/raid1/www/Hosts/bankrupt/TCR_Public/200514.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Thursday, May 14, 2020, Vol. 24, No. 134
Headlines
ACHAOGEN INC: May 28 Hearing on Disclosure Statement
AERO-MARINE TECH: Court Conditionally Approves Disclosure Statement
AGY HOLDING: BlackRock TCP Values $11.5-Mil. Loan at 2% of Face
AKORN INC: Discussions Regarding Chapter 11 Filing Ongoing
ALASKA COMMUNICATIONS: Egan-Jones Cuts Sr. Unsec. Ratings to CCC+
ALASKA UROLOGICAL: Committee Hires Dorsey & Whitney as Counsel
ALLY FINANCIAL: Moody's Affirms 'Ba1' Issuer Rating
ALPHATEC HOLDINGS: Reports $20.7 Million Net Loss for 1st Quarter
ALTA MESA: Court Conditionally Approves Disclosure Statement
ALTERRA MOUNTAIN: Moody's Alters Outlook on B1 CFR to Negative
AMERANT BANCORP: Fitch Alters Outlook on 'BB+' LT IDR to Negative
AMERICAN CENTER: Peterson/Clearstream Share Used to Fund Claims
AMERICAN GREETINGS: S&P Alters Outlook to Negative, Affirms 'B' ICR
ARCHDIOCESE OF SANTA FE: Seeks Approval to Hire Real Estate Broker
ARDEN HOLDINGS: Unsecureds Get $13,676 Under Plan
ARENA EQUITY: Taps Lambert Coffin as Litigation Counsel
AREWAY ACQUISITION: Taps Martinet Recchia as Accountant
ARMOR HOLDCO: Moody's Withdraws Caa1 Corp. Family Rating
AVIS BUDGET: Egan-Jones Lowers Senior Unsecured Ratings to CCC+
BANFF PARENT: S&P Affirms 'B-' ICR on Compuware Acquisition
BARNARD'S TRANSFER: Case Summary & 20 Largest Unsecured Creditors
BAUSCH HEALTH: Fitch Rates Senior Unsecured Notes 'B/RR4'
BAUSCH HEALTH: Moody's Rates New Senior Unsecured Notes 'B3'
BECTON DICKINSON: Moody's Rates New Senior Unsecured Notes 'Ba1'
BLACKSTONE MORTGAGE: Moody's Rates Term Loan B Add-On 'Ba2'
BLACKWOOD REDEVELOPMENT: PSB Credit Services Object to Disclosures
BLUEPOINT MEDICAL: Has Until June 9 to File New Plan & Disclosure
BOXER PARENT: Moody's Affirms B3 CFR on Proposed Acquisition
CARBO CERAMICS: Appointment of Equity Committee Sought
CARMAX INC: Egan-Jones Cuts Sr. Unsecured Ratings to BB-
CENTRAL ARKANSAS RADIATION: Fitch Affirms BB+ on $48.2MM 2013 Bonds
CF INDUSTRIES: S&P Affirms 'BB+' ICR, Alters Outlook to Stable
CHART INDUSTRIES: Egan-Jones Cuts Senior Unsecured Ratings to BB+
CLEAVER-BROOKS INC: Moody's Cuts CFR & Sr. Secured Rating to Caa1
COGECO COMMUNICATIONS: Moody's Affirms B1 CFR, Outlook Stable
COMPLETE ROOFING: Seeks to Hire David W. Steen as Counsel
COSTA HOLLYWOOD: Unsecured Claims Reduced to $8.5M
CP ENERGY: Prospect Values $24MM Loan at 26% of Face
CREDIT ACCEPTANCE: S&P Alters Outlook to Negative, Affirms 'BB' ICR
D J HARCEG TRUCKING: Has May 20 Deadline to File Plan & Disclosures
DALF ENERGY: Seeks to Hire Christopher B. Payne as Special Counsel
DALF ENERGY: Seeks to Hire Crowe & Dunlevy as Special Counsel
DANCEL LLC: Seeks to Hire Zarian Firm as Business Broker
DARDEN RESTAURANTS: Egan-Jones Cuts Local Curr. Unsec. Rating to BB
DESTILERIA NACIONAL: Taps Isabel Fullana-Fraticelli as Counsel
DIAMOND OFFSHORE: Egan-Jones Lowers Senior Unsecured Ratings to D
DIAMOND OFFSHORE: U.S. Trustee Appoints Creditors' Committee
DICK'S SPORTING: Egan-Jones Cuts Local Currency Unsec. Rating to BB
DIVERSITECH HOLDINGS: S&P Alters Outlook to Neg., Affirms 'B' ICR
DUQUESNE, PA: S&P Puts 'BB' Rating on 2015 GO Bonds on Watch Neg.
EDMENTUM ULTIMATE: BlackRock Values $18MM Loan at 63% of Face
ELWYN INC: S&P Lowers 2017 Bond Rating to 'BB' on Heightened Risk
ENGINE GROUP: Moody's Withdraws Caa2 Corp. Family Rating
EXTRACTECH LLC: Case Summary & 20 Largest Unsecured Creditors
FATSPI & SON: U.S. Trustee Unable to Appoint Committee
FOODFIRST GLOBAL: Gordon Food, WPG Appointed as Committee Members
FORESIGHT ENERGY: Committee Hires Whiteford Taylor as Counsel
FOXTROT UNITED: Voluntary Chapter 11 Case Summary
FREEDOM OIL: Case Summary & 29 Unsecured Creditors
FTS INT'L: Moody's Cuts CFR & Senior Secured Rating to 'Ca'
GAP INC: Egan-Jones Lowers Senior Unsecured Ratings to B
GAP INC: S&P Affirms 'BB-' ICR on Improved Liquidity Position
GG/MG INC: Case Summary & 20 Largest Unsecured Creditors
GNC HOLDINGS: Egan-Jones Cuts Local Currency Unsec. Rating to D
GNC HOLDINGS: Incurs $200.1 Million Net Loss in First Quarter
GOGO INC: Widens Net Loss to $84.8 Million in First Quarter
HALLIBURTON COMPANY: Egan-Jones Cuts Sr. Unsecured Ratings to BB+
HALS REALTY: U.S. Trustee Unable to Appoint Committee
HERC HOLDINGS: Egan-Jones Lowers Senior Unsecured Ratings to CC
IAA INC: Fitch Affirms BB- LT Issuer Default Rating, Outlook Stable
IANTHUS CAPITAL: Skips $4.4M Interest Payment, CEO Steps Down
IGLESIA ROCA: Ordered to Report Status of Plan by May 28
IMAGINE GROUP: Medley Values $3-Mil. Loan at 13% of Face
INTERNAP TECHNOLOGY: Unsecureds Unimpaired Under Plan
JILL ACQUISITION: Reportedly Hired Centerview, Kirkland
JOHN DAUGHERTY: U.S. Trustee Appoints Creditors' Committee
JPM REALTY: June 25 Plan Confirmation Hearing Set
L BRANDS: Egan-Jones Lowers Senior Unsecured Ratings to CC
LAMAR ADVERTISING: Moody's Lowers CFR to Ba3, Outlook Stable
LEGACY JH762: U.S. Trustee Objects to Disclosure Statement
LEGRACE CORP: U.S. Trustee Objects to Disclosure Statement
LSI CORP: Egan-Jones Withdraws BB+ Senior Unsecured Ratings
LUCKY BUMS: June 4 Hearing on Disclosure Statement
LUCKY BUMS: Unsecured Creditors Owed Less Than $5K to Get 25%
M2 SYSTEMS: Claims to be Paid From Infusions and Ongoing Operations
MACK-CALI REALTY: Egan-Jones Lowers Senior Unsecured Ratings to BB
MARRONE BIO: Incurs $7 Million Net Loss in First Quarter
MATCH GROUP: Moody's Alters Outlook on Ba2 CFR to Negative
MERITAGE HOMES: Moody's Affirms Ba2 Corp. Family Rating
MIAMI AIR INTERNATIONAL: Committee Hires Bast Amron as Counsel
MICHAELS STORES: Egan-Jones Cuts Local Currency Unsec. Rating to B-
MOHEGAN TRIBAL: Moody's Rates $100MM 1st Lien Term Loan A-2 'Caa1'
MOHEGAN TRIBAL: S&P Downgrades ICR to 'CCC+'; Outlook Negative
MORAN FOODS: Moody's Hikes CFR to B3, Outlook Stable
MOSIER MANAGEMENT: U.S. Trustee Unable to Appoint Committee
MURRAY METALLURGICAL: Gets OK to Hire Hilco as Valuation Expert
NEIMAN MARCUS: S&P Lowers ICR to 'D' on Chapter 11 Filing
NEIMAN MARCUS: Watchtell, Vinson Represent Term Lender Group
NORTHWEST HARDWOODS: Moody's Cuts CFR & Sr. Secured Rating to Ca
OFFICE DEPOT: Moody's Withdraws Ba3 Corp. Family Rating
OMEROS CORP: Incurs $29 Million Net Loss in First Quarter
OMNIMAX INT'L: Moody's Cuts CFR to Ca & Sr. Sec. Rating to Caa3
OUTFRONT MEDIA: Moody's Cuts CFR to B1 & Alters Outlook to Negative
OXBOW CARBON: S&P Lowers ICR to 'B+' on Declining Sales Volumes
PACIFIC WORLD: Prospect Values $105MM Loan at 32% of Face
PINNACLE GROUP: Disclosure Statement Hearing Reset to June 25
PIONEER ENERGY: McKool, Fried Represent Noteholder Group
PLAZE INC: Moody's Lowers CFR to B3, Outlook Stable
POINT.360: Medley Values $2.7-Mil. Loan at 7% of Face
PREMIER ON 5TH: Debtor Will Liquidate its Asset to Pay Claims
PRESTIGE HEATING: June 2 Hearing on Confirmation and Disclosures
PROFESSIONAL RESOURCES: Gets OK to Hire Keith Williams & Associates
PROJECT LEOPARD: Moody's Affirms 'B2' CFR, Outlook Negative
PTSI CONSTRUCTION: Seeks to Hire E. P. Bud Kirk as Attorney
RADIAN GROUP: Moody's Rates $525MM Senior Unsecured Notes 'Ba1'
RALSTON, NE: S&P Puts 'BB' Bond Rating on CreditWatch Negative
RAVN AIR: Unsecureds to Split "Creditors' Fund" in Liquidating Plan
RED VENTURES: S&P Downgrades ICR to 'B+'; Outlook Negative
REGIONAL SITE: Court Conditionally Approves Disclosure Statement
REVLON CONSUMER: Widens Net Loss to $212 Million in First Quarter
REVLON INC: Egan-Jones Cuts Senior Unsecured Debt Ratings to C
RITE AID: Egan-Jones Lowers Commercial Unsecured Ratings to D
ROMANS HOUSE: Unsecureds Owed $1.64M to Get $1.02M Under Plan
RPM INT'L: Egan-Jones Lowers Sr. Unsecured Ratings to BB
RUSTY GOLD: Seeks to Hire Daniel L. Swires as Accountant
SAFE FLEET: Moody's Alters Outlook on B3 CFR to Negative
SALUBRIO L: Seeks to Hire M B Lawhon as Special Counsel
SANDVINE CORP: Moody's Affirms 'B3' CFR, Outlook Stable
SARAI SERVICES: Claims to be Paid From Normal Cash Flow
SARATOGA & NORTH CREEK: U.S. Trustee Unable to Appoint Committee
SAVE MONEY AND RETAIN: Hires Mackinnon Law as Co-Counsel
SCIENTIFIC GAMES: Widens Net Loss to $155-Mil. in First Quarter
SEI HOLDING I: Moody's Cuts CFR to Caa1 & Alters Outlook to Neg.
SHANNON STALEY: Integrative Staffing Objects to Disclosure
SHANNON STALEY: National Community Objects to Disclosure Statement
SOUTHLAND ROYALTY: F&S Trucking Removed as Committee Member
SPECTRUM HOLDINGS: Moody's Lowers CFR to Caa2, Outlook Stable
SPEEDCAST INTERNATIONAL: US Trustee Appoints Creditors' Committee
STAPLES INC: S&P Downgrades ICR to 'B' on Elevated Leverage
STARFISH HOLDCO: Medley Values $2-Mil. Loan at 73% of Face
STIFEL FINANCIAL: Fitch Hikes Preferred Stock Rating to 'BB-'
SUREFUNDING LLC: Bayard Represents SureFunding Noteholders
SUSTAINABLE RESTAURANT: Case Summary & 30 Top Unsecured Creditors
TECHNIPLAS: Files for Bankruptcy as Pandemic Hurts Business
TEGNA INC: Egan-Jones Withdraws BB- LC Senior Unsecured Rating
TIDWELL BROS: U.S. Trustee Unable to Appoint Committee
TOWN SPORTS: Egan-Jones Lowers Senior Unsecured Ratings to CC
TOWNSQUARE MEDIA: S&P Alters Outlook to Negative, Affirms 'B' ICR
TRIBE BUYER: S&P Downgrades ICR to 'CCC+' on COVID-19 Disruption
UNITED AIRLINE: Fitch Withdraws BB+/RR1 Rating on Bond Abolition
UNITED CANNABIS: Hires Hart & Hart as Special Counsel
UNITED SPORTING: Prospect Values $147MM Loan at 3% of Face
UNITI GROUP: Posts $79.1 Million Net Loss in First Quarter
UNIVERSAL TURBINE: Prospect Values $30MM Loan at 84% of Face
URBAN ONE: Egan-Jones Lowers LC Senior Unsecured Rating to CCC
USES CORPORATION: Prospect Values $49MM Loan at 33% of Face
VALVOLINE INC: Moody's Rates New $300MM Add-On Unsec. Notes 'Ba3'
VALVOLINE INC: S&P Alters Outlook to Negative, Affirms 'BB' ICR
VERINT SYSTEMS: Egan-Jones Lowers Senior Unsecured Ratings to B+
VIKING CRUISES: Moody's Confirms B2 CFR & Caa1 Sr. Unsec. Rating
VINES AT TABOR: Court Approves Disclosure Statement
VIRTUAL CITADEL: U.S. Trustee Unable to Appoint Committee
VISKASE COMPANIES: Moody's Cuts CFR to Caa2 & Sec. Rating to Caa3
WALTER P SAUER: Unsecured Creditors to Get 5% Dividend Under Plan
WASTE PRO: S&P Downgrades ICR to 'B' on Higher Leverage
WELDED CONSTRUCTION: Unsecureds to Recover 21% Under Plan
WEST ALLEY BBQ: U.S. Trustee Unable to Appoint Committee
WEST GARDEN: Unsecured Creditors to Recover 100% Under Plan
WHEEL PROS: Moody's Confirms B3 Corp. Family Rating, Outlook Neg.
WHITING PETROLEUM: Seeks to Hire Jackson Walker as Co-Counsel
WORK & SON: Trustee Gets OK to Expand Scope of Colliers' Services
WYNDHAM HOTELS: Moody's Confirms Ba1 CFR & Alters Outlook to Neg.
YCO TULSA: Trustee Taps Steve M. Rutherford as Accountant
YRC WORLDWIDE: Posts $4.3 Million Net Income in First Quarter
YUMA ENERGY: Seeks to Hire Ankura Consulting, Appoint CRO
[^] Recent Small-Dollar & Individual Chapter 11 Filings
*********
ACHAOGEN INC: May 28 Hearing on Disclosure Statement
----------------------------------------------------
The hearing at which the Court will consider approval of the
Disclosure Statement on a final basis and confirmation of the Plan
filed by Achaogen, Inc., will commence on May 28, 2020 at 10:00
a.m. prevailing Eastern Time, before the Honorable Brendan L.
Shannon, in the United States Bankruptcy Court for the District of
Delaware, located at 824 Market Street, 6th Floor, Courtroom 1,
Wilmington, Delaware 19801.
The deadline for filing objections to the Plan is May 21, 2020, at
4:00 p.m. prevailing Eastern Time.
Any objection to the Plan must be filed and served on or before May
21, 2020, at 4:00 p.m. prevailing Eastern Time.
The deadline for voting on the Plan is May 21, 2020, at 4:00 p.m.
prevailing Eastern Time.
Achaogen, Inc., and the Official Committee of Unsecured Creditors,
provide this Disclosure Statement.
As described in more detail in this Disclosure Statement, 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") was the only lender willing
to fund a chapter 11 sale process. 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"). Thus, the Debtor and SVB entered into
that certain Debtor-in-Possession Loan and Security Agreement dated
as of April 15, 2019 (the "DIP Credit Agreement"). 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 September 24, 2019 (the "DIP Order").
Among other things, the DIP Order provided for a split of proceeds
of Estate Assets between SVB and the Committee as more fully
described in Section 2.3.2 herein.
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 will make distributions to Allowed
Class 4 General Unsecured Claims from the GUC Cash; provided that
such Distributions shall be subject to the satisfaction of the
Distribution Reserve.
The Plan proposes to treat claims as follows:
* Class 1 (DIP Facility Claim / Prepetition Term Loan Secured
Claim). This class is impaired. The holder of the Prepetition
Term Loan Secured Claim was indefeasibly paid $15,000,000 on
account of the Prepetition Term Loan Secured Claim pursuant to the
DIP Order from the proceeds of the DIP Facility.
* Class 4 (General Unsecured Claims). This class is impaired.
Each holder of an Allowed Class 4 General Unsecured Claim shall
receive its pro rata share of the GUC Cash.
* Class 5 (Equity and Other Interest Claims). Impaired. The
holders of Allowed Class 5 Equity and Other Interest Claims shall
not be entitled to, and shall not receive or retain any property or
interest in property under the Plan, on account of such Equity or
Other Interest Claims.
A full-text copy of the Disclosure Statement dated April 22, 2020,
is available at https://tinyurl.com/y7qqw5fe from PacerMonitor.com
at no charge.
Attorney 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.
AERO-MARINE TECH: Court Conditionally Approves Disclosure Statement
-------------------------------------------------------------------
Judge Caryl E. Delano has ordered that the Disclosure Statement
filed by Aero−Marine Technologies, Inc., is conditionally
approved.
The Court will conduct a hearing on confirmation of the Plan,
including timely filed objections to confirmation, objections to
the Disclosure Statement, motions for cramdown, applications for
compensation, and motions for allowance of administrative claims on
June 22, 2020 at 11:00 a.m. in Tampa, FL− Courtroom 9A, Sam M.
Gibbons United States Courthouse, 801 N. Florida Avenue.
Objections to confirmation must be filed with the Court and served
on the Local Rule 1007−2 Parties in Interest List no later than
seven days before the date of the Confirmation Hearing.
The Debtor must file a ballot tabulation no later than 96 hours
prior to the time set for the Confirmation Hearing.
About Aero-Marine Technologies
Aero-Marine Technologies, Inc. --
https://www.aero-marinetechnologies.com/ -- provides total support
for waste and water system components found on Boeing, Airbus and
Embraer aircraft. Aero-Marine Technologies is a full-service
Maintenance, repair and overhaul (MRO) with a worldwide customer
base.
Aero-Marine Technologies sought bankruptcy protection under Chapter
11 of the Bankruptcy Code (Bankr. M.D. Fla. Case No. 19-07547) on
Aug. 9, 2019. The Debtor's case is jointly administered to that of
Joseph N. Vaughn and Theresa L. Vaughn.
In the petition signed by Joseph N. Vaughn, president,
Aero-Marine's assets are estimated at $500,000 to $1 million, and
its liabilities at $1 million to $10 million.
The Hon. Caryl E. Delano is the case judge.
Stitchler, Riedel, Blain & Postler, P.A. is the Debtor's legal
counsel.
AGY HOLDING: BlackRock TCP Values $11.5-Mil. Loan at 2% of Face
---------------------------------------------------------------
BlackRock TCP Capital Corp. has marked its $11,481,428 loan
extended to privately held AGY Holding Corp. to market at $218,147,
or 2% of the outstanding amount, as of March 31, 2020, according to
a disclosure contained in a Form 10-Q filing with the Securities
and Exchange Commission for the quarterly period ended March 31,
2020.
AGY Holding issued Second Lien Notes (total coupon: 11%) to
BlackRock, which notes are scheduled to mature November 15, 2020.
According to The BDC Credit Reporter, BlackRock Capital (BKCC) has
almost completely written down its second lien debt exposure with
AGY to just $500,000 from a cost level of $24.5 million. That
represents ($16.7 million) in fair market value lost in two
quarters since November 2019.
The BDC Credit Reporter noted that the nearly $32 million in first
lien debt to AGY Holding held by BKCC and sister BDC BlackRock TCP
Capital (TCPC) is still accruing income for both lenders at 12.00%
or $3.8 million of investment income annually -- although that the
income is Pay-In-Kind.
AGY Holding Corp. is in the chemical industry.
AKORN INC: Discussions Regarding Chapter 11 Filing Ongoing
----------------------------------------------------------
Akorn, Inc., reported a net loss of $256.7 million on $204.7
million of net revenues for the three months ended March 31, 2020,
compared to a net loss of $82.18 million on $165.87 million of net
revenues for the three months ended March 31, 2019.
The increase in net revenue in the period was primarily due to
increases of $23.0 million, $9.0 million, and $6.8 million in
discontinued products revenue, organic revenue and new products,
respectively. The $23.0 million increase in discontinued products
revenue was primarily driven by an unapproved product that has
since been discontinued. The $9.0 million increase in organic
revenue was due to approximately $21.6 million, or 14.2% of
favorable price variance primarily due to 2019 price increases on
certain exclusive products partially offset by $12.5 million, or
8.2% in volume decline principally due to lower sales of Myorisan.
Consolidated gross profit for the quarter ended March 31, 2020, was
$94.5 million, or 46.2% of net revenue, compared to $53.5 million,
or 32.3% of net revenue, in the corresponding prior year quarter.
The increase in the gross profit percentage was principally due to
decreased costs associated with FDA compliance related improvement
activities, favorable price and product mix, including the sale of
an unapproved product that has since been discontinued.
Earnings before interest, taxes, depreciation and amortization
(EBITDA) was $(241.9) million for the first quarter of 2020,
compared to $(47.7) million for the first quarter of 2019. Adjusted
EBITDA, which is a non-GAAP measure used by management to evaluate
the performance of the Akorn business, was $58.6 million for the
first quarter of 2020, compared to $23.4 million for the first
quarter of 2019.
As of March 31, 2020, the Company had $1.03 billion in total
assets, $1.05 billion in total liabilities, and $19.49 million in
total shareholders' deficit.
Discussions Regarding Sale Process and
Chapter 11 Filing are Ongoing
On Feb. 12, 2020, Akorn, Inc. and certain of its subsidiaries
entered into a Second Amendment to Standstill Agreement and Third
Amendment to Credit Agreement to the Company's Loan Agreement,
dated as of April 17, 2014, among the Company Loan Parties, the
lenders thereunder and Wilmington Savings Fund Society, FSB, as
successor administrative agent with an ad hoc group of Lenders and
certain other Lenders. Pursuant to the terms of the Second Amended
Standstill Agreement, the duration of the "Standstill Period" was
extended from Feb. 7, 2020, until the earliest of the delivery of a
notice of termination of the Standstill Period by the Standstill
Lenders upon the occurrence of a default under the loan agreement,
or a breach of, or non-compliance with certain provisions of the
Second Amended Standstill Agreement. Among other things, the
Second Amended Standstill Agreement also (i) provides that, during
the extended Standstill Period, neither the Administrative Agent
nor the Lenders may exercise their default-related rights and
remedies with respect to specified events of default under the Term
Loan Agreement, and (ii) provides that the Company will market and
conduct a sale process for substantially all of its assets in
accordance with certain milestones, which milestones depend upon
whether the bids submitted and then in effect in connection with
the Sale Process are sufficient to pay all obligations under the
Term Loan Agreement.
As of March 28, 2020, there were no bids in the Sale Process
sufficient to pay all obligations under the Term Loan Agreement and
an immediate Event of Default under the Term Loan Agreement
occurred. As a result, as of April 1, 2020, the alternative
milestones for the Sale Process set forth in the Second Amended
Standstill Agreement apply, which provide that, among other things,
the Company shall commence one or more cases under Chapter 11 of
title 11 of the U.S. Code on or before May 1, 2020. The Company did
not satisfy the milestone requirement to commence the Chapter 11
Cases on or before May 1, 2020 and continues to engage in
discussions with the Standstill Lenders regarding the Sale Process
and the Chapter 11 Cases.
The COVID-19 Pandemic: Although the pandemic did not significantly
impact the Company's business operations during the quarter ended
March 31, 2020, the pandemic had a negative effect on the capital
markets and availability of funds for potential bidders in its sale
process, and the pandemic could have far reaching impacts on the
Company's business, operations, and financial results and
conditions, directly and indirectly, including without limitation
impacts on the health of the Company's management and employees,
manufacturing, distribution, marketing and sales operations,
customer and consumer behaviors, and on the overall economy. The
Company cannot predict the duration or magnitude of the pandemic
which may have a material adverse effect on the Company's sale
process, future financial position, results of operations, and
liquidity. The Company will continue to monitor the events and
circumstances surrounding the COVID-19 pandemic, which may require
adjustments to the Company's estimates and assumptions in the
future. The ultimate extent of the effects of the COVID-19
pandemic on the Company is highly uncertain and will depend on
future developments, and such effects could exist for an extended
period of time even after the pandemic ends.
A full-text copy of the Quarterly Report is available for free at
the Securities and Exchange Commission's website at:
https://is.gd/HwcUEy
About Akorn
Headquartered in Lake Forest, Illinois, Akorn, Inc. --
http://www.akorn.com/-- is a specialty pharmaceutical company
engaged in the development, manufacture and marketing of
multi-source and branded pharmaceuticals. Akorn has manufacturing
facilities located in Decatur, Illinois; Somerset, New Jersey;
Amityville, New York; Hettlingen, Switzerland and Paonta Sahib,
India that manufacture ophthalmic, injectable and specialty sterile
and non-sterile pharmaceuticals.
Akorn reported a net loss of $226.8 million for the year ended Dec.
31, 2019, compared to a net loss of $401.9 million on $694.02
million for the year ended Dec. 31, 2018. As of Dec. 31, 2019, the
Company had $1.28 billion in total assets, $1.05 billion in total
liabilities, and $234.3 million in total shareholders' equity.
BDO USA, LLP, in Chicago, Illinois, the Company's auditor since
2016, issued a "going concern" qualification in its report dated
Feb. 26, 2020, citing that the Company has suffered recurring
losses from operations and has a net working capital deficiency
that raise substantial doubt about its ability to continue as a
going concern.
* * *
As reported by the TCR on Feb. 24, 2020, Moody's Investors Service
downgraded the ratings of Akorn, Inc. including the Corporate
Family Rating to Caa3 from Caa1. The downgrade reflects the high
risk of a near-term bankruptcy filing by Akorn, given its ongoing
litigation and $845 million term loan maturity in April 2021.
Also in February 2020, S&P Global Ratings lowered its issuer credit
rating on Akorn Inc. to 'CCC-' from 'B-' with negative outlook.
The negative outlook reflects the increasing possibility that Akorn
will file for Chapter 11 protection under the U.S. Bankruptcy Code
in the next six months to facilitate repayment of its outstanding
debt.
ALASKA COMMUNICATIONS: Egan-Jones Cuts Sr. Unsec. Ratings to CCC+
-----------------------------------------------------------------
Egan-Jones Ratings Company, on April 27, 2020, downgraded the
foreign currency and local currency senior unsecured ratings on
debt issued by Alaska Communications Systems Group Inc. to CCC+
from B-. EJR also downgraded the rating on commercial paper issued
by the Company to C from B.
Headquartered in Anchorage, Alaska, Alaska Communications Systems
Group Inc. is a full-service telecommunications provider in
Alaska.
ALASKA UROLOGICAL: Committee Hires Dorsey & Whitney as Counsel
--------------------------------------------------------------
The committee of unsecured creditors of Alaska Urological
Institute, P.C., seeks authority from the U.S. Bankruptcy Court for
the District of Alaska to retain Dorsey & Whitney LLP, as its
counsel.
Professional services Dorsey & Whitney LLP are to render:
a. give the Committee legal advice with respect to its powers
and duties as the Committee;
b. prepare on behalf of the Committee necessary applications,
answers, orders, reports and other legal papers;
c. assist the Committee in negotiation and preparation of a
plan of reorganization;
d. perform other legal services for the Committee which may be
necessary, and for which services it will be necessary to employ
counsel; and
e. act as secretary for the Committee and to take and maintain
minutes from all Committee meetings.
The Committee has not made any arrangements with Dorsey & Whitney
for payment of its compensation.
Dorsey & Whitney LLP requests, as a condition of its employment,
that the Court issue an order confirming the carve out of $10,000
per week for the benefit of Chapter 11 estate professionals.
The attorneys at Dorsey & Whitney LLP are disinterested persons
within the meaning of 11 U.S.C. Sec. 101(14) and represent no
interest adverse to the Committee or the estate in the matters in
which they are to be engaged, according to court filings.
The firm can be reached through:
Michael R. Mills, Esq.
DORSEY & WHITNEY LLP
1031 West Fourth Avenue, Suite 600
Anchorage, AK 99501-5907
Phone: (907) 276-4557
About Alaska Urological Institute
Alaska Urological Institute, P.C., is a medical group specializing
in urology, radiation oncology, registered dietitian or nutrition
professional, nurse practitioner, family medicine, medical
oncology, physician assistant, hematology/oncology, anesthesiology,
plastic and reconstructive surgery and more.
Alaska Urological Institute, P.C., based in Anchorage, AK, filed a
Chapter 11 petition (Bankr. D. Alaska Case No. 20-00086) on March
25, 2020. Cabot Christianson, Esq., at the Law Office of Cabot
Christianson, P.C., serves as bankruptcy counsel.
In its petition, the Debtor estimated $10 million to $50 million in
assets and $1 million to $10 million in liabilities. The petition
was signed by William R. Clark, president, shareholder.
ALLY FINANCIAL: Moody's Affirms 'Ba1' Issuer Rating
---------------------------------------------------
Moody's Investors Service has affirmed the Ba1 senior long-term
unsecured rating of Ally Financial Inc. All other long-term ratings
of Ally Financial and GMAC Capital Trust I were also affirmed. The
outlook remains stable.
The following ratings/assessments are affected by its action:
Ratings Affirmed:
Issuer: Ally Financial Inc.
Issuer Rating, Affirmed Ba1, Stable
Senior Unsecured Regular Bond/Debenture, Affirmed Ba1, Stable
Backed Senior Unsecured Regular Bond/Debenture, Affirmed Ba1,
Stable
Commercial Paper (foreign currency), Affirmed NP
Backed Commercial Paper, Affirmed NP
Senior Unsecured Medium-Term Note Program (both domestic and
foreign currency), Affirmed (P)Ba1
Other Short-Term Note Program (both domestic and foreign currency),
Affirmed (P)NP
Issuer: GMAC Capital Trust I
Backed Preferred Stock, Affirmed Ba3 (hyb)
Outlook Actions:
Issuer: Ally Financial Inc.
Outlook, Remains Stable
RATINGS RATIONALE
The rapidly deteriorating economic environment in the US will
result in a material weakening of the bank's asset quality and in
turn profitability. However, the affirmation of Ally's ratings and
the stable outlook reflect Moody's assessment that Ally will
maintain asset risk, capital and profitability profiles compatible
with its current ratings, which incorporate the risks to creditors
stemming from Ally's elevated exposure to economic shocks as a
result of its focus on the auto finance sector.
Prior to the onset of the coronavirus, profitability had improved
over the last several years, with net income to average assets of
0.95% for the full year 2019, versus 0.7% for 2018. Due to the
rapidly deteriorating economic environment, Ally reported a loss of
$319 million for Q1 2020 due in large part to a large increase in
loss provisions to $903 million, up from $282 million in Q1 2019.
Common Equity Tier1 ratio was 9.27% as of March 31, 2020 versus
9.54% as of year-end 2019.
Ally also continues to increase its deposit base at a rapid rate, a
credit positive, with retail direct deposits growing to $106
billion as of March 31, 2020, a year-over-year increase of 11%.
This is the product of Ally Bank's growing franchise, which has
allowed the bank to transform to a primarily bank-funded model. As
a result, as of March 31, 2020, deposits comprised 75% of Ally's
funding profile, a significant improvement versus the 66% as of
year-end 2018 and 62% as of year-end 2017. Along with this
improvement, Ally's ratio of market funds as a percentage of
tangible banking assets has declined considerably to 22% as of
December 31, 2019 from 31% as of year-end 2018.
Ally Financial has grown its used auto loan portfolio to 55% of
total consumer auto loans as of year-end 2019. The growth in the
used vehicle mix contributed to a trend of higher credit losses
from 2015 through 2017. However, prior to the onset of coronavirus,
over the last two years, auto portfolio net charge-offs had
steadied. As a result, Ally's automotive finance operations had
displayed solid pre-tax income growth.
The spike in unemployment above the 10% level reached in the
2007-08 global financial crisis is a clear credit negative, but the
severity of deterioration in loan performance will depend on how
long unemployment remains so elevated. For example, if unemployment
falls to below 8% by early next year and continues to improve,
Moody's expects auto loan charge-offs will likely peak in 2021 at
around 2.4% to 2.8% from its 2019 average of around 1.40%. However,
if unemployment remains around or above 10% into next year, Moody's
expects loan performance will deteriorate substantially.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Given the deteriorating economic environment and the uncertain
duration, an upgrade is unlikely over the next 12-18 months.
The ratings could be upgraded if and when the risks associated with
the coronavirus pandemic outbreak abate, accompanied by the company
continuing to reduce its reliance on confidence-sensitive wholesale
funding and brokered deposits and profitability continues to
improve, while demonstrating stress capital resiliency and stable
asset quality. Prudent business diversification increase, for
example measured growth of non-auto asset classes, as well as
achieving higher absolute capital levels would also be positive for
the ratings.
The ratings could be downgraded if capitalization weakens
materially, such as tangible common equity to risk weighted assets
falling below and expected to remain below 7.5%. In addition, the
ratings could be downgraded in the event that asset performance is
weaker than Moody's currently expects, given the current economic
environment, or if liquid resources decline materially, making the
firm vulnerable to market shocks.
The principal methodology used in these ratings was Banks
Methodology published in November 2019.
ALPHATEC HOLDINGS: Reports $20.7 Million Net Loss for 1st Quarter
-----------------------------------------------------------------
Alphatec Holdings, Inc. reported a net loss of $20.72 million on
$30.11 million of total revenue for the three months ended March
31, 2020, compared to a net loss of $12.97 million on $24.55
million of total revenue for the same period in 2019.
As of March 31, 2020, the Company had $153.84 million in total
assets, $38.24 million in total current liabilities, $53.03 million
in long-term debt, $559,000 in operating lease liability, $10.97
million in other long-term liabilities, $23.60 million in
redeemable preferred stock, and $27.43 million in total
stockholders' equity.
Cash and cash equivalents were $27.5 million as of March 31, 2020.
Recent Corporate Highlights
* Increased contribution from new products to 56% of Q1 2020
U.S. revenue up from 22% in Q1 2019 and 48% in Q4 2019;
* Grew Q1 2020 revenue per case by 15% over Q1 2019;
* Continued progress transforming the sales network with Q1
2020 U.S. revenue growth from strategic distribution up 34%
compared to Q1 2019 and significant sales talent additions in
key geographies;
* Completed three FDA 510K new product regulatory submissions;
and
* Secured an additional $35 million capital commitment from
Squadron Capital.
"During the first quarter, we saw continued solid business
momentum," said Pat Miles, chairman and chief executive officer.
"While that momentum was interrupted by circumstances outside of
our control, we will navigate through the current challenges with
the same focus and execution that has driven our success to date.
We are bringing clinical distinction to a market that yearns for it
by fulfilling our commitment to launch 8 to 10 new products this
year and continuing to expand our sales network with savvy
distributors who know that the future of spine innovation is at
ATEC. This company has faced and overcome a lot of adversity over
the last few years. We are confident that we have the proven team
and resilient culture to not only weather this crisis, but to
emerge as the leader in spine innovation."
Expanded Credit Facility
On May 9, 2020, ATEC secured a commitment for $35 million in
additional secured financing from Squadron. This capital will be
made available under the same material terms and conditions as the
existing term loan with Squadron, subject to customary closing
conditions. Under the terms of the amended facility, the maturity
date on the entire term loan will be extended to May 2025. A
portion of the proceeds from the expanded facility will be used to
retire the Company's outstanding obligation under its working
capital revolver with MidCap Funding.
In connection with the additional commitment, ATEC will issue
warrants to purchase 1.076 million shares of ATEC common stock at
an exercise price of $4.88 per share. ATEC expects this
transaction to close before the end of May 2020.
2020 Financial Outlook
As a result of hospitals globally postponing elective procedures to
preserve capacity for COVID-19 patients, ATEC suspended its
previously announced 2020 revenue guidance on April 8, 2020. The
Company cannot yet determine the extent or duration of deferred
surgeries, nor the requirements or the timing of the recovery once
operating room and other pandemic-related constraints have been
lifted.
A full-text copy of the Quarterly Report is available for free at
the Securities and Exchange Commission's website at:
https://is.gd/cd1qGJ
About Alphatec Holdings
Alphatec Holdings, Inc. (ATEC) (www.atecspine.com), through its
wholly-owned subsidiaries, Alphatec Spine, Inc. and SafeOp
Surgical, Inc., is a medical device company dedicated to
revolutionizing the approach to spine surgery through clinical
distinction. ATEC architects and commercializes approach-based
technology that integrates seamlessly with the SafeOp Neural
InformatiX System to provide real-time, objective nerve information
that can enhance the safety and reproducibility of spine surgery.
Alphatec reported a net loss of $57 million for the year ended Dec.
31, 2019, compared to a net loss of $28.97 million for the year
ended Dec. 31, 2018. As of Dec. 31, 2019, the Company had $169.95
million in total assets, $36.39 million in total current
liabilities, $53.45 million in long-term debt, $925,000 in
operating lease liability, $11.95 million in other long-term
liabilities, $23.60 million in redeemable preferred stock, and
$43.63 million in total stockholders' equity.
ALTA MESA: Court Conditionally Approves Disclosure Statement
------------------------------------------------------------
The Court ruled that the Disclosure Statement filed by Alta Mesa
Resources, Inc., et al., is conditionally approved.
The combined hearing on final approval of the Disclosure Statement
and confirmation of the Plan will be on May 27, 2020 at 9:00 a.m.
(prevailing Central Time).
The deadline for filing and serving objections to confirmation of
the Plan and/or the adequacy of the Disclosure Statement will be
May 20, 2020 at 5:00 p.m. (prevailing Central Time).
The deadline for the AMR/AMH Debtors and any other party supporting
the Plan to file any pleading in support of, or in response to any
objection to, confirmation of the Plan and/or the adequacy of the
Disclosure Statement is May 22, 2020.
The AMR/AMH Debtors will file the Plan Supplement with the Court on
or before May 6, 2020, which filing is without prejudice to the
AMR/AMH Debtors' rights to amend or supplement the Plan Supplement.
The AMR/AMH Debtors will publish the Combined Notice on or prior
April 29, 2020 in the Houston Chronicle, the Kingfisher Times &
Free Press, and the national edition of the USA Today and shall be
authorized (but not required) to publish the Combined Notice in
such trade or other local publications of general circulation as
the AMR/AMH Debtors will determine.
Ballots for accepting or rejecting the Plan must be received by the
balloting agent on or before May 20, 2020 at 5:00 p.m. (prevailing
Central Time).
Kingfisher Midstream, LLC and its subsidiary debtors filed a Plan
to liquidate what's left of the company following the sale of most
of the assets to BCE-Mach III LLC.
Kingfisher selected an affiliate of an indirect equity owner of the
Debtors, BCE-Mach III LLC, as the stalking horse bidder for the KFM
Assets. The Initial Debtors signed a deal to sell substantially
all of the AMH Assets to BCE-Mach III. The purchase agreements
with BCE-Mach were selected as the highest and best bids coming out
of the auction.
Upon closing, the KFM Debtors distributed $42,267,506 of the cash
proceeds from the sale transaction to the administrative agent on
behalf of the lenders. The primary purpose of the Plan is to
provide for the distribution of the remainder of the proceeds and
implement the final wind down of the KFM Debtors and their
estates.
The Plan constitutes a joint chapter 11 plan for all of the KFM
Debtors, and the classifications and treatment of Claims and
Interests in the Plan apply to all of the KFM Debtors (but not any
of the other Debtors).
The Plan proposes to treat claims as follows:
* Class 3 Credit Agreement Claims. This class is impaired with
approximate percentage recovery of 20%. On the Effective Date,
Excess Distributable Cash of at least $1,300,000 and at least
quarterly thereafter, additional distributions of Excess
Distributable Cash, up to an amount necessary to satisfy the Credit
Agreement Claims in full.
* Class 4 General Unsecured Claims. This class is impaired.
Holders of Allowed General Unsecured Claims will not receive any
Distribution under the Plan.
* Class 6 Intercompany Interests. This class is impaired. On
and after the Effective Date, subject to the administrative agent's
prior written consent, all Intercompany Interests will be cancelled
when the applicable Post- Effective Date KFM Debtor is dissolved or
merged out of existence in accordance with the Wind-Down.
A full-text copy of the Disclosure Statement dated April 22, 2020,
is available at https://tinyurl.com/y9ftdelo from PacerMonitor.com
at no charge.
Attorneys for KFM Debtors:
Alfredo R. Perez
WEIL, GOTSHAL & MANGES LLP
700 Louisiana Street, Suite 1700
Houston, Texas 77002
Telephone: (713) 546-5000
Facsimile: (713) 224-9511
- and -
Ray C. Schrock, P.C.
Kelly DiBlasi
Lauren Tauro
WEIL, GOTSHAL & MANGES LLP
767 Fifth Avenue
New York, New York 10153
Telephone: (212) 310-8000
Facsimile: (212) 310-8007
About Alta Mesa Resources
Alta Mesa Resources, Inc. is an independent energy company focused
on the development and acquisition of unconventional oil and
natural gas reserves in the Anadarko Basin in Oklahoma, and through
Kingfisher Midstream, LLC, provides best-in-class midstream energy
services, including crude oil and gas gathering, processing and
marketing and produced water disposal to producers in the STACK
play.
Alta Mesa reported $1.4 billion in assets and $864 million in
liabilities as of Dec. 31, 2018.
Alta Mesa and six affiliates sought Chapter 11 protection (Bankr.
S.D. Tex. Case No. 19-35133) on Sept. 11, 2019.
The Hon. Marvin Isgur is the case judge.
The Debtors tapped Porter Hedges LLP and Latham & Watkins LLP as
attorneys; and Perella Weinberg Partners LP and its affiliate Tudor
Pickering Holt & Co Advisors LP as investment banker. Prime Clerk
LLC is the claims agent.
The Office of the U.S. Trustee appointed a committee of unsecured
creditors on Sept. 27, 2019. The committee tapped Brown Rudnick
LLP and Snow Spence Green LLP as its legal counsel, and Conway
McKenzie as its financial advisor.
ALTERRA MOUNTAIN: Moody's Alters Outlook on B1 CFR to Negative
--------------------------------------------------------------
Moody's Investors Service affirmed Alterra Mountain Company's
ratings, including its B1 Corporate Family Rating, its B1-PD
Probability of Default Rating, and the B1 rating on its existing
$450 million first lien revolver due 2022 and $1,727 million first
lien term loan B due 2024. At the same time, Moody's assigned a B1
rating to the company's proposed incremental $400 million senior
secured first lien term loan B due 2026. Proceeds from the term
loan will be used to repay revolver borrowings and for general
corporate purposes. The outlook was changed to negative from
stable.
Moody's affirmed the B1 CFR because Alterra has good liquidity to
manage through the coronavirus-induced downturn. Moody's expects
that resorts will reopen by the start of the 2020-2021 ski season
and remain in operation for most of the ski season, which along
with some economic recovery, will result in improved operating
results and credit metrics in the fiscal year ended July 2021 from
weak levels in fiscal 2020. Moody's projects Alterra's financial
leverage will significantly increase with debt/EBITDA above 8x in
fiscal 2020 (pro forma for the new term loan and incorporating
Moody's adjustments), primarily due to the early closure of
operations in mid-March because of the coronavirus outbreak.
However, the company's earnings and cash flows will improve once
resorts re-open and the economy emerges from recession, and
financial leverage will decline with debt/EBITDA approaching 5x in
fiscal 2021. Alterra is utilizing the offering to bolster liquidity
given the uncertain operating environment, and the projection
reflects Moody's assumption that the company will use excess
balance sheet cash to repay debt once economic uncertainty
diminishes.
The change to a negative outlook reflects the potential that some
resorts will remain closed by the start of the 2020-2021 ski season
in November 2020, or will subsequently close operations, which will
hinder the company's ability to significantly improve its credit
metrics. The negative outlook also reflects the unprecedented
nature of the downturn and that social distancing practices in
areas such as lift lines, restaurants, and lodges will lead to less
visitation and facility utilization until vaccines or other
effective coronavirus countermeasures are in place, the timing of
which is highly uncertain. These factors could prolong earnings
weakness and elevated leverage while leading to a cash burn that
increases debt.
Affirmations:
Issuer: Alterra Mountain Company
LT Corporate Family Rating, Affirmed B1
Probability of Default Rating, Affirmed B1-PD
Senior Secured Bank Credit Facility, Affirmed B1 (LGD4)
Assignments:
Issuer: Alterra Mountain Company
Senior Secured Bank Credit Facility, Assigned B1 (LGD4)
Outlook Actions:
Issuer: Alterra Mountain Company
Outlook, Changed To Negative From Stable
RATINGS RATIONALE
Alterra's B1 CFR reflects its elevated financial leverage with
debt/EBITDA expected to increase to over 8x by fiscal year-end July
2020 (pro forma for the new term loan and incorporating Moody's
adjustments). Alterra's operating results were negatively impacted
by the early closure of its resorts in mid-March 2020, due to
efforts to contain the coronavirus pandemic. Moody's projects
debt/EBITDA financial leverage will improve to the low 5x range
over the next 12-18 months, if resorts open for the majority of the
2020-2021 ski season and the company repays incremental borrowings.
However, Moody's expects skier visits, effective ticket prices, and
ancillary revenue to be below normal levels. In addition, consumers
may need to maintain social distancing and avoid large crowds,
which factors will negatively affect resort operations and
efficiency. Alterra's operating results are highly seasonal, and
exposed to varying weather conditions and discretionary consumer
spending. Governance factors primarily relate to the company's
aggressive acquisition strategy with acquisitions funded mainly
with incremental debt. Environmental considerations in addition to
exposure to adverse weather include the need to access large
quantities of water, which may be challenging following periods of
severe drought, and the vast amounts of forest land the company is
responsible to properly operate and protect.
The rating also reflects Alterra's strong position as one of the
largest operators in the North American ski industry, operating 15
ski resorts in the US and Canada. Alterra benefits from its good
geographic diversification, and high local skier customer mix given
its mostly regional portfolio of ski properties. The growing
penetration of the Ikon Pass provides a stable revenue stream that
helps mitigate weather exposure. The North American ski industry
has high barriers to entry and has exhibited resiliency even during
weak economic periods, including the 2007-2009 recession. The
company's very good liquidity reflects its material $673 million
cash balance and access to an undrawn $450 million revolver
facility due 2022, as of January 31, 2020 and pro forma for the new
term loan issuance. These liquidity characteristics provide
financial flexibility to fund operations through the temporary
closure of its resorts in 2020 and its operating seasonality.
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 leisure travel
sector including ski resorts 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
Alterra's credit profile, including its exposure to mandated stay
at home orders, increased social distancing measures and
discretionary consumer spending, have left it vulnerable to shifts
in market sentiment in these unprecedented operating conditions and
the company remains vulnerable to the outbreak continuing to
spread. Moody's regards the coronavirus outbreak as a social risk
under its ESG framework, given the substantial implications for
public health and safety. Its action reflects the impact on Alterra
of the breadth and severity of the shock, and the broad
deterioration in credit quality it has triggered.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Factors that would lead to a downgrade include operations being
suspended longer than Moody's assumption or expectations for weaker
facility utilization and earnings recovery, resulting in
debt/EBITDA expected to remain above 5x. A deterioration in
liquidity could also lead to a downgrade. The outlook could be
revised to stable if operations resume for the 2020-2021 ski season
and signs of good visitation trends and stable effective ticket and
ancillary activity prices, leading to an expectation that the
company's operating profits return close to fiscal year 2019 levels
and that debt/EBITDA will approach 5.0x over the next 12-18 months.
While unlikely in the near term, ratings could be upgraded if the
company increases its scale and geographic diversification while
debt/EBITDA is sustained below 4.0x, and retained cash flow/net
debt exceeds 17.5%. In addition, a ratings upgrade will require
financial strategies that support credit metrics at the above
levels and for the company to maintain at least good liquidity.
The principal methodology used in these ratings was Business and
Consumer Service Industry published in October 2016.
Headquartered in Denver, Colorado, Alterra Mountain Company is
owned and controlled by an investor group comprised of private
equity firm KSL Capital Partners and a minority position held by
family office/investment firm Henry Crown & Company. Through its
subsidiaries, Alterra is one of North America's premier mountain
resort and adventure companies, operating 15 destinations in the US
and Canada, including Mammoth and June Mountains, Big Bear Mountain
Resort, and Squaw Valley Alpine Meadows in California, Steamboat
and Winter Park in Colorado, Stratton and Sugarbush in Vermont,
Snowshoe in West Virginia, Tremblant in Quebec, Deer Valley and
Solitude in Utah, Crystal Mountain in Washington, and Blue Mountain
in Ontario. The company also owns Canadian Mountain Holidays, a
heli-skiing operator and aviation business. Alterra is private and
does not publicly disclose its financials. During the twelve months
ended January 31, 2020, the company generated revenue in excess of
$1.0 billion.
AMERANT BANCORP: Fitch Alters Outlook on 'BB+' LT IDR to Negative
-----------------------------------------------------------------
Fitch Ratings has affirmed the Long-Term Issuer Default rating of
Amerant Bancorp, Inc. at 'BB+'. The Rating Outlook is revised to
Negative from Stable, reflecting significant operating environment
challenges due to the disruption to economic activity and financial
markets from the coronavirus pandemic. This review is part of
Fitch's ongoing horizontal review of all U.S. banks.
Fitch revised the rating and sector outlook from stable to negative
for all U.S. banks on March 18, 2020 (Sector and Rating Outlook for
U.S. Banks Revised to Negative) reflecting the expectation that
credit fundamentals for the sector will deteriorate in the near to
medium term. Fitch believes the drop in short- and long-term rates
will adversely affect spread revenue on a sustained basis, while
fee income will also be hampered from lower client activity. Fitch
expects credit quality for issuers with relatively more exposure to
industries and asset classes affected by the spread of the
coronavirus to be significantly more adversely affected over the
course of the next two to three quarters than considered in Fitch's
U.S. Bank Outlook published during 4Q19.
Along with a revised Global Economic Outlook, Fitch also published
a common set of baseline and downside-scenario parameters against
which all ratings groups globally are evaluating the impact of the
coronavirus pandemic. As part of this portfolio review, rating
actions have been taken in line with expected trajectories under
the baseline scenario. For more information please refer to
Coronavirus Baseline and Downside Scenarios published April 29,
2020.
KEY RATING DRIVERS
Issuer Default Ratings and Viability Ratings
Unless noted, the key rating drivers for AMTB are those outlined in
its Rating Action
Commentary published in September 2019 ("Fitch Upgrades Amerant
Bancorp Inc. to 'BB+'; Outlook Revised to Stable").
In affirming AMTB ratings, Fitch is signaling its view that the
bank enters this pandemic and ensuing sharp financial downturn in a
position of reasonable strength, underpinned by its strengthening
franchise, moderating loan growth and historically solid asset
quality. However, in affirming AMTB's ratings with a Negative
Outlook, Fitch is primarily signaling that anticipated negative
trends in AMTB's asset quality, and profitability metrics stemming
from the coronavirus-related economic downturn, could in turn
pressure its overall rating. The Outlook would be appropriately
resolved over a period of 12-24 months.
AMTB's loan losses leading up the pandemic have been consistently
low over time. While the bank's home market of South Florida
performed well during the recent economic expansion, it was
historically more vulnerable to rapid downturns in recessions.
Fitch believes the effects of the coronavirus pandemic are likely
to have an acute impact on the South Florida economy, which is
reliant on travel and leisure industries.
Fitch believes restrictions from the pandemic and the resulting
sharp decline in economic activity are likely to disproportionately
affect commercial real estate, which may experience higher default
rates. AMTB maintains a high concentration in commercial real
estate of 314% as of Dec. 31, 2019, which is above the regulatory
guideline of 300%, which Fitch views as negative, particularly in
light of this crisis. Further, AMTB has significant exposures to
segments likely to be disproportionately affected by the pandemic,
including retailers, restaurants and hotels, among others.
Together, these exposures equal 30% of the bank's loan exposures.
Fitch believes AMTB's earnings could come under pressure if the
pandemic continues, and the bank experiences lower revenues and
higher loan loss provisions, particularly in light of its weaker
Earnings and Profitability profile, which Fitch assess at 'bb'.
DERIVATION SUMMARY
Long- and Short-Term Deposit Ratings
AMTB's uninsured deposit ratings are rated one notch higher than
its IDR because U.S. uninsured deposits benefit from depositor
preference. U.S. depositor preference gives deposit liabilities
superior recovery prospects in the event of default.
Holding Company
AMTB has a bank holding company (BHC) structure with the bank as
the main subsidiary. The subsidiary is considered core to the
parent holding company, supporting equalized ratings between the
bank subsidiary and the BHC. IDRs and VRs are equalized with those
of AMTB's operating company and bank, reflecting its role as the
BHC, which is mandated in the U.S. to act as a source of strength
for its bank subsidiaries.
Support Rating and Support Rating Floor
AMTB and Amerant Florida Bancorp Inc. have a Support Rating of '5'
and Support Rating Floor of 'NF'. In Fitch's view, AMTB and AFB are
not systemically important, and the probability of support is
therefore unlikely. IDRs and VRs do not incorporate any support.
RATING SENSITIVITIES
In light of the rapidly evolving economic backdrop, Fitch expects
AMTB's ratings and/or Outlook, as well as those of all other U.S.
banks, may be subject to more frequent review than in a normal
operating environment.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- A more prolonged coronavirus-related economic downturn than
under Fitch's current global base case, or the re-emergence of
infections requiring a re-imposition of lockdown measures.
-- A sustained decline in its common equity Tier 1 ratio below
8.0% without a credible plan to rebuild it to a level approaching
historical levels.
Negative pressure could be placed on AMTB's ratings if there is
evidence of outsized deterioration in the level and volatility of
earnings and credit quality relative to peers. For instance,
failure to maintain an implied earnings rating of 'bb', excluding
nonrecurring items, could warrant a rating downgrade.
Pressure on AMTB's rating could also emerge if the company's level
of impaired loans to gross loans becomes more in line with a 'bb'
implied factor and is expected to remain above that threshold for
an extended period of time.
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
Given the Negative Outlook, Fitch does not foresee the possibility
of a rating upgrade in the immediate term. Over the medium term,
should economic conditions normalize and AMTB's financial
performance show signs of returning to or above Fitch's
expectations or faster than peers, the Outlook could be revised to
Stable. This would be predicated on the company maintaining a
conservative risk appetite and asset quality measures near those of
higher rated peers during this expected period of stress, while
also maintaining profitability.
Long- and Short-Term Deposit Ratings
The long- and short-term deposit ratings for AMTB and its bank
subsidiary are primarily sensitive to any change in the company's
IDR. Should rating action be taken on the IDR, deposit ratings
could be similarly affected.
Holding Company
Should AMTB begin to exhibit signs of weakness, demonstrate trouble
accessing the capital markets, or have inadequate cash flow
coverage to meet near-term obligations, Fitch could notch the
holding company IDR and VR from the ratings of the operating
companies.
Support Rating and Support Rating Floor
Since AMTB's Support and Support Rating Floor are '5' and 'NF',
respectively, there is limited likelihood these ratings will change
over the foreseeable future.
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).
AMERICAN CENTER: Peterson/Clearstream Share Used to Fund Claims
---------------------------------------------------------------
American Center for Civil Justice, Inc., submitted a Third Modified
Disclosure Statement explaining its proposed Chapter 11 plan.
Class 3 Unsecured claims held by non-insider creditors are
impaired. The holders of allowed claims in the class will be paid
the full amount of their Allowed Claims on the Effective Date. The
claims of some creditors in this class will be compromised and
allowed the full amount, as compromised herein, as follows:
* The Campuzano Claimants. The Claims of the Campuzano Claimants
were disputed as to their validity, amount, and whether they are
secured or unsecured. The Claims of the Campuzano Claimants shall
be Allowed as Unsecured Claims in the aggregate amount of
$13,500,000 (of which $500,000 has already been advanced to Diana
Campuzano and $250,000 has already been advanced to Avi Elishis,
the “Preconfirmation Advances”) to be distributed, inclusive of
the Preconfirmation Advances, as follows: (i) to Diana Campuzano,
$5,746,075.50; to Avi Elishis, $3,708,316.35; to Gregg Salzman,
$3,295,608.15, and shall be paid in full on the Effective Date.
* Welch Claimants. The Claims of the Welch Claimants were
disputed. The Claims in this Class shall be allowed in the
aggregate amount of $355,000, to be distributed as follows: (i) to
Gerard Welch, $88,750.00; (ii) to Michael Welch, $88,750.00; and
(iii) to Betty Ann Welch, $177,500.00, and shall be paid in full on
the Effective Date.
* Brewer Claimants. The Claims of the Brewer Claimants were
disputed. The Claims in this Class shall be allowed in the
aggregate amount of $340,000, to be distributed as follows: (i) to
Joyce Brewer, $89,473.68; and (ii) to Richard Brewer, $250,526.32,
and pro rata based upon the amounts of the filed proofs of claim
filed by or on behalf of each of the Brewer Claimants and shall be
paid in full on the Effective Date.
* Ambush Claim. The Claims of Joshua Ambush were disputed and
were disallowed in their entirety by Order of the Bankruptcy Court
entered March 23, 2020, and Ambush will be paid nothing. The Debtor
retains and reserves all rights, defenses and claims against Ambush
and will continue to assert such defenses and pursue such claims
after Confirmation.
Class 4 Claims of Insiders, including Elie Eliezer Perr, Neal Sher
and RLT, are impaired. Claims in this class will be subordinated
to all other Allowed Claims and shall be paid in full but only
after all
other allowed claims in other classes have been paid in full.
Class 5 Claim of Michel Engelberg is impaired. All claims of
Micheal Engelberg shall be paid pursuant to and subject to all of
the terms and conditions of the Agreement Memorializing Engelberg
Settlement, to the extent determined to be enforceable by Final
Order.
The Peterson/Clearstream Share will be used for funding payments
under the Plan.
A full-text copy of the Third Modified Disclosure Statement dated
April 22, 2020, is available at https://tinyurl.com/y8juaogz from
PacerMonitor.com at no charge.
Attorneys for Debtor:
Timothy P. Neumann, Esq.
Broege, Neumann, Fischer & Shaver, LLC
25 Abe Voorhees
Drive Manasquan, New Jersey 08736
Tel: (732) 223-8484
E-mail: timothy.neumann25@gmail.com
About American Center for Civil Justice
American Center for Civil Justice, Inc., is a tax-exempt
organization that provides legal services. The organization
defends human and civil rights by advocating and aiding lawsuits by
victims of oppression, acts of violence and other injustices.
American Center for Civil Justice filed voluntary petitions for
relief under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D.N.J.
Lead Case No. 18-15691) on March 23, 2018. In the petition signed
by Elie Perr, president, the company was estimated to have $10
million to $50 million in assets and liabilities. The Honorable
Christine M. Gravelle oversees the case. Timothy P. Neumann, Esq.,
of Broege, Neumann, Fischer & Shaver LLC, is the Debtors' counsel.
AMERICAN GREETINGS: S&P Alters Outlook to Negative, Affirms 'B' ICR
-------------------------------------------------------------------
S&P Global Ratings revised its outlook on U.S. greeting cards maker
American Greetings Corp. (AG) to negative from stable, and affirmed
its 'B' issuer credit rating on the company.
"American Greetings Corp.'s sales will likely be hurt by the
COVID-19 pandemic because, in our view, restrictions on social
gatherings will reduce demand for greeting cards. We believe
restrictions on social gatherings will reduce demand for greeting
cards, which should hurt AG's sales and profitability," S&P said.
S&P expects a moderate impact from the postponement or cancellation
of weddings, graduation parties, and other events, but the rating
agency believes the biggest risk is a lack of birthday parties
because birthday cards make up more than half of total greeting
cards sold at retail, and about one-third of these cards are
typically delivered in person (according to the Greeting Card
Assn.). There could be a modest offset from consumers who send more
greeting cards as a way to stay connected to friends and family
during the pandemic, but S&P expects the impact will be modest
because most consumers are using digital communication tools such
as Instagram, Facebook, and Zoom to stay connected. Most of AG's
retail customers are considered essential businesses, and they
remain open even in cities with strict lockdowns, which could help
support demand. However, S&P believes consumers who are shopping at
these stores will primarily focus on purchasing food and other
essential goods rather than discretionary goods such as greeting
cards, except for around holidays such as Mother's Day and Father's
Day. In addition, given the high unemployment rate and heightened
uncertainty about the depth and length of the recession, S&P
expects to see lower consumer spending and a drop in demand for
discretionary products over the next year.
S&P expects AG to maintain leverage in the 5.5x-6.5x range over the
long term, but market headwinds will pose challenges to reducing
leverage after the pandemic. It believes double-digit sales
declines in fiscal year 2021 (ending February 2021) as a result of
lower demand will pressure profitability and could lead to leverage
approaching S&P's 7x downgrade threshold or higher. S&P's measure
of leverage is at least 1x higher than the company's reported
leverage, due to the rating agency's inclusion of about $200
million of preferred stock, which the rating agency views as a
debt-like obligation. In S&P's view, the spike in AG's leverage
this year will largely depend on its ability to reduce costs amid
lower demand. S&P believes AG will benefit on the cost side because
its retail customers are limiting how often card companies can
service card aisles in order to limit the number of people in
stores to slow the spread of the coronavirus. This could hurt sales
modestly if AG cannot replenish product quickly enough.
As economic conditions improve throughout fiscal 2022 (ending
February 2022) and consumers resume gathering socially, S&P expects
AG to improve its leverage to the 6x area through growing EBITDA.
Although it expects a bounce back as the company laps a period
marked by few social gatherings, S&P cautions that AG might not see
sustained sales increases matching those of other companies that
sell discretionary products even after economic conditions improve.
The greeting card market has experienced a slow but steady decline
over the past decade, due to changing consumer preferences and a
shift toward social media and other digital forms of expression.
But physical greeting cards remain an entrenched social norm for
many occasions in the U.S., so S&P expects declines in this market
to be gradual. AG has benefited from customers opting for
higher-priced cards, which has tempered the impact of volume
declines over the past few years. Nevertheless, S&P expects the
environment to remain somewhat difficult for AG even after the
pandemic subsides.
"Despite the headwinds and the negative outlook, we believe AG will
maintain adequate liquidity over the next 12-24 months, and we
forecast that it will maintain relatively good free cash flow of at
least $30 million this year and more than $50 million in fiscal
2022, which supports our affirmation of the current rating," S&P
said.
The negative outlook reflects the risk that S&P could lower the
rating on AG over the next 12 months if the company's operating
performance decline is more severe than the rating agency currently
forecasts.
"We could lower the rating on AG if the operating performance
decline caused by the COVID-19 pandemic and global recession is
more severe than we currently forecast, resulting in leverage
sustained over 7x or discretionary cash flow sustained at about $10
million," S&P said.
"We could consider revising the outlook to stable if AG generates
positive sales momentum and we are confident the company will
return leverage to under 7x by fiscal 2022 while maintaining
adequate liquidity and discretionary cash flow of over $10
million," the rating agency said.
ARCHDIOCESE OF SANTA FE: Seeks Approval to Hire Real 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 Walters of Coldwell Banker Legacy to assist
in the sale of its real property located in Albuquerque, N.M.
Mr. Walters, an associate broker with Coldwell, will get a
commission of 6 percent of the sales price. If there is a
cooperating broker, such broker will get 3 percent of the
commission.
Mr. Walters disclosed in court filings that his 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
Email: 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.
ARDEN HOLDINGS: Unsecureds Get $13,676 Under Plan
-------------------------------------------------
Arden Holdings, LLC, filed a Chapter 11 Plan and a Disclosure
Statement.
The Debtor's primary asset is the real property located at 3160
Arden Drive, Atlanta, Georgia 30305. The Debtor's primary
liability is the secured claim of Rebecca and Rudy Harrell and
three unsecured claims.
Class 1 (Rebecca and Rudy Harrell claim) is fully secured and
valued at $1,330,000. The Debtor will make monthly principle and
interest payments on the Harrells' secured claim amortized over 30
years at 5.00% interest, in the estimated amount of $7,180.
Payments will begin on the 10th of the month following the
Effective Date and continue on the 10th of each month thereafter.
