/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/200521.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 21, 2020, Vol. 24, No. 141 Headlines 4LESS GROUP: Has $3.9M Net Loss for the Year Ended Jan. 31, 2020 929485 FLORIDA: Needs Additional Time to Formulate Chapter 11 Plan ABUNDANT LIFE: Plan Has 10% Recovery for Unsecured Claims ADAMIS PHARMACEUTICALS: Incurs $10.3M Net Loss in First Quarter ADMA BIOLOGICS: Has $19.2-Mil. Net Loss for Quarter Ended March 31 ADVANTAGE SALES: Bank Debt Trades at 25% Discount AETERNA ZENTARIS: Has $779,000 Net Income for March 31 Quarter ALIMERA SCIENCES: Has $1.2M Net Loss for Quarter Ended March 31 ALTA MESA: May 27 Combined Hearing on Plan & Disclosures AMERICAN AIRLINES: Bank Debt Trades at 30% Discount APACHE CORP: Moody's Cuts Unsecured Notes to Ba1, Outlook Negative ARADIGM CORP: Court Conditionally Approves Disclosure Statement ARCH RESOURCES: Bank Debt Trades at 16% Discount ARETEC GROUP: Bank Debt Trades at 23% Discount ARKLOW LIMITED: Case Summary & 6 Unsecured Creditors ATX NETWORKS: Bank Debt Trades at 20% Discount ATX NETWORKS: Bank Debt Trades at 20% Discount BEI PRECISION: Bank Debt Trades at 17% Discount BETHUNE-COOKMAN UNIVERSITY: Fitch Keeps 'CCC' IDR on Watch Neg. BIG ASS: Bank Debt Trades at 25% Discount BLOOMIN' BRANDS: S&P Lowers ICR to 'B+'; Outlook Negative BRIDGEMARK CORP: Seeks to Hire Casso & Sparks as Special Counsel BRIGHTHOUSE FINANCIAL: Fitch Rates Preferred Stock 'BB+' BRIGHTHOUSE FINANCIAL: Moody's Rates New Preferred Stock 'Ba2(hyb)' BULLDOG PURCHASER: Bank Debt Trades at 32% Discount C AND N TRANSPORT: Seeks to Extend Exclusivity Period to June 19 C ROBERTSON: Unsecureds to Get 10% of Allowed Claims CAMPBELL & SON: National Loan Says Property Overvalued in Plan CARNIVAL CORP: Moody's Assigns Ba1 CFR & Alters Outlook to Negative CHAMPIONX HOLDING: Moody's Rates New $537MM Term Loan B 'Ba2' CONFIE SEGUROS II: Bank Debt Trades at 37% Discount COOPER-STANDARD AUTOMOTIVE: Moody's Cuts Sr. Sec. Debt Rating to B1 CORECIVIC INC: S&P Alters Outlook to Negative, Affirms 'BB' ICR CPI INTERNATIONAL: Bank Debt Trades at 17% Discount CSM BAKERY: Bank Debt Trades at 24% Discount DAIRYLAND USA: Bank Debt Trades at 23% Discount DANCOR TRANSIT: Seeks Court Approval to Hire Wooley Auctioneers DAYCO PRODUCTS: Bank Debt Trades at 35% Discount DBM GLOBAL: $10MM Bank Debt Trades at 16% Discount DBM GLOBAL: $5MM Bank Debt Trades at 16% Discount DENBURY RESOURCES: Posts $74 Million Net Income in First Quarter DG INVESTMENT: Bank Debt Trades at 17% Discount DIAMOND OFFSHORE: Chapter 11 Proceedings Cast Going Concern Doubt DIAMONDBACK ENERGY: Moody's Rates New $500MM Unsec. Notes 'Ba1' EAGLE ENTERPRISES: Unsecured Creditors in Unimpaired Plan EDGEWELL PERSONAL: Moody's Rates $600MM Senior Unsec. Notes 'Ba3' EMG UTICA: Bank Debt Trades at 16% Discount ENTRANS INTERNATIONAL: Bank Debt Trades at 29% Discount ERC FINANCE: Bank Debt Trades at 16% Discount EUROPEAN FOREIGN: Exclusive Plan Filing Period Extended to July 22 EXTRACTION OIL: S&P Lowers ICR to 'D' on Missed Interest Payment FIELDWOOD ENERGY: Bank Debt Trades at 87% Discount FORMING MACHINING: Bank Debt Trades at 25% Discount FORUM ENERGY: S&P Downgrades ICR to 'SD' on Distressed Exchange FREEPORT-MCMORAN INC: Moody's Alters Outlook on Ba1 CFR to Neg. FRONTERA GENERATION: S&P Cuts Debt Rating to 'BB-'; Outlook Stable GARDNER DENVER: Moody's Alters Outlook on Ba2 CFR to Stable GAVILAN RESOURCES: Moody's Cuts PDR to D-PD on Bankruptcy Filing GENWORTH FINANCIAL: S&P Cuts ICR to 'B-' on Liquidity Risk GI DYNAMICS: Maturity Date of June 2017 Note Extended to June 15 GLASS MOUNTAIN: Bank Debt Trades at 53% Discount GRAN TIERRA: S&P Cuts ICR to 'CCC+'; Ratings on Watch Negative GRANITE LAKES: Seeks Approval to Hire Buchalter as Special Counsel GUAM: Moody's Confirms Ba1 Rating & Alters Outlook to Negative HANGER INC: S&P Affirms 'B+' ICR; Rating Off CreditWatch Negative HEALTHCHANNELS INTERMEDIATE: Bank Debt Trades at 16% Discount HENRY VALENCIA: Seeks to Hire Hurley Toevs as Special Counsel HERBALIFE NUTRITION: Moody's Rates $600MM Sr. Unsec. Notes 'B1' HERTZ GLOBAL: Paul Stone Named President and CEO HIGHLINE AFTERMARKET: S&P Alters Outlook to Neg., Affirms 'B' ICR HORIZON GLOBAL: Incurs $16.7 Million Net Loss in First Quarter HOTEL CUPIDO: Wants to Move Exclusivity Filing Period to May 31 HOUGHTON MIFFLIN: Fitch Alters Outlook on 'B' LT IDR to Negative IRB HOLDING: Moody's Rates New $500MM Sec. Notes 'B3', Outlook Neg. J CREW: Bank Debt Trades at 58% Discount JC PENNEY: Fitch Cuts LongTerm IDR to D on Chapter 11 Filing JC PENNEY: Moody's Cuts PDR to D-PD on Chapter 11 Filing KETAB CORPORATION: Deadline to File Plan Extended Until Sept. 18 LEARNING CARE: Bank Debt Trades at 39% Discount LSB INDUSTRIES: All Three Proposals Approved at Annual Meeting LSC COMMUNICATIONS: Has $52M Net Loss for Quarter Ended March 31 M/I HOMES: Fitch Affirms BB- LongTerm IDR, Outlook Stable MAI HOLDINGS: S&P Downgrades ICR to 'CCC-'; Outlook Negative MANNKIND CORP: Has $9.3MM Net Loss for Quarter Ended March 31 MEDCOAST MEDSERVICE: Trustee Taps Sherwood as Financial Advisor MIA & ASSOCIATES: Voluntary Chapter 11 Case Summary MICROCHIP TECHNOLOGY: Fitch Affirms BB+ LongTerm IDR, Outlook Neg MND HOLDINGS III: Bank Debt Trades at 27% Discount MOOD MEDIA: Moody's Withdraws 'Ca' Corp. Family Rating MYOS RENS: Has $866,000 Net Loss for the Quarter Ended March 31 NABORS INDUSTRIES: S&P Downgrades ICR to 'CCC+'; Outlook Negative NATIONAL CINEMEDIA: Bank Debt Trades at 23% Discount NATIONAL CINEMEDIA: S&P Lowers ICR to 'B' on Increased Leverage NEUSTAR INC: Bank Debt Trades at 29% Discount NTHRIVE INC: Bank Debt Trades at 24% Discount O'HARE FOUNDRY: Wants to Maintain Plan Exclusivity Through June 15 OASIS PETROLEUM: Widens Net Loss to $4.3 Billion in First Quarter ODYSSEY LOGISTICS: Bank Debt Trades at 26% Discount OLIN CORP: S&P Rates New $500MM Senior Unsecured Notes 'BB-' ONEWEB GLOBAL: Hires Guggenheim Securities as Investment Banker ONEWEB GLOBAL: Seeks to Hire FTI Consulting as Financial Advisor PARALLAX HEALTH: Swings to $12.9 Million Net Loss in 2019 PARK INTERMEDIATE: Moody's Gives 'B1' CFR & Rates $500MM Notes 'B1' PEARL RESOURCES: Hires David G. Gullickson as Accountant PENN ENGINEERING: Moody's Alters Outlook on B1 CFR to Negative PENNGOOD LLC: Case Summary & 20 Largest Unsecured Creditors PHOENIX PRODUCTS: Committee Taps Dentons Bingham as Legal Counsel PIONEER ENERGY: Taps Munsch Hardt as Special Counsel PLAYPOWER INC: Bank Debt Trades at 17% Discount QUANTUM CORP: Revolver Amendment Deadline Extended to June 19 RENNOVA HEALTH: Delays Filing of Quarterly Report Due to COVID-19 ROYALE ENERGY: Posts $384K Net Income in First Quarter SAMSON OIL: Posts $8.35 Million Net Income in Third Quarter SAVVY TRANSPORTATION: Hires Schneider and Stone as Legal Counsel SEDGWICK CLAIMS: Moody's Rates $300MM Senior Sec. Term Loan 'B2' SERVICE PROPERTIES: Moody's Cuts Senior Unsecured Rating to Ba1 SFKR LLC: Texas National Bank Objects to Disclosure Statement SGR WINDDOWN: Seeks to Extend Exclusivity Period to Aug. 3 SIT-CO LLC: Seeks Approval to Hire Bankruptcy Attorney SM-T.E.H. REALTY: Gets Interim Approval to Hire Property Manager SM-T.E.H. REALTY: Seeks to Hire Silver Lake Group as Legal Counsel SMI COMPANIES: Case Summary & 20 Largest Unsecured Creditors SPECIALTY BUILDING: Bank Debt Trades at 16% Discount SRAX INC: Needs More Significant Capital to Remain Going Concern STANDARD INDUSTRIES: Moody's Rates $250MM Unsec. Notes 'Ba2' STAPLES INC: Bank Debt Trades at 16% Discount SUPERCONDUCTOR TECHNOLOGIES: Has $1.1MM Loss for March 28 Quarter TADA VENTURES: Unsecureds Will be Paid in Full Over 60 Months TALEN ENERGY: Fitch Rates $400MM Senior Secured Notes 'BB/RR1' TRITON DOWNTOWN: Bank Debt Trades at 17% Discount U.S. RENAL CARE: S&P Downgrades ICR to 'B-' on Underperformance ULTRA PETROLEUM: Fitch Cuts LT IDR to 'D', Then Withdraws Ratings UNITED AIRLINES: Bank Debt Trades at 16% Discount US FARATHANE: Bank Debt Trades at 40% Discount USI INC: S&P Rates New $150MM First-Lien Term Loan 'B' VERTEX AEROSPACE: S&P Upgrades ICR to 'B+'; Outlook Stable VIANT MEDICAL: Bank Debt Trades at 31% Discount WINDSTREAM HOLDINGS: Element Fleet Response to Disclosures WIRECO WORLDGROUP: Bank Debt Trades at 34% Discount WME IMG: S&P Rates New $260MM Term Loan 'CCC+' WOODLAWN COMMUNITY: Trustee Taps Harrison & Held as Special Counsel WORKHORSE GROUP: Needs More Revenue, Funds to Remain Going Concern ZACKY & SONS: Taps Kidder Mathews as Real Estate Broker [^] Recent Small-Dollar & Individual Chapter 11 Filings ********* 4LESS GROUP: Has $3.9M Net Loss for the Year Ended Jan. 31, 2020 ---------------------------------------------------------------- The 4LESS Group, Inc., filed with the U.S. Securities and Exchange Commission its annual report on Form 10-K, disclosing a net loss of $3,879,846 on $8,186,214 of revenue for the year ended Jan. 31, 2020, compared to a net loss of $8,125,498 on $8,312,610 of revenue for the year ended in 2019. 4LESS Group said, "Currently the Company does not have sufficient cash reserves to meet its contractual obligations and its ongoing monthly expenses, which the Company anticipates totaling approximately $4,000,000 over the next 12 months. Historically, revenues have not been sufficient to cover operating costs that would permit the Company to continue as a going concern. These conditions raise substantial doubt about the Company's ability to continue as a going concern. The Company has been able to continue operating to date largely from loans made by its shareholders, other debt financings and sale of common stock. The Company is currently looking at both short-term and more permanent financing opportunities, including debt or equity funding, bridge or short-term loans, and/or traditional bank funding, but we have not decided on any specific path moving forward. Until we have raised sufficient funding to pay our ongoing expenses associated with being a public company, and we have sufficient funds to support our planned operations, the Company can provide no assurances that it will be able to meet its short and long-term liquidity needs, until necessary financing is secured. The Company generates revenue from the Nurses Lounge business, which the Company hopes will increase to the point where the Company can finance at least a substantial portion of the Company's obligations, of which there can be no assurance." The Company's balance sheet at Jan. 31, 2020, showed total assets of $1,140,887, total liabilities of $8,390,676, and a total stockholders' deficit of $8,119,789. A copy of the Form 10-K is available at: https://is.gd/UprAZv The 4LESS Group, Inc., operates as an e-commerce auto and truck parts sales company. It offers exhaust systems, suspension systems, wheels, tires, stereo systems, truck bed covers, and shocks. The company is headquartered in Las Vegas, Nevada. 929485 FLORIDA: Needs Additional Time to Formulate Chapter 11 Plan ------------------------------------------------------------------ 929485 Florida, Inc. asked the U.S. Bankruptcy Court for the Middle District of Florida for a 30-day extension of the exclusivity period to file its Chapter 11 plan and disclosure statement. The company needed additional time to prepare and file its Plan and Disclosure Statement in light of the unusually complex circumstances created by the COVID-19 health pandemic. The company's sole asset -- the restaurant -- is currently shut down pursuant to Governor DeSantis' Executive Order No. 20-71 suspending all on-premises food consumption. Although the company has a potential buyer, who is the tenant, the buyer cannot obtain funding at the moment as no banks are lending at this time due to COVID-19 pandemic. About 929485 Florida 929485 Florida, Inc., classifies its business as single asset real estate (as defined in 11 U.S.C. Section 101(51B)). 929485 Florida sought protection under Chapter 11 of the Bankruptcy Code (Bankr. M.D. Fla. Case No. 19-09424) on Oct. 3, 2019. At the time of the filing, Debtor disclosed assets of between $1 million and $10 million and liabilities of the same range. Judge Caryl E. Delano oversees the case. The Debtor is represented by Edmund S. Whitson, III, Esq., at Adams and Reese, LLP. ABUNDANT LIFE: Plan Has 10% Recovery for Unsecured Claims --------------------------------------------------------- Abundant Life Outreach, Inc., submitted a Plan of Reorganization and a Disclosure Statement. The means of effecting the Plan will be by continued business operations and the opening of a charter school which will result in sufficient income to pay all current obligations to secured creditors, taxes and 10% of unsecured claims over a period of six years from the date of the order confirming the Plan. The Debtor-in-Possession has one bank account at York Traditions Bank listed at $700. Miscellaneous restaurant equipment not sold with 401 North George Street, York, PA and church property total $6,000. Real property consists of three separate parcels of which one has been liquidated prior to the filing of the Disclosure Statement. The remaining real property values are: 701 West King Street, York, PA $250,000 and 116 South West Street, York, PA $240,000. The Plan proposes to pay all secured and priority creditors in full over time. Since the liquidation value of the assets is less than the secured claims and priority claims, the proposal to pay unsecured creditors 10% over time is more than the creditors would receive in a liquidation. A full-text copy of the Disclosure Statement dated April 27, 2020, is available at https://tinyurl.com/y8ys6kna from PacerMonitor.com at no charge. Attorneys for the Debtor: Craig A. Diehl, Esquire, CPA LAW OFFICES OF CRAIG A. DIEHL 3464 Trindle Road Camp Hill, PA 17011 Tel: (717) 763-7613 Fax: (717) 763-8293 E-mail: cdiehl@cadiehllaw.com About Abundant Life Outreach Abundant Life Outreach, Inc. sought protection under Chapter 11 of the Bankruptcy Code (Bankr. M.D. Pa. Case No. 19-04091) on Sept. 25, 2019. In the petition signed by Anthony W. Sease, chief executive officer, the Debtor was estimated to have assets ranging between $500,001 and $1 million, and liabilities of the same range. On Nov. 6, 2019, the court ordered the dismissal of the Debtor's case. The case was reopened on Nov. 25, 2019. Judge Henry W. Van Eck oversees the case. The Debtor tapped the Law Offices of Craig A. Diehl as its legal counsel. ADAMIS PHARMACEUTICALS: Incurs $10.3M Net Loss in First Quarter --------------------------------------------------------------- Adamis Pharmaceuticals Corporation reported a net loss of $10.27 million for the three months ended March 31, 2020, compared to a net loss of $8.89 million for the three months ended March 31, 2019. Revenues were approximately $4.7 million and $4.9 million for the three months ended March 31, 2020 and 2019, respectively. The decrease of approximately 5.0% in the first quarter of 2020 compared to the comparable period of 2019 was impacted by the effect of the pandemic on demand for USC's products. Selling, general and administrative expenses for the three months ended March 31, 2020 and 2019 were approximately $6.1 million and $8.0 million, respectively. The decrease was primarily attributable to decreases in wages, benefits and other compensation expenses, and to a lesser extent by decreases in operational expenses relating to the ceasing of sales of certain USC products, and decreases in patent, consulting, outside services, professional fees, PDUFA fees, depreciation and other related expenses. Research and development expenses were approximately $2.0 million and $2.2 million for the three months ended March 31, 2020 and 2019, respectively, a decrease of approximately 7.3%. The decrease was primarily due to a decrease in development costs of our product candidates. Cash and equivalents at the end of the first quarter was approximately $10.5 million. In February 2020, the company completed a registered direct offering of common stock, and a concurrent private placement of warrants, resulting in estimated net proceeds of approximately $6.2 million. Dr. Dennis J. Carlo, president and chief executive officer of Adamis Pharmaceuticals, stated, "We are pleased to have resubmitted our ZIMHI New Drug Application to the FDA to get us back on track for regulatory review. We are also very excited to be partnering with US WorldMeds to commercialize both our SYMJEPI and ZIMHI products here in the U.S. Certainly, Adamis has been negatively affected by the COVID-19 outbreak and the various degrees of lockdowns, and it remains to be seen how quickly everyone can get back to a new normal. However, we continue to operate and progress on a number of objectives. We will continue these efforts to mitigate the financial impact of the pandemic." As of March 31, 2020, the Company had $45.28 million in total assets, $12.06 million in total liabilities, and $33.21 million in total stockholders' equity. A full-text copy of the Quarterly Report is available for free at the Securities and Exchange Commission's website at: https://is.gd/xdsbe9 About Adamis Pharmaceuticals Adamis Pharmaceuticals Corporation -- http://www.adamispharmaceuticals.com/-- is a specialty biopharmaceutical company primarily focused on developing and commercializing products in various therapeutic areas, including respiratory disease, allergy and opioid overdose. The company's SYMJEPI (epinephrine) Injection 0.3mg and SYMJEPI (epinephrine) Injection 0.15mg products were approved by the FDA for use in the emergency treatment of acute allergic reactions, including anaphylaxis. Adamis reported a net loss of $29.31 million for the year ended Dec. 31, 2019, compared to a net loss of $39 million for the year ended Dec. 31, 2018. As of Dec. 31, 2019, the Company had $47.84 million in total assets, $11.80 million in total liabilities, and $36.04 million in total stockholders' equity. Mayer Hoffman McCann P.C., in San Diego, California, the Company's auditor since 2007, issued a "going concern" qualification in its report dated March 30, 2020 citing that the Company has incurred recurring losses from operations and is dependent on additional financing to fund operations. These conditions raise substantial doubt about the Company's ability to continue as a going concern. ADMA BIOLOGICS: Has $19.2-Mil. Net Loss for Quarter Ended March 31 ------------------------------------------------------------------ ADMA Biologics, Inc., filed its quarterly report on Form 10-Q, disclosing a net loss of $19,245,230 on $10,199,744 of total revenues for the three months ended March 31, 2020, compared to a net loss of $13,067,955 on $3,528,589 of total revenues for the same period in 2019. At March 31, 2020, the Company had total assets of $210,523,827, total liabilities of $114,188,144, and $96,335,683 in total stockholders' equity. The Company said, "Our long-term liquidity depends upon our ability to raise additional capital, fund capacity expansion and commercial programs and generate sufficient revenues from our products, several of which have only recently achieved commercial status, to cover our operating expenses and meet our obligations on a timely basis. The COVID-19 pandemic has negatively affected the global economy and created significant volatility and disruption of financial markets. Failure to secure any necessary financing in a timely manner and on commercially reasonable terms could have a material adverse effect on our business plan and financial performance and we could be forced to delay or discontinue our capacity expansion, commercialization, product development or clinical trial activities, delay or discontinue the approval efforts for any of our product candidates, or potentially cease operations. In addition, we could also be forced to reduce or forgo sales and marketing efforts and forgo attractive business opportunities. Due to numerous risks and uncertainties associated with the COVID-19 pandemic, FDA reviews and approvals related to our products, patient/payer acceptance of our products, ongoing compliance and maintenance requirements and capacity expansion efforts at the Boca Facility, we are unable to estimate with certainty the amounts of increased capital outlays and operating expenditures required to fund our commercialization and other development activities. Our current estimates may be subject to change as circumstances regarding our business requirements evolve and are also subject to the effect of potential new government orders, policies and procedures that we must comply with which are outside of our control. As such, these factors raise substantial doubt about the Company's ability to continue as a going concern." A copy of the Form 10-Q is available at: https://is.gd/wjXiwn ADMA Biologics, Inc., a biopharmaceutical and specialty immunoglobulin company, develops, manufactures, and markets specialty plasma-derived biologics for the treatment of immune deficiencies and infectious diseases. Its lead product candidate is RI-002 derived from human plasma, which has completed Phase III clinical trials for the treatment of primary immune deficiency disease. The company also offers Nabi-HB, a hyperimmune globulin for the treatment of acute exposure; and Bivigam, an intravenous immune globulin for the treatment of primary humoral immunodeficiency. In addition, it operates source plasma collection facilities in Norcross, Marietta, and Kennesaw, Georgia. The company distributes its products through independent distributors, sales agents, specialty pharmacies, and other alternate site providers. ADMA Biologics, Inc. was founded in 2004 and is headquartered in Ramsey, New Jersey. ADVANTAGE SALES: Bank Debt Trades at 25% Discount ------------------------------------------------- Participations in a syndicated loan under which Advantage Sales & Marketing Inc is a borrower were trading in the secondary market around 75 cents-on-the-dollar during the week ended Fri., May 15, 2020, according to Bloomberg's Evaluated Pricing service data. The bank debt traded around 80 cents-on-the-dollar for the week ended May 8, 2020. The $760.0 million facility is a Term loan. The facility is scheduled to mature on July 25, 2022. As of May 15, 2020, the amount is fully drawn and outstanding. The Company's country of domicile is United States. AETERNA ZENTARIS: Has $779,000 Net Income for March 31 Quarter -------------------------------------------------------------- Aeterna Zentaris Inc. filed its Form 6-K, disclosing a net income of $779,000 on $1,090,000 of total revenues for the three months ended March 31, 2020, compared to a net loss of $4,911,000 on $37,000 of total revenues for the same period in 2019. At March 31, 2020, the Company had total assets of $19,641,000, total liabilities of $17,954,000, and $1,687,000 in total shareholders' equity. Management has assessed the Company's ability to continue as a going concern and concluded that additional capital will be required. There can be no assurance that the Company will be able to execute license or purchase agreements or to obtain equity or debt financing, or on terms acceptable to it. Factors within and outside the Company's control could have a significant bearing on its ability to obtain additional financing. As a result, management has determined that there are material uncertainties that may cast substantial doubt upon the Company's ability to continue as a going concern. A copy of the Form 6-K is available at: https://is.gd/caZ688 Aeterna Zentaris Inc., a specialty biopharmaceutical company, engages in developing and commercializing pharmaceutical therapies for treating oncology and endocrinology. Its commercial product is the Macrilen, a ghrelin receptor agonist that stimulates the secretion of growth hormone by binding to the GHSR-1a, a ghrelin receptor, which is used for endocrinology and oncology indications. The company has a license and assignment agreement with Strongbridge Ireland Limited for the development, manufacturing, registration, and commercialization of Macrilen in the United States and Canada. Aeterna Zentaris Inc. was incorporated in 1990 and is headquartered in Summerville, South Carolina. ALIMERA SCIENCES: Has $1.2M Net Loss for Quarter Ended March 31 --------------------------------------------------------------- Alimera Sciences, Inc. filed its quarterly report on Form 10-Q, disclosing a net loss of $1,198,000 on $14,535,000 of net revenue for the three months ended March 31, 2020, compared to a net loss of $2,763,000 on $12,890,000 of net revenue for the same period in 2019. At March 31, 2020, the Company had total assets of $48,998,000, total liabilities of $54,402,000, and $5,404,000 in total stockholders' deficit. The Company said, "To date, the Company has incurred recurring losses and negative cash flow from operations and has accumulated a deficit of $388,768,000 from inception through March 31, 2020. As of March 31, 2020, the Company had approximately $12,242,000 in cash and cash equivalents. The Company's ability to avoid depleting its cash depends upon its ability to maintain revenue and contain its expenses. Should the impact of COVID-19 be extended, the Company has plans in place to reduce its expenses further in the future. "Further, the Company must maintain compliance with the debt covenants of its $45,000,000 Loan and Security Agreement and First Amendment dated May 1, 2020 with Solar Capital Ltd. In management's opinion, the uncertainty regarding future revenues raises substantial doubt about the Company's ability to continue as a going concern without access to additional debt and/or equity financing over the course of the next twelve months. "To meet the Company's future working capital needs, the Company may need to raise additional debt or equity financing. While the Company has historically been able to raise additional capital through issuance of equity and/or debt financing, and while the Company has implemented a plan to control its expenses to satisfy its obligations due within one year from the date of issuance of these Interim Financial Statements, the Company cannot guarantee that it will be able to maintain debt compliance, raise additional equity, contain expenses, or increase revenue. Accordingly, there is substantial doubt about the Company's ability to continue as a going concern within one year after these Interim Financial Statements are issued." A copy of the Form 10-Q is available at: https://is.gd/LeiyvS Alimera Sciences, Inc., is an Alpharetta, Georgia-based pharmaceutical company that specializes in the research, development and commercialization of prescription ophthalmic pharmaceuticals. The company is focused on diseases affecting the back of the eye, or retina. ALTA MESA: May 27 Combined Hearing on Plan & Disclosures -------------------------------------------------------- Alta Mesa Resources, Inc., et al., filed a notice of (i) Combined hearing on Plan Confirmation and adequacy of Disclosure Statement, (ii) Objection and voting deadlines and (iii) Solicitation and voting procedures. A video/telephonic hearing will be held on May 27, 2020, at 9:00 a.m. (prevailing Central Time) before the Honorable Marvin Isgur, United States Bankruptcy Judge for the Southern District of Texas, to consider entry of an order confirming the Plan and approving the Disclosure Statement on a final basis. The deadline for voting on the Plan is May 20, 2020 at 5:00 p.m. (prevailing Central Time). The deadline for filing objections to the Plan and/or the Disclosure Statement is May 20, 2020 at 5:00 p.m. (prevailing Central Time). The Plan provides, among other things, for the following: * Each Holder of a Class 1 Other Secured Claim will receive (i) payment in full in Cash from the applicable Claims Reserve, (ii) the collateral securing such Allowed Class 1 Other Secured Claim, or (iii) such other treatment as may be agreed to in accordance with the Plan; * Each Holder of a Class 2 Prepetition AMH RBL Claim will receive in satisfaction of its Prepetition Secured AMH RBL Claim (i) its Pro Rata share of the Interim Distribution; (ii) 100% of the Excess AMH Distributable Cash; (iii) its Pro Rata share of the Reserved ORRI; and (iv) to the extent such Prepetition AMH RBL Claim has not been satisfied in full under the foregoing sections (i), (ii), and (iii), its Pro Rata share of the Excess AMH Reserve Amounts; * Each Holder of a Class 3 AMR General Unsecured Claim will receive (i) its Pro Rata share of the Excess AMR Distributable Cash; and (ii) to the extent such AMR General Unsecured Claim has not been satisfied in full under the foregoing section (i), its Pro Rata share of the Excess AMR Reserve Amounts; * Each Holder of a Class 4 Prepetition Senior Notes Claims will receive (i) its Pro Rata share of 100% of the Prepetition Senior Notes Distribution Cash; and (ii) its Pro Rata share of the AMH Litigation Trust Interests (to be shared with the Class 6 AMH RBL Deficiency Claims); * Each Holder of a Class 5 AMH General Unsecured Claims Each Holder will receive its Pro Rata share of 100% of the AMH GUC Distribution Cash; * Each Holder of a Class 6 Prepetition AMH RBL Deficiency Claims will receive its Pro Rata share of the AMH Litigation Trust Interests (to be shared with the Class 4 Prepetition Senior Notes Claims); * Each Holder of a Class 7 SRII General Unsecured Claims will receive payment in full in Cash from the SRII Claims Reserve; * Each Class 8 Intercompany Claim not released under the Plan will, at the option of the Debtors, either be (i) Reinstated or (ii) cancelled and extinguished, in which case Holders of Intercompany Claims will receive no recovery on account of such Claims; * Each Class 9 Intercompany Interests will be cancelled and discharged, with the Holders of such Class 9 Intercompany Interests receiving no distribution on account of such Intercompany Interests; * Each Class 10 SRII Interest will be cancelled and discharged. The Holders of such Class 10 SRII Interests and AMR (on account of AMR's Interest in SRII Opco, LP) will receive, in exchange for their respective Interests in the SRII Debtors, their Pro Rata shares of Excess SRII Distributable Cash and Excess SRII Reserve Amounts remaining after satisfaction in full of SRII General Unsecured Claims; * Each Class 11 AMR Interest will be cancelled and discharged, with the Holders of such Class 11 AMR Interests receiving no distribution on account of such AMR Interests, except to the extent that Excess AMR Distributable Cash and Excess AMR Reserve Amounts remain after satisfaction in full of AMR General Unsecured Claims, in which event the Holders of AMR Interests and any Section 510(b) Claims against AMR shall be entitled to their Pro Rata share of such remaining amounts; * Each Class 12 Section 510(b) Claim will be canceled and discharged, with the Holders of such Class 12 Section 510(b) Claims receiving no distribution on account of such Claims, except to the extent that Excess AMR Distributable Cash and Excess AMR Reserve Amounts remain after satisfaction in full of AMR General Unsecured Claims, in which event the Holders of AMR Interests and any Section 510(b) Claims against AMR shall be entitled to their Pro Rata share of such remaining amounts; and * Each Class 13 AMH Interest will be cancelled and discharged, with the Holders of such Class 13 AMH Interests receiving no distribution on account of such AMH Interests. A full-text copy of the Notice dated April 27, 2020, is available at https://tinyurl.com/y8k76kcn from PacerMonitor.com at no charge. Counsel for AMR/AMH Debtors: John F. Higgins Eric M. English Aaron J. Power M. Shane Johnson PORTER HEDGES LLP 1000 Main Street, 36th Floor Houston, Texas 77002 Telephone: (713) 226-6000 Fax: (713) 226-6248 E-mail: jhiggins@porterhedges.com eenglish@porterhedges.com apower@porterhedges.com sjohnson@porterhedges.com – and – George A. Davis (admitted pro hac vice) Annemarie V. Reilly (admitted pro hac vice) Brett M. Neve (admitted pro hac vice) LATHAM & WATKINS LLP 885 Third Avenue New York, NY 10022 Telephone: (212) 906-1200 Facsimile: (212) 751-4864 E-mail: george.davis@lw.com annemarie.reilly@lw.com brett.neve@lw.com – and – Caroline Reckler (admitted pro hac vice) LATHAM & WATKINS LLP 330 North Wabash Avenue, Suite 2800 Chicago, IL 60611 Telephone: (312) 876-7700 Facsimile: (312) 993-9667 E-mail: caroline.reckler@lw.com – and – Andrew Sorkin (admitted pro hac vice) LATHAM & WATKINS LLP 555 Eleventh Street, Suite 1000 Washington, D.C. 20004 Telephone: (202) 637-2200 Facsimile: (202) 637-2201 Email: andrew.sorkin@lw.com 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. AMERICAN AIRLINES: Bank Debt Trades at 30% Discount --------------------------------------------------- Participations in a syndicated loan under which American Airlines Inc is a borrower were trading in the secondary market around 70 cents-on-the-dollar during the week ended Fri., May 15, 2020, according to Bloomberg's Evaluated Pricing service data. The bank debt traded around 75 cents-on-the-dollar for the week ended May 8, 2020. The $1.2 billion facility is a Term loan. The facility is scheduled to mature on January 29, 2027. As of May 15, 2020, the amount is fully drawn and outstanding. The Company's country of domicile is United States. APACHE CORP: Moody's Cuts Unsecured Notes to Ba1, Outlook Negative ------------------------------------------------------------------ Moody's Investors Service downgraded Apache Corporation's senior unsecured ratings to Ba1 from Baa3, and its commercial paper rating to Not Prime from Prime-3. Moody's concurrently assigned a Ba1 Corporate Family Rating, a Probability of Default Rating of Ba1-PD, and a Speculative Grade Liquidity Rating of SGL-2 to Apache. The outlook was changed to negative. These actions conclude the ratings review initiated on March 20, 2020. "The downgrade of Apache to Ba1 reflects its expectation of higher leverage on production and reserves that we don't expect to reverse over the medium term," said Pete Speer, Moody's Senior Vice President. "The company's returns and cash flow-based leverage metrics will improve in line with the recovery in oil prices, but those metrics position Apache more in line with Ba1 rated E&P peers." Downgrades: Issuer: Apache Corporation Senior Unsecured Shelf, Downgraded to (P)Ba1 from (P)Baa3 Commercial Paper, Downgraded to NP from P-3 Senior Unsecured Notes, Downgraded to Ba1 (LGD4) from Baa3 Assignments: Issuer: Apache Corporation Probability of Default Rating, Assigned Ba1-PD Speculative Grade Liquidity Rating, Assigned SGL-2 Corporate Family Rating, Assigned Ba1 Outlook Actions: Issuer: Apache Corporation Outlook, Changed To Negative From Rating Under Review RATINGS RATIONALE The downgrade to Ba1 reflects both Apache's relatively weak credit metrics for its Baa3 rating prior to the oil price collapse and Moody's expectations of significant production and proved reserve declines that will increase its leverage on production and reserves in 2020 and 2021. The severe drop in oil and NGL prices and already low gas prices will drive very weak cash flow-based credit metrics in 2020, with an uncertain pace of improvement in commodity prices and cash flow in 2021. The company has substantially reduced its dividend and heavily cut capital spending with the objective of minimizing negative free cash flow in 2020 and to generate free cash flow as oil and gas prices recover to reduce debt. These decisive steps will enable the company to maintain solid liquidity and achieve some debt reduction in 2021. However, the low capital reinvestment will lead to declining production and reserves that will result in leverage on production and reserves that are not supportive of an investment grade rating. Moody's also expects that Apache's cash flow-based leverage metrics will be weaker than most Ba1 rated peers even when oil prices eventually recover to or exceed $50 per barrel. 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 exploration and production sector has been one of the sectors most significantly affected by the shock given its sensitivity to demand and oil prices. More specifically, the weaknesses in Apache's credit profile have left it vulnerable to shifts in market sentiment in these unprecedented operating conditions and Apache remains vulnerable to the outbreak continuing to spread and oil prices remaining weak. Moody's regards the coronavirus outbreak as a social risk under its ESG framework, given the substantial implications for public health and safety. Its downgrade reflects the impact on Apache of the breadth and severity of the oil demand and supply shocks, and the broad deterioration in credit quality it has triggered. Apache's Ba1 CFR reflects the benefits of its large asset base that is diversified geographically, geologically and by hydrocarbon. Its mix of unconventional and conventional reservoirs moderates its capital intensity compared to its more shale focused peers. The company's exposure to oil, natural gas and natural gas liquids provides it with flexibility in capital allocation in line with cyclical swings in profitability and returns between liquids and gas. Apache's property portfolio benefits from having producing assets in the North Sea and Egypt that provide exposure to Brent oil pricing and generates meaningful cash flow even in a low oil price environment. This adds diversification to its large acreage position in the Permian Basin. The company also has a prospective acreage position in Suriname with two discoveries to date. This could prove to be a very valuable asset, but this requires significant development and therefore production and cash flow generation will not begin for several more years. The company is challenged by high debt levels and weak credit metrics relative to Baa3 and Ba1 rated peers even prior to the oil price collapse in March 2020. From 2017 to 2019, Apache heavily invested in the delineation, development and midstream infrastructure build out for its Alpine High play in the Delaware Basin within the Permian. This asset holds substantial resource potential but it is not economic in the weak NGL and natural gas price environment that took hold in the latter half of 2019. This investment has weighed on the company's investment returns and leverage metrics, which have lagged the improvement demonstrated by similarly rated peers. The negative outlook reflects the uncertain pace of recovery in oil prices in the latter half of 2020 and 2021. If commodity price recovery is limited then declines in production and reserves could accelerate and Apache's metrics will not improve to levels supportive of its Ba1 rating. Apache's SGL-2 rating denotes good liquidity as underpinned by its $4 billion committed revolving credit facility that matures in March 2024. As of March 31, 2020, there was approximately $2.95 billion of availability on the revolver after taking into account $250 million of borrowings outstanding and factoring in around $800 million of letters of credit that were posted in early April 2020 for asset retirement obligations in the UK North Sea. The facility has one financial maintenance covenant for which Apache has ample headroom for future compliance. The company has no debt maturities in 2020, followed by $293 million maturing in February 2021, $463 million in April 2022, and $181 million in January 2023. Therefore, the company has ample availability for debt maturities through 2023 and potential negative free cash flow under its base commodity price assumptions. Apache's senior unsecured notes are rated Ba1, the same as the CFR. The company's revolving credit facility and senior notes are all unsecured with no subsidiary guarantees. