feb. 29, 2020 - fiscal 1Q20, down slightly from 4.8x
at fiscal 1Q19 and within Fitch's 'bb' rating category quantitative
leverage benchmark range of 4.0x-7.0x for balance sheet intensive
finance and leasing companies with operating environment scores in
the 'bbb' category. JFIN's outstanding debt at the end of fiscal
1Q20 included $622.5 million of borrowings under the firm's
third-party fronting line. Leverage would have been lower at 4.2x
if those borrowings were excluded.
While JFIN's leverage remains elevated relative to other rated
underwriters and lenders in the middle market space, Fitch views
current leverage as appropriate for its rating category and the
risk profile of the assets. However, Fitch believes that JFIN's
leverage could increase in 2020 if the firm needs to draw on
additional capacity under its credit facilities to fund commitments
to borrowers or if the firm experiences operating losses, which
could be driven by lower transaction volume, combined with higher
credit provisioning or an increase in realized or unrealized losses
on investments. The potential for higher leverage is somewhat
mitigated by the firm's ability to call on undrawn equity capital
commitments from Jefferies and MassMutual, which amounted to $195.2
million in aggregate at Feb. 29, 2020. An increase in leverage
above 5.0x for multiple quarters would likely result in a ratings
downgrade.
JFIN uses term collateralized loan obligations, revolver CLOs and
warehouse facilities to finance the funded loan portfolio -
portfolio funding debt, while term debt and senior notes issuances
- collectively, non-funding debt - and short-term fronting lines -
funding debt - have been used to fund the underwriting business.
The firm also has a corporate revolver - funding debt - to be used
for general corporate purposes. JFIN's long-term debt and revolving
credit facility include incurrence-based covenants limiting
non-funding debt to total equity to 2.0x. This ratio was 1.2x at
Feb. 29, 2020 and is the metric JFIN uses to manage leverage. While
the portfolio funding debt is non-recourse to JFIN, Fitch views the
CLO debt and warehouse facilities as a funding source for one of
the firm's core businesses and evaluates the firm's leverage on a
consolidated basis.
From an earnings perspective, JFIN's performance is heavily market
dependent, as underwriting revenues are driven by transaction
volumes and mix. Following a record year for JFIN's transaction
volume in fiscal 2018, year ended Nov. 30, 2018, market issuance
dropped significantly in fiscal 2019. The firm arranged $18.1
billion of volume in fiscal 2019 across 98 transactions, down from
$44.4 billion of arranged volume across 175 transactions in the
prior year. JFIN's pre-tax net income was 0.6% of average assets in
fiscal 2019, down from 2.6% in the prior year and below the average
of 1.3% from fiscal 2016-2019. JFIN experienced an improvement in
transaction volume in fiscal 1Q20, closing 32 transactions for
$11.1 billion in arranged volume, up from 12 transactions totaling
$2.2 billion in arranged volume in fiscal 1Q19. However, market
issuances have dropped off significantly in fiscal 2Q20, and Fitch
believes deal volumes will likely remain challenged throughout the
rest of the year.
Committed deals accounted for approximately 75% of JFIN's arranged
volume in fiscal 2019 and 23% in fiscal 1Q20. Committed deals can
be particularly risky if market conditions deteriorate between JFIN
committing to a deal and fully allocating its book. While JFIN
attempts to manage this risk through its underwriting process,
which includes a thorough assessment of the borrower's credit risk,
in addition to considerations related to pricing, capital markets,
and distribution conditions, the risk of getting hung on a
committed deal can never be fully mitigated, which serves as a
rating constraint. Fitch believes JFIN has likely experienced some
challenges in syndicating committed loans in recent weeks, which
could pressure the firm's earnings and liquidity until the markets
are fully functioning.
To offset a portion of its revenue volatility, JFIN has built a
funded loan portfolio, which consists largely of first-lien broadly
syndicated loans. Asset quality on the funded loan portfolio has
been relatively strong over time. Net charge-offs averaged 0.7%,
annually, from fiscal 2016 through 2019 and amounted to 0.9% in
1Q20 (trailing 12 months basis). Charge-offs ticked up in recent
years, compared to historical levels, as a result of JFIN working
out certain energy and retail investments. During fiscal 2019, JFIN
recorded $25.4 million of other net losses, excluding call premiums
paid in connection with refinancing unsecured notes, which resulted
largely from write-downs of certain equity investments in retail
companies. While JFIN's funded loan portfolio is well-diversified
from individual issuer and industry perspectives, particularly as
compared to business development companies, exposure to retail
investments is above-average, at 7.3% of the funded portfolio at
fiscal 1Q20. Fitch believes this sector could experience higher
losses over the medium term given the effects social distancing
guidelines have had on consumer demand. Fitch believes JFIN's
exposure to borrowers in other higher risk sectors, such as travel,
leisure, hotels and energy, is manageable, but the coronavirus
pandemic has pushed the U.S. economy toward a recession that will
have credit implications for the entire portfolio.
JFIN's liquidity resources included unrestricted cash on the
balance sheet, which amounted to $579.9 million at Feb. 29, 2020,
available equity capital commitments from Jefferies and MassMutual
of $195.2 million on a combined basis, and availability under
fronting facilities of $722.5 million. JFIN also had $261 million
of undrawn capacity under its corporate revolver at fiscal 1Q20,
$482.7 million of undrawn capacity under warehouse facilities, and
revolving capacity in term CLOs and revolver CLOs. Cash balances
are volatile over time as they are based on the amount of
transactions fronted with balance sheet cash. If adjusted for the
repayment of transactions fronted with cash, JFIN noted that
liquidity from cash, available equity commitments and fronting
facilities would have been approximately $3.3 billion at the end of
fiscal 1Q20. Subsequent to quarter-end, JFIN added $1.2 billion of
short-term credit facilities with $1 billion dedicated to
underwriting commitments and $200 million to provide liquidity for
revolver draws, which Fitch views favorably.
JFIN's primary liquidity uses relate largely to underwriting
commitments and unfunded revolver exposures. When market conditions
weaken or the market view of an individual credit deteriorate
following JFIN funding a commitment, the firm could have trouble
allocating committed deals in a timely or profitable fashion. If
JFIN needs to finance deals for a longer hold period, which has
likely occurred in 2Q20 given market volatility, it could impair
the firm's liquidity position and prevent it from committing to
additional deals once market activity resumes, which would also
have an adverse impact on JFIN's earnings, reputation and market
position.
At Feb. 29, 2020, JFIN's undrawn commitments to borrowers amounted
to $2.5 billion; about $1.2 billion of which could be funded with
CLOs and CLO warehouse capacity. Additionally, $228.8 million of
revolving commitments were held in a credit facility subject to
equity requirements. The remaining obligations could potentially
call on the firm's liquidity if revolver utilization increases
significantly, which Fitch believes has occurred in recent weeks.
JFIN has been managing its unfunded direct exposure through
revolver CLOs along with strategic sales and participation programs
in recent years, which Fitch believes have provided the firm with
enhanced ability to fund the recent increase in revolver draws.
Fitch believes JFIN has sufficient liquidity to meet its potential
obligations, but notes that leverage could increase if the firm
needs to draw on its borrowing capacity to fund incremental
commitments to borrowers.
At Feb. 29, 2020, unsecured debt represented 6% of JFIN's total
debt outstanding (6.7% of debt excluding borrowings under fronting
lines) but was 24.5% of total non-funding debt. Unsecured debt
declined from 29.9% of total debt outstanding at the end of fiscal
1Q19 following the firm redeeming three unsecured notes issuances
as part of a refinancing transaction in June 2019. Fitch believes
an unsecured funding component enhances funding flexibility,
particularly in times of stress and, therefore, viewed the decline
in the proportion of unsecured debt over the past year unfavorably,
but recognizes the benefits to fixed cost coverage resulting from
the reduction in interest expense. On a total debt basis, JFIN's
proportion of unsecured debt outstanding is below-average compared
to rated BDCs and certain other commercial lenders, but Fitch views
it as adequate for the rating category. Fitch believes JFIN's
unsecured debt issuance will remain opportunistic over time as CLOs
remain a cost-effective way to fund the loan portfolio.
The 'BB+' rating assigned to the senior secured priority revolving
credit facility is one notch above the IDR, reflecting Fitch's
expectation for good recovery prospects given strong asset coverage
and the relatively low portion of first-out debt in JFIN's funding
profile.
The 'BB' secured debt rating is equalized with the IDR, reflecting
average recovery prospects under a stress scenario.
The 'BB-' rating assigned to the senior unsecured notes is one
notch below the IDR, reflecting the higher balance sheet
encumbrance and the largely secured funding profile, which Fitch
believes indicates weaker recovery prospects under a stressed
scenario.
Subsidiary and Affiliated Company
The long-term IDR and debt ratings of JFIN Co-Issuer Corporation
are equalized with those of its parent, JFIN. JFIN Co-Issuer
Corporation is essentially a shell finance subsidiary, with no
material operations and is a co-issuer on the corporate revolver,
secured term loan, secured notes and unsecured notes.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade:
A revision of the Outlook to Stable could occur if JFIN maintains
total leverage around the current level excluding the borrowings
under fronting lines, is successful in syndicating commitments over
the near to medium term without a material adverse impact on
earnings, and maintains sufficient liquidity.
Fitch believes the likelihood of a ratings upgrade over the medium
term is limited given the potential for weaker credit metrics and
the challenging economic backdrop from the coronavirus pandemic.
Longer-term, positive rating momentum could be driven by enhanced
funding diversity, including an increase in the proportion of
unsecured funding, a decline in leverage approaching 3.0x, a
continued improvement in the firm's liquidity profile, particularly
as it relates to undrawn revolver commitments, as well as evidence
of strong asset quality performance of the funded loan portfolio,
increased revenue diversity, and improved consistency of operating
performance over time.
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade:
An increase in total debt to tangible equity above 5.0x for
multiple quarters, non-funding debt to equity approaching or
exceeding the covenanted level, a material weakening in liquidity,
meaningful deterioration in asset quality, an extended inability to
syndicate transactions which results in material operating losses
and/or weakens the firm's reputation and market position, or a
change in the firm's exclusive relationship with Jefferies could
lead to a rating downgrade.
The super senior debt, secured debt and unsecured debt ratings are
sensitive to changes in JFIN's Long-Term IDR and to the relative
recovery prospects of the instruments. The debt ratings are
expected to move in tandem with JFIN's Long-Term IDR, although the
notching could change if there is a material change in the quality
or amount of the unencumbered asset pool, or a significant shift in
the levels of secured or unsecured debt.
Subsidiary and Affiliated Company
JFIN Co-Issuer Corporation's ratings are expected to move in tandem
with JFIN's ratings.
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.
ESG CONSIDERATIONS
The highest level of ESG credit relevance, if present, is a score
of 3. This means ESG issues are credit-neutral or have only a
minimal credit impact on the entity(ies), either due to their
nature or to the way in which they are being managed by the
entity(ies).
JOHN VARVATOS: Men's Designer Brand Ends Up in Chapter 11
---------------------------------------------------------
American international luxury men's designer brand John Varvatos
Enterprises sought Chapter 11 protection, citing sales declines in
recent years, compounded by the Covid-19 pandemic.
Jean E. Palmieri and Sindhu Sundar, writing for WWD.com, reports
that
fashion designer John Varvatos was supposed to celebrate his 20th
anniversary in 2020, instead he became the newest victim of the
pandemic as his company was forced to file bankruptcy protection.
According to WWD.com, the Company said in bankruptcy filings that
the fall of online revenues and sales since 2015 worsened due to
the pandemic and resulted to the temporary closures of its stores
worldwide since March 2020. It furloughed around 226 full-time and
part-time workers, that account over three quarters of its
workforce.
"The unprecedented, exponential spread of the coronavirus disease
COVID-19 throughout the United States along with the resulting,
state-imposed limitations and prohibitions on non-essential retail
operations destroyed the debtors’ blossoming success, having a
debilitating effect on the debtors’ business and employees," the
company's chief financial officer Joseph Zorda wrote in a court
filing.
John Varvatos walked into bankruptcy with plans for a going concern
asset sale deal with Lion/Hendrix Cayman Limited, which is owned by
affiliates of Lion Capital Fund III Partnerships and Lion Capital
LLP is the majority owner of the brand. The company has negotiated
a $20.5 million debtor-in-possession facility with Lion/Hendrix
Cayman Limited, combined with the company's projected cash flow,
"is expected to support its operations during a restructuring
process," the company said in a statement.
"The agreements with Lion represent a critical step in our process
to transform our business to drive long-term, sustainable growth.
We have taken decisive action to respond to the challenges that all
retailers face in the present environment and we remain extremely
confident that our brand, celebrating its 20th year in business,
will emerge even stronger. We have a passionate team, a fierce
global consumer following and a commitment to our customers, whom
we expect to serve for many years to come," Varvatos said.
The sale of John Varvatos to Lion will be subject to court approval
and may include a court-supervised auction.
The company's secured debt includes prepetition notes worth $94.8
million and under prepetition credit agreements worth $19.5
million. It also owes more than $26 million in unsecured debt,
primarily to vendors and under lease agreements.
About John Varvatos Enterprises
John Varvatos Enterprises, Inc. is an American international luxury
men’s lifestyle brand founded by fashion designer John Varvatos
in 1999. It operates retail stores in the United States and other
countries worldwide. It sells, manufactures and designs fashion
products for men such as sweaters, knits, tees, tailored clothing,
jeans, pants, jackets, and accessories.
John Varvatos Enterprises generates revenue through the sale of
merchandise through department store and specialty wholesale
distribution, a transactional globally accessible website, and its
27 brick and mortar retail locations.
John Varvatos Enterprises, Inc. and its affiliates sought Chapter
11 protection (Bankr. D. Del. Lead Case No. 20-11043) on May 6,
2020.
John Varvatos Enterprises was estimated to have $10 million to $50
million in assets and $100 million to $500 million in liabilities
as of the bankruptcy filing.
The Hon. Mary F. Walrath is the case judge.
The Debtors tapped MORRIS, NICHOLS, ARSHT & TUNNELL LLP as counsel;
CLEAR THINKING GROUP as financial advisor; MMG ADVISORS, INC. as
investment banker; and OMNI AGENT SOLUTIONS as claims agent.
KHAN AVIATION: Trustee Hires Bose McKinney as Special Counsel
-------------------------------------------------------------
Kelly M. Hagan, Chapter 11 Trustee of Khan Aviation, Inc., and its
debtor-affiliates, seeks approval from the U.S. Bankruptcy Court
for the Western District of Michigan to retain Bose McKinney &
Evans LLP as her special counsel.
Bose McKinney will be reviewing financial investments of the
Debtors including subscription agreements, partnership agreements,
operating agreements, owner agreements, purchase agreements,
default notices, valuations and the like for compliance with
Indiana and federal securities law, applicable state law and the
enforcement of restrictive covenants.
Bose McKinney's hourly rates are:
Paul D. Vink $490
Jeff Bailey $535
Sarah Parks $290
Luis Hernandez $280
Bose McKinney is a "disinterested person" within the meaning of
Sec. 101(14), according to court filings.
The firm can be reached through:
Paul D. Vink, Esq.
Bose, McKinney & Evans, LLP
111 Monument Cir #2700
Indianapolis, IN 46204
Phone: +1 317-684-5000
About Khan Aviation
Khan Aviation, Inc. and its affiliates, GN Investments LLC, KRW
Investments Inc., NJ Realty LLC, NAK Holdings LLC, and Sarah Air
LLC sought protection under Chapter 11 of the Bankruptcy Code
(Bankr. W.D. Mich. Case Nos. 19-04261, 19-04262, 19-04264,
19-04266, 19-04267 and 19-04268) on Oct. 8, 2019.
The cases are jointly administered with that of Najeeb Ahmed Khan
(Bankr. W.D. Mich. Case No. 19-04258), which is the lead case.
Judge Scott W. Dales presides over the cases.
The Debtors are represented by Robert F. Wardrop, II, Esq., at
Wardrop & Wardrop, P.C.
Kelly Hagan was appointed as Chapter 11 trustee for the Debtors'
bankruptcy estates. The trustee is represented by Hagan Law
Offices, PLC.
At the time of the filing, the Debtors' estimated assets and
liabilities are as follows:
Debtors Assets Liabilities
------- -------------------- ----------------------
Khan Aviation $1-mil. to $10-mil. $1-mil. to $10-mil.
GN Investments $1-mil. to $10-mil. $100-mil. to $500-mil.
KRW Investments $10-mil. to $50-mil. $100-mil. to $500-mil.
NJ Realty $1-mil. to $10-mil. $100-mil. to $500-mil.
NAK Holdings $1-mil. to $10-mil. $100-mil. to $500-mil.
Sarah Air $500,000 to $1-mil. $100-mil. to $500-mil.
KRAFT HEINZ: S&P Rates New Senior Unsecured Notes 'BB+'
-------------------------------------------------------
S&P Global Ratings assigned its 'BB+' issue rating to U.S.-based
Kraft Heinz Co.'s proposed senior unsecured notes due 2027 and
2030, which are being offered to qualified institutional buyers
under rule 144A with registration rights. The proposed notes will
be issued by Kraft Heinz Foods Co. and guaranteed by Kraft Heinz
Co. The recovery rating on the proposed notes is '3', indicating
that creditors could expect meaningful (50%-70%; rounded estimate:
60%) recovery in the event of a payment default.
"We expect the proceeds from the proposed leverage-neutral offering
will be used to fund the tender offer for certain specified senior
unsecured note issuances, and the conditional redemption of all or
a portion of the 3.375% senior notes due 2021, of which there is
$300 million outstanding. Our ratings assume the proposed
transaction closes substantially on the terms presented to us," S&P
said.
All of S&P's existing ratings, including its 'BB+' issuer credit
rating, are unchanged. The outlook is negative.
"Our ratings on Kraft Heinz reflect the significant decline in
profits that occurred in the second half of 2018 and 2019 mainly
because of excessive cost cutting, operational mismanagement, and a
failure to innovate its brands. It also reflects the company's
aggressive financial policies considering its continued high
dividend payout and restrained approach to asset sales, despite
declining profitability and cash flow generation," S&P said.
"That said, compared to our pre-coronavirus expectations, we
anticipate a temporary boost to sales and EBITDA because the
coronavirus has caused a substantial increase in demand for retail
products associated with shelter-at-home and social distancing
mandates. We do not know at this time how long the company will
benefit from such trends or if subsequent significant pantry
de-stocking will hurt future profits. Operational disruptions,
commodity shortages (including proteins), and input cost volatility
could also materialize, though to date we believe Kraft Heinz has
not been materially impacted. However, the coronavirus has caused a
delay in unveiling management's plan to turnaround the company. It
is now planned for September of 2020," the rating agency said.
Kraft Heinz still owns a portfolio of large, well-known
brands-–albeit many of which are out of favor and have weak
growth potential-–and generates healthy free operation cash flow,
the majority of which it will use to pay dividends.
LAMB WESTON: Moody's Rates $400MM Senior Unsecured Notes 'Ba2'
--------------------------------------------------------------
Moody's Investors Service assigned a Ba2 rating to $400 million of
8-year senior unsecured notes being offered by Lamb Weston
Holdings, Inc. All of Lamb Weston's existing ratings, including its
Corporate Family Rating at Ba1, Probability of Default Rating at
Ba1-PD, and Speculative Grade Liquidity Rating at SGL-1, remain
unchanged. The rating outlook is stable.
Net proceeds from its issuance will be used for working capital and
other corporate purposes. The offering will further bolster the
company's liquidity by building balances of cash and marketable
securities to approximately $1.25 billion at closing. Lamb Weston
has increased its liquidity position in recent weeks as a
precautionary measure and to preserve financial flexibility given
uncertainties in global markets due to the coronavirus pandemic.
The proposed note issuance follows the comany's establishment of a
new five-year $325 million term loan (unrated) on April 20, 2020
and its borrowing of $495 million under a $500 million revolving
credit facility in late March 2020, the proceeds from both actions
being held in cash and high-quality short-term investments. Cash
balances totaled approximately $30.1 million at the end of the
fiscal third quarter ended February 23, 2020.
Lamb Weston's senior unsecured notes are rated Ba2, one notch lower
than the Ba1 CFR because of their effective subordination to $1.4
billion of senior secured debt instruments in the capital
structure, including $899 million in term loan facilities and the
$500 million revolving credit facility. These secured bank facility
instruments are not rated by Moody's.
The recent increases in debt will cause Lamb Weston's financial
leverage to increase significantly during the fiscal fourth quarter
and is likely to increase further over the next fiscal year due to
coronavirus related earnings declines. Moody's expects debt/EBITDA
for the twelve months ending May 2020 to rise to roughly 4.6x, up
from 2.8x for the twelve months ended February 2020. Net
debt/EBITDA also will rise throughout fiscal 2021 but should remain
below 3.5x.
Moody's assumes that as global capital markets regain more
stability, Lamb Weston will apply excess cash balances to debt
reduction and will continue to generate positive free cash flow.
Moody's also assumes that the company will utilize cash balances to
fund upcoming debt maturities, including the $281 million term loan
that is due in November 2021. Factoring such debt repayment,
Moody's estimates that debt/EBITDA would then be around 4.0x, which
is within expectations for the rating based on the company's
business profile.
Moody's has assigned ratings to the following debt instruments:
Lamb Weston Holdings, Inc.:
$400 million senior unsecured notes due April 2028 at Ba2 (LGD4).
The outlook remains stable.
RATINGS RATIONALE
Lamb Weston's Ba1 Corporate Family Rating reflects the company's
leading North America market position and top-tier global market
position in value-added frozen potato products--a category with
attractive operating profit margins and good long-term global
growth prospects. The rating is further supported by the company's
established track record of stable operating performance and
moderate financial leverage. The company's ratings are constrained
by its narrow business focus, relatively high customer and supply
concentrations, and somewhat limited financial flexibility due to
high capital expenditures.
Lamb Weston's SGL-1 speculative grade liquidity rating reflects
very good liquidity. May 2020 fiscal year end cash on hand will
approximate $1.2 billion and provide ample support for business
operations through the coronavirus downturn, assuming a recovery in
calendar 2021, and comfortably funds debt maturities through
calendar 2021. Moody's expects that the company will generate $75
-$125 million of annual free cash flow in fiscal years 2021 and
2022, assuming the current dividend remains in place. The next
major debt maturities occur in November 2021 when the company's
$500 million secured revolving credit facility and $281 million
secured term loan come due.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Ratings could be considered for upgrade if Lamb Weston sustains
stable operating performance, debt/EBITDA below 3.0 and retained
cash flow/net debt above 20%. In addition, the company likely will
need to achieve additional scale and diversification before Moody's
would consider an upgrade to investment grade.
Ratings could be downgraded if expected earnings declines from
coronavirus or for other reasons -- such as plant disruptions or
market share losses -- are more serious or persist longer than
anticipated. A downgrade also is possible if the anticipated $1.2
billion cash balance is utilized to support shareholder-friendly
activities such as share repurchases or dividend increases, or if
for any reason debt/EBITDA is likely to be sustained above 4.0x.
ESG CONSIDERATIONS
The rapid and widening spread of the coronavirus outbreak,
deteriorating global economic outlook, falling oil prices, and
asset price declines are creating a severe and extensive credit
shock across many sectors, regions and markets. The combined credit
effects of these developments are unprecedented. Foodservice, which
represents 80% of Lamb Weston's sales, is among the sectors most
negatively affected by the coronavirus pandemic. Moody's expects
that this exposure will be reflected in material declines in Lamb
Weston's earnings over the next year. Moody's regards the
coronavirus outbreak as a social risk under its ESG framework,
given the substantial implications for public health and safety.
The principal methodology used in these ratings was Consumer
Packaged Goods Methodology published in February 2020.
LAST FRONTIER: June 8 Plan Confirmation Hearing Set
---------------------------------------------------
On March 9, 2020, debtor Last Frontier Realty Corporation filed
with the U.S. Bankruptcy Court for the Northern District of Texas,
Dallas Division, a Disclosure Statement referring its to Amended
Plan of Reorganization.
On April 17, 2020, Judge Harlin DeWayne Hale approved the
Disclosure Statement and established the following dates and
deadlines:
* May 29, 2020 is fixed as the last day for filing and serving
written acceptances or rejections of the Plan in the form of a
ballot.
* June 8, 2020 at 1:30 p.m. is fixed for the hearing on
Confirmation of the Plan in the Courtroom of the Honorable Harlin D
Hale, 1100 Commerce Street, 14 Floor, Dallas, Texas.
* May 29, 2020 is fixed as the last day for filing and serving
written objections to confirmation of the Plan or the Disclosure
Statement.
A full-text copy of the order dated April 17, 2020, is available at
https://tinyurl.com/y7vuru6q from PacerMonitor at no charge.
About Last Frontier Realty Corp.
Last Frontier Realty Corp. is a Texas corporation which owns two
pieces of real property.
The Debtor previously filed a Chapter 11 petition (Bankr. N.D. Tex.
Case No. 17-30454) on Feb. 6, 2017. This case was dismissed on July
3, 2017.
Last Frontier Realty sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. N.D. Tex. Case No. 17-32681) on July 10,
2017. At the time of the filing, the Debtor was estimated to have
assets and liabilities of less than $1 million. Judge Stacey G.
Jernigan oversees the case. Eric A. Liepins, P.C., is the Debtor's
bankruptcy counsel.
LEVEL SOLAR: Unsecureds to Recover 10%, Liquidating Trust's Share
-----------------------------------------------------------------
Level Solar Inc.'s Chapter 11 Trustee, Lisa V. Pell and QED, LLC
(Pell-QED Proponents) filed a Disclosure Statement for their Third
Amended Joint Chapter 11 Plan of Reorganization for debtor Level
Solar Inc. (LSI) dated April 17, 2020.
Allowed General Unsecured Claims, except with respect to the Claims
of Lisa Pell, and QED, LLC, on the Effective Date, will receive 10%
of their Allowed Class 4 Claims; and (ii) their pro rata share
(based on the Allowed amount of their Class 4 Claims, less any
amounts paid on the Effective Date) of LSI Liquidating Trust
Certificates.
A full-text copy of the Disclosure Statement for the Third Amended
Joint Plan dated April 17, 2020, is available at
https://tinyurl.com/y9bsdj85 from PacerMonitor at no charge.
Counsel for Ronald J. Friedman, Esq. Chapter 11 Trustee:
SilvermanAcampora LLP
Anthony C. Acampora
100 Jericho Quadrangle, Suite 300
Jericho, New York 11753
Tel: (516) 479-6300
Fax: (516) 937-7002
E-mail: AAcampora@SilvermanAcampora.com
Counsel for Lisa V. Pell and QED, LLC:
Wollmuth Maher & Deutsch LLP
Paul R. DeFilippo
Brad J. Axelrod
500 Fifth Avenue
New York, New York 10110
Tel: (212) 382-3300
Fax: (212) 382-0050
E-mail: pdefilippo@wmd-law.com
baxelrod@wmd-law.com
About Level Solar
Based in New York, Level Solar Inc. operates under the solar-energy
installation industry. Incorporated in 2013, the company has
operations in Long Island, New York City and Massachusetts.
Level Solar filed for bankruptcy protection (Bankr. S.D.N.Y. Case
No. 17-13469) on Dec. 4, 2017. At the time of the filing, the
Debtor was estimated to have assets of between $50 million and $100
million and debt of between $1 million and $10 million.
Michael Conway, Esq., at Shipman & Goodwin LLP, is the Debtor's
bankruptcy counsel. Akin Gump Strauss Hauer & Feld LLP serves as
corporate counsel.
Ronald J. Friedman, Esq., was appointed Chapter 11 trustee for the
Debtor. The Trustee tapped SilvermanAcampora LLP as his legal
counsel.
LIQUID COLLECTIVE: Case Summary & 9 Unsecured Creditors
-------------------------------------------------------
Debtor: Liquid Collective LLC
575 St. Paul St
Denver, CO 80206
Business Description: Liquid Collective LLC provides data
processing, hosting, and related services.
Chapter 11 Petition Date: May 7, 2020
Court: United States Bankruptcy Court
District of Colorado
Case No.: 20-13146
Debtor's Counsel: Michael J. Davis, Esq.
DAVIS LAW GROUP LLC
2255 Sheridan Blvd
St. C272
Denver, CO 80214
Tel: 720-361-6036
E-mail: mdavis@mjdavislaw.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Robert Scott Brooks, senior executive
reorganization specialist.
A copy of the petition containing, among other items, a list of the
Debtor's nine unsecured creditors is available for free at
PacerMonitor.com at:
https://is.gd/PrFcbA
LITHIA MOTORS: S&P Alters Outlook to Negative, Affirms 'BB+' ICR
----------------------------------------------------------------
S&P Global Ratings revised its outlook on U.S.-based Lithia Motors
Inc. to negative from stable and affirmed its 'BB+' issuer credit
rating.
Lithia Motors Inc.'s financial results have been adversely affected
by government restrictions to contain the COVID-19 pandemic. The
COVID-19 pandemic poses risks that the company's employees and
suppliers may be prevented from conducting business activities at
full capacity due to the spread of the disease within these groups
or because of shutdowns mandated by governmental authorities. S&P
expects significantly lower vehicle sales and profitability due to
reduced service traffic levels at dealerships in 2020.
While total same-store first-quarter results were down 5%,
new-vehicle sales were down about 50% in the late March and early
April period. The company has indicated that it was beginning to
see an improvement in new-vehicle demand as the recent decline in
sales at the end of April was now down about 40%. Its parts and
services business has fallen 30%.
"In modeling a stress scenarios, we see revenue falling by 18% in
2020 and rising roughly 15% in 2021. Consequently, we expect debt
to EBITDA to increase over 3.5x in 2020 and FOCF to debt to fall
below 15% in 2020. The cushion in Lithia's credit metrics before
this year and our expectation of a rebound in 2021 justify
maintaining the current rating," S&P said.
In particular, FOCF to debt has been consistently solid due to the
company's low capital expenditures as well as the recurring revenue
nature of its business, according to S&P.
In response the company has taken defensive measures to conserve
cash in the second quarter. Lithia has postponed acquisitions to
the second half of 2020. In addition, the company announced that it
has terminated or deferred about $65 million in planned capital
expenditures and suspended share repurchases at this time.
The balance sheet remains solid. The company enters the downturn
with $550 million in cash and availability under its revolving
lines of credit; moreover, it has $500 million available through
S&P's unencumbered real estate. There are no significant debt
maturities until 2025.
How quickly consumer demand for vehicles, parts and maintenance
services will return to pre-coronavirus levels are factors that
will determine future rating actions. If the slowdown in traffic
at dealerships were to extend into the second half of 2020, S&P
would need to reassess the impact of falling sales as well as
declining profitability and cash flow on the current ratings.
Environmental, social, and governance (ESG) factors relevant to the
rating action:
-- Health and safety
Lithia does not face the demands of designing and manufacturing
vehicles that comply with air emissions regulations, and therefore
its environmental responsibilities are more circumscribed that
those of automakers or parts suppliers. Still, the company is
subject to a wide range of environmental laws and regulations,
including those governing discharges into water, air emissions, and
the storage and disposal of hazardous or toxic wastes.
The company requires appropriate levels of insurance to cover
claims from employees, customers, and third parties regarding
personal injury and property losses arising in the course of its
business. Based on available information, S&P believes Lithia
Motors operates in compliance with existing environmental laws and
regulations and that there are no material liabilities that would
hurt its financial performance and condition.
The negative outlook on Lithia reflects S&P Global Ratings' view
that there is at least a one-third chance that the company's
weighted FOCF-to-debt ratio would fall below 15% over the next 12
months.
"We could lower the rating on Lithia Motors if we came to believe
that its FOCF-to-debt ratio would fall below 15% and its
debt-to-EBITDA ratio would rise above our 3x on a sustained basis.
This could occur if government actions to restrict the spread of
COVID-19 are lifted but then are re-imposed because of a
substantial spike in infections or if consumer buying patterns fail
to normalize in the second half of the year, Lithia's EBITDA
margins could compress or its free operating cash flow could
decline, thereby leading to worsening credit metrics," S&P said.
"We would revise the outlook back to stable if the spread of
COVID-19 is contained and consumer demand for vehicles, parts, and
maintenance services begin to normalize. At the same time we would
expect the company's EBITDA margins to expand and free operating
cash flow to strengthen, thereby improving its key credit metrics,
namely FOCF to debt and debt to EBITDA," S&P said.
LSB INDUSTRIES: Incurs $19.5 Million Net Loss in First Quarter
--------------------------------------------------------------
LSB Industries, Inc., reported a net loss of $19.45 million on
$83.41 million of net sales for the three months ended March 31,
2020, compared to a net loss of $11.54 million on $94.15 million of
net sales for the three months ended March 31, 2019.
As of March 31, 2020, the Company had $1.11 billion in total
assets, $111.11 million in total current liabilities, $480.84
million in long-term debt, $14.51 million in non-current operating
lease liabilities, $5.15 million in other non-current accrued and
other liabilities, $35.34 million in deferred income taxes, $243.70
million in redeemable preferred stock, and $219.49 million in total
stockholders' equity.
"We were pleased with the performance of our chemical manufacturing
facilities in the first quarter as we continue to see improvements
in on-stream rates and overall production from the investments that
we made over the last several years," stated Mark Behrman, LSB
Industries' president and CEO. "Despite the impacts of the
COVID-19 pandemic on the U.S. economy, our facilities remain fully
operational and we expect a material year-over-year improvement in
results for full year 2020. While we operated well for the
quarter, our financial results reflected lower selling prices for
both our agricultural and industrial products, partially offset by
stronger sales volumes and lower natural gas prices."
"Pricing was down for all of our major agricultural product
categories during the first quarter reflecting the continued
oversupply of ammonia in our primary end markets, increased imports
of some of our downstream products, and a slow start to the
pre-spring fertilizer application season due to wet weather.
Pricing for our industrial products was also impacted by the excess
ammonia inventory in the U.S. distribution channel, a condition we
believe will be at least partially alleviated in the coming
quarters."
Mr. Behrman continued, "As I mentioned, our facilities operated
well during the first quarter. El Dorado delivered a particularly
strong performance, with a 99% ammonia plant on-stream rate and
record ammonia production volume averaging 1,350 tons per day for
the quarter. Cherokee and Baytown continued their consistent
performance and Pryor had a noteworthy year-over-year increase in
UAN production volume, which helped to partially offset the weaker
pricing. The strong operations at all our facilities were the
direct result of the extensive maintenance and upgrade work that we
completed during the last several years that we expect will lead to
strong production volume improvement throughout 2020."
"Even more importantly than our focus on operating efficiency is
our top priority of safe operations, which has a new meaning during
the current global health crisis. As such, we have implemented an
array of protocols and procedures to ensure the health of our
employees and personnel. These include daily health screening,
including temperature checks and questionnaires, use of proper
personal protection equipment, regular disinfection and cleaning of
equipment and workspaces, social distancing, working from home
where appropriate and quarantining of employees according to
specific protocols. Thus far, our efforts have been successful as
we have had no employees contract the virus. We will maintain our
discipline in this regard for however long the current health risk
persists. Our overall increased focus on safety led us to achieve
no recordable injuries for the quarter."
"With respect to our outlook for 2020, COVID-19 has placed the
entire U.S. and global economy in an unprecedented situation and
resulted in various levels of uncertainty across our end markets.
On the agricultural side, in late February, the USDA increased its
2020 forecast for total corn acres to be planted in 2020 to 97
million, up from an expected 94 million acres, and 2019 plantings
of 90 million. Over the past month, we have seen a strong pickup
in orders and shipments of all our fertilizer products that is
consistent with an upswing in planting activity. Potentially
impacting our agricultural business in the second half of the year
is the current drop in demand for ethanol, a corn-based fuel
additive, due to significantly reduced vehicle use as people remain
at home. We are monitoring this situation closely. On the
industrial and mining side of our business, over the last month we
have seen some pull back in demand for various products that are
ultimately used in the auto manufacturing, home building, power
generation, water treatment and coal and metals mining industries.
We are working hard to at least partially offset some of this lost
demand with new business and are shifting some of our production
towards agricultural products, given the current high level of
demand."
"In response to the uncertainties and demand headwinds being caused
by the pandemic crisis, we have taken several decisive actions to
control our costs and maintain liquidity until the business
environment stabilizes and visibility improves. Specifically, we
have halted spending of certain plant expenses and SG&A until the
impacts of the crisis have abated. Additionally, we have deferred
between $5 million and $6 million of capital expenditures not
related to Environmental, Health and Safety investments until the
fourth quarter of 2020. Finally, we have received $10 million
under the Paycheck Protection Program established by the federal
government's CARES act. We believe our liquidity as of the end of
the first quarter, coupled with the funds from the PPP loan in
April, provide us with ample liquidity needed to maintain the
continuity of our business and hedge against the uncertainty of the
impact of Covid-19 on our markets while fully maintaining our
skilled employee base and operating our facilities at high
production rates."
Mr. Behrman concluded, "Our primary focus at this time is on the
health and safety of our employees and all of the people we come in
contact with on a day-to-day basis as we run our business. After
that, our goal is to achieve and maintain the operational targets
we have set out for our facilities. We performed well in this
regard during the first quarter and thus far in the second quarter
and expect to continue to do so for the balance of the year. As a
result, despite the headwinds to our industry and our business
created by COVID-19, we continue to believe in our ability to
deliver year-over-year improvement in EBITDA and cash flow in
2020."
Financial Position and Capital Expenditures
As of March 31, 2020, the Company's total cash position was $37.5
million. Additionally, the Company had approximately $20.5 million
of borrowing availability under its Working Capital Revolver giving
the Company total liquidity of approximately $58 million. Total
long-term debt, including the current portion, was $490.5 million
at March 31, 2020 compared to $459.0 million at Dec. 31, 2019. The
increase in long-term debt largely reflects a use of funds from the
Company's revolver as it preemptively borrowed on the revolver to
ensure access to liquidity given the uncertainty surrounding
COVID-19. The aggregate liquidation value of the Series E
Redeemable Preferred at March 31, 2020, inclusive of accrued
dividends of $111.3 million, was $251.1 million.
Interest expense for the first quarter of 2020 was $13.5 million
compared to $11.0 million for the same period in 2019.
Capital expenditures were approximately $10.7 million in the first
quarter of 2020 of which approximately half relates to capital
costs incurred in the fourth quarter of 2019 but paid during the
first quarter of 2020. For the full year of 2020, total capital
expenditures related to capital work performed in 2020 are expected
to be between $25 million and $30 million, inclusive of investments
to be made for margin enhancement purposes.
A full-text copy of the Quarterly Report is available for free at
the Securities and Exchange Commission's website at:
https://is.gd/Nn80UH
LSB Industries
Headquartered in Oklahoma City, Oklahoma, LSB Industries, Inc. --
http://www.lsbindustries.com-- manufactures and sells chemical
products for the agricultural, mining, and industrial markets. The
Company owns and operates facilities in Cherokee, Alabama, El
Dorado, Arkansas and Pryor, Oklahoma, and operates a facility for a
global chemical company in Baytown, Texas. LSB's products are sold
through distributors and directly to end customers throughout the
United States.
LSB Industries reported a net loss attributable to common
stockholders of $96.44 million for the year ended Dec. 31, 2019,
compared to a net loss attributable to common stockholders of
$102.74 million for the year ended Dec. 31, 2018.
* * *
As reported by the TCR on May 7, 2018, S&P Global Ratings raised
its corporate credit rating on Oklahoma City, Oklahoma-based LSB
Industries Inc. to 'CCC+' from 'CCC'. The outlook is stable. "The
upgrade reflects our view of the improvement in LSB's overall
operations for 2017 and the first quarter of 2018 and the completed
refinancing of its $375 million senior secured notes due August
2019, which eliminates near-term refinancing risks.
In November 2016, Moody's Investors Service downgraded LSB's
corporate family rating (CFR) to 'Caa1' from 'B3', its probability
of default rating to 'Caa1-PD' from 'B3-PD', and the $375 million
guaranteed senior secured notes to 'Caa1' from 'B3'. LSB's 'Caa1'
CFR rating reflects Moody's expectations that the combined
uncertainty over operational reliability and the compressed
margins, resulting from the low nitrogen fertilizer pricing
environment, could result in continued weak financial metrics for a
protracted period.
MAGEE BENEVOLENT: May 15 Plan Confirmation Hearing Set
------------------------------------------------------
On September 3, 2019, debtor Magee Benevolent Association filed
with the U.S. Bankruptcy Court for the Southern District of
Mississippi a Disclosure Statement and First Amended Plan of
Reorganization on April 14, 2020.
On April 17, 2020, Judge Katharine M. Samson approved the
Disclosure Statement and established the following dates and
deadlines:
* May 8, 2020 is fixed as the last day for filing written
objections to confirmation of the Plan.
* May 8, 2020 is fixed as the last day for submitting ballots of
acceptance or rejection of the Plan with the attorney for the
Debtor.
* May 15, 2020, at 10:00 a.m., in the Bankruptcy Courtroom, 7th
Floor, Dan M. Russell, Jr. U. S. Courthouse, 2012 15th Street,
Gulfport, Mississippi is the hearing on confirmation of the Plan.
A full-text copy of the order dated April 17, 2020, is available at
https://tinyurl.com/y94fgt2z from PacerMonitor at no charge.
The Debtor is represented by Craig M. Geno, Esq.
About Magee General Hospital
Magee General Hospital serves as a general medical and surgical
facility in Magee, Mississippi. The Hospital offers medical
services in cardiology, audiology, dentistry, general surgery,
internal medicine, oncology, emergency care, and many other medical
services.
Magee General Hospital sought Chapter 11 bankruptcy
protection(Bankr. S.D. Miss. Case No. 18-03283) on Aug. 24, 2018.
In the petition signed by CEO Sean Johnson, the Debtor estimated $1
million to $10 million in assets and liabilities. The case is
assigned to Judge Katharine M. Samson. The Law Offices of Craig M.
Geno, PLLC, led by Craig M. Geno, is the Debtor's counsel.
The Office of the U.S. Trustee appointed an official committee of
unsecured creditors on Sept. 24, 2018. The committee tapped Arnall
Golden Gregory LLP as its legal counsel, and McCraney, Montagnet,
Quin & Noble, PLLC as its local counsel.
MAGELLAN HEALTH: S&P Places 'BB+' ICR on CreditWatch Positive
-------------------------------------------------------------
S&P Global Ratings said it placed its ratings, including its 'BB+'
issuer credit rating along with its debt ratings, on Magellan
Health Inc. (MGLN) on CreditWatch with positive implications.
The CreditWatch placement follow's MGLN's announcement that it is
selling its managed-care operation, Magellan Complete Care (MCC),
to Molina Healthcare. S&P believes that, upon transaction close
(expected by first-quarter 2021), MGLN's financial profile will
likely improve materially due to proceeds from the sale. In
exchange for the divested business, Magellan is receiving $850
million (before taxes and expenses), as well as an amount equal to
any excess capital above regulatory requirements at MCC
subsidiaries at closing (about $75 million at year-end 2019).
"The CreditWatch placement reflects our expectation that MGLN's
financial profile will show material improvements upon the close of
the transaction from sale proceeds. We could raise the ratings by
one notch at the time of sale (in first-quarter 2021) if MGLN
deploys sale proceeds so that leverage falls at least below S&PGR
adjusted levels of 2x, and we expect (based on financial policy and
earnings momentum) that it will sustain this improvement," S&P
said.
"We could affirm the rating at transaction close or earlier if we
think MGLN will not be able to maintain leverage below 2x, or if
its current fair business assessment weakens materially through
organic contractions or reduced profitability," the rating agency
said.
MAUSER PACKAGING: S&P Rates New $150MM Senior Secured Notes 'B'
---------------------------------------------------------------
S&P Global Ratings assigned its 'B' issue-level rating and '3'
recovery rating to industrial packaging manufacturer Mauser
Packaging Solutions Holding Co.'s proposed $150 million senior
secured notes due 2024. The '3' recovery rating indicates S&P's
expectation for meaningful (50%-70%; rounded estimate: 55%)
recovery in the event of a payment default. The proposed notes will
be governed by the same indenture as the company's existing senior
secured notes due 2024. Mauser is issuing the notes to provide it
with additional liquidity and for general business purposes.
ISSUE RATINGS--RECOVERY ANALYSIS
Key analytical factors
-- S&P assigned its 'B' issue-level rating and '3' recovery rating
to Mauser's proposed $150 million senior secured notes.