All amounts due and owing on the secured portion of the claim shall
come due 60 months from the first payment under the Plan.
Class 2 (Findlay Roofing and Construction Inc. claim) in the amount
of $2,720 is impaired. Findlay's claim will be treated under Class
4 as a general unsecured claim.
Class 3 (RANDAL LOWE PLUMBING LLC) in the amount of $700 is
impaired. Randal's claim will be treated under Class 4 as a general
unsecured claim.
Class 4 (General Unsecured Claims) will be paid a pro rata share of
$3,419 in semi-annual installments beginning on the 6th month
anniversary after the Effective Date and continuing for 2 years for
a total of four payments.
Funds necessary to fund the Plan will come from contributions made
by Sean and Sheree Boyd.
A full-text copy of the Disclosure Statement dated April 22, 2020,
is available at https://tinyurl.com/y7znxrg2 from PacerMonitor.com
at no charge.
Attorney for the Debtor:
Will B. Geer
50 Hurt Plaza, SE, Suite 1150
Atlanta, Georgia 30303
Tel: (404) 233-9800
Fax: (404) 287-2767
About Arden Holdings
Arden Holdings, LLC, based in Atlanta, GA, filed a Chapter 11
petition (Bankr. W.D. Ga. Case No. 19-69373) on Dec. 2, 2019. In
the petition signed by Sean Boyd, managing member, the Debtor was
estimated to have $1 million to $10 million in both assets and
liabilities. Will B. Geer, Esq., at Wiggam & Geer, LLC, serves as
bankruptcy counsel to the Debtor.
ARENA EQUITY: Taps Lambert Coffin as Litigation Counsel
-------------------------------------------------------
Arena Equity Investments, LLC received approval from the U.S.
Bankruptcy Court for the District of Maine to employ Lambert Coffin
as its special litigation counsel.
Lambert Coffin will represent Debtor in a personal injury lawsuit
filed in the Androscoggin Superior Court in July last year.
The firm will be compensated exclusively by Debtor's insurer,
Western World Insurance Group/New Hampshire Underwriters Insurance
Agency.
Jeffrey Russell, Esq., one of the attorneys expected to handle the
case, disclosed in court filings that he and other members of
Lambert Coffin neither hold nor represent any interest adverse to
Debtor and its bankruptcy estate.
The firm can be reached through:
Jeffrey D. Russell, Esq.
Lambert Coffin
One, Canal Plaza STE 400
Portland, ME 04101
Telephone: (207) 874-4000
Email: jrussell@lambertcoffin.com
About Arena Equity Investments
Arena Equity Investments, LLC, a real estate investment and
management company, filed for Chapter 11 bankruptcy protection
(Bankr. D. Me. Case No. 19-20554) on Oct. 29, 2019. In its
petition, Debtor estimated $1 million to $10 million in both assets
and liabilities. The petition was signed by Edward Riekstins,
principal.
Judge Michael A. Fagone oversees the case.
Debtor is represented by Adam R. Prescott, Esq., at Bernstein,
Shur, Sawyer & Nelson, P.A.
AREWAY ACQUISITION: Taps Martinet Recchia as Accountant
-------------------------------------------------------
Areway Acquisition, Inc. received approval from the U.S. Bankruptcy
Court for the Northern District of Ohio to employ Martinet Recchia,
Inc. as its tax accountant.
The firm will assist Areway Acquisition and its affiliates in
preparing and filing tax returns and will provide other accounting
services.
The hourly rates charged by Martinet range from $300 to $130.
Joseph Recchia, a principal of Martinet, 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:
Joseph E. Recchia
Martinet Recchia, Inc.
5000 East 345th St.
Willoughby, OH 44094
Phone: (440)942-3900
Fax: (440)942-3030
Email: jrecchia@martinetcpa.com
office@martinetcpa.com
About Areway Acquisition Inc.
Areway Acquisition, Inc. -- http://arewayacq.com/-- is a supplier
of finished forged and cast metal products with complete in-house
machining, automated polishing and buffing, powder and liquid
painting, and an ISO certified quality control system capable of
ASTM, SAE, and OEM specification testing.
Areway Acquisition sought Chapter protection (Bankr. N.D. Ohio Case
No. 20-11065) on Feb. 25, 2020. At the time of the filing, Debtor
estimated between $1 million and $10 million in both assets and
liabilities.
Jeffrey M. Levinson, Esq., at Levinson LLP, is Debtor's legal
counsel. Judge Jessica E. Price Smith oversees the case.
ARMOR HOLDCO: Moody's Withdraws Caa1 Corp. Family Rating
--------------------------------------------------------
Moody's Investors Service has withdrawn Armor Holdco, Inc.'s Caa1
corporate family rating. Moody's has also withdrawn Armor Holding
II LLC's B2 senior secured first lien term loan and revolving
credit facility ratings and Caa3 senior secured second lien term
loan rating.
Withdrawals:
Issuer: Armor Holdco, Inc.
Corporate Family Rating, Withdrawn, previously Caa1
Outlook, changed to Ratings Withdrawn, previously Negative
Issuer: Armor Holding II LLC
$405 million Senior Secured First Lien Term Loan, Withdrawn,
previously B2
$20 million Senior Secured First Lien Revolving Credit Facility,
Withdrawn, previously B2
$215 million Senior Secured Second Lien Term Loan, Withdrawn,
previously Caa3
Outlook, changed to Ratings Withdrawn, previously Negative
RATINGS RATIONALE
Moody's has decided to withdraw the ratings for its own business
reasons.
AVIS BUDGET: Egan-Jones Lowers Senior Unsecured Ratings to CCC+
---------------------------------------------------------------
Egan-Jones Ratings Company, on April 27, 2020, downgraded the
foreign currency and local currency senior unsecured ratings on
debt issued by Avis Budget Group Inc. to CCC+ from B-. EJR also
downgraded the rating on commercial paper issued by the Company to
C from B.
Headquartered in Parsippany-Troy Hills, New Jersey, Avis Budget
Group, Inc. operates as vehicle rental and mobility solution
service.
BANFF PARENT: S&P Affirms 'B-' ICR on Compuware Acquisition
-----------------------------------------------------------
S&P Global Ratings affirmed its 'B-' issuer credit rating on BMC
Software Inc.'s parent, Banff Parent Inc. following the $1.5
billion acquisition of mainframe application development software
maker Compuware Corp., and removed all ratings from CreditWatch,
where the rating agency placed them with negative implications on
March 18, 2020.
At the same time, S&P assigned a 'B-' issue-level rating and a '3'
recovery rating to the company's new secured notes.
The rating agency is also assigning a 'CCC+' issue-level and a '5'
recovery rating to the company's new second-lien notes. Finally,
S&P is raising its issue-level ratings on the company's unsecured
debt to 'CCC+' from 'CCC' and revising its recovery rating on that
debt to '5' from '6'."
The 'B-' issuer credit rating and stable outlook reflect very high
leverage in the high-10x area pro forma for Compuware, as well as
limited growth opportunities in the mainframe ecosystem and stiff
competition from larger competitors with more balance sheet
flexibility.
"Despite the company's high leverage, we believe BMC's capital
structure is sustainable because of its high recurring revenue, a
defensive industry mix, and its favorable renewal cycle. We expect
the company to generate enough cash flow to service its debt, even
during the current economic downturn." The company's liquidity
should provide a bridge past the current recessionary environment
should the company modestly underperform our forecast," S&P said.
The stable outlook reflects S&P's view that despite very high
starting leverage and the current recessionary macroeconomic
environment, BMC will be able to generate enough cash flow to cover
its debt service commitments in fiscal 2021 due to its high
recurring revenue, defensive industry mix, and favorable renewal
cycle. Even if the company underperforms S&P's already stressed
forecast, the rating agency thinks the company's liquidity could
bridge several quarters of modest cash flow deficits.
"We could lower the rating if the macroeconomic environment does
not improve in the second half of calendar 2020 and the weakness
extends into 2021, causing the company to have cash flow deficits
after debt service in the tens of millions of dollars in fiscal
2021, without good prospects for positive cash flow after debt
service in fiscal 2022. We could also lower the rating if liquidity
becomes constrained, either by tightness under financial covenants
or utilization of liquidity for acquisitions, such that we no
longer believe that liquidity can provide a bridge past the current
recession. Finally, we could lower the rating if BMC's revenue
persistently declines because customers shift mainframe workloads
to alternative platforms, or competition intensifies," S&P said.
"We could raise the rating if the company can deliver stable
operating results through a renewal cycle with leverage below 8x
and FOCF to debt in the mid-single digits," the rating agency said.
BARNARD'S TRANSFER: Case Summary & 20 Largest Unsecured Creditors
-----------------------------------------------------------------
Debtor: Barnard's Transfer Services, Inc.
206 E. 4th Street
Justin, TX 76247
Business Description: Barnard's Transfer Services, Inc. offers a
full service fabrication shop that provides
services to the railroad, oil and gas
industries. It also provides transloading,
silo bin cleaning and pit vacuuming
services, hazardous waste management, and
excavating services. For more information,
visit https://barnardstransfer.com.
Chapter 11 Petition Date: May 11, 2020
Court: United States Bankruptcy Court
Eastern District of Texas
Case No.: 20-41139
Debtor's Counsel: David Ritter, Esq.
RITTER SPENCER PLLC
15455 Dallas Parkway, Suite 600
Addison, TX 75001
Tel: (214) 295-5078
E-mail: dritter@ritterspencer.com
Estimated Assets: $500,000 to $1 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Charles Pennington, president.
A copy of the petition containing, among other items, a list of the
Debtor's 20 largest unsecured creditors is available for free at
PacerMonitor.com at:
https://is.gd/WKd9Xq
BAUSCH HEALTH: Fitch Rates Senior Unsecured Notes 'B/RR4'
---------------------------------------------------------
Fitch Ratings has assigned a 'B/RR4' rating to Bausch Health
Companies Inc.'s senior unsecured notes offering. Fitch has also
affirmed Bausch Health Companies Inc.'s and Bausch Health Americas,
Inc.'s existing ratings, including the Issuer Default Ratings, at
'B'. The Rating Outlook is Stable. The net proceeds from the new
issuance will be used to refinance the company's existing secured
notes due in 2022. The ratings apply to approximately $24.7 billion
of debt outstanding as of March 31, 2020.
At the same time, Fitch has withdrawn ratings on the following
Bausch Health Americas, Inc. issues, as a refinancing proposed for
February 2020 was withdrawn citing market conditions:
-- Senior Secured Revolver, to 'WD' from 'BB/RR1'.
-- Senior Secured Term Loan, to 'WD' from 'BB/RR1'.
-- Senior Secured Notes, to 'WD' from 'BB/RR1'.
KEY RATING DRIVERS
Coronavirus Headwinds: Fitch expects the coronavirus pandemic to
adversely affect Bausch Health's operating performance during 2020.
The company's Ortho Dermatologics, Dentistry and Global Surgical
businesses, which account for roughly 13% of revenues, will be hit
the hardest. The operating stress will likely cause gross leverage
(total debt/EBITDA) to remain above 7.0 times (x) during 2020.
However, Fitch expects that BHC will continue to generate
significantly positive FCF and maintain adequate liquidity.
Operations should improve in 2021 to pre-pandemic levels, with the
company reducing leverage to below 7.0x.
Good Progress in Business Turnaround: Bausch Health's 'B' IDR
reflects progress in stabilizing operations and reducing debt since
mid-2016 through the first two months of 2020. Throughout the
business turnaround, BHC consistently generated strong FCF relative
to the 'B' category rating, pushed its nearest large debt maturity
out until 2023 and loosened restrictive secured debt covenants
through refinancing transactions. The company's stronger operating
profile and consistent cash generation should enable it to further
reduce leverage in the near term.
Modestly High Leverage: A shareholder litigation settlement and the
negative impact of the coronavirus pandemic will stress leverage
(total debt/EBITDA) during 2020, but Fitch expects the company to
reduce leverage to 7.0x or below in 2021 and even further during
the intermediate term. Bausch Health has made good progress in
reducing its absolute level of debt outstanding by approximately
$7.6 billion since March 31, 2016 with a combination of internally
generated cash flow and proceeds from asset divestitures.
Intermediate-Term Growth Potential: Bausch Health operates with a
reasonably diverse business model relative to its products,
customers and geographies served. Many of the company's businesses
are comprised of defensible product portfolios, which are capable
of generating durable margins and cash flows. Fitch believes the
expected long-term growth for Bausch Health's eye health (Bausch +
Lomb/International) and gastrointestinal (GI/Salix) businesses
support the company's operating prospects. Fitch also expects that
the dermatology business will grow in 2021 as it successfully
commercializes recently launched products. The dermatology business
accounts for roughly 6.6% of total firm sales.
Reliance on New Products: The stabilization of Bausch Health's
operating profile has involved an increased focus on developing an
internal research and development pipeline, which Fitch believes is
constructive for the company's credit profile over the long term.
This strategy is not without risk, however, since Bausch Health
needs to ramp up the utilization of recently approved products
through successful commercialization efforts. These products
include Siliq (for the treatment of moderate-to-severe plaque
psoriasis, although with safety restrictions), Bryhali (plaque
psoriasis), Lumify (red eye) and Vyzulta (glaucoma). The recent
approval of Duobrii or IDP-118 (plaque psoriasis) should also help
to strengthen the company's dermatology business.
Near-Term Maturities Manageable: Bausch Health consistently
generates significant positive FCF (LTM as of Dec. 31, 2019 a FCF
margin of 14.2%) and, as of the current refinancing, it will
satisfy debt maturities until 2023 - aside from annual amortization
on the term loans of about $303 million starting in 2022. The
company has adequate access to the credit markets, providing the
flexibility to further refinance upcoming maturities.
DERIVATION SUMMARY
Bausch Health (B/Stable) is significantly larger and more
diversified than specialty pharmaceutical industry peers
Mallinckrodt plc (ccc-*/Negative) and Endo International plc
(ccc+*/Negative). While all three manufacture and market specialty
pharmaceuticals and have maturing pharmaceutical products, Bausch
Health's Bausch + Lomb (B+L) business meaningfully decreases
business concentration risk relative to Mallinckrodt and Endo. B+L
offers operational diversification in terms of geographies and
payers. Many of its products are purchased directly by customers
without the requirement of a prescription.
Bausch Health's rating also reflects gross debt leverage that is
higher than peers. However, potential opioid-related litigation
could significantly increase leverage for both Mallinckrodt and
Endo. Bausch Health accumulated a significant amount of debt
through numerous acquisitions. In addition, Bausch Health had a
number of missteps in the integration process and other operational
issues. Management has been focusing on reducing leverage by
applying operating cash flow and divestiture proceeds to debt
reduction and returning the business to organic growth through
internal product development efforts.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within its Rating Case for the Issuer
-- High single-digit to low double-digit percentage revenue
contraction in 2020 due to the effects of the coronavirus pandemic
on operations before returning to growth over 2019 levels in 2021.
Fitch expects particular weakness in Global Surgical, Dermatologics
and Dentistry in 2020.
-- EBITDA of $3 billion-$3.3 billion in 2020 and increasing
thereafter, driven by a return to a more normalized healthcare
environment, revenue growth, improved sales mix and cost control.
-- Negative FCF in 2020 due to the $1.21 billion litigation
payment and then normalized FCF to at least $1.21 billion.
-- Continued debt reduction utilizing FCF.
-- Leverage declining to below 7.0x by the end of 2021.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- An expectation of gross debt leverage (total debt/EBITDA)
durably below 6.0x.
-- Bausch Health continuing to maintain a stable operating
profile and refraining from pursuing large, leveraging transactions
that include acquisitions.
-- Forecasted FCF remaining significantly positive.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Material gross debt leverage (total debt/EBITDA) durably above
7.0x.
-- FCF significantly and durably deteriorating.
-- Refinancing risk increasing and the prospects for meaningful
leverage reduction weakening.
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
Bausch Health had adequate near-term liquidity as of March 31,
2020, including cash on hand of $1.923 billion. The company will
use $1.21 billion of the cash to fund the pending settlement of the
U.S. Securities litigation due in 2020.
The company had full availability (excluding letters of credit)
under its $1.225 billion revolving credit facility that matures in
2023. The company's most recent refinancing activities have largely
satisfied debt maturities through 2022. Bausch Health has
consistently generated significantly positive FCF during 2015-2019
despite facing serious operating challenges. Fitch expects the
company to maintain adequate headroom under the debt agreement
financial maintenance covenants during the 2020-2022 forecast
period.
Recovery Assumptions
The recovery analysis assumes Bausch Health would be considered a
going concern in bankruptcy and that the company would be
reorganized rather than liquidated. Fitch estimates a going concern
enterprise value of $19.7 billion for Bausch Health and assumes
that administrative claims consume 10% of this value in the
recovery analysis.
The going concern EV is based upon estimates of post-reorganization
EBITDA and the assignment of an EBITDA multiple. Fitch's estimate
of Bausch Health's going concern EBITDA of $2.63 billion is 25%
lower than the LTM 2019 EBITDA, reflecting a scenario where the
recent stabilization in the base business is reversed and the
company is not successful in commercializing the R&D pipeline.
Fitch assumes Bausch Health will receive a going-concern recovery
multiple of 7.5x EBITDA. This is slightly higher than the 6.0x-7.0x
Fitch typically assigns to specialty pharmaceutical manufacturers,
representing Bausch + Lomb's relatively more durable consumer
products focus and the company's larger scale and broader product
portfolio versus its peers. The current average forward public
market trading multiple of Bausch Health and the company's closet
peers is 9.9x.
Fitch applies a waterfall analysis to the going-concern EV based on
the relative claims of the debt in the capital structure, and it
assumes the company would fully draw the revolvers in a bankruptcy
scenario. The senior secured credit facility, including the term
loans and revolver, and the senior secured notes ($10.5 billion in
the aggregate) have outstanding recovery prospects in a
reorganization scenario and are rated 'BB/RR1', three notches above
the IDR. The senior unsecured notes ($15.4 billion in the
aggregate) have an average recovery and are rated 'B/RR4'.
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
Bausch Health Companies Inc.: 4; Exposure to Social Impacts: 4
Bausch Health Companies Inc. has an Environmental, Social and
Governance Relevance Score of 4 for Exposure to Social Impacts due
to pressure to contain healthcare spending growth, a highly
sensitive political environment and social pressure to contain
costs or restrict pricing, which has a negative impact on the
credit profile and is relevant to the rating in conjunction with
other factors.
Except for the matters discussed, the highest level of ESG credit
relevance, if present, is a score of 3 - ESG issues are credit
neutral or have only a minimal credit impact on the entity, due to
either their nature or the way in which they are being managed by
the entity.
BAUSCH HEALTH: Moody's Rates New Senior Unsecured Notes 'B3'
------------------------------------------------------------
Moody's Investors Service assigned a B3 rating to the new senior
unsecured note offering of Bausch Health Companies Inc. There are
no changes to Bausch Health's other ratings including the B2
Corporate Family Rating, the B2-PD Probability of Default Rating,
the Ba2 senior secured rating, B3 senior unsecured rating and the
SGL-1 Speculative Grade Liquidity Rating. The outlook remains
unchanged at stable.
Proceeds of the new senior unsecured notes are intended for the
redemption of existing senior secured notes due in 2022 in a
leverage neutral refinancing transaction. The refinancing is credit
positive in that it will extend Bausch's debt maturity profile.
Rating assigned:
Issuer: Bausch Health Companies Inc.
Senior unsecured notes, Assigned B3 (LGD5)
RATINGS RATIONALE
Bausch Health's B2 rating reflects its high financial leverage with
gross debt/EBITDA above 7 times. The rating also reflects the
challenges that Bausch Health faces to sustainably improve its
earnings growth while confronting legal matters including an
unresolved patent challenge on Xifaxan -- Bausch Health's largest
product. Good progress in steadily executing on its turnaround plan
will be impeded in 2020 due to demand pressures ensuing from the
global coronavirus pandemic. However, demand will substantially
return once the pandemic ebbs, and deleveraging will resume. The
company has been committed to debt reduction for the past several
years, and Moody's anticipates that this will continue. The rating
is supported by Bausch Health's good scale with roughly $8 billion
of revenue, solid product diversity and good free cash flow due to
high margins, low taxes and modest capital expenditures.
ESG considerations are material to the rating. Moody's regards the
coronavirus outbreak as a social risk under Moody's ESG framework,
given the substantial implications for public health and safety.
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.
Beyond the coronavirus outbreak, Bausch Health faces a variety of
unresolved legal issues, and the potential for large cash outflows
to resolve the matters cannot be ruled out. Other investigations
into the pharmaceutical companies' practices have taken several
years to resolve, and have sometimes resulted in large payments to
the US government. Other social risks include exposure to
regulatory and legislative efforts aimed at reducing drug pricing.
However, Bausch Health's product and geographic diversification
help mitigate some of that exposure. 60% of Bausch Health's revenue
is derived from medical devices, over-the-counter products, and
branded generic products which haven't been a significant focus for
pricing legislation. Bausch Health has also pledged to keep average
annual price increases for their branded prescription products in
the single digits.
Among governance considerations, management has had a consistent
debt reduction philosophy ever since its troubles involving
Philidor escalated. For several years, Bausch Health used the
substantial majority of its free cash flow to reduce debt. That
being said, as the company's turnaround has continued, it is now
willing to enter small acquisitions that will somewhat reduce the
rate of debt reduction.
The stable outlook reflects Moody's expectation that debt/EBITDA
will rise in 2020 because of corona-virus related earnings
pressure, but decline in 2021 to below 7.5x.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Factors that could lead to an upgrade include improvement in
earnings growth, successful commercial uptake of new products, and
significant resolution of outstanding legal matters. Specifically,
sustaining debt/EBITDA below 6.5 times with CFO/debt approaching
10% could support an upgrade.
Factors that could lead to a downgrade include significant
reductions in pricing or utilization trends of key products,
escalation of legal issues or large litigation-related cash
outfows, an adverse outcome in the Xifaxan patent challenge, or
debt/EBITDA sustained above 7.5 times.
Bausch Health Companies Inc. is a global company that develops,
manufactures and markets a range of pharmaceutical, medical device
and over-the-counter products. These are primarily in the
therapeutic areas of eye health, gastroenterology and dermatology.
Annual revenues total roughly $8 billion.
The principal methodology used in these ratings was Pharmaceutical
Industry published in June 2017.
BECTON DICKINSON: Moody's Rates New Senior Unsecured Notes 'Ba1'
----------------------------------------------------------------
Moody's Investors Service assigned a Ba1 rating to the new senior
unsecured note issuance by Becton, Dickinson and Company. There are
no changes to BD's existing ratings including its Ba1 Corporate
Family Rating, SGL-1 Speculative Grade Liquidity rating and the
outlook remains positive.
Proceeds from the offering will be used to tender for various
near-dated debt maturities. The transaction is credit positive as
it is leverage-neutral and will extend BD's debt maturity profile.
Ratings Assigned:
Becton, Dickinson and Company:
Senior unsecured notes at Ba1 (LGD 4)
RATINGS RATIONALE
BD's Ba1 Corporate Family Rating reflects its significant scale
with revenues of more than $17 billion. The company also benefits
from its significant diversity across multiple product categories
and global presence with 43% of sales generated outside the US. The
company benefits from leading positions across most of its product
lines. BD's ratings reflect its high leverage with debt/EBITDA near
four times. The company's credit profile also reflects the
company's appetite to undertake debt-financed acquisitions at a
rapid pace. BD has a clearly-articulated leverage target
(debt/EBITDA of 3 times as defined by the company) and Moody's
expects financial policies will prioritize debt repayment until its
leverage target is achieved.
The positive outlook considers the deleveraging progress that BD
has made since the closing of the Bard acquisition in December
2017. Moody's expects the company will continue to deleverage
toward its articulated target as it continues to realize cost
synergies from the Bard acquisition and use free cash flow to repay
debt. The pace of deleveraging will, however, slow in the near term
due to the impact on earnings and cash flows arising from the
coronavirus outbreak.
ESG considerations are material to BD's credit profile. Moody's
regards the coronavirus outbreak as a social risk under Moody's ESG
framework, given the substantial implications for public health and
safety. 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. Although the
medical device segment is somewhat less exposed from a demand
standpoint than other sectors, the diversion of healthcare
resources to treating the outbreak will reduce demand for some
medical device products. BD has meaningful exposure to products
used in elective procedures which have been postponed as health
systems focus on the coronavirus outbreak. Over time Moody's
expects these deferred procedures will take place, though the pace
and timing of a recovery remains uncertain. In addition, global
supply chains in the medical device industry are complex, and it is
possible that supply disruptions will cause product delays and
affect revenue of some products.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Ratings could be upgraded if the company continues to deleverage
and maintains balanced financial policies. Quantitatively ratings
could be upgraded if debt/EBITDA approaches 3.5 times over the next
12 to 18 months.
Ratings could be downgraded if BD's capital allocation priorities
become more aggressive, for example, if it undertakes a sizable
acquisition while leverage is elevated. Ratings could be downgraded
if debt/EBITDA is sustained above 4.25 times for an extended
period.
Becton, Dickinson and Company, headquartered in Franklin Lakes, New
Jersey, is a global medical technology company engaged in the
development, manufacture and sale of a broad range of medical
supplies, devices, and laboratory equipment used by healthcare
institutions, physicians, clinical laboratories, and the general
public. Revenues are approximately $17 billion.
The principal methodology used in these ratings was Medical Product
and Device Industry published in June 2017.
BLACKSTONE MORTGAGE: Moody's Rates Term Loan B Add-On 'Ba2'
-----------------------------------------------------------
Moody's Investors Service has assigned a Ba2 rating to Blackstone
Mortgage Trust, Inc.'s Term Loan B add-on. BXMT's Ba2 corporate
family rating and Ba2 senior secured rating were unaffected by the
company's decision to increase its existing Term Loan B by $250
million. BXMT's rating outlook remains negative.
RATINGS RATIONALE
BXMT's Ba2 CFR reflects the strength of the company's competitive
positioning in the commercial real estate sector resulting from its
affiliation with The Blackstone Group L.P., and its strong asset
quality, stable profitability and low leverage. BXMT also has a
longer operating history than most rated CRE lenders that spans
industry cycles, a credit positive. Credit constraints include the
company's CRE concentration, its higher business line concentration
compared to certain peers and its high reliance on secured funding
that encumbers its earning assets and limits its access to the
unsecured debt markets.
The Ba2 rating assigned to BXMT's Term Loan B reflects its senior
secured position in the company's capital hierarchy and strong
collateral coverage. Moody's views the asset pledges comprising the
loan's security, which predominantly includes equity interests in
credit facilities and retained securitization interests that have
higher expected asset volatility, to be of lesser quality than the
first lien loans securing other debt. However, the pledged
collateral has a high nominal value, which Moody's expects will
provide strong coverage of the loan even if the value of the
underlying assets weakens.
The negative rating outlook reflects Moody's expectation that
BXMT's asset quality, profitability and capital will weaken as a
result of the coronavirus pandemic, over the next 12-18 months.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
The negative outlook indicates that a ratings upgrade is unlikely
over the next 12-18 months. However, BXMT's ratings could be
upgraded if the company: 1) reduces its ratio of secured debt to
total assets to 45%, increases unencumbered assets and establishes
unsecured revolving borrowing capacity; 2) increases business
diversification; and 3) continues to demonstrate predictable
earnings, profitability and asset quality that compare favorably
with peers.
BXMT's ratings could be downgraded if the company: 1) shrinks the
amount of its availability under secured borrowing facilities, its
primary liquidity source; 2) sustains an increase in leverage
(debt/total equity) above 3.5x given the current portfolio mix; 3)
experiences a material deterioration in asset quality; or 4)
experiences a material weakening of profitability.
The principal methodology used in this rating was Finance Companies
Methodology published in November 2019.
BLACKWOOD REDEVELOPMENT: PSB Credit Services Object to Disclosures
------------------------------------------------------------------
PSB Credit Services, Inc., submitted an objection to the Blackwood
Redevelopment Co. Inc.'s Disclosure Statement and Plan of
Reorganization.
PSB Credit Services point out that the Disclosure Statement should
provide holders of claims and interests with sufficient information
to evaluate a plan and make a reasonably informed decision on
whether to accept or reject a plan.
PSB Credit Services further point out that the Disclosure Statement
fails to provide adequate valuation of both the Property and the
Liquor License.
PSB Credit Services complain that the information provided in the
Disclosure Statement with respect to the Lender fails to inform the
Court what the Lender will receive from the liquidation of the
Property and when it is expected to be liquidated.
PSB Credit Services assert that the Debtor proposes to fund the
Plan from the sale of the Property subject to the Lender's Mortgage
as well as the sale of a liquor license not owned by the Debtor.
According to PSB Credit Services, the Debtor seeks to pay
administrative expenses even if the liquidation of the Property is
not sufficient to pay the entirety of the Lender's claim, as
required by the Order.
PSB Credit Services point out that the administrative claims would
be paid out of the sale of the Liquor license, as opposed to the
sale of the Property, however, without valuation of the either
asset, it is impossible to determine same.
PSB Credit Services further point out that the Debtor’s
Disclosure Statement, in its present form, fails to properly
disclose the obligations and rights set forth in the October 1,
2019 Consent Order.
Attorney for PSB Credit Services:
Kyle F. Eingorn, Esquire
DEMBO, BROWN & BURNS LLP
1300 Route 73, Suite 205
Mount Laurel, NJ 08054
Tel: (856) 354-8866
E-mail: keingorn@dblegal.com
About Blackwood Redevelopment
Blackwood Redevelopment Co. Inc., based in Blackwood, NJ, filed a
Chapter 11 petition (Bankr. D.N.J. Case No. 19-15937) on March 25,
2019. In the petition signed by Daniel Riiff, president, the
Debtor disclosed $1,400,000 in assets and $4,342,768 in
liabilities. Scott H. Marcus, Esq., at Nehmad Perrillo Davis &
Goldstein, PC, serves as bankruptcy counsel to the Debtor.
BLUEPOINT MEDICAL: Has Until June 9 to File New Plan & Disclosure
-----------------------------------------------------------------
Judge Klinette H. Kindred has entered an order that debtor
Bluepoint Medical Associates LLC will file a Disclosure Statement
and new Plan by June 9, 2020, with a hearing for approval on the
Disclosure Statement scheduled on June 23, 2020, at 11:00 a.m. and
confirmation on new Plan scheduled for July 14, 2020, at 11:00
a.m.
A full-text copy of the order dated April 24, 2020, is available at
https://tinyurl.com/y7yvq37z from PacerMonitor.com at no charge.
The Debtor is represented by:
LAW OFFICE OF JOHN T. DONELAN
JOHN T. DONELAN, ESQUIRE
125 South Royal Street
Alexandria, Virginia 22314
Tel: 703-684-7555
Fax: 703-684-0981
About Bluepoint Medical Associates
Bluepoint Medical Associates LLC specializes in weight loss
management and sleep, serving the residents of Northern Virginia,
Maryland, Washington, D.C., and the surrounding area.
Bluepoint Medical Associates sought protection under Chapter 11 of
the Bankruptcy Code (Bankr. E.D. Va. Case No. 19-13121) on Sept.
19, 2019. At the time of the filing, the Debtor was estimated to
have assets of less than $50,000 and liabilities of less than $10
million. The petition was signed by LaTaunya Johnson-Weaver,
managing member. The Hon. Klinette H. Kindred is the case judge.
The Law Office of John T. Donelan is the Debtor's counsel.
BOXER PARENT: Moody's Affirms B3 CFR on Proposed Acquisition
------------------------------------------------------------
Moody's Investors Service affirmed Boxer Parent Company Inc.'s B3
Corporate Family Rating and B3-PD Probability of Default Rating
following plans to acquire Compuware Corp. In addition, Moody's
assigned a B2 rating to BMC's proposed 1st lien notes and affirmed
the B2 rating on the upsized 1st lien senior secured debt
facilities. Moody's also assigned a Caa2 rating to the proposed 2nd
lien secured notes and affirmed the Caa2 rating on BMC's existing
senior unsecured notes. The outlook is stable.
BMC's acquisition of Compuware is being funded with new $US and
Euro 1st lien secured notes, new 2nd lien $US secured notes and new
equity from KKR. The Compuware acquisition adds a complimentary set
of mainframe software tools further strengthening BMC's mainframe
software position versus industry leaders, IBM and Broadcom
(formerly CA, Inc.). Though the combined companies' will face
headwinds as a result of the economic recession driven by the
COVID-19 outbreak, BMC is entering peak renewal years which should
result in moderate overall growth in fiscal 2021 and 2022 (FYE
March 31).
Pro forma leverage excluding certain one-time costs is over 8x
based on December 31, 2019 trailing results (and over 9x including
those costs). Moody's expects leverage to improve towards 7x over
the next 18 months based on EBITDA growth as BMC enters the peak of
its renewal cycle and the economy gradually recovers. FY 2020 (FYE
March 31) was a trough year in BMC's renewal cycle.
RATINGS RATIONALE
The B3 CFR reflects BMC's very high leverage as a result of the KKR
buyout and Compuware acquisition, and aggressive financial
policies. The credit profile also considers the strength of BMC's
market position as a leading independent provider of IT systems
management software solutions, the resiliency of its high-margin
mainframe software business and resultant cash generating
capabilities. BMC's mainframe business (including the mainframe
portion of workload automation business) is estimated to generate
close to half of the company's operating profit and cash flow,
however it has limited growth prospects as a mature business.
BMC's revenues and free cash can swing significantly based on
renewal cycles resulting in free cash flow to debt levels between
0% and 5%. Although Moody's expects flat to modest medium term
growth, revenues and EBITDA are expected to demonstrate much higher
volatility under accounting standard ASC 606. The ratings also
reflect the challenges of navigating an evolving IT management
market while continually restructuring the business. The IT
management software industry is evolving to adapt to the growing
complexity of cloud based, privately hosted, and on-premise IT
environments. The established players such as BMC, CA (owned by
Broadcom), IBM and Hewlett Packard Enterprise face tough
competition from fast growing cloud players such as ServiceNow.
While Moody's views the product portfolio as stronger than after
the previous buyout (2013), BMC needs to continually introduce new
products and features or risk declines in market share.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The stable outlook reflects Moody's expectation that BMC's
operating performance will improve over the next two years,
relatively in line with previous renewal cycles. The outlook
accommodates typical cyclicality in revenues, EBITDA and free cash
flow tied to peaks and troughs of the renewal cycle.
Ratings could be upgraded if BMC demonstrates modest growth,
leverage declines to less than 7x and free cash flow to debt
averages greater than 5% through the renewal cycle. The ratings
could be downgraded if performance deteriorates (other than typical
renewal cycle swings), leverage is expected to be sustained above
8.5x or free cash flow is negative on other than a temporary
basis.
BMC's liquidity is considered good based on solid levels of cash at
closing, a $475 million undrawn revolver and Moody's expectation of
over $250 million of free cash flow over the next 12-18 months.
The rapid and widening spread of the coronavirus outbreak,
deteriorating global economic outlook, falling oil prices, and
asset price declines are creating a severe and extensive credit
shock across many sectors, regions and markets. The combined credit
effects of these developments are unprecedented. The weaknesses in
BMC's credit profile, including its very high leverage and exposure
to global economies have left it vulnerable to shifts in market
sentiment in these unprecedented operating conditions and BMC
remains vulnerable to the outbreak continuing to spread. Moody's
regards the coronavirus outbreak as a social risk under its ESG
framework, given the substantial implications for public health and
safety.
Assignments:
Issuer: BOXER PARENT COMPANY INC. (BMC)
Senior Secured First Lien Regular Bond/Debenture, Assigned B2
(LGD3)
Senior Secured Second Lien Regular Bond/Debenture, Assigned Caa2
(LGD5)
Affirmations:
Issuer: BOXER PARENT COMPANY INC. (BMC)
Probability of Default Rating, Affirmed B3-PD
Corporate Family Rating, Affirmed B3
Senior Secured Bank Credit Facility, Affirmed B2 (LGD3)
Senior Unsecured Regular Bond/Debenture, Affirmed Caa2 (LGD6) from
(LGD5)
Outlook Actions:
Issuer: BOXER PARENT COMPANY INC. (BMC)
Outlook, Remains Stable
BMC is a provider of a broad range of IT management software tools.
The company is owned by private equity firm KKR. Pro forma for the
Compuware acquisition, revenues were approximately $1.9 billion for
the twelve months ended December 31, 2019. The company is
headquartered in Houston, TX.
The principal methodology used in these ratings was Software
Industry published in August 2018.
CARBO CERAMICS: Appointment of Equity Committee Sought
------------------------------------------------------
A shareholder of Carbo Ceramics Inc. asked the U.S. Bankruptcy
Court for the Southern District of Texas to appoint a committee to
represent equity shareholders of the company and its affiliates.
In a motion filed in court, Nathan Smart said the "erosion of
hundreds of millions of dollars of total assets is enough to
warrant an equity committee."
According to the motion, the properties of Carbo Ceramics and its
affiliates were valued at $240.561 million prior to their
bankruptcy filing. After the companies filed for Chapter 11
protection, they valued their properties at $66.168 million.
"If stakeholders are assumed to ignore the missing $174 million in
property, it is then curious how markedly similar the $66 million
debtor valuation is to the $65 million lien, owed to the Wilks
Brothers," Mr. Smart said.
Mr. Smart also said that without an equity committee, shareholders
are bereft of resources to address remaining concerns such as the
potential future of patents.
Another equity security holder also proposed the appointment of an
equity committee "to assure adequate representation of the
interests of equity holders in order to overcome an aggressive
undervalued asset grab of debtors' assets by both the Wilks
Brothers and debtors' executive team."
Wilks Brothers and another company Equity Financial, LLC had
earlier reached an agreement with Carbo Ceramics under which they
will acquire the company through a debt-for-equity exchange
pursuant to a Chapter 11 plan of reorganization.
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
CARMAX INC: Egan-Jones Cuts Sr. Unsecured Ratings to BB-
--------------------------------------------------------
Egan-Jones Ratings Company, on April 30, 2020, downgraded the
foreign currency and local currency senior unsecured ratings on
debt issued by CarMax Incorporated to BB- from BB.
Headquartered in Richmond, Virginia, CarMax, Incorporated sells at
retail used cars and light trucks.
CENTRAL ARKANSAS RADIATION: Fitch Affirms BB+ on $48.2MM 2013 Bonds
-------------------------------------------------------------------
Fitch Ratings has affirmed the rating on the $48.245 million
Pulaski County Public Facilities Board health facilities revenue
bonds, series 2013, issued on behalf of the Central Arkansas
Radiation Therapy Institute (d/b/a CARTI) at 'BB+'.
In addition, Fitch has affirmed CARTI's Issuer Default Rating at
'BB+.'
The Rating Outlook is Stable.
SECURITY
The bonds are secured by a pledge of gross revenues, a
first-mortgage lien on CARTI's main campus and a debt service
reserve fund.
ANALYTICAL CONCLUSION
The 'BB+' IDR and revenue bond rating and Stable Outlook reflect
Fitch's expectation that CARTI will maintain a weaker but stable
financial profile with net adjusted leverage of near 4x through
Fitch's scenario analysis, which incorporates elevated levels of
operating and investment market volatility. Liquidity remains weak,
with a cushion of 0.24x and will likely remain a constraint over
the intermediate term. CARTI's revenue defensibility is midrange,
characterized by low Medicaid and self-pay exposure and a leading
market share for its essential cancer treatment services in the
stable and growing Little Rock, AR service area. Recent operating
stability has resulted in improved cash flow and CARTI's largely
new facilities provide a high degree of capital flexibility.
The recent coronavirus pandemic and related government containment
measures worldwide have created an uncertain environment for the
entire healthcare system in the near term. The essential nature of
CARTI's healthcare services has provided some insulation from
operating volatility to date, with new patient volumes showing some
softening and stability in treatment plans for current patients.
Further, CARTI has received some funds from federal stimulus
programs, adding approximately $7.3 million to operating revenues
in fiscal 2020, which Fitch's considers key to supporting the
Stable Outlook under increased operating and market volatility.
While CARTI's financial performance through the most recently
available data has not indicated any impairment related to the
pandemic, material changes in revenue and cost profiles will occur
across the sector and will likely worsen in the coming weeks and
months as economic activity suffers and as restrictions continue
until a gradual re-activation occurs. Fitch's ratings are
forward-looking in nature, and Fitch will monitor developments in
the sector as a result of the virus outbreak as it relates to
severity and duration and incorporate revised expectations for
future performance and assessment of key risks.
KEY RATING DRIVERS
Revenue Defensibility: 'Midrange'
Fitch's assessment of 'midrange' revenue defensibility corresponds
to a revenue defensibility assessment of 'bbb' under the 'U.S.
Not-For-Profit Hospitals and Health Systems Rating Criteria'. The
'bbb' assessment reflects CARTI's strong regional reputation that
solidifies its market share and provides bargaining power on key
revenue contracts with commercial payors and clinical affiliates.
Demographic characteristics in CARTI's primary operating location
of Little Rock, AR are stable, as is its payor mix, evidenced by
very low Medicaid and self-pay as a percentage of gross revenues.
Operating Risk: 'Weaker'
Fitch's assessment of operating risk at 'weaker' reflects CARTI's
history of operating deficits through fiscal 2017, with
considerable revenue and expense volatility prior to expense
controls and improved collections that have materialized over the
past couple of years. Over time, Fitch expects CARTI's revenue
growth to track expenses, with breakeven operations over the
Outlook period. Resource management outcomes are adequate, with
CARTI's growing reputation assisting in recruitment efforts of a
highly specialized medical staff at both its main facility and
affiliate locations. Capital spending from operations is expected
to be manageable over the next five years. Large scale strategic
capital projects are possible, but no material plans have been
developed to date and Fitch expects capital spending needs to be
manageable over the intermediate term.
Financial Profile: 'Weaker'
CARTI's limited balance sheet resources and history of weak cash
flow, relative to its adjusted debt through the cycle, support a
'weaker' assessment of its leverage profile. The assessment of
CARTI's overall financial profile is further constrained by its
very low liquidity cushion relative to operating expenses (around
0.24x), which compromises financial flexibility relative to Fitch's
'weaker' assessment of its operating risk.
ASYMMETRIC RISK ADDITIVE CONSIDERATIONS
There were no overall asymmetric additive risk factors applied in
the rating determination.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Volatility in patient volumes that results in weakened
financial performance, particularly as Medicare withholdings for
fiscal 2020 prepayment take effect;
-- Weaker operating performance to a level that no longer
comfortably supports annual debt service, particularly as CARTI has
a history of volatile cash flow and missed coverage covenants;
-- Prolonged erosion to CARTI's already weak leverage and/or
liquidity positions, particularly should AF fall below 50% of
adjusted debt.
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Improvement in CARTI's liquidity cushion to consistently above
0.33x cash operating expenses;
-- A track record of consistent positive operating margins with
net debt to FADS consistently below 3x.
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 PROFILE
CARTI is a freestanding outpatient cancer care provider, serving
the Little Rock and central Arkansas area with radiation, medical,
surgical and other cancer treatment services. Total revenues were
$218 million in fiscal 2019 (fiscal year end June 30).
REVENUE DEFENSIBILITY
CARTI's leadership in outpatient cancer services within Little Rock
and the surrounding market remains a key strength and is further
buttressed by relatively low levels of Medicaid and self-pay gross
revenues (around 5%). High government payor exposure remains, as
Medicare is a significant component of payor mix at consistently
above 50% of gross revenues. CARTI's favorable payor mix, with
limited Medicaid and self-pay, is expected to remain stable, given
overall stability in the greater Little Rock area that CARTI
serves, including more recent expansion into North Little Rock. The
city of Little Rock and Pulaski County both exhibit moderately
lower wealth and income levels than the national average, although
this concern is offset somewhat by continued population growth and
stable to favorable demographic trends.
Patient revenues make up essentially all of CARTI's operating
revenue base, making long-term demand prospects for services
central to future revenue defensibility. CARTI's leading market
position, prudent affiliation with partnering inpatient providers
and stable service area characteristics have resulted in
consistent, healthy volume growth in recent years.
OPERATING RISK
Revenue growth has outpaced expense growth in recent years. Revenue
growth lagged expenses after the completion of CARTI's cancer
center facility in late 2015, which effectively consolidated many
core operations that had previously been conducted in disparate
leased spaces. Fiscal 2019 reflects CARTI's third consecutive year
of revenue growth in excess of expense inflation with solid debt
service coverage on covenant and cash flow bases and an EBITDA
margin of around 3%. Initiatives in place since fiscal 2018 have
resulted in financial improvement, including strengthened revenue
cycle management, enhanced physician alignment, and tighter
management of salaries and wages. Oncology therapy drugs are
CARTI's greatest expense, resulting in a relatively variable
expense base and providing some flexibility to vary costs with
demand fluctuation. Management indicates that additional clinical
uses for some of these new treatments have resulted in growing
levels of coverage from commercial insurers, but Fitch believes
that CARTI's high government payor mix limits its ability to pass
costs on through charges for services and will require ongoing
efficiencies in revenue cycle performance and expense control to
maintain these recent operating improvements.
Resource management risk is expected to remain limited, as CARTI's
strong and growing regional reputation has facilitated the
recruitment of physicians with unique cancer therapy
specializations that enhance CARTI's outpatient performance as well
as affiliations with inpatient treatment providers.
Capital planning and management is neutral to CARTI's rating, as
budgeting and planning for facility expansions and improvements
have historically proven prudent. Future capital planning is
limited to the addition of equipment related to increased volumes
since opening the cancer center campus. Longer-term capital needs
are being considered relative to CARTI's service growth needs but
no specific plans or investment levels are currently known.
FINANCIAL PROFILE
CARTI's adjusted debt totaled $65 million in fiscal 2019, including
non-cancellable operating leases. There is no exposure to defined
benefit pension plans or variable rate instruments. CARTI's
leverage metrics have improved modestly in recent years, with
adjusted debt net of available funds remaining stable at about $20
million and net debt to funds available to pay debt service
improving to 3x in fiscal 2019 from 5x in the prior year.
Fitch expects a deep economic contraction centered in the second
quarter (2020). Fitch assumes containment measures can be unwound
in the second half of 2020, allowing for recovery, although with so
much depending on the progress of the virus, there is a large
degree of uncertainty around the agency's forecasts. Fitch's
analysis purports that the U.S. GDP would shrink in 2020 in a
deeper contraction than was seen in 2009. In the event of the virus
being contained during the second half of 2020, Fitch assumes that
real GDP growth will recover in 2021, reflecting a sharp bounce
back. CARTI's very new facilities and outpatient setting allow for
some deferred capital spending in future years. As a result, Fitch
expects capital spending from unrestricted sources to remain below
depreciation in the near to intermediate term.
Incorporating these assumptions, CARTI's leverage metrics remain
consistent with an 'BB+' rating. Net adjusted debt to FADS remains
at or below 4x throughout Fitch's forward-looking analysis and cash
to adjusted debt declining to around 45%. A sustained track record
of material growth in CARTI's liquidity cushion relative to
operating expenses would be necessary to elicit positive rating
action.
CARTI maintains a thin 0.24x liquidity cushion against cash
operating expenses, inclusive of an undrawn $5.8 million line of
credit, resulting in a negative liquidity assessment. AF totaled
$44 million in fiscal 2019 and leverage is also elevated on an AF
to debt basis, with net debt remaining consistently positive
throughout the forward look.
ASYMMETRIC RISK ADDITIVE CONSIDERATIONS
In addition to the sources of information identified in Fitch's
applicable criteria, this action was informed by information from
Lumesis.
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).
CF INDUSTRIES: S&P Affirms 'BB+' ICR, Alters Outlook to Stable
--------------------------------------------------------------
S&P Global Ratings affirmed its 'BB+' issuer credit rating on
nitrogen fertilizer producer CF Industries Inc. At the same time,
S&P affirmed its 'BBB-' issue rating on the senior secured debt
(with a '1' recovery rating) and 'BB+' issue rating on the
unsecured debt (with a '3' recovery rating).
"We are revising the outlook to stable from positive, reflecting
our view of a lower likelihood for a potential upgrade in 2020. We
expect management will continue to take steps to conserve cash and
protect current credit quality. We believe there will be sufficient
cushion under credit metrics to offset any unexpected weakening in
earnings beyond our assumed decline," S&P said.
S&P's outlook revision to stable reflects its expectation that
operating conditions in nitrogen fertilizer markets will be less
favorable than 2019, a year when earnings were especially strong.
S&P no longer expects CF to build on or sustain its 2019 earnings
peak because the rating agency now expects prices for the company's
products to be less robust than the rating agency previously
envisioned. Still, S&P does not expect 2020 to be a year of trough
earnings. It now believes the ratio of FFO to total debt will be
around 30%, at the high end of the 20% - 30% range for the current
rating. S&P believes nitrogen fertilizer prices will be weaker on
average in 2020 despite a strong start to the year. While S&P
attributes the weakening to multiple reasons, it is broadly related
to the uncertainty in demand and operating conditions created by
the COVID-19 pandemic. S&P's rating also considers that given the
higher level of uncertainty in the operating environment,
management will be prudent in managing its cash, liquidity, and
debt. The company has a recent history of meaningful debt
reductions, which S&P considers a credit strength. It no longer
believes there is uncertainty related to management actions for M&A
or shareholder rewards that could weaken credit metrics in 2020
beyond those it considered in its rating.
S&P continues to believe long term demand growth for nitrogen is
favorable. Improving economic conditions globally and a growing
global population combined with declining arable land will continue
to increase nitrogen fertilizer demand--a trend favoring globally
competitive nitrogen producers such as CF. Additionally, farmers,
in general, view the application of nitrogen fertilizer as less
discretionary than other fertilizers.
Key business strengths include CF's market-leader status as the
largest domestic nitrogen fertilizer producer (a commodity for
which domestic demand exceeds domestic supply).
"We also see CF's globally cost-competitive position--because it
benefits from access to low-cost shale gas--as an advantage. CF is
well positioned in the U.S. market, which ranks in the top four
global markets for nitrogen in terms of size. We expect imports
will continue to bridge the shortfall arising from lower domestic
production relative to domestic demand for at least the next two
years," S&P said.
Key risks include:
-- The company's narrow focus on a commodity fertilizer, and a
singular focus on only one fertilizer type, namely nitrogen;
-- Geographic concentration in the U.S. and Canadian markets;
Asset concentration with a large portion of production from a
single site in Donaldsonville, La.; and
-- The somewhat unpredictable nature of short-term demand, which
can be susceptible to weather-related events.
These characteristics can make earnings very volatile even in the
absence of substantial supply additions.
"The stable outlook reflects our view that 2020 earnings will be
lower than the highs achieved in 2019, and more in line with prior
years such as 2018, which was not a year of weak earnings by
historical standards," S&P said.
Despite weaker 2020 earnings, S&P expects the company's FFO to debt
will remain around 30%; well within the 20% to 30% range the rating
agency expects for the rating.
"In our view, cushions under credit metrics were strong for the
rating at year-end 2019, and despite some weakening, will be
appropriate for the rating at year-end 2020," S&P said.
S&P does not anticipate any supply shocks in the form of large
capacity additions (and believe some ongoing capacity expansions
could slow down in the current environment) that will meaningfully
weaken prices, nor does it anticipates long-term demand weaknesses
because of weather-related events or a general slowdown in the use
of nitrogen-based fertilizer. S&P's long-term view, over the next
decade or so, remains favorable in terms of demand growth trends.
S&P believes capital spending (which peaked in 2015 and 2016) will
continue at the significantly lower levels the company achieved
since then. In a downturn, S&P doesn't expect the ratio to drop
below 20%, without prospects for immediate recovery.
"We could lower ratings over the next 12 months if operating
performance weakens unexpectedly or debt rises such that FFO to
total debt falls below 20% on a weighted average basis with no
prospect for improvement. We could also lower ratings if management
stretches the financial profile to pursue additional growth
objectives or shareholder rewards, potentially weakening metrics,"
S&P said.
"We could raise the rating over the next 12 months if we expect the
FFO to debt to remain at levels it has only recently attained of
40% or higher, with the expectation that in a future downturn the
ratio would remain above 30%. To consider an investment-grade
rating, we would also have to believe that management is committed
to maintaining or improving credit measures, and that the potential
for debt-funded transformational acquisition is remote," the rating
agency said.
CHART INDUSTRIES: Egan-Jones Cuts Senior Unsecured Ratings to BB+
-----------------------------------------------------------------
Egan-Jones Ratings Company, on May 1, 2020, downgraded the foreign
currency and local currency senior unsecured ratings on debt issued
by Chart Industries Inc. to BB+ from BBB-.
Headquartered in Ball Ground, Georgia, Chart Industries, Inc.
operates as a global manufacturer of equipment used in the
production, storage, and end-use of hydrocarbon and industrial
gases.
CLEAVER-BROOKS INC: Moody's Cuts CFR & Sr. Secured Rating to Caa1
-----------------------------------------------------------------
Moody's Investors Service downgraded its ratings for
Cleaver-Brooks, Inc., including the company's corporate family
rating (CFR, to Caa1 from B3) and probability of default rating (to
Caa1-PD from B3-PD), as well as the ratings for its senior secured
notes (to Caa1 from B3). The ratings outlook is negative.
RATINGS RATIONALE
The downgrades reflect Moody's expectation of a difficult operating
environment for Cleaver due to the disruptive effects of the
coronavirus crisis. Moody's expects meaningful earnings and cash
flow pressures during 2021 (fiscal year ends March) as the economic
slowdown from the coronavirus pandemic reduces demand for Cleaver's
packaged and engineered boilers and curtails aftermarket and boiler
services work. These earnings headwinds will be against a backdrop
of a highly leveraged balance sheet (estimated Moody's-adjusted
debt-to-EBITDA of around 7x as of March 2020) and a weak liquidity
profile, both of which limit underlying financial flexibility.
The Caa1 CFR broadly reflects Cleaver's high financial leverage,
its small revenue base, a heavy reliance on cyclical boiler markets
and Moody's expectation of a weak liquidity profile. Moody's
recognizes Cleaver's good standing within packaged boiler markets
as well as the generally stable nature of the company's aftermarket
and business services segments, albeit with businesses generally
expected to be more volatile over the coming quarters in the face
of disruptions from the coronavirus. Litigation risk relating to
significant asbestos claims represents an additional area of
concern for creditors, but management has attempted to mitigate
this risk through insurance and indemnification from the company's
prior owner.
The rapid and widening spread of the coronavirus outbreak, the
deteriorating global economic outlook, very low and volatile 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 manufacturing sector has been adversely affected
by the shock given its indirect sensitivity to consumer demand and
sentiment. More specifically, expectations of Cleaver's weakening
financial flexibility and exposure to falling demand leave it
vulnerable in these unprecedented operating conditions, and the
company remains vulnerable to the ongoing adverse impact of the
outbreak. Moody's regards the coronavirus outbreak as a social risk
under its ESG framework, given the substantial implications for
public health and safety. Its actions reflect the expected impact
on Cleaver of the breadth and severity of the shock, and the broad
deterioration in credit quality it has triggered.
The negative outlook incorporates Moody's expectation of a
challenging operating environment, with meaningful topline and
earnings pressure and a weak liquidity profile for at least the
next 12 months.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Factors that could lead to an upgrade of ratings include
expectations of an improving liquidity profile with reduced
reliance on revolver borrowings and free cash flow-to-debt in the
low single-digit range. Moody's-adjusted debt-to-EBITDA sustained
below 7x could also result in upward ratings action.
Factors that could lead to a downgrade of ratings include
expectations of deteriorating liquidity with meaningful cash burn
during fiscal 2021, decreasing availability under the ABL facility
or an anticipated breach of financial covenants. A decrease in
earnings beyond what is already contemplated could also result in a
ratings downgrade. The ratings could also be downgraded if an
unfavorable asbestos litigation ruling is deemed to impair
Cleaver's business or liquidity profile.
The following summarizes Moody's rating actions and ratings:
Issuer: Cleaver-Brooks, Inc.
Corporate Family Rating, downgraded to Caa1 from B3
Probability of Default Rating, downgraded to Caa1-PD from B3-PD
$375 million senior secured notes due 2023, downgraded to Caa1
(LGD4) from B3 (LGD4)
Outlook, Changed to Negative from Stable
Headquartered in Thomasville, Georgia, Cleaver Brooks Inc.,
manufactures integrated proprietary boiler room systems including
boilers, burners, controls, components and accessories. The boilers
provide hot water, steam and, in some instances, localized energy
critical to operations in industrial, institutional and commercial
applications in a wide range of markets including energy and
petrochemical, healthcare, food and beverage, and government. The
company is owned by Harbour Group. Estimated revenues for the
twelve months ended March 2020 are approximately $400 million.
The principal methodology used in theses ratings was Manufacturing
Methodology published in March 2020.
COGECO COMMUNICATIONS: Moody's Affirms B1 CFR, Outlook Stable
-------------------------------------------------------------
Moody's Investors Service assigned a B1 Corporate Family Rating and
B1-PD Probability of Default Rating to Cogeco Communications (USA)
Inc. In addition, Moody's affirmed the B1 rating on the senior
secured bank credit facility, including the company's $150 million
revolving credit facility (due July 2024) and $1,635.3 million term
loan B (due January 2025), which were assumed by Cogeco
Communications Finance (USA), LP (Cogeco Finance) in August 2019,
from Cogeco Communications (USA) II L.P. (the former obligor) in
connection with a tax reorganization. The outlook is stable.
Moody's has also withdrawn the B1 CFR, B1-PD PDR, and stable
outlook at Cogeco Communications (USA) II L.P.
The direct obligor of the credit facility is Cogeco Finance, as
reflected in the amended credit agreement. Through a series of
intercompany credit agreements, Atlantic Broadband Finance LLC, a
wholly owned indirect subsidiary of Cogeco, has an intercompany
note obligation to Cogeco Finance in an equivalent amount, and on
essentially the same terms and conditions as Cogeco Finance. The
credit facility is secured on a first lien basis by all assets of
Cogeco Finance and guaranteed by Cogeco Finance and its
subsidiaries, as well as all of the subsidiaries of Cogeco which
owns substantially all the operating assets of the corporate
family.
Assignments:
Issuer: Cogeco Communications (USA) Inc.
Probability of Default Rating, Assigned B1-PD
Corporate Family Rating, Assigned B1
Issuer: Cogeco Communications Finance (USA), LP
Senior Secured Bank Credit Facility, Assigned B1 (LGD4)
Affirmations:
Issuer: Cogeco Communications (USA) II L.P. assumed by Cogeco
Communications Finance (USA), LP
Senior Secured Bank Credit Facility, Affirmed B1 (LGD4)
Withdrawals:
Issuer: Cogeco Communications (USA) II L.P.
Probability of Default Rating, Withdrawn , previously rated B1-PD
Corporate Family Rating, Withdrawn , previously rated B1
Outlook Actions:
Issuer: Cogeco Communications (USA) Inc.
Outlook, Assigned Stable
Issuer: Cogeco Communications (USA) II L.P.
Outlook, Changed To No Outlook From Stable
Issuer: Cogeco Communications Finance (USA), LP
Outlook, Assigned No Outlook
RATINGS RATIONALE
Cogeco's B1 CFR is supported by a very competitive, fiber-rich,
high speed network that is generating strong broadband demand
(high-speed data or HSD) and subscriber growth. High broadband
margins help to effectively offset the lower margin video business
which is in decline. Good liquidity is also a positive credit
factor. The Company's relatively small scale is a rating
constraint.
The company's credit profile also reflects governance
considerations, notably the implicit support from its much larger,
parent company, Cogeco Communications, Inc. (unrated) which has a
very strong credit profile, and its equity partner Caisse de depôt
et placement du Quebec, one of Canada's largest pension funds.
Cogeco is an indirect, 79% owned subsidiary of Cogeco
Communications Inc., a publicly traded Canadian communications
infrastructure company based in Montreal whose operating segment,
Cogeco Communications, is rated investment grade (Baa3 equivalent)
by other agencies. Cogeco Communications Inc. provides cable
services to residential and commercial customers in Ontario and
Quebec. This relationship provides certain benefits including
management expertise and oversight, and central equipment
procurement. Cogeco has a less than conservative financial policy
that tolerates elevated leverage though Moody's expects management
to remain very disciplined when pursuing M&A.
The rapid and widening spread of the coronavirus outbreak,
deteriorating global economic outlook, falling oil prices, and
asset price declines are creating a severe and extensive credit
shock across many sectors, regions and markets. The combined credit
effects of these developments are unprecedented. Moody's regards
the coronavirus outbreak as a social risk under its ESG framework,
given the substantial implications for public health and safety.
Moody's believes the cable sector has less exposure than many
others, with the expectation that the demand for voice, video and
data are unlikely to fall. In fact, Moody's expects greater demand
across residential, commercial, governmental, and mobile carriers.
Video viewership and engagement is rising sharply, with subscribers
spending extraordinary time watching TV for news and entertainment
comfort. Moody's also believes cable will see a significant rise in
viewership for entertainment programming, and movies with a
complete shut-down of US cinemas. Broadband demand is accelerating
with increased, more evenly distributed usage driven by remote
workers, and a dramatic shift to online commerce and
communications. Any negative implications — disruptions to direct
selling, on-premise installations and service, small and medium
sized businesses, advertising, certain programming (sports and new
production / content), and operations (component supply chains,
construction / network upgrades) will likely be only a temporary
and partial offset.
The instrument ratings reflect the probability of default of the
company, as reflected in the B1-PD Probability of Default Rating,
an average expected family recovery rate of 50% at default given
the covenant-lite nature of the secured debt, and the particular
instruments' ranking in the capital structure. The secured credit
facility is rated B1(LGD4), the same as the CFR, with one class of
debt and no significant rated junior debt to provide additional
lift.
The stable outlook incorporates its view that revenue will average
approximately $815-$820 million over the next 12-18 months. On
EBITDA margins in the mid-40% range, Moody's expects EBITDA to
range between $365 - $370 million. After capital expenditures
(averaging 17%-18% of revenue) and cost of debt (averaging near
3.75% following recent drop in LIBOR rates), Moody's expects free
cash flow to average between $130-$140 million. It projects
leverage (Moody's adjusted) to fall below 4.5x by FY 2021. Its
outlook assumes video subscribers losses in the low single-digit
percentage range, more than offset by growth in broadband
subscribers of at least mid-single digit percent range, translating
in revenue growth in the low to mid-single digit range. Moody's
expects liquidity to remain very good.
Cogeco has a very good liquidity profile supported by solid free
cash flow generation, a fully undrawn $150 million revolver, and
covenant-lite loans with substantial cushion. The company also
benefits from a favorable maturity profile with its revolver not
maturing until July 2024, and the term loan in January 2025.
Alternate liquidity is limited with a fully secured capital
structure.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Moody's would consider a positive rating action if:
- Leverage (Moody's adjusted debt-to-EBITDA) is sustained below
4x times, and
- Free cash flow to debt (Moody's adjusted) is sustained above
high single-digit percent
A positive rating action would also be considered with growth in
the scale and diversity of the business, and greater stability in
the video business.
Moody's would consider a negative rating action if:
- Leverage (Moody's adjusted debt-to-EBITDA) is sustained above
5.5x, or
- Free cash flow to debt (Moody's adjusted) is sustained below
5%
A negative rating action would also be considered if liquidity
deteriorated, company scale declined, or there was a material
change in the operating trends or position of the broadband
business.
Headquartered in Quincy, Massachusetts, Cogeco Communications (USA)
Inc., doing business as Atlantic Broadband, is a private company
currently serving approximately 897 thousand subscribers (306
thousand basic video, 457 thousand high speed data and 134 thousand
phone) across 11 states including Western Pennsylvania, Maryland,
Delaware, Florida, Eastern Connecticut, New York, West Virginia,
South Carolina, Maine, New Hampshire, and Virginia. The company is
owned by Cogeco Communications Inc, a public company in Canada, and
Caisse de depôt et placement du Quebec which holds a 21% minority
interest. Revenue for the last twelve months ended February 29,
2020 was approximately $796 million.
The principal methodology used in these ratings was Pay TV
published in December 2018.
COMPLETE ROOFING: Seeks to Hire David W. Steen as Counsel
---------------------------------------------------------
Complete Roofing and Construction LLC seeks authority from the
United States Bankruptcy Court for the Middle District of Florida
to hire David W. Steen, P.A., as its counsel.
David W. Steen will represent the Debtor in the Chapter 11
bankruptcy proceedings.
As of Petition date, David W. Steen was paid the sum of $6,717 of
the agreed $20,000 retainer, which included the filing fee in the
amount of $1,717.
David W. Steen, partner of David W. Steen, 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/its estates.
David W. Steen can be reached at:
David W. Steen, Esq.
PO Box 270394
Tampa, FL 33688-0394
Tel: (813) 251-3000
E-mail: dwsteengdsteenpa.com
About Complete Roofing
Complete Roofing and Construction LLC is a privately held company
that offers all types of roofing systems to both residential and
commercial clients. Complete Roofing is a Florida State Certified
Roofing Contractor.
Complete Roofing and Construction LLC filed a Petition under
Chapter 11 of the Bankruptcy Code (Bankr. M.D. Fla. Case No.
20-01915) on March 4, 2020. In the petition signed by Donald Eric
Deese, owner/CEO, the Debtor estimated $50,000 to $100,000 in
assets and $1 million to $10 million in liabilities. David W.