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Apache's ratings could be downgraded if commodity prices remain very low, the company's production and reserves fall faster than Moody's forecasts or if debt reduction over the medium term falls short of expectations. Retained Cash Flow (RCF)/Debt sustained below 20%, Leveraged Full-Cycle Ratio sustained below 1x, or Debt/PD above $12/boe could result in a ratings downgrade. In order for a ratings upgrade to be considered, Apache has to substantially reduce outstanding debt and grow production and reserves funded with internally generated cash flow at competitive returns in a more supportive commodity price environment. A LFCR above 1.5x, RCF/Debt above 30%, and Debt/PD approaching $8/boe could support a ratings upgrade. The principal methodology used in these ratings was Independent Exploration and Production Industry published in May 2017. Apache Corporation is a large independent exploration and production company headquartered in Houston, Texas. The company operates in the Permian Basin in west Texas and southeastern New Mexico, with acreage spanning the Midland, Delaware and Central Basin Platform sub-basins. Core international operating areas are in Egypt and the North Sea, and an exploration program is underway in Suriname. ARADIGM CORP: Court Conditionally Approves Disclosure Statement --------------------------------------------------------------- Judge William J. Lafferty, III, has ordered that the disclosure statement incorporated into the April 27 Combined Plan filed by Aradigm Corporation is conditionally approved. On or before May 11, 2020 the April 27 Combined Plan, a ballot substantially conforming to Official Form 314, and notice of the hearing to consider confirmation of the April 27 Combined Plan shall be mailed to all creditors. June 1, 2020 is fixed as the last day for filing written acceptances or rejections of the April 27 Combined Plan. June 1, 2020 is fixed as the last day for filing written objections to final approval of the disclosure statement incorporated into the April 27 Combined Plan. June 1, 2020 is fixed as the last day for filing and serving written objections to confirmation of the April 27Combined Plan. The Debtor will file its tabulation of the ballots and the ballots on or before June 8, 2020. The hearing to consider confirmation of the April 27 Combined Plan shall be held on June 10, 2020 at 10:30 a.m. before the Court. All interested parties should consult the Court's website at http://www.canb.uscourts.gov/content/page/court-operations-during-covid-19-outbreak with respect to whether the hearing will take place in the courtroom or telephonically. Terms of Liquidating Plan Aradigm Corporation filed a Combined Chapter 11 Plan and Disclosure Statement. The Plan provides for a Liquidating Trust that will be funded by Aradigm's cash on hand. The Liquidating Trust will not receive significant additional cash, if at all, until the Milestone Payments are received in approximately 3 to 5 years. Aradigm projects that its cash will be sufficient to pay all administrative expenses on the Effective Date of the Plan, to fund payment in full of the Class 1 priority wage claims and to fund the Liquidating Trust's operations until the Milestone Payments are received. The Liquidating Trust most likely will not have significant activity unless and until the Milestone Payments are received. Furthermore, no distribution will be made to class 2 unsecured creditors unless and until the Milestone Payments are received and no distribution will be made to class 3 equity holders unless and until sufficient Milestone Payments and Royalty Payments have been received to pay class 2 unsecured creditors in full with interest. Under the APA, Aradigm agreed to sell all of its intellectual property assets and certain other assets to Grifols. The purchase price was $3,247,000 in cash payable at closing, plus milestone payments amounting to an additional $3 million (the "Milestone Payments") and a royalty of 25% of the royalties received by Grifols during the royalty term in connection with the sale of any Aradigm Product under any definitive agreement between Grifols and any licensee for the development and commercialization of any Aradigm Product (the "Royalty Payments"). The Milestone Payments are payable $2 million upon FDA approval of any Aradigm Product and $1 million upon EMA approval of any Aradigm Product. The royalty term is the shorter of 10 years after the first commercial sale of an Aradigm Product or the expiration of the last Aradigm Patent covering an Aradigm Product. In addition, Grifols and its affiliate Grifols World Wide Operations, Inc., agreed to waive their filed proofs of claim in the Bankruptcy Case in the total amount of $31,735,899. Class 2 Claims of General Unsecured Creditors are impaired. Holders of allowed claims in this class shall be paid pro rata from funds received by the Liquidating Trust on account of the Milestone Payments and the Royalty Payments after payment of administrative priority expenses. Distributions to holders of allowed Class 2 claims shall be made until all such claims have been paid in full plus interest at the fixed rate of 1.5% from and after the Petition Date. On the Effective Date all Class 3 interests in Aradigm, including all warrants, unexercised options, and issued shares, shall be cancelled. Holders of allowed interests shall receive pro rata distributions from funds received by the Liquidating Trust on account of the Milestone Payments and the Royalty Payments after payment of administrative priority expenses and after payment in full, plus interest, of allowed Class 2 claims. A full-text copy of the Disclosure Statement dated April 27, 2020, is available at https://tinyurl.com/yavo386e from PacerMonitor.com at no charge. Attorneys for the Debtor: BENNETT G. YOUNG JEFFER MANGELS BUTLER & MITCHELL LLP Two Embarcadero Center, 5th Floor San Francisco, California 94111-3813 Telephone: (415)398-8080 Facsimile: (415)398-5584 E-mail: byoung@jmbm.com About Aradigm Corporation Aradigm Corporation -- http://www.aradigm.com/-- is an emerging specialty pharmaceutical company focused on the development and commercialization of products for the treatment and prevention of severe respiratory diseases. Over the last decade, the company invested a large amount of capital to develop drug delivery technologies, particularly the development of a significant amount of expertise in respiratory (pulmonary) drug delivery as incorporated in its lead product candidate that recently completed two Phase 3 clinical trials, Linhaliq inhaled ciprofloxacin, formerly known as Pulmaquin. The company is headquartered in Hayward, Calif. Aradigm Corporation sought Chapter 11 protection (Bankr. N.D. Cal. Case No. 19-40363) on Feb. 15, 2019. In the petition signed by John M. Siebert, executive chairman and interim principal executive officer, the Debtor was estimated to have $10 million to $50 million in both assets and liabilities. The case is assigned to Judge William J. Lafferty. The Debtor tapped Jeffer, Mangels, Butler & Mitchell LLP as bankruptcy counsel; Sheppard Mullin Richter & Hampton LLP as special patent counsel; and EMA Partners, LLC as investment banker. ARCH RESOURCES: Bank Debt Trades at 16% Discount ------------------------------------------------- Participations in a syndicated loan under which Arch Resources Inc is a borrower were trading in the secondary market around 84 cents-on-the-dollar during the week ended Fri., May 15, 2020, according to Bloomberg's Evaluated Pricing service data. The $298.0 million facility is a Term loan. The facility is scheduled to mature on March 7, 2024. As of May 15, 2020, $290.1 million of the loan remains outstanding. The Company's country of domicile is United States. ARETEC GROUP: Bank Debt Trades at 23% Discount ---------------------------------------------- Participations in a syndicated loan under which Aretec Group Inc is a borrower were trading in the secondary market around 77 cents-on-the-dollar during the week ended Fri., May 15, 2020, according to Bloomberg's Evaluated Pricing service data. The bank debt traded around 83 cents-on-the-dollar for the week ended May 8, 2020. The $190.0 million facility is a Term loan. The facility is scheduled to mature on October 11, 2026. As of May 15, 2020, the amount is fully drawn and outstanding. The Company's country of domicile is United States. ARKLOW LIMITED: Case Summary & 6 Unsecured Creditors ---------------------------------------------------- Lead Debtor: Arklow Limited Partnership 159 Ballville Road Bolton, MA 01740 Business Description: The Debtors collectively operate the International Golf Club, which includes two golf courses, a 54-room hotel, restaurant and function room. The original nine-hole golf course, built in 1901, was expanded to eighteen holes in 1954, becoming the "Pines Course." In addition to their golf courses, the Debtors operate a boutique lodge and signature restaurant, providing a lifestyle destination resort and a full service corporate and social event platform. Chapter 11 Petition Date: May 4, 2020 Court: United States Bankruptcy Court District of Massachusetts Three affiliates that concurrently filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code: Debtor Case No. ------ -------- Arklow Limited Partnership (Lead Debtor) 20-40523 The International Golf Club, LLC 20-40524 Wealyn, LLC 20-40525 Judge: Hon. Christopher J. Panos Debtors' Counsel: Ethan D. Jeffery, Esq. MURPHY & KING, PROFESSIONAL CORPORATION One Beacon Street Boston, MA 02108 Tel: (617) 423-0400 Email: ejeffery@murphyking.com - and - Harold B. Murphy, Esq. MURPHY & KING, PROFESSIONAL CORPORATION One Beacon Street Boston, Massachusetts Tel: (617) 423-0400 Fax: (617) 556-8985 Email: hmurphy@murphyking.com Arklow Limited's Estimated Assets: $10 million to $50 million Arklow Limited's Estimated Liabilities: $10 million to $50 million The International Golf Club's Estimated Assets: $100,000 to $500,000 The International Golf Club's Estimated Liabilities: $10 million to $50 million Wealyn, LLC's Estimated Assets: $50,000 to $100,000 Wealyn, LLC's Estimated Liabilities: $50,000 to $100,000 The petitions were signed by Craig R. Jalbert, chief restructuring officer. Copies of the petitions are available for free at PacerMonitor.com at: https://is.gd/q1QC2c https://is.gd/9rln8B https://is.gd/oT3Nb3 List of Arklow Limited's Six Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ 1. Bank of America $9,000,000 PO Box 844336 Dallas, TX 75284 Email: ashley.g.chery-mars@bofa.com 2. RSM US LLP $31,970 5155 Paysphere Circle Chicago, IL 60674-0051 Kyleen Boutte Tel: 617-912-9000 3. TCF Equipment $18,729 PO Box 77077 Minneapolis, MN 55480-7777 Email: twright@tcfef.com 4. GPS Industries $12,179 1074 N. Orange Avenue Sarasota, FL 34236 Email: joe.simmons@irco.com 5. Alphen & Santos PC Corp. $4,595 200 Littleton Road Westford, MA 01886 Email: msantos@alphensantos.com 6. Addison Law $1,937 5400 LBJ Freeway Suite 1325 Dallas, TX 75240 Tel: 972-960-8677 Email: info@addisonlaw.com ATX NETWORKS: Bank Debt Trades at 20% Discount ----------------------------------------------- Participations in a syndicated loan under which ATX Networks Corp is a borrower were trading in the secondary market around 80 cents-on-the-dollar during the week ended Fri., May 15, 2020, according to Bloomberg's Evaluated Pricing service data. The $126.0 million facility is a Term loan. The facility is scheduled to mature on December 15, 2021. As of May 15, 2020, the amount is fully drawn and outstanding. The Company's country of domicile is Canada. ATX NETWORKS: Bank Debt Trades at 20% Discount ---------------------------------------------- Participations in a syndicated loan under which ATX Networks Corp is a borrower were trading in the secondary market around 80 cents-on-the-dollar during the week ended Fri., May 15, 2020, according to Bloomberg's Evaluated Pricing service data. The $38.0 million facility is a Term loan. The facility is scheduled to mature on December 15, 2021. As of May 15, 2020, the amount is fully drawn and outstanding. The Company's country of domicile is Canada. BEI PRECISION: Bank Debt Trades at 17% Discount ------------------------------------------------ Participations in a syndicated loan under which BEI Precision Systems & Space Co Inc is a borrower were trading in the secondary market around 83 cents-on-the-dollar during the week ended Fri., May 15, 2020, according to Bloomberg's Evaluated Pricing service data. The $33.5 million facility is a Term loan. The facility is scheduled to mature on April 28, 2023. As of May 15, 2020, the amount is fully drawn and outstanding. The Company's country of domicile is United States. BETHUNE-COOKMAN UNIVERSITY: Fitch Keeps 'CCC' IDR on Watch Neg. --------------------------------------------------------------- Fitch Ratings has maintained the Rating Watch Negative on Bethune-Cookman University's Issuer Default Rating and on approximately $16.6 million of Florida Higher Educational Facilities Financing Authority, educational facilities revenue bonds, series 2010, issued on behalf of BCU. The IDR and bond ratings are 'CCC'. SECURITY The bonds are an unsecured general obligation of BCU and have a debt service reserve fund cash-funded to maximum annual debt service. ANALYTICAL CONCLUSION Maintenance of the Rating Watch Negative primarily reflects debt acceleration risk related to the series 2010 bonds. BCU has made all payments to date, but the bonds remain in technical default. A decision by bondholders to accelerate would likely cause a payment default. The 'CCC' IDR and bond ratings indicate substantial event-driven and fundamental credit risk. Default remains a real possibility as a result of any one of several challenges, including: -- Technical default, risk of bondholder acceleration and unresolved complex litigation related to a 2015 dormitory lease financing; -- Probationary status with the university's primary accreditor; -- Recent significant enrollment volatility, potentially exacerbated by the pandemic; -- Weak financial profile characterized by high leverage, a history of thin or negative cash flow and limited remaining liquidity. Maintenance of the Rating Watch Negative at the current rating level also reflects recent developments during FY 2020 and for FY 2021 that may help offset immediate costs and heightened risk related to the coronavirus pandemic. Favorable developments include: -- Budgetary Improvement: BCU expects to improve FY2020 financial results, achieving debt service coverage without dipping further into reserves and preserving its now-limited liquidity. Key drivers are significant budget reductions, including both planned cuts and additional cuts in response to the pandemic, on track to reduce cash expenses by nearly 20%; successful fundraising efforts likely to provide between $5 million and $7 million this year; and one-time federal stimulus funds of $3.3 million directly to the institution that roughly offset immediate net losses of approximately $2 million to $3 million due to the coronavirus. -- Recurring state funding allocation: The Florida ('AAA'/Stable) legislature included additional recurring funding to each of the state's three private historically black colleges and universities in its budget bill for FY 2021, including an additional $13 million to BCU, on top of the approximately $4 million the university has historically received. Recurring state funding at this level would, when paired with budgetary improvements already underway, help offset additional costs related to the coronavirus and help the university start to improve its weak financial position. However, the pandemic has delayed Florida's budget process; the budget has not yet been signed by the governor, who has line-item veto power, and may be revisited by the legislature. The recent coronavirus outbreak and related containment measures create an uncertain environment for the U.S. public finance higher education sector. Its forward-looking analysis is informed by management expectations and by Fitch's common set of baseline and downside macroeconomic scenarios. Fitch's scenarios will evolve as needed during this dynamic period. Currently, Fitch's baseline scenario includes a sharp economic contraction in the second quarter of 2020, with only sequential recovery starting in the third quarter. For higher education, the baseline case assumes that most residential campuses close for three to four months with sporadic closures thereafter. BCU closed the campus and shifted to online learning beginning in March 2020. The university is planning and budgeting for various scenarios, and a delayed start or at least partially online fall-term is likely. Management expects some negative effect on enrollment but, based on early data, expects fall 2020 will still outperform the fall 2019 cycle, which was significantly weaker due to public controversies and negative press that appears to have subsided. BCU's credit profile remains very sensitive to additional stress. Rating sensitivities address potential rating implications under Fitch's downside scenario, which assumes a much slower economic recovery and prolonged or recurring coronavirus-related disruptions such as extended lockdowns and additional sporadic campus closures into 2021. KEY RATING DRIVERS Revenue Defensibility: 'bb' Student Revenues Pressured; Significant State Support Possible Fitch expects the weaker-than-expected fall 2019 admission cycle and some likely pandemic-related disruption for fall 2020 will continue to weigh on total enrollment. High student price sensitivity will also limit capacity to increase net student fees, which make up about 77% of operating revenues. However, improved fundraising in FY 2020 and the expected additional $13 million in recurring state funding could, if maintained, materially improve BCU's revenue prospects. Operating Risk: 'bb' 2020 Expense Reductions; Pandemic to Pressure Performance Cash flow has been very weak in recent years but is expected to improve toward sufficient debt service coverage in 2020 despite the pandemic. The university is on track to cut cash expenses by nearly 20% year-over-year between planned reductions and additional adjustments in response to the outbreak. One-time federal stimulus funds and fundraising should bolster cash flow against lost revenue and additional costs related to the coronavirus, and BCU maintains some additional capacity to reduce expenses if enrollment is stressed further. The university has no major capital plans, but limited investment in capital maintenance due to cash flow constraints will build deferred maintenance needs over time. Financial Profile: 'bb' Weak Liquidity and Very High Leverage The university has very high leverage in the context of its weak operating profile. Available funds-to-adjusted debt was only 23% at FYE 2019. Liquidity remains weak, though improved cash flow and fundraising should allow the university to weather the low-cash summer period without further endowment borrowing. BCU had borrowed $8.5 million from its endowment in summer 2019 but has satisfied the endowment note in FY2020 after a review of spending and gift terms found BCU had met restrictions and was able to release approximately $9 million. The majority of BCU's $24 million of available funds (cash and investments not permanently restricted) at FYE 2019 are purpose-restricted. Fitch estimates that some but not all of these could be used for additional liquidity needs related to student aid and instruction. ASYMMETRIC ADDITIONAL RISK CONSIDERATIONS Technical default under the 2010 bonds, accreditor probation and ongoing litigation are asymmetric risk factors that together constrain the rating until resolved, even if fundamental credit factors improve. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- Resolution of technical default: Execution of a forbearance agreement or other development that removes the threat of acceleration would lead Fitch to remove the ratings from Rating Watch Negative. -- Resolution of accreditor probation: A successful accreditation outcome that removes the university's probationary status could, if accompanied by resolution of acceleration risk and fundamental credit improvement, support rating improvement over time. -- Cash flow improvement and resource growth: A trend of stable enrollment, solidly positive cash flow, and resulting resource growth could, subject to resolution of acceleration and accreditation risks, drive incremental improvements in the ratings and key assessments over time. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- Debt acceleration. A decision by series 2010 bondholders to accelerate would likely cause a payment default, as BCU does not have unrestricted liquidity to repay outstanding amounts immediately. -- Loss of accreditation: Loss of accreditation at the accreditor's 2020 review would likely trigger a downgrade to no higher than 'CC'. -- Loss of proposed state budget funding. The expected $13 million of additional recurring state funding is a key support for the current rating level, providing flexibility to manage coronavirus-driven operating pressures through FY2021. Elimination or significant reduction of those funds in the final enacted state budget could trigger a downgrade to 'CC'. -- Failure to improve liquidity and cash flow as expected. Significant weakening of cash flow or depletion of limited remaining liquidity, regardless of cause, would likely cause further downgrade. 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 Founded in 1904, BCU is a private co-educational university in Dayton Beach, FL and is one of the federally designated HBCUs in the United States. As of fall 2019, the university serves nearly 3,000 students at its main campus, satellite location and online. REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING The principal sources of information used in the analysis are described in the Applicable Criteria. ESG CONSIDERATIONS ESG - Governance: BCU has an ESG Relevance Score of 5 for Governance Structure due to ongoing accreditation probation that in part reflects the accreditor's concerns over structure and practices and for Management Strategy due to ineffective strategic planning and execution. While the transaction occurred under prior management, its negative effects continue to weigh on BCU's credit profile. Except for the matters discussed, the highest level of ESG credit relevance, if present, is a score of 3 - ESG issues are credit neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. BIG ASS: Bank Debt Trades at 25% Discount ----------------------------------------- Participations in a syndicated loan under which Big Ass Fans LLC is a borrower were trading in the secondary market around 76 cents-on-the-dollar during the week ended Fri., May 15, 2020, according to Bloomberg's Evaluated Pricing service data. The $359.0 million facility is a Term loan. The facility is scheduled to mature on May 21, 2024. As of May 15, 2020, the amount is fully drawn and outstanding. The Company's country of domicile is United States. BLOOMIN' BRANDS: S&P Lowers ICR to 'B+'; Outlook Negative --------------------------------------------------------- S&P Global Ratings lowered the issuer credit rating on Tampa, Fla.-based casual dining restaurant company Bloomin' Brands Inc. to 'B+' from 'BB-' and removed the rating from CreditWatch, where the rating agency placed it with negative implications on March 19, 2020. Concurrently, S&P lowered the issue-level rating on the company's secured credit facility to 'BB-' from 'BB+' and revised the recovery rating to '2' from '1'. "The downgrade reflects our expectation that operating results will experience significant pressure in 2020 as the company contends with the challenges of COVID-19 and a weak economic environment," S&P said. "We expect depressed sales volumes to result in an operating loss and negative free cash flow generation this year. As a result, we believe lower EBITDA levels, combined with higher debt balances from its recent convertible note issue and substantial draws under its revolving credit facility, will cause credit metrics to deteriorate sharply this year," the rating agency said. Efforts to curb the spread of COVID-19 have exerted significant pressure on the restaurant industry and has resulted in dramatic revenue losses for Bloomin'. The company closed its dining rooms and pivoted to a to-go only model in mid-March as the coronavirus outbreak accelerated and calls for greater social distancing intensified. Bloomin's U.S. comparable restaurant sales plummeted nearly 70% during the last week of March. Since then, the company has leveraged its off-premise capabilities, which include take-out, company fulfilled delivery, and third-party delivery to drive sales which have recovered somewhat to negative 48% for the week ended May 3. Bloomin' has reopened 355 restaurant dining rooms as of May 8, representing approximately 29% of its U.S. restaurant base, as state and local governments relax stay-at-home restrictions. Still, S&P expects in-restaurant sales will be limited as guidelines for physical distancing require reduced seating capacity. While sales trends are improving, overall volumes remain below cash flow breakeven levels, which the company estimates occurs at a comparable store sales level of down between 20%-25%. "We expect the restaurant operating environment will remain challenging, as weak consumer confidence, elevated unemployment, and lingering contagion fears limit a full recovery in sales levels. In addition, we expect margins will remain pressured reflecting incremental costs such as elevated off-premise fulfilment expenses and heightened health and safety requirements," S&P said. S&P's updated domestic economic forecast now projects real U.S. GDP contracting 5.2% in 2020 and unemployment of nearly 9%. In light of these difficult macroeconomic conditions and a six-week period of no on-premise sales, S&P forecasts Bloomin's revenue will decline between 20%-25% in fiscal 2020 before improving significantly in 2021, but remaining below 2019 levels. While food costs can be adjusted to meet lower demand, other restaurant level costs and general and administrative (G&A) costs are less variable in S&P's view, resulting in material sales deleveraging this year. Additionally, higher one-time costs related to COVID-19, including impairments, spoilage, and relief pay will weigh on performance. As a result, S&P forecasts Bloomin' will generate an operating loss in 2020. However, the rating agency expects a significant recovery in sales and operating profit in 2021, leading to free operating cash flow approaching $100 million and adjusted debt to EBITDA in the low-5x area. "We acknowledge uncertainty in our forecast and recognize that unprecedented events are affecting the company's results this year. We therefore view 2020 results as anomalous and place greater weight on our fiscal 2021 and 2022 projections given our view that they better reflect the company's cash flow and leverage profile. Still, we anticipate leverage will remain above our current downside threshold and are therefore revising the financial risk profile score to aggressive from significant," S&P said. "We believe Bloomin' is more vulnerable to downside risk because of its high correlation to the health of the overall macroeconomic environment. Because of these risks, we apply a negative one-notch comparable rating analysis modifier to our anchor on Bloomin'," the rating agency said. Bloomin' has taken steps to shore up liquidity while operations remain under pressure. The company has suspended dividends and share repurchases, reduced discretionary spending, slashed capital expenditures to maintenance levels, and deferred a portion of rent payments in an effort to preserve cash during this period of heightened uncertainty and stress. Earlier this month, the company issued a $230 million convertible bond, raising net proceeds of approximately $204 million. Bloomin' also successfully amended its credit agreement, which waives its total net leverage covenant through 2020. S&P estimates the company has total liquidity of approximately $500 million, which at the current weekly burn rate of $6 to $8 million, provides the company with enough runway for more than 12 months. Environmental, social, and governance (ESG) factors relevant to the rating action: -- Health and safety The negative outlook reflects the uncertainty surrounding the severity and duration of the coronavirus pandemic's impact on consumer spending. Additionally, it reflects the risk that a prolonged economic downturn would hinder Bloomin's ability to generate sufficient cash flows and profits to allow it to deleverage to appropriate levels for the current rating. S&P could lower the rating if: -- Operating performance deteriorates more than S&P currently expect, causing it to view the likelihood of a substantial recovery in 2021 as remote. -- Bloomin's ability to compete effectively in a changing landscape weakens, causing S&P's to reassess the company's competitive position. -- S&P no longer expect leverage will improve to below 5.5x in 2021. S&P could revise the outlook to stable if: -- Restaurant sales rebound faster than S&P currently anticipates, leading to higher earnings and better cash flow generation than S&P currently projects in its base case. -- Adjusted debt to EBITDA is sustained below 5.5x. BRIDGEMARK CORP: Seeks to Hire Casso & Sparks as Special Counsel ---------------------------------------------------------------- Bridgemark Corporation seeks approval from the U.S. Bankruptcy Court for the Central District of California to employ Casso & Sparks, LLP as its special counsel. Bridgemark desires to employ Casso & Sparks, LLP in order to continue utilizing its attorney, John Harris, Esq., who moved to the firm earlier this year. Mr. Harris was previously a partner with Locke Lord LLP, the firm initially hired by Debtor as special counsel. Casso & Sparks will provide legal advice regarding California law and environmental and regulatory issues pertaining to Debtor's oil and gas production operations. The firm may also represent Debtor in court proceedings involving Placentia Development Company, LLC. Mr. Harris will charge an hourly fee of $905. Mr. Harris 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: John J. Harris, Esq. CASSO & SPARKS, LLP 13300 Crossroads Parkway North, Suite 410 City of Industry, CA 91746 Telephone: (626) 269-2990 About Bridgemark Corporation Bridgemark Corporation, an oil and gas exploration and production company, filed a Chapter 11 petition (Bankr. C.D. Cal. Case No. 20-10143) on Jan. 14, 2020. At the time of the filing, Debtor disclosed assets of between $10 million and $50 million and liabilities of the same range. The petition was signed by Robert Hall, its president and chief executive officer. Judge Theodor Albert oversees the case. Debtor hired Pachulski Stang Ziehl & Jones LLP as bankruptcy counsel; Locke Lord, LLP and Greines, Martin, Stein & Richland LLP as special litigation and appellate counsel; and McGee & Associates as special corporate counsel. GlassRatner Advisory & Capital Group LLC serves as its financial advisor. BRIGHTHOUSE FINANCIAL: Fitch Rates Preferred Stock 'BB+' -------------------------------------------------------- Fitch Ratings has assigned a 'BB+' rating to the noncumulative preferred stock offered by Brighthouse Financial, Inc. KEY RATING DRIVERS The rating for the new offering is equivalent to the rating on Brighthouse's existing noncumulative preferred stock. Proceeds from the issuance will be used to repay existing borrowings under a term loan facility. The noncumulative preferred stock is perpetual. Brighthouse may elect to redeem the stock beginning in 2025. Under certain limited circumstances, Brighthouse may redeem the stock earlier than 2025. Dividends will be paid on a noncumulative basis, when and if declared. Based on Fitch's rating criteria, the noncumulative preferred stock is afforded 100% equity credit in Fitch's financial leverage calculations. As such, Fitch expects the noncumulative preferred stock will improve Brighthouse's financial leverage ratio, but reduce Brighthouse's coverage ratios. Fitch affirmed the ratings of Brighthouse with a Negative Outlook on April 21, 2020. RATING SENSITIVITIES The ratings remain sensitive to any material change in Fitch's rating case assumptions with respect to the coronavirus pandemic. Periodic updates to Fitch's assumptions are possible given the rapid pace of changes in government actions in response to the pandemic, and the pace with which new information is available on the medical aspects of the outbreak. Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade: -- A material adverse change in Fitch's ratings assumptions with respect to the coronavirus impact; -- Material deterioration in Fitch's assumed pro forma, or Brighthouse's actual, overall capitalization and leverage to below an overall score of 'aa-'. This might include a significant decline in management's strategic target for risk-based capital, a Prism capital score inconsistent with the overall credit factor score or financial leverage ratio exceeding 28%. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade: -- A positive rating action is prefaced by Fitch's ability to reliably forecast the impact of the coronavirus pandemic on the financial profile of both the U.S. life insurance industry and Brighthouse; -- A track record of strong operating performance, risk management and reasonable stability in capitalization. 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. BRIGHTHOUSE FINANCIAL: Moody's Rates New Preferred Stock 'Ba2(hyb)' ------------------------------------------------------------------- Moody's Investors Service has assigned a Ba2(hyb) rating to Brighthouse Financial, Inc.'s (senior debt Baa3 stable) anticipated issuance of around $300 million of Series B non-cumulative preferred stock. Proceeds from the offering will be used to repay a portion of the remaining borrowings under its term loan scheduled to mature in 2024. The outlook on Brighthouse and its insurance subsidiaries remains stable. RATINGS RATIONALE The Baa3 senior unsecured debt rating on Brighthouse Financial and the A3 insurance financial strength ratings of its insurance company subsidiaries are based on the Brighthouse's solid asset quality, with modest amount of exposure to high-risk assets, namely below-investment grade securities and alternative investments. Brighthouse's capital adequacy is strong, largely to enable the company to proactively manage the volatility and tail risk associated with its variable annuity block. These strengths are mitigated by risk exposures related to a concentration of legacy variable annuities, mostly with guarantees, managing a run-off block of institutional spread businesses and universal life with secondary guarantees and modest projected statutory capital generation partially due to the high cost of hedging market sensitive liabilities. The Ba2(hyb) rating on the preferred securities reflects Moody's typical notching for instruments issued by insurers relative to their IFS and senior debt ratings. Because of equity-like features contained in the preferred stock, the security will receive partial equity treatment in Moody's leverage calculation and adjusted leverage will improve as a result of the transaction. Moody's believes the coronavirus-driven bear market, ultra-low interest rates, and the restricted movement of the US population will stress most aspects of life insurers' financials, including those of Brighthouse. This includes sales, investment income, reserves and capital adequacy. Most life insurers, including Brighthouse, start with healthy capital and asset quality to weather this storm over the near term, but these conditions will weaken their creditworthiness if they persist. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The following factors could lead to an upgrade of the ratings: 1) run-rate statutory capital generation in excess of $500 million; 2) shift in the business mix towards more protection-oriented products (e.g., life insurance); and 3) earnings and cash flow coverage above 6x and 4x, respectively. Conversely, the following factors could lead to a downgrade of the ratings: 1) organic capital generation diminishes and GAAP return on capital less than 5%; 2) earnings and cash flow coverage below 4x and 2x, respectively; 3) adjusted financial leverage (excluding AOCI) above 30%. AFFECTED RATINGS The following rating was assigned: Brighthouse Financial, Inc.: preferred stock non-cumulative, assigned Ba2(hyb) The outlook on Brighthouse and its affiliates remains stable. The principal methodology used in this rating was Life Insurers Methodology published in November 2019. Brighthouse is headquartered in Charlotte, North Carolina. As of March 31, 2020, Brighthouse reported total assets of $224 billion and total equity of $20.4 billion. BULLDOG PURCHASER: Bank Debt Trades at 32% Discount --------------------------------------------------- Participations in a syndicated loan under which Bulldog Purchaser Inc is a borrower were trading in the secondary market around 68 cents-on-the-dollar during the week ended Fri., May 15, 2020, according to Bloomberg's Evaluated Pricing service data. The $125.0 million facility is a Term loan. The facility is scheduled to mature on September 5, 2026. As of May 15, 2020, the amount is fully drawn and outstanding. The Company's country of domicile is United States. C AND N TRANSPORT: Seeks to Extend Exclusivity Period to June 19 ---------------------------------------------------------------- C and N Transport, LLC asked the U.S. Bankruptcy Court for the Middle District of Florida for an extension of the exclusive period within which to file a plan until June 19, and an extension of the exclusive period to solicit votes on its plan until August 18. The Debtor also seeks an extension of the deadline for filing its plan and disclosure statement to June 19. The Debtor is unable to file a plan and disclosure statement prior to the expiration of the Filing Deadline because the individual previously responsible for bookkeeping left the Debtor, and it needs to reorganize its records. Thus, in the interests of transparency, the Debtor needs additional time to ensure adequate disclosure of its financial affairs. Moreover, the United States economy has effectively shut down as a result of COVID19. Without a healthy economy, the Debtor's customers simply are not shipping products or other material to stores on a national level because there is no consumer demand. Consequently, it is virtually impossible for the Debtor to propose a feasible plan, or prepare the necessary cash projections, until the economy begins its recovery. About C and N Transport C and N Transport LLC, a transportation services provider based in Cape Coral, Fla., sought bankruptcy protection under Chapter 11 of the Bankruptcy Code (Bankr. M.D. Fla. Case No. 20-00427) on Jan. 21, 2020. In the petition signed by Cynthia Trayner, member, Debtor estimated up to $50,000 in assets and $1 million to $10 million in liabilities. Michael R. Dal Lago, Esq., at Dal Lago Law, serves as Debtor's legal counsel. The U.S. Trustee, until further notice, will not appoint an official committee of unsecured creditors in the Chapter 11 case of C and N Transport, LLC, according to court dockets. C ROBERTSON: Unsecureds to Get 10% of Allowed Claims ---------------------------------------------------- C Robertson Insurance Agency, LLC, d/b/a Chris Robertson S Farmers Agency filed an Amended Plan of Reorganization. All Allowed Secured Claims of Celtic Bank in Class 1 are impaired. The Class 1 Claim will be treated as a general unsecured claim and treated along with other general unsecured creditors as set forth in Class 4. All Allowed Secured Claims of Bankers Healthcare Group, LLC and Holmes County Bank and Trust Company in Class 3 in the amount of $102,499 are impaired. Upon Confirmation, the allowed Class 3 Claims will be paid in monthly installments of $1,220.50 per month over 60 months commencing 30 days after the Effective Date of the Confirmed Plan. The Class 3 Claimants will retain their liens until paid in full. All Allowed Unsecured Claims in Class 4 are impaired. A Class 4 Claimant holding an Allowed Unsecured Claim shall be paid a pro rata share of $10,000 within 30 days of the Effective Date of the Confirmed Plan. The combined monthly payment to all allowed, unsecured creditors will be $167.00 per month. The Debtor disclosed the total of allowed unsecured claims to be approximately $96,781 after disputed claims are resolved. Debtor estimates the dividend to unsecured creditors will be approximately 10 percent of each creditor's allowed unsecured claim. The Reorganized Debtor will continue to perform work in accordance with ordinary business practices. A full-text copy of the Amended Plan of Reorganization dated April 27, 2020, is available at https://tinyurl.com/y7cwh2py from PacerMonitor.com at no charge. Counsel for C Robertson Insurance Agency, LLC: Areya Holder Aurzada HOLDER LAW 901 Main Street, Suite 5320 Dallas, Texas 75202 Telephone: (972) 438-8800 Email: areya@holderlawpc.com About C Robertson Insurance Agency, LLC C Robertson Insurance Agency, LLC, dba Chris Robertson Farmers Agency, an insurance agency that provides home, auto, business and life insurance in the state of Texas, filed voluntary petition under Chapter 11 of the Bankruptcy Code (Bankr. N.D. Tex. Case No. 20-30982) on March 26, 2020. The petition was signed by Christopher Robertson, an authorized member. At the time of the filing, the Debtor disclosed estimated assets of between $100,001 to $500,000 and estimated liabilities of the same range. The Debtor tapped Holder Law as its counsel. CAMPBELL & SON: National Loan Says Property Overvalued in Plan -------------------------------------------------------------- National Loan Acquisitions Company responded to Campbell & Son, LLC's Disclosure Statement. National Loan does not object to the Debtor's disclosure statement per se as it appears on its face to meet the requirements under 11 U.S.C. Sec. 1125(a). The Debtor advises that the real property "has an approximate value of $330,000.00." National Loan believes that this value is high and grossly overvalued. National Loan believes that the real property is more accurately valued at $120,475. Debtor alleges "US Bank sold the loan and the buyer insisted on payment in full." National Loan objects to this statement. The attorney for National Loan Acquisitions Company is Joshua I. Campbell at JARDINE, STEPHENSON, BLEWETT, WEAVER, P.C About Campbell & Son Based in Conrad, Montana, Campbell & Son, LLC, sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D. Mont. Case No. 19-61222) on Dec. 11, 2019, listing under $1 million in both assets and liabilities. Gary S. Deschenes, Esq., at Deschenes & Associates, is the Debtor's legal counsel. CARNIVAL CORP: Moody's Assigns Ba1 CFR & Alters Outlook to Negative ------------------------------------------------------------------- Moody's Investors Service downgraded the ratings of Carnival Corporation and Carnival plc including its senior unsecured rating to Ba1 from Baa3, senior secured rating to Baa3 from Baa2, and short-term commercial paper rating to non-Prime from P-3. Concurrently, Moody's assigned a Ba1 Corporate Family Rating, Ba1-PD Probability of Default Rating, and a Speculative Grade Liquidity Rating of SGL-2. The Baa3 secured rating includes Carnival's 2027 notes that transitioned from unsecured to secured with the closing of the recent debt raise. The outlook is negative. This concludes the review for downgrade that was initiated on March 11, 2020. "The downgrades reflect the risks Carnival faces as its operations continue to be suspended and Moody's expectation of a slow recovery resulting in financial metrics that are not indicative of an investment grade rating for the foreseeable future," stated Pete Trombetta, Moody's lodging and cruise analyst. "Moody's current assumption is that cruise operations will continue to be suspended in the US beyond the current July 24 no-cruise order issued by the Centers for Disease Control and Prevention and available capacity will be modest for the remainder of 2020 and into early 2021 as the risk of fully restarting operations before proper safety protocols are in place far exceed the potential benefits," added Trombetta. When cruise operations do resume, Moody's assumption is that deployed cruise ships will have limits on the occupancy for each ship while social distancing rules remain in place which will lead to lower ship-level profitability during this period. Downgrades: Issuer: Carnival Corporation Senior Unsecured Shelf, Downgraded to (P)Ba1 from (P)Baa3, Previously on Review for Downgrade Senior Secured Regular Bond/Debenture, Downgraded to Baa3 (LGD2) from Baa2, Previously on Review for Downgrade Senior Unsecured Commercial Paper, Downgraded to NP from P-3, Previously on Review for Downgrade Senior Unsecured Regular Bond/Debenture, Downgraded to Ba1 (LGD4) from Baa3, Previously on Review for Downgrade Issuer: Carnival plc Senior Unsecured Shelf, Downgraded to (P)Ba1 from (P)Baa3, Previously on Review for Downgrade Senior Unsecured Commercial Paper, Downgraded to NP from P-3, Previously on Review for Downgrade Senior Unsecured Regular Bond/Debenture, Downgraded to Ba1 (LGD4) from Baa3, Previously on Review for Downgrade Issuer: Long Beach (City of) CA Senior Secured Revenue Bonds, Downgraded to Baa3 (LGD2) from Baa2, Previously on Review for Downgrade Assignments: Issuer: Carnival Corporation Probability of Default Rating, Assigned Ba1-PD Speculative Grade Liquidity Rating, Assigned SGL-2 Corporate Family Rating, Assigned Ba1 Rating Confirmations: Issuer: Carnival plc Senior Secured Regular Bond/Debenture (Previously Senior Unsecured), Confirmed Baa3 (LGD2 assigned), Previously on Review for Downgrade Outlook Actions: Issuer: Carnival Corporation Outlook, Changed To Negative From Rating Under Review Issuer: Carnival plc Outlook, Changed To Negative From Rating Under Review 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, Carnival's exposure to increased travel restrictions has left it vulnerable to shifts in market sentiment in these unprecedented operating conditions and the company remains vulnerable to the continued uncertainty around the potential recovery from 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 action reflects the impact on Carnival from the breadth and severity of the shock, and the broad deterioration in credit quality it has triggered. Carnival's credit profile is supported by its position as the largest worldwide cruise line in terms of revenues, fleet size and number of passengers carried, with significant geographic and brand diversification. Carnival also benefits from its view that over the long run, the value proposition of a cruise vacation relative to land-based destinations as well as a group of loyal cruise customers supports a base level of demand once health safety concerns have been effectively addressed. In the short run, Carnival's credit profile will be dominated by the length of time that cruise operations continue to be highly disrupted and the resulting impact on the company's cash consumption, liquidity and credit metrics. The normal ongoing credit risks include Carnival's near term very high leverage, which Moody's forecasts will exceed 4.0x for at least the next two years, the highly seasonal and capital intensive nature of cruise companies, competition with all other vacation options, and the cruise industry's exposure to economic and industry cycles as well as weather related incidents and geopolitical events. The negative outlook reflects Carnival's high leverage and the uncertainty around pace and level of the recovery in demand that will enable the company to de-lever to below 4.5x. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Factors that could lead to a downgrade include indications over the coming months that 2021 demand recovery may be weaker than expected resulting in lower profitability or an expectation that debt/EBITDA will remain above 4.5x or EBITA/interest expense was stabilized below 3.0x. Ratings could also be downgraded if the level of free cash flow deficits deepen in 2020 or should liquidity deteriorate for any reason. Independent of any change to the Corporate Family Rating, the unsecured rating could be downgraded if the company were to issue additional secured debt. The outlook could be revised to stable if operations resume and demand shows good recovery trends in 2021 resulting in leverage approaching 4.5x. Given the negative outlook an upgrade is unlikely over the near term. However, ratings could eventually be upgraded if the company can maintain debt/EBITDA below 3.5x, and EBITA/interest expense above 5.0x. A ratings upgrade would also require a financial policy and capital structure that supports the credit profile required of an investment grade rating through inevitable industry downturns. Carnival Corporation and Carnival plc own the world's largest passenger cruise fleet operating under multiple brands including Carnival Cruise Line, Holland America, Princess Cruises, AIDA Cruises, Costa Cruises, and P&O Cruises, among others. Carnival Corporation and Carnival plc operate as a dual listed company. Headquartered in Miami, Florida, US and Southampton, United Kingdom. Annual net revenues for fiscal 2019 were approximately $16 billion. CHAMPIONX HOLDING: Moody's Rates New $537MM Term Loan B 'Ba2' ------------------------------------------------------------- Moody's Investors Service assigned a Ba2 rating to ChampionX Holding Inc.'s new $537 million senior secured Term Loan B facility due 2026 (Champion X term loan). The proceeds of this issuance will be used to pay Ecolab Inc (Ecolab, Baa1 positive) for its upstream business segment which will be separated from Ecolab and combined with Apergy. Post the closing of the merger transaction, ChampionX Holding Inc will be a wholly owned subsidiary of Apergy Corporation. The ChampionX term loan and Apergy's legacy secured and unsecured debt facilities will be cross-guaranteed and cross-collateralized. Concurrently, Moody's confirmed Apergy's Ba3 Corporate Family Rating and Ba3-PD Probability of Default Rating. Moody's downgraded Apergy's senior secured credit facility, consisting of a revolving credit facility (to be upsized to $400 million pro forma closing of the merger transaction) and a term loan B ($265 million outstanding as of March 31, 2020), to Ba2 from Ba1, which are pari passu with each other and will be pari passu with Champion X term loan. Moody's also downgraded Apergy's $300 million senior unsecured notes to B2 from B1. The Speculative Grade Liquidity Rating is unchanged at SGL-2 and the outlook is stable. This concludes the review that was initiated in December 2019 following the announcement of Apergy and Ecolab that Ecolab will separate its ChampionX upstream energy business segment and simultaneously combine it with Apergy in a tax-free Reverse Morris Trust transaction. ChampionX business consists of Ecolab's oil field chemicals production business and the drilling and well completion chemistry business. "At the outset of the transaction announcement, Apergy's combination with ChampionX was expected to enhance Apergy's scale substantially while further improving its low financial leverage on a pro forma basis. However, the commodity price collapse in the first quarter of 2020 poses substantial challenges for the growth prospects of the combined business, as oil and gas producers sharply reduce their capital spending budgets," commented Sreedhar Kona, Moody's Senior Analyst. "The combined company will benefit from the improved product and geographic diversification, and relative cash flow stability which contribute to the stable outlook." Assignments: Issuer: ChampionX Holding Inc. Senior Secured Term Loan, Assigned Ba2 (LGD3) Downgrades: Issuer: Apergy Corporation Senior Secured Revolving Credit Facility, Downgraded to Ba2 (LGD3) from Ba1 (LGD2) Senior Secured Term Loan, Downgraded to Ba2 (LGD3) from Ba1 (LGD2) Senior Unsecured Notes, Downgraded to B2 (LGD5) from B1 (LGD5) Confirmations: Issuer: Apergy Corporation Probability of Default Rating, Confirmed at Ba3-PD Corporate Family Rating, Confirmed Ba3 Outlook Actions: Issuer: Apergy Corporation Outlook, Changed To Stable From Rating Under Review Issuer: ChampionX Holding Inc. Outlook, Stable RATINGS RATIONALE The confirmation of Apergy's Ba3 CFR reflects the potential for the combined company's 2020 cash flow to be substantially lower and the financial leverage to be significantly higher than previously projected in December 2019. The merger transaction is credit accretive and results in a company with diversified product suite and increased international presence. However, reduced oil and gas activity will challenge the company's ability to achieve the expected growth in scale at least until the macro commodity price environment improves. The company's financial leverage will weaken through 2020 from the level projected in late 2019 at the time of placing the company's ratings on review for an upgrade. The stable outlook is supported by ChampionX business' resilience despite the industry stress and also Apergy's relatively low pro forma leverage even in light of reduced cash flow. Apergy's senior secured credit facility, consisting of a $265 million term loan B facility due in 2025 and the $400 million revolving credit facility due in 2023, and the new $537 million ChampionX term loan due in 2027 are rated Ba2, one notch above the CFR. The secured facilities benefit from their first lien claim on substantially all of Apergy's assets and their priority claim over the $300 million unsecured notes. Apergy's secured credit facility and the new ChampionX term loan are cross-guaranteed and cross-collateralized, are hence treated pari passu. The unsecured notes are rated B2, two notches below the CFR reflecting the size of the secured credit facilities in comparison to the notes and also the subordination of the notes to the secured facilities. The rapid and widening spread of the coronavirus outbreak, deteriorating global economic outlook, falling oil prices, and asset price declines are creating a severe and extensive credit shock across many sectors, regions and markets. The combined credit effects of these developments are unprecedented. The OFS sector has been one of the sectors most significantly affected by the shock given its sensitivity to demand and oil prices. More specifically, the weaknesses in Apergy's credit profile have left it vulnerable to shifts in market sentiment in these unprecedented operating conditions and Apergy remains vulnerable to the outbreak continuing to spread and oil prices remaining weak. Moody's regards the coronavirus outbreak as a social risk under its ESG framework, given the substantial implications for public health and safety. Its action reflects the impact on Apergy of the breadth and severity of the oil demand and supply shocks, and the broad deterioration in credit quality it has triggered. Apergy's Speculative Grade Liquidity Rating of SGL-2 reflects its view that the company will maintain good liquidity. At the end of the first quarter of 2020, Apergy had a cash balance of $54 million and an availability of $244 million under its senior secured revolving credit facility due in May 2023. In April 2020 the company exercised a draw of $125 million on its revolver leaving its revolver availability at $119 million. However, concurrent with the merger transaction, the revolver will be upsized to $400 million enhancing the company's liquidity. Apergy will be able to fund its reduced capital spending, working capital needs and debt servicing needs through its operating cash flow. Apergy's debt servicing will include interest payments on the legacy secured credit facility, the new ChampionX Term Loan and unsecured notes, and a 5% per annum mandatory principal amortization on the new ChampionX Term Loan. The company will also be able to reduce its term loan balance should it opt to pay it down through voluntary prepayments. The secured credit facility will require the company to be in compliance with a maximum net leverage covenant of 4x until the end of first quarter of 2021 stepping down to 3.75x by Q2-2021 and 3.5x by Q2-2022 and a minimum interest coverage ratio of 2.5x. Moody's expects the company to remain in compliance with the covenants. The company's assets are fully encumbered by the secured credit facilities, limiting the ability to raise cash through asset sales. Apergy's Ba3 CFR is supported by the company's low leverage and highly engineered and differentiated product suite that provides a fair degree of recurring revenue from the Artificial lift business and a market leading position in the Polycrystalline diamond cutter business. The combination with ChampionX business enhances the size and scale of the company and improves its product diversification. Additionally, ChampionX's significant international market presence complements Apergy's largely North American exposure. Apergy was able to reduce its debt significantly in 2018 and 2019 through voluntary prepayment demonstrating a track record of voluntary debt reduction, and resulting in a low financial leverage (debt to EBITDA ratio) of about 2.5x at year-end 2019. Apergy is challenged by the macro commodity price backdrop and the substantial demand weakening for its services in 2020. ChampionX's cash flow is relatively more durable and will cushion the 2020 stress. Moody's projects the 2021 financial leverage to improve materially as the company benefits from full year cash flow of ChampionX and also improvement in oil and gas fundamentals. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Apergy's ratings would be considered for an upgrade if OFS sector fundamentals improve and the company's EBITDA is sustained above $400 million, improving the company's financial leverage to below 2x, and the company continues to generate positive free cash flow. The company also needs to maintain good liquidity. Ratings could be downgraded if the prospect of improvement in oil and gas fundamentals through 2021 weaken and Apergy's debt/EBITDA is likely to remain above 3.5x. The principal methodology used in these ratings was Global Oilfield Services Industry Rating Methodology published in May 2017. The Woodlands, TX based Apergy Corporation (NYSE: APY) is a provider of highly engineered technologies that help companies drill for and produce oil and gas efficiently. CONFIE SEGUROS II: Bank Debt Trades at 37% Discount --------------------------------------------------- Participations in a syndicated loan under which Confie Seguros Holding II Co is a borrower were trading in the secondary market around 63 cents-on-the-dollar during the week ended Fri., May 15, 2020, according to Bloomberg's Evaluated Pricing service data. The bank debt traded around 70 cents-on-thedollar for the week ended May 8, 2020. The $220.0 million facility is a Term loan. The facility is scheduled to mature on November 2, 2025. As of May 15, 2020, the amount is fully drawn and outstanding. The Company's country of domicile is United States. COOPER-STANDARD AUTOMOTIVE: Moody's Cuts Sr. Sec. Debt Rating to B1 ------------------------------------------------------------------- Moody's Investors Service affirmed Cooper-Standard Automotive Inc.'s Corporate Family Rating and Probability of Default Rating at B3 and B3-PD, respectively, and the senior unsecured note rating at Caa1, and downgraded the senior secured debt rating to B1 from Ba3. Cooper-Standard's Speculative Grade Liquidity Rating remains SGL-3. The rating outlook remains negative. Moody's also assigned a B1 rating to the new $250 million of senior secured notes. Cooper-Standard's new senior secured notes, will rank pari passu with the existing senior secured term loan. The net proceeds will be used for general corporate purposes and support the company's liquidity profile. The following ratings were affirmed: Issuer: Cooper-Standard Automotive Inc. Corporate Family Rating, at B3; Probability of Default Rating, at B3-PD; $400 million of senior unsecured notes, at Caa1 (LGD5) The following rating is downgraded: Issuer: Cooper-Standard Automotive Inc. Senior secured term loan due 2023, to B1 (LGD2) from Ba3 (LGD2) The following rating was assigned: Issuer: Cooper-Standard Automotive Inc. Senior Secured Regular Bond/Debenture, at B1 (LGD2). The rating outlook remains negative The $180 million asset based revolving credit facility is not rated by Moody's. RATINGS RATIONALE Cooper-Standard's B3 CFR reflects Moody's expectation that profits and cash flow will remain weak through 2020 and into 2021, with cash burn of up to $150 million over the next 4 quarters, as global automotive manufacturing operations only start to reopen during the second quarter of 2020. Yet, Cooper-Standard's competitive position as a leading global supplier of essential vehicle sealing, fuel and brake delivery, and fluid transfer systems is expected to be maintained over the intermediate-term. Announced organizational realignments and plant closures will also help moderate the impact of operational inefficiencies related to the recovery global automotive production. Over the intermediate-term, Cooper-Standard's product mix is expected to be largely in line with industry megatrends around the evolution in the automotive powertrain. Cooper-Standard's debt/EBITDA will weaken through at least the second quarter of 2020, with debt/EBITDA estimated at 9.1x for the LTM period ending March, 31, 2020 before the impact of the new debt. Yet, the added liquidity will support additional operating flexibility through 2020 as the company's manufacturing operations gradually increase to support its OEM customers in North America and Europe. With recovering profit levels in the back half of 2020, EBITA margins should improve to modestly positive levels into 2021. The negative outlook reflects Moody's expectation that the company's negative EBITA margins are likely to continue into the first half of 2020 with a modest improvement in the second half of 2020 as global automotive manufacturer operations gradually recover. Cooper-Standard's SGL-3 speculative grade liquidity rating reflects an adequate liquidity profile through though 2020. Cash on hand March 31, 2020 was $302 million and will be supplemented with the net proceeds from the new note offering. The $180 million asset based revolving credit facility was unfunded at March 31, 2020 with $145.7 million of borrowing base availability after outstanding letters of credit. The facility matures in March 2025 with a spring maturity of 90 days before the maturity of the term loan (November 2023). Moody's now expects negative free cash flow over the next 4 quarters could be as much as $150 million as Moody's lowered its forecast of global automotive demand in 2020. The primary covenant in the revolver is a springing fixed charge covenant of 1 to 1 when availability falls below the greater of $15 million or 10% of the facility's borrowing base. This is a low-test level and, although Moody's does not expect sufficient borrowings to require test of the covenant, there could be stress on the limit if the covenant were to be tested. The senior secured term loan does not have financial maintenance covenants. Further, there was about $103 million of account receivables outstanding under its receivable transfer agreement at March 31, 2020 which matures in December 2023. The risk of this outlet being unavailable over the long-term weighs on the company's liquidity profile. The senior secured debt rating of B1, which was downgraded from Ba3, incorporates Cooper-Standard's weak financial position and also Moody's view of lowered recovery prospects for the secured debt holders. This is because of the diluted claim of the secured debt holders that results from the increased amount of secured debt. Moody's believe that even without the current note offering, additional capital is required to support operating flexibility, and that any incremental liquidity is likely to come from a secured offering which would further dilute the secured debt holders claim against the secured assets. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS An upgrade in the ratings is unlikely over the next 12 months. The ratings could be upgraded with strong restructuring and operating efficiency actions combined with a stabilization of global automotive production driving Moody's expectations of improving EBITA margin, Debt/EBITDA, and EBITA/Interest coverage, inclusive of restructuring charges. Maintaining an adequate liquidity profile, inclusive of addressing debt maturities in 2021, is also important to supporting an upgrade. The ratings could be downgraded with Moody's expectation that the company's restructuring and operating efficiency actions are insufficient to offset automotive production disruptions and softening industry conditions through 2020 and stabilize profit margins. A further weakening liquidity position would also drive a lower rating. Cooper-Standard's role in the automotive industry exposes the company to material environmental risks arising from increasing regulations on carbon emissions. As automotive manufacturers seek to introduce more electrified powertrains, traditional ICEs will become smaller. Some of Cooper-Standard's products are supportive of this trend including sealing systems and fluid transfer systems. Yet, fuel delivery products may be challenged over the longer-term. The principal methodology used in these ratings was Automotive Supplier Methodology published in January 2020. Cooper-Standard, headquartered in Novi, Michigan, is a leading global supplier of systems and components for the automotive industry. Products include sealing and trim, fuel and brake delivery, and fluid transfer systems. The Company operates manufacturing, design, engineering, administrative and logistics locations in 21 countries around the world. Net sales for LTM period ending March 31, 2020 were $2.9 billion. CORECIVIC INC: S&P Alters Outlook to Negative, Affirms 'BB' ICR --------------------------------------------------------------- S&P Global Ratings revised the outlook on U.S.-based private prison operator CoreCivic Inc. to negative from stable and affirmed its ratings, including the 'BB' issuer credit rating. The U.S. private prison industry is facing a decline in occupancy in 2020 primarily due to reduced Immigration and Customs Enforcement (ICE) detentions and revised prison social distancing requirements. Since early May, ICE detainee populations are down by around 50% from April levels as the closure of the U.S.-Mexico border on March 20 deterred crossings and mandated the immediate return of those that did cross back to their country of origin. This shut down the incoming flow of detainees to ICE detention centers, decreasing occupancy levels in CoreCivic's Safety segment (About 90% of the last-12-months revenues ended March 31, 2020). The pressure on ICE populations is significant for total operating results because the company generates about 29% of its consolidated revenues (quarter ended March 31) from services provided to the agency, its largest customer. Compensated man-days and occupancy levels are poised to take a further hit in the second quarter following ICE's April 10 guidelines to reduce detention populations to 75% of capacity. However, minimum revenue guarantees embedded in certain federal government client contracts provide downside protection for 14 of the 21 CoreCivic facilities that serve federal clients. The seven facilities that do not have minimum guarantees are generally smaller facilities and have other clients. COVID-19-related disruptions to the criminal justice system have also contributed to a reduction in U.S. Marshal and state prison population. In the quarter ended March 31, compensated man-days and revenues in the company's Safety segment were down by about 2.5% compared to the quarter ended Dec. 31, 2019. In S&P's base case, it forecasts the Safety segment total revenue declines for the year in the high-single-digit percent area before improving to just under 2019 levels in 2021. CoreCivic's operating profit and cash flow will decline in 2020 given its fixed cost base. A predominantly fixed cost base of operating expenses provides limited flexibility to offset revenue declines, but guaranteed minimum contract payments give some assurance of a revenue floor. Due to the transient nature of their ICE and U.S. Marshal populations (federal clients account for 50% of total revenue) and short-term length of stay, about two-thirds of federal client contracts include fixed minimum guarantee payments to ensure that prison operators manage facilities to a baseline minimum level of occupancy and operating capacity. Though many of these facilities are now operating at or below guarantee levels, staffing-level mandates dictated by contract provisions provide limited wiggle room to furlough or reduce headcount. This presents a challenge to prison operators' ability to counter rising expenses, but S&P does expect a reduction in staffing levels toward the minimum required contract levels, where feasible. Also under pressure is CoreCivic's Community segment (7% of revenues), its rehabilitation and post-release support services segment. In this segment, compensated man-days (owned and leased beds) in the first quarter of 2020 were down by about 1.7% in the quarter ended March 31 compared to the previous quarter. The Community segment relies on intake referrals from judicial proceedings, which are occurring at a compromised frequency as the judicial system is operating at a limited capacity. In addition, lower work program subsistence copayments could affect revenues. S&P expects this to translate to a mid-single-digit percentage revenue decline for the Community segment in 2020. S&P believes the company's Properties segment will continue to perform as expected. S&P estimates that fixed costs account for about 70% of the operating expenses, with labor being the largest contributor. Additionally, the incremental expenses related to COVID-related employee incentive compensation and personal protective equipment (about $11 million) will increase costs. Overall, S&P believes that total revenues could decline by 5%-10% this year and adjusted leverage could climb to around 5x. A return to credit measures to near historical levels is likely in 2021. S&P's base case assumes that CoreCivic's operations will gradually recover starting in late 2020 and the company's debt-to-EBITDA ratio will improve to below 4x in 2021, assuming the COVID-19 pandemic is contained in late 2020. Nevertheless, the trajectory of the rebound will depend on the lifting of these containment and distancing directives, the future behavior of border traffic patterns, and the return to normalized levels occupancy, as well as any secondary impact from the outcome from changes in government policies following the U.S. 2020 election. CORECIVIC has some flexibility to manage its debt leverage, if it chooses to. Although S&P's base case does not include any changes to its financial policy, it believes the company could also reevaluate its dividend policies or further delay part of its capital investment, if needed. Exposure to regulatory, government policy, and headline risks remains a constraint to the rating. Like all companies operating within the U.S. private prison industry, the exposure to change in regulation and government policy risks represent meaningful event risks. How long the company's debt costs remain elevated and its impact on the ability to obtain cost-effective funding to support acquisitions and capital expenditures (capex). In the event the company utilizes a higher proportion of secured debt, S&P could potentially lower its ratings on the secured and unsecured debt. How successfully California is able to operate under AB-32 and manage its overcrowded facilities, and the likelihood that similar initiatives are embraced by large state customers. -- Changes in state or federal sentencing guidelines and its impact on inmate populations or change in ICE holding policies or funding. -- The likelihood that the August 2016 Department of Justice directive, which was rescinded by the Trump administration in 2017, is reinstated. The directive aimed to reduce and ultimately end the use of privately operated prisons at the Federal Bureau of Prisons (BOP). -- Its ability to win new business contracts due to either competitive pressure or reputational issues caused by negative news headlines. Environmental, social, and governance (ESG) credit factors for this credit rating change: -- Health and safety "The negative outlook reflects the inherent uncertainty of the impact of the COVID-19 pandemic and timing of a rebound in occupancy, including the risk that we could lower our ratings if we expect that leverage and cash flow measures will fail to rebound in 2021. Additionally, we could lower our ratings if revenue visibility, operating conditions, or financing conditions continue to remain challenged even if credit measures rebound," S&P said. "We could lower the rating on CORECIVIC if the company is unable to improve its credit measures, such that debt to EBITDA remains above 4x by the end of 2021," the rating agency said. In this scenario: -- Occupancy rates remain low because of changes in state, local, federal enforcement immigration policies, or sentencing guidelines. -- Reduced government spending on private detention space or as a result of changes in the administration related to the upcoming election. -- Per diem rates decline due to COVID-induced stress on state budgets or administrative changes. -- Changes in government policies on the use of private detention centers causes a negative reassessment in S&P's view of the business. -- If financing conditions do not improve, constraining investment policy, liquidity or causing higher refinancing its debt -- S&P could revise the outlook to stable if the company is able to reduce its debt leverage to 4x or better and longer-term operating and financing conditions improve for the private detention operators. CPI INTERNATIONAL: Bank Debt Trades at 17% Discount ---------------------------------------------------- Participations in a syndicated loan under which CPI International Inc is a borrower were trading in the secondary market around 83 cents-on-the-dollar during the week ended Fri., May 15, 2020, according to Bloomberg's Evaluated Pricing service data. The $100.0 million facility is a Term loan. The facility is scheduled to mature on July 26, 2025. As of May 15, 2020, the amount is fully drawn and outstanding. The Company's country of domicile is United States. CSM BAKERY: Bank Debt Trades at 24% Discount -------------------------------------------- Participations in a syndicated loan under which CSM Bakery Solutions LLC is a borrower were trading in the secondary market around 76 cents-on-the-dollar during the week ended Fri., May 15, 2020, according to Bloomberg's Evaluated Pricing service data. The $210.0 million facility is a Term loan. The facility is scheduled to mature on May 23, 2021. As of May 15, 2020, the amount is fully drawn and outstanding. The Company's country of domicile is United States. DAIRYLAND USA: Bank Debt Trades at 23% Discount ----------------------------------------------- Participations in a syndicated loan under which Dairyland USA Corp is a borrower were trading in the secondary market around 77 cents-on-the-dollar during the week ended Fri., May 15, 2020, according to Bloomberg's Evaluated Pricing service data. The $239.7 million facility is a Term loan. The facility is scheduled to mature on June 22, 2022. As of May 15, 2020, $236.3 million of the loan remains outstanding. The Company's country of domicile is United States. DANCOR TRANSIT: Seeks Court Approval to Hire Wooley Auctioneers --------------------------------------------------------------- Dancor Transit, Inc. seeks approval from the U.S. Bankruptcy Court for the Western District of Arkansas to employ Wooley Auctioneers to sell certain equipment owned by the company. Wooley Auctioneers will get a commission of 10 percent, to be paid as a buyer's premium rather than out of the sales proceeds. The auctioneer will receive reimbursement for work-related costs. Brad Wooley of Wooley Auctioneers 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: Brad Wooley Wooley Auctioneers 7513 Beck Rd. Little Rock, AR 72223 Telephone: (501) 940-3979 About Dancor Transit Dancor Transit Inc., a trucking company headquartered in Van Buren, Ark., sought Chapter 11 protection (Bankr. W.D. Ark. Case No. 20-70536) on Feb. 27, 2020. The petition was signed by Dancor President Dan Bearden. At the time of the filing, Debtor disclosed assets of between $1 million and $10 million and estimated liabilities of the same range. Keech Law Firm, PA, led by Kevin P. Keech, Esq., is Debtor's legal counsel. DAYCO PRODUCTS: Bank Debt Trades at 35% Discount ------------------------------------------------ Participations in a syndicated loan under which Dayco Products LLC is a borrower were trading in the secondary market around 65 cents-on-the-dollar during the week ended Fri., May 15, 2020, according to Bloomberg's Evaluated Pricing service data. The bank debt traded around 72 cents-on-the-dollar for the week ended May 8, 2020. The $470.0 million facility is a Term loan. The facility is scheduled to mature on May 19, 2023. As of May 15, 2020, the amount is fully drawn and outstanding. The Company's country of domicile is United States. DBM GLOBAL: $10MM Bank Debt Trades at 16% Discount --------------------------------------------------- Participations in a syndicated loan under which DBM Global Inc is a borrower were trading in the secondary market around 84 cents-on-the-dollar during the week ended Fri., May 15, 2020, according to Bloomberg's Evaluated Pricing service data. The $10.0 million facility is a Term loan. The facility is scheduled to mature on April 30, 2024. As of May 15, 2020, $2.4 million of the loan remains outstanding. The Company's country of domicile is United States. DBM GLOBAL: $5MM Bank Debt Trades at 16% Discount ------------------------------------------------- Participations in a syndicated loan under which DBM Global Inc is a borrower were trading in the secondary market around 84 cents-on-the-dollar during the week ended Fri., May 15, 2020, according to Bloomberg's Evaluated Pricing service data. The $5.0 million facility is a Term loan. The facility is scheduled to mature on April 30, 2024. As of May 15, 2020, $2.3 million of the loan remains outstanding. The Company's country of domicile is United States. DENBURY RESOURCES: Posts $74 Million Net Income in First Quarter ---------------------------------------------------------------- Denbury Resources Inc. reported net income of $74.02 million on $242.20 million of total revenues and other income for the three months ended March 31, 2020, compared to a net loss of $25.67 million on $305.45 million of total revenues and other income for the three months ended March 31, 2019. As of March 31, 2020, the Company had $4.61 billion in total assets, $258.72 million in total current liabilities, $2.86 billion in total long-term liabilities, and $1.49 billion in total stockholders' equity. Chris Kendall, Denbury's president and CEO, commented, "We took multiple steps in the first quarter to further enhance Denbury's operational and financial performance and preserve liquidity, including the significant reduction to our 2020 capital spending plans that we announced in late March, and we have redoubled our first quarter efforts over the past two months to further reduce costs in response to the deep impact of the COVID-19 pandemic on the energy markets. Denbury's first quarter results reflect our focus on operational execution and efficiency, as we continued to generate free cash and maintained relatively consistent continuing production levels while spending significantly less capital. The Company has sufficient liquidity to meet its operating needs, with nothing drawn on our bank facility at the end of the first quarter, and we believe the actions we are taking will help the Company maintain access to ample liquidity as we manage through this challenging environment. In addition, we are working with advisors to evaluate a range of strategic alternatives, and we are engaging in discussions with our lenders and bondholders as part of that process. "Denbury's low decline assets and industry-leading carbon reduction capabilities set our company apart in our industry, and we expect these same core strengths will continue to differentiate us in the future. As always, our top priority is the health and safety of our employees, and I want to express my sincere gratitude to our team for its continued commitment to Denbury under these unprecedented conditions." Denbury's oil and natural gas production averaged 55,965 BOE/d during first quarter 2020. Total continuing production, which excludes production associated with the Gulf Coast Working Interests Sale, was 55,185 BOE/d during the first quarter of 2020, a decrease of 2% from the fourth quarter of 2019 and 4% compared to continuing production in the prior-year first quarter. Denbury's first quarter 2020 average realized oil price, including derivative settlements, was $50.92 per barrel ("Bbl"), a decrease of 13% from the prior quarter and 12% from the prior-year first quarter. Denbury's NYMEX differential for the first quarter 2020 was $0.38 per Bbl below NYMEX WTI oil prices, compared to $0.44 per Bbl below NYMEX WTI in the prior quarter and $1.63 per Bbl above NYMEX WTI in first quarter 2019. The year-over-year decrease was primarily attributable to a lower Gulf Coast premium in the first quarter of 2020, affecting approximately 60% of the Company's crude oil production. Total lease operating expenses in first quarter 2020 were $109 million, or $21.46 per BOE, a decrease of $7 million, or 6%, compared to the prior quarter due primarily to lower labor and overhead and a decrease of $16 million, or 13%, compared to first quarter 2019 due primarily to reductions in CO2 costs and workovers. Taxes other than income, which includes ad valorem, production and franchise taxes, decreased $3 million, or 12%, from the prior quarter and decreased $4 million, or 17%, from the prior-year first quarter, generally due to a decrease in production taxes resulting from lower oil and natural gas revenues. General and administrative expenses were $10 million in first quarter 2020, unchanged from the prior quarter when excluding $19 million of severance expense associated with the Company's December 2019 voluntary separation program. Compared to the first quarter of 2019, G&A expenses decreased $9 million, or 49%, due to lower headcount and lower bonus and other performance-based compensation expense in the current-year period. Interest expense, net of capitalized interest, totaled $20 million in first quarter 2020, a $1 million decrease from the prior quarter and an increase of $3 million compared to first quarter 2019. The sequential-quarter decrease was primarily due to senior subordinated notes repurchases in the fourth quarter of 2019, and the prior-year increase was primarily due to additional noncash expense for amortization of debt discounts associated with new notes (the Company's 7 3/4% Senior Secured Second Lien Notes due 2024 and 6 3/8% Convertible Senior Notes due 2024) issued as part of the June 2019 debt exchanges. The Company recognized a full cost pool ceiling test write-down of $73 million during the three months ended March 31, 2020. Representative oil prices utilized in the Company's full cost ceiling test were roughly consistent with adjusted prices used to calculate the Dec. 31, 2019 full cost ceiling value; however, the decline in NYMEX oil prices during March 2020 due to OPEC supply pressures and a reduction in worldwide oil demand amid the COVID-19 pandemic contributed to an impairment of the Company's unevaluated oil and natural gas properties and the transfer of $245 million of unevaluated costs to the full cost amortization base during first quarter 2020. Based on current oil price futures, the Company would expect to record significant write-downs in subsequent quarters, as the 12-month average price used in determining the full cost ceiling value would then continue to decline throughout 2020. Depletion, depreciation, and amortization was $97 million during first quarter 2020, compared to $57 million in first quarter 2019 and $63 million in fourth quarter 2019, primarily due to an accelerated depreciation charge of $37 million attributable to certain depreciable costs associated with the impaired unevaluated properties. Excluding the accelerated depreciation charge, DD&A increased $2 million from the prior-year quarter primarily due to a decrease in proved oil and natural gas reserve volumes and decreased $4 million from the sequential-quarter primarily due to a decrease in depletable costs. Denbury's effective tax rate for first quarter 2020 was negative 17%, significantly lower than the Company's estimated statutory rate of 25% due primarily to tax relief offered under the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act"), which included the full release of a $25 million valuation allowance against a portion of business interest expense that was previously estimated to be disallowed. The Company currently forecasts that its effective tax rate for the remainder of 2020 will be approximately 16%, depending in part on taxable income. BANK CREDIT FACILITY AND FIRST QUARTER DEBT TRANSACTIONS As of March 31, 2020, the Company had no outstanding borrowings on the senior secured bank credit facility, consistent with March 31, 2019 and Dec. 31, 2019, leaving $520 million of borrowing availability after consideration of $95 million of currently outstanding letters of credit. The borrowing base under the Company's senior secured bank credit facility is evaluated semi-annually, generally around May 1 and November 1. As of May 18, 2020, the bank group has not yet completed the process for the spring redetermination and therefore the borrowing base and commitment levels remain at $615 million. The Company currently anticipates that the banks will complete the redetermination process over the next several weeks, and it is uncertain if there will be any change to the borrowing base or banks' commitment levels. During the first quarter, Denbury repurchased $30 million in aggregate principal amount of its then outstanding 9% Senior Secured Second Lien Notes due 2021 in open-market transactions for a total purchase price of $14 million, excluding accrued interest. In connection with these transactions, the Company recognized a $19 million gain on debt extinguishment, net of unamortized debt issuance costs and future interest payable written off, during the three months ended March 31, 2020. 