-- S&P's simulated default scenario assumes a default occurring in
2023 because of declining sales volumes due to weak chemicals,
housing/construction, and petrochemical demand. S&P also assumes
that rising input costs and the inability to raise prices further
pressure its margins, working capital, and cash flow. Therefore,
the company would have to fund its cash flow shortfalls with
available cash and borrowings from its asset-based lending (ABL)
facility. Eventually, the company's liquidity and capital resources
becomes strained to the point that it cannot operate without an
equity infusion or bankruptcy filing.
-- S&P continues to value the company on a going-concern basis
using a 6.0x multiple of its projected emergence EBITDA of $434
million.
Simulated default assumptions
-- Year of default: 2023
-- EBITDA at emergence: $434 million
-- Multiple: 6.0x
Simplified waterfall
-- Net enterprise value (after 5% administrative costs): $2.4
billion
-- Obligor/nonobligor split: 77%/23%
-- Priority claims (ABL facility): $148.6 million
-- Collateral available to secured debt claims: $2.1 billion
-- Estimated secured debt claims (includes term loan and secured
notes): $4.0 billion
-- Recovery expectations: 50%-70% (rounded estimate: 55%)
-- Remaining value available for unsecured claims: $199.2 million
-- Total unsecured claim (includes both unsecured notes and
remaining secured debt claims): $3.3 billion
-- Recovery expectations: 0%-10% (rounded estimate: 5%)
Note: All debt amounts include six months of prepetition interest.
MILLMAC CORP: Has Until June 15 to File Plan & Disclosures
----------------------------------------------------------
Judge Michael G. Williamson of the U.S. Bankruptcy Court for the
Middle District of Florida, Tampa Division, has ordered that the
deadline for debtor Millmac Corp. to file a plan and disclosure
statement is extended through and including June 15, 2020.
A full-text copy of the order dated April 17, 2020, is available at
https://tinyurl.com/ya7jeod6 from PacerMonitor at no charge.
About Millmac Corporation
Millmac Corporation is a provider of specialized marine labor, ship
repair and dredging for industrial and residential uses.
Based in Bartow, Fla., Millmac Corporation filed for Chapter 11
bankruptcy protection (Bankr. M.D. Fla. Case No. 19-11877) on Dec.
18, 2019. In the petition signed by Michael J. Miller, president,
the Debtor disclosed $1,308,639 in assets and $1,619,039 in
liabilities. Susan Heath Sharp, Esq., at Stichter, Riedel, Blain &
Postler, P.A., is the Debtor's legal counsel.
MITCHAM INDUSTRIES: Moss Adams LLP Raises Going Concern Doubt
-------------------------------------------------------------
Mitcham Industries, Inc. filed with the U.S. Securities and
Exchange Commission its annual report on Form 10-K, disclosing a
net loss (attributable to common shareholders) of $13,337,000 on
$42,675,000 of total revenues for the year ended Jan. 31, 2020,
compared to a net loss (attributable to common shareholders) of
$21,548,000 on $42,942,000 of total revenues for the year ended in
2019.
The audit report of Moss Adams LLP states that the Company has
suffered recurring losses from operations, had negative cash flows
from operations totaling $5,800,000 and $5,500,000 during fiscal
2020 and 2019 and currently does not have additional preferred
shares authorized to sell, which has been a significant source of
equity financing during fiscal 2020, 2019 and 2018. Additionally,
the Company had to temporarily close two of its manufacturing
locations and experienced delays in shipping orders related to the
COVID-19 pandemic in 2020. These factors raise substantial doubt
about its ability to continue as a going concern.
The Company's balance sheet at Jan. 31, 2020, showed total assets
of $58,228,000, total liabilities of $10,576,000, and a total
shareholders' equity of $47,652,000.
A copy of the Form 10-K is available at:
https://is.gd/uKFawJ
Mitcham Industries, Inc., through its subsidiaries, provides
technology to the oceanographic, hydrographic, defense, seismic and
maritime security industries worldwide. The company operates in two
segments, Marine Technology Products, and Equipment Leasing.
Mitcham Industries, Inc. was founded in 1987 and is headquartered
in The Woodlands, Texas.
MJJW PORTFOLIO: Hires Hackworth Law as Special Counsel
------------------------------------------------------
MJJW Portfolio, Inc., seeks authority from the U.S. Bankruptcy
Court for the Middle District of Florida to employ Hackworth Law,
as special counsel to the Debtor.
MJJW Portfolio requires Hackworth Law to represent the estate in
the Circuit Civil Court action in and for Hillsborough County,
State of Florida, presently pending, styled Samarra Durham v. MJJW
Portfolio, Inc , Case No.: 2019-CA-7693.
Hackworth Law will be paid at these hourly rates:
Attorneys $275
Paralegals $150
Clerk $50
Hackworth Law will be paid a retainer in the amount of $3,000.
Hackworth Law will also be reimbursed for reasonable out-of-pocket
expenses incurred.
Cheyenne Whitfield, a partner at Hackworth Law, assured the Court
that the firm is a "disinterested person" as the term is defined in
Section 101(14) of the Bankruptcy Code and does not represent any
interest adverse to the Debtor and its estates.
Hackworth Law can be reached at:
Cheyenne Whitfield, Esq.
HACKWORTH LAW
1818 North 15 Street
Tampa, FL 33605
Tel: (813)280-2911
About MJJW Portfolio
MJJW Portfolio, Inc., owns in fee simple a night club known as Club
1828 in Tampa, Florida, with an appraised value of $730,000. It
also owns in fee simple a six-unit strip mall with an appraised
value of $540,000, also in Tampa, Fla.
MJJW Portfolio sought Chapter 11 protection (Bankr. M.D. Fla. Case
No. 19-08680) on Sept. 13, 2019. In the petition signed by Marlon
Wright, its president, the Debtor listed total assets at $1,270,420
and total liabilities at $384,207. Buddy D. Ford, P.A., is the
Debtor's legal counsel; and Hackworth Law, as special counsel.
MRC GLOBAL: S&P Downgrades ICR to 'B-'; Outlook Negative
--------------------------------------------------------
S&P Global Ratings lowered its issuer credit rating on Texas-based
pipe, valve, and fittings distributor MRC Global (US) Inc. to 'B-'
from 'B', and its issue-level ratings on MRC's $400 million senior
secured term loan to 'B' from 'B+'. The recovery rating of '2'
remains unchanged.
In the wake of the recent oil price decline, S&P expects MRC's
customers to further cut capital and operating expenditure budgets.
About 30% of MRC's sales are to the upstream exploration and
production (E&P) market, which the rating agency believes will
experience a severe contraction over the next 12 to 24 months. S&P
estimates a 25% revenue decline in 2020 would lead to a drop in
adjusted EBITDA to about $100 million (versus $220 million in
2019). It sees uncertain market conditions and limited visibility
on an expected recovery resulting in debt leverage reaching 8x for
the next 18 to 24 months. Once prices recover, MRC's customers may
choose to slowly ramp up their capital budgets, which would prolong
the company's weak operating performance. However, S&P notes that
compared to the previous oil price downturn, MRC has increased the
proportion of its revenue that it derives from the gas utility
market (25% of revenue in 2019 versus 20% in 2016). This is a more
stable end market and has less correlation with oil prices.
The negative outlook reflects the risk of a prolonged downturn in
the oil and gas sector and suppressed customer capex budgets, which
could result in material declines in MRC's business activity over
the coming 12 to 24 months.
S&P could lower the rating over the next 12 months if the hit to
demand from the coronavirus pandemic is sustained for longer than
the rating contemplate, resulting in a sustained reduction
earnings over the next 12 to 24 months.
-- Specifically, S&P could lower the rating if adjusted EBITDA
interest coverage falls below 1x.
-- S&P would also lower the ratings if it believes a conventional
default or a discounted debt repurchase that it viewed to be a
distressed exchange appears to be a likely risk.
S&P could revise the outlook to stable if oil market conditions
improve with better demand visibility over the near term and MRC is
able to secure additional market share to offset price declines.
-- In such a scenario, S&P would expect debt to EBITDA to be below
7x and EBITDA interest coverage of about 2x.
-- In addition, S&P would expect the company to be in a position
to address the future refinancing of its capital structure.
MURPHY OIL: Fitch Alters Outlook on 'BB+' IDR to Negative
---------------------------------------------------------
Fitch has affirmed Murphy Oil Corporation's IDR at 'BB+'. The
Outlook is revised to Negative from Stable. The affirmation of
Murphy Oil Corporation's ratings reflects a better focused asset
portfolio with three core areas, strong credit metrics, abundant
liquidity, a solid maturity profile and increased management
attention on being FCF neutral. These considerations are balanced
by the significant environmental remediation costs of operating in
the Gulf of Mexico compared with U.S. onshore peers, exposure to
weak natural gas prices in Murphy's Canadian basins, minimal hedge
book, the smaller production profile and reserve base, and the need
to grow and develop core U.S. onshore and offshore assets.
Murphy's leverage profile in terms of credit metrics is of
investment-grade quality. In its view, the company still lags
investment-grade peers in terms of FCF generation, and production
and reserve size. Capital allocation has been a concern in the
past, but recent management action, including focusing on fewer
core assets and reducing exploration risk, alleviated this risk.
The revision of the Rating Outlook to Negative from Stable reflects
the greater severity of the oil price decline since the last rating
action and the concern that commodity prices could be lower for a
longer duration. Murphy took action to increase liquidity since the
last rating action and has sufficient liquidity under Fitch's Base
case price deck. However, at current Strip prices and Fitch
projections, liquidity would tighten materially heading into 2022,
which could result in a negative rating action.
KEY RATING DRIVERS
1Q20 Liquidity Actions: Murphy announced a series of
liquidity-enhancing and cost-saving initiatives on April 1, 2020.
This includes a 50% reduction of its dividend (estimated $77
million savings), a reduction in the midpoint of the capital plan
to $780 million from $950 million guided in March 2020 (and from
$1.45 billion originally guided), executive salary reductions of an
average of 22%, 35% salary reductions for the president and CEO and
reduction of Murphy directors' cash retainers by 35%. Murphy has
not revised production guidance, but Fitch notes several of
Murphy's competitors in the GOM and onshore have announced well
shut-ins and lowered production guidance.
Better Focused Asset Portfolio: Following the sale of the Malaysian
assets in 2019 and the purchase of two GOM assets in 2018 and 2019,
Murphy's production profile is now focused on three main assets:
the GOM (43% of 4Q19 production); Canadian onshore assets in Tupper
Montney, Placid Montney and Kaybob Duvernay (30%); and the U.S.
onshore primarily in the Eagle Ford (27%). The company allocated
the bulk of its capital to growing production in its liquids-rich
assets in the Eagle Ford and GOM, which offer full-cycle returns
and higher realized prices than their Canadian assets.
Ability to Withstand Lower Prices: Despite the severe drop in
commodity prices, Fitch believes Murphy is able to withstand a
lower price environment. Leverage is relatively low with
debt/EBITDA at 1.7x as of YE 2019, the company has an undrawn $1.6
billion revolver and the next debt maturities are not until 2022,
with a portion of those bonds already addressed. Murphy also has
additional levers, such as further reducing its capex and
exploration budgets, and cutting its dividend.
Growing Eagle Ford Production: Murphy increased Eagle Ford
production by 23% during 4Q19, although production growth could
slow in the current price environment. The company has
approximately 1,720 drilling locations and an inventory of slightly
less than 20 years. Near-term drilling will be focused primarily in
the Karnes and Catarina acreage, which has high oil cuts and strong
IRRs. The company tried to exploit its Tilden acreage in 2019, and
while initial production rates were strong, the estimated ultimate
recovery was below expectations and the wells had a lower oil cut.
FCF Challenged: Under Fitch's revised base case price deck, Murphy
generates FCF deficits in 2020 and 2021, but turns positive in
outer years as the price assumptions improve. The company remains
focused on attaining FCF neutrality, and capex budgets could be
adjusted to achieve this goal. Fitch believes the company can
generate material FCF at $55 West Texas Intermediate oil prices,
which includes the common dividend and dividends to noncontrolling
interests. Murphy reduced the common dividend by 50% to help
mitigate the impact of lower oil prices. Fitch believes further
reductions are likely if commodity prices remain lower for an
extended duration.
Sufficient Liquidity: Murphy has an undrawn $1.6 billion revolver
and $307 million of cash as of Dec. 31, 2019. The next bond
maturities are not until 2022, when $579 million are due on two
separate bonds. The revolver matures in 2023, and allows for the
company to refinance the 2022 notes if necessary. The revolver is
senior in priority to the existing unsecured notes.
Light Hedging Position: The company has a relatively light hedging
position. Fitch estimates only 36% of Murphy's oil production is
hedged in 2020 and nothing beyond. The company also hedges
approximately 18% of its estimated natural gas production in 2020.
ESG Considerations: Murphy Oil has an ESG Relevance Score of '4'
for waste and hazardous materials management/ecological impacts,
due to the enterprise wide solvency risks that an offshore oil
spill poses for an exploration and production company. This factor
has a negative impact on the credit profile, and is relevant to the
rating in conjunction with other factors.
DERIVATION SUMMARY
Murphy's production of 185 thousand barrels of oil equivalent per
day (mboe/d) as of Dec. 31, 2019 is at the low end of the range of
most investment-grade issuers, such as Continental Resources Inc.
(BBB-/Negative; 340mboe/d); Hess Corporation (BBB-/Stable;
311mboe/d); Diamondback Energy, Inc. (BBB/Stable; 283mboe/d); WPX
Energy, Inc. (BBB-/Stable; pro forma 240mboe/d); and Parsley
Energy, Inc. (BBB-/Stable; 200 mboe/d). Murphy's netbacks are more
in line with investment-grade peers due to its high realized price,
which is somewhat offset by higher production expenses due to its
GOM exposure. Murphy's netback of $22.70 is lower than Parsley
($26.10) and Diamondback ($26.80), in line with Continental
($23.00), and above WPX ($19.40) and Hess ($18.50).
Murphy's leverage metrics are in line with investment-grade and
high-double issuers. Debt/1P of 3.4x is at the low end of the range
of its peers, which ranges from 3.2x to 4.8x. In addition,
debt/flowing production of $15,271 compares favorably with Hess
($17,412) and Diamondback ($19,126), and is in line with Parsley
($15,671) and Continental ($15,732). Murphy's approximately $865
million of asset retirement obligations offsets the positive
leverage metrics, Obligations are lower than Hess ($1.0 billion),
but significantly higher than onshore peers, which range from $21
million to $97 million.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Increased operational focus on core basins and the Eagle Ford
and GOM in terms of growing production;
-- Clear and conservative capital-allocation and financial policy
that demonstrates capital spending, shareholder return and M&A
discipline;
-- Adhering to management's stated policy of no more than 10% of
the capital budget in exploratory projects;
-- Increasing production above 200,000 barrels of oil equivalent
per day;
-- Lease adjusted FFO-gross leverage below 2.0x.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Midcycle debt greater than 2.5x;
-- A change in financial policy that results in capital allocated
away from core assets;
-- Midcycle debt/flowing barrel above $20,000 per barrel of oil
equivalent (boe) or debt/PD reserves of more than $6.00/boe on a
sustained basis;
-- Lease adjusted FFO-gross leverage above 2.5x.
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
Sufficient Liquidity: Murphy has an undrawn $1.6 billion revolver
and $307 million of cash as of Dec. 31, 2019. The next bond
maturities are not until 2022, when $579 million are due on two
separate bonds.
The revolver is a senior unsecured guaranteed facility that matures
in November 2023 and has priority over the senior unsecured notes.
Fitch believes the revolver is likely to be extended given the low
leverage and strong asset coverage.
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
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.
Murphy Oil has an ESG Relevance Score of '4' for waste and
hazardous materials management/ecological impacts, due to the
enterprise wide solvency risks that an offshore oil spill poses for
an E&P company. This factor has a negative impact on the credit
profile, and is relevant to the rating in conjunction with other
factors.
MYSTIC TRANSPORTATION: Hires Coan Lewendon as Counsel
-----------------------------------------------------
Mystic Transportation, LLC, seeks authority from the U.S.
Bankruptcy Court for the District of Connecticut to employ Coan
Lewendon Gulliver and Miltenberger, LLC, as counsel to the Debtor.
Mystic Transportation requires Coan Lewendon to:
a. give the Debtor in Possession legal advice with respect to
its business, operations, and the management of its
property;
b. negotiate arrangements with creditors respecting their
claims and treatmentof their claims in a Plan of
Reorganization;
c. institute and defend such litigation in the bankruptcy
court, and other courts, as counsel and the Debtor in
Possession consider necessary and appropriate for the
conduct of its reorganization;
d. prepare on behalf of the Debtor in Possession necessary
petitions, motions, answers, reports, disclosure
statements, plans and other papers; and
e. perform all other legal services for the Debtor in
Possession which may be necessary herein.
Coan Lewendon will be paid at these hourly rates:
Partners $430
Counsels $400
Associates $250
Paralegals $95 to $110
Coan Lewendon will also be reimbursed for reasonable out-of-pocket
expenses incurred.
Timothy D. Miltenberger, partner of Coan Lewendon Gulliver and
Miltenberger, LLC, assured the Court that the firm is a
"disinterested person" as the term is defined in Section 101(14) of
the Bankruptcy Code and does not represent any interest adverse to
the Debtor and its estates.
Coan Lewendon can be reached at:
Timothy D. Miltenberger, Esq.
COAN LEWENDON GULLIVER AND MILTENBERGER, LLC
495 Orange Street
New Haven, CT 06511
Tel: (203) 624-4756
Fax: 203-865-3673
E-mail: Tmiltenberger@coanlewendon.com
About Mystic Transportation
Mystic Transportation, LTD -- http://www.mystictransportation.com/
-- offers air freight courier and trucking services.
Mystic Transportation, LTD filed a voluntary petition under Chapter
11 of the Bankruptcy Code (D. Conn. Case No. 20-20531) on April 10,
2020. In the petition signed by Sandra G. Worth, president, the
Debtor was estimated to have $100,000 to $500,000 in assets and $1
million to $10 million in liabilities. Timothy D. Miltenberger,
Esq., at Coan, Lewendon, Gulliver & Miltenberger, LLC, is the
Debtor's counsel.
NCL CORP: S&P Rates Senior Secured Notes BB; Rating on Watch Neg.
-----------------------------------------------------------------
S&P Global Ratings assigned its 'BB' issue-level rating to
Miami-based cruise operator NCL Corp. Ltd.'s proposed $600 million
senior secured notes due 2024 and placed the issue-level rating on
CreditWatch with negative implications. The recovery rating is '2',
indicating S&P's expectation for substantial (70%-90%; rounded
estimate: 80%) recovery for noteholders in the event of a payment
default.
NCL plans to use the proceeds from the proposed senior secured
notes, along with proceeds from a proposed $650 million convertible
notes offering, $400 million private exchangeable notes transaction
with L Catterton, and $350 million equity issuance, to enhance its
liquidity position given the temporary suspension of operations
this year due to the COVID-19 pandemic.
S&P's existing ratings, including its 'BB-' issuer credit rating,
are unchanged and remain on CreditWatch with negative implications.
The proposed financing transaction does not change S&P's view for
NCL's 2021 adjusted leverage to be above 5x because in its prior
forecast, the rating agency had assumed NCL would rely on its
revolvers to support its liquidity needs over the next year. S&P
expects the proceeds from the proposed financing transaction will
be placed on the balance sheet to support near-term liquidity
needs, and/or reduce existing revolver balances. S&P had previously
expected the company's liquidity would become thin over the next 12
months because of negative cash flow this year, along with debt
maturities, including the June 2021 maturity of its $675 million
revolver, which will be further extended to March 2022 upon
completion of at least $1 billion of this capital raise. This
proposed financing, along with recently completed refinancing
transactions that have extended maturities, should position NCL to
better withstand the expected operating disruption this year. As a
result, S&P could revise its liquidity assessment to adequate upon
completion of the proposed notes issuance.
However, all of S&P's ratings on NCL and its debt remain on
CreditWatch with negative implications, reflecting substantial
uncertainty related to when and how NCL will resume operations and
its ability to recover in 2021. In resolving the CreditWatch
listing, S&P will monitor efforts to contain the coronavirus and
assess how the pandemic might alter or weaken travel and cruise
demand over the long term. S&P could lower the rating on NCL if the
suspension of cruise operations extends beyond third-quarter 2020
or if cruise recovery is longer or weaker than the rating agency
currently expects. S&P could also lower the rating if NCL cannot
complete these contemplated financing transactions to increase
liquidity.
Recovery Analysis
Key analytical factors
-- S&P's 'BB+' issue-level and '1' recovery ratings on NCL's $875
million revolver and $1.5 billion term loan A are unchanged because
the rating agency believes the collateral value pledged to that
credit facility provides it with full coverage. The '1' recovery
rating reflects S&P's expectation for very high (90%-100%; rounded
estimate: 95%) recovery for lenders of the credit agreement in a
payment default."
-- Once the financing transaction closes, S&P will likely lower
its issue-level rating on NCL's existing senior unsecured notes by
one notch to 'B+' from 'BB-', given the increase in both secured
and unsecured debt in the capital structure, pro forma for the
completion of the proposed financing transaction. Unsecured lenders
previously benefited from the value of unpledged ships, such
asEpic, Jade, and Sirena. Epic now secures a $675 million revolver,
and Jade and Sirena are pledged to the proposed new secured notes.
Additionally, unsecured claims will increase materially because of
the new unsecured exchangeable notes, and S&P's expectation that
collateral pledged to NCL's $675 million revolver (the Norwegian
Epic revolver) and proposed senior secured notes will be
insufficient to fully cover these obligations, resulting in
deficiency claims. S&P believes the secured deficiency claims would
be pari passu with unsecured claims.
-- S&P's simulated default scenario contemplates a payment default
by 2024, driven by cruise operators' inability to recover from the
COVID-19 pandemic such that they generate meaningfully weaker cash
flow and weaker-than-expected increases in cash flow from new ships
scheduled for delivery over the next several years.
-- S&P assumes any debt maturing between now and its assumed year
of default is extended to the year of default.
-- S&P uses a discrete asset valuation (DAV) approach for NCL
because its debt structure provides certain creditors with priority
claims against specific assets, and S&P expects lenders would
pursue the specific collateral pledged to them.
-- To calculate S&P's DAV, it applies discounts to the appraised
values of NCL's existing ships and to the costs of planned ships.
-- S&P applies discounts of 40%-50% to appraisals, depending on
the customer segment and age of the ship. In addition, when no
appraisals are available, it applies discounts of 15%-50% to the
cost of the ships, depending on when they were placed in service or
are scheduled for delivery and whether they operate in the
contemporary or premium class.
-- S&P includes in its analysis all ships--and associated
financing--to be delivered through 2023, the year prior to its
assumed year of default.
-- For the private islands that are pledged as collateral for the
proposed senior secured notes, S&P applies a 50% discount to the
fair market value because it believes there is limited repurpose
value for the land, given its location and limited accessibility.
-- S&P does not ascribe any value to the intellectual property
that is pledged as collateral for the proposed senior secured
notes, given its belief that intellectual property, particularly
tradenames, would have minimal value in a default scenario.
-- S&P assumes administrative claims total 7% of gross discrete
asset value, reflecting expenses associated with the two classes of
debt at the parent, various subsidiaries' ship financings, and
multijurisdictional considerations.
-- S&P assumes the $875 million revolver and $675 million revolver
are fully drawn at the time of default.
Simplified waterfall
-- Gross asset value: $10.2 billion
-- Net asset value after 7% administrative costs: $9.5 billion
-- Value ascribed to the credit agreement/ship loans/Epic
revolver/new senior secured notes: 20%/70%/5%/5%
-- Net value available to the secured credit agreement (including
residual value from unpledged ships after satisfying ship-level
debt): $2.6 billion
-- Secured credit facilities: $2.2 billion
-- Recovery expectation: 90%-100% (rounded estimate: 95%)
-- Remaining value available to unsecured and pari passu claims:
$420 million
-- Net value available to the proposed senior secured notes
(including collateral value pledged to the senior secured notes and
a portion of the remaining value after satisfying claims under the
credit agreement): $505 million
-- Senior secured notes: $630 million
-- Recovery expectation: 70%-90% (rounded estimate: 80%)
-- Net value available to senior unsecured notes: $333 million
-- Senior notes and convertible notes: $1.7 billion
-- Recovery expectation: 10%-30% (rounded estimate: 20%)
All debt amounts include six months of prepetition interest.
NEPHROS INC: Incurs $1.1 Million Net Loss in First Quarter
----------------------------------------------------------
Nephros, Inc. reported a net loss of $1.10 million for the three
months ended March 31, 2020, compared to a net loss of $1.35
million for the three months ended March 31, 2019.
As of March 31, 2020, the Company had $18.29 million in total
assets, $4.66 million in total liabilities, and $13.64 million in
total stockholders' equity.
"We would like to take this opportunity to thank all the health
care workers supporting COVID-19 patients," said Daron Evans,
president and CEO of Nephros. "We are always grateful to be part
of an infrastructure of people and equipment that protects patients
from waterborne pathogens, and in these challenging times, our
purpose is even more resolute. To that end, we have accelerated
our pathogen detection efforts to better support our water
treatment partners. As America transitions back to work over the
coming months, our partners will be working tirelessly to help them
ensure that under-used buildings are safe to reoccupy."
Net revenue for the quarter ended March 31, 2020 was $2.5 million,
compared with $1.8 million in 2019, an increase of 43%.
Adjusted EBITDA for the quarter ended March 31, 2020 was ($0.8
million), compared with ($0.9 million) in 2019, a 7% improvement.
Cost of goods sold for the quarter ended March 31, 2020 was $1.0
million, compared with $0.8 million in 2019, an increase of 35%.
Gross margins for the quarter ended March 31, 2020 were 59%,
compared with 56% in 2019. Management expects future gross margins
to continue in the range of 55% to 60%.
Research and development expenses for the quarter ended March 31,
2020 were $0.6 million, compared with $0.8 million in 2019, a
decrease of 26%.
Depreciation and amortization expenses for the quarter ended March
31, 2020 were approximately $46,000, compared with approximately
$50,000 in 2019, a decrease of 8%.
Selling, general and administrative expenses for the quarter ended
March 31, 2020 were $1.9 million, compared with $1.5 million in
2019, an increase of 30%.
As of March 31, 2020, Nephros had cash and cash equivalents of $9.0
million.
A full-text copy of the Quarterly Report is available for free at
the Securities and Exchange Commission's website at:
https://is.gd/dh1xGR
About Nephros Inc.
River Edge, N.J.-based Nephros, Inc., is a commercial stage medical
device company that develops and sells high performance liquid
purification filters. Its filters, which are generally classified
as ultrafilters, are primarily used in hospitals for the prevention
of infection from water-borne pathogens, such as legionella and
pseudomonas, and in dialysis centers for the removal of biological
contaminants from water and bicarbonate concentrate.
Nephros reported a net loss of $3.18 million for the year ended
Dec. 31, 2019, compared to a net loss of $3.33 million for the year
ended Dec. 31, 2018.
NEUROMETRIX INC: Incurs $657K Net Loss for Quarter Ended March 31
-----------------------------------------------------------------
NeuroMetrix, Inc. filed its quarterly report on Form 10-Q,
disclosing a net loss of $657,371 on $2,172,036 of revenues for the
quarter ended March 31, 2020, compared to a net income of
$2,050,507 on $3,122,935 of revenues for the same period in 2019.
At March 31, 2020, the Company had total assets of $6,206,496,
total liabilities of $3,692,378, and $2,514,118 in total
stockholders' equity.
The Company said, "We have reported recurring losses from
operations and negative cash flows from operating activities.
These factors raise substantial doubt about our ability to continue
as a going concern for the one-year period from the date of
issuance of these financial statements."
A copy of the Form 10-Q is available at:
https://is.gd/dUlNMB
NeuroMetrix, Inc., a healthcare company, develops and markets
products for the detection, diagnosis, and monitoring of peripheral
nerve and spinal cord disorders. The Company develops wearable
neuro-stimulation therapeutic devices and point-of-care neuropathy
diagnostic tests to address chronic health conditions, including
chronic pain, sleep disorders, and diabetes. It operates in the
United States, Europe, Japan, China, the Middle East, and Mexico.
The Company has a strategic collaboration with GlaxoSmithKline.
NeuroMetrix, Inc. was founded in 1996 and is headquartered in
Waltham, Massachusetts.
NEW BRAUNFELS: Voluntary Chapter 11 Case Summary
------------------------------------------------
Debtor: New Braunfels ER LLC
6030 S. Rice Avenue
Suite C
Houston, TX 77081
Business Description: New Braunfels ER LLC owns a real property
in New Braunfels, Texas, having a current
value of $3,587,000.
Chapter 11 Petition Date: May 8, 2020
Court: United States Bankruptcy Court
Southern District of Texas
Case No.: 20-32553
Debtor's Counsel: Nelson M. Jones III, Esq.
LAW OFFICE OF NELSON M. JONES III
440 Louisiana, Suite 1575
Houston, TX 77002
Tel: (713) 236-8736
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $100,000 to $500,000
The petition was signed by Tom Vo, managing member.
The Debtor failed to include in the petition a list of its 20
largest unsecured creditors.
A copy of the petition is available for free at PacerMonitor.com
at:
https://is.gd/XA6BLi
NFP CORP: S&P Rates $300MM Senior Secured Debt 'B'
--------------------------------------------------
S&P Global Ratings said it assigned its 'B' rating to NFP Corp.'s
$300 million fixed-rate senior secured notes maturing 2025. The
recovery ratings is '3', indicating its expectation for meaningful
(55%) recovery of principal in the event of a default.
"We expect NFP to use proceeds to bolster liquidity amid heightened
sector uncertainty from COVID-19-related business disruption. We
believe NFP's revenue could decline in the second and third
quarters of 2020 in connection with the economic downturn. Our base
case anticipates NFP will experience moderate organic revenue
contraction in 2020 but increased EBITDA margin to near 25% for
2020, per our calculations, due in part to lower add-back
exclusions," S&P said.
For 2019, NFP generated total revenues of $1.45 billion and pro
forma adjusted EBITDA of $339 million (23.2% margin) per S&P's
calculations. Including this issuance, pro forma financial leverage
for year-end 2019 rises to 10.7x (9.2x excluding preferred treated
as debt), reflecting sustained weakness relative to S&P's run-rate
expectations. This is primarily driven by the lag between liquidity
build and ultimate deployment for deal funding through 2020. S&P
believes its adjusted pro forma leverage could remain above 8.0x
well into 2021, reinforcing its negative outlook and marginally
increasing the risk of a downgrade within 12 months.
S&P's negative outlook on NFP continues to reflect heightened risk
of a worse-than-expected revenue decline and flat EBITDA margin
amid the COVID-19 pandemic, resulting in less robust cash flow
generation and credit metrics eroding to a level unsupportive of
the current rating within 12 months.
NORWEGIAN CRUISE LINE: Ponders Bankruptcy, Seeks New Funding
------------------------------------------------------------
PYMNTS.com reports that Norwegian Cruise Line (NCL) is considering
new funding and possible bankruptcy protection due to business
losses triggered by the coronavirus pandemic.
According to NCL's filing with the Securities and Exchange
Commission on May 5, 2020, the company's accounting firm had
"substantial doubt" on the ability of NCL to stay in business.
NCL said in the filing that although the company complied with all
the debt agreements as of March 31, 2020, it might need waivers.
Short of credit agreement amendment could be forced to default and
would put NCL at risk of seeking bankruptcy protection.
An investment worth $400 million works on it’s the favour of
NCL's subsidiary, NCL Corp., by private equity fund L Catterton, is
contingent on the company raising at least $1 billion from other
investors.
"We are pleased to execute this agreement with L Catterton, the
largest and most global consumer-focused private equity firm in the
world," said Norwegian CEO Frank Del Rio in a statement.
NCL plans to raise money worth $350 million from the public
offering of ordinary shares and with an option to purchase
additional ordinary shares worth $52.5 million, according to
another company statement.
"The cruise industry has been very resilient over a long period of
time, driven by strong secular tailwinds and a high level of guest
satisfaction. People enjoy cruising, with many guests taking
multiple voyages over time. The industry has overcome numerous
challenges in the past, and we expect that the industry will
rebound and prosper with even further enhancements to their already
rigorous health and safety protocols in place in the future," Scott
Dahnke, global co-chief executive officer of L Catterton, said in a
press release.
NCL said in another statement that it plans to sell $650 million in
a private offering of exchangeable notes.
About Norwegian Cruise Line
Norwegian Cruise Line Holdings Ltd. (NYSE: NCLH) is a leading
global cruise company which operates the Norwegian Cruise Line,
Oceania Cruises and Regent Seven Seas Cruises brands. With a
combined fleet of 28 ships with approximately 59,150 berths, these
brands offer itineraries to more than 490 destinations worldwide.
The Company will introduce nine additional ships through 2027.
NORWEGIAN CRUISE LINE: Raises $2.2-Bil After Going Concern Warning
------------------------------------------------------------------
Norwegian Cruise Line Holdings Ltd. (NYSE: NCLH) on May 6, 2020,
announced it successfully secured over $2 billion of additional
liquidity in response to impacts of the COVID-19 global pandemic on
the Company and the cruise industry, including the temporary
suspension of voyages, and to safeguard against a further downside
scenario.
The announcement comes a day after the cruise operator said it may
be forced to file for bankruptcy protection, saying that there's
"substantial doubt" about its ability to keep operating amid the
coronavirus pandemic.
On May 5, the company announced the launch of a series of capital
markets transactions, led by Goldman Sachs, to raise approximately
$2 billion. The transaction has since been upsized to gross
proceeds of $2.225 billion -- $2.4 billion if the underwriters
exercise their full overallotment options -- due to significant
oversubscription and demand across all three offerings. The
transactions consisted of:
(1) $400 million public offering of common equity,
(2) $750 million exchangeable senior notes offering,
(3) $675 million senior secured notes offering and
(4) $400 million private investment from global consumer-focused
private equity firm L Catterton.
Contingent on completion of the transactions, the Company expects
to have approximately $3.5 billion of liquidity. This
significantly strengthens the Company's financial position and
liquidity runway and it now expects to be positioned to withstand
well over 12 months of voyage suspensions in a potential downside
scenario. While this is not the Company's base case expectation,
the Company has taken a swift and proactive approach to protect its
future given the significant uncertainty and unknown duration of
the COVID-19 global pandemic. When the transactions are completed,
the additional liquidity alleviates management's concern about the
Company's ability to continue as a going concern for the next 12
months.
About Norwegian Cruise Line
Norwegian Cruise Line Holdings Ltd. (NYSE: NCLH) is a global cruise
company which operates the Norwegian Cruise Line, Oceania Cruises
and Regent Seven Seas Cruises brands. With a combined fleet of 28
ships with approximately 59,150 berths, these brands offer
itineraries to more than 490 destinations worldwide. The Company
will introduce nine additional ships through 2027.
At Dec. 31, 2019, the Company had a total of approximately $6
billion of total long-term debt obligations. Beginning on or
around March 12, 2020, NCL Corporation Ltd. ("NCLC") borrowed the
full amount of $1.55 billion under its $875 million revolving
credit facility, dated as of January 2, 2019 and maturing on
January 2, 2024, with JPMorgan Chase Bank, N.A. ("JPM"), as
administrative agent and as collateral agent, and certain other
lenders party thereto, and its $675 million revolving credit
facility, dated as of March 5, 2020 and maturing on March 4, 2021,
with JPM, as administrative agent and as collateral agent, and
certain other lenders party thereto.
The Company has implemented a suspension of all cruise voyages for
its three brands due to the continued spread of COVID-19, growing
travel restrictions and limited access to ports around the world.
As of April 24, 2020, advanced bookings for the remainder of 2020
were meaningfully lower than the prior year with pricing down
mid-single digits.
In March 2020, Moody's downgraded the long-term issuer and senior
unsecured debt ratings of NCLC to Ba2 from Ba1, including its
corporate family rating and senior secured bank facility, and to B1
from Ba2 on its senior unsecured rating. In April 2020, S&P Global
downgraded the issuer credit rating of NCLC to BB- from BB+.
"As a result of the impact of the COVID-19 pandemic, our financial
statements contain a statement regarding a substantial doubt about
the Company's ability to continue as a going concern and we
anticipate needing additional financing, and such financing may not
be available on favorable terms, or at all, and may be dilutive to
existing shareholder, we expect a net loss on both a U.S. GAAP and
adjusted basis for the quarter ended March 31, 2020 and year ending
December 31, 2020, and our ability to forecast our cash inflows and
additional capital needs is hampered, and we will be required to
raise additional capital," the Company said in a May 5, 2020
regulatory filing.
NOVABAY PHARMACEUTICALS: Appoints Andrew D. Jones as CFO
--------------------------------------------------------
NovaBay Pharmaceuticals, Inc. has appointed Andrew D. Jones as
chief financial officer and treasurer, effective May 4, 2020. Mr.
Jones brings to NovaBay more than 20 years of finance and
accounting experience primarily in the life sciences industry. He
replaces Lynn Christopher, who assumed these positions on an
interim basis in April 2020 and will continue to work with NovaBay
to support a smooth transition.
"We are delighted to secure a well-qualified professional to fill
our executive finance position on a permanent basis and to do so
very quickly," said Justin Hall, NovaBay CEO. "Andrew has served
every critical function in finance and accounting from high-level
strategic planning and financial modeling, budgeting and cash
management, to technical accounting, audit and tax compliance, and
managing daily accounting operations. The breadth of his finance
and accounting experience, his background in the life sciences
industry and relevant public company accounting expertise make him
an excellent fit."
"I look forward to serving as NovaBay's CFO and using my entire
skillset in an executive capacity in such a dynamic environment,"
said Mr. Jones. "I'm committed to working closely with the NovaBay
team to ensure financial accountability and prudence, and to
achieve our goals for growth and business success."
Mr. Jones most recently served as an independent consultant,
helping companies to meet their accounting and finance
requirements. He previously served as Vice President, Finance of
MyoScience, Inc., a commercial-stage medical device company,
through its acquisition by Pacira BioSciences. In this position,
he was responsible for overseeing all accounting and finance
functions as well as executive management and board-level
reporting, including strategic planning decisions that resulted in
significant revenue growth and gross margin improvements. Prior to
MyoScience, Mr. Jones was senior director of Finance at Armetheon,
Inc., a late-stage drug development company, and Corporate
Controller of Asante Solutions, Inc., a medical device company now
known as Bigfoot Biomedical, Inc., and Genelabs Technologies, Inc.,
a public biotechnology company acquired by GlaxoSmithKline.
Earlier in his career he was a Senior Manager at
PricewaterhouseCoopers providing clients with M&A advisory and
audit services. Mr. Jones holds a BA in business administration
from the University of Washington.
About Novabay
Heaquartered in Emeryville, California, NovaBay Pharmaceuticals,
Inc. -- http://www.novabay.com-- is a biopharmaceutical company
focusing on commercializing and developing its non-antibiotic
anti-infective products to address the unmet therapeutic needs of
the global, topical anti-infective market with its two distinct
product categories: the NEUTROX family of products and the
AGANOCIDE compounds. The Neutrox family of products includes
AVENOVA for the eye care market, CELLERX for the aesthetic
dermatology market, and NEUTROPHASE for wound care market.
Novabay reported a net loss and comprehensive loss of $9.66 million
for the year ended Dec. 31, 2019, compared to a net loss and
comprehensive loss of $6.54 million for the year ended Dec. 31,
2018. As of March 31, 2020, the Company had $9.48 million in total
assets, $9.82 million in total liabilities, and a total
stockholders' deficit of $349,000.
OUM & CO. LLP, in San Francisco, California, the Company's auditor
since 2010, issued a "going concern" qualification in its report
dated March 26, 2020 citing that the Company has experienced
operating losses for most of its history and expects expenses to
exceed revenues in 2020. The Company also has recurring negative
cash flows from operations and an accumulated deficit. All of
these matters raise substantial doubt about its ability to continue
as a going concern.
NOVABAY PHARMACEUTICALS: Incurs $1.6M Net Loss in First Quarter
---------------------------------------------------------------
Novabay Pharmaceuticals, Inc., reported a net loss and
comprehensive loss of $1.58 million on $1.89 million of total net
sales for the three months ended March 31, 2020, compared to a net
loss and comprehensive loss of $4.19 million on $1.49 million of
total net sales for the three months ended March 31, 2019.
As of March 31, 2020, the Company had $9.48 million in total
assets, $9.82 million in total liabilities, and a total
stockholders' deficit of $349,000.
Novabay said, "The Company has sustained operating losses for the
majority of its corporate history and expects that its 2020
expenses will exceed its 2020 revenues, as the Company continues to
re-invest in its Avenova commercialization efforts. The Company
expects to continue incurring operating losses and negative cash
flows until revenues reach a level sufficient to support ongoing
growth and operations. Accordingly, the Company's planned
operations raise substantial doubt about its ability to continue as
a going concern. The Company's liquidity needs will be largely
determined by the success of operations in regard to the
commercialization of Avenova. The Company also may consider other
plans to fund operations including: (1) out-licensing rights to
certain of its products or product candidates, pursuant to which
the Company would receive cash milestones or an upfront fee; (2)
raising additional capital through debt and equity financings or
from other sources; (3) reducing spending on one or more of its
sales and marketing programs; (4) entering into license agreements
to sell new product and/or (5) restructuring operations to change
its overhead structure. The Company may issue securities,
including common stock and warrants through private placement
transactions or registered public offerings, which would require
the filing of a Form S-1 or Form S-3 registration statement with
the Securities and Exchange Commission ("SEC"). In the absence of
the Company's completion of one or more of such transactions, there
will be substantial doubt about the Company's ability to continue
as a going concern within one year after the date these unaudited
financial statements are issued, and the Company will be required
to scale back or terminate operations and/or seek protection under
applicable bankruptcy laws."
A full-text copy of the Quarterly Report is available for free at
the Securities and Exchange Commission's website at:
https://is.gd/nmww6s
About Novabay
Heaquartered in Emeryville, California, NovaBay Pharmaceuticals,
Inc. -- http://www.novabay.com/-- is a biopharmaceutical company
focusing on commercializing and developing its non-antibiotic
anti-infective products to address the unmet therapeutic needs of
the global, topical anti-infective market with its two distinct
product categories: the NEUTROX family of products and the
AGANOCIDE compounds. The Neutrox family of products includes
AVENOVA for the eye care market, CELLERX for the aesthetic
dermatology market, and NEUTROPHASE for wound care market.
Novabay reported a net loss and comprehensive loss of $9.66 million
for the year ended Dec. 31, 2019, compared to a net loss and
comprehensive loss of $6.54 million for the year ended Dec. 31,
2018. As of Dec. 31, 2019, the Company had $11.22 million in total
assets, $10.25 million in total liabilities, and $973,000 in total
stockholders' equity.
OUM & CO. LLP, in San Francisco, California, the Company's auditor
since 2010, issued a "going concern" qualification in its report
dated March 26, 2020 citing that the Company has experienced
operating losses for most of its history and expects expenses to
exceed revenues in 2020. The Company also has recurring negative
cash flows from operations and an accumulated deficit. All of
these matters raise substantial doubt about its ability to continue
as a going concern.
ODYSSEY LOGISTICS: S&P Cuts Issue-Level Rating to 'B-'
------------------------------------------------------
S&P Global Ratings lowered the issue-level rating on Odyssey
Logistics and Technology Corp. to 'B-' from 'B'. S&P also lowered
its issue-level rating on the company's first-lien term loan to 'B'
from 'B+' and the second-lien term loan to 'CCC' from 'CCC+'.
S&P expects challenging macroeconomic conditions over the next year
to have a significant impact on Odyssey's revenues and cash flows.
"We expect Odyssey's intermodal, trucking, and international
freight-forwarding operations to be significantly impacted in 2020
by coronavirus-related business and trade disruptions and lower
consumer demand in a recessionary economic environment. We also
expect intermodal activity to be impacted by increased competition
from motor carriers because of lower fuel prices. In terms of end
markets, about 50% of Odyssey's net revenues are generated from the
more cyclical chemicals and metals segments, which we believe will
be impacted by lower commodity prices and reduced industrial
demand. Odyssey's domestic freight-forwarding segment is relatively
less volatile because of its exposure to goods with more stable
demand, such as food and consumer packaged goods, as well as its
operations on routes protected by the Jones Act (which requires
shipments between domestic U.S. ports to be transported on
American-owned vessels)," S&P said.