Steen, Esq. at DAVID W. STEEN, P.A. represents the Debtor as
counsel.
COSTA HOLLYWOOD: Unsecured Claims Reduced to $8.5M
--------------------------------------------------
Debtor Costa Hollywood Property Owner, LLC, filed a First Amended
Chapter 11 Plan of Liquidation and a First Amended Disclosure
Statement filed April 24, 2020.
On April 10, 2020, the Debtor filed an adversary proceeding against
Greenberg Traurig, P.A. and Stewart Title Guaranty Company styled
Costa Florida Hollywood Property Owner, LLC v. Greenberg Traurig,
P.A., et al., Adv. Case No. 20-01129 (the Turnover Action),
seeking, inter alia, an order directing the turnover of funds held
in escrow by Greenberg Traurig P.A. on behalf of Stewart Title
Guaranty Company.
Prior to the Petition Date, Debtor and Stewart entered into two
indemnity agreements pursuant to which funds were escrowed from
sale proceeds of unit sales to address so-called identified risks
to Stewart and the law firm GT. Specifically, the Indemnity
Agreements relate to 2 lawsuits: one involving Design Engineering
Group and the other involving Costa Investors LLC. Pursuant to the
Indemnity Agreements, a total of $1,425,140 was escrowed with GT
prepetition. GT continues to hold these funds to this day.
Claims against the Debtor raised in a lawsuit by Costa Investors
LLC have been dismissed with prejudice, and the dismissal of those
claims was affirmed on appeal. Therefore, there are no pending
claims against Debtor by Costa Investors LLC.
Design Engineering Group has not filed any proof of claim in the
bankruptcy case, and upon the sale of Debtor’s property it will
be paid in accordance therewith and its purported construction lien
against the Debtor's property will be extinguished. Despite there
no longer being any claims against the Debtor by Design Engineering
Group and Costa Investors LLC, GT and Stewart have failed and
refused to comply with Debtor's turnover demand.
General Unsecured Claims (Class 8) comprise approximately 410
claims (filed and/or scheduled) in the aggregate approximate amount
of $8,500,000, compared to $12.5 million from the previous
iteration of the plan, plus any deficiency claims of holders of
Allowed Secured Claims resulting from the sale of the Collateral.
A full-text copy of the First Amended Disclosure Statement dated
April 24, 2020, is available at https://tinyurl.com/y7gsf7yj from
PacerMonitor at no charge.
Attorneys for the Debtor:
Peter D. Russin, Esquire
James C. Moon, Esquire
Meaghan E. Murphy, Esquire
MELAND RUSSIN & BUDWICK, P.A.
3200 Southeast Financial Center
200 South Biscayne Boulevard
Miami, Florida, 33131
Tel: (305) 358-6363
Fax: (305) 358-1221
E-mail: prussin@melandrussin.com
jmoon@melandrussin.com
mmurphy@melandrussin.com
About Costa Hollywood
Costa Hollywood Property Owner, LLC --
https://www.costahollywoodresort.com/ -- is a privately held
company in the traveler accommodation industry. It owns and
operates Costa Hollywood Beach Resort, a resort hotel in Hollywood
Beach, Florida. Costa Hollywood Beach Resort offers rooms and
suites featuring an elevated design aesthetic and luxe decor.
Costa Hollywood sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. S.D. Fla. Case No. 19-22483) on Sept.
19,2019. In the petition signed by Moses Bensusan, manager and sole
member, the Debtor estimated between $50 million and $100 million
in both assets and liabilities. Judge A. Jay Cristol oversees the
case. Peter D. Russin, Esq., at Meland Russin & Budwick, P.A.,
serves as the Debtor's bankruptcy counsel.
CP ENERGY: Prospect Values $24MM Loan at 26% of Face
----------------------------------------------------
Prospect Capital Corporation has marked its $24,302,000 loan
extended to privately held CP Energy Services Inc. to market at
$23,361,000, or 26% of the outstanding amount, as of March 31,
2020, according to a disclosure contained in a Form 10-Q filing
with the Securities and Exchange Commission for the quarterly
period ended March 31, 2020.
Prospect extended to Spartan Energy Services, Inc. a Senior Secured
Term Loan B (15.00% PIK (LIBOR + 14.00% with 1.00% LIBOR floor),
which is scheduled to mature Dec. 31, 2022. The loan is on
non-accrual status effective Jan. 1, 2020.
"The interest rate on these investments is subject to the base rate
of 1-Month LIBOR, which was 0.99% and 2.40% at March 31, 2020 and
June 30, 2019, respectively. The current base rate for each
investment may be different from the reference rate on March 31,
2020 and June 30, 2019,"Prospect says.
CP Energy Services Inc. provides services for oil and gas
producers.
CREDIT ACCEPTANCE: S&P Alters Outlook to Negative, Affirms 'BB' ICR
-------------------------------------------------------------------
S&P Global Ratings said it revised its outlook on Credit Acceptance
Corp. to negative from stable and affirmed its issuer credit and
unsecured debt ratings at 'BB'.
The outlook revision on Credit Acceptance reflects S&P's view that
the company's financial performance could weaken due to the
economic fallout from the COVID-19 pandemic because of its sizable
concentration in deep subprime auto lending. S&P believes 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 Credit Acceptance. S&P's
outlook also incorporates the fluidity of the situation and
downside risks to the economic forecast over its one-year outlook
horizon.
S&P's negative outlook is based on the current macro environment
and potential impact to Credit Acceptance Corp.'s earnings,
leverage and asset quality. In particular, S&P is concerned that
elevated levels of forbearance and credit deterioration could erode
earnings, increase leverage, or could place funding sources at
risk. It expects the company to maintain debt to adjusted total
equity (ATE) of 2.0x to 2.75x, with ATE including what the rating
agency deems to be general reserves.
"We could lower the rating in the next 12 months if we believe
there is heightened risk of deteriorating asset quality and
earnings, or if debt to ATE is above 2.75x. We could also lower the
ratings if the economic environment weakens Credit Acceptance'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," S&P said.
"We could revise the outlook to stable if the macro environment
stabilizes or we see limited risk of deteriorating earnings and
credit quality," the rating agency said.
D J HARCEG TRUCKING: Has May 20 Deadline to File Plan & Disclosures
-------------------------------------------------------------------
Judge David M. Warren has ordered that D J Harceg Trucking LLC is
allowed an extension up to and including May 20, 2020, to file its
Plan of Reorganization and Disclosure Statement.
About D J Harceg Trucking
Based in Southport, N.C., D J Harceg Trucking, LLC, sought
protection under Chapter 11 of the Bankruptcy Code (Bankr. E.D.N.C.
Case No. 20-00254) on Jan. 21, 2020. At the time of the filing,
the Debtor had estimated assets of $1,234,583 and liabilities of
$1,935,513. The petition was signed by David Harceg, managing
member. Judge David M. Warren oversees the case. George M.
Oliver, Esq., at The Law Offices Of Oliver & Cheek, PLLC, serves
as the Debtor's counsel.
DALF ENERGY: Seeks to Hire Christopher B. Payne as Special Counsel
------------------------------------------------------------------
Dalf Energy, LLC, seeks authority from the US Bankruptcy Court for
the Western District of Texas to hire the Christopher B. Payne,
PLLC, as special counsel.
On July 5, 2017, Dalf, its majority owner TitanUrbi21, LLC, and an
affiliated entity known as Titan Vac & Flow, LLC filed an Original
Petition styled TitanUrbi21, LLC, DALF Energy, LLC and Titan Vac &
Flow, LLC vs. GS Oilfield Services, Oil & Gas Holdings, LLC,
Jeffrey R. Scribner, Ind. and in his Rep. Capacity, and Hector
Fino, Ind. and in his Rep. Capacity, Cause No. 38930, in the 223rd
Judicial District Court of Gray County, Texas. On Dec. 22, 2017,
the Debtor filed a Second Amended Petition which added additional
parties. The basis of the State Court Action is a suit for
rescission of certain contracts for the purchase of oil and gas
leases in the state of Texas, and for certain damages.
Rulings have not been issued on the Motions. As a result of facts
underlying Plaintiffs' claims, Dalf was left with responsibility
for operating worthless and non-profitable oil and gas wells,
resulting in Dalf owing more than $1.1 million in debt to its
creditors and no income available to pay such creditors. Multiple
lawsuits have been filed against Dalf by its creditors. Further,
Dalf has been contacted by the Texas Railroad Commission concerning
potential responsibility for the costs of plugging certain wells.
On March 18, 2020, Plaintiffs filed a Notice of Removal of the
State Court Lawsuit to the United States District Court for the
Northern District of Texas, Amarillo Division.
The scope of Christopher B. Payne's representation of the Debtor
would be to continue to provide services in the State Court Action,
before the United States District Court in the Removed Lawsuit, and
before this Court or any other tribunal on any matters related to
the claims and defenses brought in such litigation.
Christopher B. Payne's proposed hourly rate of $250.
Mr. Payne assures the court that his firm does represent any
interest adverse to the Debtor or to the bankruptcy estate.
The firm can be reached through:
Christopher B. Payne
Christopher B. Payne, PLLC
7500 Rialto Blvd., Bldg. 1, Suite 250
Austin, TX 78735
Phone: 512-872-7553
Fax: (888) 868-5007
E-mail: paynec@cbpaynelaw.com
About DALF Energy, LLC
DALF Energy, LLC is a privately held company in the oil and gas
extraction business.
DALF Energy, LLC, filed its voluntary petition under Chapter 11 of
the Bankruptcy Code (Bankr. W.D. Tex. Case No. 20-50369) on Feb.
17, 2020. In the petition signed by Carlos Sada Gonzalez,
co-manager, the Debtor estimated $1 million to $10 million in both
assets and liabilities. H. Anthony Hervol, Esq. at LAW OFFICE OF H.
ANTHONY HERVOL, represents the Debtor as counsel.
DALF ENERGY: Seeks to Hire Crowe & Dunlevy as Special Counsel
-------------------------------------------------------------
Dalf Energy, LLC, seeks authority from the US Bankruptcy Court for
the Western District of Texas to hire the Crowe & Dunlevy, PC, as
special counsel.
On July 5, 2017, Dalf, its majority owner TitanUrbi21, LLC, and an
affiliated entity known as Titan Vac & Flow, LLC filed an Original
Petition styled TitanUrbi21, LLC, DALF Energy, LLC and Titan Vac &
Flow, LLC vs. GS Oilfield
Services, Oil & Gas Holdings, LLC, Jeffrey R. Scribner, Ind. and in
his Rep. Capacity, and Hector Fino, Ind. and in his Rep. Capacity,
Cause No. 38930, in the 223rd Judicial District Court of Gray
County, Texas. On Dec. 22, 2017, the Debtor filed a Second Amended
Petition which added additional parties. The basis of the State
Court Action is a suit for rescission of certain contracts for the
purchase of oil and gas leases in the state of Texas, and for
certain damages.
Rulings have not been issued on the Motions. As a result of facts
underlying Plaintiffs' claims, Dalf was left with responsibility
for operating worthless and non-profitable oil and gas wells,
resulting in Dalf owing more than $1.1
million in debt to its creditors and no income available to pay
such creditors. Multiple lawsuits have been filed against Dalf by
its creditors. Further, Dalf has been contacted by the Texas
Railroad Commission concerning potential responsibility for the
costs of plugging certain wells.
On March 18, 2020, Plaintiffs filed a Notice of Removal of the
State Court Lawsuit to the United States District Court for the
Northern District of Texas, Amarillo Division.
Due to a local counsel requirement in the Northern District Local
Rules, the Debtor engaged Crowe & Dunlevy to file the Notice of
Removal in the Removed Lawsuit and to serve as the Debtor's local
counsel in the matter.
Titanurbi21, LLC has agreed to pay the Firm a retainer of $2,500
for the matter.
The firm will charge these hourly rates:
Vickie L. Driver $600
Christopher M. Staine $345
Seth Sloan $245
Vickie L. Driver, Esq. of Crowe & Dunlevy assures the court that
her firm does represent any interest adverse to the Debtor or to
the bankruptcy estate.
The firm can be reached through:
Vickie L. Driver, Esq.
CROWE & DUNLEVY, P.C.
2525 McKinnon Street, Suite 425
Dallas, TX 75201
Phone: (214) 420-2143
Fax: (214) 763-1762
Email: vickie.driver@crowedunlevy.com
About DALF Energy, LLC
DALF Energy, LLC is a privately held company in the oil and gas
extraction business.
DALF Energy, LLC, filed its voluntary petition under Chapter 11 of
the Bankruptcy Code (Bankr. W.D. Tex. Case No. 20-50369) on Feb.
17, 2020. In the petition signed by Carlos Sada Gonzalez,
co-manager, the Debtor estimated $1 million to $10 million in both
assets and liabilities. H. Anthony Hervol, Esq. at LAW OFFICE OF H.
ANTHONY HERVOL, represents the Debtor as counsel.
DANCEL LLC: Seeks to Hire Zarian Firm as Business Broker
--------------------------------------------------------
Dancel LLC seeks authority from the United States Bankruptcy Court
for the District of Arizona (Tucson) to hire Zarian Firm,
Corporation as its broker agent.
The services to be provided by Zarian entirely relate to the
marketing and sale of the Debtor's restaurant franchise, and Holly
A. Ford shall serve as the licensed broker for the Debtor.
Depending on whether Zarian is required to share a portion of its
commission with a cooperating agent, Zarian could receive up to 9
percent of the purchase price.
Ms. Ford 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.
The firm can be reached through:
Holly A. Ford
Zarian Firm, Corporation
411 Wolf Ledges Pkwy Ste 201
Akron, OH 44311
Tel: 513-828-9810
About Dancel L.L.C.
Dancel, L.L.C., owns and operates restaurants with multiple
locations in Bernalillo County, N.M. Dancel filed a voluntary
Chapter 11 petition (Bankr. D. Ariz. Case No. 19-10446) on August
20, 2019. In the petition signed by Laura Olguin, manager, the
Debtor was estimated to have $500,000 to $1 million in assets and
$1 million to $10 million in liabilities. The case is assigned to
Judge Scott H. Gan. Charles R. Hyde, Esq., at The Law Offices of
C.R. Hyde, PLC, serves as the Debtor's counsel.
DARDEN RESTAURANTS: Egan-Jones Cuts Local Curr. Unsec. Rating to BB
-------------------------------------------------------------------
Egan-Jones Ratings Company, on April 28, 2020, downgraded the local
currency senior unsecured rating on debt issued by Darden
Restaurants Incorporated to BB from BB+.
Headquartered in Orlando, Florida, Darden Restaurants, Inc. owns
and operates full-service restaurants.
DESTILERIA NACIONAL: Taps Isabel Fullana-Fraticelli as Counsel
--------------------------------------------------------------
Destileria Nacional, Inc. received approval from the U.S.
Bankruptcy Court for the District of Puerto Rico to employ Isabel
Fullana-Fraticelli & Assocs. PSC as its legal counsel.
As legal counsel, Isabel Fullana-Fraticelli will advise Debtor of
its powers and duties under the Bankruptcy Code, represent Debtor
in adversary proceedings, and provide other legal services in
connection with its Chapter 11 case.
The firm will be paid at these rates:
Senior Partners $250 per hour
Associate Lawyers $150 per hour
Paralegals $90 per hour
The firm received a retainer fee of $13,000, plus $1,717 for the
filing fee.
Isabel Fullana, Esq., disclosed in court filings that her firm is a
"disinterested person" within the meaning of Section 101(14) of the
Bankruptcy Code.
The firm can be reached through:
Isabel M. Fullana
Isabel Fullana-Fraticelli & Assocs. PSC
The Hato Rey Center Bldg.
248 Ave. Ponce de Leon Ste. 1002
San Juan, PR 00918-2013
Telephone: (787) 766-2530
Facsimile: (787) 756-7800
Email: ifullana@gaflegal.com
About Destileria Nacional
Destileria Nacional, Inc., a beer manufacturer headquartered in
Guaynabo, P.R., sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. D. Puerto Rico Case No. 20-01247) on March
6, 2020. At the time of the filing, Debtor had estimated assets of
between $100,001 and $500,000 and liabilities of between $500,001
and $1 million. Judge Enrique S. Lamoutte Inclan oversees the
case. Debtor hired Isabel Fullana-Fraticelli & Asoc. PSC as its
legal counsel.
DIAMOND OFFSHORE: Egan-Jones Lowers Senior Unsecured Ratings to D
-----------------------------------------------------------------
Egan-Jones Ratings Company, on April 27, 2020, downgraded the
foreign currency and local currency senior unsecured ratings on
debt issued by Diamond Offshore Drilling Inc. to D from C.
Headquartered in Houston, Texas, Diamond Offshore Drilling, Inc. is
a global offshore oil and gas drilling contractor.
DIAMOND OFFSHORE: U.S. Trustee Appoints Creditors' Committee
------------------------------------------------------------
Henry Hobbs Jr., acting U.S. trustee for Region 7, on May 11, 2020,
appointed a committee to represent unsecured creditors in the
Chapter 11 cases of Diamond Offshore Drilling, Inc. and its
affiliates.
The committee members are:
1. The Bank of New York Mellon Trust Company, N.A.
Attn: Dennis J. Roemlein
601 Travis, 16th Floor
Houston, TX 77002
Tel: 713-483-6531
Fax: 713-483-6979
Email: dennis.roemlein@bnymellon.com
Counsel: Reed Smith, LLP
Eric A. Schaffer, Esq.
Kurt F. Gwynne, Esq.
Lloyd A. Lim, Esq.
811 Main St., Suite 1700
Houston, TX 77002
Tel: 713-469-3671
Fax: 713-469-3899
Email: eschaffer@reedsmith.com
kgwynne@reedsmith.com
llim@reedsmith.com
2. National Oilwell Varco, LP
Attn: Craig L. Weinstock
7909 Parkwood Circle Drive
Houston, TX 77036
Tel: 713-375-3965
Fax: 346-278-3893
Email: craig.weinstock@nov.com
Counsel: Locke Lord
Omer F. Kuebel, Esq.
601 Poydras St.
New Orleans, LA 70130
Tel: 504-558-5155
Email: rkuebel@lockelord.com
3. Deep Sea Mooring
Attn: Frode Hoeyland
Kanalsletta 8
Stavanger, 4033
Norway
Tel: +4795265881
Email: fhoy@deepseamooring.com
Counsel: Jackson Walker, LLP
Bruce J. Ruzinsky, Esq.
1401 McKinney, Suite 1900
Houston, TX 77010
Tel: 713-752-4204
Fax: 713-308-4155
Email: bruzinsky@jw.com
4. Crane Worldwide Logistics LLC
Attn: Dylan Ross
1500 Rankin Road
Houston, TX 77073
Tel: 281-443-2777
Email: dylan.ross@craneww.com
Counsel: Kilmer Crosby & Quadros, PLLC
Brian Kilmer, Esq.
712 Main St., Suite 1100
Houston, TX 77002
Tel: 713-300-9662
Fax: 214-731-3117
Email: bkilmer@kcq-lawfirm.com
5. Kiswire Trading, Inc.
Attn: Victor Maia
P.O. Box 130711
The Woodlands, TX 77393
Tel: 201-696-6051
Email: vicmaia@kiswire.com
6. Parker Hannifin Corporation
Attn: Robert Suszek
6035 Parkland Blvd.
Cleveland, OH 44124
Tel: 216-896-2569
Email: bsuszek@parker.com
7. SafeKick Americas LLC
c/o Helio Santos
Jaime A. Bernardini Yori
1350 Ravello Drive
Katy, TX 77449
Tel: 832-437-5653
Email: helio.santos@safekick.com
Official creditors' committees serve as fiduciaries to the general
population of creditors they represent. They may investigate the
debtor's business and financial affairs. Committees have the right
to employ legal counsel, accountants and financial advisors at a
debtor's expense.
About Diamond Offshore Drilling
Diamond Offshore Drilling, Inc. provides contract drilling services
to the energy industry around the globe with a fleet of 15 offshore
drilling rigs, consisting of four drillships and 11
semi-submersible rigs, including two rigs that are currently cold
stacked. Diamond Offshore Drilling's current fleet excludes the
Ocean Confidence, which it expects to complete the sale of in the
first quarter of 2020. It employs 2,500 people and has revenue of
$981 million in 2019. Visit http://www.diamondoffshore.com/
As of Dec. 31, 2019, Diamond Offshore Drilling had $5.83 billion in
total assets against $2.60 billion in total liabilities.
Diamond Offshore and its affiliates sought Chapter 11 protection
(Bankr. S.D. Tex. Lead Case No. 20-32307) on April 26, 2020.
The Hon. David R. Jones is the case judge.
The Debtors' bankruptcy advisers include investment banker Lazard
FrÃres & Co. LLC.; financial advisor Alvarez & Marshall North
America LLC; and attorneys Porter Hedges LLP and Paul, Weiss,
Rifkind, Wharton & Garrison LLP. Prime Clerk LLC is the claims
agent.
DICK'S SPORTING: Egan-Jones Cuts Local Currency Unsec. Rating to BB
-------------------------------------------------------------------
Egan-Jones Ratings Company, on April 29, 2020, downgraded the local
currency senior unsecured rating on debt issued by Dick's Sporting
Goods Inc. to BB from BBB-.
Dick's Sporting Goods, Inc. is an American sporting goods retail
company, based in Coraopolis, Pennsylvania.
DIVERSITECH HOLDINGS: S&P Alters Outlook to Neg., Affirms 'B' ICR
-----------------------------------------------------------------
S&P Global Ratings revised its outlook on DiversiTech Holdings Inc.
to negative from stable and affirmed the 'B' issuer credit rating
on the company. S&P also affirmed its issue-level ratings on the
first- and second-lien term loans at 'B+' and 'CCC+',
respectively.
"Our outlook revision to negative on DiversiTech is based on our
belief that recessionary pressures will cause revenue and EBITDA to
decline in 2020. The company's most recent performance has been in
line with our previous expectations, with adjusted leverage of 7.2x
and EBITDA interest coverage of 2x for the 12 months ended Dec. 31,
2019. However, based on our forecasts, we expect lower demand will
cause earnings and cash flows to contract in 2020 and thus credit
measures will deteriorate over the next 12 months," S&P said.
S&P believes that the current recession has likely reduced the
U.S.' economic activity by 11.8% peak to trough, which is roughly
three times the decline seen during the Great Recession in
one-third of the time. S&P forecasts the U.S. economy will contract
5.3% this year--including an annualized decline of almost 35% in
the second quarter. Further, S&P believes the recovery will be
gradual as fears linger and social distancing endures, but it
expects the economy will at least partly reopen in the third
quarter.
Organic revenue will decline only modestly in 2020, based on high
exposure to non-discretionary R&R demand. While on an overall basis
2020 revenue might be down by about 15%-20%, a large part of it is
driven by the company's divesture of its Australian operations in
January 2020. The non-discretionary R&R end market drives 85% of
DiversiTech's revenue. As a result, S&P believes the decline in
sales will be modest (low- to mid-single-digit percent) and organic
revenues will be more resilient to recessionary pressures, compared
with that of some of its building material peers.
Depressed demand will partially offset the benefits of divesting
the low-margin-generating Australian operations, thereby causing
credit ratios to weaken over the next 12 months. With the sale of
the low-margin Australian operations in early 2020, EBITDA margins
for DiversiTech would have improved this year compared with 2019.
However, in the current environment, as sales contract,
management's efforts to curtail costs will lag the volume decline.
And thus higher costs will partially offset some of the expected
margin improvement in 2020. Based on this, S&P expects EBITDA
margins to remain flat or improve only marginally in 2020. Further,
S&P expects earnings to contract due to lower revenues and hence
expect credit measures to worsen over the next 12 months.
The negative outlook reflects S&P's belief that extended
recessionary pressure could result in DiversiTech's earnings and
credit measures worsening more than the rating agency expects
under its base case scenario, which assumes a sharp recession in
the first half of 2020 followed by a gradual recovery.
S&P could lower the ratings over the next 12 months if:
-- DiversiTech's EBITDA declined by over 20%, with little
expectations of a rapid recovery.
-- Such a decline, would drive adjusted leverage to above 8x,
EBITDA interest coverage below 1.5x and turn free cashflow
negative; or
-- The company undertook a more aggressive financial policy, such
as pursuing additional debt-funded acquisitions or dividend
payouts, causing credit metrics to deteriorate.
S&P could revise the outlook back to stable over the next 12 months
if:
-- Overall business conditions improved, and
-- DiversiTech maintained leverage in the 6x-7x range and EBITDA
interest coverage above 2x.
DUQUESNE, PA: S&P Puts 'BB' Rating on 2015 GO Bonds on Watch Neg.
-----------------------------------------------------------------
S&P Global Ratings placed its 'BB' rating on City of Duquesne,
Pa.'s series 2015 general obligation (GO) bonds on CreditWatch with
negative implications.
The city's full-faith-and-credit GO pledge secure the bonds.
"The withdrawal of the affected ratings could follow if we do not
receive fiscal 2018 financial statements within 30 days," said S&P
Global Ratings credit analyst Stuart Nicol. "We consider the
information necessary to maintain what we view as a reliable
analysis of the city's financial performance that is comparable to
that of peers, and which forms the basis of our issue ratings on
the city's debt," Mr. Nicol added.
Accordingly, the ratings are now at risk of being withdrawn,
preceded by any changes to the ratings S&P considers appropriate
given available information.
However, if the city provides S&P with 2018 financial statements
within 30 days, it will conduct a full review and take a rating
action within 90 days of the CreditWatch placement.
EDMENTUM ULTIMATE: BlackRock Values $18MM Loan at 63% of Face
-------------------------------------------------------------
BlackRock TCP Capital Corp. has marked its $18,059,291 loan
extended to privately held Edmentum Ultimate Holdings LLC to market
at $11,292,474, or 63% of the outstanding amount, as of March 31,
2020, according to a disclosure contained in a Form 10-Q filing
with the Securities and Exchange Commission for the quarterly
period ended March 31, 2020.
BlackRock holds Edmentum Ultimate's Jr PIK Notes, which is
scheduled to mature on June 9, 2020.
Edmentum Ultimate Holdings LLC is in the Diversified Consumer
Services industry.
ELWYN INC: S&P Lowers 2017 Bond Rating to 'BB' on Heightened Risk
-----------------------------------------------------------------
S&P Global Ratings lowered its long-term rating to 'BB' from 'BBB-'
on Delaware County Authority, Pa.'s series 2017 bonds issued for
Elwyn Inc. (Elwyn). The outlook is negative.
The rating had previously been placed, and then extended on
CreditWatch with negative implications, on Nov. 8, 2019 and Feb.
11, 2020, respectively, until S&P Global Ratings received
additional information of satisfactory quality, including an update
on the success of Elwyn obtaining bank waivers to mitigate the
near-term liquidity risk due to a pending technical default.
"The lowered rating reflects our view of Elwyn's probable operating
losses that are larger than expected for fiscal 2020 due to the
heightened risk and operating challenges caused by the COVID-19
pandemic likely resulting in weaker-than-anticipated financial
performance," said S&P Global Ratings credit analyst Wendy Towber.
"The negative outlook reflects our view of the continued near-term
operating and liquidity pressures, in particular with regard to
Elwyn's line of credit expiring in October 2020, and our view that
overall market access may be limited should management be unable to
secure a renewal," Ms. Towber added
In S&P's view, the health and safety aspects of the pandemic and
resulting decisions to temporarily halt certain programs have
directly negatively affected Elwyn's revenue generation and
increased costs. S&P considers this a social factor in its analysis
of environmental, social and governance risks.
The COVID-19 pandemic continues to change rapidly, with the
potential to disrupt the health care industry across the country.
While the duration, timing, and severity of the impact are unclear,
and may vary by type of human service provider and region, S&P
believes the pandemic, and its associated economic and social
challenges, will create unique operating pressures in the near term
and that a more prolonged or severe stress to operations, the
balance sheet, or primary revenue sources could create additional
negative rating pressure.
ENGINE GROUP: Moody's Withdraws Caa2 Corp. Family Rating
--------------------------------------------------------
Moody's Investors Service has withdrawn all ratings of Engine
Group, Inc., including the Caa2 Corporate Family Rating, Caa1
senior secured first-lien credit facilities ratings and Caa3 senior
secured second-lien term loan rating.
RATINGS RATIONALE
Moody's has decided to withdraw the ratings for its own business
reasons.
SUMMARY OF ITS RATING ACTIONS
Withdrawals:
Issuer: Engine Group, Inc.
Corporate Family Rating, Withdrawn, previously rated Caa2
Probability of Default Rating, Withdrawn, previously rated
Caa2-PD/LD (LD appended)
$35 Million Senior Secured Gtd First-Lien Revolving Credit
Facility due 2022, Withdrawn, previously rated Caa1 (LGD3)
$142 Million Outstanding Senior Secured Gtd First-Lien Term
Loan due 2022, Withdrawn, previously rated Caa1 (LGD3)
$50 Million Senior Secured Gtd Second-Lien Term Loan 2023,
Withdrawn, previously rated Caa3 (LGD5)
Outlook Actions:
Issuer: Engine Group, Inc.
Outlook, Changed to Rating Withdrawn from Negative
Headquartered in New York, NY, Engine Group, Inc. is a
privately-held marketing services and communications firm with a
focus on digital capabilities providing a full range of data-driven
and technology-enabled insights to a variety of leading and
boutique brands operating in diverse end markets.
EXTRACTECH LLC: Case Summary & 20 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: Extractech, LLC
103 McLeod St.
Yerington, NV 89447
Business Description: Extractech, LLC is a biotechnology company
in Yerington, Nevada.
Chapter 11 Petition Date: May 12, 2020
Court: United States Bankruptcy Court
District of Nevada
Case No.: 20-50496
Debtor's Counsel: Alan Smith, Esq.
LAW OFFICES OF ALAN R. SMITH
505 Ridge Street
Reno, NV 89501
Tel: 775-287-6850
E-mail: arsnevada52@gmail.com
Estimated Assets: $10 million to $50 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by David Neisingh, manager.
A copy of the petition is available for free at PacerMonitor.com
at:
https://is.gd/dddN5X
List of Debtor's 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
1. ACE Hardware $8,324
119 W. Bridge Street
Yerington, NV 89447
2. Armstrong Transport Group $21,100
PO Box 74815
Chicago, IL 60694
3. Arnold Machinery Company $12,310
2975 West 2100 South
Salt Lake City, UT
84119
4. Bragg Crane Services $7,234
PO Box 727
Long Beach, CA 90801
5. CEI Alarm $34,775
2155 Green Vista Drive
#201
Sparks, NV 89431
6. DB-JB Investments, LLC $65,000
539 Riverside Dr.
Reno, NV 89503
7. Dotson Law $15,067
5355 Reno
Corporate Drive
Ste 100
Reno, NV 89511
8. Foundry $23,050
255 N. Sierra Street
Ste 140
Reno, NV 89501
9. GO Partnership Limited $13,947
Accounting Department
15 Ogden Park
Bracknell, RG12
9AF
10. Hernandez Electric, LLC $55,782
340 Freeport Blvd
Ste 1
Sparks, NV 89431
11. Lyon County Clerk/ $7,194
Treasurer
27 South Main Street
Yerington, NV 89447
12. McMaster-CARR $12,404
PO Box 7690
Chicago, IL 60680
13. Miles Construction $36,396
61 Industrial Parkway
Carson City, NV 89706
14. NV Energy $12,015
PO Box 30073
Reno, NV 89520
15. Phoenix Equipment Company $17,000
333 Broad Street
Red Bank, NJ 07701
16. Polysol, Inc. $220,000
4410 Sharps Road
Reno, NV 89519
17. Ravago Chemicals North $14,876
America
Western Region
Dept. 34748
PO Box 3900
18. Robert A. Garrett $22,702
PO Box 1335
Yerington, NV 89447
19. Smith Food $14,000
Machinery Inc.
1133 N Broadway
Stockton, CA 95205
20. Tangent Membranes Inc. $20,068
17379 River Ranch Rd
Grass Valley, CA 95949
FATSPI & SON: U.S. Trustee Unable to Appoint Committee
------------------------------------------------------
The U.S. Trustee, until further notice, will not appoint an
official committee of unsecured creditors in the Chapter 11 case of
Fatspi & Son Inc., according to court dockets.
About Fatspi & Son
Fatspi & Son Inc. filed a voluntary Chapter 7 petition (Bankr. S.D.
Fla. Case No. 19-26913) on Dec. 19, 2019. On March 6, 2020, the
case was converted to one under Chapter 11. Judge Mindy A. Mora
oversees the case. White-Boyd Law, PA is Debtor's bankruptcy
counsel.
FOODFIRST GLOBAL: Gordon Food, WPG Appointed as Committee Members
-----------------------------------------------------------------
The Office of the U.S. Trustee on May 11, 2020, appointed Gordon
Food Service, Inc. and Washington Prime Group, Inc. as new members
of the official committee of unsecured creditors in the Chapter 11
cases of FoodFirst Global Restaurants, Inc. and its affiliates.
The bankruptcy watchdog had earlier appointed Rouse-Park Meadows,
LLC, Performance Food Group, Inc. and Simon Property Group, Inc.,
court filings show.
Gordon Food can be reached through:
Sharon Murphy, Director of Credit
Credit Department
Gordon Food Service, Inc.
P.O. Box 2244
Grand Rapids, MI 49501
Phone: (800) 905-3012
Email: sharon.vet@gfs.com
Washington Prime can be reached through:
Stephen E. Ifeduba, Vice President
Corporate & Litigation Counsel
Washington Prime Group, Inc. & affiliates
180 East Broad Street
Columbus, OH 43215
Phone: (614) 621-9000
Email: Stephen.ifeduba@washingtonprime.com
About FoodFirst Global Restaurants
FoodFirst Global Restaurants, Inc. is the parent company for two of
America's Italian restaurant brands: BRIO Tuscan Grille and BRAVO
Cucina Italiana. It was formed in 2018 by investment firm GP
Investments, Ltd and a group of entrepreneurial investors. Visit
https://www.foodfirst.com/index.html for more information.
FoodFirst Global Restaurants and its affiliates sought protection
under Chapter 11 of the Bankruptcy Code (Bankr. M.D. Fla. Lead Case
No. 20-02159) on April 10, 2020. At the time of the filing, the
Debtors disclosed assets of between $10 million and $50 million and
liabilities of the same range. Judge Karen Jennemann oversees the
case. Shuker & Dorris, P.A. is the Debtors' legal counsel.
FORESIGHT ENERGY: Committee Hires Whiteford Taylor as Counsel
-------------------------------------------------------------
The official committee of unsecured creditors of Foresight Energy
L.P. and its debtor affiliates seek authority from
the United States Bankruptcy Court for the Eastern District of
Missouri to retain Whiteford Taylor & Preston, LLP, as its
counsel.
The Committee requires Whiteford to:
(a) advise the Committee regarding its rights, powers, and
duties as a committee elected pursuant to Bankruptcy Code Sec.
1103;
(b) advise and consult with the Committee on the conduct of
the cases including all legal and administrative requirements under
chapter 11;
(c) attend meetings and negotiate with representatives of the
Debtors, the secured and unsecured creditors, equity holders,
employees, and other parties in interest;
(d) advise the Committee regarding any contemplated sale of
assets or business combinations including the negotiation of asset
sales, mergers or joint ventures, formulation and implementation of
bidding procedures, evaluation of competing offers, drafting of
appropriate documents regarding proposed sales, and counseling
regarding the closing of such sales;
(e) advise the Committee regarding prepetition and
post-petition financing and cash collateral arrangements and
negotiate documents relating thereto;
(f) advise the Committee on matters relating to Debtors'
assumption, assumption and assignment and rejection of executory
contracts and unexpired leases;
(g) advise the Committee on matters relating to the ordinary
course of business including employment matters, environmental,
banking, insurance, securities, corporate, business operation,
contracts, joint ventures, real and personal property, press and
public relations matters, and regulatory matters;
(h) provide advice and counseling on actions to protect and
preserve the Debtors' estates including actions and proceedings by
the Debtors or other designated parties to recover assets, defense
of actions and proceedings brought against the estates,
negotiations regarding all litigation in which the Committee may be
involved, and objections to claims filed against the estate;
(i) prepare and file necessary motions, applications, answers,
orders, reports, and papers;
(j) review all pleadings, financial and other reports filed by
the Debtors in these Chapter 11 cases and advise the Committee
about the implications;
(k) review the nature and validity of any liens asserted
against the Debtors' property and advise the Committee concerning
the enforceability of such liens;
(l) investigate the acts, conduct, assets, liabilities, and
financial condition of the Debtors, the operation of the Debtors'
business and the desirability of the continuance of such business,
and any other matter relevant to the cases or to the formulation of
a plan;
(m) commence and conduct any and all ligation necessary or
appropriate to assert rights held by the Committee and/or protect
assets of the Chapter 11 estate;
(n) Negotiate and participate in the preparation of the
Debtors' plan(s) of reorganization, related disclosure statement(s)
and other related documents and agreements, and advise and
participate in the confirmation of such plan(s);
(o) attend meetings with third parties and participate in
negotiations with respect to the above matters;
(p) appear before this Court, other courts, and the Office of
the United States Trustee to protect and represent the interests of
the Committee and the Committee's constituents;
(q) meet and coordinate with other counsel and other
professionals representing the Debtors and other parties in
interest;
(r) perform all other necessary legal services and provide all
necessary legal advice to the Committee in connection with this
chapter 11 cases; and
(s) handle such other matters as may be requested by the
Committee and to which WTP agrees.
Whiteford's hourly rates for attorneys likely to assist in these
cases range from approximately $365 per hour for associates to over
$700 per hour for the firm's partners. Billing rates for
paraprofessionals range from $195 to $295 per hour.
The firm will charge these hourly rates:
Michael J. Roeschenthaler Partner $635
Christopher A. Jones Partner $630
David W. Gaffey Partner $465
Jana S. Pail Counsel $515
Daniel R. Schimizzi Associate $425
J. Zachary Balasko Associate $365
Susan Harding Paralegal $295
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, Michael
J. Roeschenthaler disclosed that:
-- it has not agreed to any variations from, or alternatives
to, its standard or customary billing arrangements for this
engagement;
-- none of the professionals included in the engagement vary
their rate based on the geographic location of the bankruptcy
case;
-- the firm has not represented the Committee in the 12 months
prepetition; and
-- The Committee and Whiteford expect to develop a prospective
budget and staffing plan to comply with the U.S. Trustees requests
for information.
Barry Klinckhardt, Esq., a partner at Whiteford, disclosed in a
court filing that he and his firm are "disinterested" as defined in
section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Michael J. Roeschenthaler, Esq.
WHITEFORD TAYLOR & PRESTON, L.L.P.
200 First Avenue, Third Floor
Pittsburgh, PA 15222-1512
Tel: (412) 618-5600
Email: mroeschenthaler@wtplaw.com
About Foresight Energy
Foresight Energy and its subsidiaries -- http://www.foresight.com/
-- are producers of thermal coal, with four mining complexes and
nearly 2.1 billion tons of proven and probably coal reserves
strategically located near multiple rail and river transportation
access points in the Illinois Basin. The Debtors also own a
barge-loading river terminal on the Ohio River. From this
strategic position, the Debtors sell their coal primarily to
electric utility and industrial companies located in the eastern
half of the United States and across the international market.
Foresight Energy LP and its affiliates sought Chapter 11 protection
(Bankr. E.D. Mo. Lead Case No. 20-41308) on March 10, 2020.
The Hon. Kathy A. Surratt-States is the case judge.
Paul, Weiss, Rifkind, Wharton & Garrison LLP is acting as legal
counsel to Foresight Energy; Jefferies Group is acting as
investment banker; and FTI Consulting, Inc. is acting as financial
advisor. Prime Clerk LLC is the claims agent at
https://cases.primeclerk.com/ForesightEnergy
Akin Gump Strauss Hauer & Feld LLP is acting as legal counsel and
Lazard Freres & Co. LLC is acting as investment banker to the Ad
Hoc Lender Group representing lenders under the first lien credit
agreement.
Milbank LLP is acting as legal counsel and Perella Weinberg
Partners LP is acting as investment banker to the Ad Hoc Lender
Group representing crossover lenders under each of the second lien
indenture and first lien credit agreement.
The Debtors were estimated to have $1 billion to $10 billion in
assets and liabilities.
FOXTROT UNITED: Voluntary Chapter 11 Case Summary
-------------------------------------------------
Debtor: Foxtrot United, LLC
265 W Center Street
Provo, UT 84601
Business Description: Foxtrot United, LLC is a Single Asset Real
Estate (as defined in 11 U.S.C. Section
101(51B)).
Chapter 11 Petition Date: May 12, 2020
Court: United States Bankruptcy Court
District of Utah
Case No.: 20-22838
Judge: Hon. Kimball R. Mosier
Debtor's Counsel: Darren Neilson, Esq.
PARSONS BEHLE AND LATIMER
201 South Main Street Suite 1800
Salt Lake City, UT 84111
Tel: 801-536-6950
E-mail: dneilson@parsonsbehle.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Matthew Baker, manager.
A copy of the petition is available for free at PacerMonitor.com
at:
https://is.gd/LPpp2x
FREEDOM OIL: Case Summary & 29 Unsecured Creditors
--------------------------------------------------
Lead Debtor: Freedom Oil & Gas, Inc
f/d/b/a Maverick Enerholdings USA. Inc.
f/d/b/a Maverick Drilling & Exploration USA, Inc.
f/d/b/a Maverick Drilling Services USA, Inc.
5151 San Felipe, Suite 800
Houston, TX 77056
Business Description: Freedom Oil & Gas, Inc., together with its
subsidiaries, operates as an oil and gas
exploration and production company. Based
in Houston, Texas, the Company has
established an acreage position in the oil-
rich portion of the Eagle Ford shale in
South Texas, in Dimmitt County.
Chapter 11
Petition Date: May 11, 2020
Court: United States Bankruptcy Court
Southern District of Texas
Six affiliates that concurrently filed voluntary petitions for
relief under Chapter 11 of the Bankruptcy Code:
Debtor Case No.
------ --------
Freedom Oil & Gas, Inc 20-32582
Freedom Eagle Ford, Inc. 20-32583
Freedom Production, Inc. 20-32584
Freedom Oil & Gas USA, Inc. 20-32585
Maverick Drilling Company, Inc. 20-32586
Maverick Production Company, Inc 20-32587
Judge: Hon. David R. Jones
Debtors'
General
Bankruptcy
Counsel: Matthew Okin, Esq.
OKIN ADAMS LLP
1113 Vine St., Suite 240
Houston, TX 77002
Tel: (713) 228-4100
Email: info@okinadams.com
Debtors'
Brokerage &
Investment
Banking
Firm: JOHNSON RICE & COMPANY
Freedom Oil & Gas'
Estimated Assets: $1 million to $10 million
Freedom Oil & Gas'
Estimated Liabilities: $10 million to $50 million
Freedom Oil & Gas USA's
Estimated Assets: $1 million to $10 million
Freedom Oil & Gas USA's
Estimated Liabilities: $10 million to $50 million
Freedom Eagle Ford's
Estimated Assets: $1 million to $10 million
Freedom Eagle Ford's
Estimated Liabilities: $10 million to $50 million
Freedom Production's
Estimated Assets: $1 million to $10 million
Freedom Production's
Estimated Liabilities: $10 million to $50 million
Maverick Drilling Company's
Estimated Assets: $0 to $50,000
Maverick Drilling Company's
Estimated Liabilities: $0 to $50,000
Maverick Production Company's
Estimated Assets: $0 to $50,000
Maverick Production Company's
Estimated Liabilities: $0 to $50,000
The petitions were signed by Russell J. Porter, president, CEO, and
secretary.
Full-text copies of the petitions are available for free at
PacerMonitor.com at:
https://is.gd/82hvkY
https://is.gd/YTWFWp
https://is.gd/38zTyP
https://is.gd/6fOINr
https://is.gd/vnXRuq
https://is.gd/MsG1kN
Consolidated List of Debtors' 29 Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
1. Schlumberger $6,433,463
PO Box 732149
Dallas, TX 75373-2149
Email: billing@slb.com
2. Schlumberger $1,949,556
PO Box 732149
Dallas, TX 75373-2149
Email: billing@slb.com
3. Markwest Energy Gathering & $301,981
Operating Co LLC Compression
PO Box 974108
Dallas, TX 75397-4108
Email: ALBA.MNOGAL@MARKWEST.COM
4. Bracewell LLP Secured Lender $69,091
711 Louisiana St Prepetition
Houston, TX 77002 Fees
5. Eagle PCO LLC $60,553
5808 FM 3455
Navasota, TX 77868
Email: ar@eaglepressurecontrol.com
6. ETC Texas Pipeline, Ltd. Gathering $49,479
800 East Sonterra & Processing
Blvd., Suite 400
San Antonio, TX 78258
Email: Koby.Fenton@energytransfer.com
7. Howard Marketing, LLC Gathering & $39,289
16211 La Cantera Parkway, Electricity
Suite 202
San Antonio, TX 78256
Email: TPeacock@howardep.com
8. Weeks Environmental LLC $24,340
PO Box 1169
Premont, TX 78375
Email: weeksoffice@yahoo.com
9. Flowchem Technologies LLC $18,909
11200 Westheimer Road
Houston, TX 77042
Email: ar@flowchem.net
10. Deepwell Energy Services, LLC $17,762
PO Box 1000, Dept#0944
Memphis, TN 38148-0944
Email: sprine@dwservices.com
11. Shell Trading (US) Company Severance $15,624
1000 Main Street, Taxes
Level 12
Houston, TX 77002
Email: Mark.Sleeper@shell.com
12. Louisiana Crane & Construction $15,250
1045 Hwy 190 West
Eunice, LA 70535
Email: alejeune@louisiana-crane.com
13. Impact Lift LLC $8,680
332 W. Main St #10
Vernal, UT 87078
14. Thompson Oilfield Supply LLC $7,190
PO Box 4411
Victoria, TX 77903
Email: tdepine@thompsonoilfieldsupply.com
15. Pro Field Services Inc $6,750
PO Box 525
Hallettsville, TX 77964
Email: evelyn.jansky@profieldservices.com
16. Chat Chatterton (AKA $4,800
Lynne A Chatterton)
1084 Moffett Circle
Palo Alto, CA 94303
17. Weeks Environmental LLC $3,977
PO Box 1169
Premont, TX 78375
Email: weeksoffice@yahoo.com
18. Transparent Energy Services $3,000
2051 Greenhouse Road, Suite 325
Houston, TX 77084
Email: Tbenbow@transparent-energy.com
19. Frio Energy Services LLC $2,989
6711 Stella Link Rd
Houston, TX 77005
Email: jawad@frioenergyservices.com
20. WadeCo Specialties Inc. $2,911
PO Box 60634
Midland, TX 79711
Email: ashleycantu@wadecospecialties.com
21. Allocation Specialists, LLC $2,645
12810 Willow Centre Dr.,
Suite A
Houston, TX 77066
Email: Icalland@aslgb.com
22. SES Holdings, LLC $2,324
PO Box 203997
Dallas, TX 75320
Email: sesreceivables@selectenergyservices.com
23. Precision Structures Inc. $941
5055 Burke Rd
Pasadena, TX 77504
Email: precisionstructuresinc@gmail.com
24. Quorum Business Solutions Inc. $839
PO Box 734963
Dallas, TX 75373
Email: remittance_notification@qbsol.com
25. Atchafalaya Measurement, Inc $770
124 Credit Drive
Scott, LA 70583
Email: Meloney@ami.email
26. Direct Energy Business $500
PO Box 660749
Dallas, TX 75266
Email: PittsburghRemittanceTeam@directenergy.com
27. Cesar Villalobos $200
3535 SE Hill Dr
Portland, OR 97267
28. FedEx $81
PO BOX 660481
Dallas, TX 75266
Email: BillingOnline@fedex.com
29. Jet Specialty Inc $27
17 PO Box 97343
South Hwy 83
Carrizo Springs, TX 78834
Email: accountspayable@jetspecialty.com
FTS INT'L: Moody's Cuts CFR & Senior Secured Rating to 'Ca'
-----------------------------------------------------------
Moody's Investors Service downgraded FTS International, Inc.'s
Corporate Family Rating to Ca from Caa1, Probability of Default
Rating to Ca-PD from Caa1-PD and senior secured debt ratings to Ca
from Caa2. The Speculative Grade Liquidity rating remains unchanged
at SGL-3. The outlook remains negative.
"The downgrade of FTSI's ratings reflect increasing debt
restructuring risks given the very severe reduction in demand for
the company's hydraulic fracturing services caused by low oil
prices," said Jonathan Teitel, a Moody's Analyst.
Downgrades:
Issuer: FTS International, Inc.
Probability of Default Rating, Downgraded to Ca-PD from Caa1-PD
Corporate Family Rating, Downgraded to Ca from Caa1
Senior Secured Term Loan, Downgraded to Ca (LGD4) from Caa2 (LGD4)
Senior Secured Notes, Downgraded to Ca (LGD4) from Caa2 (LGD4)
Outlook Actions:
Issuer: FTS International, Inc.
Outlook, Remains Negative
RATINGS RATIONALE
FTSI's Ca CFR and Ca-PD PDR reflect increasing risk of a debt
restructuring or exchange that Moody's could view as a default as
the company's debt maturities approach and access to capital
markets is limited. In response to the weak commodity price
environment, exploration and production companies have
significantly reduced capital spending, leading to a large drop-in
drilling activity. Many of FTSI's customers have reduced or
suspended well completions and this will reduce EBITDA in 2020. In
response, the company has implemented cost reduction initiatives
and is evaluating alternatives for its capital structure.
Exemplifying the significant impact on the company from current
market conditions, FTSI expects to average only three to four
active fleets in the second quarter of 2020. This compares to an
average of 16 active fleets during the first quarter of 2020 and
seven active fleets at the end of March 2020. Reduced upstream
capital spending will likely continue to weigh on activity levels
through 2020 with an uncertain pace of recovery in 2021.
The rapid and widening spread of the coronavirus outbreak,
deteriorating global economic outlook, falling oil prices, and
asset price declines are creating a severe and extensive credit
shock across many sectors, regions and markets. The combined credit
effects of these developments are unprecedented. The oilfield
services sector has been affected by the shock given its
sensitivity to demand and oil prices. More specifically, the
weaknesses in FTSI's credit profile and liquidity have left it
vulnerable to shifts in market sentiment in these unprecedented
operating conditions and FTSI remains vulnerable to the outbreak
continuing to spread and commodity prices remaining weak. Moody's
regards the coronavirus outbreak as a social risk under its ESG
framework, given the substantial implications for public health and
safety. Its action reflects the impact on FTSI of the breadth and
severity of the shock, and the broad deterioration in credit
quality it has triggered.
The SGL-3 rating reflects adequate liquidity through early 2021
because of the company's large cash balance of $199 million as of
March 31, 2020. The undrawn ABL revolver has a $61 million
borrowing base and $4 million in letters of credit outstanding as
of March 31, 2020. The ABL revolver expires in 2023 but has a
springing maturity 90 days prior to the term loan maturing April
2021 (or the senior secured notes maturing in May 2022 if the term
loan is repaid).
FTSI's senior secured term loan and senior secured notes are rated
Ca. Because of the small size of the revolver's borrowing base, the
term loan and notes comprise the preponderance of debt, resulting
in their ratings being the same as the CFR. The senior secured ABL
revolver has a contractual priority ranking ahead of these
instruments with respect to the more liquid collateral that
includes pledges of accounts receivable and inventory. The Ca
ratings also reflect Moody's views on expected recovery for the
secured debts.
The negative outlook reflects heightening risk of default including
distressed exchange transactions that Moody's could view as a
default.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Factors that could lead to a downgrade include Moody's lowering its
view on expected recoveries.
Factors that could lead to an upgrade include the company reducing
debt sufficiently to achieve a tenable capital structure with
improved liquidity.
The principal methodology used in these ratings was Global Oilfield
Services Industry Rating Methodology published in May 2017.
FTSI, headquartered in Fort Worth, Texas, is a publicly-traded
provider of hydraulic fracturing services to exploration and
production companies in North America. Revenue for the twelve
months ended March 31, 2020 was $706 million.
GAP INC: Egan-Jones Lowers Senior Unsecured Ratings to B
--------------------------------------------------------
Egan-Jones Ratings Company, on April 29, 2020, downgraded the
foreign currency and local currency senior unsecured ratings on
debt issued by The Gap, Incorporated to B from BB. EJR also
downgraded the rating on commercial paper issued by the Company to
B from A2.
Headquartered in San Francisco, California, The Gap, Inc., commonly
known as Gap Inc. or Gap, is an American worldwide clothing and
accessories retailer.
GAP INC: S&P Affirms 'BB-' ICR on Improved Liquidity Position
-------------------------------------------------------------
S&P Global Ratings affirmed its 'BB-' issuer credit rating and 'BB'
issue-level ratings on the secured notes on San Francisco-based
specialty apparel retailer The Gap Inc.
The revised liquidity assessment follows the company's successful
closing on its $2.25 billion secured note offering and amended
revolving credit facility. Gap converted the revolver from a $500
million cash-based facility to a $1.868 billion ABL facility due
2023. The company used a portion of the proceeds from the secured
notes to repay the $500 million of outstanding borrowings under the
prior revolver and to refinance the unsecured notes due in April
2021. These additional sources of funding will provide Gap with a
liquidity cushion while its operating cash flows remain severely
depressed due to the challenges posed by the coronavirus pandemic.
S&P now forecasts that the company's liquidity sources will be more
than 1.2x its uses over the next 12 months.
The recent easing of lockdown restrictions in certain states
prompted the company to announce that it will reopen up to 800 of
its stores by the end of May representing approximately 24% of its
company-operated store base. S&P expects Gap's cash burn rate to
moderate as the in-store sales channel, which accounts for about
75% of the company's total revenue, reopens. Still, the rating
agency expects sales volumes to remain suppressed as consumers
maintain social distancing and their weaker financial health leads
to reduced demand for apparel sales.
"We believe Gap is more vulnerable to downside risk in the current
environment in light of its highly discretionary merchandise mix,
exposure to mall traffic, and waning brand appeal. In our view, the
company faces considerable pressure as it navigates through this
unprecedented period of intense macroeconomic and operational
challenges. Because of these risks, we apply a negative one-notch
comparable rating analysis modifier to our anchor on Gap," S&P
said.
Environmental, social, and governance (ESG) factors relevant to the
rating action:
-- Health and Safety
The negative outlook reflects S&P's view that Gap Inc.'s
performance will be severely pressured this year amid the
uncertainty around how long its operations will continue to be
disrupted and when consumer spending will rebound.
"We could lower our rating on Gap Inc. if it encounters
greater-than-anticipated setbacks due to COVID-19-related
challenges that delay a turnaround in its performance and stymie
its cash flow generation, leading us to expect it will no longer
improve its leverage below 4x by the end of fiscal year 2021," S&P
said. "We could revise our outlook on Gap to stable if the efforts
to reignite consumer spending are successful and it demonstrates an
on-track recovery. Under this scenario, we would expect its
operating results to indicate sequential improvement beginning in
the second half of 2020, leading us to forecast that it is on pace
to generate more than $500 million of free operating cash flow
(FOCF) in 2021."
GG/MG INC: Case Summary & 20 Largest Unsecured Creditors
--------------------------------------------------------
Debtor: GG/MG, Inc.
d/b/a Landfill Equipment Sales, Service & Parts
1535 McNutt Street
Herculaneum, MO 63048
Business Description: GG/MG, Inc. is a landfill compactor in
Herculaneum, Missouri. Landfill Equipment
restores, refurbishes, and repairs landfill
compactors. Landfill Equipment can provide
any rebuilt, reconditioned or good used
trash compactor for sale or rent, including
CAT, CMI/Rex, Al-Jon and Bomag. Visit
http://www.landfill-equip.comfor more
information.
Chapter 11 Petition Date: May 12, 2020
Court: United States Bankruptcy Court
Eastern District of Missouri
Case No.: 20-42506
Debtor's Counsel: Robert A. Breidenbach, Esq.
GOLDSTEIN & PRESSMAN, P.C.
7777 Bonhomme Ave., Suite 1910
Saint Louis, MO 63105
Tel: 314-727-1717
E-mail: rab@goldsteinpressman.com
Estimated Assets: $0 to $50,000
Estimated Liabilities: $1 million to $10 million
The petition was signed by Danielle Emert, president.
A copy of the petition containing, among other items, a list of the
Debtor's 20 largest unsecured creditors is available for free at
PacerMonitor.com at:
https://is.gd/lpuWIs
GNC HOLDINGS: Egan-Jones Cuts Local Currency Unsec. Rating to D
---------------------------------------------------------------
Egan-Jones Ratings Company, on April 29, 2020, downgraded the local
currency senior unsecured rating on debt issued by GNC Holdings
Incorporated to D from CCC. EJR also downgraded the rating on
commercial paper issued by the Company to D from C.
GNC Holdings Inc. is a Pittsburgh, Pennsylvania-based American
company selling health and nutrition related products, including
vitamins, supplements, minerals, herbs, sports nutrition, diet, and
energy products.
GNC HOLDINGS: Incurs $200.1 Million Net Loss in First Quarter
-------------------------------------------------------------
GNC Holdings, Inc., reported a net loss of $200.08 million on
$472.58 million of revenue for the three months ended March 31,
2020, compared to a net loss of $15.26 million on $564.76 million
of revenue for the three months ended March 31, 2019.
The decrease in revenue was largely due to the closure of
company-owned stores under its store portfolio optimization
strategy, sales declines during the second half of March due to the
COVID-19 pandemic, the transfer of the Nutra manufacturing to the
Manufacturing joint venture, U.S. company-owned negative same store
sales and lower domestic and international franchise revenue.
As of March 31, 2020, the Company had $1.41 billion in total
assets, $1.61 billion in total liabilities, $211.39 million in
convertible preferred stock, and a total stockholders' deficit of
$402.39 million.
Adjusted EBITDA was $31.0 million, or 6.6% of revenue in the
current quarter compared with $66.9 million, or 11.7% of revenue in
the prior year quarter.
"As people around the globe cope with the COVID-19 outbreak, GNC's
mission has never been more clear," said CEO Ken Martindale.
"While this unprecedented situation has significantly disrupted our
business and required us to make difficult decisions, we are
focused on supporting customers with high quality products through
our strong e-commerce channels and new buy-online-ship-from-store
and curbside pickup services. Our transformation into a true
omni-channel brand continues and we are working diligently to
reposition and restructure our business for the future."
Uncertainty Relating to COVID-19
The Company stated, "Our business has been materially and adversely
affected by the outbreak of the novel coronavirus known as
"COVID-19". During March 2020, many state governments ordered all
but certain essential businesses closed and imposed significant
limitations on the circulation of the populace. Approximately
1,300, or 40%, respectively, of the U.S. and Canada company-owned
and franchise retail stores were closed as of
May 6, 2020 due to the COVID-19 pandemic. Some of the stores
temporarily closed may be closed permanently in the future.
Due to the current and future potential impact of COVID-19,
including uncertainties on the severity of the virus, the duration
of the outbreak, governmental, business or other actions (which
could include limitations on our operations), impacts on our supply
chain, the effect on customer demand, temporary and permanent store
closures or changes to our operations, we have recorded charges to
carrying amount of inventory, accounts receivable, goodwill,
indefinite-lived intangibles, our equity method investment and
other long-lived assets during the three months ended March 31,
2020."
Cash Flow and Liquidity Metrics
For the three months ended March 31, 2020, cash used in operating
activities was $12.1 million compared with cash provided by
operating activities of $68.7 million for the three months ended
March 31, 2019. The decrease in cash from operating activities was
driven by a decrease in operating income and unfavorable working
capital changes. For the three months ended March 31, 2020, the
Company had negative free cash flow of $15.9 million compared with
free cash flow of $65.7 million for the three months ended March
31, 2019.
For the three months ended March 31, 2020, the Company paid down
$11.7 million of its Tranche B-2 Term Loan utilizing proceeds from
IVC's purchase of equity interest in the Manufacturing JV during
the first quarter of 2020.
At March 31, 2020, the Company's cash and cash equivalents were
$137.4 million and debt was $895.0 million. The Company had $30.0
million borrowings outstanding on the Revolving Credit Facility at
March 31, 2020. During April 2020, the Company borrowed an
additional $30.0 million on the Revolving Credit Facility and as of
April 30, 2020, the Company had $60.0 million borrowing
outstanding.
The Company has an accelerated maturity payment due on May 16, 2020
that it does not have the ability to pay. Since the Company has
not refinanced the $738.7 million of Tranche B-2 Term Loan, FILO
Term Loan and Revolving Credit Facility that will become due on the
Springing Maturity Date, management has concluded there is
substantial doubt regarding the Company's ability to continue as a
going concern within one year from the issuance date of the
Company's Consolidated Financial Statements. Failure to complete a
refinancing or other restructuring, obtain an extension of the
Springing Maturity Date as defined in the Credit Agreements, reach
an agreement with required lender groups under the Credit
Agreements prior to May 16, 2020 or to reach an agreement with the
Company's stakeholders on the terms of an out-of-court
restructuring would have a material adverse effect on the Company's
liquidity, financial condition and results of operations and may
result in filing a voluntary petition for relief under Chapter 11
of the United States Bankruptcy Code in order to implement a
restructuring plan. As of March 31, 2020, the Company's
outstanding indebtedness has been classified as current on the
Company's Consolidated Balance Sheets. In addition, the Company
accelerated the amortization of original issuance discount and
deferred financing fees for the Tranche B-2 Term Loan, FILO Term
Loan and the Revolving Credit Facility of $12.4 million to the
Springing Maturity Date.
At March 31, 2020, the Company's indebtedness includes $156.4
million of outstanding indebtedness under the convertible senior
notes, $434.8 million of outstanding indebtedness under the Tranche
B-2 Term Loan, and $273.9 million of outstanding indebtedness under
the FILO Term Loan. The Company made an excess cash flow payment
of $25.9 million that was due in April 2020 which reduced the
outstanding amount of the Tranche B-2 Term Loan. Each of the
Tranche B-2 Term Loan, FILO Term Loan and Revolving Credit facility
include an accelerated maturity date of May 16, 2020 if more than
$50 million of the Notes are outstanding on such date. The Company
does not have the ability to reduce the outstanding balance on the
Notes from $156.4 million to below $50 million with projected cash
on hand and new borrowings under the Revolving Credit Facility,
assuming such borrowings remain available.
The Company is in the process of reviewing a range of refinancing
options to refinance the Company's outstanding indebtedness. The
Company has been working with an independent committee of the Board
supported by independent financial and legal advisors to conduct
its review and has had a series of discussions with financing
sources in the United States and Asia. The Company will continue
to explore all options to refinance and restructure its
indebtedness. While the Company continues to work through a number
of refinancing alternatives to address its upcoming debt
maturities, the Company cannot make any assurances regarding the
likelihood, certainty or exact timing of any alternatives.
Reporting requirements under both the Tranche B-2 Term Loan and the
Credit Agreement require the Company to provide annual audited
financial statements accompanied by an opinion of an independent
public accountant without a "going concern" or like qualification
or exception, or qualification arising out of the scope of the
audit (other than a "going concern" statement, explanatory note or
like qualification or exception resulting solely from an upcoming
maturity date under the Tranche B-2 Term Loan or the Notes).
Management believes the Company satisfied this requirement in the
2019 Annual Report on Form 10-K, as filed with the Securities and
Exchange Commission on March 25, 2020. If the lenders take a
contrary position, (a) they could decide to instruct the
administrative agent under the Senior Credit Agreements to deliver
a written notice thereof to the borrower, and if the alleged
default continued uncured for 30 days thereafter it would become an
alleged event of default (unless waived by the lenders) and (b) the
Company intends to contest such position and any action the lenders
may attempt to take as a result thereof. If the lenders were to
prevail in any such dispute, the required lenders could instruct
the administrative agent to exercise remedies under the Senior
Credit Agreements, including accelerating the maturity of the
loans, terminating commitments under the revolving credit facility
under the ABL Credit Agreement and requiring the posting of cash
collateral in respect of outstanding letters of credit issued under
the Revolving Credit Facility ($4.5 million at March 31, 2020). If
this were to occur, management would enter into discussions with
the lenders to waive the default or forebear from the exercise of
remedies. Failure to obtain such a waiver, complete a refinancing
or other restructuring, obtain an extension of the Spring Maturity
Date as defined in the Credit Agreements or to reach an agreement
with required lender groups under the Credit Agreements prior to
May 16, 2020 or to reach an agreement with the Company's
stakeholders on the terms of an out-of-court restructuring would
have a material adverse effect on the Company's liquidity,
financial condition and results of operations and may result in
filing a voluntary petition for relief under Chapter 11 of the
United States Bankruptcy Code in order to implement a restructuring
plan.