2020 CAPITAL BUDGET As previously announced, the Company's 2020 estimated development capital budget, excluding acquisitions and capitalized interest, is currently anticipated to be between $95 million and $105 million, an $80 million, or 44%, reduction from the originally disclosed amount of between $175 million and $185 million. The capital budget consists of approximately $70 million for tertiary and non-tertiary field investments and CO2 supply, plus approximately $30 million of estimated capitalized costs (including capitalized internal acquisition, exploration and development costs and pre-production tertiary startup costs). Of this combined capital expenditure amount, $39 million (39%) has been incurred through first quarter 2020. In addition, late in the first quarter, the Company's Board of Directors determined to defer the Company's Cedar Creek Anticline CO2 tertiary flood development project beyond 2020. SHUT-IN PRODUCTION As a result of the significant decline in oil prices, the Company has focused its efforts to optimize cash flow through evaluating production economics and shutting in production where validated. Beginning in late March and accelerating through April 2020, the Company estimates that approximately 2,000 BOE/d of uneconomic production was shut-in during April as a result of those efforts. In May 2020, the Company continued evaluations around expected oil prices and production costs, and has shut-in additional production, bringing the total shut-in production to approximately 8,500 BOE/d. Management plans to continue this routine evaluation to assess levels of uneconomic production based on its expectations for wellhead oil prices and variable production costs, and will actively make decisions to either shut-in additional production or bring production back online as conditions warrant. As a result of these actions, along with reduced capital and workover spend, the Company expects production to decline from the first quarter to the second quarter. Production could be further curtailed by future regulatory actions or limitations in storage and/or takeaway capacity. A full-text copy of the Quarterly Report is available for free at the Securities and Exchange Commission's website at: https://is.gd/k5p9Fy About Denbury Headquartered in Plano, Texas, Denbury Resources Inc. -- http://www.denbury.com-- is an independent oil and natural gas company with operations focused in two key operating areas: the Gulf Coast and Rocky Mountain regions. The Company's goal is to increase the value of its properties through a combination of exploitation, drilling and proven engineering extraction practices, with the most significant emphasis relating to CO2 enhanced oil recovery operations. As of Dec. 31, 2019, Denbury had $4.69 billion in total assets, $364.2 million in total current liabilities, $2.91 billion in total long-term liabilities, and $1.41 billion in total stockholders' equity. Denbury received on March 5, 2020 formal notice from the New York Stock Exchange that the average closing price of the Company's shares of common stock had fallen below $1.00 per share over a period of 30 consecutive trading days, which is the minimum average share price for continued listing on the NYSE. The NYSE notification does not affect Denbury's ongoing business operations or its U.S. Securities and Exchange Commission reporting requirements, nor does it trigger any violation of its debt obligations. Denbury is considering all available options to regain compliance with the NYSE's continued listing standards, which may include a reverse stock split, subject to approval of the Company's board of directors and stockholders. * * * As reported by the TCR on March 15, 2020, Moody's Investors Service downgraded Denbury Resources Inc.'s Corporate Family Rating to 'Caa2' from 'B3'. The downgrade of Denbury's CFR to Caa2 reflects Moody's expectation that its revenues will decline in 2021 and the uncertainty over the company's ability to refinance its debt maturing in 2021. DG INVESTMENT: Bank Debt Trades at 17% Discount ------------------------------------------------ Participations in a syndicated loan under which DG Investment Intermediate Holdings 2 Inc is a borrower were trading in the secondary market around 84 cents-on-the-dollar during the week ended Fri., May 15, 2020, according to Bloomberg's Evaluated Pricing service data. The $186.0 million facility is a Term loan. The facility is scheduled to mature on February 1, 2026. As of May 15, 2020, the amount is fully drawn and outstanding. The Company's country of domicile is United States. DIAMOND OFFSHORE: Chapter 11 Proceedings Cast Going Concern Doubt ----------------------------------------------------------------- Diamond Offshore Drilling, Inc., filed its quarterly report on Form 10-Q, disclosing a net loss of $861,940,000 on $229,170,000 of total revenues for the three months ended March 31, 2020, compared to a net loss of $73,328,000 on $233,542,000 of total revenues for the same period in 2019. At March 31, 2020, the Company had total assets of $5,378,333,000, total liabilities of $3,006,845,000, and $2,371,488,000 in total stockholders' equity. The Company said, "In April 2020, as a result of continued challenges in the offshore drilling industry and the current uncertainty in the global markets resulting from, among other things, the COVID-19 outbreak and a significant decline in oil prices, we commenced the Chapter 11 Cases. "Although we anticipate that the Chapter 11 Cases will help address our liquidity concerns, uncertainty remains over the Bankruptcy Court's approval of a plan of reorganization, and therefore substantial doubt exists over our ability to continue as a going concern at this time. Financial information in this report has been prepared on the basis that we will continue as a going concern, which presumes that we will be able to realize our assets and discharge our liabilities in the normal course of business as they come due. Financial information in this report does not reflect the adjustments to the carrying values of assets and liabilities and the reported expenses and balance sheet classifications that would be necessary if we were unable to realize our assets and settle our liabilities as a going concern in the normal course of operations. Such adjustments could be material. Our long-term liquidity requirements, the adequacy of capital resources and ability to continue as a going concern are difficult to predict at this time and ultimately cannot be determined until a Chapter 11 plan has been confirmed, if at all, by the Bankruptcy Court. If our future sources of liquidity are insufficient, we could face substantial liquidity constraints and be unable to continue as a going concern and will likely be required to significantly reduce, delay or eliminate capital expenditures, implement further cost reductions, or seek other financing alternatives. "We have historically relied on our cash flows from operations and cash reserves to meet our liquidity needs, which primarily include the servicing of our debt repayments and interest payments, as well as funding our working capital requirements and capital expenditures. As of April 1, 2020, our contractual backlog was $1.4 billion, of which $0.5 billion is expected to be realized during the remaining nine months of 2020. Also, during the fourth quarter of 2020, we expect to receive a $25.0 million payment from a customer for a gross margin commitment pursuant to terms of an existing contract if the commitment is not satisfied by the signing of a new contract commencing in 2020. At March 31, 2020, we had cash available for current operations of $499.1 million." A copy of the Form 10-Q is available at: https://is.gd/9gEvDI Diamond Offshore Drilling, Inc., provides contract drilling services to the energy industry worldwide. The company operates a fleet of 15 offshore drilling rigs, including 4 drillships and 11 semisubmersible rigs. It serves independent oil and gas companies, and government-owned oil companies. The company was founded in 1953 and is headquartered in Houston, Texas. Diamond Offshore Drilling, Inc. is a subsidiary of Loews Corporation. On April 26, 2020, Diamond Offshore Drilling, Inc., along with its affiliates, filed a voluntary petition for reorganization under Chapter 11 in the U.S. Bankruptcy Court for the Southern District of Texas. DIAMONDBACK ENERGY: Moody's Rates New $500MM Unsec. Notes 'Ba1' --------------------------------------------------------------- Moody's Investors Service assigned a Ba1 rating to Diamondback Energy, Inc.'s proposed $500 million senior unsecured notes due 2025. Diamondback's other ratings, including its Ba1 Corporate Family Rating, and stable outlook were unchanged. Net proceeds from this debt offering will be primarily used to redeem the company's 4.625% notes due 2021 and to reduce revolver borrowings. "This transaction will provide more financial flexibility by refinancing a near term maturity and increasing revolver availability in its highly uncertain oil price environment," said Sajjad Alam, Moody's Senior Analyst. Assignments: Issuer: Diamondback Energy, Inc. Senior Unsecured Notes, Assigned Ba1 (LGD3) RATINGS RATIONALE Diamondback's senior unsecured notes are rated Ba1, the same as Ba1 CFR, given the company's unsecured capital structure, including its $2 billion committed revolving credit facility, which ranks pari passu with the unsecured notes. Diamondback's Ba1CFR is supported by its significant production and reserves in the Permian Basin; low cost and oil-weighted assets that generate peer leading cash margins; a large drilling inventory that provides portfolio durability and the ability to deliver strong organic growth; low financial leverage; and a history of conservative financial policies, including significant equity issuances for acquisitions. The rating also considers Diamondback's significant ownership interest in Viper Energy Partners LP (Viper, Ba3 stable) and Rattler Midstream LP (unrated). The CFR is restrained by Diamondback's singular geographic focus in the Permian Basin and the attendant event risks, significant undeveloped reserves and acreage, organizational complexity, a history of numerous acquisitions resulting in inconsistent F&D costs, and the high ongoing capital expenditures needed to maintain its shale assets. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The CFR could be downgraded if Diamondback significantly outspends operating cash flow, experiences a sharp decline in capital productivity, or debt funds dividends or share repurchases. More specifically, if the RCF/debt ratio falls below 35% or the LFCR falls below 1.5x, a downgrade could occur. The CFR could be upgraded if the company consistently grows in a capital efficient manner, further reduces leverage, and delivers recurring free cash flow. Specifically, if the company can sustain the leveraged full-cycle ratio above 2x, lower debt/PD reserves near $6/boe, and keep the RCF/debt ratio above 50% even in a weak price environment, an upgrade could be considered. The principal methodology used in this rating was Independent Exploration and Production Industry published in May 2017. Diamondback Energy, Inc. is an independent exploration and production company with all of its assets in the Midland and Delaware Basins in West Texas. EAGLE ENTERPRISES: Unsecured Creditors in Unimpaired Plan --------------------------------------------------------- Eagle Enterprises, LLC, submitted a Plan of Reorganization for Small Business under Chapter 11. Class 2 Secured claim of Mercantile Capital is is impaired. The claim will be paid in full at 7% interest with a payment of $2,500 per month for three years with balloon on 37th month for balance due. The Class 3 Secured claim of LendingHome Funding Corp. is impaired. The claim will be paid in full at 7% interest at three years payment of $1,574 per month mo with balloon on 37th month for balance. Class 5 Non-priority unsecured creditors are unimpaired. Prepetition utility bill of $100 was paid by shareholder postpetition. Only remaining debts are to shareholders of $77,136 total paid at $100 per month through plan. The Plan will funded by ongoing rental estate property to principals of corporation (Florida property) and to corporation owned by principals (Kentucky Property). Specifically: rent on Florida property to increase to $3,650 per month and on Kentucky Property $4,150 per month. A full-text copy of the Plan of Reorganization dated April 27, 2020, is available at https://tinyurl.com/y9n6kwoe from PacerMonitor.com at no charge. About Eagle Enterprises Eagle Enterprises, LLC, sought protection under Chapter 11 of the Bankruptcy Code (Bankr. M.D. Fla. Case No. 19-07116) on July 29, 2019. In the petition, Eagle Enterprises was estimated to have assets of less than $1 million and liabilities of less than $500,000 as of the bankruptcy filing. The case is assigned to Judge Catherine Peek Mcewen. Eagle Enterprises is represented by Michael Barnett, P.A. EDGEWELL PERSONAL: Moody's Rates $600MM Senior Unsec. Notes 'Ba3' ----------------------------------------------------------------- Moody's Investors Service assigned a Ba3 rating to Edgewell Personal Care Co.'s new $600 million senior unsecured 8-year notes. All other ratings for Edgewell including the Ba3 Corporate Family Rating and Ba3-PD Probability of Default Rating remain unchanged. The Ba3 rating on the existing 2021 notes is not affected and will be withdrawn once the bonds are redeemed. The company's SGL-3 Speculative Grade Liquidity Rating and stable outlook are unaffected. Proceeds from the new offering will be used to refinance the existing $600 million Senior Notes due May 2021. The offering is another step in the company's recent liquidity improvements following the April execution of a new $425 million secured revolver that expires in 2025. The revolver is smaller than the prior $725 million unsecured facility that was to expire in June 2020. Because Moody's expected in the Ba3 CFR and stable outlook that the company would address the revolver and 2021 note maturities, the ratings and outlook are not affected. Ratings assigned: Edgewell Personal Care Co.: Senior Unsecured Notes due 2028 at Ba3 (LGD4). The rating outlook is stable. RATINGS RATIONALE Edgewell's Ba3 CFR reflects the company's challenging industry operating environment. Edgewell will continue to face intense competition from much larger, well diversified competitors in its wet shave, skin care and feminine care businesses. This will lead to weak earnings growth and debt to EBITDA sustained around 3.7x over the next 12 months. The rating also reflects the company's concentration in mature, highly-promotional categories that present a strategic growth challenge. Moody's believes that the company will continue to utilize cash and debt to fund acquisitions to spur growth and share buy backs. Moody's expects Edgewell's financial strategy to maintain debt-to-EBITDA leverage within a 3.0-3.5x range (based on the company's calculation) will help sustain solid free cash flow. The rating is supported by the company's portfolio of well-known consumer product brands including Schick, Playtex, and Banana Boat. The company also generates good free cash flow. In terms of Environmental, Social and Governance considerations, the most important factor for Edgewell's ratings are governance considerations related to its financial policies and environmental risk. Moody's views Edgewell's financial policies as aggressive given its appetite for debt financed acquisitions. Edgewell faces environmental risk from the disposal and recycling of razors, as well as the resin and packaging related to its wet shave products. Social factors relating to shifts in consumer preferences toward greater comfort with facial hair is negatively affecting demand for shaving products. The rapid and widening spread of the coronavirus outbreak, deteriorating global economic outlook, falling oil prices, and asset price declines are creating a severe and extensive credit shock across many sectors, regions and markets. The combined credit effects of these developments are unprecedented. The consumer products sector has been one of the sectors affected by the shock given its sensitivity to consumer demand and sentiment. More specifically, the weaknesses in Edgewell's credit profile, including its exposure to multiple affected countries have left it vulnerable to shifts in market sentiment in these unprecedented operating conditions and the company remains vulnerable to the outbreak continuing to spread. Moody's regards the coronavirus outbreak as a social risk under its ESG framework, given the substantial implications for public health and safety. Edgewell reported a 2.4% organic sales increase in the second quarter ended March with a boost to feminine care and wipes from pantry loading and a focus on cleaning because of the coronavirus. Moody's expects demand for products such as wet shave and sun care could soften due to the coronavirus, and there is risk that higher unemployment will negatively affect consumer spending and Edgewell's revenue. However, Moody's anticipates any revenue pressure will be modest and that free cash flow will remain positive including the dividend The stable outlook reflects Moody's expectation that Edgewell will continue to generate flat to negative organic growth in its wet shave category. The stable outlook also reflects the rating agency's expectation that Edgewell will continue to generate solid free cash flow and proactively refinance the 2022 notes at a manageable interest cost. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS A downgrade could occur if Edgewell fails to stabilize operating performance, or if liquidity deteriorates. Moody's could also downgrade the company if debt to EBITDA is sustained above 4.0x. Other factors that could contribute to a downgrade include debt financed acquisitions or share repurchases. Edgewell's ratings could be upgraded if the company improves its scale and diversification, and it sustains solid organic growth with a stable to higher EBITDA margin. An upgrade would also require improved credit metrics such that Moody's expects debt/EBITDA to be sustained below 3.0x. The principal methodology used in this rating was Consumer Packaged Goods Methodology published in February 2020. Edgewell Personal Care Co., based in Shelton, CT manufactures, markets and distributes branded personal care products in the wet shave, skin and sun care, feminine care, and infant care categories. The company has a portfolio of over 25 brands and a global footprint in over 50 countries. Edgewell is publicly traded and generates annual revenue of about $2.1 billion. EMG UTICA: Bank Debt Trades at 16% Discount -------------------------------------------- Participations in a syndicated loan under which EMG Utica LLC is a borrower were trading in the secondary market around 85 cents-on-the-dollar during the week ended Fri., May 15, 2020, according to Bloomberg's Evaluated Pricing service data. The $172.5 million facility is a Term loan. The facility is scheduled to mature on December 6, 2026. As of May 15, 2020, the amount is fully drawn and outstanding. The Company's country of domicile is United States. ENTRANS INTERNATIONAL: Bank Debt Trades at 29% Discount ------------------------------------------------------- Participations in a syndicated loan under which EnTrans International LLC is a borrower were trading in the secondary market around 71 cents-on-the-dollar during the week ended Fri., May 15, 2020, according to Bloomberg's Evaluated Pricing service data. The bank debt traded around 76 cents-on-the-dollar for the week ended May 8, 2020. The $255.0 million facility is a Term loan. The facility is scheduled to mature on November 1, 2025. As of May 15, 2020, the amount is fully drawn and outstanding. The Company's country of domicile is United States. ERC FINANCE: Bank Debt Trades at 16% Discount ---------------------------------------------- Participations in a syndicated loan under which ERC Finance LLC is a borrower were trading in the secondary market around 84 cents-on-the-dollar during the week ended Fri., May 15, 2020, according to Bloomberg's Evaluated Pricing service data. The $30.0 million facility is a Delay-Draw Term loan. The facility is scheduled to mature on September 21, 2024. The Company's country of domicile is United States. EUROPEAN FOREIGN: Exclusive Plan Filing Period Extended to July 22 ------------------------------------------------------------------ Judge Erik P. Kimball of the U.S. Bankruptcy Court for the Southern District of Florida extended to July 22 the deadline for European Foreign Domestic Auto Repair Centre, Inc. and ASK Ventures, Inc. to file a plan and disclosure statement. The bankruptcy judge also extended to July 22 the exclusive period during which the companies may file, with a reciprocal extension of the exclusive period to obtain acceptances of any such plan to Sept. 21. The 362(d)(3) single asset real estate deadline for ASK Ventures to file a plan is extended to June 22. The companies sought the extension to give them ample time to establish a clearer track record of income and expenses and to resolve issues with their creditors in order to formulate a feasible plan. About European Foreign Domestic Auto Repair Centre and ASK Ventures European Foreign Domestic Auto Repair Centre, Inc. is a company that provides automotive repair and maintenance services. ASK Ventures Inc. is a company primarily engaged in renting and leasing real estate properties. European Foreign Domestic and ASK Ventures sought Chapter 11 protection (Bankr. S.D. Fla. Case Nos. 19-22870 and 19-22872) on Sept. 26, 2019. At the time of the filing, European Foreign Domestic was estimated to have assets of at least $50,000 and liabilities of between $1 million and $10 million. ASK Ventures was estimated to have assets of between $1 million and $10 million and liabilities of the same range. Judge Erik P. Kimball oversees the cases. FurrCohen P.A. is the Debtors' legal counsel. EXTRACTION OIL: S&P Lowers ICR to 'D' on Missed Interest Payment ---------------------------------------------------------------- S&P Global Ratings lowered the issuer credit and senior unsecured issue-level ratings on U.S.-based oil and gas exploration and production company Extraction Oil & Gas Inc. to 'D' from 'CC'. The downgrade reflects Extraction's decision to not make the May 15 interest payment on its 2024 senior notes, and enter into a 30-day grace period to evaluate certain strategic alternatives. S&P does not believe that Extraction will make the interest payment within the 30-day grace period, and has lowered the ratings to 'D'. FIELDWOOD ENERGY: Bank Debt Trades at 87% Discount -------------------------------------------------- Participations in a syndicated loan under which Fieldwood Energy LLC is a borrower were trading in the secondary market around 13 cents-on-the-dollar during the week ended Fri., May 15, 2020, according to Bloomberg's Evaluated Pricing service data. The bank debt traded around 19 cents-on-the-dollar for the week ended May 8, 2020. The $1.1 billion facility is a Term loan. The facility is scheduled to mature on April 11, 2022. As of May 15, 2020, the amount is fully drawn and outstanding. The Company's country of domicile is United States. FORMING MACHINING: Bank Debt Trades at 25% Discount ---------------------------------------------------- Participations in a syndicated loan under which Forming Machining Industries Holdings LLC is a borrower were trading in the secondary market around 75 cents-on-the-dollar during the week ended Fri., May 15, 2020, according to Bloomberg's Evaluated Pricing service data. The $60.0 million facility is a Term loan. The facility is scheduled to mature on October 9, 2026. As of May 15, 2020, the amount is fully drawn and outstanding. The Company's country of domicile is United States. FORUM ENERGY: S&P Downgrades ICR to 'SD' on Distressed Exchange --------------------------------------------------------------- S&P Global Ratings lowered its issuer credit rating on Houston-based oilfield products and services provider Forum Energy Technologies Inc. to 'SD' (selective default) from 'CC'. At the same time, S&P lowered its issue-level rating on the company's senior unsecured notes to 'D' from 'CC'. The '4' recovery rating on this debt indicates its expectation for average (30%-50%; rounded estimate: 30%) recovery of principal in the event of a payment default. The downgrade to 'SD' follows the completion of Forum's previously announced debt tender offer at a significant discount to par value. The company exchanged about $58.3 million in aggregate principal amount of its senior unsecured notes for $23.3 million in cash, or a 60% discount to par value. S&P views the transaction as distressed and tantamount to default, as debt investors did not receive the originally promised amount, and there was a realistic possibility of a conventional default prior to the exchange. The transaction was conducted through a Dutch auction style tender, whereby Forum offered to repurchase debt at between $340 to $400 per $1,000 of principal amount. This included a $50 early tender payment but excluded accrued interest. The company was willing to spend up to $80 million in cash. Following this transaction, Forum has about $330 million par value of its senior unsecured notes that remain outstanding. Although the company does not have any debt maturities over the next 12 months, its revolving credit facility maturity would spring forward to July 2021 if the remaining senior unsecured notes are not repaid or refinanced by this date. S&P expects to review its ratings on Forum once it believes no further transactions it could view as distressed are likely to occur. FREEPORT-MCMORAN INC: Moody's Alters Outlook on Ba1 CFR to Neg. --------------------------------------------------------------- Moody's Investors Service affirmed Freeport-McMoRan Inc.'s Ba1 Corporate Family Rating, Ba1-PD Probability of Default rating, its Ba1 senior unsecured note ratings and the (P)Ba1 shelf rating for senior unsecured notes. The Baa2 rating for Freeport Minerals Corporation's guaranteed senior unsecured notes was also affirmed. The Speculative Grade Liquidity rating remains SGL-1. The outlook was changed to negative from stable. "The affirmation of FCX's ratings reflects the company's strong position in the global copper markets and solid liquidity position. Although metrics will be outside the rating category in 2020, gradual improvement over the second half of 2020, a stronger rebound in 2021 on increasing volumes and lower cost copper and gold production in Indonesia as the underground mining continues to ramp up is expected to return metrics to a level more in line with the rating. The negative outlook captures the duration of uncertainties caused by the impact of the coronavirus" said Carol Cowan, Senior Vice President and lead analyst for FCX. Affirmations: Issuer: Freeport-McMoRan Inc. Corporate Family Rating, Affirmed Ba1 Probability of Default Rating, Affirmed Ba1-PD Senior Unsecured Shelf, Affirmed (P)Ba1 Gtd. Senior Unsecured Regular Bond/Debenture, Affirmed Ba1 (LGD4) Issuer: Freeport Minerals Corporation Gtd. Senior Unsecured Regular Bond/Debenture, Affirmed Baa2 (LGD2) Outlook Actions: Issuer: Freeport Minerals Corporation Outlook, Changed To Negative From Stable Issuer: Freeport-McMoRan Inc. Outlook, Changed To Negative From Stable RATINGS RATIONALE FCX's Ba1 Corporate Family Rating incorporates the company's leading position in the global copper market as a low-cost producer with a diversified operating footprint in the US, South America and Indonesia. The rating considered the negative impact on copper and gold production at the Indonesian operations in 2019 and 2020 and higher cash costs as a result of the transition to underground mining and the reductions in volumes, particularly impactful in 2019. Copper prices however were lower than anticipated in 2019 due to the concerns on trading relationships between the US and China as well as global economic growth concerns and prices remained relatively range bound only bumping up late in the year on the Phase One agreement. Consequently, the company's performance was weaker than anticipated with adjusted leverage increasing to 4.9x at year-end 2019 from 1.9x the prior year. In 2020, the impact of the coronavirus and the increasing expectation for deterioration in global GDP, including for China, a key producer and consumer of copper, resulted in a significant collapse in copper prices. Average prices plummeted from approximately $2.74/lb in January to around $2.29/lb in April 2020. This precipitous drop also contributed to an approximate $238 million adjustment in the first quarter given the provisional pricing mechanism and a $222 million metal inventory adjustment. This is not expected to be repeated in the second quarter given the recent upward tick in copper prices. Freeports performance for the second half of 2020 is expected to show improvement as operations resume at Cerro Verde following Peruvian Government mandated mining curtailments since mid-March and ramp up continues at the Indonesian operations as the transition to underground mining continues within expectations. This is particularly important as the increasing gold production will contribute to reducing cash costs, especially at current gold prices. Based upon a $2.38/lb copper price in 2020 and $1,400/oz gold price, leverage will remain high at around 6x. This is expected to improve to around 3.6x in 2021 as copper and gold production in Indonesia continue to increase, thereby reducing cash production costs, assuming a $2.50/lb copper price and $1,400/oz gold price. In response to the impact of the coronavirus, FCX, as it has done in previous copper market downturns, has announced a number of actions to balance production to expected demand, reduce costs, and maintain balance sheet strength. These include, but are not limited to (based upon a $2.30/lb copper price, $1,600/oz gold price and $9/lb molybdenum price: a) reducing output, particularly in the company's North and South American copper mines and an overall global copper reduction of around 11%, reduction in unit cash costs due to energy savings, foreign exchange benefits, reduced milling and mining costs, higher by-product credits from gold in Indonesia and other savings. In total, given the actions put in place, approximately $1.3 billion in operation cost reductions and $100MM in exploration and administration cost reductions are expected. Additionally, capital expenditures have been reduced to $2 billion from the January 2020 guidance of $2.8 billion and dividends have now been suspended. Nonetheless, FCX is expected to have a modest cash burn in 2020, which is comfortably accommodated within its liquidity profile. The company has also implemented a number of actions at all its operations focused on the health and safety of its employees. The rating acknowledges FCX's continued focus on costs, and debt reduction undertaken since 2018, which include the early 2020 financing to redeem the 2021 maturities and repay a portion of the 2022 maturities. Actions taken by the company in recent years have provided a better cushion to tolerate a level of downward movement in copper prices, as seen in 2019 as well as the production volume and cost impact of transitioning to underground mining at the Indonesian operations given the depletion of the open pit mine. However, the weaker than anticipated copper prices in 2019 and the impact of the coronavirus in 2020 has absorbed some of this cushion. Factored into the CFR is the reduced gold and copper production and resulting higher costs at Grasberg in 2019 and 2020 as the Grasberg Block Cave and Deep MLZ underground mine developments continue. Initial production at the Grasberg Block Cave commenced during 2019 with continued production increases continuing to date in 2020. Production at the Deep Mill Level Zone continues to ramp with production increasing in each of 2020 and 2021, with full production expected in 2022. Particularly impactful to FCX's performance in 2019, in addition to lower copper prices, was the significant reduction in gold production at Grasberg to around 863,000 ounces (2.4mm ounces in 2018) and resultant increase in costs given the absence of significant by-product credits. Unit net cash costs at the Indonesian mining operations were $1.28/lb. in 2019 as compared with a credit of $0.58/lb. for the comparable 2018 period. Copper production is expected to increase in 2020, with the stronger jump in production seen in 2021. Production in 2020 will also reflect the start-up of the Lone Star Leach project in Arizona in the second half of 2020, which when fully ramped will produce around 200 MM lbs. per year. 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 copper market will be affected by the shock given the sensitivity of its customers to market demand and particularly sentiment as to GDP growth in China as well market sentiment as to global economic contraction expectations. In particular, copper is a leading indicator on expected GDP growth or contraction. Moody's regards the coronavirus outbreak as a social risk under its ESG framework, given the substantial implications for public health and safety. By the nature of its business, FCX faces a number of ESG risks typical for a company in the mining industry including but not limited to wastewater discharges, site remediation and mine closure, waste rock and tailings management, air emissions, and social responsibility given its often fairly remote operating locations. FCX has detailed protocols in place to manage its environmental risks. The company is subject to many environmental laws and regulations in the areas in which it operates all of which vary significantly. The mining sector overall is viewed as a very high-risk sector for soil/water pollution and land use restrictions and a high-risk sector for water shortages and natural and man-made hazards. In 2018 approximately 81% of FCX's water usage requirements were from recycled and reused sources. The company has spent between $400 million and $500 million on environmental capital expenditures and other environmental costs in each of the last several years. The SGL-1 speculative grade liquidity rating considers FCX's very good liquidity including its $1.6 billion cash position at March 31, 2020 and borrowing availability of approximately $3.48 billion ($13 million in letters of credit issued) under its $3.5 billion unsecured revolving credit facility (RCF - $3.26 billion matures April 20, 2024 with the balance maturing April 20, 2023). Financial covenants include a total net leverage ratio (total debt/EBITDA) of no more than 5.25x through June 2021 with cash of $1.25 billion to be offset to the debt covenant calculation and an interest coverage ratio (EBITDA/cash interest expense) of no less than 2.25x. The November 2019 amendment to the RCF increased the leverage ratio and reduced the amount of attributable cash that could be applied to the leverage covenant calculation. The negative outlook contemplates the weaker debt protection metrics in 2020 and the uncertainty surrounding the duration of negative impacts from the coronavirus and timing of global economic improvement given the differing positions of governments and regional and local communities as to the reopening of economies. The outlook anticipates a maximum leverage position or around 6x in 2020 improving to around 3.7x in 2021. The Ba1 rating on the FCX unsecured notes, at the same level as the CFR, reflects the absence of secured debt in the capital structure and the parity of instruments. The Baa2 rating of Freeport Minerals Corporation reflects the fact that this debt is at the company holding all the North and South American assets and benefits from a downstream guarantee from FCX. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS An upgrade to the ratings is unlikely until such time as the underground expansion at Grasberg is completed and the production profile at this mining site returns to higher copper and gold levels. Additionally, an upgrade would require better clarity on the company's financial policy and strategic growth objectives. An upgrade would be considered if the company can sustain EBIT/interest of at least 5x, debt/EBITDA under 2.5x and (CFO-dividends)/debt of at least 40% through various price points. A downgrade would result should liquidity materially contract, (CFO-dividends)/debt be sustained below 20% or leverage increase and be sustained above 3.5x post 2020. The principal methodology used in these ratings was Mining published in September 2018. FCX, a Phoenix, Arizona based mining company, is predominately involved in copper mining and related by-product credits from the mining operations (principally gold and molybdenum). The company's global footprint includes copper mining operations in Indonesia, the United States, Chile, and Peru. Revenues for the 12 months ended March 30, 2020 were $13.4 billion. FRONTERA GENERATION: S&P Cuts Debt Rating to 'BB-'; Outlook Stable ------------------------------------------------------------------ S&P Global Ratings lowered its rating on Frontera Generation Holdings LLC's $775 million term loan B and $35 million revolving credit facility to 'BB-' from 'BB'. Recovery rating remains at '1', reflecting a rounded 90% recovery expectation under a hypothetical default scenario. "The downgrade reflects that Frontera was unable to sweep a considerable amount of cash in 2019 or 2020 despite our expectation that it will continue to benefit from higher energy margins than those of a typical U.S.-based merchant power generator. As of March 31, 2020, the project had about $761.5 million outstanding under its $775 million term loan B," S&P said. "The project swept $4 million in 2019 and we do not expect it to sweep any cash in 2020. When we affirmed our rating in October 2018 following Frontera's debt upsizing, we had expected that it would sweep more than $100 million in cash by the end of 2020. While we still consider that the project has a premium compared to U.S. based projects that sell energy in the U.S. market, we are now removing our one-notch positive peer comparison, as the project was not able to materialize this competitive advantage by pre-paying down a material amount of debt," the rating agency said. Despite the mild weather, weak commodity prices, and about 3 gigawatts (GW) of new supply in Mexico, the project was still able to realize average spark spreads of more than $30 per megawatt hour (MWh) in the second and third quarters of 2019 (when it reported EBITDA of $30.5 million and $36.7 million, respectively). However, Frontera's average spark spread has declined materially to less than $10/MWh since the fourth quarter of 2019 (with EBITDA below $12 million on a quarterly basis, some of this explained by accelerated rotor replacement and covid-19 related demand constraints in 2020). "We have revised our base-case projections to reflect the project's weaker-than-expected price environment, but still expecting spark spreads above $30/MWh in the second and third quarters of the year, in which summer power prices are typically higher. Under our revised base case, we expect that there will be about $570 million outstanding under Frontera's term loan as of its refinancing date, which compares with our initial expectation of about $450 million," S&P said. While the main reason for the lower debt pay down was the project's weaker-than-expected energy margins, its free cash flow was also lower because it accelerated the rotor replacements it had originally budgeted for 2023. This represents about $25 million of spending, mostly between 2019 and 2020, that will be finalized in 2021. S&P expects that the project's free cash flow will improve after 2021 and believe it will be able to start paying down a material amount of debt next year. The plant has locked in a 15-year capacity agreement with the Mexican state-owned electricity company Comision Federal De Electricidad (CFE), which will provide it with about $12 million of gross margin per year from 2019-2033. While this constitutes just 10% of Frontera's expected total margin, S&P notes that it has implemented significant currency and inflation hedges on this revenue. After 2033, S&P expects market capacity prices to account for about 25% of the project's gross margin. "We expect that the demand shock stemming from the coronavirus pandemic will be followed by a prolonged recovery. Due to the reduced demand for power because of the coronavirus pandemic, we expect power prices to remain somewhat depressed in 2020. We expect that the reduction in demand will last through the second quarter of 2020 and possibly beyond. While our base-case scenario assumes a recovery in power prices, we expect it to occur gradually," S&P said. 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," the rating agency said. The stable outlook reflects S&P's view that Frontera will achieve spark spreads in the mid-$20 range for 2020 and 2021 and debt service coverage ratios (DSCRs) of about 1.55x. S&P also expects that the project will be able to sweep more than $45 million in cash through year-end 2021. "We could consider lowering our rating if the project continues to sweep less cash than expected. This would likely occur due to lower-than-expected spark spreads in the Mexican market because of mild weather or weaker-than-anticipated demand. We believe a milder summer or a prolonged impact of COVID would be likely factors for pressuring credit quality. In addition, we could lower our rating if the project's downside resilience declines or its minimum DSCR falls below 1.4x," S&P said. "An upgrade, could occur if pricing at the Reynosa node improves such that the project sweeps or prepays a material amount of cash in the next 12-18 months to reduce the principal outstanding on its term loan B," the rating agency said. GARDNER DENVER: Moody's Alters Outlook on Ba2 CFR to Stable ----------------------------------------------------------- Moody's Investors Service changed the ratings outlook for Gardner Denver, Inc., to stable from positive. Gardner Denver, Inc. is a subsidiary of Ingersoll Rand Inc. (formerly known as Gardner Denver Holdings, Inc.). Gardner Denver Holdings, Inc. was renamed Ingersoll Rand Inc. as part of Ingersoll Rand Inc.'s merger with the spun off industrial business of Ingersoll-Rand plc (now known as Trane Technologies plc) on February 29, 2020. Moody's affirmed Ingersoll Rand's corporate family rating and probability of default rating at Ba2 and Ba2-PD, respectively. Concurrently, Moody's affirmed the Ba2 ratings for the company's revolving credit facility and senior secured bank debt. The company's speculative-grade liquidity rating was downgraded to SGL-2 from SGL-1, denoting a moderated but still good liquidity profile. The ratings outlook change to stable from positive reflects Moody's view that the negative impact of the coronavirus on the global macroeconomy and, in turn, the company's top-line and earnings, will prolong the time anticipated for it to achieve the leverage and free cash flow targets that had been anticipated following the recent combination with the former Ingersoll-Rand plc's industrial business. Key credit metrics over the near-term are expected to be under pressure from anticipated lower demand stemming from the coronavirus as well as further pressure on the oil & gas sector that had already experienced a degree of softness which has been exacerbated. "Once conditions normalize from the ongoing negative impact of the coronavirus pandemic, we expect that the company will continue on the path it had been on towards improving its credit profile following its combination with Ingersoll-Rand plc's industrial business earlier this year," said Gigi Adamo, Moody's Vice President. "We expect that the company's good liquidity profile will enable it to withstand the coming market downcycle," added Adamo. The rapid and widening spread of the coronavirus outbreak, deteriorating global economic outlook, low 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 one of the sectors affected by the shock given its sensitivity to consumer demand and sentiment. More specifically, the end-markets the company is exposed to, although diversified, are expected to experience lower demand at varying levels in these unprecedented operating conditions, and Ingersoll Rand 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 Moody's view of the impact on Ingersoll Rand of the breadth and severity of the shock, and the extent to which it has affected the company's credit quality. The affirmation of the Ba2 CFR is based on Moody's expectation that Ingersoll Rand's credit profile can sustain a temporary declining top-line environment given its strong free cash flow generating capability. Additionally, the Merger further diversifies and enhances the company's scale, doubling its revenue base and solidifying already entrenched market positions and brand strength in the mission critical flow control, pump, compressor and industrial technologies markets it serves. The downgrade of the speculative-grade liquidity rating to SGL-2 from SGL-1 reflects Moody's expectation that the company will maintain a good liquidity profile, but that covenant headroom will tighten as earnings compress in 2020, potentially constraining availability under its sizable $1 billion backstop revolving credit facility. Moody's took the following rating actions: Affirmations: Issuer: Gardner Denver, Inc. Corporate Family Rating, Affirmed Ba2 Probability of Default Rating, Affirmed Ba2-PD Senior Secured Bank Credit Facility, Affirmed Ba2 (LGD3) Issuer: Ingersoll-Rand Services Company Senior Secured Bank Credit Facility, Affirmed Ba2 (LGD3) Downgrades: Issuer: Gardner Denver, Inc. Speculative-Grade Liquidity Rating, Downgraded to SGL-2 from SGL-1 Outlook Actions: Issuer: Gardner Denver, Inc. Outlook, Changed To Stable From Positive Issuer: Ingersoll-Rand Services Company Outlook, Changed To Stable From Positive RATINGS RATIONALE The company's Ba2 CFR broadly reflects its well-established position and brand strength in mission critical engineered products across its key segments spanning industrial technologies and services to precision and science technologies as well as high pressure solutions. The CFR also reflects the company's breadth and depth of its sales base following a more than two-fold increase in size due to the Merger; healthy operating margins; and good free cash flow generation. Moody's recognizes that the Merger results in a stronger business profile with an enhanced competitive position in the company's industrial end-markets. In addition, the company is expected to continue to possess a good liquidity profile. At the same time, the Ba2 CFR also considers that Ingersoll Rand will be operating in a softening global macroeconomic environment compounded by the negative effects of the coronavirus, with continued top-line pressure from the upstream energy business (albeit lower exposure of less than 10% of total revenues following the recent combination). The company's EBITDA margins are anticipated to soften due to meaningful top-line pressure, but are expected to remain above 15%. The ratings also recognize the integration risk related to the Merger given the sizable nature of the same. Although cost synergies are projected to be meaningful, associated upfront costs are expected to be even more sizable including associated separation and integration costs. The stable outlook reflects Moody's expectation that the company will maintain a good liquidity profile amid the coronavirus pandemic, despite meaningful downward pressure on the company's revenues and earnings stemming from both the oil price shock and the negative impact of the coronavirus on its business, including industrial operations more broadly. Moody's expects that capital spending by companies in the energy sector will be meaningfully reduced. From a corporate governance perspective, Moody's notes that the company has prudently allocated its cash flow towards meaningful debt reduction since its May 2017 IPO, and that acquisitions have contributed to EBITDA growth in support of a more manageable level of share repurchases. In addition, financial sponsor KKR's ownership percentage has been diluted post the combination, implicitly further reducing event risk and notwithstanding KKR's maintenance of considerable board representation via its chairman. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Ratings could experience downward ratings pressure if liquidity meaningfully erodes such that annual free cash flow falls below $200 million annually and cash balances decline below $300 million. In addition, if debt/EBITDA exceeds 4.5x and EBITA/interest falls under 4.0x on a sustained basis, the ratings could also be considered for downgrade. More aggressive financial policies including debt-financed share repurchases (whether for KKR's remaining stake or in the open market) and/or the introduction of a meaningful recurring dividend or sizable debt-funded acquisitions could also lead to a ratings downgrade. Although not anticipated in the near-term, ratings could experience upward pressure if the company's top-line and earnings revert to a positive trajectory and debt-to-EBITDA improves to the mid-2x level, EBITA-to-interest exceeds 5.0x and free cash flow-to-debt exceeds 15% -- all on a sustained basis. A normalized governance structure with a diverse group of shareholders that balances debt and equity holder interests would also be considered appropriate for prospectively higher ratings. In addition, a ratings upgrade is predicated on Moody's expectation that Ingersoll Rand will not engage in debt-financed share repurchases and/or dividends over the next twelve to eighteen months. The principal methodology used in these ratings was Manufacturing Methodology published in March 2020. Headquartered in Davidson, North Carolina, Ingersoll Rand Inc. is a publicly-traded (NYSE: IR) global manufacturer of compressors, pumps and blowers used in general industrial, energy, medical and other markets. KKR owns approximately 17% of the company's common shares. Pro forma 2019 annual revenues exceed $6 billion. GAVILAN RESOURCES: Moody's Cuts PDR to D-PD on Bankruptcy Filing ---------------------------------------------------------------- Moody's Investors Service downgraded Gavilan Resources, LLC's Probability of Default Rating to D-PD from Ca-PD /LD. Gavilan's other ratings were affirmed, including its Corporate Family Rating at Ca and senior secured second lien term loan rating at C. The outlook remains negative. Downgrades: Issuer: Gavilan Resources, LLC Probability of Default Rating, Downgraded to D-PD from Ca-PD/LD Affirmations: Issuer: Gavilan Resources, LLC Corporate Family Rating, Affirmed Ca Senior Secured Term Loan, Affirmed C (LGD5) Outlook Actions: Issuer: Gavilan Resources, LLC Outlook, Remains Negative RATINGS RATIONALE Gavilan filed for bankruptcy under Chapter 11 on May 16 resulting in the downgrade of its PDR to D-PD. [1] Gavilan's Ca CFR and C senior secured second lien term loan ratings reflect Moody's views on potential recovery under the instruments. Shortly following this rating action, Moody's will withdraw all of Gavilan's ratings. The principal methodology used in these ratings was Independent Exploration and Production Industry published in May 2017. Gavilan, headquartered in Houston, Texas, is a privately-owned independent exploration and production company in the Eagle Ford Shale. GENWORTH FINANCIAL: S&P Cuts ICR to 'B-' on Liquidity Risk ---------------------------------------------------------- S&P Global Ratings said it lowered its long-term issuer credit rating on Genworth Financial Inc. (NYSE:GNW) to 'B-' from 'B'. S&P has revised the CreditWatch placement on GNW and Genworth Mortgage Insurance Co. (GMICO) to negative from developing, where the ratings were originally placed on Sept. 26, 2018. S&P also lowered the issue-level ratings on GNW's senior debt to 'B-' from 'B'. Furthermore, to correct an error in how S&P applied its notching guidelines for hybrid capital instruments, the rating agency has lowered the rating on Genworth's junior subordinated debt to 'CCC-' from 'B-'. Under S&P's notching guidelines, this debt should be rated three notches below its rating on the holding company. The downgrade on GNW reflects S&P's view of heightened liquidity risks resulting in a wider-than-standard three-notch holding company rating differential vis-a-vis its group credit profile. GNW has $1.1 billion of maturities due in 2021, of which $388 million is due in the first quarter. The sale of the Canadian mortgage insurance business generated sufficient proceeds for the company to service and pay off current-year obligations, leaving about $575 million of holding company cash and liquid assets as of March 31, 2020. However, S&P believes the anticipated holding company resources may not be sufficient to service the debt maturities due in the second half of 2021, especially if any payments related to AXA S.A. litigation are required. AXA is seeking payments of up to $625 million (including tax gross up of $142 million) alleging, among other items, that it has paid remediation to customers who purchased payment protection insurance from Genworth's former lifestyle protection insurance business it sold to AXA in 2015. In consideration of the stressed market environment, global recession, and pressure on mortgage insurance earnings, S&P does not believe substantial dividends from either the Australian or U.S. mortgage insurance businesses are forthcoming in 2020, and possibly not in 2021 if the recession is deep and prolonged." The acquisition agreement with China Oceanwide Holdings Group Co., Ltd. (Oceanwide) was extended earlier in the year for the 14th time until June quarter-end. S&P believes that the odds of this acquisition closing by then have declined in view of the stressed global economic conditions, as it seems the delay is mostly due to Oceanwide's financing of the acquisition. Outside of the planned capital contributions by the new parent, Genworth's options to address the looming obligations are limited. One plan the company highlighted in its earnings call is a possible debt issuance by the U.S. mortgage insurance business or a secured loan facility by GNW. Given the current environment, there are execution challenges. If such a plan could be executed, the issuance might alleviate near-term liquidity concerns. However, S&P expects that the new debt could carry a higher cost and the amount needed to be raised would likely be higher than the upcoming maturities to account for AXA payments, debt service costs, and holding company cash buffers. In such a scenario, the group debt load would increase. S&P expects that even without any additional debt, fixed-charge coverage would be below 2x into 2021 due to elevated corporate expenses and depressed earnings; however, as the pandemic eases, the rating agency expects coverage will improve by 2022. An increase in debt load would put further strain on the group's credit profile, and by extension to S&P's ratings on GMICO. S&P's ratings on GMICO are capped at one notch above the group credit profile. If the acquisition is completed, the question of the parent's influence on the ratings on GNW would still need to be addressed. "We do not rate Oceanwide and thus, do not have any visibility on its approach to structuring the deal on its end, but we understand that the financing needed for the acquisition and subsequent capital contributions are possibly being sourced through borrowings and the sale of U.S. commercial real estate projects. The financing is looking like a leveraged acquisition and in view of the global recession, we now believe that the upside potential for the ratings subsequent to the acquisition could be limited," S&P said. "Concurrent with the lowering of the holding company issuer credit rating, we are also lowering our rating on the company's junior subordinated debt to 'CCC-' from 'B-' in order to correct an analytical error and to reflect the rating action on the holding company. Per our Hybrid Capital Criteria, the rating should be three notches below the issuer credit rating, reflecting two notches for subordination combined with one notch for payment deferral risk," the rating agency said. Previously, the rating incorporated only a one-notch differential below the 'B' rating that had been in effect for the holding company prior to the downgrade (in other words, the rating should have been 'CCC'). The negative CreditWatch placement on the holding company reflects liquidity risks due to near-term debt maturities, whereas that on GMICO reflects negative pressures on the group credit profile from a combination of potentially higher debt load and stressed economic conditions pressuring capital and earnings. S&P would likely lower the holding company rating by one or more notches over next 90 days if it believes the company will not get access to additional resources to meet its pending obligations in 2021. S&P could lower the ratings on GMICO if: -- S&P does not expect the fixed-charge coverage to be above 2.0x on a sustainable basis; or -- The group capitalization worsens below 'BBB' confidence level on a sustained basis. Downward rating pressure could also emanate from broader credit considerations related to the potential ownership by Oceanwide post transaction close. S&P could affirm the ratings and assign a negative or stable outlook if near-term pressures on liquidity, earnings, and capitalization ease, provided that downside risk from the Oceanwide acquisition is determined to be low. Upside potential exists, if it believes broader credit considerations of the ownership by Oceanwide support a higher rating on GNW. GI DYNAMICS: Maturity Date of June 2017 Note Extended to June 15 ---------------------------------------------------------------- GI Dynamics Inc. disclosed that the Company is continuing to have discussions with institutional and private investors regarding a potential fundraising. In addition, the Company is continuing to seek to secure a bridge loan in the event that its current cash reserves are insufficient to sustain the Company's operations until the closing of any fundraising that it may be able to secure. However, there is no guarantee that the Company will be successful in securing a bridge loan or funds from any potential investors. If such funds cannot be secured, the Company would need to cease operations. Crystal Amber, the Company's major stockholder, remains supportive of the ongoing financing efforts of the Company. As a result, Crystal Amber has agreed to extend the maturity date of the June 2017 Note from May 15, 2020 to June 15, 2020. This further extension follows the recent extensions announced by the Company on April 1, 2020 and May 4, 2020. As also announced by the Company on May 11, 2020, the Company has submitted a preliminary proxy statement containing a proposal to delist the Company from the Official List of the Australian Securities Exchange to the ASX and the U.S. Securities Exchange Commission for their review. The Company anticipates issuing a definitive proxy statement to stockholders and providing further details on the proposed timing of the special meeting and delisting process shortly. About GI Dynamics Founded in 2003 and headquartered in Boston, Massachusetts, GI Dynamics, Inc. (ASX:GID) is a developer of EndoBarrier, an endoscopically-delivered medical device for the treatment of type 2 diabetes and the reduction of obesity. EndoBarrier is not approved for sale and is limited by federal law to investigational use only. EndoBarrier is subject to an Investigational Device Exemption by the FDA in the United States and is entering concurrent pivotal trials in the United States and India. GI Dynamics reported a net loss of $17.33 million for the year ended Dec. 31, 2019, compared to a net loss of $8.04 million for the year ended Dec. 31, 2018. As of March 31, 2020, the Company had $5.65 million in total assets, $8.71 million in total liabilities, and a total stockholders' deficit of $3.06 million. Wolf and Company, P.C., in Boston, Massachusetts, the Company's auditor since 2019, issued a "going concern" qualification in its report dated March 26, 2020 citing that the Company has suffered losses from operations since inception and has an accumulated deficit and working capital deficiency that raise substantial doubt about the Company's ability to continue as a going concern. GLASS MOUNTAIN: Bank Debt Trades at 53% Discount ------------------------------------------------ Participations in a syndicated loan under which Glass Mountain Pipeline Holdings LLC is a borrower were trading in the secondary market around 47 cents-on-the-dollar during the week ended Fri., May 15, 2020, according to Bloomberg's Evaluated Pricing service data. The bank debt traded around 52 cents-on-the-dollar for the week ended May 8, 2020. The $300 million facility is a Term loan. The facility is scheduled to mature on December 23, 2024. As of May 15, 2020, $293.3 million of the loan remains outstanding. The Company's country of domicile is United States. GRAN TIERRA: S&P Cuts ICR to 'CCC+'; Ratings on Watch Negative -------------------------------------------------------------- S&P Global Ratings lowered its issuer credit rating on Canada-based oil and gas producer Gran Tierra Energy Inc. (GTE) to 'CCC+' from 'B' and the issue-level ratings to 'CCC+' from 'B' on its 6.25% senior unsecured notes due 2025 and 7.75% senior unsecured notes due 2027 (for $300 million each). S&P placed the ratings on CreditWatch with negative implications. The CreditWatch negative reflects that the rating agency could envision a possible acceleration on its senior secured revolving credit facility if GTE breaches its financial restrictions. S&P expects to resolve the CreditWatch within the next 30 days once it has more clarity on the agreement achieved with lenders and the new borrowing base on its credit facility. Even though as of March 31, 2020 the company was in compliance with these covenants, the volatility affecting oil prices and related reduction in GTE's production has significantly lowered its EBITDA generation and increased the need for debt funding, increasing its debt up to $804.0 million (from $718.0 million as of Dec. 31, 2019). Given this, GTE has requested waiver authorizations to protect itself against the expected severe impact on the company amid the current recessionary conditions. S&P expects more visibility on the covenant waivers by the end of this May. In the event that the company fails to renegotiate the contractual conditions on its secured committed credit facility agreement, first S&P expects lenders to accelerate the repayment of the amounts drawn, which as of March 31, 2020, totaled $204 million. Given GTE's limited available cash, S&P believes lenders could also call on the collateral under the committed credit facilities. In this case, this facility is secured against the assets of certain subsidiaries that are considered essential for GTE's operations. Nevertheless, this could also trigger an event of default on GTE's senior unsecured notes, because it would allow bondholders to demand the repayment of its outstanding balance of $600 million ($300 million from each bond). In the event that lenders reject the petition for waivers, a weakening of GTE's liquidity sources will be inevitable, because S&P believes lenders will not allow the company to continue borrowing from its revolving credit facility. As of March 31, 2020, GTE had $96 million available to draw from its committed credit line. On the other hand, given the redetermination of the borrowing base on GTE's secured committed credit facility expected to occur in May 2020, S&P also expects that under adverse conditions, lenders could reduce the amount loaned to the company. In the first three months of 2020, GTE withdrew about $90.0 million from its secured committed credit facility, with an overall total of $204.0 million withdrawn (compared to the $300.0 million authorized). The company used $30.0 million-$40.0 million from this withdrawal to fulfill outstanding balances on accounts payable, mostly for trading activities related to the sale of its crude oil and gas production. The remaining $15.0 million-$25.0 million was used for operating activities and $30 million remains in available cash. "We believe that at this point, although the company does not have any debt maturities, its weaker operating cash generation has led it to continue increasing debt funding to cover its cash shortfall. Therefore, we now view GTE's liquidity as less than adequate because we don't believe it could withstand the current economic conditions with limited access to financing markets," S&P said. The company's production for the first quarter of 2020 totaled 24,850 boepd net after tax and inventory changes, a drop of 20.0% compared to the first quarter of 2019 and 10.6% compared to the fourth quarter of 2019. As expected, in March 2020 oil prices dropped up to about $22.7 per barrel, leading GTE to reduce operating netbacks for the first quarter of the year. For the three months ended March 31, 2020, the company reached an operating netback of $16.56 per barrel (versus $36.08 in 2019), a more than 50.0% reduction compared to last year. S&P believes GTE will continue shutting down several fields with low netbacks at current oil prices to reduce further impact on its operating cash generation. GRANITE LAKES: Seeks Approval to Hire Buchalter as Special Counsel ------------------------------------------------------------------ Granite Lakes, LLC seeks approval from the U.S. Bankruptcy Court for the Western District of Washington to employ Buchalter, a Professional Law Corporation as special counsel. Buchalter will represent the company in the adversary proceeding styled Granite Lakes, LLC v. Tipp Investments, LLC (Case No. 20-01023-CMA). Brad Thoreson, Esq., an attorney at Buchalter, disclosed in court filing that the firm is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. The firm can be reached through: Brad P. Thoreson, Esq. Buchalter, a Professional Law Corporation 1420 5th Avenue, Suite 3100 Seattle, WA 98101 Telephone: (206) 319-7036 Email: bthoreson@buchalter.com About Granite Lakes Granite Lakes, LLC sought protection under Chapter 11 of the Bankruptcy Code (Bankr. W.D. Wash. Case No. 20-10635) on Feb. 27, 2020. The petition was signed by Robert Russell, Debtor's manager. At the time of the filing, Debtor had estimated assets of between $10 million and $50 million and liabilities of between $500,000 and $1 million. Judge Christopher M. Alston oversees the case. Debtor tapped Law Office of James E. Dickmeyer PC, as its legal counsel. GUAM: Moody's Confirms Ba1 Rating & Alters Outlook to Negative -------------------------------------------------------------- Moody's Investors Service has confirmed the Government of Guam's Ba1 general obligation rating. This action concludes the review of the rating for possible downgrade that it initiated on March 25 due to the significant reduction in visitors to the territory from Asia as a result of the coronavirus pandemic and the resulting contraction of Guam's important tourism sector. This action directly affects approximately $27 million outstanding general obligation bonds. The outlook has been revised from stable to negative. RATINGS RATIONALE The confirmation of Guam's rating reflects its expectation that the impact of the coronavirus pandemic on the government's finances and liquidity will be manageable in the near term. Key contributors to this action include the substantial assistance that the government is expected to receive from the federal government and the continuation of significant military construction activity in the territory. The Ba1 rating incorporates Guam's above-average exposure to the economic and fiscal effects of the current coronavirus pandemic due to the importance of international tourism in the territory's economy, a significant accumulated general fund deficit, and debt levels which, while below those of other territories, are significantly above US state medians. Generally positive economic trends prior to the current crisis and a favorable pension funding situation are also reflected in the rating. The rapid and widening spread of the coronavirus outbreak, deteriorating global economic outlook, falling oil prices, and financial market declines are creating a severe and extensive credit shock across many sectors, regions and markets. The combined credit effects of these developments are unprecedented. Moody's regards the coronavirus outbreak as a social risk under its ESG framework, given the substantial implications for public health and safety. RATING OUTLOOK The negative outlook reflects the risks that the recovery of Guam's important tourism sector will be later and slower than currently expected and that federal assistance may be less than anticipated, placing pressure on the government's finances and liquidity. FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATING - A multi-year improvement in general fund liquidity and financial performance, including the restoration of positive fund balances without the use of deficit financings. - Significant expansion and diversification of the economy. FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATING - A slow recovery of the tourism industry and tax revenues, not offset by increased federal assistance, leading to a weakening of governmental liquidity and financial position. - A return to deficit financings. - Increase in debt levels. LEGAL SECURITY The general obligation bonds are secured by the full faith and credit of the Government of Guam. PROFILE The Territory of Guam is located in the western Pacific Ocean approximately 3,800 miles west-southwest of Honolulu, 1,550 miles south-southeast of Tokyo, and 1,600 miles east of Manila. The land area is 212 square miles, approximately the same size as the District of Columbia, and the population is approximately 162,900. The gross domestic product was $5.9 billion in 2018 and GDP per capita was $36,341, approximately 58% of the US level. HANGER INC: S&P Affirms 'B+' ICR; Rating Off CreditWatch Negative ----------------------------------------------------------------- S&P Global Ratings affirmed its 'B+' issuer credit rating on Hanger Inc. and removed it from CreditWatch negative, where the rating agency placed it on April 20, 2020. Hanger's amendment provides the company the headroom to weather the impact from COVID-19. The company recently amended its credit agreement with its revolving facility lenders, addressing the risk of covenant pressure under the original agreement. The amendment has increased the allowable leverage that Hanger can carry and incorporated a number of adjustments that will enable the company to maintain covenant compliance, despite anticipated near-term operational disruptions due to the COVID-19 pandemic. "We forecast leverage to increase above 5x (the rating threshold) in 2020, but return to below 5x in 2021, after medical procedure volumes normalize. Although Hanger's leverage may spike materially (partially because we do not net cash in our leverage calculation), our current base-case forecast assumes the impact of the pandemic will be largely limited to fiscal 2020. We also believe the company's leading market position and its long-term prospects remain solid and generally unaffected by the disruption," S&P said. The company's operating performance in the first quarter of fiscal 2020 was generally in line with S&P's projections. The company's revenue declined approximately 1%, primarily driven by challenges stemming from the pandemic in the last two weeks of March, when COVID-19 spread globally and strict stay-at-home measures were implemented in the U.S. "We expect the pandemic to have a more pronounced effect on Hanger's operating performance in the second and third quarters. The company said it estimates orthotic and prosthetics (O&P) visits in April declined 40%. At the same time, we expect Hanger to partially offset the anticipated revenue declines with the cost reduction measures it implemented in April, which should reduce its fixed costs by $75 million - $80 million over six months and capital expenditure by about $10 million - $15 million compared with the company's initial plan for 2020," S&P said. "As some markets begin a phased reopening process in May 2020, we estimate the procedure volume will start to pick up in the coming months. However, even if 2021 procedure volumes do not fully recover to their pre-COVID-19 levels, we think the company should readily be able to sustain leverage below 5x, given the leverage of about 4x at the end of 2019," the rating agency said. The stable outlook reflects S&P's view that post amendment the company has sufficient liquidity sources to cover its needs for a year. In addition, while it expects leverage to temporarily increase in 2020, S&P projects it will return to below 5x in 2021 after medical procedure volumes normalize. "We would lower our rating on Hanger if we see a higher risk that Hanger's operating performance may remain weaker than projected even in fiscal 2021 if the pandemic is prolonged, or if procedure volumes remain low because of patient reluctance to visit medical offices, causing leverage to remain above 5x for an extended period," S&P said. "Although unlikely in the coming 12 months, we could raise our rating on Hanger if the company materially increases its scale and EBITDA margins or reduces its debt such that we become confident it will sustain adjusted debt to EBITDA significantly below 4x," the rating agency said. HEALTHCHANNELS INTERMEDIATE: Bank Debt Trades at 16% Discount ------------------------------------------------------------- Participations in a syndicated loan under which Healthchannels Intermediate Holdco LLC is a borrower were trading in the secondary market around 84 cents-on-the-dollar during the week ended Fri., May 15, 2020, according to Bloomberg's Evaluated Pricing service data. The $385.0 million facility is a Term loan. The facility is scheduled to mature on April 3, 2025. As of May 15, 2020, the amount is fully drawn and outstanding. The Company's country of domicile is United States. HENRY VALENCIA: Seeks to Hire Hurley Toevs as Special Counsel ------------------------------------------------------------- Henry Valencia, Inc. seeks approval from the U.S. Bankruptcy Court for the District of New Mexico to employ Hurley, Toevs, Styles, Hamblin Panter, PA as special counsel. Hurley Toevs will provide legal services in connection with the sale of Debtor's corporate assets. The firm's attorneys and paralegal will be paid at hourly rates as follows: Thomas Toevs Attorney $350 Mandeep Talwar Attorney $195 Elaine Juancho Paralegal $95 The firm received payment of $19,935.73 for services rendered prior to Debtor's bankruptcy filing. Thomas Toevs, Esq., an attorney at Hurley Toevs, 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: Thomas H. Toevs, Esq. Hurley, Toevs, Styles, Hamblin Panter, PA 4155 Montgomery Blvd., NE Albuquerque, NM 87109 Telephone: (505) 888-1188 Facsimile: (505) 888-9215 Email: ttoevs@hurleyfirm.com About Henry Valencia Henry Valencia, Inc. is a dealer of Buick, Chevrolet, GMC cars in Espanola, NM. Henry Valencia offers new and pre-owned cars, trucks, and SUVs. Visit https://www.henryvalencia.net -- Henry Valencia sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D. N.M. Case No. 20-10539) on March 3, 2020. In the petition signed by Margaret Valencia, dealer owner and operator, Debtor estimated $1 million to $10 million in both assets and liabilities. Christopher M. Gatton, Esq., at Giddens & Gatton Law, P.C. is Debtor's legal counsel. HERBALIFE NUTRITION: Moody's Rates $600MM Sr. Unsec. Notes 'B1' --------------------------------------------------------------- Moody's Investors Service assigned a B1 rating to Herbalife Nutrition Ltd.'s new $600 million senior unsecured 5.25-year notes due 2025. The notes will be issued at Herbalife Nutrition Ltd. and HLF Financing, Inc., a wholly owned subsidiary of Herbalife. The new bonds will be pari passu in all respects with the existing 7.25% notes due 2026 issued by HLF Financing SaRL, LLC. The 2026 notes are guaranteed by Herbalife Nutrition Ltd. and the new 2025 notes are guaranteed by HLF Financing SaRL, LLC. with both notes supported by upstream guarantees from the same domestic subsidiaries. The existing unsecured notes maturing in 2026 are issued by HLF Financing SaRL, LLC. All other ratings for Herbalife including the Ba3 Corporate Family Rating and Ba3-PD Probability of Default Rating remain unchanged. The company's SGL-2 Speculative Grade Liquidity Rating and stable outlook are unaffected. Net proceeds from the new offering will be used for general corporate purposes, which may include repurchases of its common shares and other capital investment projects. The following ratings/assessments are affected by its action: New Assignment: Issuer: Herbalife Nutrition Ltd. Gtd Senior Unsecured Notes, Assigned B1 (LGD4) The rating outlook is stable. Herbalife Nutrition Ltd. and HLF Financing, Inc are expected to be co-borrowers on the proposed USD issuance. RATINGS RATIONALE Herbalife's Ba3 CFR reflects its niche product and service offering and its history of debt financed share buybacks. The company offers a combination of meal replacement products and customer support, which offers clients an avenue to weight loss and improved nutrition. While the company has been in existence for more than 40 years, there are parts of its business model that are fragile. Its global multi-level marketing structure has been under scrutiny for years by a number of regulatory agencies. The company's business model is highly reliant upon its ability to recruit and retain sales representatives around the world. There is long term risk to multi-level marketers in developing markets as increasing retail penetration, e-commerce activity, and competition gradually diminish the current distribution advantages. Developing markets also tend to include more volatile economies and foreign exchange rate exposure. Herbalife must therefore maintain stronger credit metrics than comparably rated companies that have a more stable business profile. Historically, the company has completed considerable debt financed share buybacks. Herbalife's credit profile is supported by the company's good profitability and cash flow and excellent geographic diversity. Finally, nutrition and wellness are a sector that will continue to see strong long-term demand driven by the aging population and obesity trends. Moody's also recognizes the challenges that Herbalife will face given growing governmental mandates for social distancing, reflecting efforts to contain the coronavirus, that directly contrasts with the company's inherent MLM business model. Herbalife reported that volume points were down 0.7% in April following a solid 5.6% increase in the first quarter. Moody's expects debt-to-EBITDA to rise from 3.0x at December 2019 to a range of 3.2x-3.8x over the next year because of the increased debt and the potential range of earnings declines. The rapid and widening spread of the coronavirus outbreak, deteriorating global economic outlook, falling oil prices, and asset price declines are creating a severe and extensive credit shock across many sectors, regions and markets. The combined credit effects of these developments are unprecedented. The consumer products sector has been one of the sectors affected by the shock given its sensitivity to consumer demand and sentiment. More specifically, the weaknesses in Herbalife's credit profile, including its exposure to multiple affected countries have left it vulnerable to shifts in market sentiment in these unprecedented operating conditions and the company remains vulnerable to the outbreak continuing to spread. Moody's regards the coronavirus outbreak as a social risk under its ESG framework, given the substantial implications for public health and safety. Other social risks are also a key consideration in Herbalife's credit profile. Sales representatives can earn commissions, not only for their own sales, but also for sales made by the people they recruit, which can lead to unfavorable regulatory scrutiny. In addition, changes to consumer preferences can also drive shifts in demand. Herbalife is focused on reducing its environmental footprint. The company continues to identify carbon emission and resource conservation projects. For example, Herbalife has utilized technology in its manufacturing operations that allows for significantly faster production than the industry standard, using less electricity and resources. In packaging, Herbalife focuses on reductions in single-use plastics and plastic bags. Herbalife has an aggressive financial policy as demonstrated by its continued debt financed share repurchases. The company has publicly stated that it is comfortable with gross debt to EBITDA of 3.0x. The company's debt to EBITDA is currently at about 2.6x, (3.0x including Moody's adjustments) based on their calculations. Herbalife recently appointed a new chief executive, following the retirement of the previous CEO. The vast majority of Herbalife's Board members are independent directors. The stable outlook reflects Moody's view that Herbalife will continue to generate good free cash flow but that efforts to contain the coronavirus will reduce earnings and moderately increase leverage over the next year. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING The rating could be downgraded if Herbalife's operating performance deteriorates, or if there is an adverse shift in the industry's regulatory environment. Ratings could also be downgraded if debt/EBITDA is sustained above 4.0x, or if liquidity deteriorates. The rating could be upgraded if the company achieves greater scale, profitability improves, and Moody's gains greater comfort with the industry's regulatory environment and business model. The rating could also be upgraded if Herbalife demonstrates that it will maintain a more conservative financial policy and meaningfully reduces leverage. The principal methodology used in these ratings was Consumer Packaged Goods Methodology published in February 2020. Based in Los Angeles, CA, Herbalife Nutrition Ltd is a leading direct-seller of weight management products, nutritional supplements and personal care products intended to support a healthy lifestyle. The company operates through a multi-level marketing system that consists of approximately 4 million global members across 94 countries. Publicly-traded Herbalife generates roughly $4.5 billion in annual revenues. HERTZ GLOBAL: Paul Stone Named President and CEO ------------------------------------------------ Hertz Global Holdings, Inc.'s Board of Directors has named Paul Stone president and chief executive officer, effective immediately. Mr. Stone, most recently Hertz's executive vice president and chief retail operations officer, North America, also has been elected to the Hertz Board of Directors. Mr. Stone succeeds Kathryn V. Marinello, who plans to continue with the Company in a consulting position for up to one year to support a smooth transition. "After an ongoing succession planning process, the Board elected Paul to lead Hertz's next chapter," said Henry R. Keizer, Hertz's Chairman. "Paul brings a customer-centered approach to growing the business that is driven by process excellence and employee engagement. Having successfully run our largest business segment for the last two years, Paul helped strengthen our brands by elevating service standards across the North American car rental operations." Keizer continued, "We also want to thank Kathy for her contributions as an exceptional business leader. Since joining the company in January 2017, she oversaw a successful operational turnaround, transformed Hertz's culture, and built a best-in-class leadership team. The Board wishes her all the best." "The hardest part about stepping down is leaving the amazing employees that have earned my respect over the last three-and-a-half years. It was an honor to serve them," said Marinello. "I am confident that under Paul's leadership, Hertz will prosper long into the future." "It is a tremendous honor to have the opportunity to lead Hertz," Stone said. "I thank Kathy and look forward to working with my colleagues to do what Hertz people do best - anticipate where transportation, mobility and technology are going and innovate to best serve our customers, stakeholders and communities." Mr. Stone, 50, began his 28-year career with Sam's Club/Walmart as a store manager and was quickly elevated through the ranks to Western US divisional senior vice president. He led operations for upwards of 200 locations with more than 30,000 employees. Prior to Hertz, he served as senior vice president and chief retail officer at Cabela's, one of the leading outdoor outfitter retail companies. Over the course of his career, he has delivered strategy, service, people development and full-scale retail operations leadership. Stone joined Hertz in March 2018 to lead the Company's North American car rental operations, which encompassed approximately 4,500 locations and 27,000 employees. He simplified operations, re-energized and developed talent, and elevated service standards, resulting in Hertz winning the JD Power award for the first time in 16 years. In addition to car rental, the scope of his responsibilities included Hertz's Transportation Network Companies and Car Sales businesses. Under the terms of the Amended Offer Letter, Mr. Stone or the Company may terminate the employment relationship at any time, for any reason. Mr. Stone is entitled to receive an annual base salary of $1,000,000. Additionally, Mr. Stone will (i) be eligible to receive a key employee retention bonus; (ii) continue to participate in the Company's Severance Plan for Senior Executives; (iii) continue to receive a Company-provided vehicle for personal and professional use; (iv) continue to be eligible for four weeks of vacation per the terms and conditions of the Company's vacation policy; and (v) be eligible to participate in the employee benefit plans and arrangements generally offered to other U.S. senior executives of the Company. About Hertz Hertz Holdings, a holding company for Rental Car Intermediate Holdings, LLC, is engaged in the vehicle rental and leasing business. The Company operates its vehicle rental business globally primarily through the Hertz, Dollar and Thrifty brands from approximately 12,400 corporate and franchisee locations in North America, Europe, Latin America, Africa, Asia, Australia, the Caribbean, the Middle East, and New Zealand. Hertz reported a net loss attributable to the company of $58 million for the year ended Dec. 31, 2019, compared to a net loss attributable to the company of $225 million for the year ended Dec. 31, 2018. * * * As reported by the TCR on May 13, 2020, S&P Global Ratings lowered its issuer credit rating on Hertz Global Holdings Inc. to 'SD' (selective default) from 'CCC-' and affirmed all of its issue-level ratings on the company. HIGHLINE AFTERMARKET: S&P Alters Outlook to Neg., Affirms 'B' ICR ----------------------------------------------------------------- S&P Global Ratings revised its outlook to negative from stable and affirmed its 'B' issuer credit rating on U.S.