After a relatively weak 2019, S&P expects credit ratios to
deteriorate further in 2020. Odyssey's 2019 performance was
somewhat lower than S&P's previous expectations, with revenues
declining in the low-single-digit percent area due to weakness in
the trucking and intermodal segments. S&P now expects debt to
EBITDA to increase significantly to more than 8x in 2020 from the
low-6x area in 2019, and funds from operations (FFO) to debt to
decline to the mid-single-digit percent area in 2020 from the
high-single-digit percent area in 2019. Although increased economic
activity should aid Odyssey's credit metrics in 2021, the timing
and degree are uncertain," S&P said.
S&P continues to assess Odyssey's liquidity as adequate. Although
it expects Odyssey to generate lower FFO in 2020 than it previously
forecast, S&P continues to view the company's liquidity as
adequate. The company's liquidity position is supported by its $60
million revolving credit facility, and minimal near-term debt
maturities. S&P notes that continued steep decline in EBITDA over
consecutive quarters could possibly restrict availability under the
revolver to 35% due to the presence of a springing covenant.
However, S&P does not believe this restriction would lead to a
sharp deterioration in the company's liquidity position in the
near-term, given its minimal debt maturities and relatively low
capital spending requirements (due to the largely asset-light
nature of its business).
Environmental, social, and governance (ESG) factors for this credit
rating change:
-- Health and safety factors
S&P's outlook on Odyssey is stable. Although it expects the
company's credit metrics will be significantly impacted by lower
intermodal and trucking volumes in 2020, S&P believes the company's
credit metrics will remain appropriate for the rating, and the
rating agency does not expect leverage to reach unsustainable
levels in the long term.
"We could lower our ratings on Odyssey if we believe its leverage
level will no longer be sustainable over the outlook horizon. We
could also consider lowering our ratings if sustained weakness in
operating results cause its liquidity position to weaken," S&P
said.
"We could raise our ratings on Odyssey if we expect Odyssey's debt
to EBITDA to decline to below 6.5x and FFO to debt to improve to
the high-single-digit percent area on a sustained basis. We would
also need to believe the company and its sponsors are committed to
maintaining these ratios," S&P said.
OMNI BAY COLONY: Hires Texas Ranch as Real Estate Broker
--------------------------------------------------------
Omni Bay Colony, L.P., seeks authority from the U.S. Bankruptcy
Court for the Western District of Texas to employ Texas Ranch
Sales, LLC, as real estate broker to the Debtor.
Omni Bay Colony requires Texas Ranch to market and sell the
Debtor's real property located at Lampasas County, Texas.
Texas Ranch will be paid a commission of 6% of the gross sales
price.
Sheldon Grothaus, a partner at Texas Ranch Sales, assured the Court
that the firm is a "disinterested person" as the term is defined in
Section 101(14) of the Bankruptcy Code and does not represent any
interest adverse to the Debtor and its estates.
Texas Ranch can be reached at:
Sheldon Grothaus
TEXAS RANCH SALES, LLC
920 S. Main
St. Boerne, TX 78006
Tel: (830) 741-8906
About Omni Bay Colony
Omni Bay Colony, L.P., is a single asset real estate debtor (as
defined in 11 U.S.C. Section 101(51B)).
Omni Bay Colony sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. W.D. Tex. Case No. 20-10178) on Feb. 3,
2020. At the time of the filing, the Debtor was estimated to have
assets of between $1 million and $10 million and liabilities of the
same range. Judge Christopher H. Mott oversees the case. Ron
Satija, Esq., at Hajjar Peters, LLP, is the Debtor's legal counsel.
OMNIA PARTNERS: S&P Affirms 'B' ICR Despite Economic Uncertainty
----------------------------------------------------------------
S&P Global Ratings affirmed all its ratings on OMNIA Partners,
Inc., including the 'B' issuer credit rating, the 'B' issue-level
rating, with a '3' recovery rating (rounded estimate: 65%), on the
first-lien credit facilities, and the 'CCC+' issue-level rating,
with a '6' recovery rating (rounded estimate: 0%), on the
second-lien term loan.
"We expect solid revenue growth in 2020 as the company benefits
from steady state, local, and education (SLED) spending, high
demand for its newer PPE categories, and contributions from its
recent acquisition," S&P said.
S&P currently expects coronavirus-related pressure to result in a
shift, rather than a material reduction, in overall procurement
spend flowing through OMNIA's contracts, resulting in about
mid-to-low-teens percent revenue growth in 2020. The company has
over 1000 supplier contracts set up across diverse categories.
While some categories such as food services for shut-down education
facilities are highly vulnerable to COVID-19-related spending, S&P
believes that OMNIA's contract diversity allows its buyers –
non-federal public agencies, K-12 and higher education
organizations, and private companies -- to shift spending to other
categories that OMNIA also serves, such as technology or cleaning
services, and a growing ability to procure high-demand PPE
equipment. As a result, the rating agency currently forecasts the
company will continue to steadily improve its leverage position
toward the mid-6x area on an S&P Global Ratings adjusted basis over
the next 12 months absent additional debt-financed dividends or
acquisitions.
"The stable rating outlook reflects our belief that a shift in
demand for certain products and services, rather than a material
decline in overall procurement spend, will continue to support its
ability to improve leverage toward the mid-6x area in 2020, with
free cash flow generation in the $45 million to $55 million range
over the next 12 months," S&P said.
S&P could lower its rating on OMNIA over the next 12 months if:
-- Adjusted leverage is forecasted to be sustained above 7.5x;
-- Free operating cash flow (FOCF) to debt falls to the
low-single-digit percent area; or
-- S&P assesses the company's liquidity position as less than
adequate.
In this scenario, the COVID-19 shelter-in-place directives are
extended and economic conditions are worse than expected, resulting
in sharp state and local agency expense reductions or freezes, or
K-12 or higher-education institutions remaining closed in the fall.
S&P estimates that weaker-than-expected procurement spend resulting
in over 16% revenue decline from its current base-case forecast
could also result in a downgrade.
Although unlikely given the company's sponsor's high debt and
financial policy risk tolerance, S&P could raise its rating if the
company continues to demonstrate strong operating performance and
reduces its adjusted leverage below 5x on a sustained basis.
OPTION CARE: Widens Net Loss to $20 Million in First Quarter
------------------------------------------------------------
Option Care Health, Inc., reported a net loss of $19.91 million on
$705.44 million of net revenue for the three months ended March 31,
2020, compared to a net loss of $3.71 million on $476.49 million of
net revenue for the three months ended March 31, 2019.
As of March 31, 2020, the Company had $2.61 billion in total
assets, $1.74 billion in total liabilities, and $870.49 million in
total stockholders' equity.
For the three months ended March 31, 2020 and the twelve months
ended Dec. 31, 2019, the Company's primary sources of liquidity
were cash on hand of $77.2 million and $67.1 million, respectively,
as well as the $140.4 million of borrowings available under its
credit facilities. During the three months ended March 31, 2020
and the year ended Dec. 31, 2019, the Company's positive cash flows
from operations have enabled investments in pharmacy and
information technology infrastructure to support growth and create
additional capacity in the future, as well as pursue acquisitions.
Option Care said, "The Company's primary uses of cash include
supporting our ongoing business activities and investment in
various acquisitions and our infrastructure to support additional
business volumes. Ongoing operating cash outflows are associated
with procuring and dispensing prescription drugs, personnel and
other costs associated with servicing patients, as well as paying
cash interest on the outstanding debt. Ongoing investing cash
flows are primarily associated with capital projects related to
business acquisitions, the improvement and maintenance of our
pharmacy facilities and investment in our information technology
systems. Ongoing financing cash flows are primarily associated
with the quarterly principal payments on our outstanding debt.
Our business strategy includes the selective acquisition of
additional infusion pharmacies and other related healthcare
businesses. We continue to evaluate acquisition opportunities and
view acquisitions as a key part of our growth strategy. The
Company historically has funded its acquisitions with cash with the
exception of the Merger. The Company may require additional
capital in excess of current availability in order to complete
future acquisitions. It is impossible to predict the amount of
capital that may be required for acquisitions, and there is no
assurance that sufficient financing for these activities will be
available on acceptable terms."
The Company noted that given the merger between HC Group Holdings
II, Inc. ("Option Care") and BioScrip, Inc. to form Option Care
Health on Aug. 6, 2019, comparisons to historical periods are
relative to legacy Option Care only and incorporate BioScrip
results from Aug. 6, 2019 prospectively. Further, as reported on
Feb. 3, 2020, the Company recently completed a reverse 1-for-4
stock split and, as a result, all per share data below is reported
incorporating the effect of the reverse stock split as if it was
effective for all periods reported.
John C. Rademacher, chief executive officer, commented, "We are
very pleased with the strong financial results generated in the
first quarter, including robust revenue growth and solid cash flow
generation. More importantly, as the COVID-19 pandemic arose in
the latter part of the first quarter, I could not be prouder of how
the team of more than 5,000 professionals that comprises Option
Care Heath continue to rise to the challenge to combat the
coronavirus. We continue to focus on delivering extraordinary care
despite the dynamic situation and believe transitioning care to the
home or one of our dedicated infusion suites is part of the
solution."
Update on the Impact of the COVID-19 Pandemic
"In March, at the onset of the pandemic, the Company established a
centralized command center to focus on a coordinated and
collaborative rapid response. Option Care Health has focused on
four primary priorities: (i) ensuring the safety and wellbeing of
our employees, (ii) maintaining the continuity of care for our
patients, (iii) collaborating with referral sources to support the
transition of their patients and alleviate the stress on the
healthcare system and (iv) maintaining financial stability and
liquidity for the enterprise. Overall, the Option Care Health team
has executed well across all four key priorities.
"Based on the significant technology and infrastructure investments
over the past five years, the Company quickly and efficiently
enabled and supported a virtual and remote workforce for all key
functions outside of the Company's compounding pharmacies and has
maintained overall business continuity. The Company has sought to
aggressively procure necessary personal protective equipment and
medical supplies to ensure the safety of our clinicians and
adequate inventory levels. To date, the Company has maintained
adequate levels of critical supplies.
With a network of more than 100 compounding facilities and
approximately 2,900 clinicians, Option Care Health has worked
tirelessly to ensure continuity of care for the thousands of
patients who entrust the Company with their care for life-saving
and life-sustaining therapies. Through its comprehensive clinical
protocols and national scale, the Company has diligently worked
with health systems to transition patients from hospital and acute
care settings to alternative sites for delivery of care while
concurrently partnering with payers to ensure streamlined
authorization and onboarding processes for new patients.
"Building upon the cash generation momentum from 2019, the Company
has aggressively taken steps to optimize cash flow and
preservation. To date, the Company has experienced no material
deceleration in cash collections and collaboration with payers
continues to be productive. Despite higher expenditures for
certain critical medical supplies and drugs, cash flow generation
continues to be robust. Based on the continued strong cash
balances, the Company has not drawn on its revolver to date and
monitors liquidity on a daily basis. Available borrowings under
the facility, reduced by outstanding letters of credit, remains
approximately $140 million.
"Looking forward, the pandemic is expected to impact the Company
across a number of areas; however, such impacts cannot be
accurately projected given the dynamic nature of the situation.
Such affected areas may include, but are not limited to:
* Variability in acute therapy patient referrals from
hospitals based on changes in hospital-based procedures and
treatment patterns,
* Variability in chronic therapy patient referrals based on
disruptions in the diagnosis of chronic conditions requiring
infusion therapy,
* Inefficiencies in clinical labor expenses and higher labor
costs from staffing disruptions and availability, potential
overtime due to inefficient clinical staffing and
utilization of contract labor, and
* Higher costs to procure, and potential unavailability of,
critical personal protection equipment, pharmaceuticals and
medical supplies given a constrained supply environment.
"The leadership team of Option Care Health continues to focus on
the four critical priorities and efforts to minimize the financial
impact of the areas identified above. Additionally, as part of the
Coronavirus Aid, Relief, and Economics Security Act, the Company
received approximately $11.7 million from the Public Health and
Social Services Emergency Fund in April. To what extent the
received funds will offset negative impacts of the pandemic is yet
to be determined. As a result, the Company is not in a position to
maintain its previously-communicated guidance for the full year
2020. The Company will continue to monitor the situation and will
provide further updates as able."
A full-text copy of the Quarterly Report is available for free at
the Securities and Exchange Commission's website at:
https://is.gd/kMl1w7
About Option Care Health
Option Care Health is an independent provider of home and alternate
site infusion services. With over 5,000 teammates, including
approximately 2,900 clinicians, the Company works to elevate
standards of care for patients with acute and chronic conditions in
all 50 states. Through its clinical leadership, expertise and
national scale, Option Care Health is reimagining the infusion care
experience for patients, customers and employees.
Option Care recorded a net loss of $75.92 million for the year
ended Dec. 31, 2019, compared to a net loss of $6.11 million for
the year ended Dec. 31, 2018.
OUTERSTUFF LLC: Moody's Cuts PDR to Ca-PD/LD on Missed Payment
--------------------------------------------------------------
Moody's Investors Service downgraded Outerstuff LLC's probability
of default rating to Ca-PD/LD from Caa2-PD and corporate family
rating to Ca from Caa2. The downgrades reflect Outerstuff's missed
term loan principal and interest payments that were due March 28
2020, and it entering into a forbearance agreement with term loan
lenders on April 6, 2020. The limited default "LD" designation
appended to Outerstuff's PDR reflects that the missed payments
constitute a default under Moody's definition, despite entering
into a forbearance agreement. The limited default designation will
remain until the company resolves the missed payments.
Concurrently, the rating on the Company's Senior Secured Term Loan
due July 2021 was downgraded to Ca from Caa3. The ratings outlook
remains negative.
Outerstuff needs to substantially improve performance in 2020 in
order to address looming debt maturities in April and July 2021,
which may prove challenging given the unprecedented challenges in
the face of the coronavirus pandemic. With 2019 having been a
transitional year for the Company, revenue and EBITDA growth were
expected to resume growth in 2020 prior to the onset of
coronavirus, supported by new license contracts with partners such
as Fanatics, the summer Olympics, and growing eSports offerings,
among others. Profit margins and cash flow were also expected to
benefit from increased sales of higher margin licensed businesses,
reduced inventory liquidation activities, and strategic realignment
and cost reduction initiatives.
Downgrades:
Issuer: Outerstuff LLC
Corporate Family Rating, Downgraded to Ca from Caa2
Probability of Default Rating, Downgraded to Ca-PD/LD from
Caa2-PD
Senior Secured Bank Credit Facility, Downgraded to Ca (LGD4)
from Caa3 (LGD4)
Outlook Actions:
Issuer: Outerstuff LLC
Outlook, remains Negative
RATINGS RATIONALE
The Ca CFR reflects Outerstuff's high likelihood of default due to
the missed term loan payments and subsequent forbearance agreement
with lenders. Outerstuff's credit metrics are very weak and its
capital structure is unsustainable at current levels of
performance. Liquidity is weak, reflecting the Company's need to
address looming debt maturities in April and July 2021. The rating
also reflects the company's small revenue scale, narrow product
concentration primarily in licensed children's sports apparel in
North America and a nascent adult and international presence, and
reliance on licensing arrangements from several sports leagues for
a significant majority of revenue. Also considered is private
equity ownership given joint control by management and the private
equity sponsor. Ratings are supported by the Company's
diversification across retail channels, its entrenched market
position related to exclusive license contracts with the NFL, NBA,
NHL, MLB, MLS, and U.S.A. Olympics, which allow it to sell
virtually all children's apparel with the teams' logos, and Moody's
view that the children's licensed sports apparel market is
relatively stable and recession resistant because of its low
fashion risk, natural replenishment cycle and consumers' steady
interest in team sports. However as sporting events remain canceled
due to COVID-19, demand is likely to be negatively impacted as a
result.
The rapid 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 non-food 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 Outerstuff's credit profile,
including its exposure to widespread store closures and US
discretionary consumer spending have left it vulnerable to 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.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Ratings could be downgraded if the Company defaults on other
elements of its capital structure, pursues a formal reorganization
under the U.S. Bankruptcy Code, or if Moody's comes to expect the
recovery value on Outerstuff's term loan to be lower than currently
estimated.
An upgrade would require the Company to significantly reduce debt
to more sustainable levels while improving its overall operating
performance and liquidity, such as sustained positive free cash
flow, maintaining ample excess revolver availability, and extending
its debt maturity profile.
Outerstuff is a designer, manufacturer and marketer of licensed
children's sports apparel. The company generates the majority of
its revenues from products sold under exclusive licenses with the
NFL, NBA, NHL, MLB, MLS, U.S.A. Olympics, Umbro as well as licenses
with over 200 NCAA colleges and universities, and sells to team
shops, specialty sports chain stores, department stores, and mass
merchants mainly in the United States. Since the May 2014
investment by Blackstone, the private equity sponsor and management
have equal equity stakes of approximately 50% and share control of
the company.
The principal methodology used in these ratings was Apparel
Methodology published in October 2019.
OWENS & MINOR: Incurs $11.3 Million Net Loss in First Quarter
-------------------------------------------------------------
Owens & Minor, Inc., reported a net loss of $11.32 million on $2.12
billion of net revenue for the three months ended March 31, 2020,
compared to a net loss of $14.09 million on $2.35 billion of net
revenue for the three months ended March 31, 2019.
As of March 31, 2020, the Company had $3.71 billion in total
assets, $3.29 billion in total liabilities, and $416.34 million in
total equity.
"I am pleased with the way that our teams performed in a very
challenging environment in response to the COVID-19 pandemic. I
have seen our values play out in real life as our teams worked with
customers, suppliers, and various agencies of state and federal
governments to provide creative solutions to these challenges. We
recognize our responsibilities and required leadership in
supporting the Nation's response to protect those on the front
line. Our distribution, products, and services teams have rallied
around our mission to Empower Our Customers to Advance Healthcare,"
said Edward A. Pesicka, president & chief executive officer of
Owens & Minor.
"The decisive actions we took this quarter enabled us to quickly
pivot and leverage the strength of our Americas based PPE
manufacturing footprint. While we expect the second quarter to be
very challenging due to the significant reduction in elective
procedures, we are well positioned to partially offset this impact
due to the increased demand for our PPE products." Mr. Pesicka
added, "During the second quarter, we will continue to invest in a
disciplined manner to meet the needs of our customers as their
demand for our services and products grows throughout the third and
fourth quarter as elective procedures ramp back up. While 2020 is
expected to continue to be very fluid, with downs and ups, our
demonstrated ability to quickly pivot and leverage our strengths to
best serve our customers provides us with the confidence to
re-confirm our full year adjusted EPS guidance of $0.50 to $0.60."
COVID-19 Update
* The significant reduction in elective surgical procedures,
which began mid-March, is expected to continue through the
end of the 2nd quarter of 2020. This reduction in surgical
procedures will negatively impact the Company's revenue and
profit for second quarter. However, elective procedures are
assumed to recover at an accelerated rate during the 3rd and
4th quarter of 2020, partially offsetting the 2nd quarter
impact.
* Owens & Minor expects to continue the production of its
Americas based PPE at or near full capacity through the end
of 2020 due to:
- Continued demand related to COVID-19
- Rebuilding of safety stock by our customers and
government agencies in the event COVID-19 demand slows
- The need for PPE products as elective procedures ramp up
- Owens & Minor being named by the U.S. Department of
Health and Human Services as one of five manufacturers
to collectively provide approximately 600 million N95
respirator masks over the next 18 months.
- New operating protocols requiring PPE in non-healthcare
related industries
* Owens & Minor participated in Operation Local Production in
which teammates in our Lexington, NC facility manufactured
nearly 1 million cubic yards of fabric for delivery to New
York City garment workers to make medical gowns for NYC
hospitals.
* Owens & Minor worked closely with FEMA's Supply Chain Task
Force on Project Air Bridge to accelerate the distribution
of critical PPE to areas of greatest need and reduce the
transit time of these supplies.
* Owens & Minor reaches a milestone in the COVID-19 fight with
nearly two billion units of PPE shipped during February and
March 2020.
Financial Outlook
Key assumptions supporting guidance:
* Elective procedures will not return to normal levels until
Q3, negatively impacting revenues in the Company's Global
Solutions segment during Q2.
* Hospitals will increase surgical capacity in Q3 and Q4 to
partially recover from elective procedures that were
postponed during Q2, driving incremental demand in both the
Company's Global Solutions and Global Products segments in
the second half of the year.
* Global Products production of PPE will continue to run at or
near full capacity for the balance of the year to meet
market demand and to satisfy federal government stockpiling
commitments.
* Additional favorability in commodity pricing for the
remainder of the year.
* Continued foreign exchange headwinds assumed for the balance
of the year.
Based on the above assumptions, the Company continues to expect
adjusted net income for 2020 to be in a range of $0.50 to $0.60 per
share, on a constant currency basis, despite being challenged in
the 2nd quarter to achieve breakeven. The Company believes that it
remains positioned to deliver sustained double-digit earnings
growth beyond 2020.
A full-text copy of the Quarterly Report is available for free at
the Securities and Exchange Commission's website at:
https://is.gd/1zBeoy
About Owens & Minor
Headquartered in Mechanicsville, Virginia, Owens & Minor, Inc. --
http://www.owens-minor.com-- is a global healthcare solutions
company with integrated technologies, products, and services
aligned to deliver significant and sustained value for healthcare
providers and manufacturers across the continuum of care. Owens &
Minor helps to reduce total costs across the supply chain by
optimizing episode and point-of-care performance, freeing up
capital and clinical resources, and managing contracts to optimize
financial performance. Owens & Minor was founded in 1882 in
Richmond, Virginia, where it remains headquartered today.
Owens & Minor reported a net loss of $62.37 million for the year
ended Dec. 31, 2019, compared to a net loss of $437.01 million for
the year ended Dec. 31, 2018. As of Dec. 31, 2019, the Company had
$3.64 billion in total assets, $3.18 billion in total liabilities,
and $462.15 million in total equity.
* * *
As reported by the TCR on March 11, 2020, Fitch Ratings affirmed
Owens & Minor, Inc.'s (OMI) Long-Term Issuer Default Rating at
'CCC+'. The rating affirmation reflects OMI's limited financial
flexibility as a result of customer losses, heightened competition,
accelerating pricing pressure, and significantly reduced earnings
relative to debt levels.
PBF HOLDING: Fitch Rates New Senior Secured Notes 'BB/RR2'
----------------------------------------------------------
Fitch Ratings has affirmed PBF Holding Company LLC's Long-Term
Issuer Default Rating at 'BB-'. Fitch also affirmed the rating of
the ABL Working Capital Revolving Credit Facility at 'BB+'/'RR1'
and the senior unsecured bonds at 'BB-'/'RR4'. Fitch also assigned
a 'BB'/'RR2' rating to the proposed senior secured notes offering.
The Rating Outlook remains Negative.
PBF Holding's rating reflects the materially lower liquidity levels
from the reduction of its borrowing base since the onset of the
coronavirus crisis. The borrowing base is calculated on a formula
based on cash, accounts receivable and inventory. Lower oil prices
and reduced demand has reduced both accounts receivable and
inventory levels, which resulted in a lower borrowing base. This is
offset by several actions taken to enhance liquidity, which
includes the proposed $1 billion senior secured notes offering,
asset sales, reduced 2020 capex guidance, announced plans to reduce
operating expenses and corporate overhead, and the suspension of
the quarterly dividend.
The rating also reflects the company's geographically diversified
portfolio of refineries, moderate size, the high complexity of its
refineries, strategic integration with PBF Logistics LP (PBFX;
BB/Stable), and success in integrating and organically growing its
refineries. This is offset by the refining industry's inherent
volatility; regulatory overhang; large swings in working capital;
potential disruptions from turnarounds; competitive conditions,
particularly on the East Coast; margins that have historically
trailed peers; and an historical acquisitive business strategy.
The Negative Outlook reflects the dramatic deterioration in
refining conditions stemming from the coronavirus pandemic, as
widespread state and local lockdowns in the U.S. have created
unprecedented declines in refined product demand, particularly
gasoline. The Outlook also reflects risks that are specific to PBF
Holding's business profile, including the company's high exposure
to gasoline markets (the product that is among the most affected by
shutdowns), as well as the company's shrinking liquidity position.
PBF Holding has taken several actions to enhance liquidity, which
should alleviate near-term funding needs. The Outlook could be
removed if conditions normalize and liquidity has not been
materially compromised.
Although refiners have historically shown an ability to adjust
quickly to drops in demand, a key consideration is the unknown
duration of the current downturn, which if sustained, has the
potential to keep leverage metrics elevated and drain liquidity for
an extended period.
KEY RATING DRIVERS
Secured Notes Offering: PBF Holding plans to issue up to $1 billion
of senior secured notes due 2025. The notes will be secured by
substantially all the capital stock of the company's wholly-owned
first-tier subsidiaries and substantially all of the subsidiary
guarantor's tangible and intangible assets excluding assets
securing the ABL revolver and other defined assets. Proceeds will
be used for general corporate purposes, although Fitch expects the
cash will remain on the balance sheet and applied if necessary. Pro
forma for the notes offering and the sale of the five hydrocarbon
plants, PBF Holding estimates liquidity to range from $1.9 billion
to $2.0 billion as of May 1, 2020. There are no debt maturities in
2020 and approximately $48.7 million of debt maturities over the
next three years.
Impact of Coronavirus: The material reduction in gasoline demand
since the onset of the coronavirus pandemic is likely to result in
significantly lower crack spreads and refinery margins as well as
lower utilization rates. As a result, Fitch expects PBF Holding
will generate FCF deficits in the near term that could affect
liquidity. PBF has taken steps to enhance liquidity which, in
addition to the proposed $1 billion senior secured notes offering,
includes the sale of five hydrogen plants for cash proceeds of $530
million, reduced 2020 capex guidance by $357 million, announced
plans to reduce operating expenses by $140 million and corporate
overhead by $20 million, and suspended the quarterly dividend
resulting in annual cash savings of $140 million. First quarter
2020 adjusted EBITDA is expected to range between negative $71
million to negative $59 million, and Fitch anticipates the second
quarter will be weaker.
High Volatility Sector: Refining remains one of the most cyclical
corporate sectors, and is subject to periods of boom and bust, with
sharp swings in crack spreads over the cycle. The last major bust
period was 2009, when collapsing oil prices and lagging costs led
industry margins to collapse. The rebound in market conditions was
also relatively quick, however, as the industry tends to adjust
rapidly. However, historical experiences may not apply given there
is a great deal of uncertainty as to the depth and the timing from
the impact of coronavirus. The sector has benefited in recent years
by lower crude oil prices as well as rapid increase in U.S. crude
oil production, which has widened the WTI-Brent price differential
as a result of transportation constrains.
Growing Size and Diversification: PBF Holding's strategy is to buy
complex refineries at attractive prices. Following the completion
of the Martinez acquisition, PBF Holding owns six refineries in
four different Petroleum Administration for Defense Districts
(PADDs) and has approximately 1.041 million barrels per day (bpd)
of throughput capacity. Diversification helps reduce the risk of
demand-supply imbalances of the crude input and resulting product
in each PADD. Refineries are high-fixed-cost, low-margin businesses
that can have enormous swings in working capital. Fitch believes
scale and diversification help to reduce these risks and improve
credit quality. High utilization is important in offsetting high
fixed costs. Pro forma for the Martinez acquisition, PBF Holding
will have the most complex refinery slate of any independent
refiner (Nelson complexity index of 12.8) and will be the most
complex refiner in California (Nelson complexity index of 15.5).
This complexity allows PBF Holding to run a wide range of crude
slates and take advantage of changes in price spreads among
different types of oil.
Martinez Increases Scale and Diversification: The Martinez
acquisition from Royal Dutch Shell plc provides PBF Holding with
expanded geographic diversification, increases throughput capacity
to over one million bpd, and expands the company's footprint in
California. The opportunity cost of downtime in California is high,
given the tightness of the localized market. Having two California
refineries helps to alleviate this risk. The acquisition price was
$960 million plus the value of the hydrocarbon inventory. In
addition, Shell and PBF Holding have agreed to earn-out provisions
for earnings above certain levels for the first four years.
Martinez has a Nelson complexity index of 16.1, which allows it to
process a slate of heavy, high sulphur, high total acid number
crudes to produce a high percentage of high-value clean products.
PBF Holding plans to manage the Martinez and Torrance refineries as
a single refining system to enhance synergistic benefits.
Impact of IMO: PBF Holding is well-positioned to benefit from IMO
2020 regulations, which will reduce allowed sulphur content of
marine fuel oil to 0.5% from 3.5%. PBF Holding is positioned to
take advantage due to its distillate yield, which was 33% in
third-quarter 2019, and sizable coking capacity, which can run
large amounts of discounted residual fuel oil and heavy crudes.
Although Fitch expects the rules will have a positive effect on
operators of complex refineries, the impact is not expected to be
material until after the economy recovers from the coronavirus
crisis.
Unfavorable Regulatory Headwinds: U.S. refiners face a number of
unfavorable regulatory headwinds that will cap long-term demand for
U.S. refined product, including rising renewable fuel requirements
under the renewable fuel standard (RFS) program, higher corporate
average fuel economy standards, and regulation of greenhouse gases
on the federal and state levels as a pollutant. These are expected
to limit growth in domestic product demand and keep the industry
reliant on exports to maintain full utilization. The industry has
seen regulatory relief under the current administration, including
small refinery waivers for the RFS programs, which resulted in a
significant drop in RIN prices that benefitted all refiners.
PBF Logistics Relationship: PBFX is a fee-based master limited
partnership established by PBF in 2014 to acquire, own and operate
crude oil and refined products logistics assets. PBF Energy Company
LLC owns 48.2% of PBFX and 100% of PBF Holding, as of Dec. 31,
2019. PBF Holding and PBFX have entered into a series of
transactions in which PBF Holding contributed certain assets to PBF
Energy Company LLC, which in turn contributed those assets to PBFX.
PBF Energy Company LLC received cash considerations that were
eventually contributed to PBF Holding. Although Fitch expects
similar transactions will occur in the future, PBFX's stated
strategy is to expand through organic growth and acquisition of
third-party assets. Even though the operations of PBF Holding and
PBFX are intertwined, the companies have separate boards of
directors.
Relationship with PBF Energy: PBF Holding is an indirect subsidiary
of PBF Energy Inc., a holding company with primary subsidiaries of
PBF Holding and its 48% ownership in PBFX. PBF Holding typically
distributes cash to PBF Energy to fund tax payments and dividends.
PBFX also sends its 48% share of distributions to PBF Energy, which
can be used to cover a portion of the tax payments and
distributions. The parent has no debt.
ESG Considerations: PBF Holding has an ESG Relevance Score of 4 for
Exposure to Environmental Impacts due to the potential of
operational disruptions from extreme weather events, including PBF
Holding's exposure to hurricanes on the Gulf Coast through its
Chalmette refinery, which has a negative effect on the credit
profile, and is relevant to the rating in conjunction with other
factors.
DERIVATION SUMMARY
PBF Holding's ratings reflect its status as an independent refiner,
although it does not have non-refinery operations such as retail,
unlike Marathon Petroleum Corporation (BBB/Negative), which can
reduce cash flow volatility. PBF Holding's crude capacity of 1.041
million bpd pro forma for the Martinez Acquisition is mid-range. It
is significantly smaller than Marathon (three million bpd) and
Valero Energy Corporation (BBB/Stable; 2.6 million bpd), but larger
than HollyFrontier Corporation (BBB-/Negative, 457,000 bpd) and
CITGO Petroleum Corp. (B/Negative), 749,000 bpd). PBF Holding is
believed to be the nation's most complex independent refiner, with
a weighted average Nelson complexity index of 12.8. This compares
with Valero at 11.4. PBF Holding has solid geographic
diversification, with a refinery in every PADD other than PADD 4.
PBF Holding's EBITDA margins are well below those of Marathon,
Valero and HollyFrontier, reflecting the lack of non-refinery
operations as well as the effect of its exposure to different
regional crack spreads. PBF Holding's debt/EBITDA of 1.9x at Dec.
31, 2019 was slightly higher than Valero's 1.5x and HollyFrontier's
1.3x.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- Liquidity enhancement measures without materially impacting
profitability or operations;
- Greater scale and geographic diversification;
- Through-the-cycle debt/EBITDA at or below 2.5x;
- Through-the-cycle lease adjusted FFO gross leverage at or
below 3.0x.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- Material reduction in liquidity to less than $500 million;
- A change in financial policy that includes greater use of
debt in acquisitions or greater contributions to its parent
to fund share repurchases or higher dividends;
- Through-the-cycle debt/EBITDA above 3.5x;
- Through-the-cycle lease adjusted FFO gross leverage at or
above 4.0x;
- The issuance of additional secured debt could result in a
downgrade of the senior unsecured notes.
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
Shifting Liquidity: PBF Holding had cash on hand of $763 million
and availability under its revolver of approximately $1.5 billion
with no borrowings on its revolver as of Dec. 31, 2019. The company
anticipates total liquidity to range from $1 billion to $1.1
billion as of March 31, 2020, which does not include the sale of
the hydrocarbon plants nor the secured bond offering. The maximum
commitment on the revolving credit agreement is $3.4 billion and an
accordion feature allows for commitments up to $3.5 billion. The
revolver matures in May 2023. The single financial covenant is a
consolidated fixed-charge coverage ratio of not less than 1.00:1
that is not triggered until liquidity is less than 10% of the
borrowing base.
The revolver borrowing base is derived from a formula based on cash
on hand, accounts receivable, and inventory. PBF Holding has
historically exhibited significant working capital swings, driven
by volatility in crude and refined product prices and M&A activity.
While the revolver should be adequately sized to meet cash needs
during these swings, Fitch notes that in times of weakening
conditions in the refinery sector, the borrowing base availability
reduces at a time when it is needed most. PBF Holding's liquidity
options are also enhanced by potential dropdowns to PBFX.
The maturity schedule is manageable. PBF Holding issued a $1
billion bond in January 2020 and applied proceeds to the Martinez
acquisition and redeeming the 2023 notes. The next significant
maturities are the revolver in May 2023 and the 7.25% notes in June
2025.
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
PBF Holding has an ESG Relevance Score of 4 for Exposure to
Environmental Impacts due to the potential of operational
disruptions from extreme weather events, including PBF Holding's
exposure to hurricanes on the Gulf Coast through its Chalmette
refinery, which has a negative effect 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(ies),
either due to their nature or the way in which they are being
managed by the entity(ies).
PBF HOLDING: Moody's Rates Sr. Secured Notes 'Ba2', Outlook Neg.
----------------------------------------------------------------
Moody's Investors Service assigned a Ba2 rating to senior secured
notes offered by PBF Holding Company LLC. Moody's also affirmed
PBF's Ba3 Corporate Family Rating, Ba3-PD Probability of Default
Rating, and B1 senior unsecured notes rating. The SGL-3 speculative
grade liquidity rating is unchanged. The outlook remains negative.
Assignments:
Issuer: PBF Holding Company LLC
Senior Secured Notes, Assigned Ba2 (LGD3)
Affirmations:
Issuer: PBF Holding Company LLC
Probability of Default Rating, Affirmed Ba3-PD
Corporate Family Rating, Affirmed Ba3
Senior Unsecured Notes, Affirmed B1 (LGD5)
Outlook Actions:
Issuer: PBF Holding Company LLC
Outlook, Remains Negative
RATINGS RATIONALE
The proposed senior secured notes are rated Ba2, one notch above
PBF's Ba3 CFR, reflecting the secured position of the holders of
the notes relative to unsecured lenders.
PBF is taking steps to support its liquidity and manage significant
working capital outflows resulting from the sharp decline in demand
and prices for refined products amid the economic shutdown in early
2020. These measures include a $530 million divestment closed in
April 2020 and significant cuts to capital investment and dividends
to preserve cash. The ratings assume that the company will benefit
from a recovery in demand for refined produces and will see a
reversal of the significant working capital outflow in the second
half of 2020.
The negative outlook reflects high financial risks and the impact
on PBF's credit quality of the breadth and severity of the oil
demand and supply shocks, and the company's high sensitivity to a
period of low demand for refined products.
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 Refining and
Marketing sector has been one of the sectors most significantly
affected by the shock given its sensitivity to demand for refining
products and to oil prices. Moody's regards the coronavirus
outbreak as a social risk under its ESG framework, given the
substantial implications for public health and safety.
The sharp decline in demand for refined products required PBF to
adjust its operations, including cutting run rates, and reducing
capital investment and operating expenses in 2020. While
significant, these measures will not be sufficient to fully offset
the negative impact of the decline in refined products prices and
margins on profitability and cash flow generation and will result
in exceptionally weak financial metrics in 2020.
PBF's Ba3 CFR is supported by the significant size of its
operations and relatively high complexity of the refineries,
recently enhanced by the acquisition of the Martinez refinery.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
A slower pace of recovery in demand for refined products may
necessitate additional adjustments to operations in the second half
of 2020 and result in additional pressure on PBF's liquidity and
financial position. Weaker operating performance or weaker
liquidity, including as a result of larger working capital outflows
or one-off events, could lead to the downgrade of PBF's ratings.
The ratings could be also downgraded if PBF's leverage increases
with RCF/debt below 15%.
While not likely in the near term, the ratings may be upgraded amid
sustained operating improvement and a broader recovery in the
refining sector outlook leading to improved cash flow generation
with RCF/debt maintained above 25%. Good liquidity, balanced
distributions to shareholders, and sustained improvement in
profitability would also support an upgrade of the ratings.
The principal methodology used in these ratings was Refining and
Marketing Industry published in November 2016.
PENUMBRA BRANDS: Voluntary Chapter 11 Case Summary
--------------------------------------------------
Lead Debtor: Penumbra Brands, LLC
f/k/a Penumbra Brands, Inc.
f/k/a Antenna 79, Inc.
f/k/a Pong Research Corporation
709 North 400 West, Suite 3
North Salt Lake, UT 84054
Business Description: Penumbra Brands --
https://penumbrabrands.com -- offers and
supports products that improve the
performance, aesthetic, and lifespan of
mobile devices. Established in 2009, Gadget
Guard is the primary consumer-facing brand
of Penumbra Brands and offers among its
products a comprehensive line of Black Ice
screen protectors for mobile devices in
distinct editions which provide protection
across the value and security spectrum.
Chapter 11 Petition Date: May 8, 2020
Court: United States Bankruptcy Court
District of Utah
Two affiliates that concurrently filed voluntary petitions for
relief under Chapter 11 of the Bankruptcy Code:
Debtor Case No.
------ --------
Penumbra Brands, LLC 20-22804
Penumbra Brands Holdings, Inc. 20-22806
Judge: Hon. William T. Thurman
Debtors' Counsel: Sherilyn A. Olsen, Esq.
HOLLAND & HART LLP
222 South Main St., Suite 2200
Salt Lake City, UT 84101
Tel: 801-799-5818
E-mail: solsen@hollandhart.com
Penumbra Brands, LLC's
Estimated Assets: $1 million to $10 million
Penumbra Brands, LLC's
Estimated Liabilities: $10 million to $50 million
Penumbra Brands Holdings'
Estimated Assets: $0 to $50,000
Penumbra Brands Holdings'
Estimated Liabilities: $10 million to $50 million
The petitions were signed by Gentry Jensen, CEO.
Full-text copies of the petitions are available for free at
PacerMonitor.com at:
https://is.gd/YrZsFH
https://is.gd/tYOskT
PEOPLES COMMUNITY: Seeks to Hire Osipov Bigelman as Counsel
-----------------------------------------------------------
The Peoples Community Institutional Missionary Baptist Church seeks
authority from the United States Bankruptcy Court for the Eastern
District of Michigan to employ Osipov Bigelman, P.C., as its
counsel.
Peoples Community requires Osipov Bigelman to represent and provide
legal services to the Debtor in the Chapter 11 bankruptcy
proceedings.
Osipov Bigelman will be paid at these hourly rates:
Jeffrey H. Bigelman, Esq. $375
Yuliy Osipov, Esq. $375
Anthony Miller, Esq. $340
Gary Hansz, Esq. $340
Megan Dolan, Esq. $295
Paralegal $125
Osipov Bigelman will be paid a retainer in the amount of $15,000.
Osipov Bigelman will also be reimbursed for reasonable
out-of-pocket expenses incurred.
Yuliy Osipov, partner of Osipov Bigelman, P.C., assured the Court
that the firm is a "disinterested person" as the term is defined in
Section 101(14) of the Bankruptcy Code and does not represent any
interest adverse to the Debtor and its estates.
Osipov Bigelman can be reached at:
Yuliy Osipov, Esq.
Jeffrey H. Bigelman, Esq.
OSIPOV BIGELMAN, P.C.
20700 Civic Center Dr., Ste. 420
Southfield, MI 48076
Tel: (248) 663-1800
Fax: (248) 663-1801
About The Peoples Community Institutional
Missionary Baptist Church
The Peoples Community Institutional Missionary Baptist Church is a
tax-exempt religious organization.
The Peoples Community Institutional Missionary Baptist Church filed
a Voluntary Petition
under Chapter 11 of the United States Bankruptcy Code (Bankr. E.D.
Mich. Case No. 20-43660) on MArch 12, 2020. In the petition signed
by John D. Hearn, pastor, the Debtor estimated $50,000 in assets
and $1 million to $10 million in liabilities. Yuliy Osipov, Esq. at
OSIPOV BIGELMAN, P.C. represents the Debtor as counsel.
PREMIER PETROLEUM: Seeks to Hire Armistead Law as Attorney
----------------------------------------------------------
Premier Petroleum Investment, LLC, 305 Petroleum, Inc., Pacific
Pleasant Investment, LLC, and Premier Petroleum Investment, LLC,
seeks authority from the U.S. Bankruptcy Court for the Northern
District of Mississippi to employ Armistead Law, PLLC, as attorney
to the Debtor.
Premier Petroleum requires Armistead Law to:
a. advise and consult with the Debtor-in-possession regarding
questions arising from certain contract negotiations which
will occur during the operation of business by the Debtor-
in-possession;
b. evaluate and attack claims of various who may assert
security interests in the assets and who may seek to
disturb the continued operation of the business;
c. appear in, prosecute, or defend suits and proceedings, and
take all necessary and proper steps and other matters and
things involved in or connected with the affairs of the
estate of the Debtor;
d. represent the Debtor in court hearings and to assist in the
preparation of contracts, reports, accounts, petitions,
applications, orders and other paper and documents as may
be necessary in the proceeding;
e. advise and consult with the Debtor in connection with any
reorganization plan which may be proposed in the proceeding
and any matter concerning the Debtor which arise out of or
follow the acceptance or consummation of such
reorganization or its rejection; and
f. perform such other legal services on behalf of the Debtor
as they become necessary in the bankruptcy proceeding.
Armistead Law will be paid at the hourly rate of $300.
The Debtor paid Armistead Law a retainer of $5,525.
Armistead Law will also be reimbursed for reasonable out-of-pocket
expenses incurred.
Hugh H. Armistead, partner of Armistead Law, PLLC, assured the
Court that the firm is a "disinterested person" as the term is
defined in Section 101(14) of the Bankruptcy Code and does not
represent any interest adverse to the Debtors and their estates.
Armistead Law can be reached at:
Hugh H. Armistead, Esq.
ARMISTEAD LAW, PLLC
8925 Goodman Road
Olive Branch, MS 38654
Tel: (662) 895-4844
About Premier Petroleum Investment
Premier Petroleum Investment, LLC, filed a Chapter 11 bankruptcy
petition (Bankr. N.D. Miss. Case No. 20-11596) on April 20, 2020,
disclosing under $1 million in both assets and liabilities. The
Debtor hired Armistead Law, PLLC, and the Law Offices of Craig M.
Geno, PLLC, as counsel.
PREMIER PETROLEUM: Seeks to Hire Craig M. Geno as Attorney
----------------------------------------------------------
Premier Petroleum Investment, LLC, 305 Petroleum, Inc., Pacific
Pleasant Investment, LLC, and Premier Petroleum Investment, LLC,
seek authority from the U.S. Bankruptcy Court for the Northern
District of Mississippi to employ the Law Offices of Craig M. Geno,
PLLC, as attorney to the Debtor.