Due to the adverse impacts of COVID-19, the Company withheld rent
and other occupancy payments beginning in April 2020 for certain of
its retail locations as management negotiates with landlords for
rent concessions. The Company withheld rent and other occupancy
payments of approximately $19 million in April 2020 and
approximately $16 million in May 2020. In the event that
withholding these rent payments would constitute an event of
default per the lease agreement, management intends to negotiate
resolution with the landlord. If such negotiations are not
successful, the lease liabilities associated with those leases
could become immediately due and payable. In the event that
withholding these rent payments would constitute an event of
default per the lease agreement, management intends to negotiate
resolution with the landlord. If such negotiations are not
successful, the lease liabilities associated with those leases
could become immediately due and payable. In the event that
withholding these rent payments would constitute an event of
default per the lease agreement, management intends to negotiate
resolution with the landlord. If such negotiations are not
successful, the lease liabilities associated with those leases
could become immediately due and payable.
A full-text copy of the Quarterly Report is available for free at
the Securities and Exchange Commission's website at:
https://is.gd/1cm7HI
About GNC Holdings
GNC Holdings, Inc., headquartered in Pittsburgh, PA, is a global
health and wellness brand with a diversified, multi-channel
business. The Company's assortment of performance and nutritional
supplements, vitamins, herbs and greens, health and beauty, food
and drink and other general merchandise features innovative
private-label products as well as nationally recognized third-party
brands, many of which are exclusive to GNC. The Company serves
consumers worldwide through company-owned retail locations,
domestic and international franchise activities, and e-commerce.
As of March 31, 2020, GNC had approximately 7,300 locations, of
which approximately 5,200 retail locations are in the United States
(including approximately 1,600 Rite Aid licensed
store-within-a-store locations) and the remainder are locations in
approximately 50 countries.
GNC Holdings reported a net loss of $35.11 million for the year
ended Dec. 31, 2019, compared to net income of $69.78 million for
the year ended Dec. 31, 2018. As of Dec. 31, 2019, the Company had
$1.65 billion in total assets, $1.64 billion in total liabilities,
$211.39 million in series A convertible preferred stock, and a
total stockholders' deficit of $207.3 million.
PricewaterhouseCoopers LLP, in Pittsburgh, Pennsylvania, the
Company's auditor since 2003, issued a "going concern"
qualification in its report dated March 25, 2020 citing that the
Company has significant debt (specifically the Convertible Notes
and the Tranche B-2 Term Loan) maturing at the latest in March
2021. The Company has insufficient cash flows from operations to
repay these debt obligations as they come due, which raises
substantial doubt about its ability to continue as a going concern.
GOGO INC: Widens Net Loss to $84.8 Million in First Quarter
-----------------------------------------------------------
Gogo Inc. reported a net loss of $84.78 million on $184.47 million
of total revenue for the three months ended March 31, 2020,
compared to a net loss of $16.80 million on $199.55 million of
total revenue for the three months ended March 31, 2019. The
increase in net loss was primarily due to a $46.4 million charge
related to impairment of long-lived assets and lower Adjusted
EBITDA.
Adjusted EBITDA decreased to $25.7 million, down from $38.0 million
in Q1 2019, primarily due to lower CA-NA segment profit partially
offset by improved BA segment profit. Adjusted EBITDA includes a
$6.8 million charge for expected credit losses due primarily to the
impact of COVID-19, largely from one international airline
partner.
As of March 31, 2020, the Company had $1.19 billion in total
assets, $1.68 billion in total liabilities, and a total
stockholders' deficit of $486.61 million.
Cash and cash equivalents were $214.2 million as of March 31, 2020,
including $22 million drawn in March from the Company's ABL Credit
Facility. This compares to cash and cash equivalents of $170.0
million as of Dec. 31, 2019.
"We started the year well ahead of plan, but Commercial Aviation
demand fell sharply in March due to COVID-19 and has deteriorated
further in Q2," said Oakleigh Thorne, Gogo's president and CEO.
"There has also been a slowdown in new activations and an increase
in account suspensions in our Business Aviation segment, which we
expect will negatively impact BA revenue in Q2."
"The Gogo team responded quickly to COVID-19 with actions to reduce
costs, maintain our strong global franchise and ensure our
long-term financial viability," Thorne said. "I think we are well
positioned to get through this crisis and am extremely proud of the
efforts and sacrifices of our Gogo team in these difficult times."
"To ensure our long-term liquidity, we are aggressively executing
on our previously announced 16 levers to manage costs," said Barry
Rowan, Gogo's executive vice president and CFO. "Our stronger than
expected cash position exiting 2019 and through the first four
months of 2020 has positioned us to manage through this difficult
period and we are committed to continuing this heightened level of
financial and operational discipline."
Given the continued significant impact that COVID-19 pandemic is
having on global air travel, Gogo is not providing 2020 financial
guidance. Gogo is closely tracking the evolving impact of COVID-19
on global travel and its airline partners.
A full-text copy of the Quarterly Report is available for free at
the Securities and Exchange Commission's website at:
https://is.gd/nc1oHP
About Gogo Inc.
Gogo Inc. -- http://www.gogoair.com-- is an inflight internet
company that provides broadband connectivity products and services
for aviation. It designs and sources innovative network solutions
that connect aircraft to the Internet, and develop software and
platforms that enable customizable solutions for and by its
aviation partners. Gogo's products and services are installed on
thousands of aircraft operated by the leading global commercial
airlines and thousands of private aircraft, including those of the
largest fractional ownership operators. Gogo is headquartered in
Chicago, IL, with additional facilities in Broomfield, CO, and
locations across the globe.
Gogo Inc. reported a net loss of $146 million for the year ended
Dec. 31, 2019, compared to a net loss of $162.03 million for the
year ended Dec. 31, 2018. As of Dec. 31, 2019, the Company had
$1.21 billion in total assets, $1.61 billion in total liabilities,
and a total stockholders' deficit of $398.89 million.
* * *
As reported by the TCR on April 18, 2019, Moody's Investors Service
changed the outlook on Gogo Inc. to stable from negative.
Concurrently, Moody's affirmed Gogo's corporate family rating at
Caa1. Moody's said that despite the improvement in liquidity,
Gogo's Caa1 CFR remains warranted given the company's high leverage
which Moody's expects at around 9.9x (Moody's adjusted debt/EBITDA)
by end 2019 along with the continued need for Gogo to invest
heavily in technology and equipment installs to pursue its growth
ambitions outside of North America. Gogo's Caa1 also reflects the
company's small scale relative to other players in the wider
telecommunications industry as well as the highly competitive
environment it operates in.
As reported by the TCR on March 20, 2020, S&P Global Ratings placed
all of its ratings on Gogo Inc., including its 'CCC+' issuer credit
rating, on CreditWatch with negative implications. S&P placed its
ratings on Gogo on CreditWatch with negative implications because
the company does not have sufficient liquidity cushion to absorb a
significant and prolonged cut to global air travel.
HALLIBURTON COMPANY: Egan-Jones Cuts Sr. Unsecured Ratings to BB+
-----------------------------------------------------------------
Egan-Jones Ratings Company, on May 1, 2020, downgraded the foreign
currency and local currency senior unsecured ratings on debt issued
by Halliburton Company to BB+ from BBB-.
Headquartered in Houston, Texas, Halliburton Company provides
energy and engineering and construction services, as well as
manufactures products for the energy industry.
HALS REALTY: U.S. Trustee Unable to Appoint Committee
-----------------------------------------------------
The U.S. Trustee, until further notice, will not appoint an
official committee of unsecured creditors in the Chapter 11 case of
Hals Realty Associates Limited Partnership, according to court
dockets.
About Hals Realty Associates
Hals Realty Associates Limited Partnership sought protection under
Chapter 11 of the Bankruptcy Code (Bankr. S.D. Fla. Case No.
20-13103) on March 5, 2020. At the time of the filing, Debtor had
estimated assets of between $1 million and $10 million and
liabilities of between $10,000,001 and $50 million. Judge Mindy A.
Mora oversees the case. Furr and Cohen, P.A. is Debtor's legal
counsel.
HERC HOLDINGS: Egan-Jones Lowers Senior Unsecured Ratings to CC
---------------------------------------------------------------
Egan-Jones Ratings Company, on April 27, 2020, downgraded the
foreign currency and local currency senior unsecured ratings on
debt issued by Herc Holdings Inc. to CC from CCC+. EJR also
downgraded the rating on commercial paper issued by the Company to
D from C.
Headquartered in Bonita Springs, Florida, Herc Holdings, Inc.
operates as a holding company.
IAA INC: Fitch Affirms BB- LT Issuer Default Rating, Outlook Stable
-------------------------------------------------------------------
Fitch Ratings has affirmed the Long-term Issuer Default Rating of
IAA, Inc. at 'BB-'. Fitch has also affirmed the 'BB+'/'RR1' ratings
on the company's first lien secured revolving credit facility and
term loan and the 'BB-'/'RR4' rating on the company's unsecured
notes. The Rating Outlook is Stable.
The affirmation of IAA's IDR with a Stable Rating Outlook reflects
the company's adequate near-term financial flexibility and the
comfortable headroom the company had within its adjusted leverage
sensitivities entering 2020. Fitch expects an increase in near-term
leverage; however, the company should maintain adequate metrics for
the rating by the end of 2021. IAA benefits from a leading market
position in the salvage vehicle auction industry and the company's
strong financial flexibility, cash flow generation and
profitability are key drivers of the 'BB-' rating. Fitch also
considers technological advancement in auto safety, including
autonomous vehicles, to be a long-term concern.
KEY RATING DRIVERS
Near-Term Headwinds: Fitch expects IAA will experience moderate
impacts from the coronavirus outbreak as North American
stay-at-home orders significantly reduce miles driven, resulting in
less salvaged vehicles available to auction. The company could see
a decline in revenue in the mid- to high-teen percentages for
full-year 2020, with the timing of recovery tied to the resumption
of normalized North American light-vehicle traffic.
Significant Financial Flexibility: Fitch views IAA's financial
flexibility as a main driver of the rating. The company generated
FCF margins of 14% in 2019 as a stand-alone company, and 17% and
12% in 2018 and 2017, respectively, as a subsidiary of KAR Auction
Services. Fitch estimates that the company will have FCF in the
range of $75 million to $100 million in 2020, and should return to
long-term FCF margins of around 10% or greater by 2022. Liquidity
is sufficient for the near term, totaling $469 million at May 4th.
The company prepaid its term loan amortization until September
2021, has minimal working capital requirements, and is focusing on
cutting extraneous costs which should translate into sufficient
financial flexibility to navigate the current downturn.
Fitch believes the company will deploy some of its excess cash flow
to make moderate debt prepayments, while also focusing on growth
initiatives. There is also the possibility that IAA could start to
return a material amount of cash to shareholders in the form of
dividends or share repurchases over time.
High Adjusted Leverage: Fitch expects that IAA's adjusted leverage
(total lease adjusted debt/operating EBITDAR) will increase from
4.2x at year-end 2019 to the mid-5x range at the end of 2020,
excluding any significant debt prepayment, due to lower auction
volumes. Fitch further expects adjusted leverage will decline below
5x by the end of 2021 as volumes recover. Adjusted leverage is
relatively high compared to gross leverage (total debt/operating
EBITDA) of 3.1x at year-end 2019, due to the company's heavy
utilization of operating leases.
Leading Market Position: IAA is one of the top two players in the
salvage vehicle auction industry, controlling roughly 40% of the
North American market. Its largest competitor, Copart, Inc.,
accounts for an additional 40%. The remaining 20% of the market is
somewhat fragmented and made up of smaller regional companies.
Fitch does not believe there is a material risk of disruption from
another competitor entering the market due to the geographic
footprint and established market place of the incumbents. However,
the company derives approximately 40% of its revenue from cars
sourced through three insurance companies, which exposes the
company to risk from the loss of an important customer.
Positive Long-Term Trends: IAA has largely completed its shift to
an online-only auction platform in 2020. The company has invested
significantly in online tools and technologies that it believes
will lead to revenue growth by increasing buyer confidence and
improving efficiency. Additionally, IAA is taking actions to reduce
overhead costs. Through the medium-term this should benefit IAA as
they can better utilize capacity, expand into international
markets, and increase assignment turnover. Other long-term trends
such as an increasing percentage of total-loss claims may be
somewhat offset by a slower recovery of vehicle traffic.
High Profitability: IAA benefits from strong profitability,
generating EBITDA margins of approximately 29% in 2019. Fitch
expects that lower auction volumes and fixed cost absorption will
result in meaningful EBITDA margin deterioration in the near-term,
with profitability returning to the high-20% range by 2022. The
company's long-term margin expansion plan will likely face
pressures through the end of 2021 as the company addresses more
immediate cost-structure reductions. The asset-light business model
and moderate capex are expected to result in significant EBITDA to
FCF conversion.
DERIVATION SUMMARY
IAA Inc. is one of the largest salvage vehicle auction companies in
the United States. The company is comparable in size and scale with
Copart Inc., its largest competitor. Compared with auto retailer
AutoNation, Inc. (BBB-/Stable) the company has significantly higher
EBITDA and FCF margins, but also materially higher adjusted
leverage and is much smaller. The salvage auction business has
typically remained less cyclical in times of economic recession,
while the auto retailer industry has proven to retract sharply. No
parent/subsidiary linkage, country ceiling or operating environment
constraints were in effect for these ratings.
KEY ASSUMPTIONS
-- Revenue declines mid- to high-teen percentage in 2020, driven
by a drop in light vehicle-miles during the coronavirus outbreak
resulting in fewer salvaged vehicles;
-- Revenue mostly rebounds in 2021, with a potentially weaker
recovery in light vehicle-miles somewhat offset by modest
international sales expansion;
-- EBITDA margins are significantly weaker in the near-term due
to lower sales and fixed cost under-absorption, but should recover
to the 27%-29% range by 2022;
-- Adjusted leverage increases to the mid-5x range in 2020 and
declines to the mid-4x range in 2021;
-- FCF is positive at around $75 million to $100 million in 2020,
returning to margins of greater than 10% by 2022;
-- Capex is reduced for 2020, but sustains around 5% thereafter;
-- The company begins paying dividends and/or repurchasing shares
in 2021;
-- Debt prepayments with excess cash flow are modest.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Adjusted leverage (total lease-adjusted debt/operating
EBITDAR) sustains below 4.0x;
-- FFO-adjusted leverage sustains below 5.0x;
-- The company increases its geographic diversification and
reduces customer concentration.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Adjusted leverage sustains above 5.0x;
-- FFO-adjusted leverage sustains above 6.0x;
-- FCF or EBITDA margins contract significantly to the point that
financial flexibility becomes constrained.
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: IAA's liquidity as of March 29, 2020 consists
of $86 million of cash and $218 million of available revolving
capacity, net of $7 million LOC. In May 2020 IAA increased their
revolving commitments to $361 million, bringing pro forma liquidity
up to approximately $440 million. Due to the asset-light nature of
the business Fitch believes near-term liquidity will be able to
cover minimal working capital requirements and capex.
Debt Structure: The company's capital structure consists of a $361
million revolving credit facility, $774 million outstanding under
an $800 million Term Loan B and $500 million of unsecured notes.
The revolving credit facility matures in June 2024, with pricing of
LIBOR + 175-225bps. The term loan matures in June 2026 with
quarterly amortization of $2 million, and is priced at LIBOR +
225bps. Due to prepayments, IAA does not have any term loan
payments due until September 2021. The unsecured bonds are priced
at 5.5% and mature in June 2027.
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).
IANTHUS CAPITAL: Skips $4.4M Interest Payment, CEO Steps Down
-------------------------------------------------------------
Cannabis grower iAnthus Capital Holdings, Inc. on Friday announced
the resignation of Mark Dowley from its Board of Directors. Mr.
Dowley joined the Company on December 5, 2019 as part of the
formation of the Company's independent Board of Directors, which
includes Joy Chen, Diane M. Ellis, Michael P. Muldowney, and Robert
M. Whelan, Jr.
Dowley's resignation follows the Company's announcement in early
April that it has defaulted on its $4.4 million interest
obligations to debenture holders and the immediate resignation of
Hadley Ford as CEO late last month.
In early April, the Company also unveiled it has formed a special
committee of independent directors to oversee strategic
alternatives review process and to investigate alleged related
party transactions involving Ford. On April 27, iAnthus said its
Board of Directors has accepted and considered the special
committee's findings.
The allegations were that Ford is or has been acting in a conflict
of interest and has misused iAnthus' resources to his own benefit.
Ford also has resigned as a director of the Company and as an
officer and director of the Company's subsidiaries.
Randy Maslow has been named iAnthus President and Interim CEO.
On April 6, iAnthus said it did not make applicable interest
payments due on its 13.0% Senior Secured Debentures and 13.0%
Unsecured Convertible Debentures due on March 31, 2020. As of
March 31, 2020, the aggregate principal amount outstanding on
iAnthus' debt obligations total $159.2 million, including $97.5
million of Secured Debentures, $60.0 million of Unsecured
Debentures and $1.7 million of other debt obligations.
iAnthus explained that the decline in the overall public equity
cannabis markets, coupled with the extraordinary market conditions
that began in Q1 2020 due to the novel coronavirus known as
COVID-19 ("COVID-19") pandemic, have negatively impacted the
financing markets and have caused liquidity constraints for the
Company. Despite its best efforts as of this date, the Company has
not been able to secure a further round of financing since December
20, 2019, whether as part of the larger financing plan previously
announced on September 30, 2019 or from other sources.
iAnthus said it attempted in good faith to negotiate with the
holders of the Secured Debentures for temporary relief of interest
payments, but the parties were not able to reach a satisfactory
agreement. As a result, iAnthus and its subsidiaries did not fund
the March 31, 2020 interest payment totaling $4.4 million to the
holders of the Secured Debentures and Unsecured Debentures, and the
applicable cure period prior to triggering an event of default of
the Secured Debentures has lapsed. The Company is currently in
default of the obligations to its Secured Debenture holders and the
existence of such default triggers a cross-default of the
obligation to its Unsecured Debenture holders.
"It was a difficult decision to not make the interest payment when
it was due, but management and the board decided it was in the best
interest of the Company and our stakeholders to spend our cash to
maintain the inherent value of our business operations," said
Hadley Ford, iAnthus' then-CEO, in a press statement last month.
"We have moved aggressively over the past few months to reduce
headcount and overhead spend in addition to other cost savings. Our
business has never been stronger, and iAnthus is on track to
achieve positive adjusted EBITDA and operational cash flow in 2020
as previously planned."
Despite the challenging conditions, the Company said it will
continue to pursue expansion opportunities in retail, cultivation
and manufacturing, as well as further development of its retail and
product brands. Deploying these efforts with a ruthless focus on
the customer experience and the patient journey, iAnthus remains
committed to its mission to create the most valuable cannabis
brands and network of cannabis operations and distribution
nationally.
Special Committee's Findings
The Special Committee concluded, and the Board accepted, that Ford
entered into two undisclosed loans (one loan for US$100,000.00 with
a related-party and the other for US$60,000.00 with a non-arm's
length party) and those loans created a potential or apparent
conflict and should have been disclosed to the Board in a timely
way.
With respect to the loan with the related-party, the Online Report
included an allegation that Mr. Ford entered into an undisclosed
loan transaction with the managing member (the "Managing Member")
of iAnthus' senior secured lender, Gotham Green Partners. The
Special Committee considered the allegation and the relevant
details, are summarized as follows:
On December 20, 2019, iAnthus and Gotham Green closed an additional
US$36.15 million of senior secured convertible notes from Gotham
Green and additional co-investors (the "Third Tranche").
A day after the close of the Third Tranche, on December 21, 2019,
Ford (as borrower) and the Managing Member (as lender), entered
into a loan for the principal sum of US$100,000, documented by an
email. The loan bore no interest and was to be repayable on March
31, 2020. The loan has not been repaid.
The Special Committee did not find a basis to conclude that Ford's
conduct in the face of the potential or apparent conflict impacted
the terms, timing, or negotiations the Company had with the
related-party or the non-arm's length party. Nevertheless, the
Special Committee concluded, and the Board accepted, that the
failure to disclose such personal loans to the Board was a breach
of the Company's conflict policies and other obligations as an
officer and director of the Company.
Financial Advisor Hired
The Company said the Special Committee has engaged Canaccord
Genuity Corp. as its financial advisor to assist the Special
Committee in analyzing various strategic alternatives to address
its capital structure and to position the Company for further
success. With the assistance of its financial advisor, iAnthus will
continue to be actively engaged in discussions with holders of the
Secured Debentures and Unsecured Debentures to maximize value for
all stakeholders. Additionally, the Company will continue to
pursue financing options to infuse additional cash into the
business, while also exploring other strategic and financial
opportunities. At present, there can be no assurance as to what, if
any, alternative might be pursued by the Company and there can be
no assurance that the Company will reach any solution with the
Company's holders of the Secured Debentures and Unsecured
Debentures, or as to the terms of any solution, if achieved.
In the April 27 statement, iAnthus said the Strategic Alternatives
Review Process is ongoing and there can be no assurance as to what,
if any, alternative might be pursued by the Company. In accordance
with applicable disclosure requirements, the Company will advise
the market of material changes, if and when they occur.
iAnthus also has postponed the filing of its 2019 year-end
financial statements and corresponding investor call.
The Company presently anticipates being able to complete and file
its Annual Filings on or before May 29, 2020 and its Interim
Filings by June 30, 2020. As a result of this change to the
Company's filing date of the Annual Filings, the Company's earnings
news release for the fourth quarter and full year 2019 as well as
the previously announced conference call for financial analysts and
investors will be rescheduled. The Company will provide a further
update on the exact timing of its Annual Filings and Interim
Filings as well as the earnings news release and the conference
call.
About iAnthus
iAnthus Capital Holdings, Inc. (CSE: IAN, OTCQX: ITHUF) --
https://www.iAnthus.com/ -- owns and operates licensed cannabis
cultivation, processing and dispensary facilities throughout the
United States, providing investors diversified exposure to the U.S.
regulated cannabis industry. Founded by entrepreneurs with decades
of experience in operations, investment banking, corporate finance,
law and healthcare services, iAnthus provides a unique combination
of capital and hands-on operating and management expertise. iAnthus
currently has a presence in 11 states and operates 33 dispensaries
(AZ-4, MA-1, MD-3, FL-14, NY-3, CO-1, VT-1 and NM-6 where iAnthus
has minority ownership).
IGLESIA ROCA: Ordered to Report Status of Plan by May 28
--------------------------------------------------------
On April 22, 2020, Judge Caban Flores ordered Iglesia Roca De Sion
Inc. to report on the status of the disclosure statement and plan
within 28 days. Order is due by May 20, 2020.
About Iglesia Roca de Sion
Iglesia Roca de Sion, Inc., filed a voluntary Chapter 11 petition
(Bankr. D.P.R. Case No. 19-05990) on Oct. 29, 2019, listing under
$1 million in both assets and liabilities, and is represented by
Gerardo L. Santiago Puig, Esq., at Gerardo L. Santiago Puig Law
Office.
IMAGINE GROUP: Medley Values $3-Mil. Loan at 13% of Face
--------------------------------------------------------
Medley Capital Corporation has marked its $3,000,000 loan extended
to privately held Imagine Group LLC/The to market at $375,000, or
13% of the outstanding amount, as of March 31, 2020, according to a
disclosure contained in a Form 10-Q filing with the Securities and
Exchange Commission for the quarterly period ended March 31, 2020.
Medley is a lender under Imagine Group's Senior Secured Second Lien
Term Loan (LIBOR + 8.75% Cash, 1.00% LIBOR Floor), which is
scheduled to mature June 21, 2023. The investment was on
non-accrual status as of March 31, 2020.
Imagine Group LLC/The is in the Media: Advertising, Printing &
Publishing industry.
INTERNAP TECHNOLOGY: Unsecureds Unimpaired Under Plan
-----------------------------------------------------
Internap Technology Solutions Inc., et al., jointly proposed a
First Amended Prepackaged Chapter 11 Plan of Reorganization.
Subject to the DIP Orders, on the Effective Date, the DIP Facility
Claims will be deemed to be Allowed in the full amount due and
owing under the DIP Facility Agreement as of the Effective Date
including, for the avoidance of doubt, (a) the principal amount
outstanding under the DIP Facility on such date; (b) all interest
accrued and unpaid thereon through and including the date of
payment; and (c) all accrued fees, expenses, and indemnification
obligations payable under the DIP Facility Documents). For the
avoidance of doubt, the DIP Facility Claims shall not be subject to
any avoidance, reduction, setoff, recoupment, recharacterization,
subordination (equitable or contractual or otherwise),
counter-claim, defense, disallowance, impairment, objection or any
challenges under applicable law or regulation.
Class 3 Existing Loan Claims are impaired. The Existing Loan
Claims will be Allowed in the aggregate amount of no less than
$456,415,501. On the Effective Date, each holder of an Allowed
Class 3 Claim will receive its pro rata share of (i) commitments
under the New Term Loan Facility, in the aggregate principal amount
equal to the New Term Loan Facility Principal Amount; and (ii) 100%
of New Common Equity, subject to dilution by the Management
Incentive Plan and the New Common Equity Warrants.
Class 4 General Unsecured Claims are unimpaired. Each holder of an
Allowed Class 4 Claim will receive from each relevant Reorganized
Debtor, in full and final satisfaction, settlement, release, and
discharge of, and in exchange for, each such Claim, (i) payment
equal to the Allowed amount of such Claim, in Cash, as and when
such Claim becomes due and payable in the ordinary course of the
applicable Debtor's business or in accordance with applicable court
order , or (ii) such other treatment that renders such holder
Unimpaired.
Class 8 Existing Equity Interests are impaired. All Existing
Equity Interests will be cancelled, released, and extinguished as
of the Effective Date, and holders of Existing Equity Interests
shall not receive or retain any property under the Plan on account
of such Existing Equity Interests.
Sources of consideration for plan distributions are cash, Working
Capital Exit Facility, Priority Exit Facility and New Term Loan
Facility.
A full-text copy of the First Amended Joint Prepackaged Chapter 11
Plan dated April 22, 2020, is available at
https://tinyurl.com/y73v7dam from PacerMonitor.com at no charge.
Proposed counsel to the Debtors:
Dennis F. Dunne
Abhilash M. Raval
Tyson Lomazow
MILBANK LLP
55 Hudson Yards
New York, NY 10001
Tel: (212) 530-5000
About Internap Corporation
Internap Corporation (NASDAQ: INAP) -- http://www.INAP.com/-- is a
leading-edge provider of high-performance data center and cloud
solutions with 100 network Points of Presence worldwide. INAP's
full-spectrum portfolio of high-density colocation, managed cloud
hosting and network solutions supports evolving IT infrastructure
requirements for customers ranging from the Fortune 500 to emerging
startups. INAP operates in 21 metropolitan markets, primarily in
North America, with 14 INAP Data Center Flagships connected by a
low-latency, high-capacity fiber network.
On March 16, 2020, Internap Technology Solutions Inc. and six
affiliates, including INAP Corporation, each filed a voluntary
petition for relief under Chapter 11 of the Bankruptcy Code (Bankr.
S.D.N.Y. Lead Case No. 20-22393). Judge Robert D. Drain oversees
the cases.
The Debtors tapped Milbank LLP as legal counsel, FTI Consulting as
restructuring advisor, and Moelis & Company as financial advisor.
Prime Clerk LLC is the claims agent and administrative advisor.
JILL ACQUISITION: Reportedly Hired Centerview, Kirkland
-------------------------------------------------------
Jill Acquisition LLC (d/b/a J Jill) has hired restructuring
advisers to advise on its debt, Alexander Gladstone and Lillian
Rizzo, writing for The Wall Street Journal, report, citing people
familiar with the matter. The sources told WSJ that J.Jill has
tapped Centerview Partners as investment banker and Kirkland &
Ellis as counsel.
One of the sources said a group of J.Jill lenders has hired
Guggenheim Partners and Stroock & Stroock & Lavan as advisors, WSJ
reports.
According to The BDC Credit Reporter, BDC exposure at J.Jill is
modest and limited to Goldman Sachs BDC (GSBD), which bought $6.8
million of the 2022 Term Loan as recently as the second quarter of
2019, when the investment was trading very close to par. Even at
year end 2019, the discount taken by the BDC was just (18%). Now
the same debt trades at a (29%) discount, according to the WSJ.
BDC Credit Reporter estimates the probable realized loss for GSBD
at 50% or ($3.4 million).
S&P Global Ratings downgraded Jill Acquisition LLC to 'CCC-' from
'CCC+'. At the same time, S&P lowered its issue-level rating on the
company's senior secured term loan facility to 'CCC-' from 'CCC+'.
The '3' recovery rating is unchanged.
Jill temporarily closed its stores by the second half of March
2020, and ratings firm S&P anticipates they will reopen at a
gradual pace. Its direct channel normally accounts for about 40% of
sales and continues to operate, which could partially offset some
impact from closed stores. However, S&P believes deflated consumer
confidence amid a recession and lingering concerns of a coronavirus
resurgence will slow the recovery trajectory, especially for
discretionary categories such as apparel. As such, S&P anticipates
the company will be difficult for Jill to meet its obligations and
garner support from lenders.
Headquartered in Quincy, Massachusetts, Jill Acquisition LLC, a
subsidiary of J.Jill, Inc. (J.Jill, NYSE: Jill), is a retailer of
women's apparel, footwear and accessories sold through its
e-commerce website, catalogs and 287 retail stores. The company is
publicly traded, but majority-owned by TowerBrook Capital Partners
L.P. J.Jill generated revenues of about $691 million for the
fiscal year ended February 1, 2020.
JOHN DAUGHERTY: U.S. Trustee Appoints Creditors' Committee
----------------------------------------------------------
Henry G. Hobbs Jr., acting U.S. trustee for Region 7, appointed a
committee to represent unsecured creditors in the Chapter 11 case
of John Daugherty Real Estate, Inc.
The committee members are:
1. Griffin Partners III -520//2017 LP
Attn: Edward M. Griffin
10777 Westheimer Rd., Suite 1040
Houston, TX 77042
Tel: 713-439-5322
Fax: 713-622-7715
Email: egriffin@griffinpartners.com
Counsel: Cage Hill Niehaus, LLP
Theresa D. Mobley, Esq.
5851 San Felipe, Suite 950
Houston, TX 77057
Tel: 713-789-3597
Fax: 713-974-0344
Email: tmobley@cagehill.com
2. Insource Technology Corp.
Attn: David Black
20405 SH 249, Suite 300
Houston, TX 77070
Tel: 281-774-4150
Email: david.black@insource.com
3. Gow Media
5353 W. Alabama, Suite 415
Houston, TX 77056
Tel: 713-479-5330
Fax: 713-479-5333
Email: laura.beavers@gowmedia.com
Counsel: Murrah & Killough, PLLC
Koby Wilbanks, Esq.
3000 Weslayan, Suite 305
Houston, TX 77027
Tel: 281-501-1601
Email: kwilbanks@mktxlaw.com
Official creditors' committees serve as fiduciaries to the general
population of creditors they represent. They may investigate the
debtor's business and financial affairs. Committees have the right
to employ legal counsel, accountants and financial advisors at a
debtor's expense.
About John Daugherty Real Estate
John Daugherty Real Estate, Inc. -- https://www.johndaugherty.com/
-- is a licensed real estate broker in Houston, Texas, sought
protection under Chapter 11 of the Bankruptcy Code (Bankr. S.D.
Tex. Case No. 20-31293) on February 27, 2020. The petition was
signed by John A. Daugherty, Jr., its chief executive officer. 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.
Hon. Christopher M. Lopez oversees the case.
Debtor hired Nathan Sommers Jacobs, a professional corporation, as
its banruptcy counsel. Parsons McEntire McCleary, PLLC and
Campbell & Riggs, P.C. serve as special counsel.
JPM REALTY: June 25 Plan Confirmation Hearing Set
-------------------------------------------------
On March 5, 2020, debtor JPM Realty, Inc. filed an amended
disclosure statement and an amended plan. On April 24, 2020, Judge
Robert N. Opel, II approved the amended disclosure statement and
established the following dates and deadlines:
* May 29, 2020, is fixed as the last day for submitting written
acceptances or rejections of the amended plan.
* May 29, 2020, is fixed as the last day for filing and serving
written objections to confirmation of the amended plan.
* June 18, 2020, is fixed as the last day for filing with the
Court a tabulation of ballots accepting or rejecting the amended
plan.
* June 25, 2020, at 9:30 a.m. at US Courthouse/Max Rosenn, 197
South Main Street, Courtroom 2, Wilkes-Barre, PA 18701 is fixed for
the hearing on confirmation of the amended plan.
A full-text copy of the order dated April 24, 2020, is available at
https://tinyurl.com/y878vupg from PacerMonitor at no charge.
About JPM Realty Inc.
JPM Realty, Inc. sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. M.D. Pa. Case No. 18-04511) on Oct. 24,
2018. At the time of the filing, the Debtor was estimated to have
assets of less than $500,000 and liabilities of less than $500,000.
Judge Robert N. Opel II oversees the case. The Debtor tapped C.
Stephen Gurdin Jr., Esq., as its legal counsel, and Frey & Company,
CPA's, LLC as its accountant.
L BRANDS: Egan-Jones Lowers Senior Unsecured Ratings to CC
----------------------------------------------------------
Egan-Jones Ratings Company, on April 28, 2020, downgraded the
foreign currency and local currency senior unsecured ratings on
debt issued by L Brands Incorporated to CC from CCC.
Headquartered in Columbus, Ohio, L Brands, Incorporated sells
women's apparel and beauty products.
LAMAR ADVERTISING: Moody's Lowers CFR to Ba3, Outlook Stable
------------------------------------------------------------
Moody's Investors Service downgraded Lamar Advertising Company's
corporate family rating to Ba3 from Ba2 and the probability of
default rating to Ba3-PD from Ba2-PD. In addition, Moody's assigned
a Ba3 rating to subsidiary, Lamar Media Corporation's proposed
senior unsecured notes. Moody's also affirmed Lamar Media's senior
secured credit facility at Baa3 and downgraded the existing senior
unsecured notes to Ba3 from Ba2 and the senior subordinated notes
to B1 from Ba3. The outlook remains stable.
The net proceeds from the new $400 million senior unsecured notes
due 2029 as well as cash from the balance sheet will be used to
repay the $625 million drawn on the revolver in Q1 2020. Pro forma
leverage is approximately 4.4x as of Q1 2020 (excluding Moody's
standard adjustments for lease expenses), up from 4x as of Q4 2019.
The liquidity position is improved as the $750 million revolver
will be fully available pro forma for the transaction, although
long term debt will increase as a result of the offering.
The downgrade of Lamar's CFR reflects the increase in the amount of
long term debt and the impact of the coronavirus outbreak on the
economy, which Moody's expects will materially reduce outdoor
advertising revenue in the near term and lead to higher leverage
levels and decreased cash flow from operations. The Speculative
Grade Liquidity rating remains unchanged at SGL-2.
Assignments:
Issuer: Lamar Media Corporation
Senior Unsecured Regular Bond/Debenture, Assigned Ba3 (LGD4)
Affirmations:
Issuer: Lamar Media Corporation
Senior Secured Bank Credit Facility, Affirmed Baa3 (LGD1) from
(LGD2)
Downgrades:
Issuer: Lamar Advertising Company
Probability of Default Rating, Downgraded to Ba3-PD from Ba2-PD
Corporate Family Rating, Downgraded to Ba3 from Ba2
Issuer: Lamar Media Corporation
Senior Subordinated Regular Bond/Debenture, Downgraded to B1 (LGD5)
from Ba3 (LGD5)
Senior Unsecured Regular Bond/Debenture, Downgraded to Ba3 (LGD4)
from Ba2 (LGD4)
Outlook Actions:
Issuer: Lamar Advertising Company
Outlook, Remains Stable
Issuer: Lamar Media Corporation
Outlook, Remains Stable
RATINGS RATIONALE
Lamar's Ba3 CFR reflects the ongoing impact from the coronavirus
outbreak on outdoor advertising spending which will lead to higher
leverage and decreased operating cash flow. The outdoor industry
remains vulnerable to consumer ad spending and contract terms are
generally shorter than in prior periods. As result, Moody's expects
the outdoor industry will be impacted more rapidly than in prior
recessions, although performance should improve quicker than in
previous recoveries due to the lower commitment level and ease of
initiating new outdoor campaigns.
Lamar benefits from its market presence as one of the largest
outdoor advertising companies in the US, the high-margin business
model, and strong cash flow generation prior to dividend payments
historically. The ability to convert traditional static billboards
to digital provides growth opportunities after the impact of the
pandemic subsides. As a pure play outdoor advertising company,
Lamar provides mainly local advertising and derives revenues from a
diversified customer base, with no single advertiser accounting for
more than 2% of the company's billboard advertising revenue.
Moody's projects Lamar will be less affected by the pandemic
compared to the rest of the industry given the company's
geographically diversified market position. Lamar has greater
presence in small and mid-sized markets, with less focus on major
metropolitan areas that are more exposed to more volatile national
advertising and likely to be impacted by the pandemic to a greater
degree. Compared to other traditional media outlets, the outdoor
advertising industry is not likely to suffer from disintermediation
and benefits from restrictions on the supply of billboards which
help support advertising rates and high asset valuations.
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 outdoor
advertising industry 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 Lamar's credit
profile, including its exposure to discretionary consumer spending
have left it vulnerable to shifts in market sentiment in these
unprecedented operating conditions and Lamar remains vulnerable to
the outbreak continuing to spread. Moody's regards the coronavirus
outbreak as a social risk under its ESG framework, given the
substantial implications for public health and safety. Its action
reflects the impact on Lamar of the breadth and severity of the
shock, and the broad deterioration in credit quality it has
triggered.
A governance impact that Moody's considers in Lamar's credit
profile is the relatively aggressive financial policy.
Historically, Lamar has paid material dividends and capital
expenditures that reduce the amount of free cash flow available for
debt repayment or acquisitions. The company has not announced
guidance on its dividend policy going forward, but will continue
operating as a REIT. Lamar has also competed several acquisitions
with additional purchases possible going forward. Lamar is a
publicly traded company listed on the NASDAQ stock Market, but the
O'Reilly family has voting control of the company.
The speculative grade liquidity rating of SGL-2 reflects Moody's
expectation that Lamar will maintain a good liquidity position over
the next year. Pro forma cash balance is expected to be about $272
million as of Q1 2020 with access to an undrawn $750 million
revolver due 2025. Lamar also has a $175 million A/R securitization
that is fully drawn. Moody's expects free cash flow to remain
positive although the decision regarding future dividend payments
will have a substantial impact on the amount of free cash flow
generated in future periods. Moody's projects that the company will
spend about $58 million in capex in 2020, down from $141 million
spent in 2019. Free cash flow as a percentage of debt was 3% LTM as
of Q1 2020, but Moody's projects the amount of free cash flow will
increase going forward due to efforts to improve liquidity. There
is no required amortization payment on the term loan B and
operating cash flow will likely be used for dividends, capex, debt
repayment or additional acquisitions. Lamar has an At-the-Market
(ATM) offering program which could be used to boost liquidity or
help finance acquisitions. Assets sales of outdoor billboards that
typically trade at very high valuations could also be a source of
liquidity if needed. The $535 million senior subordinated note due
2023 became callable in May 2018.
The required secured net debt covenant ratio is 4.5x compared to a
0.6x ratio pro forma for the transaction and is applicable to the
revolving credit facility only. The term loan B is covenant lite.
Moody's projects that Lamar will maintain a significant cushion of
compliance.
The stable outlook reflects Moody's expectation that leverage will
increase in the near term due to lower revenue and EBITDA and cash
flow from operations will decrease. However, Lamar has adequate
liquidity to manage through the pandemic and will be less impacted
than other operators in the industry given its geographically
diversified market position with limited transit exposure. While
results are projected to remain weak given reduced discretionary
consumer spending, Moody's expects results will gradually recover
as the pandemic subsides due to Lamar's strong market position.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The required distribution of 90% of taxable income from a REIT
qualified subsidiary limits upward rating pressure. However, an
upgrade could occur if leverage was maintained below 4x on a
sustained basis (excluding Moody's standard lease adjustments) with
confidence that the board of directors intended to maintain
leverage below this level. Also required would be a balanced
financial policy between debt and equity holders, free cash flow
after distributions of over 5% of debt, and a good liquidity
position.
A ratings downgrade would occur if leverage was sustained above 5x
(excluding Moody's standard lease adjustment) over the next year
due to a debt financed acquisition or a material decline in
advertising spend. Failure to maintain an adequate liquidity
position could also lead to rating pressure. A refinancing of the
existing $535 million senior subordinated notes due 2023 (callable
as of May 2018) with additional secured or senior unsecured debt
could also result in a downgrade of the existing senior secured or
senior unsecured debt ratings depending on the mix of debt.
The B1 rating on the senior subordinated note is one notch higher
than the B2 rating indicated by the LGD Methodology due to the
significant asset value and above average expected recovery rate in
the event of default.
Lamar Advertising Company, with its headquarters in Baton Rouge,
Louisiana, is one of the leading owners and operators of
advertising structures in the U.S. and Canada. Lamar is publicly
traded, but the Reilly family has voting control of the company.
Lamar generated revenues of approximately $1.8 billion in the LTM
period ending Q1 2020.
The principal methodology used in these ratings was Media Industry
published in June 2017.
LEGACY JH762: U.S. Trustee Objects to Disclosure Statement
----------------------------------------------------------
The United States Trustee for Region 21 submitted objections to the
disclosure statement and proposed plan filed by Legacy JH762, LLC
and Cassandra Kay Mccord.
The U.S. Trustee points out that the amended disclosure statement
indicates in one place that Class 1 is impaired and states in
another place that this Class is not impaired. To the extent the
Debtor seeks to restructure the loan, the US. Trustee questions how
the claim is not impaired.
The U.S. Trustee further points out with respect to the treatment
of Classes 3 and 4, the U.S. Trustee cannot determine if the
payments will cease on the effective date or some other date. The
information provided is unclear and payments appear to be made
pursuant to the projections provided.
The U.S. Trustee asserts that the projections include payments to
Classes 2, 5 and 6 however the plan provides that no payments are
to be made to these creditors. The Debtors should explain.
The U.S. Trustee complains that the disclosure statement fails to
provide any information regarding the marketing, sale or potential
contracts for sale of the three properties.
The U.S. Trustee questions whether the Debtor, Legacy JH762, LLC,
is entitled to a discharge since the plan proposes to liquidate all
assets.
According to The U.S. Trustee, the disclosure statement fails to
contain sufficient information and projections relevant to the
creditors' decision to accept or reject the proposed plan.
About Legacy JH762 LLC
Legacy JH762, LLC, owns three real properties in Pinehurst, N.C.
and Jupiter, Fla., having a total comparable sale value of $5.1
million.
Legacy JH762 filed a voluntary petition under Chapter 11 of the
Bankruptcy Code (Bankr. S.D. Fla. Case No. 19-16308) on May 23,
2019. In the petition signed by James W. Hall, managing member,
the Debtor disclosed $5,100,100 in assets and $3,456,044 in
liabilities. David L. Merrill, Esq., at The Associates, is the
Debtor's counsel.
LEGRACE CORP: U.S. Trustee Objects to Disclosure Statement
----------------------------------------------------------
Peter C. Anderson, the United States Trustee for the Central
District of California files an objection to Legrace Corp.'s
Amended Chapter 11 Disclosure Statement.
The United States Trustee points out that the Debtor did not file
any Amended Chapter 11 Plan in connection with the Amended
Disclosure Statement.
The U.S.. Trustee further points out that the Debtor failed to
explain the funding for the Plan, and there is no discussion of
Absolute Priority Rule even though unsecured creditors are being
paid nothing under the Plan.
The U.S. Trustee complains that the Amended Disclosure Statement
failed to disclose that the debtor entered into an amendment to a
limited partnership agreement post-petition and obtained financing
in the amount of $100,000.
About Legrace Corp.
Based in Orange, California, Legrace Corp. filed its voluntary
petition for relief under Chapter 11 of the United States
Bankruptcy Code (Bankr. C.D. Cal. Case No. 19-12812) on July 22,
2019, estimating up to $100,000 in assets and up to $1 million in
liabilities. Julie J. Villalobos at Oaktree Law is the Debtor's
counsel.
LSI CORP: Egan-Jones Withdraws BB+ Senior Unsecured Ratings
-----------------------------------------------------------
Egan-Jones Ratings Company, on April 27, 2020, withdrew its 'BB+'
foreign currency and local currency senior unsecured ratings on
debt issued by LSI Corporation.
Headquartered in San Jose, California, LSI Corporation designs,
develops, manufactures, and markets computer integrated circuits
and storage systems.
LUCKY BUMS: June 4 Hearing on Disclosure Statement
--------------------------------------------------
Judge Benjamin P. Hursh has ordered that the hearing to consider
the approval of the disclosure statement filed by Lucky Bums
Subsidiary LLC, shall be held Thursday, June 4, 2020, at 9:00 a.m.,
or as soon thereafter as the parties can be heard, in the
BANKRUPTCY COURTROOM, RUSSELL SMITH COURTHOUSE, 201 EAST BROADWAY,
MISSOULA, MONTANA.
May 21, 2020, is fixed as the last day for filing and serving
written objections to the disclosure statement.
About Lucky Bums Subsidiary
Lucky Bums Subsidiary LLC -- https://luckybums.com/ -- is a
wholesaler of sporting and recreation goods.
Lucky Bums Subsidiary filed a voluntary Chapter 11 petition (Bankr.
D. Mon. Case No. 19-61084) on Oct. 28, 2019, and is represented by
Matt Shimanek, Esq., at Shimanek Law P.L.L.C. In its petition, the
Debtor listed under $10 million in both assets and liabilities.
Judge Benjamin P. Hursh oversees the case. The Debtor tapped
Bradlee Frazer and the law firm of Hawley Troxell as special
counsel.
LUCKY BUMS: Unsecured Creditors Owed Less Than $5K to Get 25%
-------------------------------------------------------------
Debtor Lucky Bums Subsidiary LLC filed with the U.S. Bankruptcy
Court for the District of Montana a Disclosure Statement to
accompany the Chapter 11 Plan of Reorganization dated April 24,
2020.
Class 2 Allowed Unsecured Claims in excess of $5,000 is impaired
and will receive payment based upon a percentage of the Debtor's
Net Profits. Net Profit will mean the Debtors remaining profits
after deducting all operating and administrative expenses, taxes,
and payments to Class 1 claims under the Plan. Payments under the
Net Profit fund will not begin until after November 2021.
Class 3 consists of Allowed Unsecured Claims less than $4,999.99
including those Claims of the Internal Revenue Service not related
to actual pecuniary loss. Class 3 is impaired and shall be paid
25% of their allowed claim within six months of the Effective Date
of the Plan.
On or about the Effective Date, all assets of the Debtor shall be
transferred to the Reorganized Debtor free and clear of all liens,
claims, and interests of creditors, equity holders, and other
parties in interest. The assets shall be transferred subject to the
liens held by Class 1 Washington Trust Bank as discussed in the
treatment of that claim. The Reorganized Debtor shall not, except
as otherwise provided in this Plan, be liable to repay any debts
which accrued prior to the Confirmation Date. Except as provided in
this Plan, on the Confirmation Date, the Debtor shall be granted a
discharge.
The Debtor estimates the Effective Date of the Plan will be in June
or July of 2020. Thirty days after the Effective Date, the
Reorganized Debtor shall implement its Plan of Reorganization
pursuant to the terms for each class of claimants. All payments
proposed within the Plan shall be completed within 60 months of the
first payment under the Plan.
Within 30 days following the conclusion of each quarter, beginning
with the Fiscal Quarter ending November 2021, the Reorganized
Debtor shall calculate its Net Profits for the period and deposit
25% percent of the Net Profits into the Net Profits Fund for
distribution to the Class 2 Claimants. The Reorganized Debtor will
make quarterly distributions from the Net Profits Fund to Allowed
Class 2 claimants.
Given the alternative under a Chapter 7 scenario, the Debtor's
proposed Chapter 11 Plan provides a better alternative for
unsecured creditors with an estimated payment of 22% of the current
unsecured general claims. It is therefore urged by the Debtor that
all creditors vote in favor of the Plan.
A full-text copy of the Disclosure Statement dated April 24, 2020,
is available at https://tinyurl.com/y7sn6wys from PacerMonitor at
no charge.
Attorneys for the Debtor:
Matt Shimanek
Shimanek Law PLLC
317 East Spruce St.
Missoula, MT 59802
Phone: (406) 544-8049
E-mail: matt@shimaneklaw.com
About Lucky Bums Subsidiary
Lucky Bums Subsidiary LLC -- https://www.luckybums.com/ -- is a
wholesaler of sporting and recreation goods.
Lucky Bums Subsidiary filed a voluntary Chapter 11 petition (Bankr.
D. Mon. Case No. 19-61084) on Oct. 28, 2019, and is represented by
Matt Shimanek, Esq., at Shimanek Law P.L.L.C. In its petition, the
Debtor listed under $10 million in both assets and liabilities.
Judge Benjamin P. Hursh oversees the case.
M2 SYSTEMS: Claims to be Paid From Infusions and Ongoing Operations
-------------------------------------------------------------------
M2 Systems Corporation submitted a Plan of Reorganization and a
Disclosure Statement.
The Plan provides that Holders of Allowed Unsecured Claims will
receive full or partial payment from: (i) Debtor's cash on hand and
cash from continued operations in the ordinary course of business;
(ii) a cash distribution from the Equity Infusion made by Debtor's
equity interest holders in the amount of $250,000; and (iii)
guaranteed pro rata quarterly payments of $5,000 over the five year
term of Debtor's Plan; (iv) annual Distributions under the Cash
Flow Note; and (vi) proceeds derived from the Debtor's pursuit of
Causes of Action.
Class 1 consist of allowed unsecured claim of Indoor Billboard
Plaintiffs, Class 2 consist of allowed unsecured claim of Digital
Payments Holdings Limited and Class 3 consist of allowed unsecured
claim of M2 Payment Solutions. Inc. Classes 1, 2 and 3 are all
impaired and each shall receive payments in accordance with the
treatment specified in Class 4
In full satisfaction of Class 4 Allowed Unsecured Claims of Invoice
Trade Creditors, Holders of 4 Claims shall receive: (i) annual
payments under the Cash Flow Note; (ii) 50 percent of the net
proceeds of any Causes of Action after payment of all
administrative expenses and post-Effective Date professional fees
and costs as approved by the Court in accordance with Local Rule
2016-1; and (iii) guaranteed pro rata quarterly payments of $5,000
beginning on the second quarter following the Effective Date and
continuing for a period of five years thereafter.
All currently issued and outstanding Class 5 Interests shall be
retained by Joseph Adams and Michael Muscato in the same proportion
existing as of the Petition Date.
A full-text copy of the Disclosure Statement dated April 27, 2020,
is available at https://tinyurl.com/y6wx2gcs from PacerMonitor.com
at no charge.
Counsel for the Debtor:
Daniel A. Velasquez, Esq.
Frank M. Wolff, Esq.
LATHAM, LUNA, EDEN & BEAUDINE, LLP
111 N. MAGNOLIA AVE., SUITE 1400
ORLANDO, FLORIDA 32801
About M2 Systems Corporation
M2 Systems Corporation -- https://www.m2-corp.com/ -- provides
computer automated solutions for practical business problems
utilizing technology serving the financial, healthcare, retail,
security, transportation, logistics and telecommunications
industries. It specializes in developing, marketing and
implementing transaction technologies for both established and
emerging markets as well as creating outlets for licensing and
operating its solution sets. M2 Systems was founded in 1986 and
is
headquartered in Maitland, Florida.
M2 Systems sought protection under Chapter 11 of the Bankruptcy
Code (Bankr. M.D. Fla. Case No. 18-01339) on March 12, 2018. In
the petition signed by Joseph W. Adams, CEO and director, the
Debtor was estimated to have assets of less than $1 million and
liabilities of $1 million to $10 million. Latham, Shuker, Eden &
Beaudine, LLP, is the Debtor's bankruptcy counsel.
MACK-CALI REALTY: Egan-Jones Lowers Senior Unsecured Ratings to BB
------------------------------------------------------------------
Egan-Jones Ratings Company, on April 30, 2020, downgraded the
foreign currency and local currency senior unsecured ratings on
debt issued by Mack-Cali Realty Corporation to BB from BB+.
Mack-Cali Realty Corporation is a publicly-traded real estate
investment trust headquartered in Jersey City.
MARRONE BIO: Incurs $7 Million Net Loss in First Quarter
--------------------------------------------------------
Marrone Bio Innovations, Inc., reported a net loss of $7.02 million
on $9.65 million of total revenues for the three months ended March
31, 2020, compared to a net loss of $3.92 million on $8.72 million
of total revenues for the three months ended March 31, 2019. The
increase included $1.4 million in a non-cash charge related to the
estimated fair value of warrants, $0.6 million in non-cash
amortization charges associated with the acquisition of Pro Farm, a
$0.3 million increase in non-cash stock compensation expenses and
the $1.1 million addition of Pro Farm's operating expenses,
partially offset by increased gross profit.
As of March 31, 2020, the Company had $79.39 million in total
assets, $54.53 million in total liabilities, and $24.86 million in
total stockholders' equity.
Gross margins of 57.7 percent in the first quarter were a new
record, marking the company's sixth consecutive quarter of gross
margins of 50+ percent.
Operating expenses in the first quarter of 2020 were $11.2 million,
up $2.6 million from the first quarter of 2019. Of the increase,
$0.9 million was non-cash, including a $0.6 million non-cash
amortization charge, as well as stock compensation expenses. In
addition, $1.1 million of the increase was due to the addition of
Pro Farm's operating expenses.
Adjusted EBITDA increased to a $3.7 million loss in the first
quarter of 2020, from a $2.6 million loss in the first quarter of
2019, a $1.1 million difference. The increase was primarily due to
the addition of Pro Farm’s operating expenses.
Cash used in operations was $6.3 million in the first quarter of
2020 as compared to $7.7 million in the first quarter of 2019.
"Farmers around the world are working tirelessly to ensure a safe
and adequate food supply as they adjust to the changes brought on
by the COVID-19 pandemic," said Dr. Pam Marrone, chief executive
officer of Marrone Bio Innovations. "Growers remain focused on the
task at hand: harvesting early crops, planting, increasing farm
worker protection and adjusting to the changing demand from retail
and food service.
"We are pleased with the progress we have made with the Pro Farm
integration and continue to find exciting synergies, where both
Marrone Bio and Pro Farm benefit from leveraging our existing
partner relationships to expand geographically and create new
product combinations. While we have seen year-over-year revenue
growth in the first quarter of 2020 in part due to the addition of
Pro Farm's seed treatments, we expect greater growth for the
remainder of 2020, notwithstanding the impact of COVID-19."
"As an essential business, we are fortunate to continue to provide
our grower customers with necessary crop protection and plant
health tools. However, we anticipate continued challenges to the
agricultural economy through the remainder of the year. In an
uncertain environment, we have taken steps to reduce costs while
retaining our workforce," concluded Marrone.
Jim Boyd, chief financial officer of Marrone Bio Innovations,
added, "Subsequent to the end of the quarter, two events took place
that significantly reduced our business risk and strengthened our
balance sheet. First, we applied for and received a $1.7 million
loan under the Paycheck Protection Program as part of the
Coronavirus Aid, Relief and Economic Security Act, which has helped
us to maintain our workforce in the face of economic uncertainty.
Second, we signed a warrant exchange agreement with existing
institutional investors that provided $2.5 million in financing
earlier this month, and that, if exercised in full, would result in
up to $20 million in additional proceeds, which we expect would
take us to an Adjusted EBITDA breakeven level of operations given
our current outlook and plan."
A full-text copy of the Quarterly Report is available for free at
the Securities and Exchange Commission's website at:
https://is.gd/5JFAgi
About Marrone Bio Innovations
Based in Davis, California, Marrone Bio Innovations, Inc. --
http://www.marronebio.com-- discovers, develops and sells
innovative biological products for crop protection, plant health
and waterway systems treatment. MBI has screened over 18,000
microorganisms and 350 plant extracts, leveraging its in-depth
knowledge of plant and soil microbiomes enhanced by advanced
molecular technologies to rapidly develop seven effective and
environmentally responsible pest management products to help
customers operate more sustainably while uniquely improving plant
health and increasing crop yields. Supported by a robust portfolio
of over 400 issued and pending patents around its natural product
chemistry, MBI's currently available commercial products are
Regalia, Grandevo, Venerate, Majestene, Haven Stargus and
Amplitude, Zelto and Zequanox.
Marrone Bio reported a net loss of $37.17 million for the year
ended Dec. 31, 2019, compared to a net loss of $20.21 million for
the year ended Dec. 31, 2018. As of Dec. 31, 2019, the Company had
$72.72 million in total assets, $49.16 million in total
liabilities, and $23.56 million in total stockholders' equity.
Marcum LLP, in San Francisco, CA, the Company's auditor since 2018,
issued a "going concern" qualification in its report dated March
16, 2020 citing that the Company has incurred significant losses
and needs to raise additional funds to meet its obligations and
sustain its operations. These conditions raise substantial doubt
about the Company's ability to continue as a going concern.
MATCH GROUP: Moody's Alters Outlook on Ba2 CFR to Negative
----------------------------------------------------------
Moody's Investors Service has affirmed Match Group, Inc.'s Ba2
Corporate Family Rating, Ba2-PD Probability of Default Rating, Ba1
ratings on the senior secured bank credit facilities and Ba3
ratings on the senior unsecured notes. Concurrently, Moody's
assigned a Ba3 rating to the proposed $500 million senior unsecured
notes. The outlook was revised to negative from stable.
The terms of the new notes will be substantially similar to Match's
existing senior unsecured notes. Net proceeds will be used to fully
repay the $400 million 6.375% senior unsecured notes due June 2024,
which Moody's expects the company to call. The make-whole cost is
estimated at $12.8 million.
Following is a summary of its rating actions:
Assignments:
Issuer: Match Group, Inc.
$500 Million Senior Unsecured Notes due 2028, Assigned Ba3 (LGD5)
Affirmations:
Issuer: Match Group, Inc.
Corporate Family Rating, Affirmed at Ba2
Probability of Default Rating, Affirmed at Ba2-PD
$750 Million Senior Secured Revolving Credit Facility due 2025,
Affirmed at Ba1 (LGD2)
$425 Million Senior Secured Term Loan B due 2027, Affirmed at Ba1
(LGD2)
$400 Million 6.375% Senior Unsecured Notes due 2024, Affirmed at
Ba3 (LGD5) from (LGD4)
$450 Million 5.000% Senior Unsecured Notes due 2027, Affirmed at
Ba3 (LGD5) from (LGD4)
$350 Million 5.625% Senior Unsecured Notes due 2029, Affirmed at
Ba3 (LGD5) from (LGD4)
$500 Million 4.125% Senior Unsecured Notes due 2030, Affirmed at
Ba3 (LGD5) from (LGD4)
Speculative Grade Liquidity Actions:
Issuer: Match Group, Inc.
Speculative Grade Liquidity, Remains SGL-1
Outlook Actions:
Issuer: Match Group, Inc.
Outlook, Changed to Negative from Stable
On December 19, 2019, Match's parent, IAC/InterActiveCorp,
announced that its Board of Directors had approved the separation
of IAC and Match into two independent public companies [1]. Under
the terms of the spin-off transaction, IAC's shareholders will
receive a direct ownership interest in Match proportionate to IAC's
existing 81% equity stake in Match. In connection with the
transaction, Match will assume IAC's $1.7 billion of unrated
exchangeable notes and associated hedging instruments, and pay a $3
per share cash consideration to Match's shareholders and IAC,
totaling approximately $850 million in aggregate. The spin-off is
expected to close by the end of June 2020.
The rating assignment and affirmations reflect the anticipated pro
forma capital structure at transaction closing. Ratings are subject
to change should the capital mix be altered at closing. Ratings are
also subject to review of final documentation and no material
change in the size, terms and conditions of the transaction as
advised to Moody's. The transaction is leverage neutral since
Moody's expects Match to use the net proceeds to repay the 6.375%
notes and supplement cash balances with the excess. Moody's views
the transaction favorably given the extension of the debt maturity
structure and expected lower annual interest expense. Moody's will
withdraw the Ba3 rating on the 6.375% notes upon their full
redemption.
RATINGS RATIONALE
The negative outlook reflects the impact that the novel coronavirus
pandemic will have on Match's operating and financial performance
in 2020. Moody's no longer expects Match will deliver quarterly
sequential revenue growth in Q2 2020, or in the second half of
2020, given the evolving situation and numerous uncertainties
related to the social considerations and economic impact from
COVID-19 on the company's operations and financial leverage. The
negative outlook also considers governance risks, specifically the
likelihood that pro forma leverage at transaction close in Q2 2020
will be higher at roughly 5.6x (Moody's adjusted) compared to
Moody's original estimate of 5x, and deleveraging to under 4x could
take longer than 18 months after the spin-off from IAC (i.e., by
year end 2021). The magnitude of the impact will depend on the
depth and duration of the pandemic, the impact that government
restrictions to curb the virus will have on consumer behavior, the
duration of lockdowns in geographies that Match operates as well as
the timeline for reopening bars, restaurants and other social
gathering venues, which are important in the dating world.
Given the economic recession this year and the prospect of extended
business closures and high rates of unemployment, an erosion of
consumer confidence will lead to a reduction in discretionary
consumption. While roughly 97% of Match's revenue is recurring
subscription (typically ranging from 1 month to 12 months) or
re-occurring a la carte microtransactions, Moody's expects
subscription revenue to experience declines, slowing growth and
increased volatility in the months ahead. The Tinder brand accounts
for nearly 60% of Match's revenue and tends to attract the under 30
audience. Moody's expects regions with rising and high levels of
young adult unemployment will negatively impact Tinder's new
subscription sign-ups, renewals and enhanced feature offerings.
ARPU is also likely to decline as users shift to lower priced
subscriptions and less a la carte purchases. Moody's recognizes
that differences in a user's age, gender and geographic location
(hotspot vs. non-hotspot) as well as the rolling effects of the
virus will drive the degree of decline and recovery given the
company's broad geographic presence. The impact to the company's
financial performance will mirror the timing of the outbreak,
economic shutdown and eventual reopening in each region. Europe and
the US will mostly impact Match's performance in Q2 2020 and
potentially in Q3 2020, offset by growth in Asia-Pacific as that
region's economies reopen.
Despite these revenue pressures, as more people remain at home
during the pandemic, Match's services facilitate connectivity and
relationships. Moody's expects user activity, conversations and
engagement to continue to increase, especially among younger
customers. This is primarily due to implementation of stay-at-home
measures and closure of social gathering places for singles to
meet, prompting them to adjust their behavior and dating methods.
In the current environment, users have shifted to virtual dating
via phone or video. To meet this demand, Match has quickly adapted
its product offering to deploy one-to-one video chat capabilities
on many of its platforms and accelerated the rollout of one-to-many
live streaming video on Plenty of Fish, allowing users to connect
with, and form, virtual communities around live video. Tinder will
launch one-to-one live video in late Q2 2020. The company has also
launched several new features and services such as the free
Passport app on Tinder that allows users to change their geographic
location and connect with members in regions that are more impacted
by the pandemic, Match's launch of a coaching hotline, Hinge's
"Dating from Home" prompts, and video-on-demand coaching and
podcasts on Meetic. Moody's views these business model changes as
credit positive.
Moody's estimates up to 66% of Match's operating expenses are
variable enabling the company to quickly reduce operating costs in
the short-run as a result of natural expense reductions that scale
with revenue increases. The key variable cost elements are
marketing spend and cost of revenue, which include mostly in-app
purchase fees and credit card transaction fees. Moody's expects
Match to reduce certain marketing costs and delay other marketing
expenses to offset sequential revenue declines, as well as shift
spend to more efficient channels. For instance, television
viewership has increased but advertising rates have declined making
this medium more effective in the current environment, while subway
ridership and radio listenership are down making these out-of-home
channels less effective. Since only a fraction of Match's H2 2020
ad spend is committed, it can easily make these adjustments. While
Match will be judicious with other costs such as deferring
non-critical hiring, the company will continue spending in areas
where there are opportunities to increase engagement. As such,
Moody's projects adjusted EBITDA margins (as calculated by Moody's)
could temporarily migrate to the low end of the 30%-35% range over
the coming quarters.
Match's Ba2 CFR is forward-looking and based on the capital
structure at closing, which Moody's expects to occur in Q2 2020.
The Ba2 rating reflects the company's historically high growth
profile, albeit expected to slow this year, that will continue to
benefit from long-term secular adoption of online dating and social
networking apps to find romantic partners, friends and business
associates. The credit profile considers Match's scale and leading
market position as the number one online dating provider derived
from its portfolio of more than 45 brands including Tinder, the
highest grossing dating app globally. The company's dating apps
have benefited from high user engagement with approximately 9.9
million average subscribers globally, creating a strong "network
effect". Since Q1 2017, Match has added approximately 4 million
average subscribers at an 18.8% CAGR. The rating is supported by a
business model in which nearly all of the revenue is recurring
subscription or reoccurring micro-transactions. The company also
benefits from good geographic diversification with roughly 53% of
Match's LTM 3/31/20 direct revenue derived from overseas markets
and 47% from North America. Match has successfully leveraged its
dating apps into geographies with higher growth potential by
localizing and tailoring the content of its matchmaking apps to a
country's cultural norms and preferences. Further support is
provided by Match's disciplined investment and acquisition
strategy, consistent profitability, strong operating cash flow
generation and ability to de-lever from both EBITDA growth and
ample free cash flow generation to repay debt.