-based Highline Aftermarket Acquisition LLC. S&P also affirmed its 'B' issue-level rating on the company's senior secured bank credit facilities. The recovery rating on the bank facilities is unchanged at '3', indicating its expectation for meaningful (50%-70%, rounded estimate: 50%) recovery in the event of a default. Highline Aftermarket Acquisition LLC's sales and profits will decline substantially 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 chemicals, lubricants, and auto aftermarket products. S&P believes at the height of the coronavirus lockdowns that vehicle miles driven and demand for Highline's products temporarily dropped 30%-50%. S&P believes recovery has begun and should continue through the rest of the year, but it is not clear to what level sales will stabilize. An emphasis on social distancing and an increase in the number of people working from home could also result in weaker demand even if the coronavirus is contained in the near term. "We recognize that Highline could benefit somewhat if people use their vehicles in place of public transportation or air travel, especially for short-distance leisure and vacation or business trips. It is also possible economic weakness resulting in substantially reduced new vehicle sales could spur demand for aftermarket products to maintain older vehicles. Overall, however, we currently view the coronavirus impact on demand for the company's products as a negative," S&P said. S&P has revised down its forecast for sales and EBITDA, and it expects adjusted leverage to increase to the low-7x area in 2020 before improving to the high-5x area in 2021. The rating agency has revised down its forecast and now expects a 20% decline in sales and a 25% decline in EBITDA in 2020 before a double-digit rebound in 2021. "We believe most of Highline's operating cost is variable, and the company has reduced costs including cutting salespeople, furloughing workforce, and cutting discretionary projects. We now expect leverage to be in the low-7x area in 2020 and improve to the high-5x area in 2021. The company has also reduced capital expenditures (capex) this year. We expect Highline to generate about $25 million of free cash flow in 2020 and about $30 million in 2021, though this will in part depend on Highline's ability to collect receivables from its smaller customers," S&P said. Adequate liquidity should help Highline withstand near-term stress. S&P believes Highline can withstand a significant decline in demand over the near term due to its adequate liquidity position with $36 million net cash balance and full availability under its revolver. The company drew down $13 million from its revolver earlier this year but the outstanding balance was repaid subsequently. The company has no substantial debt maturities until 2025. The credit agreement contains a springing total net leverage covenant of 7.1x when revolver utilization exceeds 35% of the commitment, which equates to $14 million of the $40 million revolver. S&P does not expect the covenant to spring, and even if it springs, the rating agency expects Highline to maintain sufficient cushion in 2020. However, covenant cushion could be pressured in 2021 if there is a sustained drop in EBITDA because of a prolonged reduction in driving levels. The negative outlook reflects the potential for a lower rating over the next few quarters if Highline's operating performance materially declines due to further volume loss driven by reduced miles driven amid the COVID-19 pandemic. "We could lower the rating if the industry remains under pressure, causing Highline's sales and margins to decline well beyond our base case. This could happen if the pandemic causes a sustained drop in miles driven, sustained high unemployment, or a change in consumer behavior, leading to weaker profitability and cash flow and adjusted debt to EBITDA sustained above 7x," S&P said. S&P could revise its outlook to stable if Highline stabilizes operating performance such that revenue growth is restored and leverage improves to the mid-6x area. This could happen if employment recovers materially and vehicle miles driven rebounds to a level sufficient for the company to generate sufficient profits and cash flow. HORIZON GLOBAL: Incurs $16.7 Million Net Loss in First Quarter -------------------------------------------------------------- Horizon Global Corporation reported a net loss attributable to the company of $16.74 million on $163.3 million of net sales for the three months ended March 31, 2020, compared to a net loss attributable to the company of $25.10 million on $177.7 million of net sales for the three months ended March 31, 2019. As of March 31, 2020, the Company had $445.8 million in total assets, $458.2 million in total liabilities, and a total shareholders' deficit of $12.41 million. "Horizon Global delivered a strong year-over-year performance and generated positive operating cash flow in the first quarter of 2020, despite the unfavorable impact of COVID-19 on our business and economies around the globe," stated Terry Gohl, Horizon Global's president and chief executive officer. "I want to thank Horizon Global's employees for their commitment to maintaining our operations and excellent service delivery to our customers during these uncertain times. I also want to recognize their efforts in ensuring the health and safety of their colleagues, customers and those in the communities in which we operate." Gohl continued, "As we resume our global operations, we are focused on providing a safe and healthy workplace for our employees. During the relaunch of our business, we are carefully managing our liquidity in light of the continued macroeconomic uncertainty due to COVID-19. We will continue to flex our operations and partner with our supply chain to service our customers and meet market demand. Importantly, our business continues to improve every day as we aggressively pursue our operational improvement initiatives in 2020." Gohl further commented, "We expect this unprecedented global pandemic to have an ongoing effect on our business and customer demand patterns, which will result in a continued impact on Horizon Global's financial results in 2020. Due to these uncertain macroeconomic conditions, we are proactively preserving liquidity and managing our variable and support cost structure to allow for operating flexibility, while continuing to execute on our operational improvement initiatives that will support cash flow generation and drive near- and long-term value for our employees, customers and shareholders." COVID-19 Pandemic The Company has taken decisive actions in response to the unprecedented uncertainty related to the impact the COVID-19 pandemic is having on the global automotive industry and economies around the world. These actions include actively managing costs, capital spending and working capital to further strengthen liquidity, including the idling or ramping down of certain production facilities and distribution centers in response to the economic uncertainties and changes in customer ordering patterns. The Company will continue to closely monitor the ongoing potential impacts of COVID-19 and, while the ultimate impact of the pandemic to its business remains highly uncertain, the Company will continue to seek to aggressively mitigate and minimize its impact on its business. During the COVID-19 pandemic, Horizon Global's top priority is ensuring the health and safety of its employees. The Company is adhering to all federal, state and local mandates and guidelines, including the frequent disinfection of its facilities, equipment and individual work areas, promoting social distancing, requiring office employees to work remotely, preventing visitors from entering its facilities and restricting business travel. A full-text copy of the Quarterly Report is available for free at the Securities and Exchange Commission's website at: https://is.gd/MAktdT About Horizon Global Horizon Global -- http://www.horizonglobal.com/-- is a designer, manufacturer, and distributor of a wide variety of custom-engineered towing, trailering, cargo management and other related accessory products in North America, Australia and Europe. The Company serves OEMs, retailers, dealer networks and the end consumer. As of Dec. 31, 2019, the Company had $421.0 million in total assets, $412.4 million in total liabilities, and $8.60 million in total shareholders' equity. * * * As reported by the TCR on Dec. 16, 2019, S&P Global Ratings affirmed the 'CCC' issuer credit rating on Horizon Global Corp. and revised the outlook to negative from developing. The outlook revision to negative reflects S&P's view that despite recent debt reduction and temporary improvement in liquidity, Horizon's credit metrics and liquidity remain quite weak and could worsen as the rating agency expects the company to generate negative free flow. As reported by the TCR on June 18, 2019, Moody's Investors Service downgraded Horizon Global Corporation's Corporate Family Rating to C from Caa3. The downgrade reflects Moody's expectations that modest earnings improvement will not be sufficient to reduce leverage to a sustainable level and that the sale of the Asia-Pacific segment will, while reducing secured leverage, increase total leverage and create greater reliance on a quick turnaround in the more weakly performing U.S. and European operations to diminish restructuring risk. HOTEL CUPIDO: Wants to Move Exclusivity Filing Period to May 31 --------------------------------------------------------------- Hotel Cupido Inc., Wilmer Tacoronte Ortiz, Remliw Inc., and Monte Idilio Inc. asked the U.S. Bankruptcy Court for the District of Puerto Rico for an extension of the exclusivity period to file a joint disclosure statement and a joint plan of reorganization to May 31. The Debtors further asked for an extension of the period to secure votes to confirm a joint Plan to be sixty days from the date when the Court approves the Debtors' joint Disclosure Statement. The Governor of Puerto Rico issued an Executive Order declaring a state of emergency due to COVID-19, ordering a mandatory quarantine, and the closure of all non-essential businesses from March 15 through March 30, which has been subsequently extended until May 3. The Debtors' businesses are classified in the Executive Order as a non-essential business or commercial activity subject to the lockdown and curfew. Thus, the Debtors needed additional time to re-evaluate the financial consequences caused by the unprecedented lockdown and the impact in their cash flow and the projections that form an integral part of the projections to be included in the joint disclosure statement. Damaris Quinones Vargas, Esq., the Debtors' counsel, told the Court that "the Debtors are currently trying to weather the financial storm caused by COVID 19, although we must recognize that we are navigating the unchartered waters of a rough sea of financial uncertainty; but notwithstanding, we have the responsibility to present to the Court, the creditors and other parties in interest with numbers in tune with what the news call the new normal." About Hotel Cupido Hotel Cupido Inc. is a privately held company that owns and operates hotels and motels. Hotel Cupido sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D.P.R. Case No. 19-03799) on June 30, 2019. At the time of the filing, the Debtor disclosed $488,176 in assets and $3,213,031 in liabilities. The case is assigned to Judge Edward A. Godoy. The Debtor is represented by Bufete Quinones Vargas & Asoc. HOUGHTON MIFFLIN: Fitch Alters Outlook on 'B' LT IDR to Negative ---------------------------------------------------------------- Fitch Ratings has affirmed Houghton Mifflin Harcourt Company and the subsidiaries Houghton Mifflin Harcourt Publishers, Inc., Houghton Mifflin Harcourt Publishers Company, and HMH Publishers LLC's Long-Term Issuer Default Ratings at 'B'. In addition, Fitch has also affirmed Houghton Mifflin's first lien term loan and first lien secured notes at 'BB-'/'RR2'. The Rating Outlook has been revised to Negative from Stable. Fitch does not rate Houghton Mifflin's asset-backed lending facility. The Negative Outlook incorporates the higher degree of uncertainty for the K-12 adoption cycle owing to the coronavirus pandemic and Fitch's concerns that federal, state and local budgets will be negatively affected, which may lead to reduced or delayed education spending. Although Fitch notes that prior periods of economic stress never led to the cancellation of K-12 adoptions, with only a few instances of one-year delays, the current economic dislocation has little historic precedent. Initial data points suggest that Houghton Mifflin's larger state adoptions remain on-track with expectations. The company continues to experience strong selling performance in Texas with a leading market share for the Texas literature adoption with +75% of decisions made. In addition, the second year of the California Science adoption (three-year process) illustrated incremental progress with the win of district level approval in the Los Angeles Unified School District (LAUSD). These will support billings in 2Q and 3Q 2020. Houghton Mifflin also implemented some cost mitigation actions in addition to the late 2019 cost realignment efforts. Fitch anticipates that these will help support improved profitability and FCF generation. Fitch would consider revising the Outlook to Stable, if Houghton Mifflin's operating performance remains in-line with prior expectations and supports deleveraging and improving FCF. Houghton Mifflin's liquidity is supported by $255 million in balance sheet cash, including the company's $150 million draw on the company's asset-backed lending facility. Houghton Mifflin is taking steps to preserve liquidity during this period including reducing inventory purchasing, deferring long-term capital projects and deferring payment of payroll taxes allowed under the Coronavirus Aid, Relief, and Economic Security Act. Fitch believes that Houghton Mifflin has adequate liquidity to manage through the company's typical working capital seasonality in the first half of the calendar year. KEY RATING DRIVERS Coronavirus Pandemic: The economic dislocation caused by the coronavirus may adversely affect near-term spending on K-12. Government budgets will be negatively affected by the severe reduction in revenues along with increased spending for prevention and treatment. Fitch believes state budgets are most at risk over at least the near term given their dependence on sales and/or income taxes for revenue. Local governments should be less affected over the near-term as they derive varying portions of their revenues from property taxes, which are typically escrowed if the property has a mortgage. However, the ultimate scope of financial damage and trajectory of a recovery remain highly uncertain, depending on the severity and duration of the crisis. K-12 educational spending is primarily funded by state and local governments and the current adoption calendar, projected to be relatively flat through 2022, has not yet been adjusted for the coronavirus. Fitch notes that during prior periods of economic stress, K-12 adoptions were never cancelled and rarely delayed (if they were delayed it was only for one year). However, given that the current economic dislocation has little historic precedent, Fitch will pay close attention to upcoming near-term adoption calendars for signs of funding stress or delays in timing, with a focus on states' fiscal 2021 budgets, many of which begin on July 1, 2020. Given that state budgets typically include funding to cover approximately 45% of local educational content purchases, signs of stress at the state level could be a leading indicator for adoption delays. Mid-Cycle Adoption Calendar: K-12 educational spending is primarily funded by state and local governments. The current adoption calendar is more in-line with a mid-cycle adoption level over the next couple of years. While 2018 was a cyclical trough for K-12 adoptions in the U.S., leading to a material reduction in earnings for that period, 2019 marked the start of a stronger adoption calendar. Key upcoming adoptions are underway in Texas, California and Florida. Houghton Mifflin is performing well in the current adoption cycle despite a delay in the adoption of a new math program in Florida. Houghton Mifflin currently has a leading market share for the adoption of a new literature program in Texas with +75% of decisions made. The company was the market leader in year one of the California three-year adoption for a new science program. In year two, progress continues with the district level approval in the Los Angeles Unified School District, the second largest school district in the country. Overall, Fitch forecasts the existing mid-cycle level of adoption spending through 2022 will support an increase in revenue and EBITDA over the forecast horizon. Expectations have not yet been adjusted for the coronavirus. Fitch notes that prior periods of economic stress never led to the cancellation of K-12 adoptions, with only a few instances of one-year delays. However, given that the current economic downturn has little historic precedent, Fitch will pay close attention to upcoming near-term adoption calendars for signs of funding stress or delays in timing, with a focus on states' upcoming fiscal year budgets, many of which begin on July 1, 2020. Given that state budgets typically include funding to cover approximately 45% of local educational content purchases, signs of stress at the state level could be a bellwether for adoption delays. The Negative Outlook incorporates the reduced certainty over the existing adoption calendar and any potential impacts from a prolonged economic downturn and curtailment in state and local budgets. Fitch would revise the Outlook to Stable once there is improved clarity on operating performance and FFO leverage remains below 6.0x on a sustained basis in-line with expectations for the 'B' rating category. Reduced Costs Support Profitability: Houghton Mifflin has been focused on realigning its cost structure to support a consistently FCF positive business model. Historically, Houghton Mifflin would increase investment in marketing and product development dramatically before an adoption cycle before realizing a return on this investment in adoption years. Houghton is transitioning to a model that more evenly spread costs over all years to avoid excessive volatility in FCF over the adoption cycle. The company intends to continuously invest in new educational materials in an iterative process that leverages past works rather than creating a new book for each adoption. In connection with the shift, Houghton Mifflin undertook restructuring action late in 2019 that resulted in a net headcount reduction of approximately 8% also the company is targeting a roughly 20% reduction in previously planned content development spend over the next three years. Houghton Mifflin's pre-publication (pre-plate) capex approximated $103 million in 2019, down 17% yoy. In addition, Houghton Mifflin took additional cost actions in March to offset impacts to profitability and cash flow from the coronavirus pandemic. These included director, executive and senior leadership salary reductions and the transition of the majority of employees to a four-day work week, a freeze on spending not tied to near-term billings, the temporary closures of warehouse and distribution centers and the deferral of long-term capital projects not directly tied to 2020 billings. Digital Transition: Houghton Mifflin is experiencing increased customer usage of its digital core curriculum platform, Ed, as teachers and students pivot to virtual learning owing to the coronavirus pandemic. Student assignments reached 29 million in March 2020, up 314% from the prior year period. The unprecedented and widespread school shutdowns underscore the importance of K-12 digital learning and are likely to drive improved device to student ratios and accelerate the shift to digital-based learning. An accelerated transition to digital, or 'digital first' approach by schools and districts could foster improved gross margins as the reliance on the annual production and distribution of printed materials decreases. Extensions Growth: Fitch views Houghton Mifflin's continued investment in its Extensions segment positively given the better growth prospects in supplemental learning and the reduced cyclicality in comparison to the company's Core Solutions business. The Extensions segment focuses on providing supplemental education to students performing above or below standards and Fitch views the addressable market as large. Moderating Leverage: Houghton Mifflin's Fitch-calculated FFO total leverage approximated 3.2x at YE 2019 and increased to 3.8x for the LTM period ending March 31, 2020. The company's improved credit protection metrics reflect the better profitability in 2019 owing to the strong adoption calendar. In addition, Houghton Mifflin generated $115 million in FCF in 2019 and applied $88 million to debt reduction concurrent with its term loan refinancing in late 2019. Fitch expects Houghton Mifflin will sustain FFO total leverage below 6.0x over the rating horizon supported by a relatively stable mid-cycle adoption calendar over the next couple of years. Fitch views positively management's commitment to strengthen the balance sheet and its intention to prioritize the application of FCF to debt repayment. Adequate Liquidity: Liquidity is supported by $255 million in balance sheet cash, including the company's $150 million draw on the company's asset-backed lending facility. The company has taken steps to preserve liquidity during this potentially weaker operating period including reducing inventory purchasing, deferring long-term capital projects and deferring payment of payroll taxes allowed under the CARES Act. Fitch believes that Houghton Mifflin has adequate liquidity to manage through the company's typical working capital seasonality in the first half of the calendar year. Houghton rescinded its previous 2020 financial guidance, including its expectation to generate between $65 million-$90 million of FCF. The late 2019 refinancing extended the maturity of the company's revolver to 2024. Houghton Mifflin has roughly $19 million in annual term loan amortization over the next couple of years. Competitive Market: Houghton Mifflin competes with various other publishers in the K-12 education market, which the company estimates to be approximately $11 billion. Houghton Mifflin, together with Pearson Education and McGraw-Hill are the largest textbook manufactures and Fitch believes all three collectively hold more than approximately 80% of the market. Market share can fluctuate in any given adoption cycle as publishers trade of territory. Operational missteps such as failure to gain state approval can leave publishers open to losses in market share in any given adoption cycle. DERIVATION SUMMARY Houghton Mifflin is well-positioned in the domestic K-12 core education and supplemental learning markets and is one of the top three K-12 textbook market publishers. Houghton Mifflin has completed re-investment in its core textbook educational material following a period of operational weakness that has resulted in improved market share as evidenced by recent state adoptions. Fitch expects the K-12 education publishers to benefit from the mid-cycle adoption market from 2020-2023 including the opportunities in Florida, California and Texas, the largest adoption states that drive a significant part of the adoption cycle. The 'B' ratings reflect Houghton Mifflin's smaller scale and more narrow focus on the K-12 market as compared with peer, McGraw-Hill Global Education Holdings, LLC (B+/Negative). McGraw-Hill will be roughly double the size Houghton Mifflin in terms of revenues and will have a more diversified base with increased exposure to higher-ed following its proposed merger with Cengage Learning. McGraw-Hill has also maintained historically higher margins and lower leverage than Houghton Mifflin. KEY ASSUMPTIONS - Revenue declines in 2020 reflecting the overall lower adoption cycle in 2020 (mid-cycle as compared to 2019 adoption calendar). Incrementally, Fitch assumes some near-term adoptions are delayed as states struggle to balance budgets due to the economic dislocation caused by the coronavirus. - Thereafter, adoptions slowly return to the existing calendar leading to low single digit grow in the out years driven by market share gains. - Deferred revenue at roughly 8% of total revenue for 2020 (down from 14% in 2019) and tapering thereafter owing to relatively stable, but less favorable adoption cycle. - EBITDA margins remain low single digits in 2020 and are expected to improve driven by cost savings. - Pre-publication costs of $100 million-$110 million annually. - Other working capital management and scaled-back long-term capital projects taken to preserve liquidity. - Capex continues at historically low 2019 levels for 2020 as non-essential projects are cut, scales back to historical 4% level over rating horizon. - Generally positive FCF supported by generally mid-cycle adoption calendar over the next couple of years. - Excess FCF applied to debt prepayments. Debt reduction temporarily paused in 2020 as company preserves liquidity owing to coronavirus-related headwinds. - FFO total leverage remains below 5.5x over rating horizon. Recovery Considerations - The recovery analysis assumes Houghton Mifflin would be considered a going concern in bankruptcy and it would be reorganized rather than liquidated. Fitch has assumed a 10% administrative claim in the recovery analysis; - The recovery analysis assumes K-12 market share loss to McGraw-Hill and Pearson driven by an inability to win enough upcoming state adoptions, which pressures margins. The post-reorganization going concern EBITDA of $152 million is based on Fitch's estimate of Houghton Mifflin's average EBITDA over a normal cycle, adjusted to include deferred revenues; - Fitch assumes Houghton Mifflin will receive a going-concern recovery multiple of 5.0x EBITDA. The estimate considered several factors. Houghton Mifflin and Pearson have traded at a historical median EV/EBITDA of 12.2x and 10.9x, respectively. During the last financial recession, Pearson traded at about 8.0x EV/EBITDA, while neither McGraw -Hill nor Houghton Mifflin were public at the time. In 2014, Cengage emerged from bankruptcy with a $3.6 billion valuation, equating to an emergence multiple of 7.7x. In addition, the 5.0x multiple is further supported by Houghton Mifflin's emergence from bankruptcy in 2012 at a midpoint EV/post-emergence EBITDA multiple of 4.9x. The more recent textbook publishing transaction occurred in February 2019 with Pearson's announced sale of its K-12 business for $250 million or 9.5x operating profit (EBITDA was not disclosed). In March 2013, Apollo Global Management LLC acquired McGraw-Hill from S&P Global, Inc. for $2.5 billion, or a multiple of estimated EBITDA of approximately 7x; - Fitch assumes a 75% draw Houghton Mifflin's $250 million asset-backed revolving credit facility. The recovery analysis also assumes Houghton Mifflin has a $375 million first lien term loan and $306 million in secured notes outstanding; - The recovery analysis results in a 'BB-'/'RR2' on first lien secured debt, two notches above the 'B' IDR. Fitch does not rate asset-backed revolving credit facility. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- Debt reduction is sufficient enough to drive FFO total leverage below 4.5x with the expectation it can be sustained at that level through cyclical adoption troughs. -- Sustained positive FCF. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- Fitch-calculated FFO total leverage exceeds 5.5x on a sustained basis into cyclical industry improvement, whether driven by operating results or a leveraging transaction; -- Sustained negative FCF with the expectation of negative cash flow into cyclical industry improvement. BEST/WORST CASE RATING SCENARIO International scale credit ratings of Non-Financial Corporate issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. LIQUIDITY AND DEBT STRUCTURE Adequate Liquidity: Liquidity is supported by $255 million in balance sheet cash, including the company's $150 million draw on the company's asset-backed lending facility. The company has taken steps to preserve liquidity during this potentially weaker operating period including reducing inventory purchasing, deferring long-term capital projects and deferring payment of payroll taxes allowed under the CARES Act. Fitch believes that Houghton Mifflin has adequate liquidity to manage through the company's typical working capital seasonality in the first half of the calendar year. Houghton rescinded its previous 2020 financial guidance, including its expectation to generate between $65 million-$90 million of FCF. The late 2019 refinancing extended the maturity of the company's revolver to 2024. Houghton Mifflin has roughly $19 million in annual term loan amortization over the next couple of years. ESG CONSIDERATIONS Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of 3 - ESG issues are credit neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. 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. RATING ACTIONS ENTITY/DEBT RATING RECOVERY PRIOR Houghton Mifflin Harcourt Publishers, Inc. - LT IDR B; Affirmed - Senior secured; LT BB-; Affirmed HMH Publishers LLC - LT IDR B; Affirmed - Senior secured; LT BB-; Affirmed Houghton Mifflin Harcourt Company - LT IDR B; Affirmed Houghton Mifflin Harcourt Publishing Company - LT IDR B; Affirmed - Senior secured; LT BB-; Affirmed IRB HOLDING: Moody's Rates New $500MM Sec. Notes 'B3', Outlook Neg. ------------------------------------------------------------------- Moody's Investors Service affirmed IRB Holding Corporation's B3 Corporate Family Rating, B3-PD Probability of Default Rating, B3 senior secured bank facility rating and Caa3 senior unsecured notes ratings. In addition, Moody's assigned a B3 rating to IRB's proposed $500 million secured note offering. The outlook is negative. The affirmation of IRB's B3 CFR reflects the continuation of its drive-through, delivery and curbside pick-up operations which provide a base level of revenue during the coronavirus pandemic, adequate liquidity to manage through several months of significant revenue decline, and Moody's expectation that IRB will manage the business to preserve liquidity and then use cash flow to reduce debt once the crisis subsides. IRB's liquidity position is supported by its significant cash balances of approximately $600 million and full availability under $250 million revolving credit facility pro forma for this transaction. Proceeds from the proposed $500 million secured notes offering will be used repay outstanding borrowings under its revolving credit facilities and VFN facilities as well as general corporate purposes, which includes bolstering liquidity. Assignments: Issuer: IRB Holding Corporation Senior Secured Regular Bond/Debenture, Assigned B3 (LGD3) Affirmations: Issuer: IRB Holding Corporation Probability of Default Rating, Affirmed B3-PD Corporate Family Rating, Affirmed B3 Senior Secured Bank Credit Facility, Affirmed B3 (LGD3) Senior Unsecured Regular Bond/Debenture, Affirmed Caa3 (LGD6) Outlook Actions: Issuer: IRB Holding Corporation Outlook, Remains Negative RATINGS RATIONALE The rapid and widening spread of the coronavirus outbreak, deteriorating global economic outlook, falling oil prices, and asset price declines are creating a severe and extensive credit shock across many sectors, regions and markets. The combined credit effects of these developments are unprecedented. The restaurant sector has been one of the sectors most significantly affected by the shock given its sensitivity to consumer demand and sentiment. More specifically, the weaknesses in IRB's credit profile, including its exposure to widespread location closures have left it vulnerable to shifts in market sentiment in these unprecedented operating conditions and IRB 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 IRB of the breadth and severity of the shock, and the broad deterioration in credit quality it has triggered. IRB's credit profile is constrained by its already high leverage with debt to EBITDA of over 8.0 times prior to the impact of COVID-19. IRB had forecasted that EBITDA growth and the use of excess cash flow to repay restricted group debt would support deleveraging. However, the impact of coronavirus will likely result in leverage weakening further. Governance risk is also a key credit constraint given IRB's private equity ownership and aggressive financial strategies which include maintaining very high leverage and a history of debt financed acquisitions. The ratings also consider the cost pressures associated with certain commodities and labor, some level of geographic concentration by brand and a high level of competition particularly in the bar & grill segment. IRB benefits from its material scale, multiple brands and franchised focused business model that helps add stability to revenues and earnings and adequate liquidity. The negative outlook reflects the uncertainty with regards to the potential length and severity of restrictions and closures and the ultimate impact these will have on IRB's revenues, earnings and liquidity. The outlook also takes into account the negative impact on consumers' ability and willingness to spend on eating out until the crisis materially subsides. Restaurants by their nature and relationship with sourcing food and packaging, as well as an extensive labor force and constant consumer interaction are deeply entwined with sustainability, social and environmental concerns. While these factors may not directly impact the credit, they could impact brand image. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Factors that could result in a stable outlook include a clear plan and time line for the lifting of restrictions on restaurants that result in a sustained improvement in operating performance, liquidity and credit metrics. Given the negative outlook an upgrade is unlikely at the present time. However, an upgrade would require at least a good liquidity profile, debt/EBITDA of around 5.5x and EBIT/interest expense of over 1.5x. Factors that could result in a downgrade include a longer than currently anticipated period of restaurant restrictions or closures or a material deterioration in liquidity. Ratings could also be downgraded in the event that credit metrics remained weak despite a lifting of restrictions on restaurants and a subsequent recovery in earnings and liquidity. Specifically, ratings could be downgraded in the event debt to EBITDA exceeded 6.5 times on a sustained basis. IRB Holding Corporation is the parent holding company of Arby's Restaurant Group, Inc., Buffalo Wild Wings, Inc., Sonic Holding Company and Jimmy John's. Annual revenues are approximately $4.3 billion while systemwide sales exceed $14.0 billion. The principal methodology used in these ratings was Restaurant Industry published in January 2018. J CREW: Bank Debt Trades at 58% Discount ---------------------------------------- Participations in a syndicated loan under which J Crew Group Inc is a borrower were trading in the secondary market around 42 cents-on-the-dollar during the week ended Fri., May 15, 2020, according to Bloomberg's Evaluated Pricing service data. The bank debt traded around 48 cents-on-the-dollar for the week ended May 8, 2020. The $1.3 billion facility is a Term loan. The facility is scheduled to mature on March 5, 2021. As of May 15, 2020, $1.2 billion of the loan remains outstanding. The Company's country of domicile is United States. JC PENNEY: Fitch Cuts LongTerm IDR to D on Chapter 11 Filing ------------------------------------------------------------ Fitch Ratings has downgraded the Long-Term Issuer Default Ratings of J.C. Penney Company, Inc. and J.C. Penney Corporation, Inc. to 'D' from 'C' following the company's Chapter 11 bankruptcy protection filing on May 15, 2020. There was $4.9 billion in total debt outstanding on the petition date, including $1.2 billion of borrowings on its $2.35 billion asset-based loan. The company's prepetition senior secured first-lien term loan lenders, holders of $1.5 billion term loans due June 2023, will provide a proposed $900 million senior secured superpriority priming debtor-in-possession facility, with $450 million of new commitments and the remainder rolled over from existing term loans. The proposed DIP facility will be secured by encumbered real estate, which secures the prepetition $1.5 billion term loan and $500 million first-lien secured notes due June 2023, as well as unencumbered real estate that will be contributed to a new REIT. J.C. Penney's bankruptcy reflects the multiyear top line market share declines and EBITDA pressures due to strategic missteps that led to a highly levered balance sheet, making it challenging for the company to respond to significant changes in the operating environment, including channel shifts in revenue toward online and off-mall discount formats. The company had been seeking to rightsize its debt load, engaging with several key stakeholder groups across nearly every tranche of its capital structure since mid-2019 in the hopes of consummating a deleveraging, out-of-court transaction that would allow it to capitalize on lower interest rates and reduce its debt load in advance of upcoming debt maturities. The company indicated it came close to agreement on a deleveraging transaction on numerous occasions. However, the coronavirus pandemic adversely impacted J.C. Penney's business and liquidity, accelerating the need for a Chapter 11 filing. The company ended 2019 with $1.8 billion in liquidity and moderate near-term maturities; post the onset of the pandemic, Fitch anticipated materially negative EBITDA and resulting cash burn for 2020. KEY RATING DRIVERS The bankruptcy follows J.C. Penney's underperformance compared to its largest retail department store peers for a number of years. The multiyear top line market share declines and weak EBITDA made the company's capital structure untenable, although liquidity was adequate at $1.8 billion, with cash and availability on its $2.35 billion revolver, at Feb. 1, 2020 prior to the disruption from the coronavirus pandemic. J.C. Penney is looking to rationalize its store portfolio by approximately 30% from 846 stores to approximately 604 stores, with the exited stores accounting for $1.6 billion or 15% of 2019 revenue totaling $10.7 billion. Fitch expects significant store closures as part of J.C. Penney's bankruptcy proceedings and accelerated closures by other anchor tenants such as Macy's, which announced 125 store closings over the next three years in February 2020, and Nordstrom, which announced 16 full line store closings. These closings could have major repercussions for the affected malls, particularly if reduced traffic and co-tenancy clauses combine to trigger further tenant departures. This would lead to the accelerated reshaping of the mall landscape, which Fitch has anticipated given the ongoing channel shifts to online and off-mall discount formats. Over time, industry leaders, both in the mall and off-mall channel, that continue to invest in omnichannel capabilities could benefit, as unproductive apparel and accessories stores and malls in the U.S. are rightsized. Benefits of reduced square footage include both protection of market share and gross margins, given the need to execute unplanned promotions in apparel and accessories environments with excess inventory. DERIVATION SUMMARY Recent rating downgrades and Outlook revisions for the department stores reflect the significant business interruption from the coronavirus and the implications of a downturn in discretionary spending that Fitch expects could extend well into 2021. Rating actions have also resulted from decisions to add permanent debt to balance sheets to support liquidity. Kohl's, Nordstrom, Macy's and Dillard's are expected to have sufficient liquidity to manage operations through this downturn, should Fitch's projections come to fruition. J.C. Penney's U.S. department store peers include Nordstrom, Inc., Kohl's Corporation, Macy's Inc. and Dillard's, Inc. J.C. Penney's downgrade to 'D' follows the company's announcement that it filed for Chapter 11 bankruptcy protection on May 15, 2020. J.C. Penney's bankruptcy reflects the multiyear top line market share declines and EBITDA pressures due to strategic missteps that led to a highly levered balance sheet, making it challenging for the company to respond to significant changes in the operating environment, including shifts in revenue toward online and discount channels. Nordstrom (BBB-/Negative): Fitch anticipates a sharp increase in adjusted leverage to 7.0x in 2020 from 3.0x in 2019, based on EBITDA declining to approximately $550 million from $1.6 billion on a revenue decline of over 20% to $12 billion. Adjusted leverage is expected to decline to the mid-3.0x range in 2021, assuming sales declines of around 10% and EBITDA declines of about 20% in 2021 from 2019. Leverage could return to under 3.5x in 2022, assuming a sustained top-line recovery. Nordstrom's ratings reflect its position as a market share consolidator in the apparel, footwear and accessories space, with its differentiated merchandise and high level of customer service enabling the company to enjoy strong customer loyalty. The company has a well-developed product offering across a diverse portfolio of full line department stores, off-price Nordstrom Rack locations and multiple online channels. Kohl's (BBB-/Negative): Fitch anticipates a sharp increase in leverage to 8.0x in 2020 from 2.3x in 2019. This reflects EBITDA declining to approximately $500 million from $2 billion on a sales decline of 20% to just under $16 billion, the full drawdown on its $1.5 billion credit facility and recent $600 million bond issuance. Adjusted leverage is expected to be high-3.0x in 2021, assuming revenue declines of around 15% and EBITDA declines of around 40% in 2021 from 2019 levels and paydown of revolver borrowings. Leverage could decline to under 3.5x in 2022 assuming a sustained top-line recovery. Kohl's ratings reflect its position as the second largest department store in the U.S. and Fitch's expectation that the company should accelerate market share gains post the discretionary downturn. Kohl's, Nordstrom and Macy's continue to invest aggressively in their businesses while maintaining healthy cash flow. These retailers have well-developed omnichannel strategies, with online sales contributing close to 25% of total revenue - over 30% at Nordstrom, which should benefit their top line as retail sales continue to move online. Kohl's off-mall real estate footprint provides some insulation from mall traffic challenges. Macy's (BB+/Negative): Fitch anticipates a sharp increase in leverage to over 11.0x in 2020 from 2.9x in 2019, based on EBITDA declining to approximately $325 million from $2 billion on a revenue decline of nearly 25% to $19.2 billion. Adjusted leverage is expected to be around 4.0x in 2021, assuming revenue declines of around 15% and EBITDA declines of around 40% in 2021 from 2019 levels. Leverage could return to 3.0x in 2022 assuming a sustained top-line recovery. The company ended 2019 with $685 million of cash and recently drew fully on its $1.5 billion unsecured revolver. The company has approximately $530 million of debt maturing in January 2021 and $450 million maturing in January 2022, which Fitch expects Macy's will pay with cash on hand, given the recent drawdown on its $1.5 billion credit facility. Macy's ratings continue to reflect its position as the largest department store chain in the U.S. and Fitch's view of a prolonged timeframe for the company's operating trajectory to stabilize on a lower EBITDA base, given weak mall traffic and heightened competition from alternate channels that include online and discount. This follows comparable sustained low single digit store sales declines, recent EBITDA margins well-below expectations and increased management urgency to address secular challenges, as evidenced by the announcement of 125 store closures and $1.5 billion in cost reductions to support business reinvestment, prior to the recent downturn. Dillard's (BB/Negative): Fitch anticipates a sharp decline in EBITDA to under $50 million in 2020 from $392 million in 2019 on a revenue decline of over 20% to $5 billion. Adjusted leverage is expected to be over 2x in 2021, assuming sales declines in the low-teens and EBITDA of approximately $300 million, or around 30% lower compared to 2019 levels. Dillard's ratings reflect the company's below-industry average sales productivity, as measured by sales psf, operating profitability and geographical concentration relative to its larger department store peers, Kohl's, Nordstrom and Macy's. The ratings reflect Dillard's strong liquidity and minimal debt maturities, with adjusted debt to EBITDAR expected to return to the 2x range in 2021. RATING SENSITIVITIES No sensitivities. 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 J.C. Penney had cash and cash equivalents of $386 million as of Feb. 1, 2020 and approximately $1.4 billion available under its $2.35 billion credit facility due to mature on June 2022, after accounting for $203 million of letters of credit based on a borrowing-base calculation. As of the bankruptcy petition date, the company had approximately $500 million in cash collateral that was approved for use. The company had drawn down $1.25 billion on its ABL in March and had $1.18 billion outstanding on its ABL as of the petition date. Recovery Considerations: Fitch assumed the proposed $900 million DIP financing is put in place in its recovery considerations for J.C. Penney's prepetition capital structure. The proposed DIP facility will be secured by the company's encumbered and unencumbered real estate and will rank ahead of the remaining prepetition first-lien secured term loan of $1.1 billion, with $450 million of the prepetition $1.52 billion rolling into the proposed new DIP facility, and $500 million secured notes due June 2023, which had a first lien on the unencumbered real estate. Both the term loan facility and senior secured notes are secured by (a) first-lien mortgages on 272 owned and ground-leased stores, subject to certain restrictions primarily related to the principal property owned by J. C. Penney, and six owned distribution centers. The company also had 114 unencumbered owned and ground-leased stores. All real estate will be moved to a newly formed REIT and secure the proposed new DIP facility. For issuers with IDRs of 'B+' and below, Fitch performs a recovery analysis for each class of obligations of the issuer. The issuer ratings are derived from the IDR and the relevant Recovery Rating and notching, based on Fitch's recovery analysis that places a liquidation value under a distressed scenario of approximately $3.5 billion. Fitch applied a 70% advance rate against inventory level as a proxy for a net orderly liquidation value of the assets. In determining a real estate value of approximately $1.9 billion, Fitch used the dark store valuation of owned stores shared by J.C. Penney in an 8-K filing dated March 9, 2020 in connection to a recent discussion with a creditor to explore capital structure opportunities that has since been discontinued. J.C. Penney appraised its 272 encumbered properties, including six distribution centers, at $1.34 billion and unencumbered 114 owned and ground-leased stores at $545 million on a dark valuation basis. The company also appraised 240 leased locations at $151 million, which Fitch does not factor in its analysis. The liquidation value is higher than the going-concern value, which Fitch estimates at about $2.8 billion, based on a going-concern EBITDA of $700 million and a 4x multiple. The $700 million EBITDA assumes a rightsizing of the business in which the revenue base is around 35% lower than 2019 levels, but at an improved EBITDA margin of around 8% to 10%, which is comparable to J. C. Penney's department store peers. Based on an 8-K filing as of May 18, 2020, J.C. Penney estimated 2022 revenue to be $8.6 billion, or 80% of 2019 revenue base, assuming the contemplated closure and sale of 242 stores, made up of 192 closures in 2020 of leased stores and sales of 50 owned stores by the end of second quarter of 2021, with EBITDA of $800 million or 10% of sales. The 4.0x multiple is lower than the 5.4x median multiple for retail going-concern reorganizations, the 12-year retail market multiples of 5.0x to 11.0x, and 7.0x to 12.0x for retail transaction multiples. The 4.0x multiple reflects the significant share losses by department stores to other formats. It also reflects the aspirational nature of the $700 million of estimated EBITDA, given 2019 EBITDA of around $580 million and the likelihood of negligible to negative EBITDA in 2020-2021 due to the coronavirus pandemic and U.S. recession. J. C. Penney's $2.35 billion senior secured ABL facility maturing in June 2022 is rated 'CCC'/'RR1', which indicates outstanding recovery prospects, 91%-100%, in a distressed scenario. The facility is secured by a first-lien priority on inventory and receivables, with borrowings subject to a borrowing base. Any proceeds of the collateral will be applied first to the satisfaction of all obligations under the revolving facility. Given the significant reduction in inventory and further reductions anticipated this year based on material sales declines, Fitch does not expect material excess collateral to be available to service other debt. The $1.1 billion term loan, which takes into account $450 million rolling into the proposed new DIP facility, and $500 million senior secured notes due June 2023 are expected to have good recovery prospects, from 51% to 70%, leading to a 'CC'/'RR3' rating. Both the term-loan facility and senior secured notes are secured by (a) first-lien mortgages on 272 owned and ground-leased stores, subject to certain restrictions primarily related to the principal property owned by J.C. Penney, and six owned distribution centers; (b) a first lien on intellectual property, which are trademarks including J.C. Penney, Liz Claiborne, St. John's Bay and Arizona, as well as machinery and equipment; (c) a stock pledge of J.C. Penney Corporation and all of its material subsidiaries and all intercompany debt; and (d) second lien on inventory and accounts receivable that back the ABL facility. The term loan and senior secured notes rank pari passu in terms of priority of payment. Fitch believes that once the company puts the proposed $900 million DIP financing in place post-Chapter 11, the DIP will have a first priority on unencumbered real estate as well as the real estate securing prepetition $1.5 billion term loan and the $500 million secured notes due June 2023. The $400 million senior second-lien secured notes due 2025 are expected to have poor recovery prospects, 0%-10%, leading to a 'C'/'RR6' rating. The notes are secured by a second lien on the assets, being real estate and IP assets, securing the term loan and senior first-lien secured notes and a third lien on the ABL collateral. The senior unsecured notes are rated 'C'/'RR6', indicating poor recovery prospects. SUMMARY OF FINANCIAL ADJUSTMENTS -- EBITDA adjusted to exclude stock-based compensation expense; -- Operating lease expense capitalized by 8x to calculate historical and projected adjusted debt. REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING The principal sources of information used in the analysis are described in the Applicable Criteria. ESG CONSIDERATIONS The highest level of ESG credit relevance, if present, is a score of 3. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity(ies), either due to their nature or to the way in which they are being managed by the entity(ies). J. C. Penney Company, Inc. - LT IDR D; Downgrade J.C. Penney Corporation, Inc. - LT IDR D; Downgrade - Senior unsecured; LT C; Affirmed - Senior Secured 2nd Lien; LT C; Affirmed - Senior secured; LT CC; Affirmed - Senior secured; LT CCC; Affirmed JC PENNEY: Moody's Cuts PDR to D-PD on Chapter 11 Filing -------------------------------------------------------- Moody's Investors Service downgraded Penney (J.C.) Company, Inc.'s probability of default rating to D-PD from Caa3-PD and affirmed its Caa3 corporate family rating following the company's announcement [1] that it has commenced voluntary prearranged Chapter 11 proceedings. Moody's also affirmed Penney (J.C.) Corporation, Inc.'s ratings. The rating outlook has been revised to stable from negative. The company's SGL-3 rating remains unchanged. Downgrades: Issuer: Penney (J.C.) Company, Inc. Probability of Default Rating, Downgraded to D-PD from Caa3-PD Affirmations: Issuer: Penney (J.C.) Company, Inc. Corporate Family Rating, Affirmed Caa3 Issuer: Penney (J.C.) Corporation, Inc. Senior Secured Term Loan, Affirmed Caa2 (LGD3) Senior Secured ABL Revolving Credit Facility, Affirmed Caa1 (LGD2) Senior Secured 2nd Lien Regular Bond/Debenture, Affirmed Ca (LGD5) Senior Secured Regular Bond/Debenture, Affirmed Caa2 (LGD3) Senior Unsecured Medium-Term Note Program, Affirmed (P)C Senior Unsecured Regular Bond/Debenture, Affirmed C (LGD6) Senior Unsecured Shelf, Affirmed (P)C Outlook Actions: Issuer: Penney (J.C.) Company, Inc. Outlook, Changed to Stable from Negative Issuer: Penney (J.C.) Corporation, Inc. Outlook, Changed to Stable from Negative RATINGS RATIONALE "J.C. Penney has an unsustainable capital structure which left the company with limited financial flexibility even prior to the disruption caused by COVID-19," said Vice President, Christina Boni, "Its Chapter 11 filing which has support of approximately 70% of its first lien lenders, would enable the company to rationalize its store base and reduce debt, both which are needed to compete more effectively" Boni added. Subsequent to its actions, Moody's will withdraw the ratings due to J.C. Penney's bankruptcy filing. J.C. Penney Company, Inc. is the holding company of J.C. Penney Corporation, Inc., a U.S. department store operator headquartered in Plano, Texas, with about 850 locations in the United States and Puerto Rico. The principal methodology used in these ratings was Retail Industry published in May 2018. KETAB CORPORATION: Deadline to File Plan Extended Until Sept. 18 ---------------------------------------------------------------- Judge Deborah J. Saltzman of the U.S. Bankruptcy Court for the Central District of California extended to Sept. 18 the deadline for Ketab Corporation to file and serve its chapter 11 plan and disclosure statement. The company sought the extension to provide it ample time in the hopes of obtaining consensual withdrawals of the proof of claim filed by the Internal Revenue Service and the California Franchise Tax Board as both claims were paid in full prepetition. The company has not resolved either claim because getting responses from either taxing agency has been difficult due to the COVID-19 pandemic. Due to income instability caused by the pandemic, the company does not believe that it is prudent to propose a Plan which will likely be unreasonably speculative. About Ketab Corporation Ketab Corp. -- http://www.ketab.com/-- is a book store in Los Angeles, Calif., offering a selection of Persian, Farsi and Iranian books, music and movies. Ketab Corporation sought Chapter 11 protection (Bankr. C.D. Cal. Case No. 19-12500) on Oct. 2, 2019. In the petition signed by Bijan Khalili, president, the Debtor was estimated to have assets and liabilities of $1 million to $10 million. Judge Deborah J. Saltzman oversees the case. The Debtor tapped Resnik Hayes Moradi, LLP as bankruptcy counsel; the Law Offices of Tony Forberg as special counsel; and Financial Consultant Assoc. Inc. as accountant. LEARNING CARE: Bank Debt Trades at 39% Discount ----------------------------------------------- Participations in a syndicated loan under which Learning Care Group US No 2 Inc is a borrower were trading in the secondary market around 61 cents-on-the-dollar during the week ended Fri., May 15, 2020, according to Bloomberg's Evaluated Pricing service data. The $160.0 million facility is a Term loan. The facility is scheduled to mature on March 13, 2026. As of May 15, 2020, the amount is fully drawn and outstanding. The Company's country of domicile is United States. LSB INDUSTRIES: All Three Proposals Approved at Annual Meeting -------------------------------------------------------------- LSB Industries, Inc., held its 2020 Annual Meeting of Stockholders on May 14, 2020, at which the stockholders (i) elected Steven L. Packebush, Diana M. Peninger, and Lynn F. White as directors to serve on the Board of Directors for terms expiring in 2023; (ii) ratified the appointment of Ernst & Young LLP as the Company's independent registered public accounting firm for 2020; and (iii) approved, on an advisory basis, a resolution approving the 2020 compensation of the Company's named executive officers, which is commonly referred to as a "say-on-pay" vote. LSB Industries Headquartered in Oklahoma City, Oklahoma, LSB Industries, Inc. -- http://www.lsbindustries.com/-- manufactures and sells chemical products for the agricultural, mining, and industrial markets. The Company owns and operates facilities in Cherokee, Alabama, El Dorado, Arkansas and Pryor, Oklahoma, and operates a facility for a global chemical company in Baytown, Texas. LSB's products are sold through distributors and directly to end customers throughout the United States. LSB Industries reported a net loss attributable to common stockholders of $96.44 million for the year ended Dec. 31, 2019, compared to a net loss attributable to common stockholders of $102.74 million for the year ended Dec. 31, 2018. As of March 31, 2020, the Company had $1.11 billion in total assets, $111.11 million in total current liabilities, $480.84 million in long-term debt, $14.51 million in non-current operating lease liabilities, $5.15 million in other non-current accrued and other liabilities, $35.34 million in deferred income taxes, $243.70 million in redeemable preferred stock, and $219.49 million in total stockholders' equity. * * * As reported by the TCR on May 7, 2018, S&P Global Ratings raised its corporate credit rating on Oklahoma City, Oklahoma-based LSB Industries Inc. to 'CCC+' from 'CCC'. The outlook is stable. "The upgrade reflects our view of the improvement in LSB's overall operations for 2017 and the first quarter of 2018 and the completed refinancing of its $375 million senior secured notes due August 2019, which eliminates near-term refinancing risks. In November 2016, Moody's Investors Service downgraded LSB's corporate family rating (CFR) to 'Caa1' from 'B3', its probability of default rating to 'Caa1-PD' from 'B3-PD', and the $375 million guaranteed senior secured notes to 'Caa1' from 'B3'. LSB's 'Caa1' CFR rating reflects Moody's expectations that the combined uncertainty over operational reliability and the compressed margins, resulting from the low nitrogen fertilizer pricing environment, could result in continued weak financial metrics for a protracted period. LSC COMMUNICATIONS: Has $52M Net Loss for Quarter Ended March 31 ---------------------------------------------------------------- LSC Communications, Inc. filed its quarterly report on Form 10-Q, disclosing a net loss of $52 million on $701 million of net sales for the three months ended March 31, 2020, compared to a net loss of $125 million on $845 million of net sales for the same period in 2019. At March 31, 2020, the Company had total assets of $1,555 million, total liabilities of $1,686 million, and $131 million in total deficit. The Company said, "While operating as debtors-in-possession under Chapter 11, we may sell or otherwise dispose of or liquidate assets or settle liabilities, subject to the approval of the Bankruptcy Court or as otherwise permitted in the ordinary course of business (and subject to restrictions in our debt agreements), for amounts other than those reflected in the accompanying condensed consolidated financial statements. Further, the restructuring plan could materially change the amounts and classifications of assets and liabilities reported in the condensed consolidated financial statements. As a result of the factors noted above, we believe there is substantial doubt about the Company's ability to continue as a going concern. The condensed consolidated financial statements included in this quarterly report on Form 10-Q do not include any adjustments related to the recoverability and classification of liabilities that might be necessary should the Company be unable to continue as a going concern." A copy of the Form 10-Q is available at: https://is.gd/8dnnbK LSC Communications, Inc., together with its subsidiaries, provides various traditional and digital print, print-related services, and office products in North America, Europe, and Mexico. It operates through Magazines, Catalogs and Logistics; Book; Office Products; Mexico; and Other segments. The company was founded in 2016 and is based in Chicago, Illinois. M/I HOMES: Fitch Affirms BB- LongTerm IDR, Outlook Stable --------------------------------------------------------- Fitch Ratings has affirmed the ratings of M/I Homes, Inc., including the company's Long-Term Issuer Default Rating, at 'BB-'. The Rating Outlook is Stable. MHO's ratings reflect the company's execution of its business model in the current housing environment, its conservative land policies, management's demonstrated ability to manage land and development spending, its healthy liquidity position, and stable net debt to capitalization ratio. Risk factors include the cyclical nature of the homebuilding industry, MHO's somewhat limited geographic diversity and its relatively high speculative-inventory levels. The Stable Outlook reflects Fitch's expectations that while the coronavirus pandemic will result in meaningful interruption in housing activity, MHO will generate strong cash flow from operations and maintain a solid liquidity position during the period of lower revenues and profitability. A deeper and more prolonged downturn leading to meaningful inventory impairment charges, combined with aggressive land and development spending and/or share repurchase activity could lead to negative rating actions. KEY RATING DRIVERS Coronavirus Impact: Fitch expects a significant decline in revenues and margins as widespread lockdowns across MHO's major markets and consumer fears around coronavirus, combined with a deep global recession, lower consumer confidence, and higher unemployment will result in meaningful declines in home buying traffic (and consequently orders and closings) during the critical spring selling season and the remainder of 2020 and into 2021. While the overall impact of the coronavirus pandemic is difficult to determine at this time, Fitch's rating case assumes industry net order declines of 40%-60% during the months of April and May and continued weak order activity during the remainder of 2020 and into the early part of 2021. Fitch's rating case assumes a sharp drop in MHO's home closings during the second half of 2020, resulting in full year home closings falling 12%-13%. Fitch expects continued weakness during the first half of 2021 before recovering during the second half, causing home closings to be relatively flat next year. Fitch's rating case also assumes inventory impairments and write-offs of option deposits and pre-acquisition costs representing about 5%-7% of inventory during 2020 and 2021, although these non-cash charges could be higher if there is a prolonged downturn. Fitch expects EBITDA margins will fall 300-400 bps in 2020 and 100-200 bps in 2021. Fitch expects EBITDA-based metrics to weaken due to anticipated margin contraction, but net debt to capitalization should remain stable. Fitch expects MHO's net debt to capitalization ratio (excluding $40 million of cash classified as not readily available for working capital) will remain around between 35%-40% in 2020 and 2021, in line with the YE 2019 ratio of 38.4% and well below Fitch's negative rating sensitivity of 50% for MHO's 'BB-' rating. Fitch also expects the company's debt to EBITDA to weaken in the next few years, and will settle around 6.0x in 2020 and 9.0x in 2021 compared with 2.9x during 2019. Cash Flow Generation: The Stable Outlook reflects Fitch's expectations that the company will lower land and development spending this year as demand weakens, resulting in positive cash flow from operations of $125 million-$150 million (6%-7% of homebuilding revenues) in 2020. Fitch had previously expected MHO will be slightly CFFO negative this year due to higher land and development spending as market conditions remained favorable at that time. During 1Q20, the company spent $138 million on land and development activities, relatively flat compared with the $134 million spent during 1Q19. Management indicated that it has taken steps to extend or delay a significant number of its land purchases and lot takedowns, and, in a few cases, terminated lot contracts. MHO has also pulled back on the pace of its land development to align with order activity. If a housing recovery materializes earlier than Fitch's expectations, CFFO may be modestly lower as the company resumes higher land and development spending. Land Strategy: At March 31, 2020, the company controlled 33,820 lots, of which 43.7% were owned and the remaining lots controlled through options. Based on LTM closings, MHO controlled 5.1 years of land and owned roughly 2.2 years of land. MHO has one of the highest percentages of lots under option and one of the lowest owned-lot positions among the builders in Fitch's coverage. This strategy reduces the risk of downside volatility and impairment charges in a contracting housing market. Speculative Inventory: Management estimates that of the total number of homes closed in 2019 and 2018, about 49% and 45%, respectively, were speculative (spec) homes. MHO ended 1Q20 with 1,322 spec homes, of which 556 were completed. Total specs at the end of 1Q20 were 3.4% above the previous year's level, while total completed specs were slightly lower yoy. Based on 223 communities at the end of 1Q20, this translates into about 5.9 specs per community (2.5 completed specs per community) at 1Q20 compared with 6.0 specs per community (2.6 completed) at 1Q19. Management indicated that it has quickly pulled back on starting construction of spec homes and Fitch expects the company will continue to manage spec activity. The company has spec homes in order to facilitate delivery of homes on an immediate-need basis. The company has been able to effectively manage its spec activity in the past, although Fitch generally views high spec activity as a credit negative, all else equal, as rapidly deteriorating market conditions could result in sharply lower margins. Somewhat Limited Geographic Diversity: MHO offers homes for sale in 223 communities across 15 local markets in 10 states. The company has a top-10 position in 12 of the 50 largest MSAs in the country. The company has expanded into new markets in the past few years, entering the Minneapolis/St. Paul market in December 2015 with the acquisition of the residential homebuilding operations of Hans Hagen Homes, Inc. In July 2016, MHO entered the Sarasota, FL, market by opening a new division. In March 2018, MHO completed the acquisition of Pinnacle Homes, giving the company entry into the Detroit market. Shift Towards Entry-Level: Due to the robustness in the affordable segment of the market, MHO has shifted its offerings to target the entry-level buyer. At the end of 1Q20, MHO's affordable product, Smart Series, represented 28% of communities, up from 27% at YE 2019 and 9% at the end of 2018. The shift to this growing segment contributed to MHO's strong growth in overall orders, which increased 32.2% in 3Q19, 43.0% in 4Q19 and 24.6% in 1Q20. Fitch expects this customer segment will continue to represent a sizeable part of new home demand and help spur growth for MHO, but tightening mortgage standards may make qualification difficult for certain first time/entry level buyers. DERIVATION SUMMARY MHO's ratings reflect the company's execution of its business model in the current housing environment, its conservative land policies, management's demonstrated ability to manage land and development spending, healthy liquidity position, and stable credit metrics. Risk factors include the cyclical nature of the homebuilding industry, MHO's somewhat limited geographic diversity and its relatively high speculative-inventory levels. MHO's credit metrics and EBITDA margin are weaker compared with Meritage Homes Corporation (BB/Positive). The company is also smaller and less geographically diversified than Meritage. However, MHO has a more conservative land strategy, with over half of its lots controlled through options compared with 37% for Meritage. Meritage also has a more aggressive speculative building activity compared with MHO. KEY ASSUMPTIONS Fitch's Key Assumptions Within its Rating Case for the Issuer -- Total housing starts decline 25%, while new home sales fall 20% and existing home sales decrease 15% in 2020; -- Housing starts grow 13.7% in 2021, while new home sales improve 14.5% and existing home sales increase 5.0%; -- MHO's home closings fall 12%-13% in 2020 and is flat in 2021; -- EBITDA margins fall 300-400 bps in 2020 and 100-200 bps in 2021; -- CFFO/revenues of 6%-7% in 2020 and slightly negative in 2021; -- Net debt to capitalization of 35%-40% at the end of 2020 and 2021. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- The company increases its size and/or further enhances its geographic diversification and local market leadership position; -- 'MHO commits to maintaining net debt/capitalization below 45% and the company's net debt/capitalization is consistently at or below 40%. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- There is sustained erosion of profits, meaningful and continued loss of market share, and/or ongoing land, materials and labor cost pressures, resulting in margin contraction and weakened credit metrics (including net debt/capitalization consistently approaching 50%) and the MHO continues to maintain an aggressive land and development spending program, leading to a diminished liquidity position; -- If MHO's liquidity position (cash plus revolver availability) falls sharply and cannot cover maturities over the next two years and any cash flow shortfall in the next 12 months, this would also pressure the rating. 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 Healthy Liquidity Position: At March 31, 2020, MHO had $20.7 million of unrestricted cash and $427.3 million of borrowing availability under its $500.0 million revolving credit facility ($6.9 million outstanding and $65.8 million of letters of credit outstanding), which matures in July 2021. The company has sufficient liquidity to cover working capital needs in the intermediate term. Fitch expects the company will extend the maturity of its revolver well ahead of its scheduled maturity date. In January 2020, MHO issued $400 million of 4.95% senior unsecured notes due Feb. 1, 2028. The company used the net proceeds from the issuance to redeem $300 million of its 6.75% senior notes due 2021 and repay borrowings under the revolver. The company has no debt maturities until 2025, when $250 million of senior notes mature. SUMMARY OF FINANCIAL ADJUSTMENTS Historical and projected EBITDA is adjusted to add back non-cash stock-based compensation and interest expense included in cost of sales and also excludes impairment charges and land option abandonment costs and acquisition and integration costs. 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). MAI HOLDINGS: S&P Downgrades ICR to 'CCC-'; Outlook Negative ------------------------------------------------------------ S&P Global Ratings lowered its issuer credit rating on St. Louis-based printing equipment and services provider MAI Holdings Inc. to 'CCC-' from 'CCC'. At the same time, S&P is lowering its issue-level rating on its senior secured notes to 'CCC-' from 'CCC. The '4' recovery rating indicates S&P's expectation for average (30%-50%; rounded estimate: 30%) recovery of principal in the event of a payment default. "The downgrade reflects our view that MAI could face difficulty meeting its debt obligations or pursue a debt restructuring within the next six months. Although MAI has been able to secure incremental financing over the previous 12 months, we believe the company will have limited financial flexibility to fund operations and service its cash interest burden of about $14 million," S&P said. On July 10, 2019, MAI amended its asset-based lending (ABL) facility (unrated) and increased its borrowing capacity $5 million to a total of $37 million, subject to a borrowing base. Persistent cash flow deficits over the previous two years resulted in greater use of the company's revolving credit facility. At the end of 2019, MAI had drawn about $24 million on its ABL facility, leaving close to $6.5 million available after accounting for its borrowing base and financial covenant. As the economic disruption caused by the COVID-19 pandemic continues to affect MAI's sales volumes and operating income, S&P believes liquidity could deteriorate further in the second half of the year and the company could face difficulty meeting its debt obligations, particularly its December 2020 interest payment. In addition, MAI's secured notes currently trade at a severe discount to par. "In our view, the very distressed trading levels could increase the likelihood of a debt exchange or restructuring under which lenders receive less than originally promised," S&P said. Somewhat easing MAI's near-term liquidity shortfall, in April 2020, the company received $9.2 million pursuant to the Paycheck Protection Program (PPP) as part of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). PPP proceeds may be forgiven, or partially forgiven, if a company complies with various requirements, as well as restrictions on the use of proceeds. MAI intends to use the proceeds for qualifying expenses and expects the loan will be fully forgiven. However, if any portion of the PPP loan is not forgiven, it must be repaid within two years and accrues interest at a 1% fixed rate. S&P believes the COVID-19 global pandemic will meaningfully pressure MAI's earnings and limit its ability to turn around operating performance in 2020. The COVID-19 pandemic and global economic downturn follow an extended period of operational challenges and significant underperformance. Economic uncertainty, tariff concerns, and industry consolidation impaired equipment sales and resulted in a revenue decline of 17.5% in 2019. Digital Hybrid (HD) press introduction delays and custom product proliferation within the company's flexographic equipment led to higher costs and deteriorated earnings. In 2019, the company generated negative EBITDA and a free cash flow deficit of $14.4 million, which constrained liquidity and left the company little headroom to withstand operational setbacks. S&P believes the company will continue to face challenging demand conditions as customers delay or suspend new press orders and limit on-site service to reduce contact and adhere to social distancing mandates. S&P expects lower sales volumes in 2020 will suppress the benefit of previously implemented cost-reduction and improvement measures, which included standardizing its product offering, implementing procurement initiatives to improve its cost profile, improving supply chain practices, and employing strategic partnerships to reduce time to market on new product offerings." The negative outlook reflects the heightened risk that the company could default on its debt obligations or pursue a distressed debt restructuring within the next six months. S&P could lower its rating on MAI: -- To 'SD' (selective default) if it announced a debt restructuring or exchange offer that S&P considered distressed; or -- To 'D' if it missed either of the upcoming interest payments due June 1 or Dec. 1, and S&P did not expect it to be paid within the grace period. S&P could raise its rating: -- If MAI demonstrated a significant improvement in earnings and a return to positive reported free operating cash flow (FOCF); and -- The company improved its liquidity position and reduced the risk of a near-term payment crisis or distressed debt restructuring. MANNKIND CORP: Has $9.3MM Net Loss for Quarter Ended March 31 ------------------------------------------------------------- MannKind Corporation filed its quarterly report on Form 10-Q, disclosing a net loss of $9,322,000 on $16,235,000 of total revenues for the three months ended March 31, 2020, compared to a net loss of $14,883,000 on $17,448,000 of total revenues for the same period in 2019. At March 31, 2020, the Company had total assets of $80,212,000, total liabilities of $278,262,000, and $198,050,000 in total stockholders' deficit. The Company said, "As of March 31, 2020, we had an accumulated deficit of $3.0 billion and a stockholders' deficit of $198.1 million. We had net loss of $9.3 million for the three months ended March 31, 2020. To date, we have funded our operations through the sale of equity and convertible debt securities, from the receipt of upfront and milestone payments from certain collaborations, and from borrowings under certain loan arrangements. If we are unable to obtain additional funding, there will continue to be substantial doubt about our ability to continue as a going concern." A copy of the Form 10-Q is available at: https://is.gd/nROYt7 MannKind Corporation is a biopharmaceutical company focused on the development and commercialization of inhaled therapeutic products for patients with diseases such as diabetes and pulmonary arterial hypertension. The company is based in Westlake Village, California. MEDCOAST MEDSERVICE: Trustee Taps Sherwood as Financial Advisor --------------------------------------------------------------- David Gottlieb, the Chapter 11 trustee for MedCoast Medservice Inc., seeks approval from the U.S. Bankruptcy Court for the Central District of California to employ Sherwood Partners, Inc. as his financial advisor. Sherwood Partners will provide these services: (a) evaluate assets of Debtor and its bankruptcy estate; (b) work with the trustee and his legal counsel to ensure compliance with the requirements of the bankruptcy court, Bankruptcy Code, Bankruptcy Rules and the Office of the U.S. Trustee as they pertain to Debtor's bankruptcy estate; (c) represent the trustee in any proceeding or hearing before the bankruptcy court and the U.S. trustee; (d) assist in the preparation of case status reports, monthly operating reports and other documents; (e) work with the trustee and his legal counsel in connection with any transactions outside of the ordinary course of business; and (f) provide expert testimony and related analysis in connection with any contested matter or adversary proceeding. The firm will be paid at hourly rates as follows: Andrew De Camara $540 Jarod Wada $475 Other Personnel $300 - $500 Andrew De Camara, a senior managing director of Sherwood Partners, 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: Andrew De Camara Sherwood Partners, Inc. 3945 Freedom Circle, Suite 560 Santa Clara, CA 95054 Telephone: (650) 454-8001 Facsimile: (650) 454-8040 Email: info@sherwoodpartners.com About MedCoast Medservice MedCoast Medservice Inc. -- https://www.medcoastambulance.com/ -- provides emergency and non-emergency transportation to all of Los Angeles, Orange County and South Bay areas. MedCoast Medservice is a corporation whose primary business concerns the transport of individuals (patients) to and from their homes or places of need to hospitals, physicians, and/or health care providers. It operates from a rented facility located at 14325 Iseli Road, Santa Fe Springs, Calif. MedCoast Medservice filed for Chapter 11 protection (Bankr. C.D. Cal. Case No. 19-19334) on Aug. 9, 2019. In the petition signed by Artina Safarian, its president, the Debtor disclosed assets at $952,016 and liabilities at $2,615,768, of which approximately $1,303,754 is owed for payroll taxes to the Internal Revenue Service. Judge Sheri Bluebond is the case judge. Debtor tapped Henry D. Paloci III PA as its legal counsel, and Riley Akopians & MSA CPAS, LLP as its accountant. David Gottlieb was appointed as Debtor's Chapter 11 trustee. The trustee tapped Levene, Neale, Bender, Yoo & Brill L.L.P. as his bankruptcy counsel and Sherwood Partners, Inc. as his financial advisor. MIA & ASSOCIATES: Voluntary Chapter 11 Case Summary --------------------------------------------------- Debtor: MIA & Associates Realty Group, LLC 27523 Morton Road Katy, TX 77493-7400 Business Description: MIA & Associates Realty Group, LLC is the fee simple owne of four real properties located in Texas having a total current value of $1.4 million. Chapter 11 Petition Date: May 20, 2020 Court: United States Bankruptcy Court Southern District of Texas Case No.: 20-32708 Judge: Hon. Jeffrey P. Norman Debtor's Counsel: Richard Lee Fuqua II, Esq. FUQUA & ASSOCIATES, PC 8558 Katy Freeway, Ste. 119 Houston, TX 77024 Tel: (713) 960-0277 E-mail: RLFuqua@FuquaLegal.com Total Assets: $1,406,088 Total Liabilities: $880,823 The petition was signed by Angelica Garcia, sole member. A copy of the petition is available for free at PacerMonitor.com at: https://is.gd/Xnk7ty MICROCHIP TECHNOLOGY: Fitch Affirms BB+ LongTerm IDR, Outlook Neg ----------------------------------------------------------------- Fitch Ratings has affirmed the ratings for Microchip Technology, Inc., including the Long-Term Issuer Default Rating at 'BB+' and 1st lien senior secured rating at 'BBB-'/'RR1'. The Rating Outlook remains Negative. Fitch's actions affect $11.8 billion of total debt, including undrawn amounts under the $3.57 billion RCF. The ratings and outlook reflect Microchip's still elevated leverage metrics and Fitch's expectation for constrained near-term debt reduction capacity due to weaker demand related to coronavirus. As a result, total debt to operating EBITDA (total leverage), which was a Fitch estimated 5.0x exiting fiscal 2020, is likely to remain above Fitch's 3.5x negative rating sensitivity through at least the near term. Meanwhile, Fitch believes liquidity remains adequate and Microchip will continue to use all of its Fitch forecasted $1.0 billion to $1.5 billion of annual FCF for debt reduction until total leverage is 2.5x. KEY RATING DRIVERS Coronavirus Impact: Fitch assumes government-imposed stay-in-place orders in response to the coronavirus pandemic will result in a significant first-half downturn and partial recovery beginning in the second half of 2020, followed by slow growth to achieve full recovery on a run rate basis exiting 2021. Fitch believes end market mix and financial flexibility will determine the coronavirus' impact on semiconductor credit profiles. Issuers more exposed to infrastructure markets (DC, 5G gear and PCs), which represents roughly a third of Microchip's revenue, will outperform those exposed to markets more sensitive to GDP (automotive, consumer and industrial), which constitutes about two-thirds for Microchip. Deleveraging Behind Plan: Fitch forecasts total leverage will remain above Fitch's 3.5x negative sensitivity through at least fiscal 2021 (beyond the 24 months post-Microsemi close Fitch originally expected). A series of exogenous variables has resulted in lower than expected revenue and profitability and, therefore, deleveraging. The currently weaker demand environment stemming from coronavirus follows excess Microsemi channel inventory at close and heightened customer caution surrounding U.S. tariffs on China. Nonetheless, Microchip has repaid approximately $2.2 billion of debt and will continue using substantially all of its FCF for debt reduction until the company achieves 2.5x total leverage. Poised for Share Gains: Fitch expects Microchip will outgrow the broader semiconductor markets over the longer term due to its product breadth, which enables custom integrated solutions for longer-product life cycles. In addition, Microchip is focused on a broad set of faster growing and fragmented markets that should outperform the broader semiconductor market. Meaningful Revenue Diversification: Despite still cyclical end markets, Microchip's meaningful end market, product and customer diversification should drive comparatively even operating results. The acquisition of Microsemi increased communications and data center, computing, and aerospace and defense and industrial end market exposure. The deal also strengthened Microchip's system solutions capabilities with high voltage power management, high-reliability discretes, storage and field programmable gate array products, while reducing customer concentration. Higher Operating Leverage: Microchip's greater mix of in-house manufacturing and assembly and test than that of peers drives higher operating leverage. As a result, Fitch expects considerable profit margin expansion upon the resumption of top line growth and lower fixed cost absorption within the context of weak demand environments. Nonetheless, Microchip's ongoing realization of Microsemi acquisition-related cost synergies, including the integration of legacy Microsemi deals and the internalization of Microsemi's assembly and test, will continue to structurally expand profit margins. Reduced Acquisition Activity: Fitch expects intensified U.S. and China regulatory scrutiny will reduce acquisition activity for Microchip and the broader semiconductor industry. Deals ticked up in 2019 but were smaller in size than transformative deals of recent years and largely funded with cash flow. Meanwhile, Microchip remains focused on integrating Microsemi, organic growth opportunities debt and reduction rather than incremental acquisitions, which should result in a more stable financial profile once the company achieves its total leverage target. Recovery Rationale: The senior secured RCF (including the bridge facility), term loan and bonds are secured by substantially all assets of Microchip and its subsidiaries. As a result, Fitch notches up the secured debt by one notch to 'BBB-'/'RR1' representing Fitch's expectation for superior recovery for the first lien debt. DERIVATION SUMMARY From an operating profile perspective, Fitch believes Microchip is strongly positioned for the rating, given its leading share in secular growth markets, broad product set enabling long product life cycle customized solutions and diversified customer base, resulting in expectations for top line growth exceeding the broader market and profitability more in-line with the 'BBB'-category. A number of competitors are meaningfully more highly rated, including Samsung (AA-), Texas Instruments (A+) and NXP (BBB-), due largely to a combination of greater FCF scale and more conservative financial policies, including a greater focus on organic growth, although strained trade relations between the U.S. and China should limit meaningful further industry consolidation. Growing annual FCF and the resumption of top line growth should enable Microchip to meaningfully improve credit protection measures over the longer term, at which point Fitch believes Microchip will be positioned to migrate to investment grade. KEY ASSUMPTIONS - Sequential revenue down by mid-single digits in the June 2020 quarter, driven by weaker demand related to coronavirus. This should result in partial recovery in the second half of the year and slow growth through the end of 2021. - Beyond fiscal 2021, Fitch expects the resumption of secular revenue growth, which should be amplified by ongoing share gains. - Gross profit margins should remain near current levels in the low-60s% and increasing from there driven by internalizing Microsemi's back-end assembly and test, which should increase operating leverage for the company. - Opex at roughly 22.5% of revenue through the forecast period with largely fixed R&D moderated by variable compensation growing in-line with revenue. - The company uses substantially all of FCF for debt reduction until leverage metrics return to below Fitch's 3.5x negative rating sensitivity. - Only slight dividend growth until total debt to operating EBITDA reaches 2.5x, at which point the company will use FCF for a combination of tuck-in deals and stock buybacks. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- Fitch could stabilize the ratings when it expects total debt to operating EBITDA at or below 3.5x or total debt to FCF below 7.0x within the near term, or 2.5x for an upgrade to investment grade. -- Microchip's top line growth exceeds that of underlying markets, supporting the case for share gains and, therefore, faster profitability and cash flow growth from considerable operating leverage. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- Microchip does not use substantially all of its FCF for debt reduction until the company achieves total debt to operating EBITDA of 3.5x resulting in total debt to FCF is sustained above 8.0x. -- Microchip's top line growth rate lags that of its core growth end markets resulting in slower than anticipated profitability and cash flow growth from considerable operating leverage in the company's model. BEST/WORST CASE RATING SCENARIO International scale credit ratings of Non-Financial Corporate issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. LIQUIDITY AND DEBT STRUCTURE Adequate Liquidity: As of March 31, 2020, Fitch believes Microchip's liquidity was adequate and supported by $403 million of cash, cash equivalents and short-term investments and approximately $1.2 billion of remaining availability under the company's $3.57 billion RCF. Fitch anticipates cash will remain near current levels but that rapid repayment of the RCF will bolster liquidity through the forecast period. Fitch's expectation for $1.0 billion to $1.5 billion of annual FCF also supports liquidity, although Fitch expects Microchip will use its FCF for debt reduction until the company achieves its 2.5x total leverage target. ESG CONSIDERATIONS ESG issues are credit neutral or have only a minimal credit impact on the entity(ies), either due to their nature or the way in which they are being managed by the entity(ies). 