Premier Petroleum requires Craig M. Geno to:
a. advise and consult with the Debtor-in-possession regarding
questions arising from certain contract negotiations which
will occur during the operation of business by the Debtor-
in-possession;
b. evaluate and attack claims of various who may assert
security interests in the assets and who may seek to
disturb the continued operation of the business;
c. appear in, prosecute, or defend suits and proceedings, and
take all necessary and proper steps and other matters and
things involved in or connected with the affairs of the
estate of the Debtor;
d. represent the Debtor in court hearings and to assist in the
preparation of contracts, reports, accounts, petitions,
applications, orders and other paper and documents as may
be necessary in the proceeding;
e. advise and consult with the Debtor in connection with any
reorganization plan which may be proposed in the proceeding
and any matter concerning the Debtor which arise out of or
follow the acceptance or consummation of such
reorganization or its rejection; and
f. perform such other legal services on behalf of the Debtor
as they become necessary in the bankruptcy proceeding.
Craig M. Geno will be paid at these hourly rates:
Attorneys $425
Associates $250
Paralegals $185
The Debtor paid Craig M. Geno a retainer of $1,800, including the
filing fee.
Craig M. Geno will also be reimbursed for reasonable out-of-pocket
expenses incurred.
Hugh H. Armistead, partner of the Law Offices of Craig M. Geno,
PLLC, assured the Court that the firm is a "disinterested person"
as the term is defined in Section 101(14) of the Bankruptcy Code
and does not represent any interest adverse to the Debtors and
their estates.
Craig M. Geno can be reached at:
Craig M. Geno, Esq.
LAW OFFICES OF CRAIG M. GENO, PLLC
587 Highland Colony Parkway
Ridgeland, MS 39158-3380
Tel: (601) 427-0048
Fax: (601) 427-0050
E-mail: cmgeno@cmgenolaw.com
About Premier Petroleum Investment
Premier Petroleum Investment, LLC, filed a Chapter 11 bankruptcy
petition (Bankr. N.D. Miss. Case No. 20-11596) on April 20, 2020,
disclosing under $1 million in both assets and liabilities. The
Debtor tapped Armistead Law, PLLC, and the Law Offices of Craig M.
Geno, PLLC, as counsel.
PURPLE LINE: Fitch Cuts 2016A-D Bonds to BB, On Watch Negative
--------------------------------------------------------------
Fitch Ratings has downgraded the rating to 'BB' from 'BBB-' on
approximately $313 million of Maryland Economic Development
Corporation senior private activity bonds, series 2016A-D issued on
behalf of Purple Line Transit Partners LLC (PLTP; limited liability
company) for the Purple Line light rail transit project.
Fitch has also downgraded the rating to 'BB' from 'BBB-' on the
approximately $875 million subordinated Transportation
Infrastructure Finance and Innovation Act loan to PLTP for the
project.
All instruments have been placed on Rating Watch Negative.
The downgrade reflects the project's heightened completion risk in
light of the Design Build contractor, Purple Line Transit
Constructors, LLC, filing a notice of termination for extended
delays. Project counterparties have been trying unsuccessfully for
several years to come to an agreement on the amount of time and
monetary relief due, increasing both schedule and cost risks. The
varying levels of uncertainty are inconsistent with an investment
grade rating.
The Rating Watch Negative reflects Fitch's concern over the
potential implications to the project from a potential termination
of the DB contract at the current stage of construction, including
the inability to draw on the existing performance bond and DB
contract parent company guarantees. Execution of a global
settlement agreement that addresses a new, achievable longstop date
and ensures timely payments on all upcoming debt service
obligations, in conjunction with successful resolution of the DB
termination notice would likely resolve the Rating Watch Negative.
RATING RATIONALE
The ratings reflect heightened completion risk which constrains the
project to below investment grade. The project currently benefits
from a highly capable team of contractors that have experience with
similar large-scale capital projects, a strong revenue-paying
grantor, and well-defined payment mechanism and operating
standards. The ratings are further supported by DB, O&M, and
lifecycle cost (LC) parent guarantees. The Fitch rating case
results in an average DSCR of 1.28x, with minimum coverage of
1.20x.
KEY RATING DRIVERS
Construction Delays; Unresolved Issues - Completion Risk: Revised
to Weaker from Midrange
The weaker assessment reflects the uncertainty resulting from the
termination notification provided by PLTC for a project that is
currently roughly 50% complete. Notwithstanding, the project is
being constructed by a highly experienced DB contractor, a LLC
comprised of Fluor Enterprises, Inc., The Lane Construction
Corporation (acquired by Salini Impreglio S.p.a.; BB/Negative), and
Traylor Bros., Inc. DB requirements of PLTP are fully passed down
to the DB contractor on a back-to-back basis. PLTC sub-contracted
the rolling stock and specialized aspects of systems integration to
skilled technical experts.
Per analysis by the technical advisor at financial close, a LOC
sized to 50% (with step-up provisions to 100%) of liquidated
damages to the DB longstop date, in addition to a 55% payment bond
and a 55% performance bond, together with cash flow headroom,
provide sufficient protection to weather even the worst
construction cash flow stress scenario due to contractor
replacement at that point in time. Although there is the potential
for delays in the delivery of rolling stock due to coronavirus,
these delays are of less concern in comparison to the risks posed
by the potential termination of the DB contract. Existing DB
contract parent company guarantees (up to a 35% aggregate liability
cap) on a joint-and-several basis, add strong support to the
current contracting unit but would be at risk should the DB
contract be terminated.
Contracted Operations; Adequate Lifecycle Plan - Cost Risk:
Midrange
Project operations and light rail vehicle maintenance are
contracted through an O&M contractor, a LLC comprised of Fluor
Enterprises, Inc., Alternate Concepts, Inc., and CAF USA, Inc.,
which has extensive experience fulfilling O&M obligations on
comparable light rail projects worldwide. In addition, CAF USA is
the LRV supplier, with the obligations wrapped through the DB
contract by Fluor, providing continuity and strong parent support.
The TA believes that the project company's approach and budget is
adequately detailed for annual maintenance and lifecycle costs. The
O&M contractor will perform regular condition and performance
monitoring inspections, allowing them to better assess the
remaining life of the asset. In addition, in the event of a
rehabilitation cash flow deficit, the O&M contractor will be
required to fund a renewal reserve account. Additional support
within the O&M contract includes parent company guarantees (75%
annual liability cap, 150% rolling three-year aggregate liability
cap) and liquid security in the form of a 50% annual payment letter
of credit. This security helps cushion some cost and lifecycle
forecast uncertainty over the 30-year operations period.
Payments from Strong Counterparty - Revenue Risk: Stronger
Progress payments during construction, a revenue service
availability payment at service commencement, a final completion
payment, and availability payments, including special lifecycle
payments, during operation of the project are made by The Maryland
Department of Transportation (MDOT) and Maryland Transit
Administration (MTA; collectively the owner), with a PPP grantor
payment obligation rating of 'AA-'/Outlook Stable. The AP is
divided between a fixed capital payment, which covers debt service
and equity distributions, and escalating payments, which cover O&M
and rehabilitation obligations, based on a basket of available
indices. The tailored payment mechanism is considered moderately
better than peers and includes flexible standards or cure periods
to ensure minimal deductions are incurred.
Conservative Structure; Flat Coverage - Debt Structure: Midrange
The debt structure is fixed rate and fully amortizing and is
further supported by a six-month debt service reserve fund (DSRF)
and 1.20x equity lockup trigger. Funds trapped in the distribution
lock-up account for more than 30 months will be applied to prepay
TIFIA obligations, which Fitch views favorably in terms of
deleveraging. The DSCR profile is relatively flat, following a few
initial years of slightly higher coverage. The subordinate TIFIA
loan has the ability to spring to parity with the senior debt in a
bankruptcy related event.
Financial Summary
The Fitch cases reflect timely completion, which, based on the
original plan of finance and longstop date, is now not likely.
Fitch will continue to monitor the situation and will update the
cases once the issues are resolved. The sponsor case, adopted as
the Fitch base case, demonstrates average DSCR of 1.31x and minimum
DSCR of 1.26x. The Fitch rating case applies a realistic outside
cost of 6%, as identified by the TA, which results in an average
DSCR of 1.28x, with minimum coverage of 1.20x. Absent completion
risk issues, Fitch views the all cost break-even of 24.6% producing
a 4.1x breakeven expressed as a multiple of the ROC as consistent
with a 'BBB' category rating.
PEER GROUP
The most comparable Fitch-rated availability-based project is
Denver Transit Partners (DTP; BBB-/Stable). Both projects include
the construction of rail projects in major metropolitan areas and
benefit from similar DB and O&M parent guarantees that include the
LRV-related obligations. PLTP's underlying financial metrics
(average DSCR of 1.3x and ROC multiple of 4.1x) are slightly
stronger than DTP's (1.2x average DSCR and ROC multiple of under
3.0x). However, PLTP's lower rating reflects its increased
completion risk, while DTP is a completed and operating asset.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Successful resolution of the PLTC notice to terminate that
allows project construction to continue moving forward;
-- Execution of a global settlement agreement that provides
clarity on a new long-stop date and resolves key outstanding
disputes.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Failure to favorably resolve the notice to terminate provided
by PLTC;
-- Failure to execute a global settlement agreement to resolve
the long-stop date and key outstanding disputes.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Public Finance 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 three 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.
CREDIT UPDATE
As of the March 2020 LTA report, the project is approximately 50%
complete, with $964 million DB costs expended to date and an
estimated additional $1.1 billion remaining. However, on May 1,
2020, PLTC filed notice of their intention to terminate the DB
contract on the basis of the extended delay to the project's
critical path. Per the contract, PLTC has the right to terminate if
total delays reach 365 days. The notice is being evaluated by the
project company. Fitch understands that PLTP has five days to
assess the notice and another 45 days to respond. Four outcomes are
possible: a withdrawal of the termination notice by PLTC,
resolution of the outstanding issues via a global settlement
agreement, replacement of the DB contractor, or notice to terminate
the project by PLTP to the owner. Fitch views potential
implications of a contract termination as negative to the credit,
and will continue to monitor the situation.
Settlement discussions between PLTP and the state continue in
parallel with the contractual dispute resolution process. Major
issues include time and cost relief requested in conjunction with
the record of decisions, right of way delays, delay in CSX's final
approval of design packages, and changes in the Maryland Department
of the Environment Pond Code. In total, as of the most recent May
2020 filing, PLTP is requesting 976 days of construction relief and
approximately $665 million in cost relief. The necessity of
revising the long-stop date is recognized by both PLTP and the MTA.
However, until a settlement is reached, the current untenable
long-stop date poses a risk to the project.
Thus far, the project has been minimally impacted by the
coronavirus pandemic. PLTP filed a potential change order for force
majeure in March 2020; potential delays or costs are not yet
quantifiable. CAF, the light rail vehicle provider, has been
impacted due to delays in components sourced from China However, at
this time, it is unclear whether this will result in a critical
path delay and the LTA has yet to opine on the issue. Partially
mitigating this potential delay is the progress already made on the
vehicles (of 26 vehicles, 15 have been manufactured in Spain, and
six have been delivered to the New York facility) and the presence
of the 3% LOC in the DB contract that also supports the rolling
stock obligations.
FINANCIAL ANALYSIS
Fitch has adopted the sponsor's case as its base case due to its
view as to the reasonableness of the project's construction and
OM&R cost assumptions following conversations with the LTA. The
sponsor-provided financial model contemplated DSCRs no less than
1.26x and that average 1.31x. The project life coverage ratio in
the first operational year is 1.34x.
Fitch's rating case incorporated the ROC (expressed as a
percentage) identified by the LTA for O&M, LC, SPV, deductions and
insurance expenses exceeding initial projections in a conservative
cost overrun scenario. The ROC was applied to the base case to
measure the project's financial flexibility to absorb reasonable
cost increases. Accordingly, a ROC stress of 6% was applied to O&M
costs, 7% to LC and 3% to SPV costs, based on analysis provided by
the TA, to assess the impact that stresses would have on the
profile. Fitch did not stress deductions in its rating case given
its review of the deduction scheme in the project documents as well
as the TA's p90 montecarlo simulation of possible deduction
outcomes and the likelihood that the O&M contractor would operate
at a very good or good level of performance. The results of this
scenario resulted in average DSCR of 1.28x and a minimum of 1.20x.
Fitch analyzed a number of coverage ratio breakeven scenarios
related to the financial structure. When run on the adopted Fitch
base case using only the debt service reserve as available
liquidity, the model indicates the financial structure can
withstand a 24.6% increase in total costs. Based on an overall ROC
of 6%, the breakeven expressed as a multiple of the ROC is 4.1x.
Based on Fitch's criteria, the breakeven and coverage levels are on
the lower end for a 'BBB'-category rating for a project deemed
midrange but are constrained by the project's completion risk
profile.
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
The highest level of ESG credit relevance, if present, is a score
of 3. This means ESG issues are credit-neutral or have only a
minimal credit impact on the entity(ies), either due to their
nature or to the way in which they are being managed by the
entity(ies).
RAVN AIR GROUP: Seeks to Hire Blank Rome as Co-Counsel
------------------------------------------------------
Ravn Air Group, Inc., and its debtor-affiliates seek authority from
the U.S. Bankruptcy Court for the District of Delaware to employ
Blank Rome LLP, as co-counsel to the Debtors.
Ravn Air Group requires Blank Rome to:
a. advise the Debtors with respect to their rights, powers and
duties as debtors and debtors-in-possession in the
continued management and operation of their remaining
business and properties;
b. attend meetings and negotiating with representatives of
creditors and other parties-in-interest;
c. advise and consult the Debtors regarding the conduct of
these cases, including all of the legal and administrative
requirements of operating in Chapter 11;
d. advise the Debtors on matters relating to the evaluation of
the assumption, rejection or assignment of unexpired leases
and executory contracts;
e. take all necessary action to protect and preserve the
Debtors' estates, including the prosecution of actions on
their behalf, the defense of any actions commenced against
the estates, negotiations concerning all litigation in
which the Debtors may be involved and objections to claims
filed against the estates;
f. assist in preparing on behalf of the Debtors motions,
applications, answers, orders, reports, and papers in
connection with the administration of the Debtors' estates,
coordinating service of the same and prosecuting the same;
g. assist in prosecuting a plan and accompanying disclosure
statement and all related agreements and/or documents and
taking any necessary action on behalf of the Debtors to
obtain confirmation of such a plan;
h. appear before this Court, any appellate courts, and the
Office of the U.S. Trustee, and protecting the interests of
the Debtors' estates before such courts and the Office of
the U.S. Trustee;
i. advise the Debtors with respect to corporate issues,
including taxation and other business matters and;
j. perform all other necessary legal services and provide
all other necessary legal advice to the Debtors in
connection with these Chapter 11 cases to bring the
Debtors' Chapter 11 cases to a conclusion.
Blank Rome will be paid at these hourly rates:
Partners $510 to $1,550
Counsels $455 to $1,285
Associates $350 to $850
Paralegals $195 to $580
During the 90 days before the Petition Date, Blank Rome did not
receive any payments from the Debtors in satisfaction of
outstanding fees and expenses other than Blank Rome's receipt of
two retainers in the aggregate amount of $120,000 for services
rendered and expenses incurred on behalf of the Debtors in
connection with the commencement of the Chapter 11 Cases. On April
3, 2020 and April 5, 2020, prior to the filing of the Debtors'
petitions, Blank Rome applied $112,529 of the retainer amount to
accrued prepetition fees and expenses. The amount of the remaining
retainer amount Blank Rome currently holds is $7,471.00 (the
"Retainer").
Blank Rome will also be reimbursed for reasonable out-of-pocket
expenses incurred.
In accordance with Appendix B-Guidelines for Reviewing Applications
for Compensation and Reimbursement of Expenses Filed under 11
U.S.C. Sec. 330 for Attorneys in Larger Chapter 11 Cases, the
following is provided in response to the request for additional
information:
a. Blank Rome did not agree to a variation of its standard or
customary billing arrangement for this engagement;
b. None of the professionals included in this engagement have
varied their rates based on the geographic location of
these Chapter 11 Cases; and
c. Blank Rome represented the Debtors prior to the Petition
Date in connection with the filing of these Chapter 11
Cases. Blank Rome is billing the Debtors postpetition at
the same effective rates it billed prepetition.
Michael B. Schaedle, partner of Blank Rome LLP, assured the Court
that the firm is a "disinterested person" as the term is defined in
Section 101(14) of the Bankruptcy Code and does not represent any
interest adverse to the Debtors and their estates.
Blank Rome can be reached at:
Michael B. Schaedle, Esq.
BLANK ROME LLP
1201 N. Market Street, Suite 800
Wilmington, DE 19801
Tel: (302) 425-6400
Fax: (302) 425-6464
About Ravn Air Group Inc.
Ravn Air Group, Inc. -- https://www.flyravn.com/ -- was formed
through the combination of five Alaskan air transportation
businesses in 2009, creating the largest regional air carrier and
network in the state. Ravn owns and, until the COVID-19-related
disruptions, operated 72 aircraft at 21 hub airports and 73
facilities, serving 115 destinations in Alaska with up to 400 daily
flights. Until the COVID-19-related disruptions, Ravn Air Group and
its affiliates had over 1,300 employees (non-union), and it carried
over 740,000 passengers on an annual basis.
Ravn Air Group provides air transportation and logistics services
to the passenger, mail, charter, and freight markets in Alaska,
pursuant to U.S. Department of Transportation approval as three
separate certificated air carriers. Two of the carriers (RavnAir
ALASKA and PenAir) operate under Federal Aviation Administration
Part 121 certificates and the other (RavnAir CONNECT) operates
under an FAA Part 135 certificate. In addition to carrying
passengers, many of whom fly on Medicaid-subsidized tickets, other
key customers include companies in the oil and gas industry, the
seafood industry, the mining industry, and the travel and tourism
industries.
Ravn Air Group and its affiliates sought protection under Chapter
11 of the Bankruptcy Code (Bankr. D. Del. Lead Case No. 20-10755)
on April 5, 2020. At the time of the filing, Debtors was estimated
to have assets of between and $100 million to $500 million and
liabilities of the same range.
Judge Brendan Linehan Shannon oversees the cases.
Debtors tapped Keller Benvenutti Kim LLP as bankruptcy counsel;
Blank Rome LLP as special corporate and local bankruptcy counsel;
Conway Mackenzie, LLC as financial advisor; and Stretto as claims
and noticing agent.
RAVN AIR GROUP: Seeks to Hire Keller Benvenutti as Lead Counsel
---------------------------------------------------------------
Ravn Air Group, Inc., and its debtor-affiliates seek authority from
the U.S. Bankruptcy Court for the District of Delaware to employ
Keller Benvenutti Kim LLP, as lead counsel to the Debtors.
Ravn Air Group requires Keller Benvenutti to:
(a) advise the Debtors of their rights, powers and duties as
debtors and debtors in possession continuing to operate
and manage their respective businesses and properties
under chapter 11 of the Bankruptcy Code;
(b) prepare on behalf of the Debtors all necessary and
appropriate applications, motions, proposed orders, other
pleadings, notices, schedules and other documents, and
reviewing all financial and other reports to be filed in
these Chapter 11 Cases;
(c) advise the Debtors concerning, and preparing responses to,
applications, motions, other pleadings, notices and other
papers that may be filed by other parties in these Chapter
11 Cases and appear on behalf of the Debtors in any
hearings or other proceedings relating to those matters;
(d) review the nature and validity of any liens asserted
against the Debtors' property and advise the Debtors
concerning the enforceability of such liens;
(e) advise the Debtors regarding their ability to initiate
actions to collect and recover property for the benefit of
their estates;
(f) advise and assist the Debtors in connection with any asset
dispositions;
(g) advise and represent the Debtors with respect to
employment related issues;
(h) advise and assist the Debtors in negotiations with the
Debtors' debt holders and other stakeholders;
(i) advise the Debtors concerning executory contract and
unexpired lease assumptions, assignments and rejections;
(j) advise the Debtors in connection with the formulation,
negotiation and promulgation of a plan of reorganization,
and related transactional documents;
(k) assist the Debtors in reviewing, estimating and resolving
claims asserted against the Debtors' estates;
(l) commence and conduct litigation that is necessary and
appropriate to assert rights held by the Debtors, protect
assets of the Debtors' chapter 11 estates or otherwise
further the goal of completing the Debtors' successful
reorganization;
(m) provide non-bankruptcy services for the Debtors to the
extent requested by the Debtors, including, among others
things, advice related to mergers and acquisitions and
corporate governance; and
(n) perform all other necessary and appropriate legal services
in connection with these Chapter 11 Cases for or on behalf
of the Debtors.
Keller Benvenutti will be paid at these hourly rates:
Partners $700 to $850
Associates $450
Paralegals $150
In the year preceding the Petition Date, Keller Benvenutti received
from the Debtors totaling $350,000. On March 18, 2020, the Debtors
provided Keller Benvenutti with an advance payment of $50,000. In
sum, Keller Benvenutti received total advance Retainers of $350,000
to be applied toward restructuring work. As of the Petition Date,
the balance of the Retainer was $156,098.75 after deducting fees
and expenses.
Keller Benvenutti will also be reimbursed for reasonable
out-of-pocket expenses incurred.
Tobias S. Keller, a partner at Keller Benvenutti Kim, assured the
Court that the firm is a "disinterested person" as the term is
defined in Section 101(14) of the Bankruptcy Code and does not
represent any interest adverse to the Debtors and their estates.
Keller Benvenutti can be reached at:
Tobias S. Keller, Esq.
Jane Kim, Esq.
Thomas B. Rupp, Esq.
KELLER BENVENUTTI KIM LLP
650 California Street, Suite 1900
San Francisco, CA 94108
Tel: (415) 496-6723
Fax: (650) 636-9251
E-mail: tkeller@kbkllp.com
jkim@kbkllp.com
trupp@kbkllp.com
About Ravn Air Group
Ravn Air Group, Inc. -- https://www.flyravn.com/ -- was formed
through the combination of five Alaskan air transportation
businesses in 2009, creating the largest regional air carrier and
network in the state. Ravn owns and, until the COVID-19-related
disruptions, operated 72 aircraft at 21 hub airports and 73
facilities, serving 115 destinations in Alaska with up to 400 daily
flights. Until the COVID-19-related disruptions, Ravn Air Group
and its affiliates had over 1,300 employees (non-union), and it
carried over 740,000 passengers on an annual basis.
Ravn Air Group provides air transportation and logistics services
to the passenger, mail, charter, and freight markets in Alaska,
pursuant to U.S. Department of Transportation approval as three
separate certificated air carriers. Two of the carriers (RavnAir
ALASKA and PenAir) operate under Federal Aviation Administration
Part 121 certificates and the other (RavnAir CONNECT) operates
under an FAA Part 135 certificate. In addition to carrying
passengers, many of whom fly on Medicaid-subsidized tickets, other
key customers include companies in the oil and gas industry, the
seafood industry, the mining industry, and the travel and tourism
industries.
Ravn Air Group and its affiliates sought protection under Chapter
11 of the Bankruptcy Code (Bankr. D. Del. Lead Case No. 20-10755)
on April 5, 2020. At the time of the filing, the Debtors were
estimated to have assets of between and $100 million to $500
million and liabilities of the same range.
Judge Brendan Linehan Shannon oversees the cases.
The Debtors tapped Keller Benvenutti Kim LLP as bankruptcy counsel;
Blank Rome LLP as special corporate and local bankruptcy counsel;
Conway Mackenzie, LLC as financial advisor; and Stretto as claims
and noticing agent.
RAVN AIR GROUP: Seeks to Hire Stretto as Administrative Advisor
---------------------------------------------------------------
Ravn Air Group, Inc., and its debtor-affiliates seek authority from
the U.S. Bankruptcy Court for the District of Delaware to employ
Stretto, as administrative advisor to the Debtors.
Ravn Air Group requires Stretto to:
a. assist with, among other things, claims management and
reconciliation, plan solicitation, balloting,
disbursements, and tabulation of votes, and prepare any
related reports, as required in support of confirmation of
a chapter 11 plan, and in connection with such services,
process requests for documents from parties in interest,
including, if applicable, brokerage firms, bank back-
offices and institutional holders;
b. prepare an official ballot certification and, if necessary,
testify in support of the ballot tabulation results;
c. assist with the preparation of the Debtors' schedules of
assets and liabilities and statements of financial affairs
and gather data in conjunction therewith;
d. provide a confidential data room, if requested;
e. manage and coordinate any distributions pursuant to a
chapter 11 plan; and
f. provide such other processing, solicitation, balloting and
other administrative services described in the Engagement
Agreement, but not included in the Section 156(c)
Application, as may be requested from time to time by the
Debtors, this Court or the Office of the Clerk of the
U.S. Bankruptcy Court for the Southern District of New
York.
Stretto will be paid at these hourly rates:
Director of Securities $210
Solicitation Associate $190
COO and Executive VP No charge
Director/Managing Director $175 to $210
Associate/Senior Associate $65 to $165
Analyst $30 to $50
Stretto will be paid a retainer in the amount of $10,000.
Stretto will also be reimbursed for reasonable out-of-pocket
expenses incurred.
Sheryl Betance, a managing director of Stretto, assured the Court
that the firm is a "disinterested person" as the term is defined in
Section 101(14) of the Bankruptcy Code and does not represent any
interest adverse to the Debtors and their estates.
Stretto can be reached at:
Sheryl Betance
STRETTO
7 Times Square, 16th Floor
New York, NY 10036
Tel: (714) 716-1872
E-mail: sheryl.betance@stretto.com
About Ravn Air Group
Ravn Air Group, Inc. -- https://www.flyravn.com/ -- was formed
through the combination of five Alaskan air transportation
businesses in 2009, creating the largest regional air carrier and
network in the state. Ravn owns and, until the COVID-19-related
disruptions, operated 72 aircraft at 21 hub airports and 73
facilities, serving 115 destinations in Alaska with up to 400 daily
flights. Until the COVID-19-related disruptions, Ravn Air Group and
its affiliates had over 1,300 employees (non-union), and it carried
over 740,000 passengers on an annual basis.
Ravn Air Group provides air transportation and logistics services
to the passenger, mail, charter, and freight markets in Alaska,
pursuant to U.S. Department of Transportation approval as three
separate certificated air carriers. Two of the carriers (RavnAir
ALASKA and PenAir) operate under Federal Aviation Administration
Part 121 certificates and the other (RavnAir CONNECT) operates
under an FAA Part 135 certificate. In addition to carrying
passengers, many of whom fly on Medicaid-subsidized tickets, other
key customers include companies in the oil and gas industry, the
seafood industry, the mining industry, and the travel and tourism
industries.
Ravn Air Group and its affiliates sought protection under Chapter
11 of the Bankruptcy Code (Bankr. D. Del. Lead Case No. 20-10755)
on April 5, 2020. At the time of the filing, Debtors was estimated
to have assets of between and $100 million to $500 million and
liabilities of the same range.
Judge Brendan Linehan Shannon oversees the cases.
Debtors tapped Keller Benvenutti Kim LLP as bankruptcy counsel;
Blank Rome LLP as special corporate and local bankruptcy counsel;
Conway Mackenzie, LLC as financial advisor; and Stretto as claims
and noticing agent.
RAZZANO PERSONAL: Seeks to Hire Barry A. Friedman as Counsel
------------------------------------------------------------
Razzano Personal Fitness Training, LLC, seeks authority from the US
Bankruptcy Court for the Southern District of Alabama to employ
Barry A. Friedman & Associates, PC, as its attorney.
Razzano requires Barry A. Friedman to:
a. take appropriate action with respect to secured and
priority creditors;
b. take appropriate action with respect to possible voidable
preferences and transfers;
c. prepare on behalf of the Debtor-in-Possession necessary
petitions, answers, orders, reports, and other papers and to try
before the court whatever issues are deemed necessary;
d. investigate the accounts of the Debtor and the financial
transactions related thereto; and
e. perform all other legal services.
To the best of the Debtor's knowledge, Barry A. Friedman represents
to interest adverse to the Debtor.
Barry A. Friedman's hourly rates were not disclosed in the
application.
The firm can be reached through:
Barry A. Friedman, Esq.
Barry A. Friedman & Associates, PC
257 St Anthony St.
Mobile, AL 36603
Phone: +1 251-439-7400
About Razzano Personal Fitness Training
Razzano Personal Fitness Training, LLC, sought protection under
Chapter 11 of the US Bankruptcy Code (Bankr. S.D. Ala. Case No.
20-10825) on March 6, 2020, listing under $1 million in both assets
and liabilities. Barry A. Friedman, Esq. at BARRY A FRIEDMAN &
ASSOCIATES, PC, represents the Debtor as counsel.
RELIANCE INTERMEDIATE: DBRS Confirms BB Issuer Rating, Trend Stable
-------------------------------------------------------------------
DBRS Limited confirmed the Issuer Rating and Senior Notes (the
Notes) rating of Reliance Intermediate Holdings LP (HoldCo or the
Company) at BB with Stable trends. The ratings of HoldCo are
notched down from its operating subsidiary, Reliance LP (OpCo;
rated BBB (low) with a Stable trend by DBRS Morningstar),
reflecting (1) structural subordination of debt at HoldCo relative
to OpCo, (2) the high level of leverage at HoldCo, and (3) reliance
on a single operating subsidiary for cash distributions. HoldCo
does not have any credit facilities, and the Notes matures in
2023.
HoldCo and OpCo's operations continued to steadily grow in 2019,
which marks the second full year following the acquisition by CK
Asset Holdings Limited (formerly Cheung Kong Property Holdings
Limited). The Company's earnings and cash flows both increased in
the year, resulting in a strengthening of its key financial
metrics. OpCo's financial risk assessment improved in 2019, with
the cash flow-to-debt, debt-to-EBITDA, and EBITDA interest coverage
ratios all improving, benefitting from solid growth in the rental
base. DBRS Morningstar notes that the debt-to-EBITDA ratio improved
to 3.30 times (x), in line with the BBB rating category at the end
of 2019. DBRS Morningstar notes that as the ratings of HoldCo are
based on the structural subordination to OpCo, any changes to
OpCo's rating would translate to a change in HoldCo's ratings. DBRS
Morningstar may take a positive rating action for the Company,
distinct from OpCo, if the nonconsolidated debt-to-capital ratio is
reduced to around 20% (55.0% as of December 31, 2019). Conversely,
DBRS Morningstar may take negative rating action if there is
material incremental debt at the HoldCo level. DBRS Morningstar's
criteria guidelines provide for more than a one-notch differential
if the holding company's nonconsolidated debt leverage is above
30%.
DBRS Morningstar notes that the Company is modestly affected by the
Coronavirus Disease (COVID-19) pandemic because it is an essential
service, not discretionary, and consequently has been relatively
insulated from economic cycles. Operationally, OpCo has implemented
strict procedures for its maintenance staff, with rigorous
sanitation, as well as the provision of gloves, masks, hand
sanitizer, wipes, and disposable shoe covers. Additionally, OpCo
has instituted prescreening questions before doing maintenance to
ensure a safe environment for both customers and staff.
DBRS Morningstar acknowledges that cash flow from OpCo to HoldCo
could be restricted as a result of tight covenants on debt at OpCo,
including a two-tiered restricted payment test. OpCo is restricted
from declaring or distributing to its parent unless the senior
adjusted EBITDA-to-interest ratio is greater than 1.5x (5.4x for
2019). If this requirement is not met, OpCo may still make payments
to service HoldCo interest amounts provided that the senior
adjusted EBITDA-to-interest ratio exceeds 1.2x. DBRS Morningstar
notes that this restriction is no longer included in the Indenture
for new debt issued from 2019 onward; however, as OpCo's EBITDA
interest coverage has consistently been above 4.0x, DBRS
Morningstar does not anticipate that these restrictions will be
triggered in the foreseeable future.
ROCHESTER DRUG: Asks May 22 Hearing on All Assets Bid Procedures
----------------------------------------------------------------
Rochester Drug Co-Operative, Inc., asks the U.S. Bankruptcy Court
for the Western District of New York to adjourn the hearing on its
proposed bidding procedures in connection with the auction sale of
substantially all assets currently scheduled for 11:00 a.m. on May
15, 2020 and the related response deadline of 12:00 noon on May 11,
2020. It asks the Court to adjourn the bidding procedures hearing
to 10:00 a.m. on May 22, 2020 and the response deadline to 12:00
noon on May 18, 2020. The counsel for M&T Bank, the Committee and
the Department of Justice have consented to the adjournments.
About Rochester Drug Co-Operative
Rochester Drug Cooperative, Inc. is an independently owned New York
cooperative corporation formed in 1905 and incorporated in 1948
with a principal office and place of business located at 50 Jet
View Drive, Rochester, New York 14624. Its principal business is
to warehouse, merchandise, and then distribute, on a cooperative
basis, drugs, pharmaceutical supplies, medical equipment and other
merchandise commonly sold in drug stores, pharmacies, health and
beauty stores, and durable medical equipment business. It is a
wholesale regional drug cooperative that operates as both a buying
cooperative and a traditional drug distribution company created for
the purpose of helping independent pharmacies compete in the
current healthcare environment.
Rochester Drug Cooperative sought Chapter 11 protection (Bankr.
W.D.N.Y. Case No. 20-20230) on March 12, 2020. The Debtor was
estimated to have $50 million to $100 million in assets and $100
million to $500 million in liabilities.
The Hon. Paul R. Warren is the case judge.
The Debtor tapped Bond, Schoeneck & King, PLLC, led by Stephen A.
Donato, as counsel and Epiq Corporate Restructuring, LLC as the
claims and noticing agent.
ROCKPORT DEVELOPMENT: Case Summary & 20 Top Unsecured Creditors
---------------------------------------------------------------
Debtor: Rockport Development, Inc.
780 Roosevelt Ste 200
Irvine, CA 92620
Chapter 11 Petition Date: May 7, 2020
Court: United States Bankruptcy Court
Central District of California
Case No.: 20-11339
Judge: Hon. Catherine E. Bauer
Debtor's Counsel: Matthew W. Grimshaw, Esq.
MARSHACK HAYS LLP
870 Roosevelt
Irvine, CA 92620-3663
Tel: (949) 333-7777
E-mail: mgrimshaw@marshackhays.com
Estimated Assets: $10 million to $50 million
Estimated Liabilities: $10 million to $50 million
The petition was signed by Michael VanderLey, CRO.
A copy of the petition is available for free at PacerMonitor.com
at:
https://is.gd/zdTnLI
List of Debtor's 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
1. Birch Holding Corp Loan $1,000,000
c/o Shafan Zhang
333 S. Wabash Ave #2700
Chicago, IL 60604
2. Chunheng Weng Loan $1,000,000
Attn: Yun San Li
3705 Summer Ln
Balwin Park, CA
3. Degang Jiang Loan $600,000
55 Durham
Irvine, CA 92620
4. Dongmei Lu Loan $450,000
7755 Paxton Pl.
Rancho Cucamonga, CA 91730
5. Earnix International Balance of $200,000
Trading LTD Agreement for
c/o Cabanday Law Group Return of
Orlando F. Cabanday Investment
21221 S. Western Ave.
Ste 208
Torrance, CA 90501
6. Epic Holding LLC Loan $350,000
Attn: Yuan Zhang
3131 Royal Ct
Chino Hills, CA 91709
7. Fusheng Qin Loan $300,000
Ching & Seto, APC
6650 Lusk Blvd Ste B203
San Diego, CA 92121
8. Hillcrest Asset Loan $900,000
Based Fund I
Attn: Jingke Yu
Galaxy Soho, Tower D,
Suite 50815-16
2 Nanzhugan
Hutong, Dongcheng District
9. Huibin Zhao Loan $2,500,000
Attn: Qi Zhao
20599 Evening Breeze Dr
Walnut, CA 91789
10. Jumbo Investments, Inc. 630 Gage Dr. San $1,150,000
2275 Huntington Diego 92106 APN:
Drive, #309 532-202-05-00
San Marino, CA 91108
Loan $4,500,000
---------
$5,650,000
11. Junhui Hu $1,000,000
19954 Avenida
Amadis
Walnut, CA 91789
12. Maestro Construction Inc. Construction $300,000
Attn: Yuan Zhang Services
3131 Royal Ct
Chino Hills, CA 91709
13. Orange Grove Loan $1,200,000
Investment
Attn: Jiayi Wu
4590 Deodar St.,
Silver Springs, NV 89429
14. USP Enterprise Inc Loan $400,000
Attn: Pengfei Li
185 N. Hill Ave #3
Pasadena, CA 9110
15. Weimin Wang & Li Fang $350,000
304 Carr Manor Ct.
Baldwin, MO 63021
16. Xianggui Lu Loan $200,000
5636 Heleo Ave
Temple City, CA 91780
17. Yifeng Investment LLC $500,000
Attn: Serena Xiao
34 Poppy Hills Rd
Laguna Niguel, CA 92677
18. Ying She Loan $400,000
c/o Cong Du
PO Box 2761
La Puente, CA 91746
19. Yongzhi (USA) Loan $1,000,000
Asset Management Comp
C/O Xiaogang Wang
500 S. Kraemer Blvd.
Brea, CA 92821
20. Zhiqing Wang Loan $900,000
20651 Golden
Sprongs Dr #345
Diamond Bar, CA 91789
SALUBRIO: Seeks to Tap M B Lawhon Law Firm as HIPAA Expert Counsel
------------------------------------------------------------------
Salubrio, LLC seeks approval from the U.S. Bankruptcy Court for the
Western District of Texas to employ M B Lawhon Law Firm, PLLC as
special HIPAA expert counsel to address the Debtor's HIPAA
compliance issues.
The law firm will provide these professional services in connection
with the Debtor's chapter 11 case:
(a) provide expert testimony and advice in the area of HIPAA
and to assist Debtor's counsel and Debtor's special litigation
counsel with matters involving HIPAA which include client
confidentiality and breach of HIPAA by third parties; and
(b) assist the Debtor's bankruptcy counsel with litigation and
assist with the Chapter 11 Plan in such regard and objections to
claims and matters related to Atticus/Medlegal collection matters.
Under the proposed engagement letter, the Debtor will pay the law
firm for professional services at the rate of $350 per hour to be
applied against a retainer of $3,500 to be paid by the Debtor.
The Debtor previously paid the law firm a retainer of which $3,010
remains on hand. The law firm is not owed any money by the Debtor
for prior legal services and expenses as of the date of the
Debtor's bankruptcy filing.
Matthew B. Lawhon, an attorney and a partner in the law firm of M B
Lawhon Law Firm, PLLC, disclosed in court filings that the firm is
a "disinterested person" within the meaning of Section 101(14) of
the Bankruptcy Code.
The firm can be reached through:
Matthew B. Lawhon, Esq.
M B LAWHON LAW FIRM PLLC
11625 Custer Road, Suite 110-119
Frisco, TX 75035
Telephone: (214) 454-8035
About Salubrio
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. The Debtor tapped the Law Offices
of Martin Seidler as legal counsel and M B Lawhon Law Firm, PLLC as
HIPAA counsel.
SAND CASTLE: 2.3% Recovery for Unsecureds in Stalking Horse Bid
---------------------------------------------------------------
Sand Castle South Timeshare Owners Association, Inc., supplemented
and modified the Disclosure Statement to Chapter 11 Plan of
Liquidation that it filed on Dec. 18, 2019.
Timing of the Proposed Sale of the Condominiums, and the Steps of
the Sale Process.
As stated by the Association since the inception of this case, the
Association seeks to sell the 40 Condominiums that were under the
now terminated Timeshare Plan. The Condominiums are now owned by
approximately 820 former timeshare owners, who, following the
termination of the Timeshare Plan, collectively own them as tenants
in common. In order to sell the Condominiums in a sale that would
transfer full ownership to a buyer, the Association filed a
partition action, as provided in S.C. Code Sec. 27-32-520, et al.,
which is the primary action in the Adversary Proceeding. The
partition action is now far enough along that it is possible to
project a likely sale time. The Association projects that it
should be able to sell the Condominiums during June or July, 2020.
Distribution to Creditors
The expected distribution to creditors is not expected to fully pay
non-priority unsecured creditors, unless the Association is
successful in obtaining a sale at a much higher price than the
Stalking Horse Bidder's proposed purchase price for the
Condominiums. Similarly, Active Owners should not expect to
receive a substantial payment for their interests in the
Condominiums. At the present Stalking Horse Bidder price, the
secured claim of Horry County for ad valorem taxes will be paid in
full, the post-petition assessments of the Master Association will
be paid in full (as administrative priority expense), the
postpetition Loan will be paid in full, and other administrative
expenses will be paid in full; non-priority unsecured creditors are
likely to receive payment of only 2.3% of their allowed claims; and
Active Owners will probably receive approximately $19.38 each for
their interests. Delinquent Owners will receive no payment for
their interests.
Treatment of Class 3 Under the Plan
As stated in the Plan and in the Disclosure Statement, Class 3
under the Plan is comprised of the claims of Active Owners for
their ownership interests in the Condominiums, to the extent that
such claims are made against the Association. These claims will
first receive payment from funds which are not property of the
estate, the portion of sale proceeds attributable to each of the
Active Owners' ownership share.
A full-text copy of the Addendum to Disclosure Statement dated
April 20, 2020, is available at https://tinyurl.com/yd3bzwuz from
PacerMonitor.com at no charge.
Attorneys for Sand Castle South Timeshare Owners Association,
Inc.:
Julio E. Mendoza, Jr.
NEXSEN PRUET, LLC
1230 Main Street, Suite 700 (29201)
Post Office Box 2426
Columbia, South Carolina 29202
Telephone: 803-540-2026
E-mail: rmendoza@nexsenpruet.com
About Sand Castle South Timeshare
Owners Association
Sand Castle South Timeshare Owners Association, Inc., is a
not-for-profit corporation created to manage, operate and maintain
a 40-unit timeshare condominium resort in the Sand Castle South
condominium building located at 2207 South Ocean Boulevard, Myrtle
Beach, South Carolina.
The Association filed a Chapter 11 bankruptcy petition (Bankr.
D.S.C. Case No. 19-02764) on May 22, 2019, disclosing under $1
million in both assets and liabilities. The Debtor is represented
by Julio E. Mendoza Jr., Esq., at Nexsen Pruet LLC.
SORENSON MEDIA: June 25 Plan Confirmation Hearing Set
-----------------------------------------------------
On April 16, 2020, the U.S. Bankruptcy Court for the District of
Utah, Central Division, held a hearing to consider the motion of
Sorenson Media, Inc., seeking approval to the proposed amended
disclosure statement.
On April 21, 2020, Judge William T. Thurman approved the Disclosure
Statement and Motion and ordered that:
* The Debtor will mail ballots substantially in the form of the
ballot to each holder of a claim in the Voting Classes under the
Plan.
* The Debtor shall deposit or cause to be deposited in the
United States mail, postage prepaid, a solicitation package (the
Solicitation Package).
* June 25, 2020, at 3:00 p.m., at the United States Bankruptcy
Court at 350 South Main Street, Salt Lake City, Utah 84101, in
Courtroom 376 is the hearing for Confirmation of the Plan.
* May 28, 2020, is fixed as the last day to file any objection
to confirmation of the Plan.
* May 28, 2020, is fixed as the last day to deliver ballots to
be counted as votes to accept or reject the Plan.
A full-text copy of the Disclosure Statement dated April 21, 2020,
is available at https://tinyurl.com/ybew94j4 from PacerMonitor at
no charge.
Attorneys for Sorenson Media:
George Hofmann
Cohne Kinghorn, P.C.
111 East Broadway, 11th Floor
Salt Lake City, Utah 84111
Telephone: (801) 363-4300
About Sorenson Media
Founded in 1995, Sorenson Media, Inc. --
http://www.sorensonmedia.com/-- provides trusted solutions to the
television industry and is an innovator in driving the future of
television advertising, fusing the power and scale of linear TV
with the data and addressability of digital.
Sorenson Media, Inc., filed a voluntary petition for relief under
chapter 11 of the Bankruptcy Code (Bankr D. Utah Case No. 18-27740)
on Oct. 16, 2018. In the petition signed by CEO Pat Nola, the
Debtor was estimated to have $10 million to $50 million in assets
and $100 million to $500 million in liabilities.
Cohne Kinghorn, P.C., led by George B. Hofmann, is the Debtor's
counsel. The law firm Honigman Miller Schwartz and Cohn LLP is
serving as special corporate, intellectual property, litigation,
and commercial law counsel.
SOUTH COAST BEHAVIORAL: Trustee Extends Service of M&M Consulting
-----------------------------------------------------------------
Thomas H. Casey, the Chapter 11 Trustee of South Coast Behavioral
Health, seeks authority from the U.S. Bankruptcy Court for the
Central District of California to extend the employment of M&M
Consulting Group, LLC, to provide operational management and
support services, beyond May 13, 2020.