The Ba2 rating embeds Match's strong projected debt protection
measures for the rating category and track record of deleveraging
to its target leverage of under 3x net debt to EBITDA (as-reported)
via strong EBITDA growth. At transaction close in Q2 2020, Moody's
estimates pro forma financial leverage at roughly 5.6x total debt
to EBITDA (as calculated by Moody's) with free cash flow to
adjusted debt of approximately 15% (excluding the $850 million
one-time distribution). With the change in ownership upon close,
Moody's anticipates a lower risk of outsized dividend payments,
which should improve free cash flow conversion compared to prior
years. Moody's expects adjusted EBITDA margins (as calculated by
Moody's) in the 30%-35% area, supported by revenue growth in the
5%-8% range in 2020. The company has publicly committed to
returning net leverage to under its 3x target (as-reported) within
18 months after the spin-off transaction closes (i.e., by year end
2021). However, given that Moody's projects a global economic
recession this year with the G-20 economies contracting 4%, this
will result in lower-than-expected EBITDA and a slower pace of
deleveraging. As the virus threat is contained and economic growth
gradually returns, Moody's projects the G-20 economies will expand
4.8% in 2021, with Match de-levering to the 4x-4.5x area (as
calculated by Moody's) by year end 2021 mainly via EBITDA growth,
barring sizable debt-financed M&A.
The Ba2 rating is constrained by Match's narrow business focus in a
highly competitive industry with revenue concentration in the
Tinder brand. Given minimal entry barriers, Match faces significant
competition from a multitude of smaller players, such as Meet Group
and MagicLab, which owns the number two mobile dating app, Bumble,
and was recently acquired by The Blackstone Group; as well as
larger players like Facebook, which launched its Facebook Dating
mobile app in the US in September 2019.
Despite Match's strong growth trends in the past, there may be
periods when it could experience weaker-than-expected revenue
growth due to economic shocks, heightened competition, lower ARPU,
reduced user traffic or higher customer churn, which weighs on the
rating. Additionally, margins could experience pressure as Match
invests in new geographies, product development, customer
acquisition, marketing and data analytics to retain and attract
subscribers to its dating apps. The online dating market is also
susceptible to sudden changes in consumer engagement and rapidly
evolving technology that could lead to declines in user activity
and impact payer conversion and monetization. Moody's expects Match
to continue to invest in technology, including machine learning and
data science, as well as new product features to sustain high user
engagement.
Over the next 12-15 months, Moody's expects Match to maintain very
good liquidity (SGL-1 Speculative Grade Liquidity) supported by the
company's "asset-lite" operating model that facilitates meaningful
free cash flow generation and high free cash flow conversion in the
80%-90% range (excluding the $850 million one-time distribution)
and robust cash balances (cash levels totaled nearly $900 million
at April 30, 2020). Moody's projects free cash flow over the next
twelve months in the range of $550-$600 million (excluding the
one-time distribution). Match's external liquidity is supported by
the recently upsized $750 million undrawn revolving credit
facility, which provides ample alternate liquidity for growth
opportunities and M&A. Moody's expects Match to use cash-on-hand to
pay the $3 per share consideration, or approximately $850 million
in aggregate, to Match's shareholders and IAC when the separation
closes.
The RCF requires Match to maintain a Consolidated Net Leverage
Ratio of less than or equal to 5.0x net debt to EBITDA (as defined
in the bank credit agreement) whenever the facility is drawn. Upon
separation, the calculation will exclude the exchangeable notes
from the calculation since these obligations will reside at finco
entities, however Moody's includes them in its adjusted gross debt
calculations. Moody's estimates the company was in compliance with
an approximate 50% cushion at March 31, 2020. While Moody's does
not expect Match to draw under the facility over the coming 12-15
months (except for opportunistic M&A), it will closely monitor the
covenant headroom, which could decrease as a result of EBITDA
shortfalls or reduced cash balances. If the covenant cushion
tightens over the coming quarters, Moody's expects the company will
seek to obtain waivers from its banks.
Moody's Loss Given Default model excludes the exchangeable notes
given their equity-like feature and potential redemption via stock
in the future. Moody's also assumed minimal borrowings under the
revolver and applied a -1 notch override on the credit facilities'
ratings given the potential for a higher mix of secured debt in the
future to support acquisitions or refinancing activity.
ESG CONSIDERATIONS
The rapid and widening spread of the coronavirus outbreak,
deteriorating global economic outlook, falling oil prices, and
asset price declines are creating a severe and extensive credit
shock across many sectors, regions and markets. The combined credit
effects of these developments are unprecedented. The online dating
sector has been one of the sectors affected by the shock given its
sensitivity to consumer demand and sentiment. More specifically,
the weaknesses in Match's credit profile, including its exposure to
US, European and Asian economies, have left it vulnerable to shifts
in market sentiment in these unprecedented operating conditions and
Match remains vulnerable to the outbreak's continuing spread.
Moody's regards the coronavirus outbreak as a social risk under its
ESG framework, given the substantial implications for public health
and safety. Its action reflects the impact on Match of the breadth
and severity of the shock, and the broad deterioration in credit
quality it has triggered.
A social impact that Moody's considers in Match's credit profile is
the increasing usage of online dating and social networking
platforms that help users find potential matches for dating,
friendship and networking, which will continue to benefit Match and
support solid revenue and EBITDA growth fundamentals over the next
several years. Given that Match is entrusted with sensitive user
data, Moody's notes that potential data privacy breaches could
prompt some consumers to avoid using the company's dating apps
thereby increasing social risk. Offsetting this risk is the
company's continuing focus and increasing investment and training
in its information security, privacy and user safety programs
across all of its dating apps.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The rating outlook could be revised to stable if financial leverage
declines to the 3.5x area (Moody's adjusted) and free cash flow to
debt improves to the 15% range (Moody's adjusted, excluding the
one-time distribution) coupled with revenue growth in the 12%-15%
range.
A ratings upgrade is unlikely over the near-term, especially if the
coronavirus outbreak and economic recession continue to impact
users' willingness to purchase subscriptions and a la carte
services from Match's dating apps. Over time, an upgrade could
occur if Match exhibits revenue growth and EBITDA margin expansion
leading to consistent retained cash flow to net debt of at least
23% (Moody's adjusted) and leverage sustained near 3x total debt to
EBITDA (Moody's adjusted). Ratings could be downgraded if a decline
in revenue or higher operating expenses led to EBITDA margin
contraction or total debt to EBITDA sustained above 4x (Moody's
adjusted) 18 months after the spin-off transaction closes. There
would be downward pressure on ratings if EBITDA were to weaken
resulting in retained cash flow to net debt sustained below 15%
(Moody's adjusted).
The principal methodology used in these ratings was Business and
Consumer Service Industry published in October 2016.
Headquartered in Dallas, Texas, Match Group, Inc. is a leading
online dating provider via its major brands in 40 languages
globally. Revenue totaled approximately $2.1 billion for the twelve
months ended March 31, 2020.
MERITAGE HOMES: Moody's Affirms Ba2 Corp. Family Rating
-------------------------------------------------------
Moody's Investors Service affirmed Meritage Homes Corporation's Ba2
Corporate Family Rating, Ba2-PD Probability of Default Rating, and
the Ba2 rating on the company's senior unsecured notes of various
maturities. The SGL-2 Speculative Grade Liquidity Rating is
maintained. The outlook is stable.
The rating affirmations reflect Meritage's strong market
positioning within entry-level and first move-up homebuyer
categories, favorable demographic fundamentals given the large
population of millennials, and the company's strong balance sheet
and financial flexibility that will help weather the weaker demand
environment caused by the coronavirus outbreak.
The stable outlook reflects Moody's expectation that Meritage will
operate conservatively, and maintain a good liquidity profile over
the next 12 to 18 months. Moody's also expects homebuying demand
improving steadily once economic conditions firm up given the
supportive underlying industry fundamentals, including lack of
oversupply and low interest rates supporting affordability.
The following rating actions were taken:
Affirmations:
Issuer: Meritage Homes Corporation
Corporate Family Rating, Affirmed Ba2
Probability of Default Rating, Affirmed Ba2-PD
Senior Unsecured Regular Bond/Debenture, Affirmed Ba2 (LGD4)
Unchanged:
Speculative Grade Liquidity Rating, Unchanged at SGL-2
Outlook Actions:
Issuer: Meritage Homes Corporation
Outlook, Remains Stable
RATINGS RATIONALE
Meritage's Ba2 Corporate Family Rating reflects the company's: 1)
strong market position within entry-level and first move-up
homebuyer categories, including through its LiVE.NOW homes; 2)
product strategy focus that is expected to benefit from the demand
of millennial and baby boomer population cohorts in the next few
years; 3) governance considerations including prudent balance sheet
management with a demonstrated conservative approach to debt
leverage, which is expected to be maintained; 4) a disciplined
approach to land investments; and 5) geographic diversity and good
market positions within its individual regional markets.
At the same time, the company's credit profile is constrained by:
1) Moody's expectation of home sale declines given the widespread
effect of the coronavirus pandemic; 2) exposure to gross margin
pressure, including the potential for increased incentives; 3) high
proportion of speculative homes, accounting for approximately 50%
of all homes in production; and 4) cyclicality of the homebuilding
industry and the exposure to protracted declines during a weak
market.
Meritage's Speculative-Grade Liquidity rating of SGL-2 indicates
Moody's expectation for a good liquidity profile over the next
12-15 months, supported by a robust cash balance of $800 million,
positive cash flow from operations, the available capacity under
its $780 million revolving credit facility expiring in July 2023,
and significant cushion under financial covenants.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if Meritage is able to significantly
increase its size, scale, and geographic diversification while
maintaining strong credit metrics. Specifically:
- Revenues grow to $4.5 billion
- Gross margins of 20% are maintained
- Debt to book capitalization is sustained below 40%
The ratings could be downgraded if:
- Meritage uses debt to fund substantial land purchases or
shareholder-friendly activities such that debt to book
capitalization is sustained above 50%
- Gross margins compress meaningfully
- The company's liquidity profile deteriorates
The principal methodology used in this rating was Homebuilding And
Property Development Industry published in January 2018.
Meritage Homes Corporation, founded in 1985 and headquartered in
Scottsdale, is the eighth largest rated US homebuilder, based on
2019 revenues, primarily building single-family detached and, to a
lesser extent, attached homes. The company operates in three
regions (West, Central, East), covering 18 markets in Arizona,
California, Colorado, Texas, Florida, Georgia, North Carolina,
South Carolina, and Tennessee. Product offerings include largely
entry-level and first move-up homes, and to a lesser degree active
adult and luxury homes. Total revenues and net income for the LTM
period ended March 31, 2020 were approximately $3.8 billion and
$295 million, respectively.
MIAMI AIR INTERNATIONAL: Committee Hires Bast Amron as Counsel
--------------------------------------------------------------
The official committee of unsecured creditors of Miami Air
International, Inc. seeks authority from the U.S.
Bankruptcy Court for the Southern District of Florida to retain
Bast Amron LLP as its counsel.
The Committee requires Bast Amron to:
a. give advice to the Committee with respect to its powers and
duties as the Committee in this case;
b. advise the Committee with respect to issues including use
of financing, sales of assets, approval of any disclosure statement
which may be filed, confirmation of any plan which may be filed,
alternatives to the reorganization process, avoidance actions, and
other pertinent matters;
c. prepare motions, pleadings, orders, applications, adversary
proceedings, and other legal documents necessary in the case;
d. protect the interests of the Committee in all matters
pending before the Court;
e. represent the Committee in negotiations with the Debtor and
other creditors in this chapter 11 case.
Bast Amron will be paid at these rates:
Jeffrey P. Bast, Esq. $525
Brett M. Amron, Esq. $525
Attorneys $275 to $510
Paralegals $205 to $225
Jeffrey P. Bast, partner of Bast Amron 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.
Bast Amron can be reached at:
Jeffrey P. Bast, Esq.
BAST AMRON LLP
1 SE 3rd Ave.
Miami, FL 33131
Tel: (305) 379-7904
About Miami Air International
Miami Air International, Inc., based in Miami, FL, filed a Chapter
11 petition (Bankr. S.D. Fla. Case No. 20-13924) on March 24, 2020.
In the petition signed by Annette Eckerle, authorized officer, the
Debtor was estimated to have $1 million to $10 million in assets
and $10 million to $50 million in liabilities. The Hon. Jay A.
Cristol oversees the case. Paul J. Battista, Esq., at Genovese
Joblove & Battista, P.A., serves as bankruptcy counsel.
MICHAELS STORES: Egan-Jones Cuts Local Currency Unsec. Rating to B-
-------------------------------------------------------------------
Egan-Jones Ratings Company, on April 29, 2020, downgraded the local
currency senior unsecured rating on debt issued by Michaels Stores
Inc. to B- from B.
Headquartered in Irving, Texas, Michaels Stores, Inc. retails art
and craft products.
MOHEGAN TRIBAL: Moody's Rates $100MM 1st Lien Term Loan A-2 'Caa1'
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Moody's Investors Service assigned a Caa1 rating to Mohegan Tribal
Gaming Authority's $100 million first lien term loan A-2 due
October 2021. Proceeds from the new offering along with $42 million
of balance sheet cash will be used to repay $138 million
outstanding under the company's $250 million revolving credit
facility due October 2021. Pro forma for the transaction, the
revolver balance will be $109 million.
MTGA's existing ratings are not affected including the company's
Caa2 Corporate Family Rating, Caa2-PD Probability of Default
Rating, Caa1 senior secured 1st lien bank loan rating, and Ca
senior unsecured notes rating. The company's SGL-4 Speculative
Grade Liquidity Rating and negative outlook are unaffected.
MTGA is also seeking to obtain covenant relief from its bank
lenders. The company is proposing to replace its financial
maintenance covenants from March 2020 through September 2020 with a
minimum liquidity covenant starting at $150 million at April 2020
with the liquidity requirement dropping steadily to $50 million
through April 2021. MTGA is also proposing that the definition of
EBITDA for covenant purposes for the quarter ending March 31, 2021
be revised to be the greater of the March 31, 2021 quarter
annualized or the sum of the December 31, 2020 quarter plus the
March 31, 2021 quarter annualized, with subsequent quarters in 2021
to be annualized based on figures used for March 31, 2021 and
future periods annualized.
By terming out a portion of the revolver, MTGA's liquidity, defined
as revolver availability plus unrestricted cash, will increase by
$87 million, and total debt will be reduced by $42 million. If the
company is successful at obtaining the desired covenant relief
along with the new term loan, Moody's would consider this a credit
positive event, although not material enough to have an impact on
the company's ratings or outlook. Pro forma for the add-on, MTGA
will still face $466 million of bank debt maturities in October
2021. Additionally, the scheduled interest payment of approximately
$19.7 million that was due on April 15, 2020 with respect to the
company's 7.875% senior notes due 2024 has not yet been paid,
although MTGA is still within the 30-day grace period and has
publicly stated it plans to make that payment before the expiration
of the grace period.
Assignments:
Issuer: Mohegan Tribal Gaming Authority
Senior Secured Bank Credit Facility, Assigned Caa1 (LGD3)
RATINGS RATIONALE
MTGA's Caa2 CFR reflects the meaningful earnings decline over the
next few months expected from efforts to contain the coronavirus
and the potential for a slow recovery once properties reopen. The
ratings also reflect the negative effect on consumer income and
wealth stemming from job losses and asset price declines, which
will diminish discretionary resources to spend at casinos,
including MTGA's casino properties, once this crisis subsides.
Additionally, because of approaching October 2021 maturities and
weak earnings, MTGA's refinancing and default risk is high.
Positive rating considerations include MTGA's high quality,
well-established, and large amount of gaming and attractive
nongaming amenities along with its earnings diversification
efforts. Diversification efforts outside of MTGA's restricted group
structure include management and development fees from unaffiliated
casinos in the U.S. along with MTGA's investment in a resort casino
project in South Korea, which Moody's views as a long-term positive
for the company, despite inherent risks. Additionally, in June
2019, MTGA completed the acquisition of the MGE Niagara Resorts and
assumed the day-to-day operations of the properties under the terms
of a casino operating and services agreement.
The rapid and widening spread of the coronavirus outbreak,
deteriorating global economic outlook, falling oil prices, and
asset price declines are creating a severe and extensive credit
shock across many sectors, regions and markets. The combined credit
effects of these developments are unprecedented. The gaming sector
is one of the sectors most significantly affected by the shock
given the non-essential nature of casino gaming and the sector's
historically high sensitivity to consumer demand and sentiment.
More specifically, MTGA's continued exposure to travel disruptions
and discretionary consumer spending, have left it vulnerable to
shifts in market sentiment in these unprecedented operating
conditions and makes it vulnerable to the outbreak continuing to
spread.
Moody's regards the coronavirus outbreak as a social risk under its
ESG framework, given the substantial implications for public health
and safety. Its action reflects the impact on MTGA of the breadth
and severity of the shock, and the broad deterioration in credit
quality it has triggered.
The negative outlook acknowledges that the coronavirus situation
continues to evolve and a high degree of uncertainty remains
regarding the timing of facility re-openings and the pace at which
consumer spending at the MTGA's casinos will recover. As a result,
MTGA's credit profile, liquidity and leverage could deteriorate
quickly over the next few months if the company's operating
performance does not rebound quickly. The negative outlook also
reflects the refinancing risk associated with the approaching
October 2021 revolver and term loan A maturities in the near-term.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
An upgrade would require a high degree of confidence on Moody's
part that the gaming sector has returned to a period long-term
stability, and that MTGA demonstrate the ability to generate
positive free cash flow, maintain good liquidity including
refinancing maturities at a manageable interest cost, and reduce
leverage. A ratings upgrade is unlikely given the weak operating
environment and continuing uncertainty related to the coronavirus
Ratings could be downgraded if Moody's anticipates the company's
earnings decline and cash burn because of actions to contain the
spread of the virus or reductions in discretionary consumer
spending will lead to further liquidity deterioration and default
risk. Failure to make the interest payment within the grace period
could also result in a downgrade.
The principal methodology used in this rating was Gaming Industry
published in December 2017.
MTGA owns and operates Mohegan Sun, a gaming and entertainment
complex near Uncasville, Connecticut, and Mohegan Sun at Pocono
Downs, a gaming and entertainment facility offering slot machines
and harness racing in Plains Township, Pennsylvania. MTGA also
receives fees for the management of several nonaffiliated casinos.
MTGA is owned by the Mohegan Tribe of Indians of Connecticut, a
federally recognized Native American tribe. MTGA generated
consolidated net revenue of about $1.46 billion for the latest
12-months ended December 31, 2019.
MOHEGAN TRIBAL: S&P Downgrades ICR to 'CCC+'; Outlook Negative
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S&P Global Ratings lowered all of its ratings on casino operator
Mohegan Tribal Gaming Authority (MTGA) and hotel owner Mohegan
Tribal Finance Authority (MTFA), including its issuer credit
ratings, by one notch to 'CCC+' from 'B-' and removed the ratings
from CreditWatch, where it placed them with negative implications
on March 20, 2020.
MTGA recently announced that it is seeking a $100 million
incremental term loan due October 2021. S&P is assigning its 'CCC+'
issue-level rating to the proposed term loan. MTGA intends to use
the proceeds from this loan to repay a portion of the outstanding
balance under its $250 million revolving credit facility.
A spike in MTGA's leverage in 2020 due to the temporary casino
closures, the addition of incremental debt to enhance its
liquidity, and an expected slow recovery all increase its
refinancing risks. S&P expects MTGA's leverage to spike in fiscal
year 2020 because it is currently unable to generate revenue and
will burn cash for as long as its casinos remain closed. If the
coronavirus is contained by midyear 2020, MTGA should be able to
reopen its casinos around that time. However, lingering consumer
apprehensions about crowded public spaces, the need to implement
social distancing and other health and safety measures (including
those that reduce gaming capacity, amenities, and visitor volume),
and a U.S. recession could hamper its recovery. MTGA's cash flow is
concentrated in the Northeast, which is a region that S&P believes
may be slower to relax stay-at-home orders and social distancing
guidelines given the high concentration of cases. Although MTGA's
largest property in Connecticut is located on tribal land and is
generally not subject to regulation by the state, it has generally
adhered to state guidelines. Connecticut extended its stay-at-home
order through May 20 and the governor has indicated he does not
foresee casinos reopening on May 21. Pennsylvania announced that 24
counties would reopen beginning May 8; however, Luzerne
County--where Mohegan Sun Pocono is located--was not one of them.
Therefore, in its revised base-case scenario, S&P assumes MTGA's
casinos will generally remain closed through the second quarter.
S&P also believe that the company's casinos will reopen with social
distancing measures that will reduce the available gaming capacity
and potentially restrict the number of visitors. To achieve social
distancing, operators would have to turn off some slot machines and
reduce the number of seats at table games to spread out their
patrons. The number of amenities may also be limited. Because of
this, S&P assumes MTGA's adjusted leverage may improve next year
but remain high at about 12x through 2021, which includes spending
for the construction of Project Inspire and associated debt before
the facility ramps-up (the project is expected to open in early
2022).
"We believe the spike in MTGA's leverage in 2020 and our
expectation for a slow recovery increase its refinancing risks over
the next 12-18 months given that its $250 million revolver, $257
million term loan A, and the proposed $100 million incremental term
loan A all mature in October 2021. We anticipate that MTGA may have
difficulty refinancing this debt on favorable terms because we
believe it may take multiple years for its cash flow to return to
pre-pandemic levels," S&P said.
"In addition, the current conditions in the credit market have led
to much higher borrowing costs for gaming operators. Given MGTA's
large debt balance, combined with an uncertain and potentially slow
recovery, we believe its capital structure may be unsustainable
over the long term and expect that it could pursue a transaction we
would view as tantamount to a default over the next 12-18 months,"
the rating agency said.
The rating incorporates S&P's expectation that MTGA will make the
interest payment on its notes in the grace period. Notwithstanding
MTGA's decision to defer making the $19.7 million interest payment
on its 7.875% senior notes due 2024 on April 15, 2020, S&P expects
the company to complete the interest payment prior to the
expiration of the 30-day grace period given that it has publicly
indicated it intends to do so and has sufficient liquidity.
"While we believe it is in MTGA's best interest to make the payment
and avoid triggering the cross-default provisions in its other debt
agreements, we also believe that the closure of its properties and
current cash burn is causing it to manage its liquidity in a manner
that is detrimental to its lenders. In our view, this--combined
with its heightened refinancing risk--increases the likelihood it
will undertake some type of restructuring over the next year," S&P
said.
S&P believes the proposed incremental term loan, if completed, will
provide MTGA with sufficient liquidity to weather a prolonged
shutdown. Pro forma for the transaction and the payment of the
deferred interest prior to the end of the grace period on May 15,
MTGA had an unrestricted cash balance and revolver availability of
approximately $260 million (including bank roll and net of fees and
expenses) as of March 30, 2020. This does not include the $112
million of restricted cash at Project Inspire in Korea, which is
not available to fund debt service or operating expenses here in
the U.S.
S&P's base-case forecast assumes MTGA's operations remain closed
through the second quarter and resume early in the third quarter,
though at weaker levels compared with before the pandemic. If the
casino closures are prolonged, S&P believes MTGA would have
sufficient cash on hand to fund its liquidity needs for at least
the next eight months based on the rating agency's assumed cash
burn rate. MTGA will rely on its cash balances and revolver
availability to meet its liquidity needs for as long as its
properties remain closed. These liquidity uses largely include
payroll and other modest operating expenses, minimal capital
expenditure, debt service, and distributions to the tribe.
Concurrent with the proposed incremental term loan, MTGA is also
seeking to amended its financial maintenance covenants to provide
it with covenant relief amid the pandemic. The proposed amendment
replaces the senior secured leverage, total leverage, and
fixed-charge coverage covenants through Dec. 31, 2020, with a
minimum liquidity covenant that will be tested monthly through
April 30, 2021. MTGA will be required to have unrestricted cash on
hand at the end of each month in the following amounts:
-- $150 million on May 31, 2020;
-- $125 million on June 30, 2020;
-- $100 million on July 31, 2020;
-- $75 million on Aug. 31, 2020; and
-- $50 million at the end of each month thereafter through April
30, 2021.
After the covenant relief period:
-- The senior secured leverage ratio will gradually step down from
5.5:1 for the 12 months ending March 31, 2021, to 4.25:1 for the 12
months ending Sept. 30, 2022;
-- The total leverage ratio will gradually step down from 7.5:1
for the 12 months ending March 31, 2021 to 6.0:1 for 12 months
ending Sept. 30, 2022; and
-- The fixed-charge coverage ratio will increase from 1.0:1 for
the 12 months ending March 31, 2021, through Dec. 31, 2021, to
1.05:1 thereafter.
The amendment also modifies how MTGA's EBITDA is calculated for the
covenant tests for the quarters ending March 31, June 30, and Sept.
30, 2021. Under S&P's current forecast, it expects MTGA to maintain
an adequate cushion under these revised covenants.
The downgrade reflects MTFA's heightened liquidity risk, given its
reliance on MTGA for its cash flows and debt service, and S&P's
view that the property closures could pressure MTGA's ability and
willingness to continue paying rent to MTFA. S&P expects that
MTGA's credit measures will remain weak through 2021, which could
pressure its ability to pay its base rent expense to MTFA. MTFA
relies on this base rent payment to service its outstanding bonds.
MTFA leases the Earth Hotel Tower at Mohegan Sun Connecticut to
MTGA. The lease agreement between MTGA and MTFA is structured such
that the base rent payments from MTGA fully cover MTFA's debt
service and minimal operating expenses without providing an
additional cushion. MTFA maintains minimal cash on its balance
sheet given that it is a pass-through entity. Additionally, if the
rent payments from MTGA are insufficient to cover MTFA's debt
service, the Tribe has pledged the hotel occupancy tax revenue it
receives from Mohegan Sun as an additional source of liquidity.
However, the Tribe is generating zero hotel occupancy tax revenue
while the property remains closed, which provides MTFA with a
minimal additional cash flow cushion. In addition, S&P believes the
most likely scenario under which MTGA would fail to make the full
rent payment would be if Mohegan Sun experiences a significantly
weaker operating performance and faces liquidity challenges, which
could occur if the property remains closed for a prolonged period
or its recovery is slower than it expects once it resumes
operation.
Environmental, social, and governance (ESG) credit factors for this
credit rating change:
-- Health and safety factors
The negative outlook reflects that S&P could lower its ratings on
MTGA and MTFA if the rating agency believes either entity will face
a liquidity crisis in the next 12 months or a distressed exchange
or other restructuring that the rating agency would view as
tantamount to a default appears likely.
"We would likely lower our ratings if MTGA's liquidity continues to
deteriorate because its casinos remain closed for longer than we
currently expect, which could lead to a liquidity crisis. We could
also lower the ratings if we believe a debt restructuring of some
form is likely in the next six to 12 months. IF MTGA does not
complete the proposed transaction to bolster its liquidity
position, we could also lower our ratings," S&P said.
"It is unlikely that we would revise our outlooks to stable or
raise our ratings on MTGA or MTFA until the properties reopen and
we can assess their recovery paths. It is also unlikely that we
would consider raising our ratings until MTGA refinances its 2021
debt maturities. If MTGA addresses its 2021 debt maturities, the
properties recover such that MTGA can begin to reduce its debt, and
we conclude that its capital structure is sustainable over the long
term, we could consider revising our outlook to stable or raising
our ratings," the rating agency said.
MORAN FOODS: Moody's Hikes CFR to B3, Outlook Stable
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Moody's Investors Service upgraded the Corporate Family Rating and
Probability of Default Rating of Moran Foods LLC, the parent of
Save-A-Lot Holdings, LLC. to B3 and B3-PD/LD from Caa3 and Caa3-PD
respectively. Moody's also assigned a B1 rating to the company's
new super priority delayed draw term loan, a B3 rating to its new
first lien term loan and a Caa1 rating to its new second lien term
loan. The rating for the company's old $740 million senior first
lien term loan was withdrawn. The outlook is stable.
Moody's appended the company's B3-PD Probability of Default rating
with the "/LD" designation as the company's recapitalization
transaction whereby term loan debt was exchanged for equity in
order to reduce the overall debt burden is viewed by Moody's as a
distressed exchange which is an event of default under Moody's
definition of default. Moody's will remove the "/LD" designation
from the company's PDR after three days.
"The upgrade is driven by the stronger balance sheet due to the
lower debt burden as a result of the company's recapitalization
transaction. Moody's Vice President Mickey Chadha stated. "Although
the company's plan to change its business model to become a pure
wholesaler to its licensee store base and do away with operating
retail stores will lower operating expenses and improve
profitability, the transformation comes with high execution risks
and will take at least a year to complete", Chadha further stated.
Upgrades:
Issuer: Moran Foods LLC
Probability of Default Rating, Upgraded to B3-PD/LD from Caa3-PD
Corporate Family Rating, Upgraded to B3 from Caa3
Assignments:
Issuer: Moran Foods LLC
Senior Secured Super Senior Bank Credit Facility, Assigned B1
(LGD3)
Senior Secured 1st Lien Bank Credit Facility, Assigned B3 (LGD3)
Senior Secured 2nd Lien Bank Credit Facility, Assigned Caa1 (LGD5)
Withdrawals:
Issuer: Moran Foods LLC
Senior Secured Bank Credit Facility, Withdrawn, previously rated Ca
(LGD4)
Outlook Actions:
Issuer: Moran Foods LLC
Outlook, Changed to Stable from Negative
RATINGS RATIONALE
Moran Foods' B3 Corporate Family Rating reflects its good liquidity
and weak credit metrics. Moody's expects lease adjusted debt/EBITDA
to be over 6.0x for the next 12 months despite the company's recent
recapitalization which resulted in reduction of funded debt by
about $500 million. Moody's expects the company to pay PIK interest
on its term loans at least for 2020 to conserve cash and expects
the company's credit metrics to improve in 2021 as EBITDA improves
due to lower SG&A expenses as the company transforms from a
retailer to a distributor to its licensee stores. However, the
transition will take at least a year to accomplish and comes with
high execution risks. If the transformation and expense reduction
take longer than expected metrics could remain weak for a longer
period of time as competitive pressures are not expected to abate
and margins and topline growth will remain pressured. The company
expects to have about 965 to 1,035 licensed stores and only about
20 corporate stores after the transformation is complete. After a
number of store closures through the years the remaining cohort of
licensed stores are healthier but still have to contend with strong
competitors like Walmart, Dollar General and Aldi, which plans to
aggressively expand its store base across the U.S. and also new
entrants like Lidl that could create additional competitive
pressure in the longer term.
Save-A-Lot's total network same store sales declined in each
quarter of fiscal 2018 and 2019 due to lower sales at its corporate
stores and lower purchases from its licensees. The first quarter of
2020 saw network same store sales up primarily due to pantry
loading related to the coronavirus pandemic. The lower debt burden
will definitely help but the key to the company's success will be
reversing the negative operating performance trends of the past
couple of years at the licensee stores going forward in the face of
increasing competitive pressures.
Moody's continues to believe that the hard discount food retail
sector is well positioned for growth relative to other retail
channels given its low-price points and relative resistance to
economic cycles and e-commerce albeit still in a very highly
competitive operating environment.
The stable outlook reflects Moody's expectation that the company's
transformation plan will proceed as planned with an improvement in
EBITDA and credit metrics as operating expenses are lowered and the
licensee store base operating performance improves.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Ratings could be upgraded if operating margins improve and
liquidity is good. Quantitatively ratings could be upgraded if
debt/EBITDA is sustained below 5.25x and EBITA to interest is
sustained above 2.0x.
Ratings could be downgraded if the company's cash flow and
liquidity deteriorate, and operating margins and EDITDA do not
improve. Specifically, should the transformation plan take longer
than expected or Debt/EBITDA is sustained above 6.25x or
EBITA/interest is sustained below 1.5x ratings could be
downgraded.
Post transformation Moran Foods will be a wholesaler to about 965to
1,035 licensed stores under the Save-A-Lot banner. Proforma
revenues will be approximately $3.3 billion. The company is
majority owned by its lenders including JP Morgan, Voya, CDPQ and
Aberdeen Capital.
The principal methodology used in these ratings was Distribution &
Supply Chain Services Industry published in June 2018.
MOSIER MANAGEMENT: U.S. Trustee Unable to Appoint Committee
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The Office of the U.S. Trustee disclosed in a court filing that no
official committee of unsecured creditors has been appointed in the
Chapter 11 case of Mosier Management LLC.
About Mosier Management
Mosier Management LLC, wich operates under the name Adsit Company,
specializes in parts exclusively for Mercedes Benz automobiles.
Visit https://www.adsitco.com
Mosier Management sought protection under Chapter 11 of the
Bankruptcy Court (Bankr. S.D. Ind. Case No. 20-00640) on Feb. 3,
2020. In the petition signed by Josiah Mosier, sole member, Debtor
was estimated to have $100,000 to $500,000 in assets and $1
million to $10 million in liabilities. Terry E. Hall, Esq., at
Terry Hall Law PC, represents Debtor as counsel.
MURRAY METALLURGICAL: Gets OK to Hire Hilco as Valuation Expert
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Murray Metallurgical Coal Holdings, LLC received approval from the
U.S. Bankruptcy Court for the Southern District of Ohio to employ
Hilco Valuation Services, LLC as valuation expert.
The services to be provided by the firm include an appraisal of
certain longwall shields that Bay Point Capital Partners II, LP
obtained for use in the Oak Grove mine under its lease agreement
with Murray Metallurgical's affiliate, Murray Oak Grove Coal, LLC.
The firm will receive a flat fee of $15,000.
Aside from the appraisal services, Hilco will also provide expert
testimony related to the appraisal and will prepare an expert
report in response to any appraisal or valuation report prepared on
behalf of Bay Point. The firm will be compensated for such
services at these rates:
Research and client consultation $350/hour
Administrative tasks $75/hour
Deposition and court testimony $3,500/day (with half-day
(including travel days) $1,750 minimum per day)
Hilco received a retainer of $7,500.
Sarah Baker, managing member of Hilco, 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:
Sarah Baker
Hilco Valuation Services, LLC
5 Revere Dr Suite 206
Northbrook, IL 60062
Telephone: (847) 509-1100
About Murray Metallurgical Coal Holdings
Murray Metallurgical Coal Holdings and its affiliates are engaged
in the mining and production of metallurgical coal. They own and
operate two active coal mining complexes and other assets in
Alabama and West Virginia.
On Feb. 11, 2020, Murray Metallurgical Coal Holdings and five
affiliates each filed a voluntary Chapter 11 petition (Bankr. S.D.
Ohio Lead Case No. 20-10390). Murray Metallurgical was estimated
to have $100 million to $500 million in assets and liabilities as
of the bankruptcy filing.
Judge John E. Hoffman, Jr. oversees the cases.
Debtors tapped Proskauer Rose LLP as legal counsel; Evercore Group
LLC as investment banker; Alvarez & Marsal LLC as financial
advisor; Prime Clerk LLC as claims agent; and Hilco Valuation
Services LLC as valuation expert.
NEIMAN MARCUS: S&P Lowers ICR to 'D' on Chapter 11 Filing
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S&P Global Ratings lowered the issuer credit rating on Dallas-based
department store operator Neiman Marcus Group LLC and affected
issue-level rating to 'D' on April 22, 2020. S&P lowered the rest
of the company's issue-level ratings to 'D' as a result of the
generalized default.
Neiman Marcus Group LLC (NMG) has commenced a voluntary prearranged
Chapter 11 bankruptcy. The company anticipates restructuring its
balance sheet debt and entered into a restructuring support
agreement with most of its creditors.
"We have accordingly lowered the issue-level ratings on the
company's secured debt facilities to 'D'. We had previously lowered
the issuer credit rating to 'D' on April 22 following a missed
interest payment on its unsecured notes. We also lowered the
issue-level on the unsecured debt to 'D' at that time," S&P said.
NMG has struggled for years to adapt to ongoing secular changes
facing the department store sector, a circumstance that has
deteriorated because of operational disruptions from the
coronavirus and recessionary conditions. S&P expects to discontinue
the ratings on the company in 30 days.
Environmental, social, and governance (ESG) credit factors for this
credit rating change:
-- Health and safety
NEIMAN MARCUS: Watchtell, Vinson Represent Term Lender Group
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Pursuant to Rule 2019 of the Federal Rules of Bankruptcy Procedure,
the law firms of Wachtell, Lipton, Rosen & Katz and Vinson & Elkins
LLP submitted a verified statement to disclose that they are
representing Ad Hoc Group of Term Loan Lenders in the Chapter 11
cases of Neiman Marcus Group Ltd LLC, et al.
The Ad Hoc Group of Term Loan Lenders of indebtedness pursuant to
that certain Credit Agreement, dated as of October 25, 2013,
together with any other agreements or documents in connection
therewith, executed or delivered by and among Mariposa Intermediate
Holdings LLC, Neiman Marcus Group LTD LLC, The Neiman Marcus Group
LLC and The NMG Subsidiary LLC, the guarantors party thereto,
Credit Suisse AG, Cayman Islands Branch as administrative agent and
collateral agent, and the Lenders party thereto.
As of May 7, 2020, members of the Ad Hoc Group of Term Lenders and
their disclosable economic interests are:
Davidson Kempner Capital Management LP
520 Madison Avenue 30th Floor
New York, NY 10022
* Prepetition CF Credit Facility: $302,587,038.87
* 2028 Debentures: $66,015,000.00
* Third Lien Notes: $115,963,278.00
Pacific Investment Management Company LLC
650 Newport Center Drive
Newport Beach, CA, 92660
* Prepetition CF Credit Facility: $1,120,069,048.96
Sixth Street Partners, LLC
345 California Street
San Francisco, CA 94104
* Prepetition CF Credit Facility: $239,211,705.34
* FILO Loans: $74,500,000
No member of the Ad Hoc Group of Term Loan Lenders represents or
purports to represent any other member in connection with the
Debtors' Chapter 11 Cases. In addition, each member of the Ad Hoc
Group of Term Loan Lenders (a) does not assume any fiduciary or
other duties to any other member of the Term Loan Group and (b)
does not purport to act or speak on behalf of any other member of
the Term Loan Group in connection with these Chapter 11 Cases.
Nothing contained in this Statement (or Exhibit A hereto) is
intended to or should be construed to affect or impair any claims
against the Debtors held by any member of the Ad Hoc Group of Term
Loan Lenders. Nothing herein should be construed as a limitation
upon, or waiver of, any rights of any member of the Ad Hoc Group of
Term Loan Lenders to assert, file, and/or amend any proof of claim
in accordance with applicable law. This Statement may be amended or
supplemented as necessary in accordance with Bankruptcy Rule 2019.
Counsel to the Ad Hoc Group of Term Loan Lenders can be reached
at:
WACHTELL, LIPTON, ROSEN & KATZ
Joshua A. Feltman, Esq.
Emil A. Kleinhaus, Esq.
51 West 52nd Street
New York, NY 10019
Tel: (212) 403-1000
Fax: (212) 403-2000
Email: jafeltman@wlrk.com
eakleinhaus@wlrk.com
VINSON & ELKINS LLP
Harry A. Perrin, Esq.
Kiran Vakamudi, Esq.
1001 Fannin Street, Suite 2500
Houston, TX 77002-6760
Tel: (713) 758-2222
Fax: (713) 758-2346
Email: hperrin@velaw.com
kvakamudi@velaw.com
- and -
Paul E. Heath, Esq.
Matthew W. Moran, Esq.
Katherine Drell Grissel, Esq.
2001 Ross Avenue, Suite 3900
Dallas, TX 75201-2975
Tel: (214) 220-7700
Fax: (214) 220-7716
Email: pheath@velaw.com
mmoran@velaw.com
kgrissel@velaw.com
A copy of the Rule 2019 filing, downloaded from PacerMonitor.com,
is available at https://is.gd/53sTNP
About Neiman Marcus Group
Neiman Marcus Group is a luxury, multi-branded, omni-channel
fashion retailer conducting integrated store and online operations
under the Neiman Marcus, Bergdorf Goodman, Neiman Marcus Last Call,
and Horchow brand names.
The company was acquired by private equity firm Ares Management and
the Canada Pension Plan Investment Board, which bought it in 2013
for $6 billion.
Weeks after being forced to temporarily shut stores due to the
Covid-19 pandemic, Neiman Marcus Group and 23 affiliates sought
Chapter 11 protection (Bankr. S.D. Tex. Lead Case No. 20-32519) on
May 7, 2020, after reaching an agreement with a significant
majority of our creditors to undergo a financial restructuring that
will substantially reduce the Company's debt load, and provide
access to considerable financing to ensure business continuity.
Kirkland & Ellis LLP is serving as legal counsel to the Company,
Lazard Ltd. is serving as the Company's investment banker, and
Berkeley Research Group is serving as the Company's financial
advisor. Stretto is the claims agent, maintaining the page
https://cases.stretto.com/NMG
The Extended Term Loan Lenders are represented by Wachtell, Lipton,
Rosen & Katz as legal counsel, and Ducera Partners LLC as
investment banker.
The Noteholders are represented by Paul, Weiss, Rifkind, Wharton &
Garrison LLP as legal counsel and Houlihan Lokey as investment
banker.
NORTHWEST HARDWOODS: Moody's Cuts CFR & Sr. Secured Rating to Ca
----------------------------------------------------------------
Moody's Investors Service downgraded Northwest Hardwoods, Inc.'s
Corporate Family Rating to Ca from Caa2 and the Probability of
Default Rating to Ca-PD from Caa2-PD. Moody's also downgraded the
rating on the company's senior secured notes due 2021 to Ca from
Caa3. The outlook remains negative.
These rating actions result from Northwest's ongoing lackluster
performance, which will result in meaningful deterioration in key
credit metrics and an inability to generate cash. The coronavirus
outbreak and the resulting economic contraction is adversely
impacting Northwest. Moody's projects that Northwest will not have
sufficient liquidity to meet its debt service obligations beginning
in 2021. Moody's view is that Northwest's debt capital structure is
untenable.
"Due to its anemic operating performance, Northwest will not be
able to address its debt maturities without significant concessions
from equity and debt holders," according to Peter Doyle, a Moody's
VP-Senior Analyst.
The following ratings/assessments are affected by its action:
Downgrades:
Issuer: Northwest Hardwoods, Inc.
Probability of Default Rating, Downgraded to Ca-PD from Caa2-PD
Corporate Family Rating, Downgraded to Ca from Caa2
Senior Secured Regular Bond/Debenture, Downgraded to Ca (LGD4) from
Caa3 (LGD4)
Outlook Actions:
Issuer: Northwest Hardwoods, Inc.
Outlook, Remains Negative
RATINGS RATIONALE
Northwest's Ca CFR reflects rapidly worsening credit metrics due to
the contraction in key end markets and ongoing weak liquidity. Very
high leverage and weak liquidity combine to make Northwest's
capital structure untenable. The company's revolving credit
facility expiration date springs forward to June 2021 followed by
the maturity of its notes on August 1, 2021. Also, Moody's believes
that Northwest will pursue a debt restructuring or interest
forbearance agreement before February 1, 2021, the date at which
the company must make a semi-annual bond interest payment of about
$14 million.
The rapid and widening spread of the coronavirus outbreak and the
resulting economic contraction are creating a severe and extensive
credit shock, limiting construction activity and reducing the need
for hardwood used in cabinets and furniture. Reduced shipments of
lumber to China, Northwest's primary overseas market, and Moody's
expectation of lower demand in the future for hardwood panel for
the recreation vehicle end-market are contributors as well to
Northwest's financial difficulties. Governance risks Moody's
considers in Northwest's credit profile include an aggressive
financial policy, evidenced by its extremely high leverage and the
reluctance at this time of Littlejohn & Co., the primary owner of
Northwest, to inject additional capital in order to honor
Northwest's commitment to its note holders and to prevent an
inevitable restructuring.
However, Northwest is reducing its costs to meet lower demand,
working through inventory and reducing capital expenditures in
order to preserve cash. These efforts and cash of about $26 million
at Q1 2020 give Northwest some financial flexibility to meet its
debt service obligations through the balance of 2020, including a
$14 million bond interest payment on August 1.
However, Northwest is reducing its costs to meet lower demand,
working through inventory and reducing capital expenditures in
order to preserve cash. These efforts and existing cash on hand of
about $26 million at Q1 2020 give Northwest some financial
flexibility to meet its debt service obligations through the
balance of 2020, including a $14 million bond interest payment on
August 1.
The negative outlook reflects the increased likelihood of Northwest
restructuring its debt over the next twelve months The company's
inability to generate earnings and free cash flow hampers recovery
in key debt metrics.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The rating could be upgraded if:
- The company provides a long-term solution to its looming debt
maturities
- Liquidity improves
- Ongoing trends in end markets support sustained organic growth
The rating could be downgraded if:
- The company does not extend its debt maturities
- Redemption of debt at deep discounts or conversion of debt for
equity, which would be considered a default
Northwest Hardwoods, Inc., headquartered in Tacoma, Washington, is
a national manufacturer and distributor of hardwood lumber used for
diverse products such as mill work, cabinetry, flooring, and
furniture. Littlejohn & Co., through its affiliates, is the primary
owner of Northwest. Northwest is privately owned and does not
disclose financial information publicly.
The principal methodology used in these ratings was Manufacturing
Methodology published in March 2020.
OFFICE DEPOT: Moody's Withdraws Ba3 Corp. Family Rating
-------------------------------------------------------
Moody's Investors Service withdrew its ratings for Office Depot,
Inc. including the company's Ba3 corporate family rating and Ba3
senior secured term loan ratings.
Withdrawals:
Issuer: American Foreign Power
Senior Unsecured Regular Bond/Debenture, Withdrawn, previously
rated B1 (LGD5)
Issuer: Office Depot, Inc.
Probability of Default Rating, Withdrawn, previously rated Ba3-PD
Speculative Grade Liquidity Rating, Withdrawn, previously rated
SGL-1
Corporate Family Rating, Withdrawn, previously rated Ba3
Senior Secured Bank Credit Facility, Withdrawn, previously rated
Ba3 (LGD3)
Outlook Actions:
Issuer: American Foreign Power
Outlook, Changed To Rating Withdrawn From No Outlook
Issuer: Office Depot, Inc.
Outlook, Changed To Rating Withdrawn From Stable
RATINGS RATIONALE
Moody's has decided to withdraw the ratings for its own business
reasons. The company fully repaid the it senior secured term loan.
Office Depot, Inc. is the second largest office supply retailer in
the U.S. operating approximately 1,320 stores. The company operates
through three reportable segments: Retail, Business Solutions and
CompuCom. The BSD, retail and CompuCom segments generate revenues
of approximately, $5.3 billion, $4.5 billion and $1.0 billion,
respectively. The CompuCom segment was formed as a result of the
acquisition of CompuCom Systems, Inc. during the fourth quarter of
2017. The company sells through multiple channels, consisting of
retail stores, a business to business sales force, internet sites,
an inside sales organization, direct marketing catalogs and call
centers, all supported by a network of supply chain facilities and
delivery operations.
OMEROS CORP: Incurs $29 Million Net Loss in First Quarter
---------------------------------------------------------
Omeros Corporation reported a net loss of $29.03 million on $23.54
million of revenue for the three months ended March 31, 2020,
compared to a net loss of $24.34 million on $21.78 million of
revenue for the three months ended March 31, 2019.
As of March 31, 2020, the Company had $118.21 million in total
assets, $57.94 million in total current liabilities, $31.39 million
in lease liabilities, $160.75 million in unsecured covertible
senior notes, and a total shareholders' deficit of $131.86
million.
At March 31, 2020, Omeros had cash, cash equivalents and short-term
investments available for operations of $54.0 million, a decrease
of $6.8 million from Dec. 31, 2019.
"I am immensely proud of how Omeros' employees have responded to
the unprecedented challenges presented by the global pandemic,
adapting to a changing work environment while continuing to meet
program milestones with the same commitment, sense of urgency and
level of productivity," said Gregory A. Demopulos, M.D., Omeros'
chairman and chief executive officer. "We already are seeing rapid
resumption of OMIDRIA purchases by ASCs and hospitals as they
reopen and begin addressing the backlog of cataract surgery
patients. For narsoplimab, we just submitted the second part of
our rolling BLA as scheduled and continue to target next quarter
for its completion. Our ongoing and upcoming clinical programs
have weathered COVID-19 well, and we continue to target the start
of our OMS906 clinical program next month and data readout from our
ARTEMIS-IGAN trial next year. Our research laboratories and
nonclinical functions have also remained fully operational. Our
preparations for the commercial launch of narsoplimab have
accelerated and, with the addition of recent hires, we continue to
build top-tier sales, marketing and medical affairs teams. We look
forward to adding narsoplimab to what we expect will be a long line
of commercial products."
A full-text copy of the Quarterly Report is available for free at
the Securities and Exchange Commission's website at:
https://is.gd/TUuZiD
About Omeros Corporation
Headquartered in Seattle, Washington, Omeros Corporation --
http://www.omeros.com/-- is an innovative biopharmaceutical
company committed to discovering, developing and commercializing
small-molecule and protein therapeutics for large-market as well as
orphan indications targeting complement-mediated diseases,
disorders of the central nervous system and immune-related
diseases, including cancers. In addition to its commercial product
OMIDRIA (phenylephrine and ketorolac intraocular solution) 1%/0.3%,
Omeros has multiple Phase 3 and Phase 2 clinical-stage development
programs focused on complement-mediated disorders and substance
abuse, as well as a diverse group of preclinical programs including
GPR174, a novel target in immuno-oncology that modulates a new
cancer immunity axis recently discovered by Omeros. Small-molecule
inhibitors of GPR174 are part of Omeros' proprietary G
protein-coupled receptor (GPCR) platform through which it controls
54 new GPCR drug targets and their corresponding compounds. The
company also exclusively possesses a novel antibody-generating
platform.
Omeros reported a net loss of $84.48 million for the year ended
Dec. 31, 2019, a net loss of $126.76 million in 2018, and a net
loss of $53.48 million in 2017. As of Dec. 31, 2019, the Company
had $136.97 million in total assets, $55.46 million in total
current liabilities, $32.32 million in lease liabilities, $158.21
million in unsecured convertible senior notes, and a total
shareholders' deficit of $109.02 million.
Ernst & Young LLP, in Seattle, Washington, the Company's auditor
since 1998, issued a "going concern" qualification in its report
dated March 2, 2020, citing that the Company has suffered losses
from operations and has stated that substantial doubt exists about
the Company's ability to continue as a going concern.
OMNIMAX INT'L: Moody's Cuts CFR to Ca & Sr. Sec. Rating to Caa3
---------------------------------------------------------------
Moody's Investors Service downgraded OmniMax International, Inc.'s
Corporate Family Rating to Ca from Caa2, Probability of Default
Rating to Ca-PD from Caa2-PD and senior secured notes to Caa3 from
Caa1. The rating outlook remains negative.
"The downgrade reflects OmniMax's unsustainable debt burden and the
high likelihood of a distressed exchange or debt restructuring
given the approaching maturity of its bond," said Griselda Bisono,
Moody's Vice President-Senior Analyst. "Furthermore, the negative
outlook considers its expectations of a decline in earnings in 2020
driven by reduced demand for building products amid the COVID-19
pandemic."
Downgrades:
Issuer: OmniMax International, Inc.
Corporate Family Rating, Downgraded to Ca from Caa2
Probability of Default Rating, Downgraded to Ca-PD from Caa2-PD
Senior Secured Regular Bond/Debenture, Downgraded to Caa3 from Caa1
(LGD3)
Outlook Actions:
Issuer: OmniMax International, Inc.
Outlook, Remains Negative
RATINGS RATIONALE
OmniMax's Ca CFR reflects an elevated default risk as a result of
the company's untenable capital structure, high leverage, near-term
debt maturities and expectations for declining earnings over the
next 12-18 months. Moody's broadly expects weaker demand for
building products, and in particular OmniMax's recreational vehicle
and commercial products, which made up 36% of net sales in 2019. As
a result, Moody's expects an increase to the company's already high
leverage by year-end 2020 to 17.0x from 12.5x at year-end 2019.
Construction is broadly considered an essential service in the U.S
and OmniMax's residential products, which feed into the repair and
remodel segment, are well-positioned to benefit longer term from
strong demand characteristics in the markets served.
The rapid and widening spread of the coronavirus outbreak,
deteriorating global economic outlook, falling oil prices, and
asset price declines are creating a severe and extensive credit
shock across many sectors, regions and markets. The combined credit
effects of these developments are unprecedented. Moody's regards
the coronavirus outbreak as a social risk under its ESG framework,
given the substantial implications for public health and safety.
OmniMax's liquidity is weak, despite $96 million in cash, as a
result of low revolver availability and near-term debt maturities.
The company needs to address a wall of maturing debt, the most
pressing of which are the ABL revolver with a springing maturity in
June 2020 and the $385 million senior secured bond due August 2020.
Although the company should be able to use available cash to pay
off the ABL balance of $38.1 million (balance at the end of Q1
2020), the company will need to refinance the $385 million bond in
a weak economic environment. Corporate governance considerations at
OmniMax include the potential for debt repurchases at a significant
discount, which Moody's could view as a distressed exchange.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Given the negative outlook a ratings upgrade is unlikely at this
time. However, over a longer-term horizon rating could be upgraded
if OmniMax were to improve its liquidity position materially,
demonstrate stabilization of revenue and profit levels,
meaningfully reduce leverage and begin generating free cash flow.
An upgrade would also be predicated on the successful refinancing
of the company's senior secured notes and ABL.
The ratings could be downgraded if the risk of default increases or
Moody's recovery estimates deteriorate. The ratings could also be
downgraded if liquidity deteriorates for any reason.
The principal methodology used in these rating was Manufacturing
Methodology published in March 2020.
Headquartered in Norcross, Georgia, OmniMax is a manufacturer of
aluminum, steel, vinyl and copper products sold mainly in North
America and Europe. OmniMax's products are sold to the residential
repair and remodel, commercial construction and recreational
vehicle markets. OmniMax's main sponsors are TPG Opportunities
Partners and Highland Capital Management.
OUTFRONT MEDIA: Moody's Cuts CFR to B1 & Alters Outlook to Negative
-------------------------------------------------------------------
Moody's Investors Service downgraded OUTFRONT Media Inc.'s
corporate family rating to B1 from Ba3 and the Probability of
Default Rating to B1-PD from Ba3-PD. In addition, Moody's
downgraded the senior unsecured note rating issued by OUTFRONT's
subsidiary to B2 from B1 and affirmed the senior secured debt
rating at Ba1. The outlook was changed to negative from stable.
The downgrade of OUTFRONT's CFR and negative outlook reflect the
impact of the coronavirus outbreak on the economy which Moody's
expects will materially reduce outdoor advertising revenue in the
near term and lead to higher leverage levels and decreased cash
flow from operations. The Speculative Grade Liquidity (SGL) rating
remains unchanged at SGL-2.
Downgrades:
Issuer: OUTFRONT Media Inc.
Corporate Family Rating, downgraded to B1 from Ba3
Probability of Default Rating, downgraded to B1-PD from Ba3-PD
Issuer: OUTFRONT Media Capital LLC
Gtd Senior Unsecured Notes, downgraded to B2 (LGD5) from B1 (LGD4)
Affirmations:
Issuer: OUTFRONT Media Capital LLC
Senior Secured Term Loan B due 2026, Affirmed Ba1 (LGD2)
Senior Secured Revolving Credit Facility due 2024, Affirmed Ba1
(LGD2)
Outlook Actions:
Issuer: OUTFRONT Media Inc.
Outlook, changed to Negative from Stable
Issuer: OUTFRONT Media Capital LLC
Outlook, changed to Negative from Stable
RATINGS RATIONALE
OUTFRONT's B1 CFR reflects the impact from the coronavirus outbreak
on outdoor advertising spending which will lead to higher leverage
and decreased operating cash flow. The smaller transit division,
which had been the fastest growing division prior to the pandemic,
is projected to be impacted more severely in the near term and take
longer to recover than the billboard division. OUTFRONT also has
significant exposure to both New York City and Los Angeles which
will elevate the impact of the pandemic on operating performance in
the near term. The company also has a sizable, long term contract
with the New York Metropolitan Transit Authority to deploy digital
transit displays (including platform, subway, and railcar displays)
over the next several years. The outdoor industry remains
vulnerable to consumer ad spending, with contractual terms
generally shorter than in prior periods. As a result, Moody's
expects the outdoor advertising industry will be impacted more
rapidly than in prior recessions, although performance should
improve quicker than in previous recoveries due to the lower
commitment level and ease of initiating new outdoor campaigns.
OUTFRONT benefits from its market position as one of the largest
outdoor advertising companies in the US with positions in all the
top 25 markets and approximately 150 markets in the US and Canada.
The conversion of traditional static billboards and transit
displays to digital is expected to support revenue and EBITDA
growth after the impact of the pandemic abates. The outdoor
advertising industry also benefits from restrictions on the supply
of billboards, which help support advertising rates and high asset
valuations.
OUTFRONT'S leverage has increased to 5.9x (excluding Moody's
standard lease adjustment) as of Q1 2020 following the $495 million
revolver draw during the quarter from 4.9x as of Q4 2019. Moody's
expects that leverage will increase further in the near term.
Expense and capex reductions as well as the suspension of its
dividend are projected to offset part of the economic impact on
profitability and cash flow. OUTFRONT issued $400 million of
preferred equity in Q2 2020 which supports its liquidity position,
but elevates the potential for additional debt in the future to
refinance the preferred stock.
The rapid and widening spread of the coronavirus outbreak,
deteriorating global economic outlook, falling oil prices, and
asset price declines are creating a severe and extensive credit
shock across many sectors, regions and markets. The combined credit
effects of these developments are unprecedented. The outdoor
advertising industry 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 OUTFRONT's credit
profile, including its exposure to discretionary consumer spending
have left it vulnerable to shifts in market sentiment in these
unprecedented operating conditions and OUTFRONT remains vulnerable
to the outbreak continuing to spread. Moody's regards the
coronavirus outbreak as a social risk under its ESG framework,
given the substantial implications for public health and safety.
Its action reflects the impact on OUTFRONT of the breadth and
severity of the shock, and the broad deterioration in credit
quality it has triggered.
A governance impact that Moody's considers in OUTFRONT's credit
profile is the company's relatively aggressive financial policy.
Historically, OUTFRONT paid material dividends and capital
expenditures that have led to negative free cash flow over the past
few years. Moody's expects that OUTFRONT will be focused on
preserving liquidity, as evidenced by the suspending of dividend
payments in the near term. OUTFRONT operates as a REIT and is a
publicly traded company listed on the New York Stock Exchange.
Moody's expects OUTFRONT to maintain good liquidity as reflected by
the SGL-2 speculative grade liquidity rating. OUTFRONT drew $495
million of its $500 million revolver due 2024 ($2 million of LCs
outstanding) in Q1 2020 and issued $400 million in new preferred
equity in Q2 2020. Pro forma cash on the balance sheet as of Q1
2020 following the revolver draw and new preferred equity is
approximately $870 million, which should provide sufficient
liquidity to manage through the pandemic. The borrowings on the
$125 million Accounts Receivable Facility is $120 million, while
$90 million is outstanding against its Repurchase Facility. There
is an additional $78 million of L/C facilities which had $71
million outstanding as of Q1 2020. OUTFRONT has generated good cash
flow from operations prior to shareholder distributions
historically, but FCF was negative in 2017, 2018 and 2019 after
capex, MTA equipment deployment costs, and dividends. The dividend
payment was suspended to help preserve liquidity in the near term.
OUTFRONT's also has a $300 million At-the-Market equity (ATM)
offering program ($52 million issued in 2019) that could be used to
help fund modest acquisitions or negative FCF.
The term loan is covenant lite, but the revolver is subject to a
maximum consolidated net secured leverage ratio of 4.5x compared to
a ratio of 2x as of Q1 2020. OUTFRONT recently executed an
amendment to its financial covenants that allows for the use of
covenant EBITDA from Q2 and Q3 2019 in place of Q2 and Q3 2020
EBITDA levels, which Moody's expects will allow OUTFRONT to
maintain a sufficient cushion of compliance with its covenant.
The negative outlook reflects Moody's expectation of significant
declines in OUTFRONT's revenue and EBITDA due to the economic
impact of the pandemic which will lead to higher leverage levels
and negative free cash flow in the near term. OUTFRONT's smaller
transit division will be the most significantly affected in the
near term due to the company's exposure to New York City and will
take longer to recover than the billboard division. Prolonged
closures of key markets would increase leverage levels
substantially given OUTFRONT's presence in larger markets, as well
as more volatile national advertising. As markets open, Moody's
expects performance will be dampened by a weak economy and reduced
advertising spending in the near term.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
An upgrade could occur if leverage decreases below 5x (excluding
Moody's standard adjustments) and OUTFRONT demonstrates both the
desire and ability to sustain leverage below that level while
maintaining a good liquidity position. Positive organic revenue
growth would also be required, in addition to positive free cash
flow after distributions.
The ratings could be downgraded if leverage was expected to be
maintained above 6x (excluding Moody's standard adjustments). A
deterioration in OUTFRONT's liquidity position, continued negative
free cash flow after dividends, or inability to obtain an amendment
to the financial maintenance covenant if needed could also trigger
a downgrade.
OUTFRONT Media Inc. (fka CBS Outdoor Americas Inc.) is one of the
leading outdoor advertising companies with operations primarily in
the US in addition to Canada. OUTFRONT was previously an operating
subsidiary of CBS Corporation and in July 2014 began operating as a
REIT. In 2014, OUTFRONT completed the acquisition of certain
outdoor assets from Van Wagner Communications, LLC for $690
million. In 2016, the company sold its Latin America outdoor assets
to JCDecaux S.A. for approximately $82 million in cash. In 2017,
OUTFRONT acquired the equity interests of certain subsidiaries of
All Vision LLC to expand its outdoor advertising assets in Canada
for $94 million of cash and equity. Reported revenues were
approximately $1.8 billion as of Q1 2020.
The principal methodology used in these ratings was Media Industry
published in June 2017.
OXBOW CARBON: S&P Lowers ICR to 'B+' on Declining Sales Volumes
---------------------------------------------------------------
S&P Global Ratings lowered its rating on U.S.-based petroleum and
calcined coke processor and distributor Oxbow Carbon LLC to 'B+'
from 'BB-', reflecting its expectation of debt leverage above 4x in
2020 and 2021.
S&P also lowered its issue-level rating on the company's first-lien
term loans to 'BB-' from 'BB'. The recovery ratings are unchanged
at '2'.
S&P expects volumes to continue falling as COVID-19 limits economic
activity and the commodity environment remains weak. It expects
Oxbow to face challenging macroeconomic conditions through the rest
of 2020 amid the COVID-19 pandemic. S&P Global Ratings now
estimates North America real GDP will contract by 5.2% though the
Asia-Pacific region real GDP will grow marginally by 0.7% in 2020.
Oxbow generates approximately 40% and 30% of its revenues from
these regions, respectively. S&P believes these recessionary
pressures will result in weaker demand across all end markets. As
nonessential economic activity remains limited, S&P anticipates
decreased demand from the cement and steel industries supplied by
Oxbow's fuel-grade petroleum coke (petcoke). It also anticipates
deferred purchases of calcined petroleum coke (CPC, a key input in
manufacturing aluminum), as the automotive, aerospace and
construction industries – all acutely affected by the pandemic
– slowly rebuild their demand for aluminum. The COVID-19-induced
recessionary headwinds are compounded by ongoing, longer-term
pressures on commodity prices. S&P Global Ratings expects aluminum
prices to drop 6% to $1,700 per metric ton (MT) in 2020. Finally,
low oil prices could extend the cuts in oil production, restricting
volumes of the petroleum coke byproduct.
S&P expects Oxbow's liquidity to remain adequate through the end of
2020, though a delayed recovery could affect refinancing prospects
and revolving credit facility availability thereafter. It
anticipates Oxbow will have sufficient liquidity sources for 2020.
This is based on S&P's expectation of cash inflows from working
capital as volumes sold are reduced, and its expectation that the
company will be able to maintain steady margins and positive free
cash flow, despite current pricing pressures. In 2019 Oxbow sold
its low-margin sulfur and activated carbon business and reinvested
proceeds into the company. Additionally, while declining demand and
prices for CPC contributed to margin pressures last year, the
company has emphasized its quality proposition, and recent
reductions on the CPC supply side, have reversed some of the
related margin deterioration. As a result, S&P expects Oxbow to
maintain flat EBITDA margins in 2020. However, the rating agency
does not expect the margin performance to offset volume declines,
particularly as the specter of new trade policy negotiations and
tariffs rises again. Beyond 2020 S&P's liquidity outlook will
incorporate refinancing plans for the term loan A and revolving
credit facility both due in January 2022.
The negative outlook reflects S&P's expectation that debt leverage
will peak around 5x over the next 12 months. However, if current
conditions intensify or persist longer than expected, debt leverage
could exceed these levels. This would increase the refinancing risk
associated with the term loan A and the revolving credit facility
which become current in January 2021.
"We could lower the rating if adjusted debt leverage increases
above 7x. This could happen if volumes fall more than anticipated
as customers cancel orders or extend deferrals. Debt leverage could
rise, especially if the commodity environment shifts, reversing
recent gains in margins leading to revolving credit facility
borrowings. We could also lower the rating if we no longer consider
liquidity to be adequate, which could happen if Oxbow breaches its
covenants and loses access to the facility amid free cash
outflows," S&P said.