On March 26, 2020, the Trustee submitted his initial application to
engage M&M Consulting on behalf of the estate, to provide
operational and management support services on an ongoing basis. By
Order entered April 23, 2020, the Court authorized the Trustee to
engage M&M Consulting, but limited the term of the engagement to
and including May 13, 2020.
M&M Consulting will render the following services:
-- implement and oversee proper Covid-19 protocols;
-- provide daily oversight of supervisors and troubleshooting
of operational issues;
-- assist HR director with employee issues, particularly given
the impact of Covid-19 on staffing;
-- oversee internal compliance with California Department of
Health Care Services ("DHCS") and other regulatory
agencies, and with insurance payor guidelines;
-- maintain proper employee headcount for day to day business
operations;
-- oversight of administrative functions, including renewal of
insurance policies and business licenses;
-- identify and troubleshoot previous poor business practices
and make necessary corrections;
-- manage budgets and expenses, signing off on daily
purchases;
-- handle banking deposits;
-- work with accounting team to handle past due and urgent
payments;
-- work with the internal UR team to create efficiencies with
third party billing company;
-- daily review of bank account activity in online accounts,
rejecting transactions initiated by the former management
team, transferring funds between accounts, matching daily
activity downloaded from the bank into QuickBooks;
-- daily supervision of accounting clerk, including reviewing
invoices, responding to inquiries from the clerk and
vendors, oversight of accounts payable and payroll
data entry processing;
-- oversight of bi-monthly payroll processing, including
validation of funding;
-- process of payroll taxes bi-monthly, monthly and quarterly,
including verification of payroll return filing;
-- perform weekly and monthly accounting duties, including
preparing journal entries to record monthly activities and
other duties to present financials on an accrual/GAAP
basis;
-- reconcile balance sheet accounts, including bank accounts,
to statement and other supporting documentation to validate
assets and liabilities;
-- manage relationships with vendors and landlords in
resolving outstanding balances unpaid by former management
team;
-- provide analysis to determine overhead and staffing cost
reductions and related projections, and overseeing
implementation of cost reduction measures;
-- prepare supporting documentation for income tax return
preparation;
-- prepare budgets and other financial documents as required
for Join Commission and CARF licensing requirements;
-- assist in preparing monthly operating reports and
supporting documentation for submission to the Office of
the U.S. Trustee and the Court;
-- build out restructuring plans, as requested by the Trustee
or Force 10;
-- assist the Trustee, his financial advisors, and his counsel
with questions and analysis related to legal tasks for the
facility, including responding to requests for financial
information, payment records to various vendors, and
related support; and
-- assist the Trustee and his counsel with sale efforts, as
requested.
M&M Consulting will be paid at the hourly rates of $100 to $150.
During the Trustee's tenure, M&M Consulting has billed the estate
on March 2020 in the amount of $44,525, and on April 2020 (to date)
the amount of $41,840.
M&M Consulting will also be reimbursed for reasonable out-of-pocket
expenses incurred.
Todd A. Major, co-founder of M&M Consulting Group, LLC, assured the
Court that the firm is a "disinterested person" as the term is
defined in Section 101(14) of the Bankruptcy Code and does not
represent any interest adverse to the Debtor and its estates.
M&M Consulting can be reached at:
Todd A. Major
M&M Consulting Group, LLC
16168 Beach Boulevard, Suite 201C
Huntington Beach, CA 92647
Tel: (949) 610-9841
E-mail: todd@mandmconsultinggroup.com
About South Coast Behavioral Health
South Coast Behavioral Health, Inc. -- https://www.scbh.com/ -- is
a healthcare company that specializes in the in-patient and
outpatient treatment of addicts, alcoholics, and persons dealing
with mental health issues. It offers a clinically supervised
residential sub-acute detox services, therapeutic and residential
treatment centers, intensive outpatient treatment services, and
partial hospitalization programs.
South Coast Behavioral Health sought protection under Chapter 11 of
the Bankruptcy Code (Bankr. C.D. Cal. Case No. 19-12375) on June
20, 2019. At the time of the filing, Debtor disclosed assets of
between $1 million and $10 million and liabilities of the same
range. Judge Mark S. Wallace oversees the case.
Debtor hired Nicastro & Associates, P.C. as its bankruptcy
counsel.
The Office of the U.S. Trustee appointed a committee of unsecured
creditors in Debtor's case. The committee tapped Weiland Golden
Goodrich LLP as its legal counsel, and Bryars Tolleson Spires +
Whitton LLP as its financial advisor.
On Feb. 27, 2020, the U.S. Trustee appointed Thomas Casey as
Debtor's Chapter 11 trustee. Mr. Casey tapped Ringstad & Sanders
LLP as his bankruptcy counsel, and Nicastro & Associates, PC as
special counsel.
STANLEY C. CHESTNUT: $820K Sale of NC Properties to J&N Approved
----------------------------------------------------------------
Judge Joseph N. Callaway of the U.S. Bankruptcy Court for the
Eastern District of North Carolina authorized Stanley Claxton
Chestnut's sale to J and N Developers, LLC of the following real
properties:
(i) for $60,000 the parcel of real estate in fee simple
comprising .73 acres, more or less, lying and being in Johnston
County, North Carolina, and described as .73 Acres identified as
2428 Massey Holt Road, Princeton, North Carolina, 27569, PIN
264200-80-0494; and
(ii) for $760,000 the parcels of real estate in fee simple
absolute comprising 151 acres, more or less, lying and being in
Johnston County, North Carolina, and described as follows:
a. .95 acres near Running Deer Lane, PIN 264100-89-0211 (Lot
1);
b. 1.11 acres near Running Deer Lane, PIN 264100-79-7252 (Lot
2);
c. 1.15 acres near Running Deer Lane, PIN 264100-79-4195 (Lot
3);
d. .96 acres near Running Deer Lane, PIN 264100-88-0909 (Lot
4);
e. 1.01 acres near Running Deer Lane, PIN 264100-78-7996 (Lot
5);
f. 1.00 acre near Running Deer Lane, PIN 264100-78-5973 (Lot
6);
g. .96 acres near Running Deer Lane, PIN 264100-78-3961 (Lot
7);
h. 1.00 acre near Running Deer Lane, PIN 264100-78-1819 (Lot
8);
i. 3.56 acres near Running Deer Lane, PIN 264100-68-7910 (Lot
9);
j. 35.84 acres near Massey Holt Road, PIN 264100-69-4294; and
k. 104.02 acres identified as 2598 Massey Holt Road,
Princeton, North Carolina 27569, PIN 264100-69-1846.
The sale is free and clear of all liens, claims, encumbrances, or
interests pursuant to the terms of the Confirmed Plan and Section
363 with such interests attaching to the proceeds of the sales as
those interests appear of record, subject to the reasonable closing
costs and tax proration attributable to the seller according to
prevailing custom in Johnston County, North Carolina.
The stay of Rule 6004(h) is waived since the proposed sale is
pursuant to the terms of the Confirmed Plan.
Stanley Claxton Chestnut sought Chapter 11 protection (Bankr.
E.D.N.C. Case No. 19-00698) on Feb. 15, 2019. The Debtor tapped
David F. Mills, Esq., as counsel.
STAR DETECTIVE: Seeks to Hire Porter Law as Legal Counsel
---------------------------------------------------------
Star Detective & Security Agency Incorporated seeks authority from
the U.S. Bankruptcy Court for the Northern
District of Illinois to employ the Porter Law Network as its
attorney.
Services Porter Law will render are:
(a) give the Debtor legal advice with respect to its powers
and duties as a debtor-in-possession, in the continued management
of its assets;
(b) prepare applications, motions, complaints, orders,
reports, pleadings, plans, disclosure statements or other papers on
the Debtor's behalf that may be necessary regarding this case;
(c) assist the Debtor in preparing and obtaining the court's
approval of a plan of reorganization and disclosure statement;
preserve the value of Debtors assets;
(d) take action as may be necessary with respect to claims
that may be asserted against the Debtors; and
(e) perform all other legal services for the Debtors which may
be required regarding this case.
The Debtor paid Karen J. Porter, Esq. a retainer in the amount of
$5,000 and the filing fee in the amount of $1,717.
The Porter Law Network will the following hourly rates:
Karen J. Porter $450
Associated attorneys $350 to $200
Legal assistants $175
Ms. Porter assures the court that her firm does not represent any
interest that is adverse to this estate in the matters in which the
firm is to be employed.
The firm may be reached at:
Karen J. Porter, Esq.
PORTER LAW NETWORK
230 West Monroe, Suite 240
Chicago, IL 60606
Tel: (312) 372-4400
Fax: (312) 372-4160
About Star Detective
Star Detective & Security Agency Incorporated --
https://starsecurityinc.com/ -- offers both armed and unarmed
security guard services serving real estate developers, financial
institutions, offices & commercial buildings, residential
buildings, and hospitals. The Company also provides international
expertise in all forms of corporate investigations.
Star Detective & Security Agency sought protection under Chapter 11
of the Bankruptcy Code (Bankr. N.D. Ill. Case No. 20-05300) on Feb.
26, 2020. The petition was signed by Dominique A. Wallace, sole
shareholder. At the time of filing, the Debtor was estimated to
have $100,000 to $500,000 in assets and $1 million to $10 million
in liabilities. The case is assigned to Judge David D. Cleary. The
Debtor is represented by Karen Jackson Porter, Esq., at PORTER LAW
NETWORK.
STUART BRYAN: Has Until May 18 to File Plan & Disclosures
---------------------------------------------------------
On April 2, 2020, the U.S. Bankruptcy Court for the Southern
District of Florida, West Palm Beach Division, held a hearing on
the motion of debtor Stuart Bryan Gallon Revocable Land Trust for
extension of deadline to file Plan and Disclosure Statement.
On April 17, 2020, Judge Erik P. Kimball granted the motion and
established the following deadlines:
* The deadline set in the Court's order shortening time for
filing proofs of claim, establishing Plan and Disclosure Statement
filing deadlines, as well as the deadlines to file a plan and
disclosure statement, are extended to May 18, 2020.
* The deadline for the Debtor to obtain approval of the plan is
extended up to and including July 17, 2020.
A full-text copy of the order dated April 17, 2020, is available at
https://tinyurl.com/yd3v5tft from PacerMonitor at no charge.
Attorneys for Debtor:
Robert F. Reynolds, Esq.
Slatkin & Reynolds, P.A.
One East Broward Blvd., Suite 609
Fort Lauderdale, FL 33301
Telephone: 954.745.5880
Facsimile: 954.745.5890
About Stuart Bryan Gallon
Revocable Land Trust
Stuart Bryan Gallon Revocable Land Trust sought protection under
Chapter 11 of the Bankruptcy Code (Bankr. S.D. Fla. Case
No.19-25515) on Nov 18, 2019. At the time of the filing, the Debtor
estimated assets of $50,000 and liabilities of $1 million to $10
million. Judge Erik P Kimball oversees the case. The Debtor tapped
Slatkin & Reynolds, P.A. as its legal counsel.
SUNOPTA INC: Reports $1.34 Million Net Income for First Quarter
---------------------------------------------------------------
Sunopta Inc. reported earnings attributable to common shareholders
of $1.34 million on $335.95 million of revenues for the three
months ended March 28, 2020, compared to earnings attributable to
common shareholders of $23.65 million on $305.27 million of
revenues for the three months ended March 30, 2019.
As of March 28, 2020, the Company had $894.4 million in total
assets, $676.4 million in total liabilities, $84.55 million in
series A preferred stock, and $133.5 million in total equity.
"We are well into executing our turnaround plan. We delivered an
outstanding first quarter, with 13% adjusted revenue growth and the
second highest adjusted EBITDA in the Company's history. The
growth and margin strength were broad based, across all three
operating segments," said Joe Ennen, chief executive officer of
SunOpta. "Our focus and investment in plant-based foods and
beverages continues to be a significant driver of revenue and
margin growth. We generated 30% adjusted revenue growth in this
key segment and doubled gross profit versus prior year. We remain
well positioned to capitalize on the rapidly growing plant-based
trend. We also continue to make progress on our capital
investments to expand capacity and capabilities, supported by our
recent preferred equity capital raise. Our Fruit-Based Food and
Beverages segment is performing in-line with previously
communicated expectations and our productivity initiatives to
improve margins are on track. We generated 9% revenue growth in
our fruit platform and continued to deliver sequential improvements
in gross margin. We have sold through the vast majority of higher
priced 2019 inventory related to last year's supply constraints.
We have successfully taken pricing action, delivered productivity
improvements and are entering the 2020 procurement season in a very
healthy position. Finally, our Global Ingredients segment
contributed 6% adjusted revenue growth and saw strong improvement
in gross margin. We are successfully executing our strategy of
investing and focusing on key ingredient categories, where we can
maximize our return on capital."
"Looking ahead for the remainder of 2020, we remain focused on our
key initiatives and remain confident in our ability to drive
further year-over-year adjusted EBITDA improvement. We have
successfully responded to the evolving environment of COVID-19. We
have followed government advice as it evolved and are very focused
on the health and safety of our employees. Our facilities are
operating effectively and uninterrupted and we have maintained high
levels of service to all of our customers. We remain well
positioned in large and growing categories with strong market
positions and are successfully executing our turnaround strategy,"
continued Ennen.
A full-text copy of the Quarterly Report is available for free at
the Securities and Exchange Commission's website at:
https://is.gd/XDbGQ4
About SunOpta Inc.
Headquartered in Ontario, Canada, SunOpta Inc. is a global company
focused on plant-based foods and beverages, fruit-based foods and
beverages, and organic ingredient sourcing and production. SunOpta
specializes in the sourcing, processing and packaging of organic,
natural and non-GMO food products, integrated from seed through
packaged products; with a focus on strategic vertically integrated
business models.
SunOpta reported a loss attributable to common shareholders of
$8.78 million for the year ended Dec. 28, 2019, compared to a net
loss attributable to common shareholders of $117.11 million for the
year ended Dec. 29, 2018. As of Dec. 28, 2019, the Company had
$923.4 million in total assets, $710.93 million in total
liabilities, $82.52 million in series A preferred stock, and
$129.91 million in total equity.
* * *
As reported by the TCR on Sept. 18, 2019, S&P Global Ratings
lowered its issuer credit rating on Mississauga, Ont.-based SunOpta
Inc. to 'CCC' from 'CCC+'. The downgrade reflects weak operating
performance due to crop shortages in SunOpta's key strawberry
sourcing regions.
SVENHARD'S SWEDISH: Seeks to Hire Cera LLP as Special Counsel
-------------------------------------------------------------
Svenhard's Swedish Bakery, seeks authority from the U.S. Bankruptcy
Court for the Eastern District of California to employ Cera LLP, as
special litigation counsel to the Debtor.
Svenhard's Swedish requires Cera LLP to pursue against USB and
others to impose successor liability and lender liability, and for
damages, rescission, restitution, and other potential remedies (the
"USB Litigation").
Cera LLP will receive a contingency fee for legal services of 33.3%
of any recoveries obtained for the Debtor from the USB Litigation,
exclusive of costs.
Solomon B. Cera, a partner of Cera LLP, assured the Court that the
firm is a "disinterested person" as the term is defined in Section
101(14) of the Bankruptcy Code and does not represent any interest
adverse to the Debtor and its estates.
Cera LLP can be reached at:
Solomon B. Cera, Esq.
CERA LLP
595 Market Street, Suite 1350
San Francisco, CA 94105
Tel: (415) 777-2230
Fax: (415) 777-5189
About Svenhard's Swedish Bakery
Svenhard's Swedish Bakery is a privately held company that
primarily engaged in manufacturing fresh and frozen bread and other
bakery products.
Svenhard's Swedish Bakery, based in Fresno, CA, filed a Chapter 11
petition (Bankr. E.D. Cal. Case No. 19-15277) on Dec. 19, 2019. In
the petition signed by David Kunkel, chief operating officer, the
Debtor was estimated to have $1 million to $10 million in assets
and $10 million to $50 million in liabilities. The Hon. Rene
Lastreto II is the presiding judge. Derrick Talerico, Esq., at
Zolkin Talerico LLP, serves as bankruptcy counsel; Gary Garrigues
Law Firm, and Cera LLP, as special litigation counsels.
TANYA E. TUCKER: $720K Sale of St. Petersburg Property Approved
---------------------------------------------------------------
Judge Caryl E. Delano of the U.S. Bankruptcy Court for the Middle
District of Florida authorized Tanya E. Tucker's private sale of
the real property located at 105 13th Avenue, St. Petersburg,
Florida to Juan Martin Bulgheroni and Iara Martha Bussey for
$720,000.
The "As Is" Residential Contract for Sale and Purchase is
approved.
The sale under the Agreement is free and clear of all Interests
other than those Interests identified on the Commitment for Title
Insurance as surviving the Sale.
Notwithstanding Bankruptcy Rule 6004(h), the terms and conditions
of the Order will be immediately effective and enforceable upon its
entry and there will be no stay of execution or effectiveness of
the Order.
Regions Bank, doing business as Regions Mortgage, will provide the
Debtor with an updated payoff statement before May 6, 2020 to be
paid in full at the closing.
Any balance, equity or sale proceeds owed to the Debtor will be
deposited into a separate Sale Proceeds DIP Account. The only
authorized signatories on the Sale Proceeds DIP Account will be one
or more attorneys at the Jennis Law Firm. The Sale Proceeds DIP
Account may only be used for plan payments. This provision does
not apply to any balance, equity or sale proceeds owed to Thomas
Tucker as a member of Tucker Turnkey Investments, LLC.
Thomas Tucker is authorized and approved as the seller's realtor to
the Sale pursuant to Sections 327 and 328 of the Bankruptcy Code;
and, his commission of $21,600 under the Agreement is authorized
and approved and may be paid directly out of the closing proceeds.
The remaining $21,600 real estate commission will be deposited into
a separate Commission DIP Account. The only authorized signatories
on the Commission DIP Account will be one or more attorneys at the
Jennis Law Firm. The Court will conduct a hearing on disposition
of the Commission DIP Account on May 18, 2020 at 2:00 p.m. at the
Same M. Gibbons Federal Courthouse, 801 North Florida Avenue,
Courtroom 9A, Tampa, Florida 33602.
Effective March 16, 2020, and continuing until further notice,
Judges in all Divisions will conduct all preliminary and
non-evidentiary hearings by telephone. For Judge Delano, parties
should arrange a telephonic appearance through Court Call
(866-582-6878).
Tanya E. Tucker sought Chapter 11 protection (Bankr. M.D. Fla. Case
No. 20-03009) on April 10, 2020. The Debtor tapped Daniel
Etlinger, Esq., at Jennnis Law Firm as counsel.
THERMASTEEL INC: Taps Creekmore Law as Special Litigation Counsel
-----------------------------------------------------------------
Thermasteel, Inc., seeks approval from the U.S. Bankruptcy Court
for the Western District of Virginia to hire The Creekmore Law Firm
PC as its special litigation counsel.
Creekmore Law will assist the Debtor in all litigation matters that
the Debtor expects to arise in this chapter 11 case involving its
ongoing dispute with Tulip Thermasteel and parties related to Tulip
Thermasteel, including:
a. an adversary proceeding pending in the U.S. District Court
seeking a determination of the validity and extent of an alleged
lien asserted by Tulip Thermasteel, and liquidation of the
Debtor’s claims against Tulip Thermasteel and other related
defendants;
b. in the event the reference for the Tulip Adversary
Proceeding is not withdrawn to the U.S. District Court for the
Western District of Virginia, representation of the Debtor in the
Tulip Adversary Proceeding in this Court;
c. representation of the Debtor in examinations under Rule
2004 of the Federal Rules of Bankruptcy Procedure or other
examinations, to the extent such examinations arise from or relate
to the District Court Litigation;
d. motions for relief from the automatic stay filed by Tulip
Thermasteel or related parties, to the extent such matters arise
from, relate to, or impact the District Court Litigation;
e. responding to potential objections to confirmation of a
chapter 11 plan of reorganization, to the extent such matters arise
from, relate to, or impact the District Court Litigation; and
f. responding to potential objections to other motions the
Debtor may file in this chapter 11 proceeding, to the extent such
matters arise from, relate to, or impact the District Court
Litigation.
The hourly rates for the attorneys who will be primarily
responsible for this matter are $350 per hour for attorneys, and
$100 per hour for paralegals.
Creekmore Law was paid an advance fee deposit of $5,000.
James R. Creekmore, attorney with Creekmore, assures the court that
his firm is a "disinterested person" as
that term is defined in Bankruptcy Code Sec. 101(14).
The firm can be reached through:
James R. Creekmore, Esq.
The Creekmore Law Firm PC
318 N. Main Street
Blacksburg, VA 24060
Phone: +1 540-443-9350
About Thermasteel Inc.
Thermasteel, Inc. -- http://www.thermasteelinc.com/-- is a
provider of panelized composite building systems, manufacturing
composite foundation, floor, wall, roof and ceiling panels for
residential, commercial and industrial applications. Its
pre-insulated steel framing has been used in large military housing
projects in the USA, Germany and Guantanamo Bay, Cuba. Production
facilities are presently located in USA (Virginia, Alaska), and
Russia, with products being shipped via container to many other
countries.
Thermasteel sought protection under Chapter 11 of the Bankruptcy
Code (Bankr. W.D. Va. Case No. 18-71461) on Oct. 26, 2018. At the
time of the filing, the Debtor estimated assets of $1 million to
$10 million and liabilities of the same range. The case is
assigned to Judge Paul M. Black. The Debtor tapped the Law Office
of Richard D. Scott as its legal counsel.
TIME DEFINITE: Seeks to Hire Soriano Law as Special Counsel
-----------------------------------------------------------
Time Definite Services, Inc., and its debtor-affiliates seek
authority from the U.S. Bankruptcy Court for the Middle District of
Florida to employ Soriano Law, P.A., as special counsel to the
Debtor.
JPMorgan Chase Bank, N.A. has asserted secured claims against the
Debtors on certain items of rolling stock and also on accounts
receivable and other personal property, an administrative priority
claim for "failed adequate protection," and general unsecured
deficiency claims. These claims approximate $7 million. The
allowability and amount of these claims present threshold
confirmation issues.
As the Debtor announced at the April 15, 2020, hearing, it filed a
Motion to Value the collateral securing JPMorgan Chase's cash
collateral as of the Petition Date, maintaining that the value of
JPMorgan Chase's collateral as of that date is less than $1.3
million. If the Debtor is correct, it follows that JPMorgan Chase's
collateral has not declined in value during the case as a result of
the automatic stay and that JPMorgan Chase has no administrative
claim. Both of these issues are key to reaching confirmation.
Shortly after the filing of the Motion to Value, also as noted at
the April 15, 2020, hearing, the Debtors extended a settlement
offer to JPMorgan Chase. It has to date received no response.
JPMorgan Chase's response to the Motion to Value has been to serve
several sets of extensive discovery on the Debtor. In response the
Debtors has served discovery requests. JPMorgan Chase has also
requested that the Debtors clarify its legal position, which the
Debtors is in the process of doing. A preliminary hearing is
scheduled for May 12, 2020.
Time Definite requires Soriano Law to assist the Debtor in relation
to the pending issues with JPMorgan Chase Bank, N.A.
Soriano Law will be paid at the hourly rate of $400, and a retainer
of $5,000.
Soriano Law will also be reimbursed for reasonable out-of-pocket
expenses incurred.
Robert Sorian, partner of Soriano Law, P.A., assured the Court that
the firm is a "disinterested person" as the term is defined in
Section 101(14) of the Bankruptcy Code and does not represent any
interest adverse to the Debtors and their estates.
Soriano Law can be reached at:
Robert Sorian, Esq.
SORIANO LAW, P.A.
4830 W. Kennedy Blvd., Suite 600
Tampa, FL 33609
Tel: (813) 830-2800
About Time Definite Services
Time Definite Services, Inc., is a provider of refrigerated
trucking and individualized logistics. Its affiliate Time Definite
Leasing LLC provides truck renting and leasing services.
Time Definite Services and Time Definite Leasing filed voluntary
petitions for relief under Chapter 11 of the Bankruptcy Code
(Bankr. M.D. Fla. Lead Case No. 19-06564) on July 12, 2019. In the
petition signed by Michael Suarez, president, Time Definite
Services disclosed $21,898,781 in assets and $22,555,177 in
liabilities. Judge Michael G. Williamson oversees the case. Buddy
D. Ford, P.A. is the Debtors' counsel.
TITAN INTERNATIONAL: Moody's Cuts CFR to Caa3 & Sec. Rating to Ca
-----------------------------------------------------------------
Moody's Investors Service downgraded its ratings for Titan
International, Inc., including the company's corporate family
rating to Caa3 from Caa1, the Probability of Default Rating to
Caa3-PD from Caa1-PD and the senior secured rating to Ca from Caa2.
The outlook is stable.
The downgrades reflect expectations for challenging industry
conditions through 2020 to pressure Titan's earnings and cash flow,
resulting in the company's capital structure remaining
unsustainable with excessive financial leverage above 10x
debt/EBITDA likely into 2021 and a weak liquidity profile reliant
on external and alternative funding sources. Titan's
underperformance in 2019 relative to Moody's expectations has
positioned the company weakly to withstand the significant drop in
end market demand expected for 2020. Accordingly, Moody's believes
the prospects for a debt restructuring of some type to be very
elevated, with expected recovery for the senior secured notes to be
in a range around 30%.
Moody's expects Titan to pursue various cost saving actions to
mitigate the earnings decline. However, credit metrics will likely
remain very weak for a period of time, including expectations for
negative free cash flow for 2020.
The stable outlook reflects Moody's view that Titan's position as a
key supplier to cyclical, yet essential end markets provides the
company with the opportunity to execute an operational turnaround
for when demand recovers.
The following rating actions were taken:
Downgrades:
Issuer: Titan International, Inc.
Corporate Family Rating, Downgraded to Caa3 from Caa1
Probability of Default Rating, Downgraded to Caa3-PD from Caa1-PD
Senior Secured Regular Bond/Debenture, Downgraded to Ca (LGD4) from
Caa2 (LGD4)
Outlook Actions:
Issuer: Titan International, Inc.
Outlook, Changed to Stable from Negative
RATINGS RATIONALE
Titan's ratings reflect the company's very high financial leverage,
exposure to cyclical end markets and customer concentration, and
weak liquidity profile characterized by historically low cash
balances and need for alternate sources of liquidity. Titan's
debt/EBITDA rose to 15x at the end of 2019 following significant
earnings decline due to both softer industry conditions impacted by
weather and trade as well as operational challenges relating to
increased steel purchasing costs. Moody's expects Titan's earnings
will remain pressured through 2020 with negative EBITA margins as
the company's top line declines significantly, especially in its
Earthmoving/Construction segment. Despite various cost savings
initiatives being undertaken by the company, Moody's expects
leverage will remain well above 10x debt/EBITDA into 2021.
Titan's operating performance is heavily dependent on demand for
new farm and construction equipment and is concentrated with
several large customers, although Titan maintains long-standing
relationships with as a key supplier of tires and wheels. Moody's
expects Titan's revenues to decline by around 20% in 2020 with
steep declines for new equipment somewhat offset by the aftermarket
component of the company's business.
Titan's SGL-4 liquidity rating reflects the expectation for Titan
to maintain a very modest cash balance relative to its size,
negative free cash flow for 2020 and the company's continued
reliance on asset sales and other divestments. During 2019, Titan's
liquidity was impacted by about $72 million in cash payments
related to the Voltyre-Prom put option settlement, requiring the
company to utilize a combination of borrowings under its $125
million asset-based revolving credit facility and about $30 million
in non-core asset sales. Moody's expects Titan to execute another
approximately $20 to $50 million in non-core asset sales and other
alternate sources during the near-term to support its liquidity and
to offset Moody's expectation for negative free cash flow in 2020
and a likely contraction in the company's availability under its
ABL as declining production reduces its borrowing base. Completing
additional asset sales during the current economic environment
could prove difficult, in Moody's view.
From a governance perspective, Titan's financial policy in terms of
acquisitions or shareholder returns is constrained by the company's
elevated leverage profile. Moody's expects Titan to continue to
undertake divestitures to generate liquidity and repay revolver
borrowings when possible. Moody's views environmental risk to
Titan's credit profile to be manageable. The company is exposed to
environmental risks through its manufacturing processes and
handling of hazardous waste material. Given the nature of its
products, Titan is not directly exposed to emission requirements
for equipment used in agriculture or construction although its
major customers face certain regulations.
The rapid and widening spread of the coronavirus outbreak, with
deteriorating global economic outlook, falling oil prices, and
asset price declines are creating an extensive credit shock,
including the construction and agriculture equipment sector.
Weakness in Titan's credit profile have left it vulnerable to
shifts in market sentiment in these unprecedented operating
conditions. Moody's regards the coronavirus outbreak as a social
risk under its ESG framework, given the substantial implications
for public health and safety.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if Titan demonstrates an improving
liquidity profile highlighted by a higher cash balance, reduced
reliance on the revolving credit facility and sustainable positive
free cash flow generation. Metrics that could support a higher
rating include debt/EBITDA sustained below 9x and EBITA/interest
expense approaching 1x.
The ratings could be downgraded if the company's revenue and
earnings continue to decline, causing further weakness in liquidity
including increased cash consumption and revolver usage such that
default risk rises further.
The principal methodology used in these ratings was Manufacturing
Methodology published in March 2020.
Headquartered in Quincy, Illinois, Titan (NYSE: TWI) is a
manufacturer of wheels, tires, assemblies and undercarriage
products for off-highway vehicles. The company serves end markets
in the agricultural, earthmoving/construction, and consumer
industries. Titan sells its products directly to OEMs as well as in
the aftermarket through independent distributors, equipment dealers
and distributions centers. The company produces tires primarily
under the Titan and Goodyear brand names. For the twelve months
ended March 31, 2020, Titan reported about $1.4 billion of revenue.
TITAN INTERNATIONAL: Posts $27.5M Net Income in First Quarter
-------------------------------------------------------------
Titan International, Inc., reported a net loss of $27.50 million
for the three months ended March 31, 2020, compared to net income
of $1.01 million for the three months ended March 31, 2019.
As of March 31, 2020, the Company had $1.06 billion in total
assets, $856.33 million in total liabilities, $25 million in
redeemable non-controlling interest, and $178.92 million in total
equity.
Net sales for the first quarter of 2020 were $341.5 million,
compared to net sales of $410.4 million for the first quarter of
2019, representing a $68.9 million, or 16.8 percent, decrease. On
a constant currency basis, net sales for the first quarter 2020
would have been $354.2 million. Net loss applicable to common
shareholders for the first quarter of 2020 was $25.5 million, equal
to $(0.42) per basic and diluted share, compared to income of $1.2
million, equal to $0.02 per basic and diluted share, in the first
quarter of 2019. The first quarter 2020 adjusted net loss
attributable to Titan was $10.6 million, equal to $(0.18) per basic
and diluted share, compared to an adjusted net loss of $3.7
million, equal to $(0.06) per basic and diluted share, in the
comparable prior year period.
"As we announced on March 4th in our earnings release concerning
our fiscal year 2019 results, we expected a solid rebound in
full-year 2020 EBITDA driven by internal actions and relatively
stable sales compared to 2019," stated Paul Reitz, president and
chief executive officer. The COVID-19 pandemic has severely
impacted the world since then, making it difficult to forecast
demand in the coming months. We expect the months ahead will be
challenging as order trends have pulled back, but we do believe
that a significant portion of that demand will shift to the second
half of this year and not be completely lost. As a result, we have
and will continue to be comprehensive in taking immediate cost
control actions along with appropriate cash preservation measures.
"I would like to take a moment to express my thanks to each and
every Titan employee for their dedication and commitment over these
past several weeks. I am proud of our One Titan team for their
determination and resilience in the midst of a global pandemic that
has impacted all of us in our work and personal lives. While we
have seen a rapid change in demand for our products, much of our
business is considered critical infrastructure, which means many of
our major facilities have remained operational to meet the needs of
our customers. The decision to remain open comes with great
responsibility for both Titan and every employee working hard in
these conditions. We continually strive to ensure the safety of
our people, while maintaining business continuity and have
established effective global teams that are in constant
communication in response to changing conditions. Again, I am
proud of our entire workforce and leadership team that have stepped
up in a major way during this unprecedented time and played a part
in keeping our facilities operating safely.
"Amidst this global pandemic period, I want to reiterate a comment
from last quarter where I stated that Titan builds a broad
portfolio of good products that are important to our customers.
Along with that, we certainly simplify and de-risk our customers'
supply chains with our regional manufacturing facilities producing
wheels, tires and undercarriage that are capable of meeting their
changing needs. For example, our wheel businesses have invested
millions into customized tooling that is specific to the OEM and
their particular lines of equipment. We then purchase localized
steel with three-month lead times that is converted into a wheel
that is customized to fit on their specific equipment. In
addition, we also work closely with OEMs to adjust our production
schedules as they shift to their customers' evolving needs. The
bottom-line is we provide significant value to our customers on
critical components of their supply chain. The current pandemic
only highlights our value in de-risking supply chains and we will
continue to utilize strategic pricing changes to capture more of
that value.
"As COVID-19 progressed globally, Titan initially felt its impact
in China with the government mandated lock-down and curtailment of
business operations from late January through February 2020. The
impact on the Company expanded into Europe through travel
restrictions, social distancing, mandatory stay-at-home orders and
sanitization of our facilities. Due to these and other related
COVID-19 restrictions, we experienced disruptions in production
during the tail end of the first quarter, which continued into the
second quarter. The Company began to experience the impact of
COVID-19 in South America during the latter part of March,
continuing through the early part of April due to similar
stay-at-home restrictions in place as Europe. At our major tire
plant in São Paulo, we implemented stringent practices and
supported our employees with company-provided transportation, which
has resulted in nearly 100% attendance since we restarted
operations in April. Within North America, our facilities have
remained open throughout this time with social distancing and
sanitization protocols implemented as recommended by the CDC, WHO
and government. Our Australian and Russian operations have
experienced a lesser impact than our operations in the other
geographies other than enhanced sanitization of our facilities. We
currently expect the biggest impact to our operations from
government mandates to have already occurred in April while in May
we will have most of our production online, but at lower levels in
response to customer demand. With the current uncertainty in the
earthmoving/construction market from COVID-19 and the global
economic contraction, the demand in that segment is more unclear
than within agriculture. In the second quarter, agriculture
production is expected to continue at better levels than
construction, as most governments typically take actions to protect
their food supply and farmers are currently active in the fields.
That activity is expected to continue to support demand for our
tires within the aftermarket, while full year OEM demand remains
difficult to predict at this time.
"While the current volatility and uncertain demand outlook implies
a sales decline from our 2019 levels, we currently anticipate
EBITDA will approximate 2019 levels. Important steps we are taking
to maintain EBITDA in a down market include the measures previously
outlined during our fourth quarter earnings release along with
certain other intensified efforts throughout 2020 as we align
production and costs with the current business environment. The
current market conditions and the ongoing impact of the COVID-19
global pandemic continues to create a dynamic and fluid situation
with our customers as they shift schedules in the current period
and are providing limited visibility into their plans for the
second half of the year."
Liquidity Position and Outlook
"During the course of the last several months, we have taken swift
and decisive actions to reduce costs and to preserve liquidity,"
stated David Martin, senior vice president and chief financial
officer. "We have cut discretionary spending, adjusted work
schedules and have taken steps to utilize government sponsored
programs. We have also temporarily suspended capital spending,
except for those investments necessary to ensure continuity of
production, which is the approach we will continue to take for the
near-term. As we demonstrated in 2019, we have been successful
with our working capital initiatives and it remains a source of
liquidity for the business. In the first quarter, inventory levels
declined by $27 million, which supported positive operating cash
flow of $4 million, despite the net loss of $27 million.
"In addition, we are taking steps to increase credit capacity for
our international operations, with the support of our banking
partners and the backing of government secured programs. We expect
to lift our credit capacity in these operations by approximately
$15 million to $20 million, and have extended approximately $10
million of current maturities on certain term debt in Latin America
and Russia by up to one year. A portion of these actions was taken
in March. At the end of March, we had additional borrowing
capacity under our domestic credit facility of approximately $62
million, which will support the business during the current
economic downturn, while we are currently taking steps to secure
additional liquidity utilizing unencumbered assets as security. We
believe that our financial position is bolstered by the different
operational levers that we can draw on, along with the continuing
working capital management measures, ongoing sale of non-core
assets and related transactions, and our current and anticipated
credit capacity."
Results of Operations
Paul Reitz concluded, "In our fourth quarter earnings release, we
noted that the lower quarterly sales level made it difficult to
overcome the lower absorption of overhead and fixed costs of our
production facilities. Our first quarter sales increased nearly
$40 million or 13% from the fourth quarter 2019 levels with good
adjusted EBITDA growth of over $12 million, but our sales at $342
million still remained at a lower level compared to the first
quarter of 2019, which continued to create a drag on margins from
lower absorption. The volume loss was most notable within the
earthmoving/construction segment, which declined nearly 23 percent
during the quarter as a result of a slowdown of the global
construction market, primarily within Europe. Early in the first
quarter, prior to the emergence and spread of COVID-19, we had seen
signs of improved North American OEM customer production, but those
signs disappeared as uncertainty increased during the period."
EBITDA was a negative $5.6 million for the first quarter of 2020,
compared to $25.5 million in the comparable prior year period.
Adjusted EBITDA was $9.3 million for the first quarter of 2020,
compared to $19.8 million in the comparable prior year period. The
Company utilizes EBITDA and adjusted EBITDA, non-GAAP financial
measures, as a means to measure its operating performance.
A full-text copy of the Quarterly Report is available for free at
the Securities and Exchange Commission's website at:
https://is.gd/ua0Mb4
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."
TMS CONTRACTORS: Class 4A Pearland Conduit Creditors to Recover 80%
-------------------------------------------------------------------
This is the disclosure statement in the chapter 11 case of TMS
CONTRACTORS, LLC.
There are three classes of secured creditors under the Plan, all of
which are currently held by Texas Citizens Bank. There are three
classes of unsecured creditors under this Plan. The first two
classes contain creditors who were subcontractors on the final two
projects undertaken as a general contractor by the Debtor and
which, under Texas State law, have the right to payment out of
funds in the hands of the owner (or owner's lender). These funds
are not property of the Debtor's estate. To the extent that claims
are allowed to these sub-contractors for which there are funds in
the hands of the owners or in the hands of their lenders, those
claims are to be paid out of those funds first. They are known
under the Plan as "conduit claims" held by "conduit creditors."
The first class, Class 4A, is made up of holders of claims accrued
as sub-contractors of the Debtor who performed labor or provided
materials in relation to the Pearland project and the second class,
Class 4B, is made up of holders of claims accrued as
sub-contractors of the Debtor who performed labor or provided
materials in relation to the Brittmoore project. These creditors
will be paid at least part of their claims out of funds recovered
from the Owners or their lenders, ahead of secured claims because
the funds which will flow to these special classes of unsecured
claims are not property of the estate of the Debtor under State law
and are not, therefore property subject to the secured claims of
Texas State Bank.
After payment of these conduit claims, the claims held by secured
creditors are entitled to payment. This means that Texas Citizens
Bank will be paid on its allowed secured claims after the conduit
payments are made but before creditors holding unsecured claims are
paid at all. After investigation, it appears that the Pearland
project Owner/Lender has a total sum of $511,000 undisbursed and
available to pay conduit creditor’s claims. It also appears that
the Brittmoore project Owner and its lender have Zero undisbursed
and available funds to pay conduit claims.
Several sub-contractors, holders of allowed conduit claims and/or
allowed unsecured claims, are also holders of a lien against the
Pearland Project and/or the Brittmoore Project itself. This status
as a lien holder in the project(s) does not give that same creditor
a secured claim against assets of this bankruptcy case. To the
extent that the Owners or Lenders of the Pearland and/or Brittmoore
projects have made payments against or to extinguish the lien
rights of these holders, Debtor will object to allowance of their
claims to the same extent.
All unsecured claims not entitled to treatment as conduit claims
are classified in Class 4C. These general unsecured creditors will
receive payment for each allowed claim payable out of any the funds
remaining after payment of administrative and priority creditors
and conduit creditors holding allowed conduit claims and the senior
Secured Creditor, Texas Citizens Bank. It is anticipated that
Class 4A Pearland Conduit Creditors will receive 80% plus of their
allowed claims. It is anticipated that Class 4B Brittmoore Conduit
Creditors will receive nothing as a result of their conduit claims
and will only see a recovery in this Bankruptcy after satisfaction
of the Senior Secured Creditor, Texas Citizens Bank.
The Debtor will obtain turnover of funds held by TCB and secure
credit facilities necessary to support the prosecution of the
Brittmoore Collection Litigation, the Pearland Collection
Litigation, and the Joint Venture Litigation, as well as recovery
of any preferential transfers and other Chapter 5 causes of action
that the Debtor elects to pursue. The financing will be known as
the Litigation Credit Facility and may impair the rights of holders
of Class 3A and 3B, and 4C claims to the extent that the Debtor is
permitted under the Plan to grant a security interest to the
lender(s) under such credit facilities in all assets of the estate
of the debtor with a super priority position, in an amount of no
more than $350,000.
A full-text copy of the Disclosure Statement dated April 20, 2020,
is available at https://tinyurl.com/yaoeekxb from PacerMonitor.com
at no charge.
Counsel for the Debtor:
Donald L. Wyatt, Jr.
ATTORNEY DONALD WYATT, PC
26418 Oak Ridge Dr.
The Woodlands, TX 77380
281-419-8733 Phone
281-419-8703 Fax
don.wyatt@wyattpc.com
About TMS Contractors
and TMSC Properties
TMS Contractors, LLC -- https://www.tmsbuilds.com/ -- is a general
contractor specializing in residential, commercial, and industrial
buildings. It can supply pre-engineered, conventional or hybrid
steel solutions for all building needs from complete design,
engineered and fabricated building systems to conventional steel
for building structure.
TMSC Properties, an affiliate of TMS Contractors, is primarily
engaged in leasing real estate properties.
TMS Contractors and TMSC Properties sought protection under Chapter
11 of the Bankruptcy Code (Bankr. S.D. Tex. Case Nos. 19-33555 and
19-33556) on June 27, 2019. At the time of the filing, TMS
Contractors disclosed $6,031,517 in assets and $2,958,214 in
liabilities; and TMSC Properties disclosed $5,559,541 in assets and
$1,783,866 in liabilities.
The case has been assigned to Judge David R. Jones.
Attorney Donald Wyatt, PC is the Debtor's bankruptcy counsel.
TNS INC: S&P Alters Outlook to Negative, Affirms 'B' ICR
--------------------------------------------------------
S&P Global Ratings revised its outlook on Reston, Va.-based data
communications provider TNS Inc. to negative from stable and
affirmed all of its ratings on the company, including its 'B'
issuer credit rating.
The outlook revision reflects S&P's view that COVID-19 could have a
significant impact on payment transaction volumes, which could push
leverage above 6x from 5.4x as of the end of fiscal 2019. S&P
believes the shuttering of many non-essential businesses, such as
retail and restaurants, has negatively affected the company's
internet protocol (IP)-based and dial-based network services by
reducing point-of-sale card payment transaction volumes by half. As
consumers "shelter-in-place" and if non-essential businesses remain
closed, payment transactions volumes could continue to be under
pressure.
"Although we expect volumes to begin to improve in the second half
of the year as more states and countries reopen, there is much
uncertainty with respect to the timing and strength of the
anticipated recovery, which could pressure payment network services
revenue in 2021 as well. That said, we believe that a faster and
robust economic rebound could drive payment volume growth and
enable the company to reduce leverage in 2021," S&P said.
The negative outlook reflects the potential for a one notch
downgrade if COVID-19 and the resultant recession have a
significant impact on TNS's overall operations because of a steep
decline in the company's payment services business, which pushes
leverage above 6x in 2020.
"We could lower the rating if the coronavirus and resultant
recession contributed to weaker operating performance such that the
company's adjusted leverage rose above 6x on a sustained basis.
This would most likely be the result of steeper-than-expected
revenue declines in the company's payment services business as
dial-based and IP-based volume transactions contract because of the
recession," S&P said.