"We could revise the outlook back to stable once the COVID-19
pandemic appears to be contained, and we have more clarity on
global economic prospects including indications of stronger or at
least bottoming out commodity prices. In this scenario we would
also expect Oxbow to sustain debt leverage below 7x with adequate
sources of liquidity, taking into account upcoming maturities and
amortizations," the rating agency said.
PACIFIC WORLD: Prospect Values $105MM Loan at 32% of Face
---------------------------------------------------------
Prospect Capital Corporation has marked its $105,045,000 loan
extended to privately held Pacific World Corporation to market at
$92,277,000 or 32% of the outstanding amount, as of March 31, 2020,
according to a disclosure contained in a Form 10-Q filing with the
Securities and Exchange Commission for the quarterly period ended
March 31, 2020.
Prospect extended to Pacific World Corporation a Senior Secured
Term Loan A (6.25% PIK (LIBOR + 5.25% with 1.00% LIBOR floor),
which is scheduledto matureSept. 26, 2020. The loan is on
non-accrual status effective Oct. 24, 2018
"The interest rate on these investments is subject to the base rate
of 1-Month LIBOR, which was 0.99% and 2.40% at March 31, 2020 and
June 30, 2019, respectively. The current base rate for each
investment may be different from the reference rate on March 31,
2020 and June 30, 2019,"Prospect says.
Pacific World Corporation is an innovator and supplier of
proprietary nail and beauty care products to the food, drug, mass
and value retail channels worldwide.
PINNACLE GROUP: Disclosure Statement Hearing Reset to June 25
-------------------------------------------------------------
Judge Paul G. Hyman, Jr., has ordered that the hearings on the
Continued Emergency Motion to Use Cash Collateral; Continued Motion
to Permit Inter-Company Transfers; Continued Motion to Approve Post
Petition Financing and hearing to consider approval of the
Disclosure Statement of Debtors Pinnacle Group, LLC, Paradigm
Gateway International, Inc., and Partes Mundo, Sa, Inc. are
re-scheduled for June 25, 2020, at 10:00 a.m. via Court Call.
A copy of the order dated April 23, 2020, is available at
https://tinyurl.com/ybqhx8eh from PacerMonitor at no charge.
The Debtors' counsel:
Jordan L. Rappaport, Esquire
RAPPAPORT OSBORNE & RAPPAPORT, PLLC
1300 N. Federal Highway, Suite 203
Boca Raton, FL 33432
Telephone: (561) 368-2200
Facsimile: (561) 338-0350
About Pinnacle Group
Based in Sunrise, Fla., Pinnacle Group and its subsidiaries are
wholesalers of motor vehicle parts and accessories. Pinnacle Group
and its subsidiaries sought Chapter 11 protection (Bankr. S.D. Fla.
Lead Case No. 19-13519) on March 19, 2019. In its petition,
Pinnacle Group was estimated to have assets of $500,000 to $1
million and liabilities of $1 million to $10 million. Judge John
K. Olson oversees the case. Jordan L. Rappaport, Esq., at
Rappaport Osborne & Rappaport, PLLC, is the Debtor's bankruptcy
counsel.
PIONEER ENERGY: McKool, Fried Represent Noteholder Group
--------------------------------------------------------
In the Chapter 11 cases of Pioneer Energy Services Corp., et al.,
the law firms of McKool Smith LLP and Fried, Frank, Harris, Shriver
& Jacobson LLP submitted a joint verified statement under Rule 2019
of the Federal Rules of Bankruptcy Procedure, to disclose that they
are representing Ascribe III Investments LLC, Loomis, Sayles &
Company, L.P. and Strategic Income Management, LLC.
In or around April 2020, the Non-Objecting Noteholders Group
engaged Fried Frank to represent it in connection with their
holdings of the Prepetition Senior Notes. In or around April 2020,
the Non-Objecting Noteholders Group engaged McKool Smith to act as
co-counsel in these Chapter 11 cases.
Counsel does not represent or purport to represent any other
persons or entities in connection with these Chapter 11 Cases.
As of May 11, 2020, the Non-Objecting Noteholder Group and their
disclosable economic interests are:
ASCRIBE III INVESTMENTS LLC
299 Park Avenue, 34th Floor
New York, NY 10171
* Prepetition Senior Notes: $47,357,000 in aggregate principal
amount of Prepetition Senior Notes
LOOMIS, SAYLES & COMPANY, L.P.
1 Financial Center
Boston, MA 02111
* Prepetition Senior Notes: $45,745,000 in aggregate principal
amount of Prepetition Senior Notes
STRATEGIC INCOME MANAGEMENT, LLC
1200 Westlake Ave N, Suite 713
Seattle, WA 98109
* Prepetition Senior Notes: $25,886,000 in aggregate principal
amount of Prepetition Senior Notes
* Common Stock: 10,770 shares of the Common Stock
Upon information and belief, Counsel does not hold any claims
against, or interests in, the Debtors or their estates, other than
claims for fees incurred and costs expended in representing the
Non-Objecting Noteholder Group after commencement of the Chapter 11
Cases.
Counsel to the Non-Objecting Noteholder Group can be reached at:
MCKOOL SMITH, P.C.
Hugh M. Ray, Jr., Esq.
John J. Sparacino, Esq.
Veronica F. Manning, Esq.
600 Travis St., Ste. 7000
Houston, TX 77002
Telephone: (713) 485-7300
Email: hray@mckoolsmith.com
jsparacino@mckoolsmith.com
vmanning@mckoolsmith.com
- and -
FRIED, FRANK, HARRIS, SHRIVER & JACOBSON LLP
Brad Eric Scheler, Esq.
Michael C. Keats, Esq.
Andrew M. Minear, Esq.
One New York Plaza
New York, NY 10004
Telephone: (212) 859-8000
Facsimile: (212) 859-4000
Email: brad.eric.scheler@friedfrank.com
michael.keats@friedfrank.com
andrew.minear@friedfrank.com
A copy of the Rule 2019 filing, downloaded from PacerMonitor.com,
is available at https://is.gd/7aACZ6
About Pioneer Energy
Pioneer Energy Services (OTC: PESX) -- http://www.pioneeres.com/--
provides well servicing, wireline, and coiled tubing services to
producers primarily in Texas and the Mid-Continent and Rocky
Mountain regions. Pioneer also provides contract land drilling
services to oil and gas operators in Texas, Appalachia and Rocky
Mountain regions and internationally in Colombia. Pioneer is
headquartered in San Antonio, Texas.
Pioneer Energy Services Corp. and nine related entities sought
Chapter 11 protection (Bankr. S.D. Tex. Lead Case No. 20-31425) to
effectuate its prepackaged plan of reorganization that will cut
debt by $260 million.
Pioneer Energy disclosed $689,693,000 in assets and $576,545,000 in
liabilities as of Sept. 30, 2019.
The Hon. David R. Jones is the case judge.
Paul, Weiss, Rifkind, Wharton & Garrison LLP and Norton Rose
Fulbright US LLP are serving as legal counsel to Pioneer, Lazard is
acting as financial advisor and Alvarez & Marsal is serving as
restructuring advisor. Epiq Corporate Restructuring, LLC, is the
claims agent.
Davis Polk & Wardwell LLP and Haynes and Boone, LLP are acting as
legal counsel for the ad hoc group of Senior Unsecured Noteholders
and Houlihan Lokey is acting as financial advisor.
PLAZE INC: Moody's Lowers CFR to B3, Outlook Stable
---------------------------------------------------
Moody's Investors Service downgraded its rating for Plaze, Inc.'s,
including the company's corporate family rating (CFR to B3 from B2)
and probability of default rating (to B3-PD from B2-PD), along with
its senior secured bank credit facility rating (to B3 from B2). The
ratings outlook is stable.
"Plaze's recent acquisitions and high leverage weakly positions the
company at the onset of the coronavirus crisis and economic
slowdown", says Shirley Singh, Moody's lead analyst for Plaze.
While Plaze's favorable exposure to cleaning and disinfectant
products will partially mitigate the decline in more discretionary
products such as personal care and automotive, Moody's expects the
company's adjusted debt-to-EBITDA to remain higher than previous
indicated downgrade factor of 6.0x for a B2 CFR. The current
liquidity provisions also provide limited financial flexibility to
contend upcoming weak market conditions.
The rapid and widening spread of the coronavirus outbreak, the
deteriorating global economic outlook, falling oil prices and asset
price declines are creating a severe and extensive credit shock
across many sectors, regions and markets. The combined credit
effects of these developments are unprecedented. The industrial,
personal care, and automotive sectors have been adversely affected
by the shock given its sensitivity to broad market demand and
sentiment. More specifically, Plaze's more discretionary end
markets such as personal care and automotive make it vulnerable to
shifts in market sentiment in these unprecedented operating
conditions, and the company remains vulnerable to the outbreak
continuing to spread. Moody's regards the coronavirus outbreak as a
social risk under its ESG framework, given the substantial
implications for public health and safety. Its actions reflect the
impact on Plaze of the breadth and severity of the shock, and the
broad deterioration in credit quality it has triggered.
Moody's took the following actions on Plaze, Inc.:
Downgrades:
Issuer: Plaze, Inc.
Corporate Family Rating, Downgraded to B3 from B2
Probability of Default Rating, Downgraded to B3-PD from B2-PD
Senior Secured Bank Credit Facility, Downgraded to B3 (LGD3) from
B2 (LGD4)
Outlook Actions:
Issuer: Plaze, Inc.
Outlook, Remains Stable
RATING RATIONALE
Plaze's B3 CFR broadly reflects its modest size with niche market
focus and elevated adjusted debt-to-EBITDA (leverage) of over 6.0x
resulting from the company's aggressive acquisitive growth. Moody's
expects the company's leverage to remain above 6.0x as softer
market conditions will limit deleveraging expected after the
acquisition of Liquid Technologies. Plaze benefits from its
exposure to relatively stable consumer products sector, and raw
material cost favorability should help moderate earnings and cash
flow volatility in a weak economic environment. The rating also
benefits from the company's entrenched market position with
long-standing customer relationship, low capital needs and diverse
customer base. Environmental risk is moderate due to its exposure
to environmental regulations mandated by state and federal
regulatory bodies such as United States Environmental Protection
Agency and California Air Resources Board.
The stable outlook reflects Moody's expectation the company will
continue to generate positive free cash flow despite the
coronavirus-related and macroeconomic headwinds.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Ratings could be upgraded if the economic condition stabilizes and
earnings grow such that adjusted debt-to-EBITDA is sustained below
6x and free cash flow-to-debt grows above 5%.
Ratings could be downgraded if the earnings decline results in
adjusted debt-to-EBITDA to be sustained above 7.0x and/or
operations become cash consumptive.
The principal methodology used in these ratings was Manufacturing
Methodology published in March 2020.
Headquartered in Downers Grove, Illinois, Plaze, Inc., is a
manufacturer and marketer of specialty aerosol products including
cleaners, disinfectants, lubricants, air fresheners,
antiperspirants, sunscreen, polishes, adhesives and insecticides
for the North American market. The company has approximately 500
proprietary aerosol formulations and serves janitorial, sanitation,
industrial, automotive, paint, glass, personal care and other end
markets. The company is owned by Pritzker Private Capital.
POINT.360: Medley Values $2.7-Mil. Loan at 7% of Face
-----------------------------------------------------
Medley Capital Corporation has marked its $2,669,829 loan extended
to privately held Point.360 to market at $178,879, or 7% of the
outstanding amount, as of March 31, 2020, according to a disclosure
contained in a Form 10-Q filing with the Securities and Exchange
Commission for the quarterly period ended March 31, 2020.
Medley is a lender under Point.360's Senior Secured First Lien Term
Loan (LIBOR + 6.00% PIK), which is scheduled to mature July 8,
2020. The investment was on non-accrual status as of March 31,
2020.
Point.360 is in the Services: Business industry.
PREMIER ON 5TH: Debtor Will Liquidate its Asset to Pay Claims
-------------------------------------------------------------
Premier On 5th, LLC, filed a Plan and a Disclosure Statement.
The Debtor's business is the development of a real estate project
on the real property located at 1469 Fifth street, Florida. The
Plan will be funded from the liquidation of all of the Debtor's
assets.
The Plan proposes to treat claims as follows:
* Class 2 Secured Claim of Rubin C. Peacock is impaired. The
Debtor shall sell the Property free and clear of all liens, claims
and encumbrances, in accordance with the Bid Procedures Order. The
net proceeds of the Sale, after payment of Allowed Secured Tax
Claims, shall be paid to Rubin C. Peacock up to the amount of his
Allowed Secured Claim. To the extent Rubin C. Peacock's Allowed
Secured Claim is not paid in full from the net proceeds of the
Sale, its Allowed Deficiency Claim shall be treated as a Class 4
Claim.
* Class 4 Unsecured Claims are impaired. Each Holder of an
Allowed Unsecured Claim will receive its pro rata share of the
Unsecured Creditor Distribution. The payment will be made within
30 days of the Effective Date. Each Holder of an Unsecured Claim
in Class 4 is entitled to vote to accept or reject the Plan.
A full-text copy of the Disclosure Statement dated April 27, 2020,
is available at https://tinyurl.com/y7mujaog from PacerMonitor.com
at no charge.
Attorney for the Debtor:
Timothy W. Gensmer, Esq.
2831 Ringling Blvd., Suite 202-A
Sarasota, Florida 34237
Tel: (941) 952-9377
Fax: (941) 954-5605
E-mail: timgensmer@aol.com
About Premier on 5th
Premier on 5th, LLC, owns in fee simple a real property in
Sarasota, Fla.
Premier on 5th sought protection under Chapter 11 of the Bankruptcy
Code (Bankr. M.D. Fla. Case No. 19-12098) on Dec. 27, 2019. At the
time of the filing, the Debtor disclosed $1,195,000 in assets and
$494,132 in liabilities. Timothy W. Gensmer, P.A., is the Debtor's
legal counsel.
PRESTIGE HEATING: June 2 Hearing on Confirmation and Disclosures
----------------------------------------------------------------
Judge Eduardo V. Rodriguez has ordered that the hearing to consider
the confirmation of the Prestige Heating and Air Conditioning,
LLC’s Chapter 11 Plan and Final Approval of the Debtor’s
Disclosure Statement filed on March 23, 2020 shall be continued to
the 8th of June, 2020 at 4:00 p.m. in courtroom 402, 515 Rusk,
Houston, Texas, 77002.
The deadline for which the Debtor must confirm its plan is extended
to the 1st of June, 2020.
All objections to confirmation of the Plan or final approval of the
Disclosure Statement shall be filed and served no later than 5:00
p.m. on the 1st of June, 2020.
About Prestige Heating
Prestige Heating and Air Conditioning, LLC, filed a Chapter 11
petition (Bankr. S.D. Tex. Case No. 19-3529) on Sept. 23, 2019.
The Debtor is represented by Susan Tran Adams, Esq., of CORRAL TRAN
SINGH LLP.
PROFESSIONAL RESOURCES: Gets OK to Hire Keith Williams & Associates
-------------------------------------------------------------------
Professional Resources Management of Crenshaw, LLC received
approval from the U.S. Bankruptcy Court for the Middle District of
Alabama to employ Keith Williams & Associates, Inc. to prepare its
2019 Medicare and Medicaid cost report.
The firm will bill Debtor a flat rate of $15,000 for its services.
Keith Williams is a "disinterested person" within the meaning of
Section 101(14) of the Bankruptcy Code, according to court
filings.
The firm may be reached at:
Keith Williams, Esq.
Keith Williams & Associates, Inc.
608 Burghley Lane
Franklin, TN 37064
Telephone: (615) 591-0436 / (615) 390-8006
Email: kgwhcadvisors@comcast.net
About Professional Resources Management of Crenshaw
Founded in 2005, Professional Resources Management of Crenshaw, LLC
conducts business under the name Crenshaw Community Hospital.
Crenshaw Community Hospital has 65 beds and offers a range of
diagnostic, therapeutic, emergency and surgical services.
Professional Resources sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. M.D. Ala. Case No. 19-33272) on Nov. 7,
2019. At the time of the filing, Debtor had estimated assets of
less than $50,000 and liabilities of between $1 million and $10
million. The case has been assigned to Judge William R. Sawyer.
Memory Memory & Causby, LLP is Debtor's legal counsel.
PROJECT LEOPARD: Moody's Affirms 'B2' CFR, Outlook Negative
-----------------------------------------------------------
Moody's Investors Service affirmed Project Leopard Holdings Inc.'s
B2 Corporate Family Rating, B2-PD Probability of Default Rating and
B2 ratings on the senior secured bank credit facilities. The
outlook remains negative.
The negative outlook reflects Moody's expectation of a
deterioration in Kofax's credit metrics due to the effects of the
COVID-19 pandemic on the global economy, as well as the uncertainty
over the depth and duration of the outbreak. While the majority of
Kofax's revenue base is recurring and will provide stability in
free cash flow generation, the company's print management and
capture software products for multi-function printers will face
stronger headwinds to sales and cash flow over the near-term. It
also remains uncertain how the COVID-19 pandemic will transform the
office sector as permanent remote locations will likely be
considered, depressing long-term demand for certain IT hardware and
related products. Overall, Moody's expects organic revenue to
decline in the low teens percentage range in 2020 as companies will
postpone purchasing new products related to MFPs due to work from
home arrangements. As a result, Moody's projects EBITDA to decline,
increasing leverage to at least the mid 5x range for the next 12 to
18 months.
Nonetheless, the ratings affirmation reflects Kofax's good
liquidity position which will allow the company to manage through
the economic recession. Additionally, it also incorporates Moody's
view that as the economy gradually recovers, Kofax will be able to
reduce debt-to-EBITDA to under 5x by the end of 2021.
Rating Affirmations:
Issuer: Project Leopard Holdings Inc.
Corporate Family Rating, Affirmed B2
Probability of Default Rating, Affirmed B2-PD
Senior Secured Term Loan, Affirmed B2 (LGD3 from LGD4)
Senior Secured 1st Lien Term Loan, Affirmed B2 (LGD3 from LGD4)
Senior Secured Revolving Credit Facility, Affirmed B2 (LGD3 from
LGD4)
Outlook Actions:
Issuer: Project Leopard Holdings Inc.
Outlook, Remains Negative
RATINGS RATIONALE
Kofax's B2 CFR reflects its leading position in the multi-channel
capture and financial process automation software markets, good
liquidity and moderate pro forma leverage compared to many other
software rated B2 peers. The ratings also reflect the operational
successes of integrating the Nuance Document Imaging acquisition
and effectively realizing the cost synergies associated with the
transaction. Kofax's credit profile is challenged by the company's
core operations in the mature software capture and print management
segments, and an aggressive acquisition-based growth strategy. M&A
activity may result in further uses of internal cash flow or
additional debt. Moody's expects Kofax's revenue and earnings to
decline in 2020 from lower business spending on IT products,
leading to an increase in leverage to at least the mid 5x range,
with a gradual recovery in operating performance in 2021 as the
global economy recovers.
Moody's views Kofax's liquidity as good based on $124 million of
cash (as of March 31, 2020) and an undrawn $80 million revolver
expiring July 2022. For the next 12 to 18 months, Moody's expects
positive free cash flow generation. Kofax's cash flow exhibits some
seasonality as the company bills a significant portion of its new
perpetual licenses and maintenance contracts in December and
collects cash during the January through March period. The
company's capital expenditures are modest and annual term loan
amortization is $9.7 million. The revolver has a springing covenant
with step downs, which is applicable if revolver utilization
exceeds 30%. Moody's does not expect the covenant to be triggered
and projects Kofax to maintain comfortable cushion if it were to be
tested.
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 IT hardware
and related services sectors have been sectors affected by the
shock given their sensitivity to business demand and sentiment.
More specifically, the weaknesses in Kofax's credit profile,
including its exposure to global economies have left it vulnerable
to shifts in market sentiment in these unprecedented operating
conditions and Kofax remains vulnerable to the outbreak continuing
to spread. Moody's regards the coronavirus outbreak as a social
risk under its ESG framework, given the substantial implications
for public health and safety. Its action reflects the impact on
Kofax of the breadth and severity of the shock, and the broad
deterioration in credit quality it has triggered.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Given the negative outlook, an upgrade of Kofax's ratings is
unlikely. However, the ratings could be upgraded if organic
revenues grow at least low-to-mid single digits, leverage is
expected to be sustained under 4.5x, and free cash flow to debt
exceeds 10%.
The ratings could be downgraded if Kofax experiences steeper
revenue and earnings decline than currently anticipated such that
adjusted free cash flow to debt falls below 5%, or leverage is
sustained over 6.5x.
The principal methodology used in these ratings was Software
Industry published in August 2018.
Project Leopard Holdings Inc. is a leading provider of
multi-channel capture and business process management software. The
company had pro forma revenues of approximately $574 million in the
last twelve months ended March 31, 2020. Project Leopard Holdings
Inc. is a holding company set up by private equity group, Thoma
Bravo to acquire the Kofax business from Lexmark International in
June 2017.
PTSI CONSTRUCTION: Seeks to Hire E. P. Bud Kirk as Attorney
-----------------------------------------------------------
PTSI Construction, Inc. seeks authority from the United States
Bankruptcy Court for the Western District of Texas (El Paso) to
hire E. P. Bud Kirk as its attorney.
Professional services to be rendered by E.P. Bud Kirk are:
a. give the Debtor legal advice with respect to its powers and
duties as Debtor-in-Possession and the continued operation of its
business and management of its properties;
b. review the various contracts entered by the Debtor and to
determine which contracts should be rejected and assumed;
c. represent the Debtor in collection of its accounts
receivable, if needed;
d. prepare on behalf of the Debtor necessary Schedules,
Statements, Applications, and Answers, Orders, Reports, and other
legal documents required for reorganization;
e. assist the Debtor in formulation and negotiation of a Plan
with its creditors in these proceedings;
f. review all presently pending litigation in which the Debtor
is a participant, to recommend settlement of such litigation which
the attorney deems to be in the best interest of the estate, and to
make an appearance as lead trial counsel in all litigation which
the attorney believes should be continued, if needed.
g. review the transactions of the Debtor prior to the filing
of the Chapter 11 proceedings to determine what further litigation,
if any, pursuant to the Bankruptcy Code, or otherwise, should be
filed on behalf of the estate;
h. examine all tax claims filed against the Debtor, to contest
any excessive amounts claimed therein, and to structure a payment
of the allowed taxes which conforms to the Bankruptcy Code and
Rules; and
i. perform all other legal services of the Debtor, as
Debtor-in-Possession, which may be necessary.
E.P. Bud Kirk will be paid at these hourly rates:
E.P. Bud Kirk (Attorney) $300
Kathryn A. McMillan (Paralegal) $90
Maura Casas (Paralegal) $100
A retainer of $5,000 was paid to E.P. Bud Kirk upon the filing of
the bankruptcy proceedings. Prior to filing, $1,200 was paid to
E.P. Bud Kirk by the Debtor, for pre-bankruptcy services actually
rendered.
E.P. Bud Kirk, a partner of Law Office of E.P. Bud Kirk, 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.
E.P. Bud Kirk can be reached at:
E.P. Bud Kirk, Esq.
LAW OFFICE OF E.P. BUD KIRK
600 Sunland Park Drive, Suite 400
El Paso, TX 79912
Tel: (915) 584-3773
Fax: (915) 581-3452
E-mail: budkirk@aol.com
About PTSI Construction, Inc.
Based in El Paso, Texas, PTSI Construction, Inc. sought protection
under Chapter 11 of the Bankruptcy Code (Bankr. W.D. Tex. Case No.
20-30522) on April 17, 2020, listing under $1 million in both
assets and liabilities. E.P. Bud Kirk, Esq. at E.P. BUD KIRK
represents the Debtor as counsel.
RADIAN GROUP: Moody's Rates $525MM Senior Unsecured Notes 'Ba1'
---------------------------------------------------------------
Moody's Investors Service has assigned a Ba1 rating to $525 million
of 6.625% senior unsecured notes to be issued by Radian Group Inc.
(Radian – senior debt at Ba1). The issuance is a drawdown from a
shelf registration filed on February 28, 2020. Net proceeds from
the offering will be used for general corporate purposes, which may
include future contributions to Radian's insurance subsidiaries.
The notes mature in 2025 and are redeemable at the option of the
issuer. The outlook on Radian and its affiliates is stable.
RATINGS RATIONALE
According to Moody's, Radian's Ba1 senior debt rating reflects its
strong position in the US mortgage insurance market, its diverse
customer base, its comfortable cushion in its compliance with the
GSEs' capital standards and recent actions to extend its debt
maturity profile and increase liquidity at the holding company.
These strengths are tempered by the uncertainties related to
mortgage loan credit performance due to the economic disruption
created by the coronavirus pandemic, the commodity-like nature of
the mortgage insurance product and the potential for increased
price competition in the US mortgage insurance market.
The contraction of the US economy due to coronavirus-related
shutdowns has resulted in a significant increase in the
unemployment rate and deteriorating macroeconomic conditions for
the US housing market. While the fiscal stimulus measures taken
will mitigate the negative impact, Moody's expects mortgage loan
delinquency rates to spike higher in the coming months. The
longer-term impact on Radian and its peers will depend on the
length and depth of the economic contraction, as well as the
efficacy of mortgage loan payment forbearance programs implemented
by Fannie Mae and Freddie Mac in reducing foreclosures, and by
extension, ultimate mortgage insurance claim rates.
The path of US house prices will be a key determinant of future
mortgage insurance claims. While Moody's expects the recent
moderate gains in home prices to stall, it doesn't expect a
significant decline in house prices this year. The unprecedented
fiscal stimulus measures enacted should cushion the impact of the
economic shock on house prices and mortgage loan forbearance
programs will limit the need for properties to be liquidated at
lower pricing levels. The continued imbalance between housing
supply and demand and historically low mortgage interest rates are
also expected to mitigate the negative impact of the economic
downturn on home prices to some degree.
Moody's notes that Radian enters the economic downturn from a
position of relative strength. The company's extensive reinsurance
program, including various quota share reinsurance treaties and
$1.2 billion of excess of loss reinsurance through its Eagle Re
insurance-linked notes and traditional reinsurance, provides
significant protection to earnings and capital across a wide range
of stress scenarios.
Following the issuance of the new senior notes, Radian's Q1 2020
pro forma adjusted financial leverage will be around 27.6%, up from
18.9%. at year-end 2019. Moody's expects Radian to hold the net
proceeds from the offering at the holding company for future
capital contributions to its main operating subsidiary, Radian
Guaranty Inc (Radian Guaranty – IFS rating at Baa1), if needed.
Radian's next scheduled major debt maturity is in 2024.
While Radian is currently unable to upstream ordinary dividends
from Radian Guaranty, Moody's notes that Radian Guaranty's
regulator has approved a tax, interest and expense sharing
agreement allowing Radian to receive cash from its insurance
subsidiaries to make interest payments on its outstanding debt and
to pay certain corporate taxes and other expenses.
RATINGS DRIVERS
Over the coming months, Radian's credit profile will be influenced
by a number of factors, including: projections of unemployment
rates once the economy re-opens, forbearance take-up rates on its
insured mortgage loans, the percentage of delinquent loans that
ultimately cure or are modified and the path of US house prices.
Its base case economic assumptions consider a year-end 2020
unemployment rate in the high single digit percentage range and a
moderate decline in US house prices during both 2020 and 2021. To
the extent new economic data and forecasts deviate materially from
these assumptions, there could be negative ratings pressure on
Radian and its affiliates.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Given the company's business and financial profile and the
uncertainty related to key drivers of mortgage credit performance,
there is unlikely to be an upgrade of the ratings over the near to
medium term. However, the following factors could positively
influence the firm's credit profile: (1) more comprehensive
reinsurance coverage on its entire insured portfolio; (2) adjusted
financial leverage in the 15% range; (3) maintaining its top-tier
market position in the US mortgage insurance market; and (4)
sustained PMIERs compliance with the maintenance of a comfortable
capital adequacy buffer.
Conversely, the following factors could lead to a downgrade of the
group's ratings: (1) non-compliance with PMIERs; (2) decline in
shareholders' equity (including share repurchases) by more than 10%
over a rolling twelve month period; (3) deterioration in the parent
company's ability to meet its debt service requirements; and (4)
adjusted financial leverage above 25%.
The following rating has been assigned:
Radian Group Inc. – senior unsecured notes due 2025 at Ba1.
The outlook on Radian and its affiliates is stable.
Radian Group Inc., through its subsidiaries, provides mortgage
insurance and products and services to the real estate and mortgage
finance industries. As of March 31, 2020, Radian had primary
insurance-in-force of approximately $242 billion and shareholders'
equity of approximately $3.9 billion.
The principal methodology used in this rating was Mortgage Insurers
Methodology published in November 2019.
RALSTON, NE: S&P Puts 'BB' Bond Rating on CreditWatch Negative
--------------------------------------------------------------
S&P Global Ratings placed its 'BB' rating on Ralston, Neb.'s series
2011A, 2011B, 2012A, and 2012B general obligation (GO) unlimited ad
valorem tax arena bonds on CreditWatch with negative implications.
Financing has not been secured to rollover the city's unrated 2018
$1.1 million promissory notes due May 15, 2020. This action
represents a governance risk that, in S&P's view, is above the
sector standard and could weaken the city's overall
creditworthiness.
"The CreditWatch Negative placement reflects our view that there is
at least a one-in-two likelihood that we could lower the rating,
potentially by multiple notches, within the next 90 days should the
city's liquidity position materially weaken as a result of
cash-funding the upcoming note payment, hindering its ability to
meet its other financial obligations in a timely manner," said S&P
Global Ratings credit analyst Blake Yocom.
S&P is in contact with management and the city's financing team and
will monitor matters closely over the next week. It will take a
rating action as necessary based on the outcome of the rollover
and/or the city's ability and willingness to make the payment with
available liquidity.
City management indicates that there is sufficient liquidity on
hand to cover the upcoming payment should it fail to secure
financing. Officials represent that $2.16 million in cash is
available if the rollover financing is not secured in time.
Additionally, the city has access to a $500,000 line of credit it
could draw on to make the payment. The fiscal year-end 2019 (Sept.
30) audit reported approximately $2.7 million in total cash and
cash equivalents.
Should the city use its available cash to make the payment and not
quickly replenish liquidity, the rating would likely be lowered
given that its ability to continue to meet its other financial
obligations in a timely manner will be in question. Management
represents that additional short-term financing would be required
within three-to-four months.
The CreditWatch could be removed if the city is able to secure
financing in a timely manner to avert a draw on its liquidity, and
the implications to the arena enterprise fund because of social
distancing do not lead to a deterioration in overall credit quality
for the already struggling arena venue. However, given the
imbalanced state of arena operations prior to the onset of COVID-19
and the related recession and the additional pressure it places on
Ralston and the arena operations, a negative outlook may be
warranted should S&P view a downgrade as at least a one-in-three
likelihood over the short term.
In S&P's view, the city's ongoing structural imbalance persists and
reflects a weak financial position stemming from its
underperforming arena.
Ralston requires cash-flow borrowing to cover arena expenditures
and without it, the city's short-term financial and liquidity
position would be worse. Its liquidity is very weak, coupled with
what S&P views as weak management conditions. Furthermore, Ralston
is highly leveraged, reflected in a high overall debt burden as a
percentage of market value. The city's high debt burden will likely
continue to pressure its financial position, liquidity, and taxing
flexibility.
RAVN AIR: Unsecureds to Split "Creditors' Fund" in Liquidating Plan
-------------------------------------------------------------------
Ravn Air Group, Inc. and its affiliated debtors submitted a
[Proposed] Chapter 11 Plan of Liquidation.
Prepetition Secured Creditor Claims in Class 1 are impaired. On
the Effective Date, each Holder of an outstanding Prepetition
Secured Creditor Claim shall be issued One Class B Liquidation
Trust Interest in exchange for every $1,000 of such Holder's Class
1 Claim.
General Unsecured Claims in Class 4 are impaired. On, or as soon
as reasonably practicable after, the later of (i) the Effective
Date and (ii) the date on which a General Unsecured Claim becomes
payable pursuant to and as specified by an order of the Bankruptcy
Court, the Holder of such Allowed General Unsecured Claim shall
receive, in full satisfaction, settlement, and release of and in
exchange for such Allowed General Unsecured Claim, its pro rata
share of the Creditors' Fund. Any Allowed General Unsecured Claim
with respect to an Insured Claim shall be limited to the Uninsured
Portion of such Claim, provided such Claims have been timely Filed
by the applicable Claims Bar Date.
The Creditors' Fund is defined as a fund to be established on the
Effective Date for distribution to General Unsecured Creditors,
comprised of Cash in the amount of ($_______), and administered by
the Liquidation Trustee.
Equity Interests in Class 6 are impaired. As of the Effective
Date, all Equity Interests shall be deemed void, cancelled, and of
no further force and effect.
The Plan will be implemented by various acts and transactions as
set forth in the Plan, including, among other things, the
establishment of the Liquidation Trust, the appointment of the
Liquidation Trustee, and the making of Distributions by the
Liquidation Trust.
A full-text copy of the [Proposed] Chapter 11 Plan of Liquidation
dated April 27, 2020, is available at https://tinyurl.com/y8mq7r4v
from PacerMonitor.com at no charge.
Counsel to the Debtors:
Victoria A. Guilfoyle
Stanley B. Tarr
Jose F. Bibiloni
BLANK ROME LLP
1201 N. Market Street, Suite 800
Wilmington, Delaware 19801
Telephone: (302) 425-6400
Facsimile: (302) 425-6464
- and -
Tobias S. Keller
Jane Kim
Thomas B. Rupp
KELLER BENVENUTTI KIM LLP
650 California Street, Suite 1900
San Francisco, California 94108
Telephone: (415) 496-6723
Facsimile: (650) 636-9251
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.
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.
RED VENTURES: S&P Downgrades ICR to 'B+'; Outlook Negative
----------------------------------------------------------
S&P Global Ratings lowered its issuer credit rating on Red Ventures
Holdco L.P. to 'B+' from 'BB-' because it believes the company's
affiliates and business partners will likely pull back marketing
spending as consumers reduce discretionary spending, causing
leverage to increase above 6x in 2020 from 4.4x in 2019.
The downgrade and negative outlook reflects the increase in Red
Ventures' leverage stemming from the coronavirus pandemic and
resulting economic downturn and the uncertainty surrounding the
timing and speed of economic recovery.
S&P expects Red Ventures' leverage will spike above 6x in 2020 from
about 4.4x at the end of 2019 because it believes many of the
company's affiliates and business partners will pull back marketing
spending as consumers reduce discretionary spending. S&P expects
the company's largest segment, financial services (includes
creditcards.com and bankrate.com), will face the most pressure
during the recession as card issuers and loan lenders pull back
marketing spending and reduce approval rates. While the company's
recent health care and education acquisitions have added diversity
to Red Ventures' offerings and should provide some stability
through the pandemic and economic downturn, these segments remain a
smaller portion of total revenue.
S&P now forecasts real U.S. GDP growth will contract by 5.2% in
calendar 2020 (compared with 1.9% growth before the pandemic) and
expect Red Ventures' revenue to decline because of lower consumer
confidence and spending. Furthermore, government efforts to contain
the virus have encouraged U.S. consumers to practice social
distancing and stay home, dramatically reducing production and
profitability for a number of industries and businesses. S&P
expects the steepest declines to Red Ventures' revenue to occur in
the second and third quarters of 2020, before its results begin to
improve in late 2020 through 2021. The rating agency expects
leverage will return to the 5x area or lower in 2021.
"Our negative outlook on the rating reflects the risk that EBITDA
and cash flows could be pressured through 2021 due to a prolonged
recession causing net leverage to increase and remain above 6x,"
S&P said.
Red Ventures generates a majority of its revenue through a
pay-for-performance business model, exposing it to steep revenue
declines in an economic downturn.
This payment structure incentivizes the company to take
responsibility to attract and convert customers. The timing of
payments has greater uncertainty than a subscription-based revenue
model, and new client onboarding for the company's strategic
partnerships typically involves a meaningful investment from Red
Ventures because each client often has a dedicated client services
team (designers, copywriters, data analysts, engineers,
strategists, etc.). This model helps Red Ventures quickly increase
revenue and EBITDA during periods of economic growth. However, S&P
believes this model will likely result in meaningful revenue and
EBITDA declines in an economic downturn.
Red Ventures has good cash flow generation capabilities due to its
high margins and asset light model.
S&P expects the company will continue to generate good cash flow in
2020 even if EBITDA declines significantly from 2019 levels. Over
the past few years, Red Ventures has acquired a number of owned and
operated (O&O) websites that have limited exposure to a single
customer. The company's portfolio of O&O websites accounts for
about 70% of Red Ventures' revenue and generates higher margins
than the company's strategic partnerships with individual companies
since digital transactions through the O&O sites have a much
smaller or no physical sale center component. S&P believes about
half of the company's operating expenses are variable marketing
expenses which it can cut to preserve cash flow through the
recession. Additionally, Red Ventures' digital platform requires
modest capital expenditures, which helps the company convert a high
percentage of its EBITDA into discretionary cash flow (DCF). It
expects Red Ventures to generate about $150 million to $200 million
of DCF in 2020.
Red Ventures has an aggressive financial policy.
The company has a history of large debt-funded acquisitions
including Bankrate, HigherEducation.com, and Healthline. It has
also successfully integrated and increased monetization and
customer conversion rates at its acquired websites. S&P believes
Red Ventures could make additional large acquisitions which could
temporarily increase leverage further if it finds an acquisition
target in which it can implement its more profitable customer
acquisition and search engine optimization strategies.
In April 2020, Red Ventures provided a one-year $75 million loan to
certain shareholders.
"While we don't view this as significant due to the company's solid
cash position, the shareholder loan temporarily prioritizes
shareholder interests over lenders during a period of market
stress. Additional loans or an extension of the loan could cause us
to reassess our view of the company's management and governance and
could result in a downgrade," S&P said.
The negative outlook reflects the uncertainty around the extent and
duration of COVID-19's impact on the economy and Red Ventures'
operating performance and the risk that a prolonged economic
downturn could cause net leverage to remain above 5.5x and FOCF to
debt to fall well below 10%.
"We could lower the rating if we expect net leverage will increase
and remain above 5.5x and FOCF to debt to decline well below 10%
through 2021. This could occur if a severe recession extends
through 2021, resulting in significantly lower marketing spending
by the company's business partners and spending by consumers, or if
the company's financial policy becomes more aggressive through
high-priced, debt-financed acquisitions," S&P said.
"We could revise the outlook to stable if economic conditions
improve in the second half of 2020, and we expect Red Ventures'
leverage to remain below 5.5x. An upgrade is unlikely over the next
12 months and would require the company to lower its leverage below
4.5x," the rating agency said.
REGIONAL SITE: Court Conditionally Approves Disclosure Statement
----------------------------------------------------------------
Judge Lena Mansori James has ordered that the Disclosure Statement
filed by the Regional Site Solutions, Inc., on April 24, 2020, is
conditionally approved.
May 27, 2020 is fixed as the last date for filing and serving
written objections to the Disclosure Statement.
The hearing on confirmation of the Plan and final approval of
disclosure Statement will be held on June 2, 2020 at 2:00 p.m. in
Courtroom 3, Second Floor, 101 South Edgeworth Street, Greensboro,
NC 27401.
May 27, 2020 is fixed as the last day for filing written
acceptances or rejections of the Plan. A Ballot should be completed
and filed with the Court on or before the date fixed herein.
May 27, 2020 is fixed as the last day for filing and serving
written objections to the confirmation of the Plan.
About Regional Site Solutions
Regional Site Solutions, Inc., is a privately held company that
operates in the surfacing and paving business.
Regional Site Solutions sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. M.D.N.C. Case No. 19-11191) on Oct. 28,
2019. At the time of the filing, the Debtor was estimated to have
assets of between $500,000 and $1 million and liabilities of
between $1 million and $10 million. The case is assigned to Judge
Lena M. James. Dirk W. Siegmund, Esq., at Ivey, McClellan, Gatton &
Siegmund, LLP, is the Debtor's legal counsel.
REVLON CONSUMER: Widens Net Loss to $212 Million in First Quarter
-----------------------------------------------------------------
Revlon Consumer Products Corporation and subsidiaries reported a a
net loss of $212.2 million on $453 million of net sales for the
three months ended March 31, 2020, compared to a net loss of $73.5
million on $553.2 million of net sales for the three months ended
March 31, 2019.
As of March 31, 2020, the Company had $2.92 billion in total
assets, $1.48 billion in total current liabilities, $2.40 billion
in long-term debt, $174.9 million in long-term pension and other
post-retirement plan liabilities, $153.4 million in other long-term
liabilities, and a total stockholders' deficiency of $1.30
billion.
At March 31, 2020, the Company had a liquidity position of $121.0
million, consisting of: (i) $62.8 million of unrestricted cash and
cash equivalents; (ii) $34.3 million in available borrowing
capacity under Products Corporation's Amended 2016 Revolving Credit
Facility (which had $341.5 million drawn at such date); (iii) $30
million in available borrowing capacity under the Amended 2019
Senior Line of Credit Facility, which had no borrowings at such
date; and less (iv) $6.1 million of outstanding checks. Under the
Amended 2016 Revolving Credit Facility, as Products Corporation's
consolidated fixed charge coverage ratio was greater than 1.0 to
1.0 as of March 31, 2020, all of the $34.3 million of availability
under the Amended 2016 Revolving Credit Facility was available as
of such date.
A full-text copy of the Quarterly Report is available for free at
the Securities and Exchange Commission's website at:
https://is.gd/0n9Ua7
About Revlon
Revlon, Inc. (together with its subsidiaries) conducts its business
exclusively through its direct wholly-owned operating subsidiary,
Revlon Consumer Products Corporation, and its subsidiaries. The
Company manufactures, markets and sells an extensive array of
beauty and personal care products worldwide, including color
cosmetics; fragrances; skin care; hair color, hair care and hair
treatments; beauty tools; men's grooming products; anti-perspirant
deodorants; and other beauty care products.
Revlon Inc. and its subsidiaries reported a net loss of $157.7
million for the year ended Dec. 31, 2019, compared to a net loss of
$294.2 million for the year ended Dec. 31, 2018.
* * *
As reported by the TCR on May 12, 2020, Moody's Investors Service
affirmed Revlon's Corporate Family Rating at Caa3. The affirmation
of the Caa3 CFR with a negative outlook reflects that the
transaction will meaningfully increase the company's cash interest
cost at a time when Revlon will continue to generate negative free
cash flow.
REVLON INC: Egan-Jones Cuts Senior Unsecured Debt Ratings to C
--------------------------------------------------------------
Egan-Jones Ratings Company, on April 28, 2020, downgraded the
foreign currency and local currency senior unsecured ratings on
debt issued by Revlon Incorporated to C from CC.
Headquartered in New York, New York, Revlon, Incorporated
manufactures, markets, and sells beauty and personal care
products.
RITE AID: Egan-Jones Lowers Commercial Unsecured Ratings to D
-------------------------------------------------------------
Egan-Jones Ratings Company, on May 1, 2020, downgraded the foreign
currency and local currency ratings on commercial paper issued by
Rite Aid Corporation to D from C.
With headquarters in Camp Hill, Pennsylvania, Rite Aid Corporation
is a drugstore chain in the United States.
ROMANS HOUSE: Unsecureds Owed $1.64M to Get $1.02M Under Plan
-------------------------------------------------------------
Romans House, LLC, and Healthcore System Management, LLC, filed a
Joint Plan of Reorganization and a Disclosure Statement.
General unsecured creditors are classified in Class 3B, and will
receive a distribution of their allowed claims, quarterly after the
Effective Date on a pro rata basis from the unsecured creditor
pool. This class is impaired with estimated allowed of $1,640,000.
Creditors will get pro rata distribution from unsecured creditor
pool. The estimated distribution of this class is $1,018,000.
Class 3D general unsecured claims totaling $1,290,000 are impaired.
Creditors will get a pro rata distribution from the unsecured
creditors pool. The estimated distribution of this class is
$1,290,000.
Based upon the financial projections and the assumptions set forth
herein, the Debtors believe they will have adequate cash flow to
make all required Plan payments from operational revenue.
A full-text copy of the Disclosure Statement dated April 27, 2020,
is available at https://tinyurl.com/y942d4m7 from PacerMonitor.com
at no charge.
Counsel for the Debtor:
DeMarco Mitchell, PLLC
Robert T. DeMarco
Michael S. Mitchell
1255 West 15th St., 805
Plano, TX 75075
Tel: 972-578-1400
Fax: 972-346-6791
About Romans House
Romans House, LLC, operates Tandy Village Assisted Living, a
continuing care retirement community and assisted living facility
for the elderly in Fort Worth, Texas. Affiliate Healthcore System
Management, LLC, operates Vincent Victoria Village Assisted Living,
also an assisted living facility for the elderly.
Romans House, LLC, and Healthcore System sought Chapter 11
protection (Bankr. N.D. Tex. Case Nos. 19-45023 and 19-45024) on
Dec. 9, 2019. Romans House estimated $1 million to $10 million in
both assets and liabilities. Healthcore was estimated to have $1
million to $10 million in assets, and $10 million to $50 million in
liabilities. The Hon. Edward L. Morris is the case judge. DeMarco
Mitchell, PLLC, is the Debtors' counsel.
RPM INT'L: Egan-Jones Lowers Sr. Unsecured Ratings to BB
--------------------------------------------------------
Egan-Jones Ratings Company, on April 30, 2020, downgraded the
foreign currency and local currency senior unsecured ratings on
debt issued by RPM International Inc. to BB+ from BBB-.
Headquartered in Medina, Ohio, RPM International, Inc.
manufactures, markets, and sells various specialty chemical product
lines.
RUSTY GOLD: Seeks to Hire Daniel L. Swires as Accountant
--------------------------------------------------------
Rusty Gold Hydro-Testers, Inc. seeks approval from the U.S.
Bankruptcy Court for the District of Colorado to employ Daniel L.
Swires, CPA, as its accountant.
Daniel L. Swires will assist the Debtor with ongoing accounting
matters, tax matters including preparation of tax returns,
compliance with filing its Monthly Operating Reports and compliance
with other U.S. Trustees reporting requirements, as well as
assisting the Debtor with other requested accounting services.
The firm's hourly rates are:
Partner/Principal $425
Staff $120-$140
Mr. Swires assured the Court that his 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/its estates.
The firm can be reached through:
Daniel L. Swires, CPA
Daniel L. Swires, CPA
9830 Isabelle Rd.
Lafayette, CO 80026
Phone: +1 303-665-6477
About Rusty Gold Hydro-Testers
Rusty Gold Hydro-Testers, Inc., dba Catamount Oilfield Services,
offers a full line of API tubing, casing, and line pipe to the
oilfield industry, headquartered in Fort Morgan, Colorado, filed
its voluntary petition under Chapter 11 of the Bankruptcy Code
(Bankr. D. Colo. Case No. 20-12629) on April 16, 2020. The petition
was signed by Clinton Gould, its president. At the time of the
filing, the Debtor disclosed total assets of $8,944,869 and total
liabilities of $12,808,395. Hon. Michael E. Romero oversees the
case. The Debtor tapped Buechler Law Office, LLC as attorneys.
SAFE FLEET: Moody's Alters Outlook on B3 CFR to Negative
--------------------------------------------------------
Moody's Investors Service changed the ratings outlook for Safe
Fleet Holdings LLC to negative from stable. At the same time,
Moody's affirmed the company's B3 corporate family rating and B3-PD
probability of default rating, along with its B2 first lien senior
secured credit facilities rating and Caa2 senior secured second
lien term loan rating.
"The negative outlook reflects its expectation that deteriorating
market conditions in the aftermath of the COVID-19 crisis will
weaken Safe Fleet's earnings and cash flow in 2020," says Shirley
Singh, Moody's lead analyst for the company. Safe Fleet's high
adjusted debt-to-EBITDA (leverage) in excess of 7x makes its
susceptible to anticipated contraction of fleet vehicle production
and, consequently, reduced demand for the company's products. Even
so, Moody's expects the company to generate positive free cash flow
over the course of 2020. "The company's current liquidity position
is bolstered by cash balances of close to $100 million following
drawdown under its revolver, and Moody's believes this provides
important flexibility to absorb the anticipated earnings decline,"
added Singh.
The rapid and widening spread of the coronavirus outbreak, the
deteriorating global economic outlook, very low and volatile 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. More specifically, Safe Fleet's exposure to
economically sensitive fleet vehicle markets leaves it vulnerable
to shifts in sentiment in these unprecedented operating conditions,
and the company remains vulnerable to the ongoing adverse impact of
the outbreak. Moody's regards the coronavirus outbreak as a social
risk under its ESG framework, given the substantial implications
for public health and safety. Its actions reflect the impact on
Safe Fleet of the breadth and severity of the shock, and the broad
deterioration in credit quality it has triggered.
The following rating actions were taken:
Affirmations:
Issuer: Safe Fleet Holdings LLC
Corporate Family Rating, Affirmed B3
Probability of Default Rating, Affirmed B3-PD
Senior Secured 1st Lien Bank Credit Facility, Affirmed B2 (LG3)
Senior Secured 2nd Lien Bank Credit Facility, Affirmed Caa2 (LGD6
from LGD5)
Outlook Actions:
Issuer: Safe Fleet Holdings LLC
Outlook, Changed To Negative From Stable
RATING RATIONALE
Safe Fleet's B3 CFR broadly reflects the company's high financial
risk evidenced by leverage of 7.5x and rising, in conjunction with
modest scale and aggressive financial policies. Moody's expects the
company's leverage to increase to more than 9x in 2020 due to weak
demand across its end markets. Even so, the company is expected to
generate weak but positive free cash flow supported by strong
profitability margins and low capital investment needs. The rating
also benefits from the company's solid market position in its niche
end markets and meaningful aftermarket business. Governance risk is
deemed to be high, evidenced by the company's high leverage and
history of debt-financed acquisition.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Ratings could be downgraded if revenue and earnings decline such
EBITA-to-interest falls below 1x and free cash flow deficits are
realized.
Although unlikely in the near term, ratings could be upgraded if
adjusted debt-to-EBITDA is sustained below 6x and free cash flow
to-debt increases to the high single-digit percent range.
The principal methodology used in these ratings was Manufacturing
Methodology published in March 2020.
Headquartered in Belton, Missouri, Safe Fleet Holdings LLC
manufactures safety and productivity products for fleet vehicles
serving primarily the emergency vehicle, school and transit buses,
and truck and trailer end markets. Among Safe Fleet's products are
cameras and surveillance systems, ladder racks, ramps and
platforms, nozzles and valves, and stop signs and crossing arms for
school buses. The company is majority-owned by Oak Hill Capital
Partners. Sales in the last twelve months to March 31, 2020 were
$466 million.
SALUBRIO L: Seeks to Hire M B Lawhon as Special 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 counsel.
The services to be provided by the firm include advising Debtor on
matters involving the Health Insurance Portability and
Accountability Act (HIPAA) and assisting Debtor's bankruptcy
counsel in litigation.
M B Lawhon will charge an hourly fee of $350. The retainer fee is
$3,500 to be paid by Debtor.
Matthew Lawhon, Esq., a partner at M B Lawhon, disclosed in court
filings that his 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 LLC
Salubrio, LLC, which conducts business under the name Brio San
Antonio, is a medical diagnostic imaging center in San Antonio,
Texas. It offers patients innovative and timely onsite technology
for musculoskeletal and traumatic brain injury diagnostics.
Salubrio specializes in weight-bearing MRI installed by Esaote USA.
For more information, visit https://salubriomri.com
Salubrio sought protection under Chapter 11 of the Bankruptcy Code
(Bankr. W.D. Texas Case No. 20-50578) on March 11, 2020. At the
time of the filing, Debtor disclosed assets of between $1 million
and $10 million and liabilities of the same range. Judge Ronald B.
King oversees the case. Debtor tapped the Law Offices of Martin
Seidler as legal counsel, and M B Lawhon Law Firm, PLLC as special
counsel.
SANDVINE CORP: Moody's Affirms 'B3' CFR, Outlook Stable
-------------------------------------------------------
Moody's Investors Service affirmed Sandvine Corporation's B3
corporate family rating, B3-PD probability of default rating, and
B2 ratings on its senior secured revolving credit facility and
senior secured term loan. The outlook remains stable.
"The affirmation reflects expectations that the company's good
liquidity will allow it to weather the potential impact of the
coronavirus pandemic on its results and credit metrics in the next
12 to 18 months", said Peter Adu, Moody's Vice President and Senior
Analyst.
Ratings Affirmed:
Corporate Family Rating, B3
Probability of Default Rating, B3-PD
$30 million Senior Secured First Lien Revolving Credit Facility due
2023, B2 (LGD3)
$400 million (face value) Senior Secured First Lien Term Loan due
2025, B2 (LGD3)
Outlook Action:
Outlook, Remains Stable
RATINGS RATIONALE
Sandvine's B3 CFR is constrained by: (1) high leverage (adjusted
Debt/EBITDA) of 7.3x for 2019, together with execution risk of
deleveraging below 7x by the end of 2021 due to effects of the
coronavirus pandemic; (2) high business risk as a result of its
limited portfolio of niche network traffic management and policy
enforcement products, small scale relative to competitors, which
include major telecom equipment manufacturers, and operating in an
intensely competitive industry; and (3) a large portion of revenue
derived from product sales (60% of 2019 revenue), which have a high
degree of variability. The rating benefits from: (1) good
geographic diversity; (2) diversified and extensive client base;
(3) positive free cash flow generation, which provides deleveraging
capacity; and (4) good liquidity and lack of refinancing risk until
2023.
The rapid and widening spread of the coronavirus outbreak,
deteriorating global economic outlook, falling oil prices, and
asset price declines are creating a severe and extensive shock in
many sectors, regions, and markets. The combined credit effects of
these developments are unprecedented. Moody's expect credit quality
to deteriorate, especially for those companies in the vulnerable
sectors that are most affected by sharply reduced revenue and
profitability, and disrupted supply chains. Moody's will take
rating actions as warranted to reflect the breadth and severity of
the shock, and the broad deterioration in credit quality that it
has triggered.
Sandvine has good liquidity over the next 12 months. Sources
approximate $95 million while it has about $4 million of mandatory
debt repayment in the next four quarters. Sources include about $74
million of cash and expected free cash flow of $20 million through
the next four quarters. Sandvine has about $1.6 million of
availability under its $30 million revolving credit facility due in
November 2023 ($17 million drawn and $11.4 million for letters of
credit). The company's revolver is subject to a first lien net
leverage covenant if utilization exceeds 35%. Covenant cushion is
expected to exceed 30% over the next 12 months. Sandvine has
limited flexibility to generate liquidity from asset sales. The
company has no refinancing risk until 2023 when its revolver comes
due.
The stable outlook reflects expectations that Sandvine will
generate positive free cash flow through the next 12 to 18 months,
despite potential slowdown in revenue growth due to the coronavirus
pandemic, and that leverage will be sustained below 7x in this
timeframe.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The rating could be upgraded if the company generates positive
revenue and EBITDA growth on a consistent basis and sustains
leverage below 6x (7.3x for 2019) and FCF/Debt above 5% (8% for
2019).
The rating could be downgraded if revenue or EBITDA decline on a
consistent basis, if leverage is sustained above 7x (7.3x for
2019), if free cash flow is negative or if liquidity is weak.
Sandvine has moderate social risk. Social issues are linked to the
impact of the coronavirus outbreak as well as data security,
diversity in the workplace and access to highly skilled workers.
Sandvine has high governance risk. As a sponsor-owned company,
Sandvine's financial policies will favor its owner. This is
evidenced by the $110 million debt-funded shareholder returns in
October 2018.
The principal methodology used in these ratings was Software
Industry published in August 2018.
Sandvine Corporation, owned by funds affiliated with Francisco
Partners, provides network intelligence solutions to mobile, fixed,
cable, satellite and Wi-Fi service providers and governments
globally. The company generated revenue of $215 million for 2019.
SARAI SERVICES: Claims to be Paid From Normal Cash Flow
-------------------------------------------------------
Sarai Services Group, Inc., et al., submitted a Fourth Amended
Joint Plan of Reorganization.
The Debtors' normal cash flow and proceeds from resolving
unliquidated claims will be the sole source of funds for the
payments to creditors authorized by the U.S. Bankruptcy Court's
confirmation of this Plan.
The Plan proposes to treat claims against Sarai Services Group as
follows:
* Class 1 Secured Claim of Everest Business Funding. This class
is impaired with a total claim of $66,718. The creditor in this
Class will be paid equal monthly payments for a period of 60 months
with the approved claim amount amortized for a 240-month term.
Upon completion of the 60-month payment term, the entire remaining
unpaid balance will be due as a single, lump-sum balloon payment.
* Class 2 Secured Claim of Pearl Delta Funding LLC. The class
is impaired with a total claim of $133,855. The creditor in the
class will be paid equal monthly payments for a period of 60 months
with the approved claim amount amortized for a 240-month term.
Upon completion of the 60-month payment term, the entire remaining
unpaid balance will be due as a single, lump-sum balloon payment.
* Class 4 Unsecured Priority Employee Claims. The class is
impaired with a total claim of $1,818,932. The Debtor expects the
U.S. Department of Labor to satisfy many of the claims in this
class pursuant to the Court-approved settlement of the dispute in
this Disclosure Statement.
* Class 5 Unsecured Priority Health Insurance Plan Premiums.
The class is impaired with a total claim of $133,915. Commencing
on the first day of the first month following the Effective Date of
the Plan, the Debtor will make equal monthly payments on the first
day of each month to the claim-holder in the class for a period of
60 months with the approved claim amount amortized for a 150-month
term, with all unpaid principal and interest due on the first day
of the 61st month following the Effective Date. Interest will
accrue at the fixed rate of Wall Street Journal Prime as of the
Effective Date.
* Class 6 General Unsecured Claims. This class is impaired with
a total claim of $463,508. Beginning on the Effective Date, the
Debtor will commence equal monthly payments of $2,000, split and
apportioned to the creditors in the class. The allowed claims will
each receive a pro-rata split of every $2,000 payment amount based
on their claim's proportionate share of the total allowed claims in
the class on the date that each individual monthly payment's
issuance.
The Plan proposes to treat claims against SSGWWJV LLC as follows:
* Class 1 Unsecured Priority Employee Claims. This class is
impaired with a total claim of $140,047. The Debtor expects the
U.S. Department of Labor to satisfy many of the claims in this
class pursuant to the Court-approved settlement of the dispute in
the Disclosure Statement.
* Class 2 General Unsecured Claims. This class is impaired with
a total claim of $703,995. After the Debtor has satisfied all
allowed priority claims in Class 1, the creditors in the class
will be paid in full on their allowed claim amounts, to the extent
the Debtor has cash-in-hand available for distribution within 60
days of the Effective Date.
The Plan treats claims against Sarai Investment Corporation as
follows:
* Class 1 Unsecured Priority Employee Claims. This class is
impaired with a total claim of $33,222. The creditors in this
Class will be paid in full on their priority claim amounts, to the
extent allowed pursuant to 11 U.S.C. Sec. 507, from proceeds of the
Debtor’s IRS employment tax refund claim, described above in this
Disclosure Statement.
* Class 2 General Unsecured Claims. This class is impaired with
a total claim of $694,168. After the Debtor has satisfied all
allowed priority claims, the Debtor will pay the creditors in the
class their allowed claim amounts from proceeds of the Debtor's IRS
employment tax refund claim.
A full-text copy of the Fourth Amended Joint Plan of Reorganization
dated April 27, 2020, is available at https://tinyurl.com/y8xdydm4
from PacerMonitor.com at no charge.
Attorneys for the Debtors:
SPARKMAN, SHEPARD & MORRIS, P.C.
P.O. Box 19045
Huntsville, AL 35804
Tel: (256) 512-9924
Fax: (256) 512-9837
About Sarai Services Group
Sarai Services Group, Inc., together with its subsidiaries, is a
privately-held company in Huntsville, Alabama, that specializes in
logistics, program management and information technology.
Sarai Services Group, SSGWWJV LLC, Sarai Investment Corporation and
CM Holdings, Inc., sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. N.D. Ala. Case Nos. 18-82948 to 18-82951)
on Oct. 3, 2018. In the petitions signed by CEO James Mitchell,
each Debtor was estimated to have assets of $1 million to $10
million and liabilities of the same range. Judge Clifton R. Jessup
Jr. oversees the cases. Sparkman, Shepard & Morris, P.C., is the
Debtor's counsel.
SARATOGA & NORTH CREEK: U.S. Trustee Unable to Appoint Committee
----------------------------------------------------------------
The Office of the U.S. Trustee disclosed in a court filing that no
official committee of unsecured creditors has been appointed in the
Chapter 11 case of Saratoga and North Creek Railway, LLC.
About Saratoga and North Creek Railway
Saratoga and North Creek Railway, LLC, a privately held company in
the rail transportation industry, filed a voluntary Chapter 11
(Bankr. D. Col. Case No. 20-12313) on March 30, 2020. In the
petition signed by William A. Brandt, Jr., Chapter 11 trustee of
San Luis & Rio Grande Railroad, Inc., Debtor was estimated to have
$1 million to $10 million in both assets and liabilities. Judge
Thomas B. Mcnamara oversees the case. The Debtor tapped Markus
Williams Young & Hunsicker LLC as its legal counsel, and
Development Specialists, Inc. as its accountant.
SAVE MONEY AND RETAIN: Hires Mackinnon Law as Co-Counsel
--------------------------------------------------------
Save Money and Retain Temperature, LLC, seeks authority from the
U.S. Bankruptcy Court for the Middle District of Florida to employ
Robert Mackinnon Law, P.A. and Mackinnon Law Group, P.A., as its
special counsel.
The Debtor filed a Motion for Order Approving Settlements and
Related Settlement Distributions (Doc. 246) that lists various
cases against insurance companies that have been settled. Mackinnon
represented the Debtor in several of those claims. On April 6,
2020, this Court entered an Order on Debtor's Motion for Order
Approving Settlements and Related Settlement Distributions (Doc.
294 – the "Settlement Order") whereby the underlying settlements
were approved, and a process was established for the approval of
distributions to law firms.
The engagement of Mackinnon permitted the Debtor to reach favorable
settlements of claims and was in the best interest of the Debtor
and the estate.
Robert Mackinnon, owner of Mackinnon, assures the court that the
firm does not represent or hold any interest adverse to the Debtor
or to the estate with respect to the matters on which it was
retained.
The firm can be reached through:
Robert Mackinnon, Esq.
Robert Mackinnon Law, P.A.
Mackinnon Law Group, P.A.
10033 North Dale Mabry Highway, Suite B
Tampa, FL 33618
Phone: (813) 751-0293
Fax: (813) 961-7800
About Save Money
Save Money and Retain Temperature, LLC, is a general contractor,
focusing on obtaining clients who have insurance claims relating to
disasters like hurricanes. It finds the clients, obtains an
assignment of their insurance claim, hires attorneys to prosecute
claims against the insurance companies, and in the meantime
commences repairs on the clients' property generally before any
collection of insurance proceeds. The actual repairs are undertaken
by a "project manager" and various subcontractors.
Save Money and Retain Temperature sought protection under Chapter
11 of the Bankruptcy Code (Bankr. M.D. Fla. Case No. 19-04090) on
April 30, 2019. 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. Santana, Byrd & Jaap, P.A., is the
Debtor's bankruptcy counsel. Makris & Mullinax, P.A., and Kling
Law, P.A., serve as special counsels.
SCIENTIFIC GAMES: Widens Net Loss to $155-Mil. in First Quarter
---------------------------------------------------------------
Scientific Games Corporation reported a net loss of $155 million on
$725 million of total revenue for the three months ended March 31,
2020, compared to a net loss of $24 million on $837 million of
total revenue for the three months ended March 31, 2019. Net loss
includes a $54 million goodwill impairment charge related to the
Company's legacy U.K. Gaming reporting unit and a negative impact
of $37 million related to Gaming business segment receivable credit
allowances and inventory write-down charges, all driven by COVID-19
disruptions.
As of March 31, 2020, the Company had $7.46 billion in total
assets, $9.82 billion in total liabilities, and a total
stockholders' deficit of $2.35 billion.
Consolidated Adjusted EBITDA, a non-GAAP financial measure,
decreased 39 percent to $200 million from $328 million in the prior
year period, driven by the previously mentioned $37 million charge
related to receivables credit allowances and inventory write-down
charges and the time between the sudden drop in revenue from
COVID-19 and the benefits of the cost savings measures implemented
late in the quarter.
Net cash provided by operating activities was $120 million versus
$167 million in the year ago period.
Operational and capital cost-savings measures are expected to
improve quarterly cash flows in the second quarter by over $150
million. The Company implemented these cost-savings measures as a
result of the COVID-19 disruptions. The cost reductions are
related to lower capital expenditures, workforce related savings,
and reduced expenses.
Second quarter projected consolidated net cash outflow, a non-GAAP
financial measure, is expected to be approximately $70 million -
$90 million. The COVID-19 impact accelerated in the latter half of
March 2020 and the Company expects this trend to reach its peak in
the second quarter.