"We could revise our outlook on TNS to stable if operating trends
in the payment services segment improved, which enabled the company
to stabilize EBITDA and keep leverage comfortably below 6x with
further improvements thereafter," the rating agency said.
TOUCHPOINT GROUP: Cherry Bekaert LLP Raises Going Concern Doubt
---------------------------------------------------------------
Touchpoint Group Holdings, Inc. filed with the U.S. Securities and
Exchange Commission its annual report on Form 10-K, disclosing a
net loss (attributable to common stockholders) of $6,508,000 on
$170,000 of revenue for the year ended Dec. 31, 2019, compared to a
net loss (attributable to common stockholders) of $13,769,000 on
$306,000 of revenue for the year ended in 2018.
The audit report of Cherry Bekaert LLP states that the Company has
recurring losses and negative cash flows from operations that raise
substantial doubt about its ability to continue as a going
concern.
The Company's balance sheet at Dec. 31, 2019, showed total assets
of $4,827,000, total liabilities of $2,855,000, and a total
stockholders' equity of $1,367,000.
A copy of the Form 10-K is available at:
https://is.gd/TZvUuE
About Touchpoint Group Holdings
Touchpoint Group Holdings, Inc. (http://touchpointgh.com),formerly
known as One Horizon Group, Inc., is a media and digital technology
acquisition and software company, which owns Love Media House, a
full-service music production, artist representation and digital
media business. The Company also holds a majority interest in
123Wish, a subscription-based, experience marketplace, as well as
majority interest in Browning Productions & Entertainment, Inc., a
full-service digital media and television production company."
TRC FARMS: Has Until May 23 to File Plan and Disclosure Statement
-----------------------------------------------------------------
TRC Farms, Inc., filed a motion for an extension of time to file a
Plan of Reorganization and Disclosure Statement, pursuant to which
it is seeking an additional 30 days, from and after April 22, 2020,
within which to file the said Plan and Disclosure Statement.
The Debtor seeks an extension of this deadline as it is in the
process of gathering information regarding the feasibility of its
Chapter 11 Plan and requests an extension of 30 days, to and
including May 22, 2020 within which to file same.
The best interests of the Debtor, the creditors and estate will be
served by the allowance of this Motion extending the time period
within which the Debtor may file its Plan of Reorganization and
Disclosure Statement.
Attorneys for the Debtor:
David J. Haidt
AYERS & HAIDT, P.A.
Post Office Box 1544
New Bern, North Carolina 28563
(252) 638-2955 telephone
(252) 638-3293 facsimile
davidhaidt@embarqmail.com
About TRC Farms Inc.
TRC Farms, Inc., a privately held company in the livestock farming
industry, filed a petition for relief under Chapter 11 of the
Bankruptcy Code (Bankr. E.D.N.C. Case No. 20-00309) on Jan. 23,
2020. In the petition signed by Timmy R. Cox, president, the
Debtor disclosed $3,846,275 in assets and $5,412,282 in
liabilities. Judge Joseph N. Callaway oversees the case. The
Debtor tapped Ayers & Haidt, PA as its legal counsel, and Carr
Riggs & Ingram, LLC as its accountant.
TWIN RIVER: S&P Retains 'B+' Issuer Credit Rating On Watch Neg.
---------------------------------------------------------------
S&P Global Ratings assigned its 'BB-' issue-level rating and '2'
recovery rating to U.S. gaming operator Twin River Worldwide
Holdings Inc.'s $275 million incremental term loan due 2026, which
the company intends to use to repay $250 million under its revolver
that it fully drew in March 2020.
The issuer credit rating remains 'B+' because S&P believes the
company has sufficient liquidity in the form of cash balances and
revolver availability pro forma for the incremental term loan to
weather the closure of its casinos through the next 12 months and
to fund the company's acquisitions of two additional casinos from
Eldorado Resorts Inc. and one casino from Caesars Entertainment
Corp. and VICI Properties Inc. for $180 million.
In addition, S&P's base case assumes containment of the pandemic by
midyear and the beginning of a recovery in the second half of 2020.
The rating agency believes Twin River's leverage may improve below
5x by the end of 2021 after a significant spike in 2020. The rating
remains on CreditWatch where S&P placed it with negative
implications on March 20, 2020.
Despite the temporary closures of casinos in the U.S., which will
likely cause leverage to spike very high in 2020, the issuer credit
rating remains 'B+' because leverage could decline below 5x in
2021. Twin River's leverage will likely spike in 2020 because the
company will generate near-zero revenue and burn cash for as long
as properties are closed. If containment occurs midyear, the
properties should reopen, but lingering apprehensions around
crowded public spaces, the need to implement social distancing
measures, and the recession could hamper recovery. S&P believes
regional gaming markets, such as the ones that Twin River operates
in, will recover faster than destination markets such as Las Vegas,
because most customers drive to those properties instead of fly,
which reduces the cost of these trips and potential lingering
travel fears over the virus.
Environmental, social, and governance (ESG) factors relevant to the
rating action:
-- Health and safety factors
The CreditWatch listing reflects substantial uncertainty as to Twin
River's ability to recover later this year and into 2021 following
a significant deterioration in cash flow and credit measures.
"In resolving the CreditWatch placement, we plan to monitor Twin
River's prospects for reopening its casinos, assess customer demand
upon reopening including the response to likely social distancing
measures and other operational changes concerning health and
safety, and how plausible our assumed recovery path is in light of
that demand. We could lower the ratings if we no longer believed
Twin River's properties would reopen in the third quarter and begin
recovering in a manner that would allow Twin River's leverage to
improve below 5x in 2021," S&P said.
UNITED EMERGENCY: June 10 Hearing on Disclosures and Confirmation
-----------------------------------------------------------------
Due to the Covid-19 emergency, Judge Mildred Caban Flores has
ordered that a hearing on final approval of Disclosure Statement
and confirmation of the Plan filed by United Emergency Medical Corp
is scheduled, for cause, for June 10, 2020, at 9:00 a.m., at the
U.S. Bankruptcy Court, Jose V. Toledo Federal Building and US
Courthouse, 300 Recinto Sur Street, Courtroom 3, Third Floor, San
Juan, Puerto Rico.
About United Emergency
United Emergency Medical Corp. is a privately held company that
provides medical transportation services. United Emergency filed a
Chapter 11 petition (Bankr. D.P.R. Case No. 19-02477) on May 2,
2019. The case is assigned to Hon. Mildred Caban Flores. At the
time of filing, the Debtor disclosed assets of $1,681,407 and
liabilities of $825,705. The Debtor's counsel is Ruben Gonzalez
Marrero, Esq. of GONZALEZ & VELASCO LAW OFFICE.
VALERITAS HOLDINGS: June 4 Plan & Disclosures Hearing Set
---------------------------------------------------------
Valeritas Holdings, Inc. and its debtor affiliates filed with the
U.S. Bankruptcy Court for the District of Delaware a motion for
entry of an order approving the Debtors' Combined Disclosure
Statement and Joint Chapter 11 Plan of Liquidation.
On April 21, 2020, Judge Laurie Selber Silverstein granted the
motion and established the following dates and deadlines:
* June 4, 2020, at 2:00 p.m. is the combined hearing to consider
confirmation of the Combined Disclosure Statement and Plan.
* May 28, 2020, at 4:00 p.m. is fixed as the last day to file
objections to confirmation of the Combined Disclosure Statement and
Plan.
* June 1, 2020, at 4:00 p.m. is the deadline for the Debtors to
file a memorandum of law in support of the adequacy of the
information contained in the Combined Disclosure Statement and
Plan, including a reply to any objections to the Combined
Disclosure Statement and Plan, and the deadline for responses of
any party supporting Confirmation of the Combined Disclosure
Statement and Plan.
* May 28, 2020, at 4:00 p.m. is the deadline to receive ballots
by the Voting Agent.
A full-text copy of the order dated April 21, 2020, is available at
https://tinyurl.com/ya3q2bfq from PacerMonitor at no charge.
About Valeritas Holdings
Valeritas Holdings, Inc. (OTCPK: VLRXQ) --
https://www.valeritas.com/ -- is a commercial-stage medical
technology company focused on improving health and simplifying life
for people with diabetes by developing and commercializing
innovative technologies.
Valeritas' flagship product, V-Go Wearable Insulin Delivery device,
is a simple, affordable, all-in-one basal-bolus insulin delivery
option for adult patients requiring insulin that is worn like a
patch and can eliminate the need for taking multiple daily shots.
V-Go administers a continuous preset basal rate of insulin over 24
hours, and it provides discreet on-demand bolus dosing at
mealtimes. It is the only basal-bolus insulin delivery device on
the market today specifically designed keeping in mind the needs of
type 2 diabetes patients.
New Jersey-based Valeritas operates its R&D functions in
Marlborough, Mass.
Valeritas Holdings and three affiliates sought Chapter 11
protection (Bankr. D. Del. Lead Case No. 20-10290) on Feb. 9, 2020.
Valeritas Holdings disclosed $49.2 million in total assets
and$38.2 million in total debt as of Sept. 30, 2019.
Judge Laurie Selber Silverstein oversees the cases.
The Debtors tapped DLA Piper LLP (US) as legal counsel; Lincoln
International as investment banker; PricewaterhouseCoopers LLP as
financial advisor; and Kurtzman Carson Consultants LLC as claims
agent.
The U.S. Trustee for Regions 3 and 9 appointed a committee of
unsecured creditors in the Debtors' cases.
VBI VACCINES: Incurs $8.36 Million Net Loss in First Quarter
------------------------------------------------------------
VBI Vaccines Inc. reported $8.36 million on $415,000 of revenues
for the three months ended March 31, 2020, compared to a net loss
of $14.61 million on $360,000 of revenues for the three months
ended March 31, 2019.
As of March 31, 2020, the Company had $107.23 million in total
assets, $29.13 million in total current liabilities, $3.67 million
in total non-current liabilities, and $74.43 million in total
stockholders' equity.
President and CEO, Jeff Baxter, commented, "The last several months
have brought unprecedented public health and societal challenges.
Science and technology are at the forefront of everyone's mind, and
since the outbreak of COVID-19 there has been a renewed interest in
the vaccine space. An effective COVID-19 vaccine is vital to
enabling the return to normalcy. We need the collaboration of many
great minds to solve this crisis, and we are aggressively working
to be part of the solution with our recently announced
pan-coronavirus vaccine candidate. Our candidate, VBI-2901,
co-expresses SARS-CoV-2, SARS-CoV, and MERS-CoV spike proteins in a
multivalent construct that could allow for the production of
broadly reactive antibodies, which may also offer potential
protection from mutated strains of COVID-19 that may emerge over
time. In collaboration with the National Research Council of
Canada (NRC), we are evaluating and selecting the optimal vaccine
candidate, with the goal of having clinical study material
available in Q4 2020. Additionally, we aim to provide periodic
updates on the candidate development throughout 2020.
"In this time of heightened public health focus and awareness, we
continue to fire on all cylinders as we work to address other
significant public health needs. Following the successful
completion of the pivotal Phase 3 program for Sci-B-Vac, our
tri-antigenic prophylactic hepatitis B vaccine, we are working with
the FDA, EMA, and Health Canada to prepare for submissions of
regulatory approval applications in the U.S., Europe, and Canada,
beginning in the fourth quarter of 2020. Additionally, the
clinical trials for our hepatitis B immunotherapeutic and our
glioblastoma (GBM) cancer vaccine immunotherapeutic candidates have
not yet been materially impacted by the COVID-19 pandemic and are
currently on-track for their respective clinical data readouts
expected later in 2020.
"We have been working hard to ensure the safety and health of all
employees while also continuing to achieve key program milestones.
This balance has required tremendous dedication, flexibility, and
communication from every member of the VBI team. With net proceeds
of approximately $54 million from our recent equity raise added to
the balance sheet, we believe we are now well-positioned to
capitalize on the growth and value-driving opportunities ahead."
First Quarter 2020 Financial Results
* VBI ended the first quarter of 2020 with $35.8 million in
cash and cash equivalents compared to $44.2 million as of
Dec. 31, 2019. Cash position at March 31, 2020, does not
include approximately $54 million of net cash proceeds from
the April 2020 underwritten public offering.
* Net cash used in operations for the three months ended
March 31, 2020 was $7.6 million compared to $14.0 million for
the same period in 2019. This decrease was due to completion
of the Sci-B-Vac Phase 3 clinical studies.
* Cash used for purchase of property and equipment was $0.1
million for the three months ended March 31, 2020 compared to
$1.9 million for the same period in 2019. The difference is
due to capital purchases and replacements related to the
modernization and capacity increases of our manufacturing
facility in Rehovot, Israel, that occurred in the first
quarter of 2019. The modernization and capacity increases
were completed in May 2019.
* Cost of revenues was $2.6 million for the first quarter of
2020 compared to $1.2 million in the same period of 2019.
The increase is due to re-commencement of manufacturing at
the facility in Rehovot and the related costs.
* Research and development expenses were $3.2 million for the
first quarter of 2020, compared to $9.0 million for the same
period in 2019. The decrease in R&D expenses is the result
of the decrease in costs related to the Sci-B-Vac Phase 3
clinical studies, the first of which (PROTECT) completed in
June 2019, the second of which (CONSTANT) completed in
January 2020.
* General and administrative expenses were $4.1 million for the
first quarter of 2020, compared to $4.0 million for the same
period in 2019. This slight increase is due to the increase
in pre-commercial activities for Sci-B-Vac, but is largely
offset by the allocation of certain cost of revenues, related
to the temporary closure of the Rehovot facility, in the
first quarter of 2019 that did not reoccur during the first
quarter of 2020.
A full-text copy of the Quarterly Report is available for free at
the Securities and Exchange Commission's website at:
https://is.gd/ESR82M
About VBI Vaccines Inc.
VBI Vaccines Inc. (Nasdaq: VBIV) -- http://www.vbivaccines.com--
is a commercial-stage biopharmaceutical company developing a next
generation of vaccines to address unmet needs in infectious disease
and immuno-oncology. VBI is advancing the prevention and treatment
of hepatitis B, with the only trivalent hepatitis B vaccine,
Sci-B-Vac, which is approved for use and commercially available in
Israel, and recently completed its Phase 3 program in the U.S.,
Europe, and Canada, and with an immunotherapeutic in development
for a functional cure for chronic hepatitis B. VBI's enveloped
virus-like particle (eVLP) platform technology enables development
of eVLPs that closely mimic the target virus to elicit a potent
immune response. VBI's lead eVLP programs include a vaccine
immunotherapeutic candidate targeting glioblastoma (GBM) and a
prophylactic CMV vaccine candidate. VBI is headquartered in
Cambridge, MA, with research operations in Ottawa, Canada, and
research and manufacturing facilities in Rehovot, Israel.
VBI Vaccines reported a net loss of $54.81 million for the year
ended Dec. 31, 2019, compared to a net loss of $63.60 million for
the year ended Dec. 31, 2018. As of Dec. 31, 2019, the Company had
$122.20 million in total assets, $29.76 million in total current
liabilities, $4.19 million in total non-current liabilities, and
$88.25 million in total stockholders' equity.
EisnerAmper LLP, in Iselin, New Jersey, the Company's auditor since
2016, issued a "going concern" qualification in its report dated
March 5, 2020 citing that the Company has incurred, and it
anticipates it will continue to incur, significant losses and
generate negative operating cash flows and as such will require
significant additional funds to continue its development activities
to ultimately achieve commercial launch of its products. These
factors raise substantial doubt about its ability to continue as a
going concern.
VCHP WICHITA: Hires Agentis PLLC as Bankruptcy Counsel
------------------------------------------------------
VCHP Wichita, LLC, seeks authority from the United States
Bankruptcy Court for the Middle District of Florida to employ
Agentis PLLC as its bankruptcy counsel.
VCHP Wichita requires Agentis PLLC to:
a. advise the Debtor with respect to its powers and duties as
a debtor in possession and the continued management of its business
operations;
b. advise the Debtor with respect to its responsibilities in
complying with the U.S. Trustee's Operating Guidelines and
Reporting Requirements and with the rules of the Court;
c. prepare motions, pleadings, orders, applications, adversary
proceedings, and other legal documents necessary in the
administration of the case;
d. protect the interests of the Debtor and the Estate in all
matters pending before the Court; and
e. represent the Debtor in negotiations with its creditors in
the preparation of a plan.
Agentis PLLC will be paid at these hourly rates:
Attorneys $290 to $610
Paralegals $125 to $220
Jacqueline Calderin, Esq., the attorney who will be handling the
case, will charge an hourly fee of $515.
Ms. Calderin disclosed in court filings that the firm is
"disinterested" within the meaning of Section 101(14) of the
Bankruptcy Code.
The firm can be reached through:
Jacqueline Calderin, Esq.
Agentis PLLC
55 Alhambra Plaza, Suite 800
Coral Gables, FL 33134
Phone: 305.722.2002
Email: jc@agentislaw.com
About VCHP Wichita, LLC
Based in Wichita, Kansas, VCHP Wichita, LLC, filed its voluntary
petition under Chapter 11 the Bankruptcy Code (Bankr. M.D. Fla.
Case No. 20-01239) on April 8, 2020. In the petition signed by
Dmitry Tomkin, Vendian Capital Management Limited as manager of
Vendian-Covenant Hospitality Partners, LLC, the managing member,
the Debtor estimated $1 million to $10 million in both assets and
liabilities. Jacqueline Calderin, Esq. at AGENTIS PLLC represents
the Debtor as counsel.
VIDANGEL INC: Studios Object to Trustee's Amended Disclosures
-------------------------------------------------------------
Disney Enterprises, Inc., Lucasfilm Ltd. LLC, Twentieth Century Fox
Film Corporation, Warner Bros. Entertainment Inc., MVL Film Finance
LLC, New Line Productions, Inc. and Turner Entertainment Co. object
to the Trustee's Second Amended Disclosure Statement, and request
that the Court deny the Motion for Approval.
The Studios aver that approval should be denied for these reasons:
* The Trustee Does Not Disclose Any Estimate Of The Costs To
Litigate the Legality Of The DVR Model.
* The Trustee Does Not Disclose The Plan Administrator Lien And
Other Plan Supplement Documents.
* The Trustee does not provide sufficient information regarding
the form and substance of all ballots he proposes to send to
creditors and equity holders.
The Studios request the Court deny approval of the Trustee's Second
Amended D.S. and solicitation procedures. If the Court permits the
Trustee's Plan to move forward at this time, the Studios request
the Court set a disclosure and discovery schedule.
A full-text copy of the Studios' objection to Trustee's disclosure
statement dated April 21, 2020, is available at
https://tinyurl.com/y939gh43 from PacerMonitor at no charge.
Attorneys for the Studios:
Thomas B. Walper
Kelly M. Klaus
Rose Leda Ehler
Munger, Tolles & Olson LLP
350 South Grand Avenue, 50th Floor
Los Angeles, California 90071-3426
Telephone: (213) 683-9100
Facsimile: (213) 687-3702
E-mail: thomas.walper@mto.com
E-mail: kelly.klaus@mto.com
E-mail: rose.ehler@mto.com
- and -
Michael R. Johnson, Esq.
David H. Leigh, Esq.
Ray Quinney & Nebeker P.C.
36 South State Street, 14th Floor
Salt Lake City, Utah 84111
Telephone: (801) 532-1500
Facsimile: (801) 532-7543
E-mail: mjohnson@rqn.com
E-mail: dleigh@rqn.com
About Vidangel Inc.
Based in Provo, Utah, VidAngel, Inc., is an entertainment platform
empowering users to filter language, nudity, violence, and other
content from movies and TV shows on modern streaming devices such
as iOS, Android, and Roku. The company's newly launched service
empowers users to filter via their Netflix, Amazon Prime, and HBO
on Amazon Prime accounts, as well as enjoy original content
produced by VidAngel Studios. Its signature original series, Dry
Bar Comedy, now features the world's largest collection of clean
standup comedy, earning rave reviews from fans nationwide.
VidAngel filed a Chapter 11 petition (Bankr. D. Utah Case
No.17-29073) on Oct. 18, 2017. In the petition signed by CEO Neal
Harmon, the Debtor was estimated to have $1 million to $10 million
in both assets and liabilities.
Judge Kevin R. Anderson oversees the case.
The Debtor tapped Parsons Behle & Latimer, as bankruptcy counsel;
Durham Jones & Pinegar, Baker Marquart LLP, Stris & Maher LLP and
Call & Jensen, P.C. as special counsel; and Tanner LLC as auditor
and advisor. The Debtor also hired economic consulting expert
Analysis Group, Inc.
George Hofmann was appointed as the Debtor's Chapter 11 trustee.
Cohne Kinghon, P.C. is the Trustee's bankruptcy counsel. The
Trustee also hired Call & Jensen, P.C., TraskBritt, P.C., Call &
Jensen, P.C., and Magleby Cataxinos & Greenwood, P.C. as special
counsel.
VILLAGE EAST: Seeks to Hire Kaplan Johnson as Legal Counsel
-----------------------------------------------------------
Village East, Inc. seeks authority from the United States
Bankruptcy Court for the Western District of Kentucy to employ
Kaplan Johnson Abate & Bird, LLP as its counsel.
Village East requires Kaplan Johnson to:
a. to give legal advice with respect to the Debtor's powers
and duties as debtor in possession in the continued operations of
the company's business and management of estate assets;
b. to take all necessary action to protect and preserve the
estate, including the prosecution of actions on behalf of the
Debtor, the defense of any actions commenced against the Debtor,
negotiations concerning all litigation in which the Debtor is
involved, if any, and objecting to claims filed against the
Debtor's estate;
c. to prepare on behalf of the Debtor all necessary motions,
answers, orders, reports and other legal papers in connection with
the administration of the Debtor's estate herein; and
d. and to perform any and all other legal services for the
Debtor in connection with this chapter 11 case and the formulation
and implementation of the Debtor's chapter 11 plan.
Kaplan Johnson will be paid based upon its normal and usual hourly
billing rates. The firm will also be reimbursed for reasonable
out-of-pocket expenses incurred.
Charity S. Bird, partner of Kaplan Johnson Abate & Bird, LLP,
assured the Court that the firm is a "disinterested person" as the
term is defined in Section 101(14) of the Bankruptcy Code and does
not represent any interest adverse to the Debtor and its estates.
Charity S. Bird can be reached at:
Charity S. Bird, Esq.
Kaplan Johnson Abate & Bird, LLP
710 West Main Street, 4th Floor
Louisville, KY 40202
Tel: (502) 416-1630
Fax: (502) 540-8282
E-mail: cbird@kaplanjohnsonlaw.com
About Village East, Inc.
Village East, Inc. -- https://www.villageeastcommunity.com -- is a
Kentucky nonprofit corporation that operates a senior living
community. It offers assisted living apartments, independent
living patio homes, and apartments for seniors.
Village East, Inc., filed a voluntary petition under Chspter 11 of
the Bankruptcy Code (Bankr. W.D. Ky. Case No. 20-31144) on April 9,
2020. In the petition signed by Tina Newman, executive director,
the Debtor estimated $8,143,599 in assets and $9,247,199 in
liabilities. Charity S. Bird, Esq. at Kaplan Johnson Abate & Bird,
LLP represents the Debtor as counsel.
WATSON GRINDING: Hires Cummings & Houston as Accountant
-------------------------------------------------------
Watson Grinding and Manufacturing Co. seeks authority from the
United States Bankruptcy Court for the Southern District of Texas
to employ Cummings & Houston, L.L.P., as its accountant.
Watson Grinding requires Cummings & Houston to:
a) prepare any necessary federal and state income, payroll,
sales, franchise and excise tax returns and reports of the
bankruptcy estate; and
b) provide evaluations and advice to the Debtor on tax matters
which may arise, including the determination of the tax basis of
estate assets and the evaluation of the tax effects of the sale of
assets of the estate.
Cummings & Houston will be paid at the hourly rates of $110 to
$380.
Cummings & Houston will also be reimbursed for reasonable
out-of-pocket expenses incurred.
Charles C. Cummings, Jr., a partner of Cummings & Houston, assured
the Court that the firm is a "disinterested person" as the term is
defined in Section 101(14) of the Bankruptcy Code and does not
represent any interest adverse to the Debtor and its estates.
Cummings & Houston can be reached at:
Charles C. Cummings, Jr.
CUMMINGS & HOUSTON, L.L.P.
440 Louisiana St., Suite 650
Houston, TX 77002
Tel: (713) 224-8890
About Watson Grinding & Manufacturing
Watson Grinding & Manufacturing Co. --
http://www.watsongrinding.com/-- provides precision machined
parts, thermal spray coatings and grinding services to companies in
the oil and gas, chemical, and mining industries.
Watson Valve Services, Inc., -- http://watsonvalve.com/-- is a
turn-key OEM manufacturer of severe service ball valves.
Additionally, Watson Valve provides hydrostatic and pneumatic
pressure testing; oxygen service cleaning; on-site and off-site
installation support and troubleshooting; valve dis-assembly,
analysis, repair, and rebuilding; actuation system mounting and
installation; CNC and manual machining; grinding; thermal spray
coatings; coatings analysis; and non-destructive testing.
Watson Grinding and Watson Valve sought protection under Chapter 11
of the Bankruptcy Code (Bankr. S.D. Tex. Case Nos. 20-30967 and
20-30968) on Feb. 6, 2020.
At the time of the filing, Watson Grinding disclosed assets of
between $10 million and $50 million and liabilities of the same
range. Watson Valve had estimated assets of between $10 million
and $50 million and liabilities of between $500,000 and $1
million.
Judge Marvin Isgur oversees the cases.
The Debtors tapped McDowell Hetherington, LLP and Jones, Murray &
Beatty, LLC, as their legal counsel.
On Feb. 21, 2020, the United States Trustee for the Southern
District of Texas appointed the Official Committee of January 24
Claimants. The Committee retained Porter Hedges LLP, and Burns
Bowen Bair LLP, as counsel.
WEEKS HOLDINGS: Aims to Hike Renters to Fund Plan
-------------------------------------------------
Weeks Holdings, LLC, submitted a Reorganization Plan and a
Disclosure Statement.
The Debtor seeks to accomplish payments under the Plan by
reorganizing its debt and to increase rentable property to more
than one renter which will increase receivables to the Debtor to
fund the Plan.
In an effort to remedy the problems that led to the bankruptcy
filing, Debtor has implemented the following: the Debtor has a
potential new renter and potential buyer for some or all of the
real property. The potential new renter wants to lease one to two
pieces of real property. The Debtor's goal is to increase rentable
property to more than one renter which will increase receivables to
the Debtor along with restructuring the business debt.
The Debtor's assets which are subject to collateral consist of 4110
E. Spring St, Unit 1-3, Tucson, AZ 85712; 4014 E. Pima St., Tucson,
AZ 85712; 4024 E. Pima St., Tucson, AZ 85712; 4034 E. Pima St.,
Tucson, AZ 85712 and 2785 N. Calle De Romy, Tucson, AZ 85712.
The Plan classifies and treats claims as follows:
* Class 3 Property to Be Sold. This class is impaired. Debtor
will sell the collateral after the Effective Date of the Plan. Any
Secured Claim will be satisfied in full through sale of the
collateral.
* Class 5 Debtor to Make Regular Payments and Pay Arrears over
Time. These Secured Claims are Impaired and entitled to vote.
* Class 6 Debtor to Strip Lien to Value of Collateral and Pay
over Time. This class is impaired. The Debtor contends the value
of the collateral is less than the amount of the Claim. The Debtor
will pay as a Secured Claim the amount equal to the value of the
collateral as established by Bankruptcy Court order or stipulation.
The Debtor will pay the above Secured Claim in full with interest
from the Effective Date through 60 equal payments. Payments will
be due on the 20 day of the month, starting on the first month
after the Effective Date.
* Class 7 Debtor to Strip Lien. This class is impaired. Any
claim of a cvreditor whose lien is stripped is a general Unsecured
Claim and will be treated in Class 11.
* Class 8 Debtor to Adjust Terms and Pay Amount in Full over
Time. The creditor is Stearns Bank, N.A. This class is impaired
with amount of claim of $2,690,720 bearing an interest of 4.50%.
Creditor will received monthly payment of $15,000 for 25 years.
* Class 9 Priority Non-Tax Claims. This class is impaired.
Certain Priority Non-Tax Claims referred to under Sec.
507(a)(1)-(7) are entitled to priority treatment.
* Class 11 General Unsecured Claims. The Debtor believes there
are no claims in this class.
The Debtor has a projected net income of not less than $15,250 per
month for a term of 25 years.
A full-text copy of the Disclosure Statement dated April 20, 2020,
is available at https://tinyurl.com/y8vvyquu from PacerMonitor.com
at no charge.
Attorney for the Debtor:
Eric Slocum Sparks
LAW OFFICES OF ERIC SLOCUM SPARKS, P.C.
3505 North Campbell Avenue #501
Tucson, Arizona 85719
Telephone (520) 623-8330
Facsimile (520) 623-9157
About Weeks Holdings
Weeks Holdings, LLC, based in Tucson, AZ, filed a Chapter 11
petition (Bankr. D. Ariz. Case No. 20-00766) on Jan. 22, 2020. In
the petition signed by Sherre Weeks, manager, the Debtor was
estimated to have up to $50,000 in assets and $1 million to $10
million in liabilities. The Hon. Scott H. Gan oversees the case.
Eric Slocum Sparks, Esq., serves as bankruptcy counsel to the
Debtor.
WELDED CONSTRUCTION: Objectors Oppose to Disclosure Statement
-------------------------------------------------------------
Sunbelt Equipment Marketing, Inc., Sunbelt Tractor & Equipment
Company, Cross Country Infrastructure Services, Inc., f/k/a Cross
Country Pipeline Supply Co., Inc., and Outlaw Padding Company
object to the Disclosure Statement filed by debtors Welded
Construction, L.P. and Welded Construction Michigan, LLC in support
of their Chapter 11 Plan.
The Objectors claim that:
* The Disclosure Statement offers no information on the
projected amounts of professional fees or the projected amounts of
other administrative expenses. There is no information on what
amount of funds will be available to pay the nonprofessional fee
administrative expenses, or whether the funds that may be set aside
to pay them will be sufficient to pay them in full.
* It is important that the Disclosure Statement include
projected ranges for both the class of General Unsecured Claims and
the class of Surety Bond Claims. Both classes are unsecured claims,
so creditors will be entitled to know to what extent they are being
treated differentially, and in turn, whether the treatment is fair.
* A disclosure statement needs to provide a liquidation analysis
comparing the likely recoveries by creditors under the Plan against
the recoveries under a Chapter 7 liquidation of the Debtor's
estate.
* The Disclosure Statement fails to address or explain whether
the Debtors’ intent is to delay payment of an administrative
expense claim of a creditor if an objection (including any
avoidance action) were filed as to an unsecured claim asserted by
that creditor.
A full-text copy of Objectors' opposition to disclosure statement
dated April 17, 2020, is available at https://tinyurl.com/y92bw9ka
from PacerMonitor at no charge.
Attorneys for Objectors:
MORRIS JAMES LLP
Stephen M. Miller
Douglas N. Candeub
500 Delaware Avenue, Suite 1500
P.O. Box 2306
Wilmington, DE 19899-2306
Telephone: (302) 888-6800
E-mail: smiller@morrisjames.com
dcandeub@morrisjames.com
About Welded Construction
Perrysburg, Ohio-based Welded Construction, L.P., is a mainline
pipeline construction contractor capable of executing pipeline
construction projects in lengths ranging from a few hundred feet to
over 200 miles.
Welded Construction, L.P., and Welded Construction Michigan, LLC,
sought bankruptcy protection on Oct. 22, 2018 (Bankr. D. Del. Lead
Case No. 18-12378). The jointly administered cases are pending
before Judge Kevin Gross.
The Debtors tapped Young Conaway Stargatt & Taylor, LLP as counsel;
and Kurtzman Carson Consultants LLC as claims and noticing agent
and administrative advisor. The Debtors also tapped Zolfo Cooper
Management, LLC and the firm's managing director Frank Pometti who
will serve as their chief restructuring officer.
An official committee of unsecured creditors was appointed on Oct.
30, 2018. The committee tapped Blank Rome LLP as its legal counsel
and Teneo Capital LLC as its investment banker and financial
advisor.
WESTERN HOST: Municipio de San Juan Objects to Disclosure & Plan
----------------------------------------------------------------
Creditor MUNICIPIO DE SAN JUAN (MSJ) filed an objection to Western
Host Associates' Plan and Disclosure Statement.
On August 28, 2018, Creditor filed Proof of Claim No. 11 for
Municipal License Tax. Said Proof of Claim included an Unsecured
Priority portion of $49,320.23, Unsecured portion of $15,218.74 and
a total prepetition claim of $64,538.97.
The Debtor has provided no basis or evidence for its proposed
treatment of the MSJ’s tax claims, therefore the MSJ is unable to
assess said treatment.
Municipality of San Juan objects the proposed Disclosure Statement
and Plan of Reorganization as filed, for failure to consider the
amounts according to its Proof of Claim No 11.
A full-text copy of MSJ's objection dated April 21, 2020, is
available at https://tinyurl.com/ycbduasl from PacerMonitor at no
charge.
The Creditor is represented by:
CARLA FERRARI-LUGO
FERRARI LAW PSC
PO Box 988
Aguadilla, P.R. 00605
Tel: (787) 891-4255
Fax: (787) 986-7493
E-mail: ferraric@ferrarilawpr.com
About Western Host Associates
Western Host Associates, Inc., owns a four-story commercial hotel
building located at 202 San Jose Street, Old San Juan, Puerto
Rico.
The hotel is currently non-operational and is valued by the company
at $1.35 million.
The company previously sought bankruptcy protection on Nov. 14,
2012 (Bankr. D.P.R. Case No. 12-09093) and on May 19, 2011
(Bankr.D.P.R. Case No. 11-04152).
Western Host Associates sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. D.P.R. Case No. 18-02696) on May 15, 2018.
In the petition signed by Luis Alvarez, president, the Debtor
disclosed $1.36 million in assets and $4.82 million in
liabilities.
Judge Brian K. Tester oversees the case.
The Debtor tapped Gratacos Law Firm, PSC, as its legal counsel and
the Law Offices of Jose R. Olmo-Rodriguez, as special counsel.
WISE ESPRESSO: Has Until Aug. 17 to Confirm Plan & Disclosure
-------------------------------------------------------------
Judge Carla E. Craig of the U.S. Bankruptcy Court for the Eastern
District of New York has ordered that the time to confirm debtor
Wise Espresso Bar, Corp.'s Disclosure Statement together with a
Chapter 11 Plan shall be extended though and including August 17,
2020.
A full-text copy of the order dated April 17, 2020, is available at
https://tinyurl.com/y8jhnzlj from PacerMonitor at no charge.
About Wise Espresso Bar
Wise Espresso Bar, Corp., operates a cafe and restaurant serving
Russian and European Fusion cuisine in Brooklyn, New York.
The Chapter 11 case stems from the filing of two claims under the
FLSA (Federal Labor Standards Act), by two former employees of the
business.
Wise Espresso filed for Chapter 11 bankruptcy protection on March
25, 2019. Alla Kachan, Esq., at LAW OFFICES OF ALLA KACHAN, P.C.,
is the Debtor's counsel.
WITTER HARVESTING: Unsecureds to Get $2K Quarterly for 5 Years
--------------------------------------------------------------
Witter Harvesting, Inc., submitted an Amended Disclosure Statement
explaining a proposed Plan of Reorganization.
Because dairy prices are continuing to decline and the industry
itself is changing, the Debtor is also taking a closer look at
whether it needs to restructure its business model to meet the
changes in the industry and obtain work outside of the dairy
industry. Since the filing of the initial Disclosure Statement,
the COVID-19 pandemic hit the county and it is unknown to what
extent the spread of the coronavirus/COVID-19 will effect the
Debtor's business income, however, the Debtor anticipates that the
income will remain constant during the pandemic. Although it is
impossible at this time to predict the breadth or extent of the
impact the virus will have on the Debtor. The Debtor will take the
following steps to either increase income or decrease expenses to
be able to meet plan payments:
* The projections attached to the Disclosure Statement indicate
an average monthly repair cost of $9,300. The Debtor is going to
work to reduce that expense by doing repairs to the equipment "in
house" and reusing and repairing parts instead of buying new.
* The principals are going to take on more work themselves in
an effort to avoid having to increase payroll during high season
(May – October). The Debtor is only going to be using hired
staff as needed.
* The Debtor is in the process of negotiating with their
customers to have their customers supply more of the fuel than
they have in the past. Per the projections, fuel averages $16,055
per month.
* Dairy farm feed ratios are changing, meaning the dairy farmers
are going to be using more grass in their feed in an effort to
reduce supply. Accordingly, the Debtor has been in negotiations
with its customers to cut more grass this year. Grass is cut every
30 days so this will add more income to the "low season" months,
November – April.
* The Debtor has analyzed whether it needs all of the equipment
that it currently uses its operations and has made a business
decision that it cannot efficiently operate if any more equipment
is surrendered
The Plan proposes to treat claims as follows:
-- Class One (Suntrust Bank, N.A.). Suntrust Bank, N.A.'s
secured claim in the amount of $36,647 (Claim #1) secured by 2016
Chevrolet Silverado 3500 will by paid at the contract rate of 4.69%
at the contract amount of $918.35 per month until paid in full.
This claim is impaired
-- Class Two (Bank of America). Bank of America, N.A.'s secured
claim in the amount of $30,778 (Claim #2) secured by 2016 Chevrolet
Silverado 3500 will by paid at the contract rate of 4.29% at the
contract amount of $792.09 per month until paid in full. This claim
is impaired
-- Class Three (Santander Consumer USA, Inc.). Santander
Consumer USA, Inc.'s secured claim in the amount of $44,563 (Claim
#5) secured by 2015 Dodge Ram will by paid at the contract rate of
4.88% at the contract amount of $887.17 per month until paid in
full. This claim is impaired
-- Class Five (CIT Bank, N.A.): CIT Bank, N.A.'s secured claim in
the amount of $303,832 (Claim #6) secured by 2014 Krone Big X 1100
Forage. The secured portion of the claim in the amount of $200,000
will be paid at a rate of 5.25% over 60 months at a rate of $3,797
per month. This claim is impaired.
-- Class Six (PNC Equipment Finance, LLC). PNC Equipment
Finance, LLC's secured claim in the amount of $130,355 (Claim #8)
secured by 2013 Versatile Tractor. The secured portion of the
claim in the amount of $85,000 will be paid at a rate of 5.25% over
60 months at a rate of $1,614 per month. This claim is impaired
-- Class Seven (PNC Equipment Finance, LLC): PNC Equipment
Finance's secured claim in the amount of $220,058 (Claim #9)
secured by 2013 Krone Mower. The secured portion of the claim in
the amount of $140,000 will be paid at a rate of 5.25% over 60
months at a rate of $2,658 per month. This claim is impaired.
-- Class Ten (Navitas Credit Corporation): Navitas Credit
Corporation's claim in the amount of $26,076 (Claim #18) secured by
2005 Peerless Trailer. By way of the Proof of Claim, Navitas
indicates that the secured portion of the claim $22,500.
Accordingly, the secured portion of the claim shall be paid at a
rate of 5.25% over 60 months at a rate of $427.18 per month.
Navitas shall have a general unsecured claim in the amount of
$3,575.88 which shall be treated in Class 17. Navitas filed a
Proof of Claim in this matter. This claim is impaired.
-- Class Eleven (Navitas Credit Corporation). Navitas Credit
Corporation’s claim in the amount of $51,807 (Claim #19) secured
by 2017 Innovative Trailer. y way of the Proof of Claim, Navitas
indicates that the secured portion of the claim $50,000.
Accordingly, the secured portion of the claim will be paid at a
rate of 5.25% over 60 months at a rate of $949.30 per month. This
claim is impaired.
-- Class Twelve (Sumitoto Mitsui Finance). The secured claim of
Sumitoto Mitsui Finance secured claim in the amount of $320,909
(Claim #22) secured by a 2016 Versa Silage Bagger ID1014. The
secured portion of the claim in the amount of $200,000 will be paid
at a rate of 5.25% over 60 months at a rate of $3,797 per month.
This claim is impaired.
-- Class Thirteen (Summit Funding Group, Inc.). Summit Funding
Group claim in the amount of $95,628 (Claim #23) secured by 2013
Krone 12 Row Cornhead. The secured portion of the claim in the
amount of $38,000 will be paid at a rate of 5.25% over 60 months at
a rate of $721.47 per month. This claim is impaired.
-- Class Sixteen (US Bank Equipment Finance). The claim of US
Bank, N.A. d/b/a US Bank Equipment Finance claim in the amount of
$302,135 (Claim #26) is secured by 2014 Versatile Tractor Model
550DT. US Bank Equipment Finance shall have an allowed secured
claim of and an agreed upon allowed unsecured claim in the amount
of $80,135 in Class 16. The claim will be paid as follows: five
consecutive yearly payments of $44,400, due on Aug. 1, 2019
(previously paid); Aug. 1, 2020; Aug. 1, 2021; Aug. 1, 2022 and
Aug. 1, 2023. US Bank Equipment Finance filed a Proof of Claim in
this matter. This claim is impaired.
-- Class Seventeen (General Unsecured Claims). The general
unsecured claims (prior to the filing of any objections) total the
amount of $2,217,578, which will be paid over the five year term of
the Plan at the rate of $2,000 per quarter on a pro rata basis.
The payments will commence on the Effective Date of the Plan. This
claim is impaired.
-- Class Eighteen (Equity Shareholders): There shall be no
distribution to the equity holder. This claim is impaired.
As shown in the cash collateral budgets in this case and the
Monthly Operating Reports, the Debtor earns a significant amount of
its income from May – November. It then saves that excess income
to make up the deficiency due to decreased income from December –
April. In other words, although it some months the Debtor's net
income is negative, the Debtor is able to make up the shortfall
with the income it saved from the peak season.
A full-text copy of the Amended Disclosure Statement dated April
20, 2020, is available at https://tinyurl.com/yamg8zns from
PacerMonitor.com at no charge.
Attorneys for Debtor:
Dana Kaplan, Esquire
KELLEY, FULTON & KAPLAN, P.L.
1665 Palm Beach Lakes Blvd.
The Forum - Suite 1000
West Palm Beach, Florida 33401
Telephone: (561) 491-1200
Facsimile: (561) 684-3773
About Witter Harvesting
Witter Harvesting Inc. provides agricultural and crop harvesting
services in Okeechobee, Fla.
Witter Harvesting sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. S.D. Fla. Case No. 19-14063) on March 29,
2019. At the time of the filing, the Debtor estimated assets and
liabilities of between $1 million and $10 million. The case is
assigned to Judge Mindy A. Mora.
The Debtor tapped Kelley & Fulton, PL, as its bankruptcy counsel;
and CPA Tax Solutions, LLC as an accountant.
The U.S. Trustee, until further notice, will not appoint an
official committee of unsecured creditors in the Chapter 11 case.
WOMEN'S CENTER FT. LAUDERDALE: Unsecureds to Recover 100% in Plan
-----------------------------------------------------------------
Debtor Women's Center of Ft. Lauderdale, LLC (WCFL) filed with the
U.S. Bankruptcy Court for the Middle District of Florida, Orlando
Division, a Disclosure Statement describing its Plan of
Reorganization dated April 21, 2020.
Class 1 consists of the Allowed Unsecured Claims against WCFL. This
Class is Unimpaired. The Debtor will pay the holders of Class 1
Claims in ful1 with cash on the effective date.
Class 2 consists of the membership interests in Women's Center of
Ft. Lauderdale, LLC. This Class is impaired. Holders of a Class 2
interest, after payment of new value sufficient to pay all claims,
will retain their full equity interest in the same amounts,
percentages, manner and structure as existed on the Petition Date.
The Debtor will continue to exist as the Reorganized Debtor,
preserving the Women's Center of Ft. Lauderdale, LLC. After
confirmation but prior to the Effective Date all currently issued
or authorized outstanding Equity Interests in the Debtor shall be
vested in Denise Williams.
The Plan contemplates holders of the equity interests in the
Debtor, Denise Williams, will provide sufficient new value to pay
all outstanding claims in full on or before the Effective Date.
A full-text copy of the Disclosure Statement dated April 21, 2020,
is available at https://tinyurl.com/ybptl7t3 from PacerMonitor at
no charge.
The Debtor is represented by:
Jeffrey S. Ainsworth, Esquire
BransonLaw, PLLC
1501 E. Concord Street
Orlando, Florida 32803
Tel: (407) 894-6834
Fax: (407) 894-8559
E-mail: jeff@bransonlaw.com
About Women's Center of Ft. Lauderdale
Women's Center of Ft. Lauderdale, LLC operates a clinic offering
surgical and medication abortion procedures. It filed a Chapter 11
bankruptcy petition (Bankr. M.D. Fla. Case No. 19-08242) on Dec.
18, 2019. Judge Karen Jennemann is assigned to the case.
Bransonlaw, PLLC, is the Debtor's counsel.
WOMEN'S CENTER HYDE PARK: Unsecureds to Get Full Payment Under Plan
-------------------------------------------------------------------
Debtor Women's Center of Hyde Park, LLC (WCHP) filed with the U.S.
Bankruptcy Court for the Middle District of Florida, Orlando
Division, a Disclosure Statement describing its Plan of
Reorganization dated April 21, 2020.
Class 1 consists of the Allowed Unsecured Claims against WCHP.
This class is unimpaired. The Debtor will pay the holders of Class
1 Claims in ful1 with cash on the effective date.
Class 2 consists of the membership interests in Women's Center of
Hyde Park, LLC. This Class is Impaired. Holders of a Class 2
interest, after payment of new value sufficient to pay all claims,
shall retain their full equity interest in the same amounts,
percentages, manner and structure as existed on the Petition Date.
The Debtor will continue to exist as the Reorganized Debtor,
preserving the Women's Center of Hyde Park, LLC. After Confirmation
but prior to the Effective Date all currently issued or authorized
outstanding Equity Interests in the Debtor will be vested in Denise
Williams.
The Plan contemplates holders of the equity interests in the
Debtor, Denise Williams, will provide sufficient new value to pay
all outstanding claims in full on or before the Effective Date.
A full-text copy of the disclosure statement dated April 21, 2020,
is available at https://tinyurl.com/y9t5dyqa from PacerMonitor at
no charge.
The Debtor is represented by:
Jeffrey S. Ainsworth, Esquire
BransonLaw, PLLC
1501 E. Concord Street
Orlando, Florida 32803
Tel: (407) 894-6834
Fax: (407) 894-8559
E-mail: jeff@bransonlaw.com
About Women's Center of Hyde Park
Based in Orlando, Florida, Women's Center of Hyde Park, LLC, sought
Chapter 11 protection (Bankr. M.D. Fla. Case No. 19-08243) on Dec.
18, 2019, estimating less than $1 million in both assets and
liabilities. BRANSONLAW, PLLC, led by Jeffrey S. Ainsworth, Esq.,
is the Debtor's counsel.
WPB HOSPITALITY: Hires Sender & Smiley as Mediator
--------------------------------------------------
WPB Hospitality, LLC, seeks authority from the U.S. Bankruptcy
Court for the District of Colorado to employ Sender & Smiley, LLC,
as mediator to the Debtor.
WPB Hospitality requires Sender & Smiley to act as mediator for the
Debtor and American Lending Center, LLC, pursuant to the Court's
Order requiring the Debtor and American Lending to mediate Claims
Objection dispute between them in relation to the bankruptcy case.
Sender & Smiley will be paid a flat rate of $4,000, which will be
split between the Debtor and American Lending equally. The Debtor's
share of $2,000 out of the $4,000, will be paid by Wanda Bertoia or
her company, Alpine Hospitality, Inc.
John Smiley, partner of Sender & Smiley, LLC, assured the Court
that the firm is a "disinterested person" as the term is defined in
Section 101(14) of the Bankruptcy Code and does not represent any
interest adverse to the Debtor and its estates.
Sender & Smiley can be reached at:
John Smiley, Esq.
SENDER & SMILEY, LLC
600 17th Street, Suite 2800
Denver, CO 80202
Tel: (303) 454-0508
Fax: (303) 568-0102
E-mail: jsmiley@sendersmiley.com
About WPB Hospitality
WPB Hospitality, LLC is a single asset real estate company (as
defined in 11 U.S.C. Section 101(51B)) whose principal assets are
located at 16161 E. 40th Ave., Denver, Colorado.
WPB Hospitality sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. D. Colo. Case No. 18-18636) on Oct. 3,
2018. In the petition signed by Wanda Bertoia, owner, the Debtor
was estimated to have assets of less than $50,000 and liabilities
of $10 million to $50 million. Judge Elizabeth E. Brown oversees
the case. The Debtor tapped Lindquist-Kleissler & Company, LLC as
its legal counsel and CBRE, Inc. as broker.
YARBROUGH HOSPITALITY: Hires Michael K. Daniels as Counsel
----------------------------------------------------------
Yarbrough Hospitality, LLC, and its debtor-affiliates seek
authority from the U.S. Bankruptcy Court for the District of New
Mexico to employ Michael K. Daniels, as counsel to the Debtor.
Yarbrough Hospitality requires Michael K. Daniels to represent and
provide legal services to the Debtor in the Chapter 11 bankruptcy
proceedings.
Michael K. Daniels will be paid at the hourly rate of $250.
Michael K. Daniels will also be reimbursed for reasonable
out-of-pocket expenses incurred.
Michael K. Daniels, assured the Court that the firm is a
"disinterested person" as the term is defined in Section 101(14) of
the Bankruptcy Code and does not represent any interest adverse to
the Debtor and its estates.
Michael K. Daniels can be reached at:
Michael K. Daniels, Esq.
PO Box 1640
Albuquerque, NM 87103
Tel: (505) 246-9385
Fax: (505) 246-9104
About Yarbrough Hospitality
Yarbrough Hospitality, LLC, filed a Chapter 11 bankruptcy petition
(Bankr. D.N.M. Case No. 20-10881) on April 29, 2020. The Debtor
tapped Michael K. Daniels, as counsel.
[*] S&P Revises Outlook on 13 US Banks to Neg. on Economic Downturn
-------------------------------------------------------------------
S&P Global Ratings revised its outlooks to negative and affirmed
its ratings on 13 U.S. banks and their rated operating
subsidiaries.
S&P said, "We affirmed our ratings and revised to negative, from
stable, the outlooks on Ally Financial Inc., Capital One Financial
Corp., Discover Financial Services, Synchrony Financial, SLM Corp.,
American Savings Bank FSB, CIT Group Inc., East West Bancorp Inc.,
Investors Bancorp Inc., New York Community Bancorp Inc., Synovus
Financial Corp., Trustmark Corp., and Valley National Bancorp.
"We also affirmed our ratings and maintained a stable outlook on
American Express and affirmed our ratings and maintained a negative
outlook on UMB Financial Corp.
"In addition, we revised the trend on our economic risk score--one
of the two factors that drives our Banking Industry Country Risk
Assessment (BICRA) and an important input to our bank ratings--to
negative from stable for the U.S."
The COVID-19 pandemic and the associated sharp contraction in the
U.S. economy have abruptly ended a long period of good fortune for
U.S. banks and created their greatest challenge since the 2008-2009
financial crisis. The widespread halting of much business activity
and the surge in unemployment is weighing on their revenue streams
and earnings, weakening the creditworthiness of their borrowers,
and forcing them to sharply increase the allowances they set aside
for future losses on their loans.
Positively, unlike in the last crisis, U.S. banks enter this period
largely from a position of strength with capital, liquidity, and
profitability near the highest levels they have been in decades. In
addition, the extraordinary and rapid actions by the federal
government and the Federal Reserve have helped keep financial
markets functioning and are offsetting at least a portion of the
financial pain many bank customers are feeling. Without those
strengths in the banking system and actions from the government,
the fallout from the pandemic and pressure on bank ratings would
undoubtedly be far greater.
Still, in their baseline forecast, S&P's economists project U.S.
GDP to contract at a 35% annualized rate in the second quarter and
5.2% for 2020, with a gradual recovery returning the economy to its
prerecession level in the third quarter of 2021. They expect
unemployment to peak at 19% in May and end the year at 8.8%,
declining to 6.7% in 2021.
Given the severity of the downturn, S&P expects banks' asset
quality to deteriorate significantly in the coming quarters, which
speaks to the negative outlooks on bank ratings and the negative
economic risk trend on the U.S. BICRA. Banks already have been
sharply increasing their allowances for loan losses, extending
deferrals, and making other accommodations to borrowers. Whether
borrowers are ultimately able to meet the terms of the loans once
the period of accommodation ends will depend on the duration of the
pandemic and how quickly the economy rebounds.
Given that uncertainty, forecasting the ultimate level of
charge-offs is difficult, but perhaps the stress tests conducted in
recent years could serve as a guide if the economy continues to
perform poorly. For instance, the Fed estimated in its 2019 stress
test--which envisioned a longer, but shallower, downturn than the
one our economists currently expect to play out--a 5.7% loan loss
rate over the nine quarters of the severely adverse stress period
for the 18 participating banks. S&P also conducted a stress test
using loss rates similar to those in the 2008-2009 financial
crisis, which are akin to loss rates used in the Fed's severely
adverse stress test. If bank losses were to materialize at these
levels or higher, particularly over a shortened horizon, capital
declines would likely be material and downgrades could ensue.
S&P siad, "We are not yet forecasting such levels of charge-offs,
and therefore have not taken more extensive rating actions. In
fact, while we have revised our outlooks on 30 banks so far either
to negative from stable or to stable from positive, we have not
downgraded any U.S. banks up to this point (see Related Research).
That said, we expect banks that have the greatest proportional
exposures to industries most directly affected by the pandemic,
such as segments of commercial, commercial real estate (CRE)
(including multifamily), and consumer lending, to be the most
immediately negatively affected. The halting of business activity
and social distancing measures are hurting many commercial
borrowers and CRE owners, and the surge in unemployment is testing
the ability of individuals to pay their credit card, auto, and
other consumer loans. Banks that lack loan or business
diversification could be especially tested if the areas where they
have concentrations deteriorate meaningfully. The outlook revisions
we have taken have been on banks with one or more of those
characteristics, and for now, have a higher likelihood of more
substantial losses materializing.
"We believe the large U.S. banks we rate may be less immediately
and proportionally affected by the pandemic because of their
stronger diversification or greater ability to absorb that impact
at their current ratings. That includes the eight globally
systemically important banks and other large U.S. banks under
enhanced supervision. We believe the stricter regulations and
supervision they operate under, the various measures they have
taken to boost their creditworthiness since the financial crisis,
and their often superior business and loan diversification give
them protections that more concentrated banks do not have. That
said, the situation is fluid and there are downside risks to the
economy. We could take further negative actions if our expectations
for the economy worsen or more evidence emerges of deterioration in
banks' creditworthiness.
"The economic risk score of the U.S. BICRA is '3'. We could revise
it to '4' if the economy's rebound is weaker than we currently
expect, causing a surge in loan losses for banks. A change to '4'
would not lead us to change the 'bbb+' anchor, or starting point,
for our ratings on all U.S. banks. Still, a worsening of that
economic risk score would negatively affect our proprietary
risk-adjusted capital ratio (RAC) measure that we calculate on all
rated banks. Under our criteria, when the economic risk score
worsens, the risk weights we assign to exposures climbs and
therefore weighs on RAC ratios."
American Express Co.
Primary: Rian Pressman
Rationale
S&P's affirmation of the ratings on American Express (Amex)
reflects its view that the bank's financial performance will be
more resilient to the economic fallout from the COVID-19 pandemic
than its credit-card-focused peers.
Specifically, Amex's business model focuses more on higher-quality
consumers, which has resulted in lower balances to borrowers with
FICO scores of 660 or lower (the average FICO at acquisition was
about 750 in 2019) and historically better asset-quality
performance relative to peers. In addition, more than one-third of
customer borrowings were originated on charge cards, which repay
much more rapidly than traditional card loans. (Charge cards
generally lack a revolving credit feature.) Historically, the
charge card portfolio has had even lower losses than the loan book,
partly owing to the significant proportion of large corporate
customers.
Amex has demonstrated resilience through economic downturns and
performs well in the Fed's annual stress tests. This is largely
because of its spending-centric model owing to its proprietary
network, which has historically resulted in noninterest income
exceeding net interest income (NII) by more than 3x, in contrast to
peers that are highly dependent on NII. S&P said, "We expect card
spending to drop, likely precipitously in the first half of 2020,
particularly given the almost 30% of spending historically
generated by travel and entertainment. Nonetheless, we do not
expect Amex's noninterest income buffer to decline sustainably, and
we expect some rebound in spending in the latter half of the year.
We also believe that Amex's flexible expense base will allow it to
preserve profitability, as it works to cut customer acquisition and
marketing costs, and benefits from a decline in rewards and card
member services costs, which are closely correlated with card
spending."
Amex reported net income of $367 million in the first quarter,
mostly attributable to a $1.7 billion provision for credit losses.
At quarter-end, the bank's reserve coverage for card loans and
charge receivables was 6.7% and 1%, respectively. Amex's common
equity Tier 1 (CET1) ratio was 11.7%--higher than most traditional
commercial banks and above the high end of its 10%-11% long-term
target--although its regulatory capital ratios benefited from
regulatory rules regarding an extended recognition period for CECL
provisions. Liquidity resources are strong at about $41.1 billion,
or 22% of total assets, and deposits continue to grow. S&P believes
Amex has limited capital markets funding needs for 2020,
particularly given the likely decline in customer borrowings led by
charge card receivables.
The U.S. government has been executing a number of programs
designed to buttress consumer and business finances, although the
ultimate impact on default rates is unclear at this point. Similar
to its peers, Amex is offering customer remediation programs. As of
April 19, card loan and charge receivable balances in deferment
were 6% and 8%, respectively, of the total. S&P will be closely
monitoring these statistics in the future, which may be useful to
gauge the level of borrower distress and possibly the trajectory
and severity of future loan losses. (These deferments will not be
recognized as delinquent or restructured until the deferment period
ends.)
Outlook
S&P said, "The stable outlook reflects our view that Amex's
financial performance will be more resilient to the economic
fallout from the COVID-19 pandemic than its credit-card-focused
peers. Although we expect that Amex's earnings and asset quality
will likely deteriorate significantly in 2020, we believe it will
most likely remain profitable and maintain good capital and
liquidity over the next two years. Nonetheless, we believe the
increase in unemployment and weakened consumer confidence (leading
to lower consumer spending and lending activity) from the
COVID-related economic shutdown has resulted in substantial
headwinds for U.S. consumer lenders like Amex.
"We expect the recession triggered by the COVID-19 pandemic could
result in Amex modifying a meaningful portion of loans and taking
substantial credit provisions. We could lower the ratings if the
length and severity of the recession is greater or the rebound
slower than we currently anticipate or if the unique features of
Amex's business model that we have identified fail to deliver loss
resilience commensurate with its historical performance or the
Fed's stress tests. For example, Amex's profitability might not
support elevated credit provisions to the degree we currently
expect, which could occur if customer spending declines more
precipitously or for longer than we anticipate, or if its expense
base proves less flexible than we expect.
"We could also lower the rating if Amex's asset quality worsens to
a degree not commensurate with its historical performance. For
example, its higher FICO score borrowers may incur more economic
hardship than we currently expect, or government programs designed
to support small businesses may prove inadequate for the severity
of the downturn for the bank's borrowers, leading to a rapid
acceleration of customer deferrals and eventual losses." Amex is
exposed to U.S. small businesses through its card loans (20% of the
total) and charge receivables (35%), and over half of total payment
deferral requests through April 19 have been to small businesses.
The adequacy of Amex's loss buffer, including capital and loan
reserves, to absorb the evolving ramifications of the COVID-19
pandemic will be a key factor in determining the ratings. Other
factors include the maintenance of stable funding, robust
on-balance-sheet liquidity, and conservative capital management,
including limiting share repurchases until economic conditions
improve. S&P said, "We could lower the ratings if we believe that
Amex's S&P Global Ratings' RAC ratio will remain sustainably below
the lower bounds of our 7%-10% adequate range, or if we believe
that credit reserves will be insufficient to absorb losses we
expect will materialize."
An upgrade is unlikely based on weak economic conditions and
comparisons with higher-rated peers.
UMB Financial Corp.
Primary: Barbara Duberstein
Rationale
S&P said, "The affirmation of our issuer credit ratings on UMB
reflects the company's substantial contribution from its
established fee-based businesses, its strong capital ratios, and
its somewhat conservative credit culture. However, like other U.S.
regional banks, UMB's asset quality will likely be hurt in 2020 by
the sharp economic downturn caused by the COVID-19 pandemic.
Although UMB has a long track record of superior asset quality
relative to peers', we believe that UMB may have more inherent
credit quality risk than in past cycles because of the rapid growth
of its CRE business over the past six years."
In the first quarter of 2020, the company reported a $3.4 million
net loss reflecting a large $88 million loan loss provision under
the newly adopted Current Expected Credit Losses (CECL) accounting
standards. UMB estimates that a substantial 15.7% of its loan
portfolio is to highly impacted industries: oil and gas (3.3%),
multifamily/student housing (4.8%), retail CRE (3.2%), hotel CRE
(2.4%), and transportation C&I (2.1%). However, because of factors
such as the strength of sponsors, the company believes that a
subset of this exposure is potentially more vulnerable, totaling
8.7% of loans.
UMB has accommodated borrowers by modifying a substantial amount of
loans since the onset of the pandemic in March 2020. S&P believes
that some of those modified loans could become nonaccrual,
resulting in potential loan losses. UMB said modification requests
totaled 12% of total loans. Positively, UMB's reserves rose to 1.4%
of loans. The RAC ratio, based on its measure, was strong at 11.65%
as of year-end 2019.
The rating also incorporates the company's ample deposit funding,
as well as its good balance sheet liquidity, given the large
proportion of cash and securities. S&P expects UMB's preprovision
earnings to remain satisfactory, although its net interest margin
will weaken moderately because of lower interest rates, and its
substantial noninterest income may be somewhat negatively affected
by lower market values in coming quarters.
Outlook
The negative outlook reflects the possibility that, over the next
two years, UMB's asset quality could deteriorate to a level that is
no longer commensurate with the relatively high rating on the
company. We believe that the company might not be able to maintain
its track record of better than peers' loan performance, given the
economic downturn from the COVID-19 pandemic as well as possible
higher risks from its rapid commercial loan growth in recent
years.
S&P said, "We could lower the ratings on UMB over the next two
years if asset quality metrics deteriorate to a level that is no
longer in line with our currently strong assessment of UMB's risk
profile. We could also lower the rating if we expect sustained weak
profitability, a significant decline in the proportion of
noninterest income to total revenue, or a sustained decline in the
RAC ratio to below 10%.
"We could revise the outlook to stable if we believe that net loan
losses will not be substantial, and if the economic environment
rebounds so that we are more confident that UMB's asset quality,
earnings and capital will remain solid and consistently better than
peers'."
Ally Financial
Primary: Diogenes Mejia
Rationale
The revision of Ally Financial's outlook to negative reflects S&P's
view that the bank's financial performance could be more sensitive
to the economic fallout from the COVID-19 pandemic than the average
U.S. bank because of its sizable concentration in auto lending.
Approximately $104 billion of the company's $128 billion in loans
are auto related as of March 31, 2020, with retail composing 70% of
its auto portfolio and commercial loans the remaining. The company
reported that retail auto applications had decreased 50% by late
March due to the pandemic, and it has predicted retail net
charge-offs will be between 1.8% and 2.1% for the year compared
with its prior guidance of 1.4% to 1.6%. The company's
profitability, which is generally weaker than other rated banks,
also may not be sufficient to absorb rising provisions. The company
is still scheduled to close its acquisition of CardWorks Inc. in
the third quarter of 2020, which would likely further increase
provisions and charge-offs based on the subprime credit composition
of that portfolio. CardWorks had $4.7 billion in total assets as of
year-end 2019, including $3.4 of credit card loans with an average
FICO score of 630.
S&P said, "We believe the U.S. government's launch of support
programs is designed to buttress consumer and business finances,
although the ultimate impact on default rates is unclear at this
point. Similar to its peers, Ally is offering customer remediation
programs. The programs allow customers to defer payments for up to
120 days with no late fees while finance charges accrue. The
company disclosed that about 25% of its consumer auto customers had
enrolled in the program, while over 70% of their automotive-dealer
customers are receiving some kind of relief. While this
participation is higher than most peers, we believe the company has
been more proactive with its customers than some peers." However,
it remains unclear how accounts on deferral may transition to
delinquency at the end of the deferral term and ultimately charge
off. As a result of expected credit deterioration, the company also
increased reserves to 2.54% of loans from 0.99%, with 104 basis
points (bps) of this increase due to the transition to Current
Expected Credit Losses (CECL) methodology, with the remainder due
to revised economic expectations factoring in the expected impact
of the COVID-19 pandemic.
Ally reported a net loss of $319 million in the first quarter,
mostly attributable to a $903 million provision for credit losses.
At quarter-end, the bank's reserve coverage for retail auto loans
was 3.91%. Ally's CET1 ratio was 9.3%--lower than peers. The
company continues to maintain liquidity of $30 billion in mostly
cash and highly liquid securities, has only $460 million of
unsecured debt maturities for the rest of the year, and expects
continued deposit growth. Liquidity is lower than peers, in S&P's
view, with other consumer-focused banks maintaining over 20% in
liquid assets compared with 16% at Ally. Regulatory capital will be
bolstered by the company's decision to suspend share repurchases
and its election to defer CECL capital impact for two years in
accordance with regulatory guidance.
Outlook
S&P said, "The negative outlook reflects our view that Ally's
financial performance could be more sensitive to the economic
fallout from the COVID-19 pandemic than the average U.S. bank. We
attribute this sensitivity to Ally's sizable concentration in auto
lending that may face heightened risk of financial distress in the
current economic environment. We believe the increase in
unemployment levels and weakened consumer confidence (leading to
lower consumer spending and lending activity) from the
COVID-19-related economic shutdown has resulted in substantial
headwinds for U.S. consumer lenders like Ally. Our outlook also
incorporates the fluidity of the situation and downside risks to
the economic forecast over our two-year outlook horizon."
The recession triggered by the COVID-19 pandemic has resulted in
Ally modifying a meaningful portion of loans and taking substantial
credit provisions. S&P said, "We could lower the ratings if the
economic environment weakens Ally's financial performance more than
we currently anticipate. This could be caused by the length and
severity of the recession being greater or the rebound being slower
than we currently expect." For example, government programs
designed to support consumer finances may prove inadequate for the
severity of the downturn for the bank's borrowers, leading to a
rapid acceleration of loan deferrals and eventual loan losses.
Borrower behavior in terms of willingness to repay or collateral
values may also differ from norms banks' experienced in prior
downturns or simulated during stress testing, which could put
additional pressure on credit metrics. At the same time, ultra-low
interest rates will weigh on net interest income (which accounts
for more than 70% of total net revenues, potentially weakening
preprovision earnings).
The adequacy of Ally's loss buffer, including capital and loan
reserves, to absorb the evolving ramifications of the COVID-19
pandemic will be a key factor in determining the ratings. Other
factors include the maintenance of stable funding, adequate
on-balance-sheet liquidity, and conservative capital management,
including limiting share repurchases until economic conditions
improve. S&P said, "We could lower the ratings if we believe that
Ally's S&P Global Ratings' RAC ratio will remain sustainably below
the lower bounds of our 7%-10% adequate range, or if we believe
that credit reserves will be insufficient to absorb the losses we
expect will materialize."
S&P said, "We would revise the outlook back to stable if we see
convincing evidence of abatement in problem assets and
normalization of earnings in line with an economic rebound. In
order to revise the outlook to stable, we would need to see Ally
demonstrate a track record of financial resilience through the
economic downturn and a clear path to rebuilding its loan reserves,
capital, and liquidity buffers to pre-pandemic levels, excluding
the impact from CECL." An upgrade is unlikely based on comparisons
with higher-rated peers.
American Savings Bank F.S.B.
Primary: Nicholas Wetzel
Rationale
S&P said, "The outlook revision on our ratings on American Savings
Bank FSB (ASB) primarily reflects our view that the bank's earnings
and asset quality could materially decline, given the company's
geographic concentration in Hawaii, where the labor market has been
severely weakened by the COVID-19 pandemic. As of mid-April,
Hawaii's labor force had one of the highest rates of unemployment
claims of any state. While the bank's direct exposure to tourism is
manageable, the hit to leisure and hospitality sectors, which
together account for 19% of Hawaii's total jobs, may generate
significant headwinds for the bank's broader customer base.
Government programs designed to support consumers and businesses
may prove inadequate for the severity and duration of the downturn
for the bank's borrowers, leading to an acceleration of loan
deferrals and eventual loan losses. We believe ASB's loan portfolio
could therefore see deterioration given it is heavily weighted
toward residential mortgages and consumer loans.
"Additionally, we think ASB's net interest margin will decline and
overall profitability will weaken in 2020. Net income for the first
quarter of 2020 declined 24% from the first quarter of 2019,
primarily due to higher provisions for credit losses and lower net
interest income.
"Our ratings affirmation considers ASB's long history of good
credit quality, conservative loan-to-value ratios, and minimal
large direct loan exposures to the tourism/hospitality industry.
ASB has strong capital ratios, with a CET1 capital ratio at 12.75%
as of March 31, 2020; remains well funded with low-cost deposits;
and maintains adequate liquidity, in our assessment."
Outlook
S&P said, "The negative outlook on ASB reflects the potential that
we could lower the ratings in the next two years should ASB's
earnings and asset quality deteriorate to a point that could lead
to a material weakening of its capital or overall financial
standing. We expect a meaningful decline in earnings and a rise in
modified loans, nonperforming assets, and ultimately net
charge-offs in 2020." Still, given the fluidity of the situation,
the downside risks to the economic forecast, and uncertainty
regarding the effectiveness of government support programs, it
remains difficult to forecast precisely how significantly earnings
and asset quality will worsen.
S&P said, "As those variables become clearer, we could lower the
ratings on the bank if we expect the weaker earnings and asset
quality to meaningfully reduce the company's capital ratios,
liquidity, or business strength. For instance, we could also lower
our ratings on ASB if we expect the company's RAC ratio to fall
below 10%--from 11.2% as of year-end 2019--on a sustained basis.
Conversely, we could revise the outlook to stable if we see
convincing evidence of a normalization in earnings and the company
does not experience significant deterioration in its loan
performance, or the Hawaiian economy and labor market rebound
faster than we expect."
Capital One Financial Corp.
Primary: Rian Pressman
Rationale
S&P said, "The revision of our outlook on Capital One to negative
reflects our view that the bank's financial performance could be
more sensitive to the economic fallout from the COVID-19 pandemic
than the average U.S. bank because of its sizable concentration in
credit card and auto lending. Specifically, about 45% of loans are
to credit card borrowers and 23% to auto borrowers as of March 31,
2020. Moreover, about 35% of domestic card borrowers and 53% of
auto borrowers had FICO scores of 660 or below, which could make
them particularly susceptible to economic distress, in our view."
Capital One also has exposure to potentially vulnerable specialty
finance segments, including its health care, multifamily, and CRE
portfolios.
The U.S. government has been executing a number of programs
designed to buttress consumer and business finances, although the
ultimate impact on default rates is unclear at this point. Similar
to its peers, Capital One is offering customer remediation
programs. As of April 17, credit card and auto loan balances in
deferment were 2% and 11%, respectively, of the total. S&P will be
closely monitoring these statistics in the future, which may be
useful to gauge the level of borrower distress and possibly the
trajectory and severity of future loan losses. (These deferments
will not be recognized as delinquent or restructured until the
deferment period ends.)
Capital One reported a net loss of $1.3 billion in the first
quarter, mostly attributable to a $5.4 billion provision for credit
losses. At quarter-end, the bank's reserve coverage for domestic
branded cards, auto, and commercial loans was 10.1%, 3.4%, and
1.9%, respectively. Capital One's CET1 ratio was 12%--higher than
most traditional commercial banks and above its 11% long-term
target--although its regulatory capital ratios benefited from
regulatory rules regarding the exclusion of accumulated other
comprehensive income and an extended recognition period for CECL
provisions. Liquidity resources are robust at about $106 billion or
27% of total assets (a small portion of which reflects
off-balance-sheet borrowing capacity), and deposits continue to
grow. S&P believes Capital One has limited capital markets funding
needs for 2020.
Outlook
S&P said, "The negative outlook reflects our view that Capital
One's financial performance could be more sensitive to the economic
fallout from the COVID-19 pandemic than the average U.S. bank
because of its sizable concentration in consumer lending, including
to subprime consumers through its credit card and auto lending
businesses. We believe the increase in unemployment and weakened
consumer confidence (leading to lower consumer spending and lending
activity) from the COVID-related economic shutdown has resulted in
substantial headwinds for U.S. consumer lenders like Capital One.
Our outlook also incorporates the fluidity of the situation and
downside risks to the economic forecast over our two-year outlook
horizon.
"We expect the recession triggered by the COVID-19 pandemic could
result in Capital One modifying a meaningful portion of loans and
taking substantial credit provisions. We could lower the ratings if
the economic environment has a more severe impact on Capital One's
financial performance than we anticipate. This could be caused by
the length and severity of the recession being greater or the
rebound being slower than we currently expect." For example, it is
possible that government programs designed to support consumer
finances will prove inadequate for the severity of the downturn for
the bank's borrowers, leading to a rapid acceleration of loan
deferrals and eventual loan losses. Borrower behavior in terms of
willingness to repay or collateral values may also differ from the
norms that Capital One experienced in prior downturns or simulated
during stress testing, which could put additional pressure on
credit losses. At the same time, ultra-low interest rates and
higher on-balance-sheet liquidity will weigh on net interest income
(which accounts for more than 80% of total revenues), and
suppressed business activity will hurt fee income, although
operating expenses rationalization may provide an offset.
The adequacy of Capital One's loss buffer, including capital and
loan reserves, to absorb the evolving ramifications of the COVID-19
pandemic will be a key factor in determining the ratings. Other
factors include the maintenance of stable funding, robust
on-balance-sheet liquidity, and conservative capital management,
including limiting share repurchases until economic conditions
improve. S&P could lower the ratings if Capital One's S&P Global
Ratings' RAC ratio declines and remains sustainably below the lower
bounds of its 7%-10% adequate range or if we believe that credit
reserves will be insufficient to absorb the losses that we expect
will materialize.
S&P said, "We would revise the outlook back to stable if we see
convincing evidence of abatement in problem assets and
normalization of earnings in line with an economic rebound. In
order to revise the outlook to stable, we would need to see Capital
One demonstrate a track record of financial resilience through the
economic downturn and a clear path to rebuilding its loan reserves,
capital, and liquidity buffers to pre-pandemic levels." An upgrade
is unlikely based on comparisons with higher-rated peers.
CIT Group Inc.
Primary: Robert Hansen
Rationale
S&P said, "The outlook revision on our long-term rating on CIT
primarily reflects the company's likely deterioration in loan
performance, particularly among its more vulnerable loan
portfolios, as well as pressures on net interest margins (NIMs),
earnings, and capital ratios. The downturn in the U.S. economy
resulting from the COVID-19 pandemic is weighing on many of CIT's
borrowers, particularly in areas like energy, retail, hospitality,
commercial airline, and maritime. We estimate that CIT has roughly
$6.4 billion (about 15% of total loans) in loans to borrowers in
industries most affected by the pandemic."
CIT reported a net loss of $628 million in the first quarter--hurt
by a goodwill impairment charge of $339 million, large loan loss
provisions primarily due to the adoption of CECL, and lower NIMs.
It also reported higher net charge-offs and a substantial decline
in capital ratios. Specifically, CIT's CET1 ratio fell to 9.7% as
of March 31, 2020, from 12.0% as of Dec. 31, 2019, due to the
closing of the Mutual of Omaha Bank acquisition and the large net
loss in the quarter, and S&P estimates that the company's RAC
ratio, which was 12.2% as of Dec. 31, 2019, also fell by a similar
amount. Given that profitability will likely remain weak on the
back of continued pressure on asset quality and the net finance
margin, the RAC ratio could fall further in the coming quarters.
Still, we expect it to ultimately rebound above 10% in the next two
years.
CIT's earnings and capital ratios will depend in large part on how
much more it needs to add to its allowance for credit losses, which
is difficult to predict. The company significantly built its
allowance in the first quarter to 2.88% of loans from 1.56% as of
Dec. 31, 2019, but it may have to go further than that,
particularly if the economic downturn is long lasting or the
rebound is weak.
S&P said, "Despite that uncertainty, we are affirming our ratings
on CIT at this point largely because of the many improvements it
has made to its balance sheet, risk management, and funding over
the last several years. We believe CIT is a far different company
than it was in the lead-up to the financial crisis--most
importantly, with a much stronger and less risky financial
position. For instance, CIT has a solid liquidity position in our
assessment with unrestricted cash and unencumbered investment
securities of roughly $9.5 billion or 16% of total assets as of
March 31, 2020, as well as substantial contingent liquidity
sources.
"Still, we expect the pandemic and associated downturn to serve as
a good test of the strength of its underwriting and
more-specialized assets classes in areas like CRE, rail car
leasing, asset-backed finance, factoring, and cash-flow lending."
Outlook
S&P said, "The negative outlook on CIT reflects our view that we
could lower the rating given a likely deterioration in loan
performance, particularly within more vulnerable loan portfolios,
as well as pressures on the NIM, profitability, and capital ratios.
Specifically, we expect that earnings will remain under pressure
and that the dividend payout ratio will remain elevated in the near
term. Nonetheless, we view capital ratios as strong and liquidity
as adequate.
"We could lower the ratings over the next two years if further
deterioration in asset quality and earnings weighs heavily on CIT's
financial position, leading us to believe that the company will be
unable to maintain a RAC ratio above 10% after two years. Pursuant
to our criteria, a one-notch lowering of the group credit profile
(GCP), currently 'bbb-', would result in a two-notch downgrade of
the holding company. To reflect structural subordination, we
typically rate bank holding companies one notch below the GCP when
the GCP is 'bbb-' or higher, and two notches below when the GCP is
below that.
"Conversely, we could revise the outlook to stable if it becomes
clear that the company will be able to avoid the type of
asset-quality deterioration that could eat materially into its
capital and weaken its financial position, allowing it to maintain
a RAC ratio of at least 10.0% after two years."
Discover Financial Services
Primary: Shameer Bandeally
Rationale
S&P said, "Our revision of the rating outlook on DFS to negative
primarily reflects the banks higher sensitivity to the economic
fallout resulting from the COVID-19 pandemic than the average U.S.
bank because of its concentration in unsecured consumer lending.
Approximately 80% of DFS' total loans are credit cards, with
student lending and unsecured personal lending constituting 10.7%
and 8.25%, respectively. We believe the increase in unemployment
and weakened consumer confidence (leading to lower consumer
spending and lending activity) from the COVID-related economic
shutdown has resulted in substantial headwinds for U.S. consumer
lenders like DFS. While DFS' card portfolio is predominantly prime
(FICO 660 and above represent 79% of total loans), we expect higher
delinquencies, increased charge-offs (well above DFS' long-term
range of 3% to 3.5%), and lower loan and sales volumes over the
next few quarters, depending on the length and depth of this
downturn."
Similar to its peers, DFS is offering customer remediation
programs, allowing principal and interest payment relief for up to
two months. In parallel, the U.S. government has been executing a
number of programs designed to buttress consumer and business
finances, which could help consumer's liquidity. As of April 19,
credit card, student, and personal loan accounts in deferment
appeared to be quite manageable at 1.6%, 6.6%, and 5.7%,
respectively. S&P will be closely monitoring these disclosures over
the course of this year to gauge how many of these could ultimately
end up getting charged off.
DFS posted a net loss in the first quarter driven by a sizable
credit loss provision of $1 billion, reflecting CECL and the
deteriorating credit conditions with the onset of COVID. Credit
reserves now stand at 7.4% of total loans (more than double from
3.5% at Dec. 31, 2019). Given DFS' lend-centric business model, we
expect further build-up of reserves over the remainder of 2020
alongside incremental NIM compression and weaker spending volumes
(card sales volume fell 29% year over year month-to-date through
April 19). The company has suspended share repurchases and
announced expense reductions of $400 million, or about 10% of total
expenses, both of which we view positively. Funding has thus far
been stable, given the bank's much lower contribution of wholesale
funding (including card asset-backed securities) currently than
during the 2009 downturn. Contingent liquidity available to DFS is
good, with $23 billion of liquid assets (as of April 20), $6
billion of committed undrawn borrowing capacity through privately
placed asset-backed securitizations, and $35 billion in borrowing
capacity at the Federal Reserve discount window.
Outlook
S&P said, "Our revision of DFS' outlook to negative primarily
reflects the bank's higher sensitivity to the economic fallout
resulting from the COVID-19 pandemic than the average U.S. bank
because of its concentration in credit cards, as well as student
and personal lending. We believe the increase in unemployment and
weakened consumer confidence (leading to lower consumer spending
and lending activity) from the COVID-19-related economic shutdown
has resulted in substantial headwinds for U.S. consumer lenders
like DFS. Our outlook also incorporates the fluidity of the
situation and downside risks to the economic forecast over our
two-year outlook horizon.
"We expect loan modifications and charge-offs could sharply
increase if unemployment remains high for an extended period. We
believe the ultra-low interest rates and payment deferrals could
pose another headwind to operating performance given its extensive
reliance on spread revenues, which typically contributes over 80%
of total revenues. We could lower the ratings if the recession
deepens further or continues for an extended period (with a slower
rebound in employment and economic activity) such we expect DFS'
profitability and capital levels will be impaired from higher
credit losses. The adequacy of DFS' loss buffer, including capital
and loan reserves, to absorb the evolving ramifications of the
COVID-19 pandemic will be a key factor in determining the ratings.
Other factors include the maintenance of stable funding, robust
on-balance-sheet liquidity, and conservative capital management,
including limiting share repurchases until economic conditions
improve. We could lower the ratings if we believe that DFS' S&P
Global Ratings' RAC ratio will remain sustainably below the lower
bounds of our 7%-10% adequate range or if we believe that credit
reserves will be insufficient to absorb losses we expect will
materialize.
"Conversely, we would revise the outlook back to stable if we see
convincing evidence of abatement in problem assets and
normalization of earnings in line with an economic rebound." A
stable outlook would also necessitate that DFS demonstrate a track
record of financial resilience through the economic downturn and a
clear path to rebuilding its loan reserves, capital, and liquidity
buffers to pre-pandemic levels. An upgrade is unlikely based on the
level of economic turbulence in the U.S. and comparisons with
higher-rated peers.
East West Bancorp Inc.
Primary: Shameer Bandeally
Rationale
The outlook revision on EWBC primarily reflects the possibility
that asset quality could worsen substantially, given the company's
high concentration in sectors that may come under sustained stress
during the economic downturn resulting from the COVID-19 pandemic.
S&P said, "We believe the bank has somewhat higher-than-peer
exposures to commercial and industrial (C&I) and CRE sectors that
are vulnerable to extended periods of social distancing and might
suffer until the economy begins to function at full capacity.
"In particular, we believe the bank's higher-than-peer combined
exposures to retail CRE (9% of total loans), hospitality (5% of
total loans), and construction (2% of total loans) remain the most
vulnerable components of its CRE loans.
"We believe approximately 5% of total loans are to businesses that
are prone to U.S.-China trade-related turbulence (companies
primarily based in California that import goods from Greater China
for U.S. consumers); and another 5% of total loans are domiciled in
mainland China. In addition, 4% of total loans are to the oil and
gas industry. While about 60% of the oil borrowers have some
protection from hedging, we believe credit losses in this sector
will increase further given our expectations for protracted low oil
prices.
"Most of the EWBC's CRE exposures have a low loan-to-value (LTV)
ratio, and, as of April 23, fewer than 2% of total commercial loans
had deferral requests--a lower proportion than reported by many
banks. Still, we believe the bank's small and midmarket clients
based in California that have been hurt by the ongoing shutdown of
nonessential businesses could be a source of incremental credit
risk. We will continue to monitor the effectiveness of government
support programs in providing borrower relief.
"Our ratings affirmation recognizes EWBC's good track record of
better-than-peer asset quality and low loan charge-offs over the
past several years with substantially lower exposure to
construction lending. Moreover, EWBC's strong capital ratios,
including its 11.99% RAC ratio at year-end 2019 and 12.4% CET 1
ratio as of March 31, 2020, offer a solid bulwark through the
current economic downturn."
Outlook
S&P said, "Our negative outlook on EWBC reflects the possibility
that, over the next two years, nonperforming assets may rise
significantly in its CRE and lower-to-midmarket C&I portfolios,
particularly if downside risks to the pandemic-induced stress
increase. Our outlook revision also considers the potential hit to
EWBC's profitability from sustained low interest rates (given its
high-than-peer asset sensitivity) and higher provisioning.
"If loan losses increase meaningfully, leading to significant
declines in earnings or capital, we could lower the ratings. We
could also lower the ratings over the next two years if the RAC
ratio were to decline sustainably below 10% because of higher loan
loss provisions, weaker earnings, or from share buybacks. While
less likely, we would also negatively view significantly weaker
on-balance-sheet liquidity during this crisis. The adequacy of
EWBCs reserve coverage and capital ratios will also be key factors
in determining our ratings.
"Conversely, we could revise the outlook to stable if we believe
that net loan losses will be manageable and not outsize relative to
peers, or if we see convincing evidence of abatement in potential
problem assets and normalization of earnings in line with an
economic rebound."
Investors Bancorp Inc.
Primary: Catherine Mattson
Rationale
The outlook revision on S&P's ratings on Investors reflects the
possibility that asset quality could worsen substantially, given
the company's high concentration in CRE and multifamily loans,
sectors that may come under sustained stress during the economic
downturn resulting from the COVID-19 pandemic.
Total real-estate-related loans make up 72% of Investors' total
loans, including 36% multifamily, 24% residential mortgage, and 24%
CRE and construction loans. S&P said, "These loans are primarily
based in the New York metropolitan market and in New Jersey, both
of which, we believe, could face significant stress in the near
term, given the high spike in unemployment and the ongoing shutdown
of nonessential businesses. We believe that Investors' multifamily
borrowers will likely have reduced cash flows at least in the near
term, given the economic hardships on renters from the sudden sharp
rise in regional unemployment. Although Investors reported good
first-quarter asset-quality trends, a high 17% of its loans had
requested deferral of payments as of April 22, 2020, which could
suggest elevated stress among its borrowers in our view."
S&P said, "The outlook revision also reflects our expectation that
Investors will likely incur higher provisions during this economic
downturn, which could hurt earnings, even though the company's
liability sensitivity could benefit the NIM somewhat. As an offset
to these factors, we have a favorable view of Investors' good track
record of better-than-peer asset quality and low loan charge-offs.
Moreover, Investors' strong capital ratios, including its 11.76%
RAC ratio as of Dec. 31, 2019, and 13.05% CET 1 ratio as of March
31, 2020, should help to sustain it through the current economic
downturn. However, if Investors' loan losses increase meaningfully,
leading to significant declines in earnings or capital, we could
lower the ratings."
Outlook
S&P said, "Our negative outlook on Investors reflects the
possibility that, over the next two years, nonperforming assets may
rise significantly in the company's large real estate portfolios,
particularly if the economic downturn in the New York metropolitan
area and in New Jersey are sustained into 2021. Moreover, we
believe Investors' profitability could be hurt by the need to
increase loan loss reserves if credit quality deteriorates
significantly.
"We could lower the ratings over the next two years if we expect
loan net charge-offs to increase meaningfully and if we believe
that the company's profitability will be hurt for a sustained
period because of higher loan loss provisions. We could also lower
the rating if capital ratios decline to levels we no longer view as
strong. Conversely, we could revise the outlook to stable if we
believe that net loan losses will not be substantial, and if the
economic environment rebounds so that we are more confident that
Investors' asset quality will not deteriorate to a level that poses
a risk to its earnings and capital."
New York Community Bancorp Inc.
Primary: Barbara Duberstein
Rationale
S&P said "The outlook revision on our ratings on NYCB reflects the
possibility that NYCB's asset-quality performance could worsen
substantially, given the company's high concentration in the New
York metropolitan area and in multifamily lending, a sector that
may be under sustained stress during the economic downturn from the
COVID-19 pandemic. Multifamily loans comprise 75% of NYCB's total
loans and are mainly in the hard-hit New York City area.