Available liquidity, including SciPlay at quarter-end was $967
million.
Barry Cottle, president and chief executive officer of Scientific
Games, said, "We are working around the clock to take care of our
employees, customers, shareholders and other key stakeholders in
these difficult times, while providing uninterrupted products and
services to those customers who continue to operate. I am
confident that the measures we are implementing now will allow us
to take advantage of opportunities to strengthen our business and
prepare us to come out of the crisis even stronger than before. We
have a diverse portfolio of assets, products and services, and our
previous investments in digital gaming technologies uniquely
position us to navigate and ultimately excel, as we emerge from
this challenging environment."
Michael Quartieri, chief financial officer of Scientific Games,
added, "We have made swift and meaningful reductions to our cost
structure in response to the current environment. We believe these
changes in conjunction with our available liquidity provide us the
tools to withstand the impact from COVID-19. I'm confident that
our streamlined cost structure will allow for accelerated cash flow
generation and deleveraging in the future."
As of March 31, 2020, the Company had $967 million in available
liquidity, which included SciPlay's revolving credit facility. On
April 9, 2020, the Company borrowed $480 million under SGI's
revolving credit facility, which was substantially all of the
remaining availability thereunder.
On May 8, 2020, the Company amended its credit agreement to obtain
relief on the net first lien leverage ratio covenant through and
including Q1 2021. The Company will be required to maintain a
minimum liquidity of at least $275 million (excluding SciPlay)
through the covenant relief period, with a potential step-down in
minimum liquidity to $200 million in Q2 2021. The amendment
imposes additional limitations on restricted payments, debt and
liens incurrence and investments during the covenant relief
period.
Net cash provided by operating activities was $120 million versus
$167 million in the year ago period due to a $67 million decrease
in earnings after noncash adjustments in net loss, partially offset
by a $20 million favorable change in working capital accounts and
other.
Free cash flow, a non-GAAP financial measure, was $59 million
compared to $96 million in the year ago period.
Capital expenditures totaled $53 million in the first quarter of
2020, compared to $67 million in the prior-year period. For 2020,
the Company now anticipates that capital expenditures will be in
the range of $210 million - $240 million, due to capital
liquidity-saving measures implemented as a result of the COVID-19
disruptions, as compared to the $300 million - $330 million
estimate set forth in its fourth quarter 2019 earnings release.
A full-text copy of the Quarterly Report is available for free at
the Securities and Exchange Commission's website at:
https://is.gd/awnc1Y
About Scientific Games
Based in Las Vegas, Nevada, Scientific Games Corporation
(NASDAQ:SGMS) -- http://www.scientificgames.com/-- is a developer
of technology-based products and services and associated content
for the worldwide gaming, lottery, social and digital gaming
industries. Its portfolio of revenue-generating activities
primarily includes supplying gaming machines and game content,
casino-management systems and table game products and services to
licensed gaming entities; providing instant and draw-based lottery
products, lottery systems and lottery content and services to
lottery operators; providing social casino solutions to retail
consumers and regulated gaming entities, as applicable; and
providing a comprehensive suite of digital RMG and sports wagering
solutions, distribution platforms, content, products and services.
Scientific Games reported a net loss of $118 million for the year
ended Dec. 31, 2019, compared to a net loss of $352 million for the
year ended Dec. 31, 2018. As of Dec. 31, 2019, the Company had
$7.81 billion in total assets, $9.91 billion in total liabilities,
and a total stockholders' deficit of $2.11 billion.
SEI HOLDING I: Moody's Cuts CFR to Caa1 & Alters Outlook to Neg.
----------------------------------------------------------------
Moody's Investors Service downgraded the ratings of SEI Holding I
Corporation, including the corporate family rating and senior
secured first lien to Caa1 from B3, the probability of default
rating to Caa1-PD from B3-PD, and the senior secured second lien
debt to Caa3 from Caa2. Moody's also changed the outlook to
negative from stable.
RATINGS RATIONALE
The ratings, including the Caa1 CFR, reflect weak liquidity with
looming debt maturities (in early 2021) in an environment of
tightening credit conditions and terms that likely will consume
cash, if the debt is refinanced. The ratings also reflect high
financial leverage for SBP's business risk, given its highly
cyclical and volatile markets and its modest scale in a competitive
landscape. Moody's anticipates debt/EBITDA will approach 8x
(inclusive of Moody's standard adjustments) in 2020 and remain
elevated over the next year in the face of expected earnings
pressures. The ratings consider the weakening end-market demand
stemming from the low oil price shock and weak industrial growth
accelerated by the coronavirus outbreak. These conditions are
likely to persist into 2021, weighing on the company's earnings and
cash flow.
As a distributor, SBP has a degree of flexibility in its cost
structure and low capital spending needs that support positive free
cash flow. Moody's believes SBP will continue to re-size its costs
to offset revenue declines into 2021. The company distributes a
broad range of construction and industrial products that serve
aftermarket applications, providing some downside protection. The
company's engineering and fabrication services, which enable
moderately higher margins than for traditional distributors, are
also factored in the ratings.
The negative outlook reflects SBP's weak liquidity, including high
refinancing risk, its limited flexibility given the high financial
leverage and Moody's expectation of meaningful downwards pressure
on revenue and earnings, driven by the oil price shock and
end-market pressures amid deepening recessionary conditions.
From a corporate governance perspective, the company's high
leverage partly reflects its private equity ownership Event risk is
elevated for potential debt-financed dividends and considering SBP
has had an aggressive pace of acquisitions to increase scale in a
fragmented landscape, with transactions funded primarily with debt.
This has limited de-leveraging prospects amidst earnings growth
headwinds.
Moody's took the following actions on SEI Holding I Corporation:
Corporate Family Rating, Downgraded to Caa1 from B3;
Probability of Default Rating, Downgraded to Caa1-PD from B3-PD;
Senior Secured First Lien Term Loan, Downgraded to Caa1 (LDG3) from
B3 (LGD3);
Senior Secured Second Lien Term Loan, Downgraded to Caa3 (LGD5)
from Caa2 (LGD5);
Outlook changed to Negative from stable.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be downgraded with expectations of eroding
liquidity from an inability to refinance the near term debt
maturities or weakening free cash flow, or if Moody's expects
credit metrics to weaken, including debt/EBITDA expected to remain
above 8x or EBITA/interest below 1x on a sustained basis.
A ratings upgrade is unlikely until business conditions improve
along with end market activity and the broader macroeconomic
environment. Over time, the ratings could be upgraded with
meaningful and consistent organic growth in revenue and earnings
such that Moody's expects debt/EBITDA to remain below 6.5x and
EBITA/interest about 2x. A stronger liquidity profile would also be
expected for higher ratings.
The principal methodology used in these ratings was Business and
Consumer Service Industry published in October 2016.
SEI Holding I Corporation and Bishop Lifting Products, Inc. are
intermediate subsidiaries of the ultimate holding company: SBP
Holding LP. The company, based in Pearland, Texas, distributes
industrial rubber, wire rope & rigging equipment, and provides
related services including testing, installation, inspection, and
equipment rental. Revenues approximated $514 million for the last
twelve months ended February 28, 2020.
SHANNON STALEY: Integrative Staffing Objects to Disclosure
----------------------------------------------------------
Creditor Integrative Staffing Group, LLC (ISG) objects to the
adequacy of the Disclosure Statement for Chapter 11 Plan of
Reorganization of debtor Shannon Staley & Sons LLC.
ISG believes the Disclosure Statement does not provide information
sufficient to enable a reasonable person to make an informed
judgment about the Plan.
ISG asserts that:
* The Disclosure Statement fails to provide any information
regarding the proposed financing from Enterprise Bank, NA.,
including whether it has provided the Debtor with a commitment
letter or has otherwise approved the Debtor for financing.
* The Disclosure Statement is clear that the feasibility of the
Plan is contingent upon the Debtor’s ability to obtain financing
and the Debtor has failed to set forth any information regarding
its plan to obtain financing.
* The Disclosure Statement fails to disclose the financial
status of the Debtor's principal, Steve Daniele.
ISG believes that in order for the Debtor to obtain financing, Mr.
Daniele will be required to sign as a guarantor to secure the debt
obligation. Mr. Daniele's financial status directly impacts the
Debtor's ability to obtain financing and therefore directly impacts
the feasibility of the proposed Plan.
A full-text copy of ISG's objection to disclosure statement dated
April 24, 2020, is available at https://tinyurl.com/y7935uof from
PacerMonitor at no charge.
About Shannon Staley & Sons
Shannon Staley & Sons LLC -- https://shannonstaleyandsons.com/ --
is a full-service construction services firm offering on demand
construction services, turn key real estate, contract construction
services, and property management services.
Shannon Staley sought Chapter 11 protection (Bankr. W.D. Pa. Case
No. 19-23101) on Aug. 6, 2019, in Pittsburgh, Pa. As of the
petition date, Debtor was estimated to have total assets between
$500,000 and $1 million, and liabilities of between $1 million and
$10 million. The Hon. Carlota M. Bohm oversees the Debtor's case.
Robert O. Lampl Law Office is the Debtor's counsel.
The Office of the U.S. Trustee on Oct. 15, 2019, disclosed in a
court filing that no official committee of unsecured creditors has
been appointed in the Chapter 11 case.
SHANNON STALEY: National Community Objects to Disclosure Statement
------------------------------------------------------------------
Creditor National Community Reinvestment Coalition (NCRC) objects
to the adequacy of the Disclosure Statement for Chapter 11 Plan of
Reorganization of debtor Shannon Staley & Sons LLC.
NCRC believes the Debtor's Disclosure Statement fails to provide
sufficient information to enable a reasonable person to make an
informed judgment about the Plan.
NCRC asserts that:
* The Debtor has failed to provide any information whatsoever
regarding the proposed post-petition financing from Enterprise Bank
and the feasibility of said financing post-petition.
* Where a debtor requires financing in order to satisfy the
feasibility of the proposed plan of restructure, the failure to
provide financial information concerning the debtor entity's
principals renders the disclosure statement insufficient.
* NCRC objects to the Debtor's Disclosure Statement as it fails
to identify or provide any information regarding potential
insurance coverage Debtor maintained that may cover the claims and
accrued damages sustained by NCRC due to Debtor’s actions.
A full-text copy of NCRC's objection to disclosure statement dated
April 24, 2020, is available at https://tinyurl.com/y9rs95js from
PacerMonitor at no charge.
Counsel for National Community:
Philip J. Sbrolla, Esquire
Post & Schell, P.C.
One Oxford Centre
301 Grant Street, Suite 3010
Pittsburgh, PA 15219
Phone: (412) 506-6377
E-mail: psbrolla@postschell.com
About Shannon Staley & Sons
Shannon Staley & Sons LLC -- https://shannonstaleyandsons.com/ --
is a full-service construction services firm offering on demand
construction services, turn key real estate, contract construction
services, and property management services.
Shannon Staley sought Chapter 11 protection (Bankr. W.D. Pa. Case
No. 19-23101) on Aug. 6, 2019, in Pittsburgh, Pa. As of the
petition date, the Debtor was estimated to have total assets
between $500,000 and $1 million, and liabilities of between $1
million and $10 million. The Hon. Carlota M. Bohm oversees the
Debtor's case. Robert O. Lampl Law Office is the Debtor's
counsel.
No official committee of unsecured creditors has been appointed in
the Chapter 11 case.
SOUTHLAND ROYALTY: F&S Trucking Removed as Committee Member
-----------------------------------------------------------
The U.S. trustee for Region 3 disclosed in a notice filed with the
U.S. Bankruptcy Court for the District of Delaware that as of May
6, these creditors are the remaining members of the official
committee of unsecured creditors in the Chapter 11 case of
Southland Royalty Company, LLC:
(1) Halliburton Energy Services, Inc.
Attn: Connie Talley, Manager
Customer Financial Services
210 Park Ave., Suite 2000
Oklahoma City, OK 73102
Phone: (405) 552-1768
(2) Taylor Construction, Inc.
Attn: Dawn Connors, CFO
P.O. Box 1616
Pinedale, WY 82941-1616
Phone: (307) 367-4155
(3) Terry R. Pitt Construction, Inc.
Attn: Troy Householder, Operations Manager
180 Pollux Drive
Rock Springs, WY 82901
Phone: (307) 362-8077
(4) White River Royalties, LLC
Attn: Susan J. Jerman, Member
4194 South Valentia Street
Denver, CO 80237-1746
Phone: (720) 341-4877
F&S Trucking, Inc.'s name did not appear in the notice. The
company was appointed as committee member on Feb. 11, court filings
show.
About Southland Royalty Co.
Southland Royalty Company LLC -- http://www.southlandroyaltyco.com/
-- is a privately held independent exploration and production
company engaged in the acquisition and development of hydrocarbons.
Headquartered in Fort Worth, Southland Royalty Company conducts
its business across four states, with the majority of operations in
Wyoming and New Mexico. Southland Royalty Company was formed
principally to produce and extract hydrocarbons in the Wamsutter
field of the Green River Basin and in the San Juan Basin.
Southland Royalty Company sought Chapter 11 protection (Bankr.
D.Del. Case No. 20-10158) on Jan. 27, 2020.
In the petition signed by CRO Frank A. Pometti, the Debtor was
estimated to have $100 million to $500 million in assets and $500
million to $1 billion in liabilities.
The Debtor tapped Shearman & Sterling LLP as bankruptcy counsel;
Young Conaway Stargatt & Taylor, LLP as Delaware counsel; AP
Services, LLC as interim management services provider; PJT Partners
Inc. as investment banker; and Epiq Corporate Restructuring, LLC as
claims and noticing agent.
SPECTRUM HOLDINGS: Moody's Lowers CFR to Caa2, Outlook Stable
-------------------------------------------------------------
Moody's Investors Services downgraded its ratings for Spectrum
Holdings III Corp., including the company's corporate family rating
(CFR, to Caa2 from Caa1) and probability of default rating (to
Caa2-PD from Caa1-PD), along with the rating for its first lien
senior secured credit facilities (to Caa1 from B3) and second lien
term loan rating (to Ca from Caa3). The ratings outlook is stable.
"The downgrades reflect Spectrum's sustained high adjusted
debt-to-EBITDA (leverage) in excess of 10x and weak cash generation
against the backdrop of a deteriorating economic environment," says
Shirley Singh, Moody's lead analyst for the company. Despite the
recent surge in demand for its medical products, Spectrum's debt
serviceability remains weak with EBITA-to-interest of just 1.1x
given its heavy debt stack. Moody's believes the challenging market
conditions will curtail the company's ability to achieve sufficient
deleveraging over the next couple of years such that its debt will
be refinanceable on economically reasonable terms, particularly as
some of its products that are less specialized in nature will face
pricing pressure and demand reductions in more discretionary
segments, exacerbating already weak key credit metrics.
The rapid and widening spread of the coronavirus outbreak, the
deteriorating global economic outlook, very low and volatile 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. More specifically, Spectrum's levered balance sheet
and inherently limited financial flexibility, coupled with some
exposure to discretionary medical segments in particular, leave it
vulnerable to shifts in market sentiment in these unprecedented
operating conditions, and the company remains exposed to the
ongoing adverse impact of the outbreak. Moody's regards the
coronavirus outbreak as a social risk under its ESG framework,
given the substantial implications for public health and safety.
Its actions reflect the impact on Spectrum of the breadth and
severity of the shock, and the broad deterioration in credit
quality it has triggered.
The following rating actions were taken:
Downgrades:
Issuer: Spectrum Holdings III Corp.
Corporate Family Rating, Downgraded to Caa2 from Caa1
Probability of Default Rating, Downgraded to Caa2-PD from Caa1-PD
Senior Secured 1st Lien Bank Credit Facility, Downgraded to Caa1
(LGD3) from B3 (LGD3)
Senior Secured 2nd Lien Bank Credit Facility, Downgraded to Ca
(LGD5) from Caa3 (LGD5)
Outlook Actions:
Issuer: Spectrum Holdings III Corp.
Outlook, Remains Stable
RATING RATIONALE
Spectrum's Caa2 CFR broadly reflects the company's high financial
risk with very elevated leverage in excess of 10x, low interest
coverage and relatively modest scale. Moody's expects the company's
key credit metrics to remain weak over the course of 2020,
increasing the risk of default if the current challenging market
environment worsens further and persists longer than anticipated.
The ratings, nonetheless, are supported by the company's solid
margins, good product diversification and relatively high barriers
to entry for its more specialized medical devices products.
The stable outlook reflects Moody's expectation that Spectrum's
favorable end market exposure to the broad medical and food sectors
will sustain earnings at reasonable levels that are supportive of
the revised ratings. The outlook also reflects the company's deemed
adequate liquidity provisions, with no near-term debt maturities.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Ratings could be downgraded if operating performance deteriorates
due to customer or contract losses or pricing pressure, or if there
is further weakening of liquidity including negative free cash flow
and increased revolver utilization.
Ratings could be upgraded if the company delivers sustained growth
in revenue and earnings that result in a material reduction in
leverage to below 9x, with free cash flow as a percentage of debt
sustained above 1%.
Headquartered in Alpharetta, Georgia, Spectrum Plastics Group is a
manufacturer and provider of a wide variety of engineered specialty
plastics products used in medical, food and industrial end markets.
The company is owned by private equity firm, AEA Investors. Sales
in 2019 were $315 million.
The principal methodology used in these ratings was Manufacturing
Methodology published in March 2020.
SPEEDCAST INTERNATIONAL: US Trustee Appoints Creditors' Committee
-----------------------------------------------------------------
The Office of the U.S. Trustee appointed a committee to represent
unsecured creditors in the Chapter 11 cases of SpeedCast
International Limited and its affiliates.
The committee members are:
1. Intelsat US LLC
7900 Tysons One Place
McLean, VA 22102-5972
Dieter Hase
703-559-7927
Dieter.hase@intelsat.com
2. Thrane & Thrane A/S Cobham SATCOM
Lundtoftegaardsvej 93 D
DK-2800 Kgs. Lyngby, Denmark
David Grant
+45-3955-8314
David.grant@cobham.com
3. New Skies Satellites, B.V.
Rooseveltplantsoen 4
2517 KR The Hague
Brendan O'Callaghan
202-478-7152
Brendan.o.callaghan@ses.com
4. Asia Satellite Telecommunications Co. Ltd
15 Dai Kwai Street, Tai Po Industrial Estate
Tai Po, New Territories, Hong Kong
Sue Yeung, 852-2500-0800
syeung@asiasat.com
5. Intellian
11 Studebaker
Irvine, CA 92618
Edward Joannides, 949-771-4505
Edward.joannides@intelliantech.com
6. Telesat Canada
160 Elgin Street, Suite 2100
Ottawa, ON Canada K2P2P7
Richard O'Reilly, 613-748-8720
roreilly@telesat.com
7. APT Satellite Company Limited
22 Dai Kwai Street
Tai Po Industrial Estate, Hong Kong
Huang Baozhong, 852- 2600- 2100
HuangBaozhong@apstar.com
Official creditors' committees serve as fiduciaries to the general
population of creditors they represent. They may investigate the
debtor's business and financial affairs. Committees have the right
to employ legal counsel, accountants and financial advisors at a
debtor's expense.
About SpeedCast International
SpeedCast International Limited and its affiliates provide remote
and offshore satellite communications and information technology
services. SpeedCast's fully-managed service is delivered to more
than 2,000 customers in 140 countries via a global, multi-access
technology, multi-band and multi-orbit network of more than 80
satellites and an interconnecting global terrestrial network,
bolstered by on-the-ground local support from more than 40
countries. Speedcast services customers in sectors such as
commercial maritime, cruise, energy, mining, government, NGOs,
enterprise, and media.
SpeedCast International and its affiliates sought protection under
Chapter 11 of the Bankruptcy Code (Bankr. S.D. Texas Lead Case No.
20-32243) on April 23, 2020.
At the time of the filing, Debtors disclosed assets of between $500
million and $1 billion and liabilities of the same range.
Judge David R. Jones oversees the cases.
Debtors tapped Weil, Gotshal & Manges, LLP as bankruptcy counsel;
Herbert Smith Freehills as co-counsel with Weil; Moelis Australia
Ltd. as financial advisor; FTI Consulting Inc. as restructuring
advisor; and Kurtzman Carson Consultants LLC as claims agent.
STAPLES INC: S&P Downgrades ICR to 'B' on Elevated Leverage
-----------------------------------------------------------
S&P Global Ratings lowered its issuer credit rating on U.S.-based
business-to-business office supplies distributor Staples Inc. to
'B' from 'B+'. At the same time, S&P lowered its issue-level rating
on the company's senior secured debt to 'B' from 'B+' and its
issue-level rating on its unsecured debt to 'CCC+' from 'B-'. S&P's
recovery ratings on the debt remain unchanged.
Staples entered the current economic recession with a highly
leveraged balance sheet and limited financial flexibility to
withstand an extended economic downturn. Under its base-case
forecast, S&P assumes U.S. GDP declines by 5.2% in 2020, supporting
a mid-teens percentage decline in Staples' revenue for the year.
S&P expects the largest contraction in the company's revenue to
occur in the second quarter as the temporary business shutdowns and
stay-at-home orders reduce product demand across virtually all of
the company's product channels. With the exception of its
Janitorial and Sanitation (Jan San) products and Staples.com
channel (which have benefitted from increased demand for cleaning
products and orders from telecommuters), the demand for its core
products (ink, paper, toner) has continued to decline. Though
Staples has tried to manage its costs through employee furloughs
and executive compensation reductions, increased logistics costs
will pressure margins, contributing to S&P's forecast adjusted
margin decline of 50 basis points (bps)-100 bps in 2020. S&P
expects adjusted leverage to increase over 8x in 2020 and remain
above 7x through 2021.
Extended stay-at-home mandates and a continued increase in
telecommuting beyond 2020 could exacerbate the decline in Staples'
organic revenue. With over 90% of the U.S population under
stay-at-home orders, the demand for office products has fallen
substantially, which led to year-over-year sales declines of about
30% for the company in April. Despite some offsetting revenue from
its 2019 acquisitions and a healthy start to the year, Staples
expects its revenue to decline by about 10% in the first quarter
(ended May 2, 2020). The company's path to, and timeline for,
recovery remains unclear and is complicated by the U.S.' high
unemployment rate, the increasing risk of small business failures
or contraction, and the likelihood that the prevalence of remote
working will remain elevated going forward.
S&P's economists believe that a portion of the population will
return to work during the third quarter of 2020 as the outbreak
spreads unevenly across the different regions of the U.S. However,
S&P anticipates that containment measures may need to stay in place
longer than currently planned, which will keep people away from the
workplace and depress the demand for office supplies. In addition,
the permanent adoption of social distancing precautions could
substantially reduce workforce density and thereby decrease the
consumption of office supplies as a whole, which would have an
extended effect on Staples' ability to recover following the
containment of the virus. Therefore, S&P believes there are limited
opportunities for Staples to reverse the degradation in its credit
metrics and reduce its debt levels, which have remained elevated
since its March 2019 dividend recapitalization. The demand for its
office products, which was already facing headwinds due to the
ongoing secular shift away from the company's core ink, toner, and
paper products (about 50% of revenue as of fiscal year 2019), will
be further reduced by the coronavirus-induced business shutdowns
and distancing measures. S&P expects the company to face continued
pressure at least through the end of fiscal year 2021, which ends
in January 2021.
S&P acknowledges a high degree of uncertainty about the rate of
spread and peak of the coronavirus outbreak.
"Some government authorities estimate the pandemic will peak about
midyear, and we are using this assumption in assessing the economic
and credit implications. We believe the measures adopted to contain
COVID-19 have pushed the global economy into recession. As the
situation evolves, we will update our assumptions and estimates
accordingly," S&P said.
Environmental, social, and governance (ESG) credit factors for this
credit rating change:
-- Health and safety
The negative outlook reflects the risk that the company may be
unable to reduce its adjusted debt leverage and improve cash flows
due to the uncertain demand for office products, which could be
further reduced by the continuation of social distancing practices,
elevated levels of unemployment, and an increased shift to remote
working overlaid by ongoing underlying secular headwinds in core
office products.
"We could lower our ratings on Staples' if revenue losses or
operating margin declines are greater than expected, resulting in a
higher rate of cash burn such that the company's free operating
cash flow to debt ratio is sustained in the low-single digit
percent area or prevents a reduction in debt leverage to the 7x
area or lower in 2021. Given debt trading prices, we could also
lower the rating if we expect the company to engage in debt
repurchases that we may consider a selective default," S&P said.
"We could revise the outlook to stable if Staples is able to offset
its revenues losses with substantial cost actions, greater than
expected working capital improvements, reduced capital spending or
debt reduction such that we forecast it is able to return adjusted
leverage below 7x or lower in the next 12 to 24 months. Under this
scenario, we would expect the company to report strong operating
performance, reduced capital spending, or debt reductions," the
rating agency said.
STARFISH HOLDCO: Medley Values $2-Mil. Loan at 73% of Face
----------------------------------------------------------
Medley Capital Corporation has marked its $2,000,000 loan extended
to privately held Starfish Holdco LLC to market at $1,458,800, or
73% of the outstanding amount, as of March 31, 2020, according to a
disclosure contained in a Form 10-Q filing with the Securities and
Exchange Commission for the quarterly period ended March 31, 2020.
Medley is a lender under Starfish Holdco's Senior Secured Second
Lien Term Loan (LIBOR + 9.00% Cash, 1.00% LIBOR Floor), which is
scheduled to mature August 18, 2025.
Starfish Holdco LLC is in the High Tech Industries.
STIFEL FINANCIAL: Fitch Hikes Preferred Stock Rating to 'BB-'
-------------------------------------------------------------
Fitch Ratings has upgraded Stifel Financial Corporation's preferred
stock rating to 'BB-' from 'B+', and the "under criteria
observation" has been removed. Stifel's preferred stock rating had
been placed on UCO on Feb. 28, 2020 in conjunction with the
publishing of new Bank Rating Criteria. Within the new criteria,
Fitch reduced the base case notching for nonperformance on
preferred stock, narrowing the relative gap between subordinated
Tier 2 and AT1 instruments.
KEY RATING DRIVERS
The rating assigned to Stifel's perpetual, noncumulative preferred
stock is four notches below its viability rating of 'bbb', which
encompasses two notches for nonperformance and two notches for loss
severity.
ESG CONSIDERATIONS
Stifel has an ESG Relevance Score of 4 for Governance Structure due
to Fitch's view of elevated key person risk associated with its
CEO, who has an outsized influence on the strategic direction of
the firm.
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.
RATING SENSITIVITIES
Stifel's preferred stock rating is primarily sensitive to any
change in the company's VR and would be expected to move in tandem
with any changes in Stifel's credit profile. Factors that could,
individually or collectively, lead to positive rating
action/upgrade: Evidence of strong asset quality performance
through the credit cycle, and higher and more consistent earnings
and profitability, while maintaining leverage near current levels
and maintaining a strong funding and liquidity profile. Reduced
key-person risk associated with Stifel's co-chairman and CEO,
including publicly announcing a formal succession plan, would also
be viewed positively.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
An increased appetite for balance sheet-intensive acquisitions,
which result in a change to the firm's risk profile or leverage
profile.
The ratings could also be downgraded if double leverage, as
calculated by Fitch, were to increase above 120% on a sustained
basis given that the holding company relies on the upstreaming of
dividends from its regulated operating subsidiaries, which can be
restricted by regulators during periods of stress.
Additional negative rating drivers include material trading or
operational losses, material deterioration in capitalization,
either for the overall firm or at the subsidiary level, outsized
credit losses or impairments in its loan and securities portfolios
held at the bank, and regulatory, litigation, or reputational
damage that impairs the franchise and/or weakens its funding and
liquidity profile.
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
Stifel Financial Corp.: Governance Structure: 4
SUREFUNDING LLC: Bayard Represents SureFunding Noteholders
----------------------------------------------------------
In the Chapter 11 cases of SureFunding, LLC, the law firm of
Bayard, P.A. submitted a statement under Rule 2019 of the Federal
Rules of Bankruptcy Procedure, to disclose that it is representing
the Ad Hoc Committee of SureFunding Noteholders.
On or about May 4, 2020, the Noteholders retained Bayard to
represent them in connection with the Chapter 11 Case.
Bayard only represents the Noteholders in this Chapter 11 Case and
does not represent or purport to represent any other entities in
connection with this Chapter 11 Case.
As of May 11, 2020, members of the Ad Hoc Committee of SureFunding
Noteholders and their disclosable economic interests are:
Wayne J. James
2903 Lepage St. Apt 3
New Orleans, LA 70119
* Secured Promissory Amount: Approximately $34 million
* Claim: In excess of $2.1 million
Blake Coler-Dark
2975 Chillon Way
Laguna Beach, CA 82651
* Secured Promissory Amount: Approximately $34 million
* Claim: $60,000
Mark Teitelbaum
1810 N Kentucky Street
Arlington, VA 22205
* Secured Promissory Amount: Approximately $34 million
* Claim: $200,000
Nothing contained in this Statement is intended or shall be
construed as (i) a waiver or release of any claim against the
Debtors by any Participant of the Noteholders; (ii) an admission
with respect to any fact or legal theory; or (iii) a waiver or
release of any other rights, claims, actions, defenses, setoffs or
recoupments to which the Noteholders may be entitled, in law or in
equity, under any agreement or otherwise, with all of such rights,
claims, actions, defenses, setoffs or recoupments being expressly
reserved.
Counsel to the Ad Hoc Committee of SureFunding Noteholders can be
reached at:
BAYARD, P.A.
Scott D. Cousins, Esq.
Scott D. Jones, Esq.
600 N. King Street, Suite 400
Wilmington, DE 19801
Telephone: (302) 655-5000
Facsimile: (302) 658-6395
E-mail: scousins@bayardlaw.com
sjones@bayardlaw.com
A copy of the Rule 2019 filing, downloaded from PacerMonitor.com,
is available at https://is.gd/dIhoBa
SureFunding, LLC, sought Chapter 11 protection (Bankr. D. Del. Case
No. 20-10953) on April 14, 2020. The Debtor was estimated to have
$10 million to $50 million in assets and liabilities. FOX
ROTHSCHILD LLP is the Debtor's bankruptcy counsel. GAVIN/SOLMONESE
LLC is the chief restructuring and liquidation officer provider.
SUSTAINABLE RESTAURANT: Case Summary & 30 Top Unsecured Creditors
-----------------------------------------------------------------
Lead Debtor: Sustainable Restaurant Holdings, Inc.
920 SW 6th Avenue, Suite 1200
Portland, OR 97204
Business Description: Founded in 2008, Sustainable Restaurant
Holdings, Inc. and its debtor affiliates
currently maintains 10 restaurants located
in Oregon, Washington, Arizona, California,
and Colorado and operates under the "Bamboo
Sushi" and "Quickfish" brand names. Visit
https://sustainablerestaurantgroup.com/
Chapter 11
Petition Date: May 12, 2020
Court: United States Bankruptcy Court
District of Delaware
Twenty-two affiliates that concurrently filed voluntary petitions
for relief under Chapter 11 of the Bankruptcy Code:
Debtor Case No.
------ --------
Sustainable Restaurant Holdings, Inc. (Lead Case) 20-11087
SRG Operations, LLC 20-11088
Quickfish LLC 20-11089
Bamboo Sushi, LLC 20-11090
Quickfish Pearl District LLC 20-11091
Quickfish SW Stark, LLC 20-11092
Quickfish Slabtown LLC 20-11093
Quickfish Avanti (Bamboo Sushi Avanti), LLC 20-11094
Bamboo Sushi NE Alberta, LLC 20-11095
Bamboo Sushi Lake Oswego, LLC 20-11096
Bamboo Sushi SW 12th, LLC 20-11097
Bamboo Sushi Denver Lo-Hi, LLC 20-11098
Bamboo Sushi NW 23rd, LLC 20-11099
Bamboo Sushi Seattle Cap Hill, LLC 20-11100
Bamboo Sushi U Village Seattle, LLC 20-11101
Bamboo Sushi Embarcadero SF, LLC 20-11102
Bamboo Sushi Bishop Ranch, LLC 20-11103
Bamboo Sushi Kierland Scottsdale, LLC 20-11104
Bamboo Sushi Commissary Kitchen, LLC 20-11105
Bamboo Sushi Biltmore Phoenix, LLC 20-11106
Bamboo Sushi Valley Fair, LLC 20-11107
Bamboo Sushi Washington Square, LLC 20-11108
Debtors'
Legal
Counsel: Domenic E. Pacitti, Esq.
Michael W. Yurkewicz, Esq.
Sally E. Veghte, Esq.
KLEHR HARRISON HARVEY BRANZBURG LLP
919 N. Market Street, Suite 1000
Wilmington, DE 19801
Tel: (302) 426-1189
Fax: (302) 426-9193
Email: dpacitti@klehr.com
myurkewicz@klehr.com
sveghte@klehr.com
- and -
Morton R. Branzburg, Esq.
KLEHR HARRISON HARVEY BRANZBURG LLP
1835 Market Street, 14th Floor
Philadelphia, PA 19103
Tel: (215) 569-2700
Fax: (215) 568-6603
E-mail: mbranzburg@klehr.com
Debtors'
Investment
Banker: SSG ADVISORS, LLC
Debtors'
Restructuring
Advisor: GETZLER HENRICH & ASSOCIATES LLC
Debtors'
Notice,
Claims &
Balloting
Agent: OMNI AGENT SOLUTIONS
https://is.gd/bqvnYK
Estimated Assets: $10 million to $50 million
Estimated Liabilities: $1 million to $10 million
The petitions were signed by Matthew Park, president and chief
executive officer.
A full-text copy of Sustainable Restaurant Holdings' petition is
available for free at PacerMonitor.com at:
https://is.gd/HW1Yql
List of Debtors' 30 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
1. OVF Bamboo, LLC Debts $1,409,800
c/o Oregon Venture Fund
Attn: Eric Rosenfeld
760 SW 9th Ave, Ste 2380
Portland, OR 97205
Email: eric@oregonventurefund.com
2. Shrader & Martinez Vendor $1,068,100
Construction, USA LLC
160 Dry Creek Rd
Sedona, AZ 86336
Tel: 928-282-7554
Email: lkeesey@shradermartinez.com;
cbertnick@shradermartinez.com
3. D Kelly Construction, Inc. Vendor $375,733
55 Lafayette St
San Francisco, CA 94103
Attn: Lisa Craib McMillan
Tel: 415-330-9294
Fax: 415-330-9284
4. Bargreen Ellingson Vendor $98,917
Lockbox 310055
P.O. Box 94328
Seattle, WA 98124-6628
Attn: Alex Leppe
Tel: 206-682-1472; 303-405-2734
Fax: 303-607-6551
Email: a.leppe@bargreen.com
5. University Village LP Landlord $71,450
2623 NE University Village St.,
Ste 7
Seattle, WA 98105
Attn: Phil Flores
Tel: 206-523-0622
Email: phil@uvillage.com;
ar@uvillage.com
6. Bain Capital Professional $44,000
Double Impact, LP Services
John Hancock Tower
200 Clarendon St
Boston, MA 02116
Attn: Bryan C Curran
Tel: 617-516-2075
Email: bcurran@baincapital.com;
twestermann@baincapital.com
7. VF Mall LLC Landlord $43,313
P.O. Box 55702
Los Angeles, CA 90074-5702
Attn: Jim Lee
Tel: 310-689-5651
Email: jim.lee@urw.com
8. Washington Dept of Revenue Tax $33,902
Treasury Management
P.O. Box 47464
Olympia, WA 98504-7464
9. Scott Edwards Architecture, LLP Vendor $32,580
2525 East Burnside St
Portland, OR 97214-1753
Attn: Jeff Hammond,
Lindsey Phillips
Tel: 503-226-3617
Email: jeff@seallp.com;
lphillips@seallp.com
10. Platinum AVL Vendor $31,800
104 SW 2nd Ave
Portland, OR 97204
Attn: Ali Tabatabaie
Tel: 503-222-9166
Fax: 503-222-9355
Email: Ali@platinumAVL.com
11. Geffen Mesher Professional $30,000
888 SW 5th Ave, Ste 800 Services
Portland, OR 97204
Attn: Lindsey S Martin
Tel: 503-445-3371
Email: lmartin@gmco.com
12. LoHi Garden LLC Landlord $28,535
Attn: Sharon McMeen
7400 E Crestline Cr, Ste 125
Greenwood Village, CO 80111
Tel: 720-219-7647
Email: reganschmergel@infinityc.com
13. Courtyard Properties Landlord $27,874
1122 Stark Investment, LLC
2455 NW Marshall St Ste 1
Portland, OR 97210-2997
Attn: Carmen Toney
Tel: 503-223-6260
Email: f19b3eb43c2fb390580f865aa6b027746e5d
c50d@courtyardproperties.mailer.appfolio.us
14. Ascentium Capital LLC Vendor $26,535
P.O. Box 301593
Dallas, TX 75303-1593
Attn: Robert Alvarado, Melissa Scheu
Tel: 877-568-5915 x0347; 281-902-1452
Fax: 866-846-3679; 281-921-3452
Email:
RobertAlvarado@ascentiumcapital.com;
MelissaScheu@ascentiumcapital.com
15. US Foods - Seattle Vendor $26,523
P.O. Box 94781
Seattle, WA 98124-7081
Attn: John Sandstrom
Tel: 855-877-1476
Email: john.sandstrom@usfoods.com;
seaarrequests@usfood.com
16. Davis Wright Tremaine LLP Professional $24,686
1300 SW Fifth Ave, Ste 2400 Services
Portland, OR 97201
Attn: Julie Springer
Tel: 503-778-5462
Fax: 503-778-5299
Email: juliespringer@dwt.com
17. Pacific Lightworks LLC Vendor $23,999
16459 Lexington Ct
Lake Oswego, OR 97034
Attn: Earl F Levin
Tel: 503-635-7203
Email: ELevin@PacificLightworks.com
18. Creative Financial Vendor $23,625
Staffing, LLC
1 International Pl, 16th Fl
Boston, MA 02110
Attn: Mary Gerber
Tel: 503-552-6719
Email: mgerber@cfstaffing.com
19. Biltmore Fashion Park Landlord $23,527
P.O. Box 31001-2178
Pasadena, CA 91110-2178
Attn: Rick Dawson
Tel: 602-955-8401
Email: Rick.Dawson@macerich.com
20. Lmnop Design, Inc. Vendor $22,635
45 29th St
San Francisco, CA 94110
Attn: Tyler Pew, Benjamin Rubke
Tel: 415-400-3863
Email: tyler@lmnopdesigninc.com;
ben@makedesignthink.com
21. ROY - A Hospitality Vendor $21,092
Design Studio
3616 Lawton St
San Francisco, CA 94122
Attn: Hannah Collins
Tel: 415-829-2670
Email: hannah@thisisroy.com
22. California Dept of Tax & Fee Tax $21,007
Administration
P.O. Box 942879
Sacramento, CA 94279
23. Fyrn Vendor $19,851
Attn: David Charne
2901 Mariposa St, Ste 10
San Francisco, CA 94110
Attn: David Charne
Tel: 415-306-2671
Email: dave@fyrn.com
24. JFC International, Inc. Vendor $19,540
5015 E 8th St, Ste B
Tacoma, WA 98424
Attn: Joshua Her, Chiharu Hogan
Tel: 253-922-8889; 253-896-2152
Email: jher@jfc.com; chogan@jfc.com;
jse.ar@jfc.com
25. True World Foods, LLC Vendor $18,205
32-34 Papetti Plz
Elizabeth, NJ 07206
Attn: Yasu Endo
Tel: 360-695-9577
Email: EndoY@trueworldfoods.com
26. Aeonian Partners, LP Landlord $17,856
c/o Sunset Development Company
P.O. Box 640
San Ramon, CA 94583
Attn: Marilou Jocson
Tel: 925-815-1901; 925-815-1907
Email: mjocson@bishopranch.com
27. Wizer Properties LLC Landlord $17,494
c/o GREP Southwest, LLC
Attn: Commercial Property Manager
1125 NW Couch St, Ste 450
Portland, OR 97209
Attn: Bryce Harp
Tel: 503-416-2587
Email: Bryce.Harp@greystar.com
28. Pacific Sea Food Co Inc 570 Vendor $15,487
16797 SE 130th Ave
Clackamas, OR 97015
Attn: Andrea Greene
Tel: 503-905-4438
Email: AGreene@pacseafood.com;
argeneral@pacseafood.com
29. Pine City LLC Landlord $15,397
1271 Adair St
San Marino, CA 91108
Attn: Renita Lin
Email: renitaolivia@gmail.com
30. Kristofer Lofgren Former Undetermined
1011 SW Davenport St Employee
Portland, OR 97201
Tel: 310-877-9808
Email: kslofgren@gmail.com
TECHNIPLAS: Files for Bankruptcy as Pandemic Hurts Business
-----------------------------------------------------------
Wisconsin-based automobile parts manufacturer Techniplas LLC sought
Chapter 11 protection with a deal to transfer ownership to
bondholders in a debt-for-equity transaction, absent higher and
better offers.
Becky Yerak, writing for Wall Street Journal, reports that
Techniplas said it filed for bankruptcy protection, with the intent
to hand over ownership to bondholders including HIG Capital LLC,
because the coronavirus pandemic has further impacted its
struggling business.
According to the papers it filed with the U.S. Bankruptcy Court,
Techniplas filed for chapter 11 on May 6, 2020, the same day that a
forbearance agreement with one of its lenders expired.
The bankruptcy was caused by diverse factors that have contributed
to the decline of Techniplas' liquidity and earnings and liquidity,
the latest of which is a pandemic that has punished the global
economy, said Techniplas CEO Peter Smidt in a court filing.
The company has 445 active employees and furloughed 271 employees.
Prior to the bankruptcy filing, it retrenched 190 jobs at
facilities in Iowa and Alabama.
Nearly all of the equity of Techniplas is owned by founder George
Votis.
Under its proposed debt-reduction proposal, a ground of bondholders
will serve as the company's lead bidder while it searches for
possible buyers for its international business operations and the
remaining three running manufacturing plants in the United States.
Bondholders offer credit bid worth $105 million, that involves
swapping equity for debt.
Techniplas said that its bankruptcy does not include its foreign
subsidiaries and it plans to pay vendors in full under customary
terms for goods and services received after the bankruptcy filing.
Some bondholders and the Bank of America Corp. offered Techniplas
funding worth $150 million to help the company get through
bankruptcy.
Private equity firm Jordan Co. also expressed its interest in
buying the business, before it filed for bankruptcy protection, but
it didn't come to fruition. Jordan also purchased some October
2020 bonds from the company, said Techniplas.
About Techniplas LLC
Techniplas, LLC, headquartered in Nashotah, Wisconsin USA, is a
privately held producer of technical plastic components for the
automotive, transportation and electrical industry. Techniplas is
specialized in thermoplastic and thermo-set molding and has
expertise in metal-to-plastic conversion, light weighting and tool
design. Techniplas employed about 2,357 employees in its
operations as of December 2018 and generated revenue of $529
million in 2018.
As of December 2020, Techniplas had total assets worth $258.6
million and liabilities worth $331 million, according to court
filing.
Techniplas, LLC, and its affiliates sought Chapter 11 protection
(D. Del. Lead Case No. 20-11049) on May 6, 2020.
The Debtors were estimated to have $100 million to $500 million in
assets and liabilities.
The Debtors tapped WHITE & CASE LLP as counsel; FOX ROTHSCHILD LLP
as restructuring counsel; MILLER BUCKFIRE & CO., LLC as investment
banker; FTI CONSULTING, INC., as restructuring advisor; and EPIQ
CORPORTAE RESTRUCTURING, LLC, as claims agent.
TEGNA INC: Egan-Jones Withdraws BB- LC Senior Unsecured Rating
--------------------------------------------------------------
Egan-Jones Ratings Company, on April 27, 2020, withdrew its 'BB-'
local currency senior unsecured rating on debt issued by TEGNA
Incorporated to CC from CCC+.
Headquartered in Virginia, TEGNA Incorporated is a broadcasting,
digital media, and marketing services company.
TIDWELL BROS: U.S. Trustee Unable to Appoint Committee
------------------------------------------------------
The U.S. Trustee, until further notice, will not appoint an
official committee of unsecured creditors in the Chapter 11 case of
Tidwell Bros Construction, Inc., according to court dockets.
About Tidwell Bros. Construction
Tidwell Bros. Construction Inc. is a privately held construction
company in Florida serving industrial, commercial, and residential
clients. It specializes in all phases of earthwork, paving,
construction/demolition, and aggregate production.
Tidwell Bros. Construction Inc. filed a voluntary petition under
Chapter 11 of the United States Bankruptcy Code (Bankr. M.D. Fla.
Case No. 20-00837) on March 6, 2020. The petition was signed by
Anthony J. Tidwell, president. At the time of filing, the Debtor
was estimated to have $1 million to $10 million in both assets and
liabilities. Aaron A. Wernick, Esq., at Furr Cohen P.A., is the
Debtor's counsel.
TOWN SPORTS: Egan-Jones Lowers Senior Unsecured Ratings to CC
-------------------------------------------------------------
Egan-Jones Ratings Company, on April 29, 2020, downgraded the
foreign currency and local currency senior unsecured ratings on
debt issued by Town Sports International Holdings Inc. to CC from
CCC-. EJR also downgraded the rating on commercial paper issued by
the Company to D from C.
Headquartered in New York, New York, Town Sports International
Holdings, Inc. owns and operates fitness clubs in the Northeast and
mid-Atlantic regions of the United States.
TOWNSQUARE MEDIA: S&P Alters Outlook to Negative, Affirms 'B' ICR
-----------------------------------------------------------------
S&P Global Ratings affirmed its 'B' issuer credit rating on
Townsquare Media Inc. and revised its outlook on Townsquare to
negative from stable.
S&P expects declines in advertising revenue will cause Townsquare's
leverage to spike in 2020, although it expects it will improve in
2021 as the economy recovers.
Townsquare had leverage of 5.4x as of Sept. 30, 2019, and S&P
previously expected the company's leverage to decline to the
high-4x area in 2020 due mainly to growth from its digital
businesses. However, S&P now expects declines in radio advertising
revenue from economic weakness from the spread of the coronavirus
will cause the company's leverage to spike above 7x in 2020. While
S&P believes Townsquare has some ability to reduce costs, this will
likely be insufficient to offset the material decline in its
revenue. Nonetheless, S&P expects the company to generate positive
cash flow through the downturn and return to generating
discretionary cash flow to debt of roughly 7% in 2021 as the
economic and advertising environments improve, causing leverage to
return back to the mid-5x area.
Advertisers have already pulled back on their spending.
"We now forecast that U.S. real GDP will contract by 5.2% in 2020,
which is substantially more severe than our March forecast for a
1.3% decline. We believe the current recession will reduce economic
activity by roughly three times the decline reported during the
Great Recession in one-third of the amount of time. Specifically,
we expect declining consumer confidence and spending during the
recession to reduce industry-wide broadcast radio advertising
revenue by 23.5% in 2020," S&P said.
"Given the shorter lead time for broadcast radio advertising
relative to other types of media, we believe U.S. radio
broadcasters started to feel the effects of the virus' spread in
March. We expect the steepest declines in spending to occur in the
second and third quarters of 2020 before there is a modest
improvement in the fourth quarter. While the rate of the virus'
spread and its potential peak is uncertain, we expect it to peak
about midyear and anticipate that it will be followed by a U-shaped
recovery in the second half of 2020," the rating agency said.
Townsquare generates more revenue from digital offerings than many
of its peers, which will partially offset declines in broadcast
radio advertising.
S&P previously expected digital revenue to account for 35%-40% of
total revenue in 2020. As broadcasting revenues decline, S&P
expects digital revenues to remain roughly flat, causing it to
become an even larger percentage of total revenue in 2020.
Townsquare's higher proportion of digital revenue differentiates
the company from its pure-play broadcast peers (such as Beasley and
Hubbard) because it provides a buffer against the secular decline
and cyclicality of broadcast advertising. While it expects leverage
to remain elevated above 5x through 2021, S&P believes the
company's more diverse revenue base will support refinancing
efforts associated with its term loan due in 2022 and the springing
maturity of its revolver (six months prior to the term loan).
"We expect Townsquare to have sufficient liquidity to weather the
recession, but liquidity could be limited by the springing covenant
on its revolver," S&P said.
Townsquare had about $74 million of cash on its balance sheet
facility as of Sept. 30, 2019, and drew the full amount under its
$50 million revolving credit facility on March 17, 2020.
S&P expects the company to have sufficient cash on hand to
withstand the sharp decline in radio advertising in the first half
of 2020 before it returns to generating positive cash flow over the
second half of the year. However, Townsquare's revolving credit
facility is subject to a springing senior secured leverage covenant
of 3.75x when more than 30% is drawn on the revolver. S&P expects
the company's EBITDA cushion under this covenant to be thin as of
the June 30, 2020, test date and anticipates that it would likely
violate the covenant as of the Sept. 30, 2020, test date. S&P
believes the company would be able to repay the revolver draw to
below 30% and still maintain enough cash to fund its operations,
although the company could alternatively seek an amendment or
waiver from its lender group.
The negative outlook reflects uncertainty around the extent of the
pandemic's impact on Townsquare's performance and the potential
that steeper-than-expected declines or a delayed recovery in radio
advertising could cause leverage to remain elevated above S&P's
6.5x downgrade threshold and free operating cash flow to debt to
remain below 5% through 2021.
"We could lower the rating if declines in radio advertising are
more severe than we expect or if its recovery is prolonged, such
that we believe Townsquare's leverage will remain above 6.5x or
FOCF to debt will remain below 5% through the end of 2021." This
would likely diminish the company's liquidity position and
potentially increase refinancing risks associated with the April
2022 maturity of its term loan," S&P said.
S&P could revise the outlook to stable if all of the below
scenarios occurred:
-- The company returns to 2019 growth trends in its digital
businesses and with total profitability approaching pre-coronavirus
levels.
-- S&P believes Townsquare will reduce leverage back below 6.5x by
the end of 2021 and that it will not face any risk refinancing its
debt maturities in 2022 and 2023.
-- S&P believes the company will consistently generate FOCF to
debt of more than 5%.
TRIBE BUYER: S&P Downgrades ICR to 'CCC+' on COVID-19 Disruption
----------------------------------------------------------------
S&P Global Ratings lowered its issuer credit rating on Tribe Buyer
LLC to 'CCC+' from 'B-'. At the same time, S&P lowered its
issue-level rating on the company's first-lien debt to 'CCC+' from
'B-'. The '3' recovery rating is unchanged.
The downgrade reflects a very challenging macroeconomic environment
S&P expects Tribe Buyer will continue to face over the next 12
months and anticipated weakening credit metrics. The ongoing
response to the COVID-19 pandemic has slowed many ongoing
construction projects, including the nonresidential market, where
Tribe Buyer derives most of its revenues by providing labor. Work
halts and job site closures have brought the number of placed
laborers down, while the path to normalization remains clouded.
Furthermore, S&P expects the economic distress may force clients to
exit existing projects through force majeure clauses and to delay
others, severely imperiling Tribe Buyer revenue. S&P expects Tribe
Buyer's adjusted leverage will spike above 10x in 2020 due to a
material decline in revenue, which the rating agency believes the
company cannot fully offset with cost cuts. It expects leverage to
improve in 2021 as the economy recovers, but leverage will likely
remain above 8x.
Tribe Buyer could breach its leverage covenant in the second or
third quarter of 2020. Its revolving credit facility and
first–lien term loan include a maximum 8x net first-lien
covenant. There are no covenant step-downs. As of Dec. 30, 2019,
the covenant headroom was about 29%. Based on its EBITDA forecast
for substantial declines in the second and third quarters of 2020,
S&P believes the company may have to seek a waiver or amendment
from its lenders to avoid a technical default and maintain access
to liquidity.
Tribe Buyer's gross margins have slipped as pay rates lagged bill
rates. While pay rates rose to attract and retain qualified
laborers, hourly billing rates have not kept pace. Tribe Buyer's
gross margins decreased due to this rate differential in recent
years. S&P believes in a COVID-19 recovery this differential could
accelerate as more distressed firms pursue revenue growth over
gross margin improvement in an effort to recapture or maintain
market share.
Environmental, social, and governance (ESG) credit factors for this
credit rating change:
-- Health and safety
The negative outlook reflects S&P's expectation that absent an
amendment, Tribe Buyer could breach its net leverage covenant in
2020 because of significant EBITDA declines and elevated leverage
related to the COVID-19 pandemic and economic downturn.
"We could lower the ratings if Tribe Buyer requires, but is unable
to secure a covenant amendment, or we believe there is a high
likelihood of a payment default or distressed exchange with its
lenders over the next 12 months," S&P said.
"An upgrade is unlikely in the near term based on our forecast of
lower revenue and EBITDA. We could consider raising the rating if
Tribe Buyer obtains a covenant amendment or waiver, such that it
maintains at least a 15% covenant cushion over the next 12 months,
and sustains operating performance improvement so that leverage
becomes comfortably below 8x," the rating agency said.
UNITED AIRLINE: Fitch Withdraws BB+/RR1 Rating on Bond Abolition
----------------------------------------------------------------
Fitch Ratings has withdrawn its previously assigned May 6 'BB+/RR1'
ratings to United Airline's proposed $2.25 billion secured bond
issuance because. United chose not to proceed with the offering.
United's other ratings are not affected by this action. Fitch
currently rates United at 'BB-'/'Rating Outlook Negative'.
The ratings were withdrawn with the following reason:
Bonds were cancelled.
KEY RATING DRIVERS
Ratings have been withdrawn as the issuance did not proceed as
previously planned.
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.
DATE OF RELEVANT COMMITTEE
April 29, 2020
United Airlines, Inc.
- Senior secured; LT WD; Withdrawn
UNITED CANNABIS: Hires Hart & Hart as Special Counsel
-----------------------------------------------------
United Cannabis Corporation seeks approval from the U.S. Bankruptcy
Court for the District of Colorado to employ Hart & Hart, LLC as
special counsel.
Hart & Hart will assist Debtor in the review and preparation of SEC
filings and certain contracts.
William Hart, Esq., the firm's attorney who will be providing the
services, charges an hourly fee of $425.
Mr. Hart 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:
William T. Hart, Esq.
Hart & Hart, LLC
1624 Washington St.
Denver, CO 80203
About United Cannabis Corporation
United Cannabis Corporation -- www.unitedcannabis.us -- is a
biotechnology company dedicated to the development of
phyto-therapeutic-based products supported by patented technologies
for the pharmaceutical, medical and industrial markets. It has
long advocated the application of cannabinoids for medical
applications and is building a platform for designing targeted
therapies to increase the quality of life for patients around the
world.
United Cannabis sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. D. Colo. Case No. 20-12692) on Apr. 20,
2020. The petition was signed by John Walsh, Debtor's chief
financial officer. At the time of the filing, Debtor disclosed
estimated assets of $1 million to $10 million and estimated
liabilities of the same range. Judge Kimberley H. Tyson oversees
the case. Debtor tapped Wadsworth Garber Warner Conrardy, P.C. as
its legal counsel.
UNITED SPORTING: Prospect Values $147MM Loan at 3% of Face
----------------------------------------------------------
Prospect Capital Corporation has marked its $147,470,000 loan
extended to privately held United Sporting Companies, Inc. to
market at $105,478,000 or 3% of the outstanding amount, as of March
31, 2020, according to a disclosure contained in a Form 10-Q filing
with the Securities and Exchange Commission for the quarterly
period ended March 31, 2020.
Prospect extended to United Sporting Companies, Inc. a Second Lien
Term Loan (13.25% (LIBOR + 11.00% with 1.75% LIBOR floor) plus
2.00% PIK, which is scheduled to mature November 16, 2019.The loan
is on non-accrual status effective April 1, 2017.
According to Prospect, "The interest rate on these investments is
subject to the base rate of 1-Month LIBOR, which was 0.99% and
2.40% at March 31, 2020 and June 30, 2019, respectively. The
current base rate for each investment may be different from the
reference rate on March 31, 2020 and June 30, 2019."
United Sporting Companies, Inc. provides hunting and shooting
sports products.
UNITI GROUP: Posts $79.1 Million Net Loss in First Quarter
----------------------------------------------------------
Uniti Group Inc. reported a net loss attributable to common
shareholders of $79.05 million on $266.2 million of total revenues
for the three months ended March 31, 2020, compared to net income
attributable to common shareholders of $1.01 million on $261.03
million of total revenues for the three months ended March 31,
2019.
As of March 31, 2020, the Company had $5.01 billion in total
assets, $6.61 billion in total liabilities, and a total
shareholders' deficit of $1.59 million.
"We are pleased that the U.S. Bankruptcy Court for the Southern
District of New York approved our previously announced settlement
agreement with Windstream. This agreement adds significant
strategic value for Uniti as it further expands and enhances the
value of our national network, strengthens Windstream's competitive
position, and provides Uniti a clear path forward," commented Kenny
Gunderman, president and chief executive officer.
Mr. Gunderman continued, "We are also announcing today new terms
for our previously announced sale of certain U.S. towers. Following
the "go-shop" period, Uniti will now sell 90% of its U.S. tower
business to the same wireless infrastructure operator and investor,
Melody Investment Advisors LP ("Melody"), while retaining a 10%
investment interest through an affiliate of Melody. This
transaction will realize significant value for Uniti while allowing
us to own a meaningful interest in a scale wireless tower owner and
operator. As part of the transaction, Melody and Uniti will enter
into a strategic relationship to collaborate on integrated
solutions for wireless carriers requiring towers, fiber and small
cells infrastructure.
"We continue to closely monitor the effects on our operations from
COVID-19. Currently, we have not seen any meaningful impact on our
business, and our fiber network continues to perform well. We are
also addressing any concerns from our customers who may have been
impacted by this pandemic and continue to ensure that our field
crews perform their work safely and responsibly."
Court Approval of Settlement with Windstream
On May 8, 2020, the Company's previously agreed settlement with
Windstream Holdings, Inc. and its subsidiaries was approved by the
Honorable Robert D. Drain of the U.S. Bankruptcy Court for the
Southern District of New York. The Settlement resolves any and all
claims and causes of action that were or may have been asserted
against Uniti by Windstream, including those claims and causes of
action currently asserted by Windstream and certain of its
creditors in Windstream's bankruptcy cases.
The effectiveness of the Settlement is subject to finalization and
execution of definitive documentation, certain regulatory
approvals, and other conditions precedent, including receipt of
certain legal opinions as to federal tax compliance. Following
satisfaction of all such conditions precedent, consummation of the
Settlement will occur on the earlier of Windstream's emergence from
bankruptcy and Feb. 28, 2021. All litigation between Windstream
and Uniti is stayed while the parties implement the Settlement,
during which time Windstream will be obligated to pay rent in
full.
Investement Transactions
The Company recently entered into a revised agreement that modifies
the structure of its previously announced sale of its U.S. towers.
Under this agreement, Uniti will sell 90% of its U.S. tower
business to Melody for total cash consideration of approximately
$220 million, compared to the $190 million previously disclosed,
subject to adjustments. In addition, Uniti will retain a 10%
investment interest in the tower business through an affiliate of
Melody. As part of the agreement, Uniti will receive an
incremental earnout for each additional pipeline tower completed in
2020.
The transaction is subject to various closing conditions, including
execution of definitive documentation, and is expected to close by
the end of second quarter 2020. Goldman Sachs & Co. LLC served as
exclusive financial advisor to Uniti in connection with this
transaction.
Liquidity and Financing Transactions
At quarter-end, the Company had approximately $149 million of
unrestricted cash and cash equivalents, and undrawn borrowing
availability under its revolving credit agreement. The Company's
leverage ratio at quarter end was 6.4x based on Net Debt to
Annualized Adjusted EBITDA.
On May 11, 2020, the Company's Board of Directors declared a
quarterly cash dividend of $0.15 per common share, payable on July
10, 2020 to stockholders of record on June 26, 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/cKdRSs
About Uniti
Headquartered in Little Rock, Arkansas, Uniti (www.uniti.com), an
internally managed real estate investment trust, is engaged in the
acquisition and construction of mission critical communications
infrastructure, and is a provider of wireless infrastructure
solutions for the communications industry. As of March 31, 2020,
Uniti owns 6.3 million fiber strand miles, approximately 700
wireless towers, and other communications real estate throughout
the United States.
As of Dec. 31, 2019, the Company had $5.02 billion in total assets,
$6.50 billion in total liabilities, and a total shareholders'
deficit of $1.48 billion.
PricewaterhouseCoopers LLP, in Little Rock, Arkansas, the Company's
auditor since 2014, issued a "going concern" qualification in its
report dated March 12, 2020, citing that the Company's most
significant customer, Windstream Holdings, Inc., which accounts for
approximately 65.0% of consolidated total revenues for the year
ended Dec. 31, 2019, filed a voluntary petition for relief under
Chapter 11 of the Bankruptcy Code, and uncertainties surrounding
potential impacts to the Company resulting from Windstream
Holdings, Inc.'s bankruptcy filing raise substantial doubt about
the Company's ability to continue as a going concern.
* * *
As reported by the TCR on March 20, 2020, Fitch Ratings affirmed
the Long-Term Issuer Default Ratings and security ratings of Uniti
Group, Inc. and Uniti Fiber Holdings at 'CCC'.
As reported by the TCR on March 6, 2020, S&P Global Ratings placed
all ratings on U.S. telecom REIT Uniti Group Inc., including the
'CCC-' issuer credit rating, on CreditWatch with positive
implications. The CreditWatch placement follows the company's
announcement it reached an agreement in principle with its largest
tenant Windstream Holdings Inc. to resolve all legal claims it
asserted against Uniti in the context of Windstream's bankruptcy
proceedings.
UNIVERSAL TURBINE: Prospect Values $30MM Loan at 84% of Face
------------------------------------------------------------
Prospect Capital Corporation has marked its $30,225,000 loan
extended to privately held Universal Turbine Parts, LLC to market
at $30,225,000or 84% of the outstanding amount, as of March 31,
2020, according to a disclosure contained in a Form 10-Q filing
with the Securities and Exchange Commission for the quarterly
period ended March 31, 2020.
Prospect extended to Universal Turbine Parts, LLC a Senior Secured
Term Loan A (7.21% (LIBOR + 5.75% with 1.00% LIBOR floor), that is
scheduled to mature July 22, 2021.
"The interest rate on these investments is subject to the base rate
of 3-Month LIBOR, which was 1.45% and 2.32% at March 31, 2020 and
June 30, 2019, respectively. The current base rate for each
investment may be different from the reference rate on March 31,
2020 and June 30, 2019," Prospect says.
Universal Turbine Parts, Inc was founded in 1993. The company's
line of business includes the wholesale distribution of
transportation equipment and supplies.
URBAN ONE: Egan-Jones Lowers LC Senior Unsecured Rating to CCC
--------------------------------------------------------------
Egan-Jones Ratings Company, on April 27, 2020, downgraded the local
currency senior unsecured rating on debt issued by Urban One
Incorporated to CCC from CCC+.
Headquartered in Silver Spring, Maryland, Urban One, Inc. provides
radio broadcasting services.
USES CORPORATION: Prospect Values $49MM Loan at 33% of Face
-----------------------------------------------------------
Prospect Capital Corporation has marked its $49,199,000loan
extended to privately held Uses Corporation to market at
$30,651,000or 33% of the outstanding amount, as of March 31, 2020,
according to a disclosure contained in a Form 10-Q filing with the
Securities and Exchange Commission for the quarterly period ended
March 31, 2020.
Prospect extended to Uses Corporation a Senior Secured Term Loan A
(9.00% PIK, in non-accrual status effective April 1, 2016, which is
scheduled to mature July 29, 2022.
USES provides environmental cleaning services.
VALVOLINE INC: Moody's Rates New $300MM Add-On Unsec. Notes 'Ba3'
-----------------------------------------------------------------
Moody's Investors Service assigns Ba3 to Valvoline Inc.'s new $300
million senior unsecured notes, which are an add-on to the 4.375%
senior unsecured notes due 2025. The ratings are one notch below
the company's CFR rating of Ba2 reflecting the priority of the
senior secured tranche of term loan debt in the capital structure.
Proceeds from the issuance will be used to repay $300 million
outstanding under the revolver, $450 million of which was drawn in
March to shore up liquidity during the COVID crisis. The outlook on
the ratings is stable.
"The step up in gross debt from the recent draw on the revolver,
repaid with this debt issuance, increased gross adjusted leverage
but left net adjusted leverage roughly unchanged in the mid 3x
range, supporting the Ba2 CFR ratings," according to Joseph
Princiotta, SVP at Moody's. "The company's large cash balance of
$775 million currently supports strong liquidity during these
uncertain times, but beyond the covid crisis Moody's expects cash
to be used to reduce gross debt leverage to the mid-to-high 3x
range, acceptable but potentially slightly stressed for the
ratings. Moody's expects to see gross adjusted leverage trend to
the mid 3x range to support the ratings as EBITDA recovers"
Princiotta added.
Assignments:
Issuer: Valvoline Inc.
Senior Unsecured Regular Bond/Debenture, Assigned Ba3 (LGD5)
RATINGS RATIONALE
The rapid and widening spread of the coronavirus outbreak,
deteriorating global economic outlook, falling oil prices, and
asset price declines are creating a severe and extensive credit
shock across many sectors, regions and markets. The combined credit
effects of these developments are unprecedented. The chemical
sector in general and auto lube subsector in particular have been
affected by the shock, especially the auto markets and lube oil
demand given the sensitivity to consumer demand and auto miles
driven. Moody's regards the coronavirus outbreak as a social risk
under its ESG framework, given the substantial implications for
public health and safety. Its commentary, in part, reflects the
impact on Valvoline and the breadth and severity of the shock, and
the broad deterioration in credit quality it has triggered.
Valvoline's credit profile reflects its leading market positions in
retail (conventional and synthetic) passenger car lubricants, the
quick lube DIFM (Do It for Me) market, and the distributor and
direct installer service markets in the US. The ratings also
reflect strong and relatively stable margins in this mostly
recession resistant space, which is largely tied to miles driven
and requirements for periodic oil changes in the auto and truck
markets.
The ratings also reflect increasing capex and the growing
importance of acquisitions to support growth in the instant Oil
change Quick Lube segment and to offset competitive and secular
pressures in the other two segments, including the impact of the
longer-term decline trend due to growth of electric vehicles. More
immediate trends include the benefit to the Core NA and
International segments from the growing share of synthetic oils in
new vehicles, but this has been recently offset by volume pressure
due to price differences versus less expensive private label
brands. The company has suspended guidance in light of the
uncertainty created by the covid crisis, but Moody's expects EBITDA
could be down in the low $400 million range for 2020.
As of December 31, 2019, Valvoline's credit metrics were supportive
of the rating with adjusted gross leverage (Debt/EBITDA) of roughly
3.7x and Retained Cash Flow/Debt (RCF/Debt) of roughly 17%. But in
the fiscal 2Q March quarter the revolver drawdown increased debt
and adjusted gross leverage is closer to 5.0x while net leverage
was unchanged at roughly 3.5x.
Moody's expects M&A activity and share repurchases to be modest
this year, but beyond the covid crisis Moody's expects M&A activity
to be financed with free cash flow and in some cases additional
debt leaving leverage mostly unchanged in the mid 3x range as
EBITDA grows. Moody's expects leverage to trend back to the mid 3x
range overtime, mainly through EBITDA growth.
Moody's expects Valvoline to have strong liquidity during the covid
crisis including substantial balance sheet cash of roughly $775
million at March 31, 2020. Pro forma for this new bond issuance,
outstanding under the $475 million revolver are expected to be
roughly $150 million. Moody's expects the company will use balance
sheet cash at some point to restore the revolver to its full
availability. Moody's also expects modest free cash flow from
operations, despite the pressure on EBITDA this year from the covid
crisis. Maintenance covenants on the revolver include a Net
Leverage test (maximum 4.5 times) and Coverage test (minimum 3.0
times) with ample cushion expected on a one year forward basis. The
company also has access to a $175 million accounts receivable
securitization facility, which had $90 million outstanding as of
March 31, 2020.
ESG factors are not material to the credit profile at this time.
The most significant ESG issue stems from the longer-term trend in
electric vehicles, which use far less engine lubes than
conventional internal combustion engine vehicles and represent a
long-term headwind to demand for the company's products. However,
significant penetration by EVs is likely still many years away, and
the total global count of existing vehicles, which will continue to
grow and require periodic oil changes, will remain substantially
larger than new vehicle sales for decades to come. Social issues,
while high in profile given the connection with the transportation
space and its carbon footprint, are still viewed as only modest in
the credit profile due to the very long tail that lube products are
expected to sustain, albeit against secular demand pressure. As a
public company, governance issues are also viewed as modest and
supported by what has thus far been adherence to conservative
financial policies.
The stable outlook anticipates leverage remaining at or below 3.5x
and RCF/Debt to remain near or above 20% for the foreseeable
future, excluding the impact from additional acquisitions. The
ratings also anticipate small to moderate bolt-on acquisitions that
do not spike leverage substantially above 3.5x on a sustained
basis, or with a delayed recovery in leverage following larger
acquisitions.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
Prospects for an upgrade are currently limited given the pressure
on earnings from the covid crisis, as well as the importance beyond
covid of M&A in the growth of the quick lubes segment. However,
successful execution in profitable store growth in the quick lube
segment and overall margin stability and expansion could eventually
support a higher rating if adjusted leverage were to sustainably
fall below 2.5 times. Moody's could consider a downgrade if
adjusted gross leverage is not restored closer to 3.5 times or if
retained cash flow to debt falls below 10%, on a post covid
sustained basis; due to a shift in financial policies, poor
performance, aggressive share repurchases, or if acquisitions that
cause leverage to spike meaningfully above 3.5x with delayed
recovery.
Valvoline Inc., headquartered in Lexington, Kentucky, is a marketer
of premium-branded automotive and commercial lubricants. The
company sells its products through over 30,000 retail outlets and
about 1,350 franchised and company-owned stores. Its three business
segments are Core North America (39% of sales), which includes
"Do-It-Yourself", "Do-It-For-Me", and commercial and industrial;
Quick Lubes (37% of sales); and International (24% of sales), which
includes passenger and heavy duty branded products sold to about
140 countries outside the US and Canada. The company has revenues
of over $2.44 billion for the December 31, 2019 LTM period.
The principal methodology used in these ratings was Chemical
Industry published in March 2019.
VALVOLINE INC: S&P Alters Outlook to Negative, Affirms 'BB' ICR
---------------------------------------------------------------
S&P Global Ratings revised its outlook to negative from stable and
affirmed its 'BB' issuer credit rating on U.S.-based Valvoline
Inc.
At the same time, S&P is lowering its issue-level rating on the
senior unsecured notes to 'BB-' from 'BB' following the company's
proposed $300 million add-on to its existing $400 million senior
unsecured notes due 2025. S&P is revising the recovery rating on
the notes to '5' from '4' due to the increase in senior unsecured
claims, reflecting S&P's expectation for modest (10%-30%; rounded
estimate 20%) recovery in the event of a payment default. S&P is
affirming its 'BBB-' issue-level rating on the company's senior
secured bank credit facilities. The recovery rating on the bank
facilities is unchanged at '1'.
Sales and profits will decline meaningfully at least over the near
term. The COVID-19 pandemic and shelter-in-place restrictions have
resulted in reduced economic activity and fewer people driving,
causing a significant decline in miles driven and lower demand for
lubricants. In addition, an emphasis on social distancing and more
people working from home could also result in weaker demand even if
the virus is contained in near term. While S&P's economists'
base-case scenario points to a rebound in the second half of
calendar year 2020, there is substantial uncertainty around the
rate of spread and peak of COVID-19 and its lingering effects on
the U.S. economy. If the pandemic is not contained in the near term
and prolongs the recession and subsequent recovery, S&P can see
continued volume losses, which will further affect Valvoline's
sales and profits. The company responded with adjusting shifts at
its plants and distribution network, decreasing marketing and other
discretionary operating expenses and flexing its store labor. While
these efforts can mitigate some impact from COVID-19, it is likely
to be modest.
The negative outlook reflects the potential for a lower rating over
the next few quarters if the company's operating performance
materially declines due to further volume loss amid the COVID-19
pandemic.
"We could lower the ratings if the industry remains under pressure
causing us to lower our view of the business risk profile. This
could happen if the company's sales decline well beyond our base
case due to a continued decline in miles driven and lower lubricant
volume, leading to weaker profitability and cash flows, resulting
in adjusted debt to EBITDA sustained above 4x. We could also lower
the ratings if the company's financial policy with respect to
shareholder returns becomes more aggressive, such that leverage is
sustained above 4x," S&P said.
"We could revise our outlook to stable if the company stabilizes
operating performance such that revenue growth is restored and
leverage is sustained below 4x. This could happen if macroeconomic
conditions improve and pandemic spread eases such that miles driven
and product volume return to historical levels," S&P said.
VERINT SYSTEMS: Egan-Jones Lowers Senior Unsecured Ratings to B+
----------------------------------------------------------------
Egan-Jones Ratings Company, on April 27, 2020, downgraded the
foreign currency and local currency senior unsecured ratings on
debt issued by Verint Systems Incorporated to B+ from BB-.
Headquartered in Huntington, New York, Verint Systems Inc. provides
analytic solutions for communications, interception, digital video
security and surveillance, and enterprise business intelligence.
VIKING CRUISES: Moody's Confirms B2 CFR & Caa1 Sr. Unsec. Rating
----------------------------------------------------------------
Moody's Investors Service confirmed the ratings of Viking Cruises
Ltd including its Corporate Family Rating of B2, Probability of
Default Rating of B2-PD and senior unsecured rating of Caa1.
Concurrently, Moody's downgraded its senior secured rating to B1
from Ba3 and assigned a B1 to Viking's proposed senior secured note
issuance. The ratings outlook is negative. This concludes the
review for downgrade that was initiated on March 31, 2020.
"The confirmation reflects Moody's view that Viking's liquidity is
sufficient to get through this period of unprecedented earnings
decline -- Moody's expects the company's operations will be
suspended through most of the third quarter of 2020 -- as a result
of the spread of the coronavirus (COVID-19)," stated Pete
Trombetta, Moody's lodging and cruise analyst. "While earnings will
improve over the next two years, Moody's anticipates that bookings
will still be weak relative to 2019, which will result in Viking's
debt/EBITDA approximating 6.0x as of year-end 2022," added
Trombetta. The negative outlook reflects Viking's very high
leverage and the significant uncertainty around demand levels.
Moody's believes Viking's 2021 demand could be slower to recover as
a significant number of its passengers are North American residents
that rely on air travel to Europe to cruise.
The downgrade of the senior secured notes rating reflects the
higher level of secured debt in the capital structure relative to
unsecured debt following the proposed secured notes issuance. This
shift in capital structure mix has likely reduced the level of
recovery in a default scenario of the existing secured notes.
Downgrades:
Issuer: Viking Ocean Cruises Ltd.
Senior Secured Regular Bond/Debenture, Downgraded to B1 (LGD3) from
Ba3 (LGD3)
Assignments:
Issuer: Viking Cruises Ltd
Senior Secured Regular Bond/Debenture, Assigned B1 (LGD3)
Confirmations:
Issuer: Viking Cruises Ltd
Probability of Default Rating, Confirmed at B2-PD
Corporate Family Rating, Confirmed at B2
Senior Unsecured Regular Bond/Debenture, Confirmed at Caa1 (LGD5)
Outlook Actions:
Issuer: Viking Cruises Ltd
Outlook, Changed To Negative From Rating Under Review
Issuer: Viking Ocean Cruises Ltd.
Outlook, Changed To Negative From No Outlook
RATINGS RATIONALE
The rapid spread of the coronavirus outbreak, deteriorating global
economic outlook, 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 cruise sector has been one of the sectors most
significantly affected by the shock given its sensitivity to
consumer demand and sentiment. More specifically, Viking's credit
profile, which includes its exposure to increased travel
restrictions for US citizens which represents a majority of the
company's revenue and earnings have left it vulnerable to shifts in
market sentiment in these unprecedented operating conditions and
the company remains vulnerable to the outbreak continuing to
spread. Moody's regards the coronavirus outbreak as a social risk
under its ESG framework, given the substantial implications for
public health and safety.
Viking's credit profile is supported by its well-recognized brand
name in both the premium segment of the river cruising and ocean
cruising markets. Viking has approximately a 50% market share of
the North American sourced river cruise passengers for Europe,
Russian and China. Since entering the ocean cruising market with
its first ship in 2015, Viking has grown that segment such that it
accounts for about 40% of Viking's revenue. Under normal
conditions, Viking's credit profile is also enhanced by its good
forward booking visibility and short lead time to build new river
vessels which allows Viking to adjust river cruise capacity to
demand trends. Viking's historical willingness to bring in new
equity partners provides credit support. In 2016 when Viking needed
to boost liquidity, TPG Capital and Canada Pension Plan Investment
Board (each with one board member) contributed capital. On a
combined basis, they own a 23% stake in the company. In the short
run, Viking's credit profile will be dominated by the length of
time that cruise operations continue to be highly disrupted and the
resulting impacts on the company's cash consumption and its
liquidity profile. The normal ongoing credit risks include Viking's
high leverage which Moody's forecasts could approximate 6.0x at the
end of 2022 assuming negative EBITDA in 2020 and some recovery in
2021 and 2022. The company's credit profile is also constrained by
its limited diversification both in terms of geography and customer
base and the cyclicality, seasonality and capital intensity
inherent in the cruise industry. Governance risks, particularly
financial strategy, specifically related to dividends, the absence
of target leverage levels, and the lack of a committed revolver are
also constraints.
The B1 rating on the company's planned secured note issuance -- one
notch above the Corporate Family Rating -- reflects its unsecured
upstream guarantees from all subsidiaries of Viking Cruises Ltd
that currently provide unsecured upstream guarantees to the
existing unsecured notes as well as the first priority lien on 20
unencumbered Swiss river vessels and intellectual property. While
the addition of the unsecured guarantee package results in a
moderate level of credit enhancement of the proposed secured notes
relative to the existing secured notes, it was deemed insufficient
to provide any additional rating lift as the secured debt
represents the largest class of debt in the capital structure (67%
of total obligations). The Caa1 rating on the unsecured notes
(about 33% of the capital structure) -- two notches below the
Corporate Family Rating -- reflects the material amount of secured
debt ahead of it in the debt structure and that this instrument is
in a first loss position.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Factors that could lead to a downgrade include updated expectations
for a weaker recovery in 2021, resulting in debt/EBITDA remaining
above 6.0x on a sustained basis. Factors that could lead to the
outlook being revised to stable include signs of good demand trends
for 2021, leading to an expectation that the company's finances
will stabilize in the near term and that debt/EBITDA will approach
5.5x over the medium term. Ratings could be upgraded should
operating performance recover to levels that would support
debt/EBITDA sustained at or below 5.0x while maintaining good
liquidity.
Viking operates a fleet of 72 river cruise vessels and six ocean
cruiseships as of December 31, 2019. Its river cruises operate in
over 30 countries largely in Continental Europe. About 86% of its
total river and ocean customers are sourced from North America. TPG
Capital and Canada Pension Plan Investment Board own a minority
interest (about 23% on a combined basis) in Viking Holdings Ltd,
parent company of Viking Cruises. The remaining ownership is
indirectly held under a trust in which Torstein Hagen has a life
interest. Net cruise revenues were about $2.1 billion for the
fiscal year 2019.
The principal methodology used in these ratings was Business and
Consumer Service Industry published in October 2016.
VINES AT TABOR: Court Approves Disclosure Statement
---------------------------------------------------
Judge Christopher D. Jaime has ordered that the Disclosure
Statement filed by The Vines at Tabor, a California Limited
Partnership is approved.
May 26, 2020 is fixed as the last day for submitting written
ballots accepting or rejecting the Plan.
May 26, 2020 is fixed as the last day for filing and serving
written objections to confirmation of the Plan.
June 2, 2020 is fixed as the last day for filing and serving (1)
written responses to objections to confirmation of the Plan, (2) a
written tabulation of ballots and copies of all ballots.
The hearing on confirmation of the Plan is set for June 9, 2020 at
2:00 P.M. in Department "B" of the United States Bankruptcy Court,
501 "I", Sixth Floor (Courtroom 32), Sacramento, California.
Attorneys for the Debtor:
Gabriel E. Liberman
LAW OFFICES OF GABRIEL LIBERMAN, APC
1545 River Park Drive, Suite 530
Sacramento, California 95815
Telephone: (916) 485-1111
Facsimile: (916) 485-1111
About The Vines at Tabor
The Vines at Tabor, a California limited partnership, sought
protection under Chapter 11 of the Bankruptcy Code (Bankr. E.D.
Cal. Case No. 20-20975) on Feb. 24, 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 Christopher D.
Jaime oversees the case. The Debtor tapped the Law Offices of
Gabriel Liberman, APC, as its legal counsel.
VIRTUAL CITADEL: U.S. Trustee Unable to Appoint Committee
---------------------------------------------------------
The U.S. Trustee for Region 21 disclosed in a court filing that no
official committee of unsecured creditors has been appointed in the
Chapter 11 cases of Virtual Citadel, Inc. and its affiliates.
About Virtual Citadel
Virtual Citadel, Inc. -- https://vcitadel.com -- is a comprehensive
turnkey enterprise hosting provider in Atlanta, Georgia. Citadel
owns and operates tier 1 and tier 2 data centers throughout the
metro Atlanta area. Founded in 1990, vCitadel provides custom
hosting solutions for cloud, data, and co-location applications.
Virtual Citadel, Inc., and four affiliates sought Chapter 11
protection (Bankr. N.D. Ga. Case No. 20-62725) on Feb. 14, 2020.
The Debtors tapped Polsinelli PC as counsel; Baker, Donelson
Bearman, Caldwell & Berkowitz, PC as conflicts counsel; Glass
Ratner as financial advisor; and Highgate Partners LLC as real
estate broker.
VISKASE COMPANIES: Moody's Cuts CFR to Caa2 & Sec. Rating to Caa3
-----------------------------------------------------------------
Moody's Investors Service downgraded Viskase Companies, Inc.'s
Corporate Family Rating to Caa2 from B3 and its Probability of
Default Rating to Caa2-PD from B3-PD. Moody's also downgraded the
rating on the company's senior secured term loan due January 2021
to Caa3 from B3. The Speculative Grade Liquidity Rating remains
SGL-4. The outlook remains negative.
The downgrade reflects the company's failure to refinance its debt
maturities due January 2021, negative free cash flow and elevated
leverage of 7.1 times (debt to LTM EBITDA at December 2019,
incorporating Moody's adjustments). The company's liquidity is
insufficient to repay the debt maturities which creates a reliance
on access to the capital markets at a time when it may be
restricted creating a heightened risk of default. Viskase's
majority owner, Icahn Enterprises LP, has made additional equity
investments in the company in the past, but has not made a public
commitment to do so again to date. Moody's expects that Viskase's
credit metrics will remain weak over the next 12 to 18 months given
competitive conditions and the uncertainty regarding when North
American demand will stabilize. The company has failed to meet
projected expectations and unit volume growth has continued to
decline.
Viskase has limited exposure to industries that may be negatively
affected by the rapid and widening spread of the coronavirus
outbreak and high exposure to those that are expected to benefit
(primarily food). Moody's regards the coronavirus outbreak as a
social risk under its ESG framework, given the substantial
implications for public health and safety.
Downgrades:
Issuer: Viskase Companies, Inc.
Probability of Default Rating, Downgraded to Caa2-PD from B3-PD
Corporate Family Rating, Downgraded to Caa2 from B3
Senior Secured Bank Credit Facility, Downgraded to Caa3 (LGD4) from
B3 (LGD3)
Outlook Actions:
Issuer: Viskase Companies, Inc.
Outlook, Remains Negative
RATINGS RATIONALE
Viskase Companies, Inc.'s credit profile is constrained by the
uncertainty regarding the company's ability to refinance its debt
maturities due January 2021 and Moody's expectation of elevated
financial leverage and negative free cash flow. The company faces
declining demand for certain of its products in North America
(casings for hot dogs and sausages) and significant competition in
international markets. Viskase also has modest scale (revenue) and
a narrow product line. Moody's believes demand for the company's
products will remain weak as consumers continue to shift to
healthier options and competition in international markets will
remain strong.
The credit profile is supported by Viskase's good market position
in a niche segment of the customized casings business, an
established brand name, and high exposure to food end markets. The
company also has long-term relationships with customers including
many blue-chip names. Financial policies are aggressive under
majority owner Icahn Enterprises, but the firm has demonstrated
support for the company including a $50 million equity contribution
in 2018 (although no commitment to do so has been publicly
announced to date).
The negative outlook reflects Viskase's imminent need to address
the upcoming January 2021 maturity of its revolving credit facility
and term loan at a time of continued weakness in earnings and free
cash flow and sluggishness in capital markets.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be downgraded if the company fails to refinance
the maturing debt instruments or if the expected cost of a
refinancing increases and puts further pressure on free cash flow.
The rating could also be downgraded if operating performance
deteriorates further or if unit volumes continue to decline.
The ratings could be upgraded if the company refinances its debt
instruments, sustainably improves credit metrics and improves
liquidity (especially free cash flow). An upgrade would also
require an indication of a stabilization of volumes both
internationally and in North America. Specifically, the ratings
could be upgraded if debt to EBITDA is below 7.0 times, funds from
operations to debt is above 5.5% and EBITDA to gross interest is
over 1.5 times.
Viskase's SGL-4 Speculative Grade Liquidity rating reflects the
company's weak liquidity, due to the approaching maturity of the
term loan and revolver, continued negative free cash flow and low
cash balance. As of December 2019, the company has $22 million of
cash and full availability under its $45 million revolving credit
facility. However, this facility along with the term loan matures
in January 2021. Moody's expects the company's free cash flow will
remain weak given the uncertainty of demand for certain products
and continued strong competition. The existing revolving credit
agreement contains a springing minimum fixed charge coverage ratio
of 1.0x, a $21 million minimum EBITDA requirement and maximum
capital expenditure of $35 million, triggered if utilization
exceeds 90%. Moody's expects that Viskase will maintain sufficient
cushion under these covenants. The term loan does not contain any
financial maintenance covenants. Working capital needs are seasonal
and peak in the first half of the year. Most assets are encumbered
by the preponderance of secured debt leaving little in the way of
alternative sources of liquidity.
Viskase, headquartered in Lombard, Illinois, is a global producer
of cellulose, fibrous and plastic casings for hot dogs and sausages
and other processed meat products. Viskase has sizable
international operations with approximately 50% of sales generated
from customers located outside North America. Revenue for the
twelve months ended December 31, 2019 was approximately $385
million. Viskase is publicly traded over the counter and Icahn
Enterprises LP owns approximately 78.6% of the company.
The principal methodology used in these ratings was Packaging
Manufacturers: Metal, Glass, and Plastic Containers published in
May 2018.
WALTER P SAUER: Unsecured Creditors to Get 5% Dividend Under Plan
-----------------------------------------------------------------
Walter P Sauer LLC submitted an Amended Disclosure Statement for
its proposed Plan of Reorganization.
The Plan will be funded by a $125,000 contribution to be made by
Anthony Morris. After payment of administrative and priority
claims, the balance of the plan fund will be distributed to
unsecured creditors. General unsecured creditors are classified in
Class 4, and will receive a distribution of 5% of their allowed
claim to be distributed as follows: lump sum payment to be made on
the effective date of the Plan. In the event that the Debtor
pursues any preference claims pursuant to Section 547 of the
Bankruptcy Code, the net proceeds after paying expenses of
litigation will be distributed to the unsecured creditors.
A full-text copy of the Amended Disclosure Statement dated April
27, 2020, is available at https://tinyurl.com/y8xdydm4 from
PacerMonitor.com at no charge.
Attorneys for the Debtor:
LAWRENCE F. MORRISON
BRIAN J. HUFNAGEL
MORRISON TENENBAUM PLLC
87 Walker Street, Floor 2
New York, New York 10013
Telephone: (212) 620-0938
Facsimile: (646) 390-5095
About Walter P Sauer LLC
Walter P. Sauer LLC is a furniture manufacturer based in Brooklyn,
New York.
Walter P. Sauer LLC filed a voluntary petition for relief under
Chapter 11 of the Bankruptcy Code () on July 8, 2019. In the
petition signed by Anthony Morris, managing member, the Debtor was
estimated to have up to $50,000 in assets and $1 million to $10
million in liabilities.
Lawrence Morrison, Esq., at Morrison Tenenbaum, PLLC, is the
Debtor's counsel.
WASTE PRO: S&P Downgrades ICR to 'B' on Higher Leverage
-------------------------------------------------------
S&P Global Ratings lowered all of its ratings on Waste Pro USA
Inc., including the issuer credit rating to 'B' from B+ and placing
the ratings on CreditWatch with negative implications.
"We expect leverage to be above 7x given conditions in the
macroenvironment. The company ended its first quarter of 2020 with
some topline growth across segments, excluding one-time
hurricane-related landfill revenue from last year. However, we
expect some underperformance across the company's end markets this
year given business closures related to COVID-19. Specifically, we
expect the company's residential waste segment to see increased
volume at less attractive margins," S&P said.
"We also expect weakness in some of the company's other revenue
streams. While the Southeast, the company's area of operation, has
slowly begun to reopen for business, we expect end markets in this
area to face challenges in 2020 given the uncertainty caused by
COVID-19 and that, until a vaccine is widely available, business
activity may be muted, resulting in lower waste volumes and
hampering the company's pricing power," the rating agency said.
S&P expects EBITDA margins to decline and free operating cash flow
(FOCF) to remain negative over the next 12 months. About half of
the company's revenue comes from municipal waste, which S&P expects
will see higher volumes given stay-at-home measures. While the
company has language in its contracts that allows it to pass along
some of the increased costs associated with this excess volume, S&P
believes this may be difficult given municipalities' eroded tax
bases during the current downturn. Additionally, the rating agency
expects the company may need to make price concessions to its
industrial and commercial customers because of COVID-19-related
business dislocation. Coupled with its expectations for high
capital expenditures in 2020, S&P expects FOCF to remain negative
over the coming 12 months.
The company's eroded asset-backed loan (ABL) covenant headroom
remains a risk to its liquidity position given working capital
needs. The company attained a waiver in February 2020, allowing it
to maintain leverage of up to 6.75x through Feb. 15, 2021. As of
the end of the first quarter, the company had very little headroom
under this covenant.
"Coupled with a worsening economic backdrop, we expect negligible,
if any, headroom under this covenant during 2020. Absent an
amendment or an additional waiver, we expect the company to fail
the covenant calculation by the first quarter of 2021 when its
covenant steps back down to 5.75x," S&P said.
"The CreditWatch placement reflects our view that there is at least
a one-in-two chance that we could lower the ratings further over
the next 90 days. A further downgrade would most likely be the
result of constrained liquidity in light of diminished covenant
headroom or if the effects of the pandemic are more severe than we
currently anticipate," the rating agency said.
WELDED CONSTRUCTION: Unsecureds to Recover 21% Under Plan
---------------------------------------------------------
Welded Construction, L.P., et al., submitted an Amended Chapter 11
Plan and an Amended Disclosure Statement.
The Debtors, the Official Committee of Unsecured Creditors, Bechtel
GP, et al., the Partner Settlement Parties (i.e., the Plan
Settlement Parties) have agreed to the settlement provided for in
the Plan Settlement Agreement and Indemnity Agreement as a material
component of the Plan.
In general, the Plan Settlement Parties have agreed to the Plan
Settlement on the following terms:
(i) any and all disputes between the Debtors, the Committee and
the Partner Settlement Parties will be resolved;
(ii) the Partner Settlement Parties will make the Plan Settlement
Payment of $2,000,000, and waive any and all claims against the
Debtors and the Estates;
(iii) Bechtel Global Corporation has agreed to enter into that
certain Indemnity Agreement with Welded Construction, L.P., in the
form set forth as Exhibit A to the Plan Settlement Agreement,
pursuant to which, among other things, the Debtors have agreed that
their liability with respect to that certain proof of claim number
534 (the "Withdrawal Liability Claim") filed by the Central States,
Southeast and Southwest Areas Pension Fund (the "Central States")
in the Chapter 11 Cases shall be determined in the arbitration
against Central States demanded by Bechtel on January 8, 2020, by
the filing of an arbitration demand with the American Arbitration
Association, and Bechtel Global Corporation has agreed to indemnify
the Debtors against the Withdrawal Liability Claim;
(iv) the Plan Settlement Parties agree that any residual proceeds
of the letter of credit posted for the benefit of Zurich American
Insurance Company and its affiliates by Welded Construction, L.P.,
but paid for by Bechtel Corporation and/or its affiliates (the
"Residual LOC Proceeds"), are not property of the Estates and shall
not be deemed Assets that vest in the Post-Effective Date Debtors
but will be the sole and exclusive property of Bechtel Corporation
and/or its affiliates. Any Residual LOC Proceeds that are refunded
to the Debtors or the Post-Effective Date Debtors shall be
forwarded to Bechtel Global Corporation or its applicable affiliate
by the Plan Administrator within three Business Days after receipt
of such Residual LOC Proceeds;
(v) the Debtors and their Estates, with the consent of the
Committee to be bound, release, waive and forever discharge the
Partner Settlement Party Releasees and the Plan Settlement Parties
agree to certain other release provisions in the Plan; and
(vi) the Committee has agreed to support the Plan.
The Plan proposes to treat claims as follows:
* Class 3 Allowed Surety Bond Claims. This class is impaired
with estimated allowed amount of claims $76.1 million. The
projected recovery under the plan is 21%.
* Class 4 Allowed General Unsecured Claims. This class is
impaired with estimated allowed amount of claims $5 million. The
projected recovery under the Plan is 21%. Holder of allowed
general unsecured claims will each receive (a) its pro rata share
of the general unsecured claim distribution, or (b) such other less
favorable treatment as to which such holder and the Post Effective
Date Debtors will have agreed upon in writing.
* Class 5 Allowed Convenience Claims. This class is impaired
with estimated allowed amount of claims $5 million. The projected
recovery under the plan is 50%; up to a maximum of $50,000.
* Class 6 Subordinated Claims. This class is impaired.
* Class 7 Interests. This class is impaired.
Prior to the commencement of the Chapter 11 cases, the Debtors and
their advisors evaluated the cash requirements for the business and
chapter 11 filing and reached out to potential third-party sources
of financing. Simultaneously, the Debtors began negotiating a
potential debtor-in-possession financing facility with NAPEC. Only
NAPEC agreed to provide the Debtors the necessary funding to
support the company and prosecute the Chapter 11 cases.
A full-text copy of the Amended Disclosure Statement dated April
27, 2020, is available at https://tinyurl.com/yagchw6w from
PacerMonitor.com at no charge.
Counsel to the Debtors:
Sean M. Beach
Matthew B. Lunn
Robert F. Poppiti, Jr.
Allison S. Mielke
Betsy L. Feldman
YOUNG CONAWAY STARGATT & TAYLOR, LLP
1000 North King Street
Wilmington, DE 19801
Telephone: (302) 571-6600
Facsimile: (302) 571-1253
E-mail: sbeach@ycst.com
mlunn@ycst.com
rpoppiti@ycst.com
amielke@ycst.com
bfeldman@ycst.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.
WEST ALLEY BBQ: U.S. Trustee Unable to Appoint Committee
--------------------------------------------------------
The Office of the U.S. Trustee disclosed in a court filing that no
official committee of unsecured creditors has been appointed in the
Chapter 11 case of West Alley BBQ LLC.
About West Alley BBQ
West Alley BBQ, LLC, owner of a barbecue restaurant in Jackson,
Tenn., sought protection under Chapter 11 of the Bankruptcy Code
(Bankr. W.D. Tenn. Case No. 20-10577) on March 16, 2020. At the
time of the filing, Debtor had estimated assets of less than
$50,000 and liabilities of between $1 million and $10 million. The
Hon. Jimmy L. Croom oversees the case. Thomas H. Strawn, Esq., at
Strawn Law Firm, is Debtor's legal counsel.
WEST GARDEN: Unsecured Creditors to Recover 100% Under Plan
-----------------------------------------------------------
West Garden Club LLC, et al., submitted a Combined Plan of
Reorganization and Disclosure Statement.
Class I consists of the secured claim of iBorrow REIT, LP, in an
amount equal to iBorrow's allowed secured claim. iBorrow's Class I
Claim will be recapitalized as of the Effective Date and will, from
and after the Effective Date, accrue interest at the Interest Rate.
iBorrow's Class I Claim will be amortized over a 30-year period.
Class III consists of all allowed unsecured claims not entitled to
priority. The Debtors presently estimate the aggregate amount of
the claims in this Class to be $163,926. The Debtors propose that,
on or before the first (1st) June 30 and Dec. 31 and each June 30
and Dec. 31 thereafter until and including 2025, all holders of an
allowed unsecured claim will receive a distribution, in cash, in an
amount equal to 10 percent of the amount of their respective
allowed claims, thereby totaling 100 percent distribution to all
holders of allowed unsecured claims. Class Ill is an impaired
class. Each holder of a Class Ill Claim is entitled to vote to
accept or reject the Plan.
The Debtors believe that their future operations and the
post-confirmation rents will generate sufficient funds to permit
the Reorganized Debtors to satisfy their operating expenses and
obligations under the Plan.
A full-text copy of the Combined Plan of Reorganization and
Disclosure Statement dated April 27, 2020, is available at
https://tinyurl.com/yapdcrer from PacerMonitor.com at no charge.
Attorneys for the Debtor:
Michael I. Zousmer
ZOUSMER LAW GROUP PLC
4190 Telegraph Road, Suite 3000
Bloomfield Hills, Michigan 48302
Tel: 248 (351)-0099
About West Garden Club
West Garden Club, LLC, sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. E.D. Mich. Case No. 20-41080) on Jan. 26,
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 Mark A. Randon oversees the case. Zousmer Law Group,
PLC, is the Debtor's legal counsel.
WHEEL PROS: Moody's Confirms B3 Corp. Family Rating, Outlook Neg.
-----------------------------------------------------------------
Moody's Investors Service confirmed the ratings of Wheel Pros,
Inc., including the corporate family rating at B3, Probability of
Default Rating at B3-PD, and the senior secured first lien and
second lien term loans at B2 and Caa2, respectively. The outlook is
negative. This action concludes the review for downgrade initiated
on March 26, 2020.
The confirmation reflects Moody's expectation for Wheel Pros to
adjust its highly-variable cost structure in response to top line
pressures during a recessionary environment in 2020 to sustain its
margins and to manage working capital effectively to generate free
cash flow. As a result, Moody's expects Wheel Pros to maintain an
adequate liquidity profile supported by cash, no significant debt
maturities until 2023 and some positive free cash flow.
Nevertheless, Wheel Pros' financial leverage is expected to
increase to well above 7x debt/EBITDA in 2020 and event risk of
acquisition activity resuming post-recession remains heightened.
The following rating actions were taken:
Confirmations:
Issuer: Wheel Pros, Inc.
Corporate Family Rating, Confirmed at B3
Probability of Default Rating, Confirmed at B3-PD
Senior Secured 1st Lien Bank Credit Facility, Confirmed at B2
(LGD3)
Senior Secured 2nd Lien Bank Credit Facility, Confirmed at Caa2
(LGD5)
Outlook Actions:
Issuer: Wheel Pros, Inc.
Outlook, Changed To Negative From Rating Under Review
RATINGS RATIONALE
Wheel Pros' ratings, including the B3 CFR, reflect the top line
pressures from the highly discretionary nature of the company's
products of custom vehicle wheels, elevated leverage and seasonal
working capital needs contributing to periods of cash burn. Wheel
Pros has a leading market position with strong brand presence in
its wheel products, a flexible cost structure and low capital
requirements, and favorable customer diversification. Moody's
expects Wheel Pros' revenues to be impacted through 2020 as
consumers opt out of discretionary upgrades to their vehicles,
especially while unemployment levels remain elevated. Wheel Pros
maintains a high degree of flexibility in its cost structure to
adapt to lower volumes, and Moody's expects the company to maintain
an EBITA margin in the low-teens range as the company realizes
certain cost synergies from its 2019 acquisition of Mobile Hi-Tech
Wheels.
The negative outlook reflects Moody's view that earnings and cash
flow generation could be pressured beyond current expectations
during a recessionary environment in 2020, resulting in leverage
remaining above 7x debt/EBITDA through 2021 and greater reliance on
its asset-based facility.
Wheel Pros is expected to maintain an adequate liquidity profile
into 2021. Moody's expects Wheel Pros to generate moderately
positive free cash flow in 2020 in the range of $10 million to $20
million through prudent working capital management and reduction in
capital expenditures toward maintenance levels. The company's cash
flows are subject to seasonality, with the first quarter typically
a period of cash burn resulting in moderate use of its $60 million
ABL due 2023 to support working capital investments. Moody's
expects working capital unwind to occur into the back-half of 2020
to provide for repayment of ABL borrowings. However, earnings
pressure during 2020 could limit cash generation and impact timing
working capital inflows. The company, though, does not face any
significant debt maturities until the ABL comes due in 2023 and is
expected to maintain sufficient liquidity to cover required annual
debt amortization of about $5.6 million.
From a corporate governance perspective, the company's high
leverage partly reflects its private equity ownership. Event risk
is high considering Wheel Pros' aggressive pace of acquisitions,
with transactions funded primarily with debt. Moody's expects
acquisition activity to be limited during the current environment
but could likely return in the 2021 timeframe.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be downgraded if Wheel Pros' liquidity position
deteriorates due to an inability to generate positive free cash
flow or ongoing reliance on its ABL to fund operations. A downgrade
could also result if Moody's expects that Wheel Pros' leverage
profile will be sustained above 7x debt/EBITDA through 2021 either
through a decline in earnings or resumption of debt-funded
acquisition activity.
An upgrade is unlikely in the near-term. However, the ratings could
be upgraded if the company demonstrates a financial policy that
supports debt/EBITDA sustained below 5.5x even when considering its
acquisition growth strategy, and retained cash flow-to-debt
maintained above 10%. At least an adequate liquidity profile would
also need to be maintained for consideration of an upgrade.
The principal methodology used in these ratings was Automotive
Supplier Methodology published in January 2020.
Wheel Pros, headquartered in Greenwood Village, Colorado, is a
wholesale distributor of custom and proprietary branded wheels,
performance tires and related accessories in the aftermarket
automotive segment. The company is majority-owned by private equity
financial sponsor Clearlake Capital Group, L.P. Management reported
revenue (pro forma for the acquisition of MHT) for the year ended
December 31, 2019 of approximately $782 million.
WHITING PETROLEUM: Seeks to Hire Jackson Walker as Co-Counsel
-------------------------------------------------------------
Whiting Petroleum Corporation and its debtor-affiliates seek
approval from the U.S. Bankruptcy Court for the Southern District
of Texas to employ Jackson Walker LLP as co-counsel and conflicts
counsel.
The Debtors' requires Jackson Walker to:
a. provide legal advice and services regarding local rules,
practices, and procedures, including Fifth Circuit law;
b. provide certain services in connection with administration
of the chapter 11 cases, including, without limitation, preparing
agendas, hearing notices, witness and exhibit lists, and hearing
binders of documents and pleadings;
c. review and comment on proposed drafts of pleadings to be
filed with the Court;
d. at the request of the Debtors, appear in Court and at any
meeting with the United States Trustee, and any meeting of
creditors at any given time on behalf of the Debtors as their local
and conflicts bankruptcy co-counsel;
e. perform all other services assigned by the Debtors to the
Firm as local and conflicts bankruptcy co-counsel; and
f. provide legal advice and services on any matter on which
Kirkland & Ellis may have a conflict or as needed based on
specialization.
Jackson Walker will be paid at these hourly rates:
Partners $565-900
Associates $420-565
Paraprofessionals $175-185
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, Matthew
D. Cavenaugh disclosed that:
-- it has not agreed to any variations from, or alternatives
to, its standard or customary billing arrangements for this
engagement;
-- none of the professionals included in the engagement vary
their rate based on the geographic location of the bankruptcy
case;
-- The firm represented the Debtors during the weeks
immediately before the Petition Date, using the foregoing hourly
rates; and
-- the firm has not prepared a budget and staffing plan.
Matthew D. Cavenaugh, partner of Jackson Walker 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.
Jackson Walker can be reached at:
Matthew D. Cavenaugh, Esq.
JACKSON WALKER LLP
1401 McKinney Street, Suite 1900
Houston, TX 77010
Tel: (713) 752-4200
Fax: (713) 752-4221
About Whiting Petroleum Corporation
Whiting Petroleum Corporation, a Delaware corporation --
http://www.whiting.com/-- is an independent oil and gas company
that explores for, develops, acquires and produces crude oil,
natural gas and natural gas liquids primarily in the Rocky Mountain
region of the United States. Its largest projects are in the Bakken
and Three Forks plays in North Dakota and Niobrara play in
northeast Colorado. Whiting Petroleum trades publicly under the
symbol WLL on the New York Stock Exchange.
Whiting Petroleum and its affiliates sought protection under
Chapter 11 of the Bankruptcy Code (Bankr. S.D. Texas Lead Case No.
20-32021) on April 1, 2020. At the time of the filing, Debtors
disclosed $7,636,721,000 in assets and $3,611,750,000 in
liabilities. Judge David R. Jones oversees the cases.
The Debtors tapped Kirkland & Ellis, LLP, Kirkland & Ellis
International, LLP and Jackson Walker L.L.P. as legal counsel;
Moelis & Company as investment banker; Alvarez & Marsal as
financial advisor; Stretto as claims and solicitation agent, and
administrative advisor; and KPMG LLP US as tax consultant.
WORK & SON: Trustee Gets OK to Expand Scope of Colliers' Services
-----------------------------------------------------------------
Stanley Murphy, the trustee appointed in the Chapter 11 cases of
Work & Son, Inc. and its affiliates, received approval from the
U.S. Bankruptcy Court for the Middle District of Florida to expand
the scope of Colliers International Florida, LLC's services.
Colliers will assist the bankruptcy trustee in the marketing and
sale of the Rhodes Funeral Home as a stand-alone commercial
property. The property is located in Clearwater, Fla.
The trustee said the property "may yield the highest value" as a
stand-alone commercial property to entities not necessarily
involved in the funeral home or cemetery business.
Colliers will get a 5 percent commission if the sales price of the
property is $750,000 or less. If the sales price is over $750,001,
the firm will get an additional commission of 7 percent.
Windsor Capital, the broker previously retained to sell the Rhodes
Funeral Home and four other properties of Debtor, will continue to
market the properties to entities involved in the funeral home or
cemetery business despite the employment of Colliers.
In the event the trustee accepts an offer for the Rhodes Funeral
Home on or before Sept. 17 from a buyer contacted by Windsor and
the offer does not include the sale of other properties owned by
Debtor, Windsor will get 50 percent of Colliers' commission on a
sales price of up to $750,000. Windsor will not get a commission
on a sales price of $750,001 or more.
If Rhodes Funeral Home is sold with other properties of Debtor,
Colliers will receive a marketing fee in the amount of $22,500 and
will not get any commission.
The firm may be reached at:
Colliers International Florida, LLC
801 Brickell Ave #934
Miami, FL 33131
Telephone: (305) 359-3690
About Work & Son
Work & Son Inc. and its affiliates are privately-held companies in
the funeral services industry.
On Nov. 18, 2018, Work & Son and its affiliates sought protection
under Chapter 11 of
the Bankruptcy Code (Bankr. M.D. Fla. Lead Case No. 18-09917). At
the time of the filing, Work & Son was estimated to have assets of
less than $50,000 and liabilities in the same range.
Debtors tapped the Law Offices of Mary A. Joyner, PLLC as their
legal counsel, and Dearolf & Mereness LLP as their accountant.
Stanley Murphy was appointed as Debtors' Chapter 11 trustee. The
trustee is represented by McIntyre Thanasides Bringgold Elliot
Grimaldi Guito & Matthews, P.A.
WYNDHAM HOTELS: Moody's Confirms Ba1 CFR & Alters Outlook to Neg.
-----------------------------------------------------------------
Moody's Investors Service confirmed the ratings of Wyndham Hotels &
Resorts including its Corporate Family Rating at Ba1, Probability
of Default Rating at Ba1-PD, and senior unsecured rating at Ba2. At
the same time, Moody's downgraded the company's senior secured
rating to Ba1, the same as its Corporate Family Rating, from Baa3
given that secured debt makes up a preponderance of the company's
total debt. The company's Speculative Grade Liquidity rating of
SGL-2 is unchanged. The outlook is negative. The concludes the
review that was initiated on March 23, 2020.
"The confirmation of Wyndham Hotels' Ba1 CFR reflects Moody's
expectation that despite earnings pressure in 2020 due to the
impact from the spread of the coronavirus, the company will be able
to reduce leverage to below its 4.0x downgrade factor in 2021,"
stated Pete Trombetta, Moody's lodging and cruise analyst. "More
than 90% of Wyndham Hotel's properties are open and the benefit of
cost cutting and better performance in economy and midscale hotels
relative to the upscale segments, will enable Wyndham Hotels to
return close to 2019 levels quicker than its rated peers," added
Trombetta. In April, STR data [1] shows occupancy levels for the
economy and midscale segments declined about 45%, well below the
85% average decline for the upscale segments and the 68% decline
across all segments in the US.
Downgrades:
Issuer: Wyndham Hotels & Resorts
Senior Secured Bank Credit Facility (Local Currency) May 30, 2023,
Downgraded to Ba1 (LGD3) from Baa3 (LGD3)
Confirmations:
Issuer: Wyndham Hotels & Resorts
Probability of Default Rating, Confirmed at Ba1-PD
Corporate Family Rating, Confirmed at Ba1
Senior Unsecured Regular Bond/Debenture, Confirmed at Ba2 (LGD6
from LGD5)
Outlook Actions:
Issuer: Wyndham Hotels & Resorts
Outlook, Changed To Negative From Rating Under Review
RATINGS RATIONALE
Wyndham Hotels' Ba1 credit profile benefits from its large scale as
one of the largest hotel companies in the world with about 830,000
rooms across 20 different brands. The company also benefits from
its franchise based business model which generates stable and
recurring earnings. Approximately 90% of the company's EBITDA is
generated from royalty fees (including fees from Wyndham
Destinations (Ba3 negative). Wyndham Hotels is constrained by its
high leverage (relative to its Ba1 rating per Moody's Business and
Consumer Services methodology) which will exceed the company's
downgrade trigger of 4.0x for the next year, and its modest brand
concentration as two of the company's 20 brands -- the Super 8 and
Days Inn brands -- account for about 40% of its total hotel rooms
(all metrics include Moody's standard adjustments).
The rapid spread of the coronavirus outbreak, deteriorating global
economic outlook, and asset price declines are creating a severe
and extensive credit shock across many sectors, regions and
markets. The combined credit effects of these developments are
unprecedented. The lodging sector has been one of the sectors most
significantly affected by the shock given its sensitivity to
consumer demand and sentiment. More specifically, Wyndham Hotels'
credit profile, including its exposure to travel restrictions
across the US which represents a majority of the company's revenue
and earnings have left it vulnerable to shifts in market sentiment
in these unprecedented operating conditions and the company remains
vulnerable to the outbreak continuing to spread. Moody's regards
the coronavirus outbreak as a social risk under its ESG framework,
given the substantial implications for public health and safety.
Its action reflects Wyndham Hotels' ability to outperform relative
to peers in the face of such unprecedented disruption.
The negative outlook reflects its view that a delay in the lifting
of travel restrictions could continue to pressure Wyndham Hotels'
earnings into 2021 and possibly slow its return to debt/EBITDA
below 4.0x.
Wyndham Hotels' liquidity is good with cash balances of about $750
million at March 31, 2020. These cash balances include proceeds
from the full draw down of the company's $750 million revolving
credit facility that expires in May 2023. The company recently
amended its credit facility to provide covenant relief -- its
covenant will not be tested until June 30, 2021 -- and modifies the
test for the second, third and fourth quarters of 2021 to be
calculated using annualized results instead of last 12 month
figures. In return for the amendment, Wyndham Hotels is required to
maintain minimum liquidity of $200 million, among other
considerations. The amendment also allows Wyndham Hotels to
continue dividends in an amount that is 50% of its declared
dividend amount. The company has stated its plans to pay an
approximate $7 million dividend in the second quarter of 2020, an
amount that is 25% of its normal dividend level.
The downgrade of the senior secured bank credit facility rating to
Ba1 reflects the high level -- more than 80% -- of secured debt in
the capital structure relative to unsecured debt per Moody's Loss
Given Default methodology. This high level of secured debt --
consisting of a $750 million revolving credit facility and $1.5
billion secured term loan B -- in the capital structure mix reduces
the level of recovery in a default scenario.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The outlook could return to stable if occupancy and RevPAR trends
improve and it appears that debt/EBITDA will return to below 4.0x.
An upgrade would require adoption of financial policies and a
capital structure indicative of an investment grade company.
Quantitatively, an upgrade would require debt/EBITDA of below 3.0x
and EBITA/interest expense of above 6.0x. Ratings could be
downgraded if the company's liquidity weakens or if occupancy and
RevPAR trends deteriorate at a rate that is faster than its current
assumptions resulting in debt/EBITDA maintained above 4.0x and
EBITA/interest expense is sustained below 4.0x.
Wyndham Hotels & Resorts is one of the largest hotel companies in
the world with about 830,000 rooms across 20 different brands. The
company generated net revenues of about $1.4 billion in 2019 (net
of reimbursements).
The principal methodology used in these ratings was Business and
Consumer Service Industry published in October 2016.
YCO TULSA: Trustee Taps Steve M. Rutherford as Accountant
---------------------------------------------------------
Steven Rutherford, the Subchapter V trustee appointed in YCO Tulsa,
Inc.'s Chapter 11 case, seeks approval from the U.S. Bankruptcy
Court for the Northern District of Oklahoma to employ Steve M.
Rutherford, CPA, P.C. as his accountant.
The firm will provide these services:
(a) file various reports to the court and interested parties;
(b) perform accounting, spreadsheets and bookkeeping; and
(c) assist the trustee in any and all matters that may require
the benefit and experience of an accountant or paraprofessional.
The hourly rates charged by the firm range from $75 to $130.
Steve M. Rutherford is a "disinterested person" within the meaning
of Section 101(14) of the Bankruptcy Code, according to court
filings.
The firm can be reached through:
Steven M. Rutherford
Steve M. Rutherford, CPA, P.C.
5215 East 71st Street, Suite 400
Tulsa, OK 74136-6345
Telephone: (918) 744-8228
Facsimile: (918) 743-4146
Email: steve@smrutherford.com
About YCO Tulsa Inc.
YCO Tulsa, Inc., a mental health clinic in Oklahoma, sought
protection under Chapter 11 of the Bankruptcy Code (Bankr. N.D.
Okla. Case No. 19-11235) on June 14, 2019. In the petition signed
by YCO Tulsa President Robert Lobato, Debtor was estimated to have
assets of less than $50,000 and liabilities of less than $50,000.
Judge Dana L. Rasure oversees the case. Brown Law Firm, P.C., and
Riggs, Abney, Neal, Turpen, Orbison & Lewis serve as Debtor's legal
counsel.
Neal Tomlins was appointed as Debtor's Chapter 11 trustee. The
trustee is represented by Tomlins Law, PLLC.
YRC WORLDWIDE: Posts $4.3 Million Net Income in First Quarter
-------------------------------------------------------------
YRC Worldwide Inc. reported net income of $4.3 million on $1.15
billion of operating revenue for the three months ended March 31,
2020, compared to a net loss of $49.1 million on $1.18 billion of
operating revenue for the three months ended March 31, 2019.
As of March 31, 2020, the Company had $1.85 billion in total
assets, $704.5 million in total current liabilities, $838.3 million
in long-term debt and financing, $230.5 million in pension and
postretirement, $223 million in operating lease liabilities, $290.5
million in claims and other liabilities,and a total shareholders'
deficit of $433.8 million.
"Despite the COVID-19 pandemic and ensuing economic fallout during
the first quarter of this year, we have continued our enterprise
transformation efforts, working toward our vision of combining the
power of our five brands into one network and one enterprise-wide
service offering," said Darren Hawkins, chief executive officer.
"Additionally, as we realized the seriousness and severity of its
impact on the economy and the less-than-truckload (LTL) industry
specifically, we took immediate and swift liquidity preservation
actions, including:
* Working with our term loan lenders to secure an amendment
waiving our minimum Adjusted EBITDA covenant for every
quarter this year through and including the year-end 2020
covenant and to convert the vast majority of the cash
interest payments due in the first half of the year into
non-cash payable-in-kind;
* Making appropriate adjustments to our cost structure such as
elimination of executive bonuses and merit increases,
employee furloughs and cessation of discretionary spend
items; and
* Implementing additional liquidity preservation measures as
appropriate under the circumstances.
"Our nation has never depended more on our 30,000 employees than it
does today. Coast to coast, our team members are answering the
call every day to ensure our customers receive the goods that our
communities need, and we will continue to do so as the economy
stabilizes and begins to recover. YRCW and our family of companies
are vital to the nation's supply chain and a critical partner to
over 200,000 customers throughout the nation including many medical
suppliers, and the U.S. government, including the Departments of
Defense, Energy, and Homeland Security. Since our beginnings over
90 years ago, we have grown to become the second largest LTL
carrier and the fifth largest transportation company in America
transporting shipments every day to every corner of the country to
every type of business, small, large and everything in between. I
have always been proud of our employees, but today is like none
other in my career. I stand in awe of their dedication and
resilience to deliver essential goods, and as the nation gets back
to business, our employees will continue to be there to help put
America on the road to recovery," concluded Hawkins.
At March 31, 2020, the Company's outstanding debt was $879.9
million, a decrease of $4.6 million compared to $884.5 million as
of March 31, 2019.
For the three months ended March 31, 2020, cash used in operating
activities was $15.6 million compared to $41.7 million for the
three months ended March 31, 2019.
The Company's available liquidity, which is comprised of cash and
cash equivalents and Managed Accessibility under its ABL facility
was $80.4 million as of Dec. 31, 2019. During the first quarter,
as a result of the Company's liquidity preservation efforts, its
available liquidity increased by $37.6 million to end the quarter
March 31, 2020 at $118.0 million.
"Based on the our current expectations and in conjunction with the
COVID-19 pandemic, we think it will be unlikely that we be in
compliance with the Adjusted EBITDA covenant when it becomes
applicable again at the end of first quarter of 2021 or possibly
the liquidity covenant required by the amendment to our term loan
facility over the specified period that covenant is applicable. As
a result, we will need to either seek an extension of the waiver
period or otherwise modify the covenant," the Company said.
A full-text copy of the Quarterly Report is available for free at
the Securities and Exchange Commission's wesbsite at:
https://is.gd/WfBCYe
About YRC Worldwide
YRC Worldwide Inc., headquartered in Overland Park, Kan., is the
holding company for a portfolio of less-than-truckload (LTL)
companies including Holland, New Penn, Reddaway, and YRC Freight,
as well as the logistics company HNRY Logistics. Collectively, YRC
Worldwide companies have one of the largest, most comprehensive
logistics and LTL networks in North America with local, regional,
national and international capabilities. Through their teams of
experienced service professionals, YRC Worldwide companies offer
industry-leading expertise in flexible supply chain solutions,
ensuring customers can ship industrial, commercial and retail goods
with confidence.
YRC incurred a net loss of $104 million for the year ended Dec. 31,
2019.
* * *
As reported by the TCR on April 14, 2020, S&P Global Ratings
lowered its rating on Overland Park, Kan., less-than-truckload and
logistics company, YRC Worldwide Inc. to 'CCC+' from 'B-'. "The
downgrade reflects our view that YRC Worldwide Inc.'s 2020
operating prospects will be weaker than previously expected due to
the coronavirus pandemic, which leads us to believe that its
capital structure may be unsustainable over the long term," S&P
said.
Also in April 2020, Moody's Investors Service downgraded the
ratings of YRC Worldwide Inc., including the Corporate Family
Rating to Caa1 from B2. Moody's said 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.
YUMA ENERGY: Seeks to Hire Ankura Consulting, Appoint CRO
---------------------------------------------------------
Yuma Energy, Inc. seeks approval from the U.S. Bankruptcy Court for
the Northern District of Texas to employ Ankura Consulting Group,
LLC as its financial advisor and appoint Anthony Schnur, the firm's
senior managing director, as its chief restructuring officer.
Ankura will provide these services in connection with the Chapter
11 cases filed by Yuma Energy and its affiliates:
(a) Manage the Chapter 11 process, subject to the authority
and direction of, and report to the board of directors (or the
special committee, if applicable;
(b) assist Debtors' other professionals in the reorganization
process consistent with their overall restructuring goals and
provide testimony in their bankruptcy cases;
(c) assist in the sale or disposition of substantially all
assets of Debtors;
(d) assist in the preparation of financial projections and
cash flow budgets;
(e) assist in negotiating the terms of debtor-in-possession
financing up to $1 million in availability;
(f) assist in the preparation of reports required by the
bankruptcy court, Office of the U.S. Trustee, secured lenders and
other statutory entities.
(g) assist with and provide input into business planning,
operations, projections, budgeting, and capital expenditure
requirements;
(h) negotiate with stakeholders regarding Debtors'
restructuring and prepare a plan of reorganization;
(i) negotiate with vendors, customers and other constituents
of Debtors concerning claims reconciliation, plan classification
modeling and claims estimation as requested by the board of
directors; and
(j) provide other similar services that the board of directors
determines to be necessary.
The hourly rates charged by the firm are as follows:
Senior Managing Director $1,015 - $1,100
Managing Director $900 - $990
Senior Director $760 - $870
Director $610 - $725
Senior Associate $495 - $575
Associate $410 - $460
Paraprofessionals $150 - $250
Mr. Schnur charges an hourly fee of $1,050. His firm received a
$50,000 retainer.
Mr. Schnur disclosed in court filings that his firm is a
"disinterested person" within the meaning of Section 101(14) of the
Bankruptcy Code.
The firm can be reached through:
Anthony Schnur
Ankura Consulting Group, LLC
2 Houston Center
909 Fannin Street, Suite 2450
Houston, TX 77010
Telephone: (713) 516-4199
- and –
Scott Pinsonnault
Ankura Consulting Group, LLC
1700 Lincoln Street, 17th Floor
Denver, CO 80203
Telephone: (214) 771-6133
Email: scott.pinsonnault@ankura.com
About Yuma Energy
Yuma Energy, Inc. -- http://www.yumaenergyinc.com/-- is an
independent Houston-based exploration and production company. The
Company is focused on the acquisition, development, and exploration
for conventional and unconventional oil and natural gas resources,
primarily in the U.S. Gulf Coast, the Permian Basin of West Texas
and California. The Company has employed a 3-D seismic-based
strategy to build a multi-year inventory of development and
exploration prospects. Its current operations are focused on
onshore properties located in southern Louisiana, southeastern
Texas and recently, in the Permian basin of West Texas. In
addition, the Company has non-operated positions in the East Texas
Eagle Ford and Woodbine, and operated positions in Kern County in
California.
Yuma Energy and three of its affiliates filed for bankruptcy
protection on April 15, 2020 (Bankr. N. D. Texas, Lead Case No.
20-41455). The petitions were signed by Anthony C. Schnur, chief
restructuring officer.
As of Dec. 31, 2019, Yuma posted $32,290,329 in total assets and
$28,270,794 in total liabilities.
Debtors have tapped Fisher Broyles LLP as their legal counsel;
Seaport Gordian Energy LLC as their investment banker; Ankura
Consulting Group LLC as their financial advisor; and Stretto as
their administrative advisor.
[^] Recent Small-Dollar & Individual Chapter 11 Filings
-------------------------------------------------------
In re CSF Technologies Inc.
Bankr. M.D. Fla. Case No. 20-02586
Chapter 11 Petition filed May 6, 2020
See https://is.gd/Di27OZ
represented by: Jeffrey S. Ainsworth, Esq.
BRANSONLAW, PLLC
E-mail: jeff@bransonlaw.com
In re Angela Lee Stahlke
Bankr. N.D. Cal. Case No. 20-50729
Chapter 11 Petition filed May 6, 2020
represented by: Eric Gravel, Esq.
In re Ilyas M. Chaudhary
Bankr. C.D. Cal. Case No. 20-11329
Chapter 11 Petition filed May 6, 2020
represented by: Kevin Tang, Esq.
In re Michael Wayne Fancher
Bankr. D.N.J. Case No. 20-16268
Chapter 11 Petition filed May 6, 2020
represented by: Dean G. Sutton, Esq.
In re Joseph Martin Thomas
Bankr. W.D. Pa. Case No. 20-10334
Chapter 11 Petition filed May 6, 2020
represented by: Michael P. Kruszewski, Esq.
THE QUINN LAW FIRM
E-mail: mkruszewski@quinnfirm.com
In re Ezra Kassab and Rina Kassab
Bankr. E.D.N.Y. Case No. 20-42010
Chapter 11 Petition filed May 6, 2020
In re Aquarius Building, Inc.
Bankr. S.D. Fla. Case No. 20-15108
Chapter 11 Petition filed May 7, 2020
See https://is.gd/W6LTRv
represented by: Michael S. Hoffman, Esq.
HOFFMAN, LARIN & AGNETTI, P.A.
E-mail: mshoffman@hlalaw.com
In re Maverick Restoration & Waterproofing, LLC
Bankr. S.D. Tex. Case No. 20-32528
Chapter 11 Petition filed May 7, 2020
See https://is.gd/YObKP2
represented by: Susan Tran Adams, Esq.
CORRAL TRAN SINGH, LLP
E-mail: Susan.Tran@ctsattorneys.com
In re Roland Valdes, Jr.
Bankr. E.D. Ky. Case No. 20-30178
Chapter 11 Petition filed May 7, 2020
represented by: Michael McClain, Esq.
In re Juan Jason Spencer
Bankr. N.D. Cal. Case No. 20-50738
Chapter 11 Petition filed May 7, 2020
represented by: Arasto Farsad, Esq.
In re Paul Mendoza Pingol and Ruby Piolo Lozada
Bankr. E.D. Cal. Case No. 20-22413
Chapter 11 Petition filed May 7, 2020
represented by: Arasto Farsad, Esq.
In re Salguero's, Inc.
Bankr. E.D. Pa. Case No. 20-12251
Chapter 11 Petition filed May 8, 2020
See https://is.gd/5J4LKP
represented by: John A. DiGiamberardino, Esq.
CASE & DIGIAMBERARDINO, P.C
In re Mark Randolph Eskew
Bankr. D.S.C. Case No. 20-02087
Chapter 11 Petition filed May 8, 2020
represented by: Robert Cooper, Esq.
THE COOPER LAW FIRM
In re Island Chain LLC
Bankr. D. Nev. Case No. 20-12287
Chapter 11 Petition filed May 11, 2020
See https://is.gd/jZng2b
represented by: Michael J. Harker, Esq.
LAW OFFICES OF MICHAEL J. HARKER
E-mail: notices@harkerlawfirm.com
In re Richard A. Campbell, Sr. and Gloria J. Campbell
Bankr. N.D. Miss. Case No. 20-11774
Chapter 11 Petition filed May 11, 2020
represented by: Robert Gambrell, Esq.
In re Renew Chiropratic GJ LLC
Bankr. D. Colo. Case No. 20-13230
Chapter 11 Petition filed May 12, 2020
See https://is.gd/WurQXZ
represented by: Phillip J. Jones, Esq.
WILLIAMS, TURNER & HOLMES, P.C
E-mail: pjones@wth-law.com
In re 1765 NE 58 Street, Inc.
Bankr. S.D. Fla. Case No. 20-15232
Chapter 11 Petition filed May 12, 2020
See https://is.gd/uWt57N
represented by: Susan D. Lasky, Esq.
SUE LASKY, PA
E-mail: Jessica@SueLasky.com
In re Brigham G. Field
Bankr. C.D. Cal. Case No. 20-10622
Chapter 11 Petition filed May 12, 2020
In re Windward Long LLC
Bankr. E.D.N.Y. Case No. 20-72041
Chapter 11 Petition filed May 12, 2020
See https://is.gd/sLUt8v
represented by: Seth D. Weinberg, Esq.
HASBANI & LIGHT, P.C.
E-mail: sweinberg@hasbanilight.com
*********
Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par. Prices are
obtained by TCR editors from a variety of outside sources during
the prior week we think are reliable. Those sources may not,
however, be complete or accurate. The Monday Bond Pricing table
is compiled on the Friday prior to publication. Prices reported
are not intended to reflect actual trades. Prices for actual
trades are probably different. Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy or
sell any security of any kind. It is likely that some entity
affiliated with a TCR editor holds some position in the issuers
public debt and equity securities about which we report.
Each Tuesday edition of the TCR contains a list of companies with
insolvent balance sheets whose shares trade higher than $3 per
share in public markets. At first glance, this list may look like
the definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical cost
net of depreciation may understate the true value of a firm's
assets. A company may establish reserves on its balance sheet for
liabilities that may never materialize. The prices at which
equity securities trade in public market are determined by more
than a balance sheet solvency test.
On Thursdays, the TCR delivers a list of recently filed
Chapter 11 cases involving less than $1,000,000 in assets and
liabilities delivered to nation's bankruptcy courts. The list
includes links to freely downloadable images of these small-dollar
petitions in Acrobat PDF format.
Each Friday's edition of the TCR includes a review about a book of
interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.
Monthly Operating Reports are summarized in every Saturday edition
of the TCR.
The Sunday TCR delivers securitization rating news from the week
then-ending.
TCR subscribers have free access to our on-line news archive.
Point your Web browser to http://TCRresources.bankrupt.com/and use
the e-mail address to which your TCR is delivered to login.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published
by Bankruptcy Creditors Service, Inc., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA.
Jhonas Dampog, Marites Claro, Joy Agravante, Rousel Elaine
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Sheryl Joy P. Olano, Psyche A. Castillon, Ivy B. Magdadaro, Carlo
Fernandez, Christopher G. Patalinghug, and Peter A. Chapman, Editors.
Copyright 2020. All rights reserved. ISSN: 1520-9474.
This material is copyrighted and any commercial use, resale or
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re-mailing and photocopying) is strictly prohibited without prior
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herein is obtained from sources believed to be reliable, but is
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