"We believe that NYCB's landlord borrowers will likely have reduced
cash flows at least in the near term, given the economic hardships
on renters from the sudden sharp rise in regional unemployment. In
addition, NYCB has substantial retail CRE loan exposures, which we
think could be more vulnerable. NYCB reported that, as of April 28,
it agreed to allow deferred payments on approximately 12.6% of its
multifamily and CRE loans, which could suggest elevated stress
among its borrowers. However, we recognize that NYCB's multifamily
portfolio has performed well with below-peer net losses during
other economic cycles, largely reflecting NYCB's good underwriting
and the financial strength of NYCB's long-time real estate
borrowers."
Although NYCB does not have particularly strong core earnings,
unlike many other regional banks, its preprovision earnings and net
interest income will likely benefit somewhat in 2020 from the
recent drop in interest rates because of the company's liability
sensitivity. S&P said, "While NYCB's deposit-gathering franchise
remains challenged, we expect the company's funding to remain
stable from its retail deposit base and Federal Home Loan Bank
advances. We also expect that NYCB's capital ratios will remain
satisfactory."
Outlook
S&P said, "Our negative outlook on NYCB reflects the possibility
that, over the next two years, nonperforming assets may rise
significantly in NYCB's predominant multifamily portfolio, as well
as among its retail CRE loans, particularly if the economic
downturn in the New York metropolitan area is sustained into 2021.
While NYCB's core earnings will benefit from lower interest rates,
profitability could still be significantly hurt by the need to
increase loan loss reserves.
"We could lower the ratings over the next two years if we expect
net charge-offs to increase meaningfully and if we believe that the
company's profitability will be hurt for a sustained period because
of higher loan loss provisions. We would also negatively view--but
don't currently expect--significantly reduced capital ratios or
weaker balance-sheet liquidity during this crisis.
"Conversely, we could revise the outlook to stable if we believe
that net loan losses will not be substantial, and if the economic
environment rebounds so that we are more confident that NYCB's
asset quality will not deteriorate to a level that poses a risk to
NYCB's earnings and capital ratios."
SLM Corp.
Primary: Diogenes Mejia
Rationale
The revision of the outlook on SLM to negative reflects S&P views
that the bank's financial performance could be more sensitive to
the economic fallout from the COVID-19 pandemic than the average
U.S. bank because of its sizable concentration in student loans.
Approximately 93% of the company's loans outstanding were private
student loans, with the remaining mostly split between student
loans insured or guaranteed under the previously existing Federal
Family Education Loan Program and personal loans. The company
maintains cosign rates on its private student loan portfolio at
approximately 90%, with average FICO scores of just below 750.
The U.S. government has been executing a number of programs
designed to buttress consumer and business finances, although the
ultimate impact on default rates is unclear at this point. Similar
to its peers, SLM is offering customer remediation programs. The
company disclosed that 11.8% of private student loans in repayment
and forbearance were in forbearance as of April 21, 2020, up from
4.1% at year-end 2019, which is high related to peers. As a result
of CECL and expected credit deterioration, the company increased
reserves for private student loans to 7.01% as of March 31, 2020,
from 1.61% of loans at year-end 2019. The company expects losses of
2.1% of loans in repayment based on current economic forecasts and
its loan loss model. We will be closely monitoring these
statistics, which may be useful to gauge the level of borrower
distress and possibly the trajectory and severity of future loan
losses. Despite the size of SLM's current allowance, it may need to
build further, should economic conditions worsen.
SLM reported a net income of $362 million in the first quarter,
mostly attributable to a $239 million gain on the sale of a $3
billion portfolio of student loans. SLM's CET 1 ratio was
12.4%--higher than most peers--although its regulatory capital
ratios benefited from regulatory rules regarding the extended
recognition period for CECL provisions. The company continues to
maintain strong liquidity with $7.3 billion of cash and equivalents
on a balance sheet with $31.8 billion in total assets. Regulatory
capital will be bolstered by the company's decision to suspend
share repurchases and to defer CECL capital impact for two years in
accordance with regulatory guidance. There is some uncertainty as
to its funding needs, as originations in the fall will be driven by
college enrollment that could be materially weakened by COVID-19.
The company may issue in the ABS market later this year but could
also fund loans via use of brokered deposits, or use its ample
liquidity already on the balance sheet.
Outlook
S&P said, "The negative outlook reflects our view that SLM's
financial performance could be more sensitive to the economic
fallout from the COVID-19 pandemic than the average U.S. bank. We
attribute this sensitivity to SLM's sizable concentration in
student lending that may face heightened risk of financial distress
in the current economic environment. We believe the increase in
unemployment and weakened consumer confidence (leading to lower
consumer spending and lending activity) from the COVID-19-related
economic shutdown has resulted in substantial headwinds for U.S.
consumer lenders like SLM. Our outlook also incorporates the
fluidity of the situation and downside risks to the economic
forecast over our two-year outlook horizon.
"We expect the recession triggered by the COVID-19 pandemic could
result in SLM modifying a meaningful portion of loans and taking
substantial credit provisions. We could lower the ratings if the
economic environment has a more severe impact on SLM's financial
performance than we currently anticipate. This could be caused by
the length and severity of the recession being greater or the
rebound being slower than we currently expect. For example,
government programs designed to support consumer finances could
prove inadequate for the severity and duration of the downturn for
the bank's borrowers, leading to a rapid acceleration of loan
forbearance and eventual loan losses. Borrower behavior in terms of
willingness to repay may also differ from norms banks' experienced
in prior downturns or simulated during stress testing, which could
put additional pressure on credit losses.
The adequacy of SLM's loss buffer, including capital and loan
reserves, to absorb the evolving ramifications of the COVID-19
pandemic will be a key factor in determining the ratings. Other
factors include the maintenance of stable funding, robust
on-balance-sheet liquidity, and conservative capital management,
including limiting share repurchases until economic conditions
improve. S&P said, "We could lower the ratings if we believe that
SLM's S&P Global Ratings' RAC ratio will remain sustainably below
the lower bounds of our 7%-10% adequate range or if we believe that
credit reserves will be insufficient to absorb losses we expect
will materialize."
S&P would revises the outlook back to stable if it seea convincing
evidence of abatement in problem assets and normalization of
earnings in line with an economic rebound. An outlook revision to
stable would also necessitate that SLM demonstrate a track record
of financial resilience through the economic downturn and a clear
path to rebuilding its loan reserves, capital, and liquidity
buffers to pre-pandemic levels, excluding the impact from CECL. An
upgrade is unlikely based on comparisons with higher-rated peers.
Synchrony Financial
Primary: Rian Pressman
Rationale
S&P said, "Our revision of the outlook on Synchrony to negative
reflects our view that the bank's financial performance could be
more sensitive to the economic fallout from the COVID-19 pandemic
than the average U.S. bank because of its sizable concentration in
credit card lending. Synchrony specializes in private label cards,
which have historically had higher default rates because of their
lower utility to borrowers. (Fewer than 25% of outstanding balances
were originated on cards with general purpose features at March 31,
2020.) In addition, about 27% of borrowers had FICO scores of 660
or lower, which could make them particularly susceptible to
economic distress, in our view. Nonetheless, Synchrony's retailer
share arrangements (RSAs) should help mitigate some of the risk of
the higher loss profile of its private label portfolio, in our
view." The RSAs generally provide for payments to its retail
partners if the economic performance of a given program exceeds a
contractual threshold. Management's ability to reduce such payments
as the economics of a program decline provides a buffer to credit
provisions in stressed economic environments.
Another risk factor is Synchrony's exposure to troubled retailers,
including J.C. Penney Co. Inc. and The Gap Inc., which are among
its five-largest partners. Historically, the bankruptcy of a retail
partner has resulted in a reduction in borrowers' willingness to
pay. (Synchrony generally has very low exposure to the retailer
itself.) In recent years, the bank has proven its ability to manage
such situations by actively engaging borrowers, liquidating
balances, and migrating qualified customers to Synchrony-branded
rewards cards. Nonetheless, executing this strategy in a severe
economic downturn may be more difficult, thus adding incremental
pressure on asset quality.
The U.S. government has been executing a number of programs
designed to buttress consumer and business finances, although the
ultimate impact on default rates is unclear at this point. Similar
to its peers, Synchrony is offering customer remediation programs.
As of April 21, credit card balances in deferment were
approximately 2% of the total. S&P will be closely monitoring these
statistics in the future, which may be useful to gauge the level of
borrower distress and possibly the trajectory and severity of
future loan losses. (These deferments will not be recognized as
delinquent or restructured until the deferment period ends.)
Synchrony reported net income of $286 million in the first quarter,
down 74% from the prior-year period, mostly attributable to a $1.7
billion provision for credit losses. At quarter-end, the bank's
reserve for credit losses was about 11% of receivables. Synchrony's
CET 1 ratio was 14.3%--higher than its card peers--although its
regulatory capital ratios benefited from regulatory rules regarding
an extended recognition period for CECL provisions. Liquidity
resources are adequate at about $25 billion or 25% of total assets
(about one-quarter of this reflects off-balance-sheet borrowing
capacity), and deposits continue to grow. We believe Synchrony has
limited capital markets funding needs for 2020.
Outlook
S&P said, "The negative outlook reflects our view that Synchrony's
financial performance could be more sensitive to the economic
fallout from the COVID-19 pandemic than the average U.S. bank
because of its sizable concentration in credit card lending,
including to subprime consumers through its private-label credit
card business. We believe the increase in unemployment levels and
weakened consumer confidence (leading to lower consumer spending
and lending activity) from the COVID-19-related economic shutdown
has resulted in substantial headwinds for U.S. consumer lenders
like Synchrony. Our outlook also incorporates the fluidity of the
situation and downside risks to the economic forecast over our
two-year outlook horizon.
"We expect the recession triggered by the COVID-19 pandemic could
result in Synchrony modifying a meaningful portion of loans and
taking substantial credit provisions. We could lower the ratings if
the economic environment has a more severe impact on Synchrony's
financial performance than we currently anticipate. This could be
caused by the length and severity of the recession being greater or
the rebound slower than we currently expect." For example,
government programs designed to support consumer finances could
prove inadequate for the severity of the downturn for the bank's
borrowers, leading to a rapid acceleration of loan deferrals and
eventual loan losses. Borrower behavior in terms of willingness to
repay (including that of cardholders of troubled retail partners)
may also differ from norms that Synchrony experienced in prior
downturns or simulated during stress testing, which could put
additional pressure on losses. At the same time, ultra-low interest
rates and higher on-balance-sheet liquidity will weigh on net
interest income, which accounts for more than 95% of total
revenues, although reduced operating expenses may provide an
offset.
The adequacy of Synchrony's loss buffer, including capital and loan
reserves, to absorb the evolving ramifications of the COVID-19
pandemic will be a key factor in determining the ratings. The
benefit of reduced RSA payments to retail partners will also be
considered to the extent that it is an effective offset to higher
credit provisions and preserves profitability. Other factors
include the maintenance of stable funding, robust on-balance-sheet
liquidity, and conservative capital management, including limiting
share repurchases until economic conditions improve. S&P said, "We
could lower the ratings if we believe that Synchrony's S&P Global
Ratings RAC ratio will remain sustainably below the lower bounds of
our 7%-10% adequate range or if we believe that credit reserves
will be insufficient to absorb losses that we expect will
materialize."
S&P said, "We would revise the outlook to stable if we see
convincing evidence of abatement in problem assets and
normalization of earnings in line with an economic rebound. In
order for us to revise the outlook to stable, we would need to see
Synchrony demonstrate a track record of financial resilience
through the economic downturn and a clear path to rebuilding its
loan reserves, capital, and liquidity buffers to pre-pandemic
levels, while maintaining key retailer relationships." An upgrade
is unlikely based on comparisons with higher-rated peers.
Synovus Financial Corp.
Primary: Erik Oja
Rationale
The revision in S&P's outlook on Synovus to negative primarily
reflects the possibility that Synovus' asset-quality performance
might worsen substantially, given the company's high lending
exposure to sectors stressed by the COVID-19 pandemic, including
hotels, shopping centers, restaurants, nonessential retail trade,
entertainment, and energy. The company estimated this exposure to
be approximately $4.6 billion, equal to 12% of total lending, as of
March 31, 2020.
Synovus also reported that its percentage of total deferrals is
around 13% of the overall portfolio, with those industries more
directly weakened by COVID-19 carrying higher percentages. S&P
said, "Synovus reported the company has funded approximately $2.0
billion in Paycheck Protection Program (PPP) loans as of April 22,
2020. However, because of the sharp economic downturn, we see an
increasing possibility that many of the bank's commercial clients
may not return to normal levels of operation for several quarters,
or beyond the periods covered by the PPP and loan modifications. We
also consider that Synovus could see asset quality deteriorate in
its construction portfolio, which was significant at 9% of total
loans as of March 31. Thus, we expect that Synovus' troubled debt
restructurings, nonaccrual loans, and net charge-offs could
significantly increase once the PPP and modification periods end
later this year."
As a buffer to these risks, Synovus, as of March 31, had an
allowance for loan losses of $493.4 million, or 1.3% of total
loans, and satisfactory regulatory capital ratios, including a Tier
1 capital ratio of 9.97%, a CET 1 ratio of 8.72%, as well as a Dec.
31, 2019 S&P Global Ratings' RAC ratio of 9.0%. S&P's ratings
affirmation considers Synovus' improving operating performance, as
well as the numerous steps that Synovus has taken over the last
decade to diversify its loan portfolio and strengthen its balance
sheet.
Outlook
S&P said, "Our negative outlook on Synovus reflects the possibility
that, as a result of widespread closures from the pandemic-related
stress, Synovus' asset quality and capital ratios may decline later
this year to a level that may not be in line with the current
ratings.
"We could lower the ratings over the next two years if we expect a
substantial increase in nonperforming assets or net charge-offs as
a result of the COVID-19 pandemic and if we believe that the
company's profitability will be hurt for a sustained period because
of higher loan loss provisions.
"Alternately, we could revise the outlook to stable if the U.S.
economy were to rebound quickly and sustainably, such that loan
performance does not deteriorate substantially, and if we are
confident that Synovus' overall financial performance will remain
in line with similarly rated peers."
Trustmark Corp.
Primary: Erik Oja
Rationale
S&P said, "The outlook revision on our ratings on Trustmark
reflects the possibility that Trustmark's asset quality performance
might worsen substantially, given the company's relatively high
lending exposure to businesses we view as immediately vulnerable to
the economic downturn resulting from the COVID-19 pandemic.
Moreover, we believe that Trustmark's earnings could be hurt from
higher loan loss provisions and pressured net interest margins,
making it less likely that its RAC ratio will grow close to 10%
over the next two years, as we had previously thought.
"Our current ratings on Trustmark incorporate our expectation that
its RAC ratio, which was 9.2% as of Dec. 31, 2019, would increase
and approach 10% over the next two years. However, current economic
headwinds could slow this process. We recognize Trustmark's strong
regulatory capital ratios, including a Tier 1 capital ratio of
11.88%, and a CET 1 ratio of 11.35% at March 31, 2020. In addition,
Trustmark recently suspended its share repurchase program to
conserve capital.
"We could also revise our ratings on Trustmark if asset quality
deteriorates significantly. The company estimated its exposure to
highly COVID-19-sensitive businesses, including restaurants,
hotels, retail, energy, and higher-risk commercial lending, at
approximately $1.1 billion, equal to 11.7% of total loans, as of
March 31, 2020. Although loan modifications and PPP loans could
support some of these businesses for up to the next six months, we
see an increasing possibility that many of these businesses, such
as restaurants and hotels, may likely not return to normal levels
of operation for several quarters, or beyond the periods covered by
the PPP and loan modifications. We also consider that Trustmark
could see asset quality deteriorate in its construction portfolio,
which was relatively significant at 12% of total lending as of
March 31. Thus, we expect that Trustmark's troubled debt
restructurings, nonaccrual loans, and net charge-offs may
significantly increase once the PPP and modification periods end
later this year."
Outlook
S&P said, "Our negative outlook on Trustmark reflects the
possibility that its asset quality could worsen in a prolonged
economic downturn, profitability could be hurt by higher loan loss
provisions and margin pressures, or capital accumulation could
stall.
"We could lower the ratings over the next two years if we expect a
substantial increase in nonperforming assets or net charge-offs as
a result of the COVID-19 pandemic or if we project that capital
ratios will decline and the company's profitability will be hurt
for a sustained period because of higher loan loss provisions.
Alternately, we could revise the outlook to stable if the U.S.
economy rebounds quickly and sustainably, such that we believe that
net loan losses will remain manageable; if the company's RAC ratio
grows to the 10% range; and if we are confident that Trustmark's
overall financial performance will remain in line with similarly
rated peers."
Valley National Bancorp
Primary: Catherine Mattson
Rationale
S&P said, "The outlook revision on our ratings on Valley National
Bancorp primarily reflects the possibility that asset quality could
worsen substantially, given the company's high concentration in CRE
and multifamily loans, sectors that may come under sustained stress
during the economic downturn resulting from the COVID-19 pandemic.
Non-owner-occupied CRE loans comprised 49% of Valley's total loans
as of March 31, 2020, including 17% multifamily loans and 6%
construction loans. About 64% of loans were based in the New York
metropolitan market, 26% in the Florida/Alabama market, and 10% in
other geographies at Dec. 31, 2019. We believe that New York area
loans in particular could face significant stress in the near term,
given the high spike in unemployment, and the ongoing shutdown of
nonessential businesses. Nevertheless, we recognize Valley's
generally conservative lending policies, with average LTVs of less
than 60% in its CRE book, and long track record of strong loan
performance through various economic downturns.
"The outlook revision also reflects our expectation that Valley's
earnings could be hurt by the need for higher provisions during
this economic downturn. Although we recognize the recent
improvement in Valley's capital ratios, including its 8.8% RAC
ratio as of Dec. 31, 2019, capital ratios remain below peer
averages, giving it slightly less of a cushion in the event of a
prolonged downturn."
Outlook
S&P said, "Our negative outlook on Valley reflects the possibility
that, over the next two years, nonperforming assets may rise
significantly in Valley's large CRE and multifamily portfolios,
particularly if the economic downturn in the New York metropolitan
area is sustained into 2021. Moreover, we believe Valley's
profitability could be hurt by a sustained period of low interest
rates and the need to increase loan loss reserves, which could
weaken its already below peer capital levels.
"We could lower the ratings over the next two years if we expect
loan losses to increase significantly, leading to meaningful
declines in profitability or capital. We could also lower the
ratings if the company's overall financial performance is weaker
than similarly rated peers. Conversely, we could revise the outlook
to stable if we believe that net loan losses will not be
substantial, and if the economic environment rebounds so that we
are more confident that Valley's asset quality will not deteriorate
to a level that poses a risk to its earnings and capital."
A list of Affected Ratings can be viewed at:
https://bit.ly/2W5kagw
[^] BOND PRICING: For the Week from May 4 to 8, 2020
----------------------------------------------------
Company Ticker Coupon Bid Price Maturity
------- ------ ------ --------- --------
24 Hour Fitness Worldwide HRFITW 8.000 4.250 6/1/2022
24 Hour Fitness Worldwide HRFITW 8.000 2.248 6/1/2022
AMC Entertainment Holdings AMC 5.750 22.402 6/15/2025
AMC Entertainment Holdings AMC 6.125 22.933 5/15/2027
AMC Entertainment Holdings AMC 5.875 22.144 11/15/2026
Ahern Rentals Inc AHEREN 7.375 45.490 5/15/2023
Ahern Rentals Inc AHEREN 7.375 47.648 5/15/2023
Ally Financial Inc ALLY 4.000 99.221 5/15/2020
Ally Financial Inc ALLY 3.900 92.400 7/15/2020
Ally Financial Inc ALLY 3.000 93.853 6/15/2020
Ally Financial Inc ALLY 4.000 99.197 5/15/2020
Ally Financial Inc ALLY 3.000 99.221 5/15/2020
Ally Financial Inc ALLY 3.950 99.221 5/15/2020
Ally Financial Inc ALLY 3.000 99.221 5/15/2020
American Airlines 2011-1
Class A Pass
Through Trust AAL 5.250 80.860 1/31/2021
American Airlines Group AAL 5.000 45.789 6/1/2022
American Airlines Group AAL 5.000 45.559 6/1/2022
American Energy- Permian
Basin LLC AMEPER 12.000 69.250 10/1/2024
American Energy- Permian
Basin LLC AMEPER 12.000 12.170 10/1/2024
American Energy- Permian
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Aptim Corp CSVCAC 7.750 33.827 6/15/2025
Arbor Realty Trust Inc ABR 5.375 89.808 11/15/2020
BPZ Resources Inc BPZR 6.500 3.017 3/1/2049
Bank of America Corp BAC 3.250 100.000 11/13/2034
Bank of America Corp BAC 3.000 99.830 5/13/2020
Bank of New York
Mellon Corp/The BK 4.950 94.518 N/A
Basic Energy Services Inc BASX 10.750 42.841 10/15/2023
Basic Energy Services Inc BASX 10.750 42.841 10/15/2023
Beverages & More Inc BEVMO 11.500 55.115 6/15/2022
Beverages & More Inc BEVMO 11.500 52.244 6/15/2022
Bon-Ton Department Stores BONT 8.000 9.378 6/15/2021
Briggs & Stratton Corp BGG 6.875 48.751 12/15/2020
Bristow Group Inc BRS 6.250 6.442 10/15/2022
Bristow Group Inc BRS 4.500 6.375 6/1/2023
Bruin E&P Partners LLC BRUINE 8.875 1.388 8/1/2023
Bruin E&P Partners LLC BRUINE 8.875 1.446 8/1/2023
Buffalo Thunder
Development Authority BUFLO 11.000 50.125 12/9/2022
CBL & Associates LP CBL 5.250 28.816 12/1/2023
CBL & Associates LP CBL 4.600 27.059 10/15/2024
CEC Entertainment Inc CEC 8.000 7.731 2/15/2022
CSI Compressco LP / CSI
Compressco Finance Inc CCLP 7.250 35.407 8/15/2022
CalAmp Corp CAMP 1.625 99.750 5/15/2020
Calfrac Holdings LP CFWCN 8.500 5.986 6/15/2026
Calfrac Holdings LP CFWCN 8.500 6.100 6/15/2026
California Resources Corp CRC 8.000 2.980 12/15/2022
California Resources Corp CRC 6.000 1.913 11/15/2024
California Resources Corp CRC 8.000 1.066 12/15/2022
Callon Petroleum Co CPE 6.250 20.959 4/15/2023
Callon Petroleum Co CPE 6.125 16.546 10/1/2024
Callon Petroleum Co CPE 6.375 15.279 7/1/2026
Callon Petroleum Co CPE 8.250 16.248 7/15/2025
Callon Petroleum Co CPE 6.125 15.986 10/1/2024
Callon Petroleum Co CPE 6.125 15.986 10/1/2024
Capital One Financial Corp COF 2.473 99.899 5/12/2020
Capital One Financial Corp COF 5.550 83.500 N/A
Cengage Learning Inc CNGO 9.500 39.048 6/15/2024
Chaparral Energy Inc CHAP 8.750 3.624 7/15/2023
Chaparral Energy Inc CHAP 8.750 2.748 7/15/2023
Chesapeake Energy Corp CHK 11.500 5.917 1/1/2025
Chesapeake Energy Corp CHK 4.875 3.880 4/15/2022
Chesapeake Energy Corp CHK 11.500 6.106 1/1/2025
Chesapeake Energy Corp CHK 5.500 1.250 9/15/2026
Chesapeake Energy Corp CHK 5.750 3.449 3/15/2023
Chesapeake Energy Corp CHK 5.375 2.995 6/15/2021
Chesapeake Energy Corp CHK 7.000 2.973 10/1/2024
Chesapeake Energy Corp CHK 8.000 3.206 6/15/2027
Chesapeake Energy Corp CHK 8.000 2.229 1/15/2025
Chesapeake Energy Corp CHK 7.500 2.938 10/1/2026
Chesapeake Energy Corp CHK 8.000 2.000 3/15/2026
Chesapeake Energy Corp CHK 8.000 2.681 3/15/2026
Chesapeake Energy Corp CHK 8.000 3.239 6/15/2027
Chesapeake Energy Corp CHK 8.000 2.581 1/15/2025
Chesapeake Energy Corp CHK 8.000 3.239 6/15/2027
Chesapeake Energy Corp CHK 8.000 2.581 1/15/2025
Chesapeake Energy Corp CHK 8.000 2.681 3/15/2026
CorEnergy Infrastructure
Trust Inc CORR 7.000 80.000 6/15/2020
DCP Midstream LP DCP 7.375 50.555 N/A
DFC Finance Corp DLLR 10.500 67.125 6/15/2020
DFC Finance Corp DLLR 10.500 67.125 6/15/2020
Dean Foods Co DF 6.500 4.000 3/15/2023
Dean Foods Co DF 6.500 4.171 3/15/2023
Denbury Resources Inc DNR 9.000 23.891 5/15/2021
Denbury Resources Inc DNR 5.500 4.979 5/1/2022
Denbury Resources Inc DNR 9.250 26.378 3/31/2022
Denbury Resources Inc DNR 7.750 23.641 2/15/2024
Denbury Resources Inc DNR 4.625 2.127 7/15/2023
Denbury Resources Inc DNR 6.375 3.327 8/15/2021
Denbury Resources Inc DNR 9.000 27.433 5/15/2021
Denbury Resources Inc DNR 9.250 26.246 3/31/2022
Denbury Resources Inc DNR 7.500 21.536 2/15/2024
Denbury Resources Inc DNR 7.750 23.243 2/15/2024
Denbury Resources Inc DNR 7.500 21.536 2/15/2024
Diamond Offshore Drilling DOFSQ 5.700 9.183 10/15/2039
Diamond Offshore Drilling DOFSQ 3.450 10.625 11/1/2023
Diamond Offshore Drilling DOFSQ 7.875 11.250 8/15/2025
Downstream Development
Authority of the Quapaw
Tribe of Oklahoma QUAPAW 10.500 51.015 2/15/2023
ENSCO International Inc VAL 7.200 7.252 11/15/2027
EP Energy LLC / Everest
Acquisition Finance Inc EPENEG 7.750 12.000 5/15/2026
EP Energy LLC / Everest
Acquisition Finance Inc EPENEG 8.000 47.000 11/29/2024
EP Energy LLC / Everest
Acquisition Finance Inc EPENEG 9.375 1.127 5/1/2024
EP Energy LLC / Everest
Acquisition Finance Inc EPENEG 9.375 1.127 5/1/2024
EP Energy LLC / Everest
Acquisition Finance Inc EPENEG 7.750 12.216 5/15/2026
EP Energy LLC / Everest
Acquisition Finance Inc EPENEG 8.000 0.787 11/29/2024
EnLink Midstream Partners ENLK 6.000 30.000 N/A
Energy Conversion Devices ENER 3.000 7.875 6/15/2013
Energy Future Competitive
Holdings Co LLC TXU 1.235 0.072 1/30/2037
Evergy Kansas Central Inc EVRG 5.100 99.995 7/15/2020
Exantas Capital Corp XAN 4.500 48.300 8/15/2022
Exela Intermediate LLC /
Exela Finance Inc EXLINT 10.000 15.027 7/15/2023
Exela Intermediate LLC /
Exela Finance Inc EXLINT 10.000 16.420 7/15/2023
Extraction Oil & Gas Inc XOG 7.375 11.068 5/15/2024
Extraction Oil & Gas Inc XOG 5.625 11.055 2/1/2026
Extraction Oil & Gas Inc XOG 7.375 11.238 5/15/2024
Extraction Oil & Gas Inc XOG 5.625 11.074 2/1/2026
FTS International Inc FTSINT 6.250 23.966 5/1/2022
Federal Home Loan Banks FHLB 3.000 99.866 10/7/2039
Federal Home Loan Mortgage FHLMC 1.625 99.496 2/14/2022
Fenix Marine Service
Holdings Ltd NOLSP 8.000 40.770 1/15/2024
Fleetwood Enterprises Inc FLTW 14.000 3.557 12/15/2011
Ford Motor Credit Co LLC F 2.400 97.760 5/20/2020
Ford Motor Credit Co LLC F 2.300 99.105 5/20/2020
Ford Motor Credit Co LLC F 2.350 99.016 5/20/2020
Ford Motor Credit Co LLC F 2.500 98.940 5/20/2020
Forum Energy Technologies FET 6.250 31.869 10/1/2021
Frontier Communications FTR 10.500 33.125 9/15/2022
Frontier Communications FTR 11.000 33.500 9/15/2025
Frontier Communications FTR 8.750 29.000 4/15/2022
Frontier Communications FTR 7.125 29.185 1/15/2023
Frontier Communications FTR 7.625 29.750 4/15/2024
Frontier Communications FTR 6.250 27.500 9/15/2021
Frontier Communications FTR 6.875 28.000 1/15/2025
Frontier Communications FTR 7.000 28.150 11/1/2025
Frontier Communications FTR 7.875 27.750 1/15/2027
Frontier Communications FTR 9.250 26.150 7/1/2021
Frontier Communications FTR 8.875 28.500 9/15/2020
Frontier Communications FTR 11.000 29.500 9/15/2025
Frontier Communications FTR 6.800 16.782 8/15/2026
Frontier Communications FTR 10.500 32.659 9/15/2022
Frontier Communications FTR 10.500 30.875 9/15/2022
Frontier Communications FTR 11.000 32.354 9/15/2025
GameStop Corp GME 6.750 77.312 3/15/2021
GameStop Corp GME 6.750 77.713 3/15/2021
General Electric Co GE 5.000 77.000 N/A
Global Eagle Entertainment ENT 2.750 7.625 2/15/2035
Gogo Inc GOGO 6.000 74.554 5/15/2022
Goldman Sachs Group Inc/The GS 5.375 91.625 N/A
Goldman Sachs Group Inc/The GS 2.707 100.022 5/13/2020
Goodman Networks Inc GOODNT 8.000 41.624 5/11/2022
Great Western Petroleum
LLC / Great Western
Finance Corp GRTWST 9.000 88.000 9/30/2021
Great Western Petroleum
LLC / Great Western
Finance Corp GRTWST 9.000 88.750 9/30/2021
Grizzly Energy LLC VNR 9.000 6.000 2/15/2024
Grizzly Energy LLC VNR 9.000 6.000 2/15/2024
Guitar Center Inc GTRC 13.000 40.001 4/15/2022
Hertz Corp/The HTZ 6.250 19.055 10/15/2022
Hertz Corp/The HTZ 6.000 14.041 1/15/2028
Hertz Corp/The HTZ 7.625 31.118 6/1/2022
Hertz Corp/The HTZ 5.500 17.777 10/15/2024
Hertz Corp/The HTZ 7.625 31.734 6/1/2022
Hertz Corp/The HTZ 5.500 14.228 10/15/2024
Hertz Corp/The HTZ 7.125 14.173 8/1/2026
Hertz Corp/The HTZ 7.125 19.835 8/1/2026
Hertz Corp/The HTZ 7.000 18.593 1/15/2028
Hertz Corp/The HTZ 6.000 14.582 1/15/2028
Hi-Crush Inc HCR 9.500 6.991 8/1/2026
Hi-Crush Inc HCR 9.500 6.718 8/1/2026
High Ridge Brands Co HIRIDG 8.875 6.000 3/15/2025
High Ridge Brands Co HIRIDG 8.875 6.000 3/15/2025
HighPoint Operating Corp HPR 7.000 27.933 10/15/2022
HighPoint Operating Corp HPR 8.750 48.000 6/15/2025
International Wire Group ITWG 10.750 77.460 8/1/2021
International Wire Group ITWG 10.750 77.497 8/1/2021
JC Penney Corp Inc JCP 5.875 40.460 7/1/2023
JC Penney Corp Inc JCP 6.375 3.413 10/15/2036
JC Penney Corp Inc JCP 7.625 2.500 3/1/2097
JC Penney Corp Inc JCP 7.400 4.628 4/1/2037
JC Penney Corp Inc JCP 8.625 6.831 3/15/2025
JC Penney Corp Inc JCP 5.875 42.392 7/1/2023
JC Penney Corp Inc JCP 7.125 2.400 11/15/2023
JC Penney Corp Inc JCP 8.625 6.941 3/15/2025
JC Penney Corp Inc JCP 6.900 2.358 8/15/2026
Jonah Energy LLC / Jonah
Energy Finance Corp JONAHE 7.250 4.074 10/15/2025
Jonah Energy LLC / Jonah
Energy Finance Corp JONAHE 7.250 3.013 10/15/2025
KLX Energy Services
Holdings Inc KLXE 11.500 40.586 11/1/2025
KLX Energy Services
Holdings Inc KLXE 11.500 40.414 11/1/2025
KLX Energy Services
Holdings Inc KLXE 11.500 40.414 11/1/2025
LSC Communications Inc LKSD 8.750 18.250 10/15/2023
LSC Communications Inc LKSD 8.750 5.000 10/15/2023
Liberty Media Corp LMCA 2.250 48.098 9/30/2046
LoanCore Capital Markets
LLC / JLC Finance Corp JEFLCR 6.875 94.750 6/1/2020
Lonestar Resources America LONE 11.250 9.169 1/1/2023
Lonestar Resources America LONE 11.250 9.185 1/1/2023
MAI Holdings Inc MAIHLD 9.500 20.000 6/1/2023
MAI Holdings Inc MAIHLD 9.500 20.000 6/1/2023
MAI Holdings Inc MAIHLD 9.500 20.000 6/1/2023
MF Global Holdings Ltd MF 9.000 15.625 6/20/2038
MF Global Holdings Ltd MF 6.750 15.625 8/8/2016
Martin Midstream Partners
LP / Martin Midstream
Finance Corp MMLP 7.250 40.699 2/15/2021
Martin Midstream Partners
LP / Martin Midstream
Finance Corp MMLP 7.250 40.690 2/15/2021
Martin Midstream Partners
LP / Martin Midstream
Finance Corp MMLP 7.250 40.690 2/15/2021
Mashantucket Western
Pequot Tribe MASHTU 7.350 13.875 7/1/2026
McClatchy Co/The MNIQQ 6.875 2.000 3/15/2029
McClatchy Co/The MNIQQ 6.875 25.000 7/15/2031
McClatchy Co/The MNIQQ 7.150 2.000 11/1/2027
McDermott Technology
Americas Inc / McDermott
Technology US Inc MDR 10.625 5.250 5/1/2024
McDermott Technology
Americas Inc / McDermott
Technology US Inc MDR 10.625 4.762 5/1/2024
McGraw-Hill Global
Education Holdings LLC /
McGraw-Hill Global
Education Finance MCGHLL 7.875 39.420 5/15/2024
Men's Wearhouse Inc/The TLRD 7.000 22.489 7/1/2022
Men's Wearhouse Inc/The TLRD 7.000 23.963 7/1/2022
MetLife Inc MET 5.250 89.500 N/A
Morgan Stanley MS 5.550 91.034 N/A
Morgan Stanley MS 1.720 99.832 5/14/2020
Murray Energy Corp MURREN 12.000 0.001 4/15/2024
Murray Energy Corp MURREN 12.000 0.593 4/15/2024
NWH Escrow Corp HARDWD 7.500 53.088 8/1/2021
NWH Escrow Corp HARDWD 7.500 53.088 8/1/2021
Nabors Industries Inc NBR 5.750 27.682 2/1/2025
Nabors Industries Inc NBR 4.625 63.724 9/15/2021
Nabors Industries Inc NBR 5.100 32.082 9/15/2023
Nabors Industries Inc NBR 5.500 25.510 1/15/2023
Nabors Industries Inc NBR 0.750 19.750 1/15/2024
Nabors Industries Inc NBR 5.750 28.002 2/1/2025
Nabors Industries Inc NBR 5.750 28.061 2/1/2025
Neiman Marcus Group LLC/The NMG 7.125 12.489 6/1/2028
Neiman Marcus Group
LTD LLC / Neiman Marcus
Group LLC / Mariposa
Borrower / NMG NMG 8.000 8.138 10/25/2024
Neiman Marcus Group
LTD LLC / Neiman Marcus
Group LLC / Mariposa
Borrower / NMG NMG 14.000 26.000 4/25/2024
Neiman Marcus Group
LTD LLC / Neiman Marcus
Group LLC / Mariposa
Borrower / NMG NMG 8.750 7.771 10/25/2024
Neiman Marcus Group
LTD LLC / Neiman Marcus
Group LLC / Mariposa
Borrower / NMG NMG 8.000 8.229 10/25/2024
Neiman Marcus Group
LTD LLC / Neiman Marcus
Group LLC / Mariposa
Borrower / NMG NMG 14.000 27.135 4/25/2024
Neiman Marcus Group
LTD LLC / Neiman Marcus
Group LLC / Mariposa
Borrower / NMG NMG 8.750 8.053 10/25/2024
Neiman Marcus Group Ltd LLC NMG 8.000 54.000 10/15/2021
Neiman Marcus Group Ltd LLC NMG 8.000 53.875 10/15/2021
New Gulf Resources LLC/
NGR Finance Corp NGREFN 12.250 3.876 5/15/2019
Nine Energy Service Inc NINE 8.750 21.559 11/1/2023
Nine Energy Service Inc NINE 8.750 21.663 11/1/2023
Nine Energy Service Inc NINE 8.750 22.034 11/1/2023
Northwest Hardwoods Inc HARDWD 7.500 35.000 8/1/2021
Northwest Hardwoods Inc HARDWD 7.500 35.000 8/1/2021
OMX Timber Finance
Investments II LLC OMX 5.540 0.573 1/29/2020
Oasis Petroleum Inc OAS 6.875 13.601 3/15/2022
Oasis Petroleum Inc OAS 6.875 12.982 1/15/2023
Oasis Petroleum Inc OAS 6.250 12.000 5/1/2026
Oasis Petroleum Inc OAS 2.625 10.125 9/15/2023
Oasis Petroleum Inc OAS 6.500 17.535 11/1/2021
Oasis Petroleum Inc OAS 6.250 11.915 5/1/2026
Oil States International OIS 1.500 39.250 2/15/2023
Omnimax International Inc EURAMX 12.000 74.978 8/15/2020
Omnimax International Inc EURAMX 12.000 74.749 8/15/2020
Optimas OE Solutions
Holding LLC / Optimas
OE Solutions Inc OPTOES 8.625 56.917 6/1/2021
Optimas OE Solutions
Holding LLC / Optimas
OE Solutions Inc OPTOES 8.625 56.917 6/1/2021
PHH Corp PHH 6.375 57.140 8/15/2021
Party City Holdings Inc PRTY 6.125 8.154 8/15/2023
Party City Holdings Inc PRTY 6.625 7.586 8/1/2026
Party City Holdings Inc PRTY 6.625 8.027 8/1/2026
Party City Holdings Inc PRTY 6.125 8.921 8/15/2023
Pioneer Energy Services PESX 6.125 1.000 3/15/2022
Pride International LLC VAL 7.875 8.662 8/15/2040
Principal Financial Group PFG 4.700 86.678 5/15/2055
Pyxus International Inc PYX 9.875 54.000 7/15/2021
Pyxus International Inc PYX 9.875 15.942 7/15/2021
Pyxus International Inc PYX 9.875 18.491 7/15/2021
QEP Resources Inc QEP 6.875 63.296 3/1/2021
QEP Resources Inc QEP 5.250 42.448 5/1/2023
QEP Resources Inc QEP 5.375 47.741 10/1/2022
Quorum Health Corp QHC 11.625 17.250 4/15/2023
Renco Metals Inc RENCO 11.500 24.875 7/1/2003
Revlon Consumer Products REV 5.750 45.254 2/15/2021
Revlon Consumer Products REV 6.250 17.892 8/1/2024
Rolta LLC RLTAIN 10.750 6.351 5/16/2018
SESI LLC SPN 7.125 29.176 12/15/2021
SESI LLC SPN 7.750 17.762 9/15/2024
SESI LLC SPN 7.125 45.072 12/15/2021
SM Energy Co SM 6.125 35.844 11/15/2022
SM Energy Co SM 5.000 31.604 1/15/2024
SM Energy Co SM 6.750 26.208 9/15/2026
Sable Permian Resources
Land LLC / AEPB Finance AMEPER 7.375 0.932 11/1/2021
Sable Permian Resources
Land LLC / AEPB Finance AMEPER 7.375 0.932 11/1/2021
SanDisk LLC SNDK 0.500 85.310 10/15/2020
Sanchez Energy Corp SNEC 7.250 1.040 2/15/2023
Sanchez Energy Corp SNEC 6.125 0.600 1/15/2023
Sanchez Energy Corp SNEC 7.250 1.022 2/15/2023
SandRidge Energy Inc SD 7.500 0.500 2/15/2023
Sears Holdings Corp SHLD 6.625 9.875 10/15/2018
Sears Holdings Corp SHLD 8.000 1.175 12/15/2019
Sears Holdings Corp SHLD 6.625 3.013 10/15/2018
Sears Roebuck Acceptance SHLD 7.500 1.000 10/15/2027
Sears Roebuck Acceptance SHLD 6.750 1.231 1/15/2028
Sears Roebuck Acceptance SHLD 6.500 1.000 12/1/2028
Sempra Texas Holdings Corp TXU 5.550 13.500 11/15/2014
Stearns Holdings LLC STELND 9.375 45.375 8/15/2020
Stearns Holdings LLC STELND 9.375 45.375 8/15/2020
Summit Midstream Holdings
LLC / Summit Midstream
Finance Corp SUMMPL 5.750 25.672 4/15/2025
Summit Midstream Holdings
LLC / Summit Midstream
Finance Corp SUMMPL 5.500 29.857 8/15/2022
Summit Midstream Partners SMLP 9.500 7.750 N/A
Teligent Inc/NJ TLGT 4.750 38.167 5/1/2023
TerraVia Holdings Inc TVIA 5.000 4.644 10/1/2019
TerraVia Holdings Inc TVIA 6.000 4.644 2/1/2018
Tesla Energy Operations TSLAEN 3.600 88.806 6/11/2020
Tesla Energy Operations TSLAEN 3.600 88.806 5/21/2020
Tesla Energy Operations TSLAEN 3.600 92.505 8/6/2020
Tilray Inc TLRY 5.000 33.500 10/1/2023
Transworld Systems Inc TSIACQ 9.500 24.250 8/15/2021
Transworld Systems Inc TSIACQ 9.500 24.250 8/15/2021
Tupperware Brands Corp TUP 4.750 30.500 6/1/2021
Tupperware Brands Corp TUP 4.750 30.108 6/1/2021
Tupperware Brands Corp TUP 4.750 30.108 6/1/2021
UCI International LLC UCII 8.625 4.780 2/15/2019
Ultra Resources Inc/US UPL 7.125 0.050 4/15/2025
Ultra Resources Inc/US UPL 7.125 1.000 4/15/2025
Unit Corp UNTUS 6.625 8.176 5/15/2021
ViacomCBS Inc VIAC 4.500 103.168 3/1/2021
W&T Offshore Inc WTI 9.750 38.771 11/1/2023
W&T Offshore Inc WTI 9.750 38.518 11/1/2023
Western Alliance Bank WAL 5.000 92.971 7/15/2025
Western Asset Mortgage
Capital Corp WMC 6.750 48.000 10/1/2022
Whiting Petroleum Corp WLL 6.625 8.250 1/15/2026
Whiting Petroleum Corp WLL 5.750 7.750 3/15/2021
Whiting Petroleum Corp WLL 6.250 7.125 4/1/2023
Whiting Petroleum Corp WLL 6.625 6.750 1/15/2026
Whiting Petroleum Corp WLL 6.625 8.100 1/15/2026
Windstream Services LLC /
Windstream Finance Corp WIN 10.500 5.875 6/30/2024
Windstream Services LLC /
Windstream Finance Corp WIN 9.000 5.250 6/30/2025
Windstream Services LLC /
Windstream Finance Corp WIN 9.000 5.231 6/30/2025
Windstream Services LLC /
Windstream Finance Corp WIN 7.500 2.356 6/1/2022
Windstream Services LLC /
Windstream Finance Corp WIN 6.375 2.500 8/1/2023
Windstream Services LLC /
Windstream Finance Corp WIN 8.750 2.956 12/15/2024
Windstream Services LLC /
Windstream Finance Corp WIN 6.375 2.496 8/1/2023
Windstream Services LLC /
Windstream Finance Corp WIN 10.500 3.000 6/30/2024
Windstream Services LLC /
Windstream Finance Corp WIN 8.750 2.956 12/15/2024
Windstream Services LLC /
Windstream Finance Corp WIN 7.750 1.260 10/1/2021
rue21 inc RUE 9.000 1.305 10/15/2021
*********
Monday's edition of the TCR delivers a list of indicative prices
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