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. MND HOLDINGS III: Bank Debt Trades at 27% Discount -------------------------------------------------- Participations in a syndicated loan under which MND Holdings III Corp is a borrower were trading in the secondary market around 73 cents-on-the-dollar during the week ended Fri., May 15, 2020, according to Bloomberg's Evaluated Pricing service data. The bank debt traded around 79 cents-on-the-dollar for the week ended May 8, 2020. The $258.1 million facility is a Term loan. The facility is scheduled to mature on June 19, 2024. As of May 15, 2020, the amount is fully drawn and outstanding. The Company's country of domicile is United States. MOOD MEDIA: Moody's Withdraws 'Ca' Corp. Family Rating ------------------------------------------------------ Moody's Investors Service withdrew its ratings for Mood Media Borrower, LLC, including the company's Ca corporate family rating and C Senior Secured Second Lien Notes rating. Withdrawals: Issuer: Mood Media Borrower, LLC Probability of Default Rating, Withdrawn, previously rated Ca-PD Corporate Family Rating, Withdrawn, previously rated Ca Senior Secured Regular Bond/Debenture, Withdrawn, previously rated C (LGD5) Outlook Actions: Issuer: Mood Media Borrower, LLC Outlook, Changed To Rating Withdrawn From Negative RATINGS RATIONALE Moody's has decided to withdraw the ratings for its own business reasons. Headquartered in Austin, Texas, Mood Media Borrower, LLC provides in-store/on-premises digital audio and visual media for customers in a variety of industries, including quick service restaurants, retailers and hotels. The company is privately held by Apollo Global Management, LLC, GSO Capital Partners LP, and FS/KKR Advisor, LLC. LTM 9/2019 revenues was approximately $355 million. MYOS RENS: Has $866,000 Net Loss for the Quarter Ended March 31 --------------------------------------------------------------- MYOS RENS Technology Inc. filed its quarterly report on Form 10-Q, disclosing a net loss of $866,000 on $290,000 of net revenues for the three months ended March 31, 2020, compared to a net loss of $975,000 on $149,000 of net revenues for the same period in 2019. At March 31, 2020, the Company had total assets of $3,591,000, total liabilities of $977,000, and $2,614,000 in total stockholders' equity. The Company has suffered recurring losses from operations and incurred a net loss of $866 for the three months ended March 31, 2020. The accumulated deficit as of March 31, 2020 was $40,191. The Company has not yet achieved profitability and expects to continue to incur cash outflows from operations. It is expected that its operating expenses will continue to increase and, as a result, the Company will eventually need to generate significant product revenues to achieve profitability. These conditions indicate that there is substantial doubt about the Company's ability to continue as a going concern within one year after the condensed consolidated financial statement issuance date. A copy of the Form 10-Q is available at: https://is.gd/Tq74yh MYOS RENS Technology Inc. focuses on the discovery, development, and commercialization of nutritional ingredients, functional foods, and other technologies that enhance muscle health and performance. The company was formerly known as MYOS Corporation and changed its name to MYOS RENS Technology Inc. in March 2016. MYOS RENS Technology was founded in 2007 and is based in Cedar Knolls, New Jersey. NABORS INDUSTRIES: S&P Downgrades ICR to 'CCC+'; Outlook Negative ----------------------------------------------------------------- S&P Global Ratings lowered its issuer credit rating and issue-level ratings on Nabors Industries Ltd.'s guaranteed unsecured debt to 'CCC+' from 'B-'. S&P also lowered the rating on Nabors' unsecured debt without guarantees to 'CCC-' from 'CCC+'. Demand for oilfield services is depressed this year due to E&P spending cuts. S&P expects demand in North America to drop by at least 30% in 2020 as upstream companies reduce development activity in shale plays. S&P views international demand to be less sensitive to short-term oil price volatility; however, the rating agency expects international demand to decline about 5% this year relative to 2019. Nabors' industry-leading market positions across multiple products, both domestically and internationally, provides some cushion against weak demand, but the company remains exposed to the volatile North American market. Based on its lower assumptions for demand and pricing, S&P forecasts the company is at risk of breaching its 5.5x net debt leverage covenant this year. S&P expects some recovery in 2021 under its rising oil price assumptions. Nabors' debt securities are trading at significant discounts to par. "Some of the company's unsecured notes are trading at prices that heighten the risk of a debt exchange or below par debt repurchase that we could view as distressed. We note that restrictions under the company's credit agreement limit--the amount of priority debt the company can issue without amendment-- as constraining the likelihood of a near-term up-tier debt exchange," S&P said. Nabors has substantial debt maturities over the next several years. The company has $139 million due in September 2020 and $173 million due in 2021 and S&P views unsecured debt markets as unavailable to Nabors based on the current trading prices of the company's securities. S&P notes the company significantly improved its maturity profile through a debt issuance and tender in January. S&P forecasts only modest cash flow available for debt repayment this year; however, the company has limited cash outside its joint venture in Saudi Arabia. While Nabors is forecasting more robust cash flow, S&P expects the company to rely on its credit facility to address upcoming maturities, limiting liquidity. The $1 billion facility is approximately half-drawn as of the end of the first quarter. The negative outlook reflects S&P's view that, based on market prices, Nabors may engage in a debt exchange or below par repurchase that S&P regards as distressed. The outlook also reflects S&P's forecast debt leverage, which indicates the company may breach a covenant under its credit facility this year, potentially limiting access. "We could lower our ratings on the company if we view the prospect of a distressed exchange or below par repurchase is more likely. We could also lower the rating if liquidity becomes constrained beyond our expectations. This could occur if the company breaches a covenant under its credit facility and does not receive a waiver or amendment," S&P said. "We could return the outlook to stable if Nabors is able address upcoming maturities while maintaining adequate liquidity and remains in compliance with covenants. A stable outlook would also require reduced risk of a distressed exchange or below par debt repurchase, which would likely occur if market prices improve," the rating agency said. NATIONAL CINEMEDIA: Bank Debt Trades at 23% Discount ---------------------------------------------------- Participations in a syndicated loan under which National CineMedia LLC is a borrower were trading in the secondary market around 77 cents-on-the-dollar during the week ended Fri., May 15, 2020, according to Bloomberg's Evaluated Pricing service data. The bank debt traded around 82 cents-on-thedollar for the week ended May 8, 2020. The $270.0 million facility is a Term loan. The facility is scheduled to mature on June 20, 2025. As of May 15, 2020, $266.0 million of the loan remains outstanding. The Company's country of domicile is United States. NATIONAL CINEMEDIA: S&P Lowers ICR to 'B' on Increased Leverage --------------------------------------------------------------- S&P Global Ratings lowered its issuer credit rating on U.S.-based theatre advertising company National CineMedia Inc. (NCM) to 'B' from 'B+'. At the same time, S&P removed the ratings from CreditWatch. Leverage will spike in 2020 and likely remain above 5x in 2021 due to S&P's expectation that a slow recovery in theater attendance will have a prolonged impact on theater advertising. NCM's revenue is directly tied to theater attendance as it is paid by advertisers based on the number of impressions it can deliver. While theaters remain closed due to the coronavirus, the company is not generating any revenue and is generating modestly negative EBITDA and cash flow. "We expect leverage will spike well above our 5x downgrade threshold in 2020, even if theaters reopen in July, and remain above 5x until revenue can return to about 85% to 90% of 2019 levels, which could be difficult to achieve in 2021. When current stay-at-home restrictions are eased, local and national governments may still impose social distancing restrictions, which would almost certainly affect crowd-based events, including movie theaters, and could limit NCM's audience. We also believe consumers will continue to be wary of attending such events until either a vaccine is available or the risks of COVID-19 are better understood. These factors will likely lead to a prolonged impact on NCM's revenue, such that we expect leverage to remain above 5x through at least 2021," S&P said. NCM generates over 70% of its total advertising revenue from national advertising, which is cyclical. Similar to national TV advertising, theater advertising has longer lead times relative to other forms of media. As a result, S&P expects declines in national advertising to generally lag an economic downturn, but be slower than other forms of media to recover. It expects national advertising will have the steepest declines in the second and third quarters, with some improvement in the fourth quarter. S&P expects NCM to shift the majority of its upfront commitments from the second quarter into the third quarter, which could help offset some of the expected weakness in the scatter market when theaters reopen. If the economy begins to recover in the second half of 2020, advertisers that have pulled back on transactional advertising may retain more of their budgets that are committed to brand building, which could benefit theater advertisers. Any benefits from this could be tempered by a smaller audience if theaters are forced to implement social distancing through the end of 2020 or potentially lower cost-per-thousand (CPM) pricing if the recession lowers what advertisers are willing to pay. NCM eliminated its covenant risk through July 2021 and S&P believes the company has ample liquidity to weather an extended shutdown of theaters. The company obtained a waiver on both its 4.5x net senior secured leverage covenant and its 6.25x total net leverage covenant that provides relief through the quarter ended Jul 1, 2021. As part of the waiver agreement, NCM LLC (the operating subsidiary) will need to maintain a minimum of $55 million of unencumbered cash on its balance sheet. It also will not be able to distribute any of its cash flows to its parent (National CineMedia Inc.) or founding members (including Cinemark and Cineworld) unless it is able to meet minimum EBITDA thresholds. The company has about $169 million of cash at NCM LLC as of May 5th, 2020, which S&P believes provides more than enough liquidity to fund operations while theaters remain closed. The company's cost structure is mostly variable, and it has reduced its fixed costs by 50% since theaters closed in March. Including debt service, the company's cash burn will be roughly $9 million per month while theaters remain closed. "We expect the company will have enough cash for theaters to remain closed through mid-2021 before violating the $55 million minimum liquidity requirement. Theaters are currently planning to reopen in July, although there is considerable risk to that timeline, especially for key markets in the Northeast and California. But even if theaters do not open until later in 2020, we believe NCM has enough liquidity to weather the shutdown period and will be able to quickly return to positive cash flow, even with a slow ramp up in attendance," S&P said. Environmental, social, and governance (ESG) factors relevant to the rating action: -- Health and safety The negative outlook reflects the uncertainty around the length of the shutdown and the extent of its impact on theater attendance and the potential that a longer shutdown, a slower recovery in theater attendance, or a more prolonged impact on national advertising than S&P currently expects could cause the company's cash balance to deteriorate over the next 12 months. "We could lower our ratings if theaters remain closed well into the second half of 2020, theater attendance is lower than expected in 2021, or the downturn in national advertising lasts into 2021, such that liquidity declines and the company has less than 15% cushion with its $55 million minimum cash requirement. We could also lower the rating if we believe the company will require an extension of its covenant waiver beyond July 1, 2021," S&P said. "We could revise our outlook to stable if theaters reopen in the second half of 2020, attendance returns to a level that allows NCM to return to positive free cash flow, and we believe the company has no near-term liquidity or covenant risks," the rating agency said. NEUSTAR INC: Bank Debt Trades at 29% Discount --------------------------------------------- Participations in a syndicated loan under which NeuStar Inc is a borrower were trading in the secondary market around 71 cents-on-the-dollar during the week ended Fri., May 15, 2020, according to Bloomberg's Evaluated Pricing service data. The bank debt traded around 81 cents-on-the-dollar for the week ended May 8, 2020. The $325.0 million facility is a Term loan. The facility is scheduled to mature on August 8, 2025. As of May 15, 2020, the amount is fully drawn and outstanding. The Company's country of domicile is United States. NTHRIVE INC: Bank Debt Trades at 24% Discount --------------------------------------------- Participations in a syndicated loan under which nThrive Inc is a borrower were trading in the secondary market around 76 cents-on-the-dollar during the week ended Fri., May 15, 2020, according to Bloomberg's Evaluated Pricing service data. The bank debt traded around 81 cents-on-the-dollar for the week ended May 8, 2020. The $562.0 million facility is a Term loan. The facility is scheduled to mature on October 20, 2022. As of May 15, 2020, $558.2 million of the loan remains outstanding. The Company's country of domicile is United States. O'HARE FOUNDRY: Wants to Maintain Plan Exclusivity Through June 15 ------------------------------------------------------------------ O'Hare Foundry Corporation asked the U.S. Bankruptcy Court for the Eastern District of Missouri to extend the exclusivity period for filing its plan and disclosure statement through June 15, and the period to solicit acceptances for the plan through August 24. Currently, O'Hare Foundry is working with a consultant to improve its pricing and profitability, and continues to work on the financing necessary to its reorganization. The company wants to have those price increases implemented and financing in place before determining the exact terms of its plan. In addition, the company recently devised a plan for eliminating an unprofitable line of work, which will enable it to liquidate some of its equipment and reduce its space requirements, allowing it to eliminate substantial occupancy expense and increase its profitability. However, earlier this year, the company ran into some personnel problems and lost some of its most productive employees. It has taken a few months to replace and train them. Finally, the coronavirus pandemic has introduced substantial uncertainties into the operations of O'Hare Foundry's customers as well as the company. For the moment, though, there have been no substantially negative effects. About O'Hare Foundry Corporation Established in 1921, O'Hare Foundry Corporation -- http://www.oharefoundry.com-- manufactures sand castings from brass, brass and bronze alloys, and aluminum alloys. O'Hare Foundry Corporation sought protection under Chapter 11 of the Bankruptcy Code (Bankr. E.D. Mo. Case No. 19-41834) on March 27, 2019. At the time of the filing, the Debtor estimated assets of between $1 million and $10 million and liabilities of between $1 million and $10 million. The case is assigned to Judge Charles E. Rendlen III. The Debtor tapped Danna McKitrick, P.C. as legal counsel; Tueth, Keeney, Cooper, Mohan, and Jackstadt, PC as special counsel; and Stark & Company, P.C. as accountant. OASIS PETROLEUM: Widens Net Loss to $4.3 Billion in First Quarter ----------------------------------------------------------------- Oasis Petroleum Inc. reported a net loss attributable to the company of $4.31 billion on $387.8 million of total revenues for the three months ended March 31, 2020, compared to a net loss attributable to the company of $114.88 million on $575.7 million of total revenues for the three months ended March 31, 2019. As of March 31, 2020, the Company had $2.87 billion in total assets, $3.37 billion in total liabilities, and a total stockholders' deficit of $499.17 million. Updated 2020 Outlook * Reducing 2020 E&P CapEx by 50% to 60% as compared to February 2020 guidance of $575 million to $595 million, with expected spending from 2Q20 to 4Q20 of $80 million to $140 million. * Expecting to generate free cash flow at strip NYMEX WTI prices based on the Company's revised 2020 plan, as strong hedge position helps protect cash flow. * 2Q20 hedged volumes of 50 MBopd and 2H20 hedged volumes of 38 MBopd drive mark to market value of $262 million as of March 31, 2020. * Ramped down all drilling and completion activity. Completion activities have shut down with the flexibility to resume the appropriate level of activity in the fall. * Suspending 2020 volume and operating cost guidance given ongoing uncertainty, continued market volatility and the uncertainty around the size and duration of volume curtailments over the coming months. * Completed 27 gross operated wells in 1Q20. Most flush production from newly completed wells is currently curtailed to preserve value. Compared to 1Q20 production, volumes in the Williston Basin were reduced by approximately 25% in April. May curtailments are currently expected to be higher than those in April. Oasis has significant flexibility to bring volumes back online and can respond quickly to market dynamics. * Expected Midstream CapEx has been reduced by approximately 65% to 70%, ranging from $35 million to $40 million in 2020, with approximately 35% attributable to Oasis. Chairman and Chief Executive Officer, Thomas B. Nusz commented, "We are living in unprecedented times and during this challenging macroeconomic environment and pandemic, Oasis is first and foremost focused on the health and safety of our employees, contractors, and communities. Additionally, Oasis is aligning our operations and capital spending plan with the current market reality. Oasis acted immediately to reduce activity following the sharp oil price declines in March. As we have done in the past, the team took aggressive actions with the goal of better protecting our balance sheet. We dramatically lowered our cost structure in 2019, established a robust hedge position that provides protection to our 2020 cash flow, and materially changed our executive compensation and compensation structure as outlined in our definitive proxy statement filed on March 30, 2020. The aggressive actions we are taking are aimed at preserving liquidity while maintaining optionality for a more normalized pricing environment. Oasis is continuously reviewing its plans and has the ability to make necessary additional adjustments as the unprecedented global macroeconomic dislocation continues to unfold." Mr. Nusz continued, "Oasis executed well in the first quarter, building off the positive momentum seen in the back half of 2019. Volumes exceeded expectations while spending and operating costs were significantly lower, driven by further efficiency gains. In the Williston Basin, Oasis continued to enhance returns by optimizing the development program and driving costs lower, all while maintaining industry-leading gas capture rates. In the Delaware Basin, capital efficiency exceeded expectations, allowing Oasis to get wells online sooner than expected at lower costs. The macroeconomic environment changed significantly over the first quarter, but the team delivered exceptionally well." G&A totaled $31.2 million in 1Q20, $34.5 million in 1Q19 and $25.3 million in 4Q19. Amortization of equity-based compensation, which is included in G&A, was $6.8 million, or $0.93 per barrel of oil equivalent ("Boe"), in 1Q20 as compared to $9.0 million, or $1.09 per Boe, in 1Q19 and $7.2 million, or $0.90 per Boe, in 4Q19. G&A for the Company's E&P segment, excluding G&A expenses attributable to other services, totaled $23.3 million in 1Q20, $27.5 million in 1Q19 and $19.0 million in 4Q19. E&P Cash G&A expenses (non-GAAP), excluding G&A expenses attributable to other services, non-cash equity-based compensation expenses and other non-cash charges, were $2.29 per Boe in 1Q20, $2.30 per Boe in 1Q19 and $1.51 per Boe for 4Q19. Impairment expense was $4.8 billion in 1Q20 as compared to $0.6 million in 1Q19 and $9.6 million in 4Q19. In 1Q20, the Company recorded impairment charges of $4.4 billion on its proved oil and gas properties in the Williston Basin and the Delaware Basin, $291.3 million on its unproved oil and gas properties, $108.3 million on its midstream assets and $15.8 million on its well services assets. In 1Q19, the Company recorded impairment charges of $0.6 million on its unproved oil and gas properties. No other impairment charges were recorded for the period. In 4Q19, the Company recorded impairment charges of $4.7 million on its unproved oil and gas properties and $4.4 million to adjust the carrying value of equipment held for sale related to exiting the well services business to the estimated fair value less costs to sell. Interest expense was $95.8 million in 1Q20 as compared to $44.5 million in 1Q19 and $44.7 million in 4Q19. Capitalized interest totaled $2.3 million in 1Q20, $2.8 million in 1Q19 and $2.5 million in 4Q19. Cash Interest (non-GAAP) totaled $93.5 million in 1Q20, $42.6 million in 1Q19 and $40.7 million in 4Q19. For the three months ended March 31, 2020, interest expense and Cash Interest include additional interest charges of $29.3 million per the Fourth Amendment of the Oasis Credit Facility and additional interest charges of $25.9 million for the OMP Credit Facility. In 1Q20, the Company recorded an income tax benefit of $254.7 million, resulting in a 5.6% effective tax rate as a percentage of its pre-tax loss for the quarter. In 4Q19, the Company recorded an income tax benefit of $23.9 million, resulting in a 27.1% effective tax rate as a percentage of its pre-tax loss for the quarter. Liquidity and Balance Sheet As of March 31, 2020, Oasis had cash and cash equivalents of $134.0 million, total elected commitments under its revolving credit facility of $1,100.0 million and total elected commitments under the revolving credit facility among OMP, as parent, OMP Operating LLC, a subsidiary of OMP, as borrower, Wells Fargo Bank, N.A., as administrative agent and the lenders party thereto of $575.0 million. In addition, Oasis had $522.0 million of borrowings and $18.9 million of outstanding letters of credit issued under the Oasis Credit Facility and $487.5 million of borrowings and a $1.7 million outstanding letter of credit issued under the OMP Credit Facility. On April 24, 2020, Oasis completed its spring redetermination of its borrowing base under the Oasis Credit Facility and entered into that certain Limited Waiver and Fourth Amendment to the Oasis Credit Facility. As a result, Oasis's borrowing base decreased from $1,300.0 million to $625.0 million and aggregate elected commitments were set at the level of the borrowing base. The next redetermination under the Oasis Credit Facility is scheduled for Oct. 1, 2020. The following additional reductions under the Oasis Credit Facility will be effective on June 1, 2020 and July 1, 2020, respectively: (1) the June Reduction consists of borrowing base and aggregate elected commitment amount reductions from $625.0 million to $612.5 million, and (2) the July Reduction consists of additional borrowing base and aggregate elected commitment amount reductions from $612.5 million to $600.0 million. In addition, the Fourth Amendment amended the financial covenants under the Oasis Credit Facility to provide that the Company's Current Ratio (as defined in the Oasis Credit Facility) has been waived for the fiscal quarter ending June 30, 2020 and the Company's Ratio of Total Debt to EBITDAX (as defined in the Oasis Credit Facility) shall not, for the four quarter period ended on the last day of each fiscal quarter, be greater than 4.00 to 1.00. As a result of ongoing internal oversight processes, OMP Operating LLC identified that a Control Agreement (as defined in the OMP Credit Facility) had not been executed for a certain bank account held at JPMorgan Chase Bank, N.A., who is a lender under the OMP Credit Facility. The Control Agreement serves to establish a lien in favor of the lenders under the OMP Credit Facility with respect to the JPM Account. On May 11, 2020, OMP Operating LLC executed a Control Agreement with both the administrative agent and JPMorgan, thereby completing the documentation required under the OMP Credit Facility. Despite the Control Agreement's execution, the failure to have had it in place before the JPM Account was initially funded with cash represents a past Event of Default. On May 15, 2020, OMP Operating LLC entered into a limited waiver of this past Event of Default, which provides forbearance of additional interest owed arising from this past Event of Default until the earlier to occur of (i) Nov. 10, 2020 and (ii) an Event of Default. Pursuant to the Limited Waiver, OMP Operating LLC recorded an additional interest charge of approximately $25.9 million in the unaudited condensed consolidated financial statements as of March 31, 2020. Going Concern Based on the current commodity price environment, the Company currently expects it will be unable to comply with the leverage ratio covenant under its revolving credit facility, as amended in April 2020, beginning with the fourth quarter of 2020, which raises substantial doubt about the Company's ability to continue as a going concern within one year after the financial statements are issued. Failure to comply with this covenant, if not waived, would result in an event of default under the Oasis Credit Facility, the potential acceleration of outstanding debt thereunder and the potential liquidation of the collateral securing such debt. An acceleration under the Oasis Credit Facility could result in an event of default and an acceleration under the indentures for the Company's senior unsecured notes and senior unsecured convertible notes. The Company is actively pursuing, with support from its Board of Directors, a variety of transactions and cost-cutting measures, including but not limited to, reduction in corporate discretionary expenditures, refinancing transactions, capital exchange transactions, asset divestitures, reduction in capital expenditures in 2020 by approximately 50% to 60% from the initial total 2020 capital expenditure plan announced in February 2020 and operational efficiencies. Management believes these measures, as the Company continues to implement them, may enable it to comply with its leverage ratio covenant. However, the Company cannot predict the extent to which any of these measures will be successful, if at all. As a result of the foregoing liquidity concerns and the Company's reduction in planned capital expenditures in 2020 in response to the depressed commodity price environment, the Company's estimated quantity of proved reserves has decreased significantly from the previous estimate disclosed in its 2019 Annual Report. This decrease is primarily due to the removal of proved undeveloped reserves in contemplation of the ongoing market downturn and uncertainty regarding the Company's ability to finance the development of such reserves within five years. A full-text copy of the Quarterly Report is available for free at the Securities and Exchange Commission's website at: https://is.gd/QMqX5w About Oasis Petroleum Oasis Petroleum Inc. -- http://www.oasispetroleum.com/-- is an independent exploration and production company focused on the acquisition and development of onshore, unconventional crude oil and natural gas resources in the United States. Oasis reported a net loss attributable to the company of $128.24 million for the year ended Dec. 31, 2019, compared to a net loss attributable to the company of $35.29 million for the year ended Dec. 31, 2018. * * * As reported by the TCR on April 3, 2020, S&P Global Ratings lowered its issuer credit rating on Oasis Petroleum Inc. to 'CCC+' from 'B+'. S&P said the collapse in oil prices will materially hurt Oasis Petroleum's cash flow and leverage metrics. ODYSSEY LOGISTICS: Bank Debt Trades at 26% Discount --------------------------------------------------- Participations in a syndicated loan under which Odyssey Logistics & Technology Corp is a borrower were trading in the secondary market around 74 cents-on-the-dollar during the week ended Fri., May 15, 2020, according to Bloomberg's Evaluated Pricing service data. The bank debt traded around 83 cents-on-the-dollar for the week ended May 8, 2020. The $106.0 million facility is a Term loan. The facility is scheduled to mature on October 12, 2025. As of May 15, 2020, the amount is fully drawn and outstanding. The Company's country of domicile is United States. OLIN CORP: S&P Rates New $500MM Senior Unsecured Notes 'BB-' ------------------------------------------------------------ S&P Global Ratings assigned its 'BB-' issue-level and '4' recovery ratings to Olin Corp.'s proposed $500 million senior unsecured notes due 2025. The '4' recovery rating indicates S&P's expectation for average (30%-50%; rounded estimate: 30%) recovery in the event of a payment default. The rating agency expects the company will use the net proceeds for general corporate purposes. It bases the rating on preliminary terms and conditions. S&P's 'BB-' issuer credit rating, negative outlook, and existing 'BB+' secured and 'BB-' unsecured issue-level ratings are unchanged. ONEWEB GLOBAL: Hires Guggenheim Securities as Investment Banker --------------------------------------------------------------- OneWeb Global Limited and its affiliates seek approval from the U.S. Bankruptcy Court for the Southern District of New York to employ Guggenheim Securities, LLC as investment banker effective March 27. Guggenheim Securities will provide these investment banking services in connection with Debtors' Chapter 11 cases: (a) review and analyze the business, financial condition and prospects of Debtors; (b) evaluate Debtors' liabilities, debt capacity and strategic and financial alternatives; and (c) assist Debtors in connection with any potential transaction that they elect to pursue. Guggenheim Securities and the Debtors have agreed on the following terms of compensation and expense reimbursement: (a) Monthly Fees (i) Debtors will pay Guggenheim Securities a non-refundable cash fee of $200,000 per month. (ii) Commencing with the seventh monthly fee, an amount equal to 50 percent of each monthly fee actually paid to Guggenheim Securities shall be credited against any "transaction fee" that thereafter becomes payable. (b) Restructuring Transaction Fee (i) If any restructuring transaction is consummated, then Debtors will pay Guggenheim Securities a cash fee in the amount of $10 million. (c) Financing Fee (i) If any financing transaction is consummated, Debtors will pay Guggenheim Securities one or more cash fees in an amount equal to the sum of: (A) 150 basis points (1.5 percent) of the aggregate face amount of any new money debt obligations to be issued or raised by Debtors in any debt financing (including the face amount of any related commitments) that is secured by first priority liens over any portion of Debtors' assets, plus (B) 300 basis points (3 percent) of the aggregate face amount of any new money debt obligations to be issued or raised by Debtors in any debt Financing (including the face amount of any related commitments) that is not covered by Sections 4(c)(i)(A) or 4(c)(i)(C)(x) of the amended engagement letter, plus (C) 400 basis points (4 percent) of (x) the aggregate face amount of any new money debt obligations to be issued or raised by Debtors in any debt financing (including the face amount of any related commitments), which transaction includes warrants to acquire equity interests in Debtors or in respect of which transaction the underlying financing documentation includes "liquidation preference"-like payment obligations to Transaction Counterparties that are triggered upon a sale, bankruptcy case or other extraordinary corporate transaction involving Debtors; or (y) the aggregate amount of gross proceeds raised by Debtors in any equity financing pursuant to which Debtors raise, sell, place or issue equity-linked securities, convertible debt or convertible equity securities, plus (D) 500 basis points (5 percent) of the aggregate amount of new money gross proceeds raised by Debtors in any equity financing that is not covered by Section 4(c)(i)(C)(y) of the amended engagement letter. (ii) Notwithstanding anything to the contrary in the amended engagement letter (but subject to Section 4(f) thereof), the amount of each financing fee payable by Debtors to Guggenheim Securities on account of any financing transaction shall at all times equal to the greater of (x) the amount of the applicable financing fee relating to such transaction, and (y) $3 million. (d) Sale Transaction Fees (i) If any sale transaction is consummated, then Debtors will pay Guggenheim Securities a cash fee in an amount equal to the amount determined by reference to the fee scale below: Sale Transaction Fee Aggregate Sale Consideration (Subject to Linear Interpolation) ($ in millions) ($ in millions) --------------- --------------- $100 $3.000 $500 $8.750 $1,000 $13.250 $3,000 $24.000 $4,000 $28.000 In the event that the aggregate sale consideration exceeds $4 billion, the amount of the sale transaction fee will be the sum of $28 million, plus 70 basis points (0.70 percent) of the aggregate sale consideration in excess of $4 billion. (e) JV Transaction Fees. (i) If Debtors request that Guggenheim Securities perform services in connection with any "excluded JV transaction and such transaction is consummated, the firm will receive a cash fee in an amount equal to $1 million. Excluded JV transaction means any transaction, involving Debtors and any of (i)Airbus SE; (ii) any governmental agency and state-owned enterprise of the Republic of Kazakhstan, Kingdom of Saudi Arabia and the People's Republic of China; and any private entity organized or incorporated under the laws of Kazakhstan, Kingdom of Saudi Arabia and the People's Republic of China. Adam Preiss, a senior managing director at Guggenheim Securities, 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: Adam Preiss Guggenheim Securities LLC 330 Madison Avenue New York, New York 10017 Telephone: (212) 739-0700 About OneWeb Global Limited Founded in 2012, OneWeb Global Limited is a global communications company developing a low-Earth orbit satellite constellation system and associated ground infrastructure, including terrestrial gateways and end-user terminals, capable of delivering communication services for use by consumers. OneWeb's business consists of the development of the OneWeb System, which has included the development of small-next generation satellites that have been mass-produced through a joint venture and the development of specialized connections between the satellite system and the internet and other communications networks through the SNPs. For more information, visit https://www.oneweb.world. OneWeb Global Limited and its affiliates sought protection under Chapter 11 of the Bankruptcy Code (Bankr. S.D. N.Y. Lead Case No. 20-22437) on March 27, 2020. At the time of the filing, Debtors disclosed assets of between $1 billion and $10 billion and liabilities of the same range. Judge Robert D. Drain oversees the cases. Debtors tapped Milbank, LLP as legal counsel; Guggenheim Securities, LLC as investment banker; FTI Consulting, Inc. as financial advisor; Omni Agent Solutions as claims, noticing and solicitation agent; and Choate, Hall & Stewart LLP as special corporate counsel. ONEWEB GLOBAL: Seeks to Hire FTI Consulting as Financial Advisor ---------------------------------------------------------------- OneWeb Global Limited and its affiliates seek approval from the U.S. Bankruptcy Court for the Southern District of New York to employ FTI Consulting, Inc. as their financial advisor nunc pro tunc to March 27. FTI Consulting will provide these financial advisory services in connection with Debtors' Chapter 11 cases: (a) assist Debtors' legal counsel in the preparation of motions and other filings throughout the course of the cases; (b) document and describe key company functions in support of motions addressing critical post-petition requirements; (c) assist in developing or updating cash forecasts; (d) assist Debtors' management in obtaining and sizing the required liquidity either through cash collateral or debtor-in-possession financing; (e) assist Debtors' management and legal counsel in the preparation of court-mandated reporting requirements; (f) assist Debtors in connection with the restructuring proceedings in the U.K. or other jurisdictions outside the U.S.; (g) assist in preparing due diligence materials for potential lenders, investors and acquirors; (h) assist Debtors in the reconciliation of claims; (i) assist Debtors in the financial analysis of potential avoidance actions; (j) assist in the preparation of Debtors' Chapter 11 plan, disclosure statement and supporting materials; (k) provide testimony and other litigation support as the circumstances warrant; (l) assist Debtors in developing and communicating messaging for external stakeholders, including media relations; and (m) assist Debtors in preparing an internal document to support employee communications. FTI's hourly rates for its professionals are as follows: Senior Managing Directors $920 - $1,295 Directors/Senior Directors/Managing Directors $690 - $905 Consultants/Senior Consultants $370 - $660 Administrative/Paraprofessionals $150 - $280 FTI received advance payments totaling $1,144,999.71 from Debtors in the 90 days prior to the petition date. Michael Katzenstein, a senior managing director of FTI, 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: Michael Katzenstein FTI CONSULTING INC. Three Times Square, 9th Floor New York, NY 10036 Telephone: (214) 384-4909 Email: mike.katzenstein@fticonsulting.com - and – Mark Spragg FTI CONSULTING INC. 8251 Greensboro Drive, Suite 400 McLean, VA 22102 Telephone: (202) 368-7521 Email: mark.spragg@fticonsulting.com About OneWeb Global Limited Founded in 2012, OneWeb Global Limited is a global communications company developing a low-Earth orbit satellite constellation system and associated ground infrastructure, including terrestrial gateways and end-user terminals, capable of delivering communication services for use by consumers. OneWeb's business consists of the development of the OneWeb System, which has included the development of small-next generation satellites that have been mass-produced through a joint venture and the development of specialized connections between the satellite system and the internet and other communications networks through the SNPs. For more information, visit https://www.oneweb.world. OneWeb Global Limited and its affiliates sought protection under Chapter 11 of the Bankruptcy Code (Bankr. S.D. N.Y. Lead Case No. 20-22437) on March 27, 2020. At the time of the filing, Debtors disclosed assets of between $1 billion and $10 billion and liabilities of the same range. Judge Robert D. Drain oversees the cases. Debtors tapped Milbank, LLP as legal counsel; Guggenheim Securities, LLC as investment banker; FTI Consulting, Inc. as financial advisor; Omni Agent Solutions as claims, noticing and solicitation agent; and Choate, Hall & Stewart LLP as special corporate counsel. PARALLAX HEALTH: Swings to $12.9 Million Net Loss in 2019 --------------------------------------------------------- Parallax Health Sciences, Inc., reported a net loss of $12.87 million on $128,600 of revenue for the year ended Dec. 31, 2019, compared to net income of $14.78 million on $11,739 of revenue for the year ended Dec. 31, 2018. As of Dec. 31, 2019, the Company had $1.36 million in total assets, $11.61 million in total liabilities, and a total stockholders' deficit of $10.25 million. As of Dec. 31, 2019, the Company had cash in the amount of $6,445 compared to $262 as of Dec. 31, 2018. The Company had a working capital deficit of $7,664,145 as of Dec. 31, 2019, compared to a working capital deficit of $5,115,430 at Dec. 31, 2018. The decrease in working capital deficit of $2,548,715 is primarily attributable to increases in cash of $6,183, and operating lease asset of $52,176; increases in operating lease liability of $52,176, short-term settlements payable of $2,824,200, short-term derivative liability of $38,875, notes payable of $345,000, notes payable to bank of $18,616, related party note payable of $126,152, convertible notes payable of $806,364, and related party payable of $103,760; and decreases in accounts payable and accrued expenses of $572,160, short-term debentures of $724,903, and related party short-term debentures of $411,006. During the year ended Dec. 31, 2019, the Company used $2,945,573 of cash flow for operating activities of continuing operations, compared with $1,291,984 for the year ended Dec. 31, 2018. During the year ended Dec. 31, 2019, the Company used $2,628 of cash flow for investing activities, compared with none for the year ended Dec. 31, 2018. The increase in cash used by investing activities is attributable to the purchase of professional equipment in the amount of $2,628. During the year ended Dec. 31, 2019, the Company was provided with $2,954,384 in cash flows from financing activities of continuing operations, compared to $1,332,005 during the year ended Dec. 31, 2018. Freedman & Goldberg CPAs, in Farmington Hills, Michigan, the Company's auditor since 2016, issued a "going concern" qualification in its report dated May 15, 2020, citing that the Company has suffered recurring losses from operations, has a net capital deficiency and has significant contingencies that raise substantial doubt about its ability to continue as a going concern. A full-text copy of the Annual Report is available for free at the Securities and Exchange Commission's website at: https://is.gd/ixnL0G About Parallax Headquartered in Santa Monica, California, Parallax Health Sciences, Inc. -- http://www.parallaxcare.com/-- is a healthcare company focused on developing products and services that can provide remote communication, diagnosis, treatment, and monitoring of patients on a proprietary platform. Through its innovative technologies, both patented and patent-pending, the Company's principal mission is to deliver solutions that empower patients, reduce costs, and improve the quality of care. PARK INTERMEDIATE: Moody's Gives 'B1' CFR & Rates $500MM Notes 'B1' ------------------------------------------------------------------- Moody's Investors Service assigned first-time ratings to Park Intermediate Holdings LLC, including a B1 Corporate Family Rating and a B1 senior secured notes rating to its $500 million senior secured notes being marketed. In the same rating action, Moody's also assigned a speculative grade liquidity rating at SGL-4 to Park. The rating outlook is negative. The negative outlook reflects Moody's expectation that the current travel restrictions being put in place across the US related to the spread of the COVID-19 coronavirus will put significant pressure on Park's earnings and operating cash flows in the next twelve to eighteen months. The negative outlook also reflects the uncertain prospects for recovery, as job losses and declining asset values will impact consumer discretionary spending once the public health crisis subsides. Issuer: Park Intermediate Holdings LLC Corporate Family Rating at B1 Senior Secured Notes Rating at B1 Speculative Grade Liquidity Rating at SGL-4 Outlook Action: Issuer: Park Intermediate Holdings LLC Negative Outlook 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 commercial lodging real estate sector has been one of the sectors most significantly affected by the shock given its sensitivity to consumer demand and sentiment. More specifically, the weaknesses in Park's credit profile, including its exposure to increased travel restrictions for US citizens have left it vulnerable to shifts in market sentiment in these unprecedented operating conditions and Park remains vulnerable to the outbreak continuing to spread. Moody's regards the coronavirus outbreak as a social risk under its ESG framework, given the substantial implications for public health and safety. The B1 senior secured rating for Park reflects the REIT's dominant size and scale as the second largest publicly traded lodging REIT in the U.S. and good asset diversification with sixty premium-branded hotels and resorts located in prime U.S. markets with high barriers to entry. Moreover, the rating reflects an experienced management team with a long track record and strong knowledge of the hospitality sector. Moody's believes this bench strength should help the REIT to navigate through this unprecedented time and grow and expand its portfolio in the long-term. These positive factors are offset by the cyclicality of the lodging sector, characterized by high cash flow and profit volatility and Park's concentration to Hilton with approximately 85% of rooms. The B1 rating also incorporates Park's high leverage and secured debt to gross assets ratio. A significant portion of Park's portfolio of assets is encumbered either under a CMBS structure, mortgaged or pledged to the senior secured credit facility and the new $500 million senior secured notes. The high leverage, significant share of secured debt in the REIT's capital structure, and its modest unencumbered portfolio of assets are credit negatives. Importantly, Park faces a large debt maturity tower in 2021, a key constraint to the rating. Park operates as a standalone REIT after its spin-off from Hilton Worldwide Finance, LLC (Ba1 negative) in 2017. The REIT increased its brand diversification through the acquisition of Chesapeake Lodging Trust in September 2019 in a transaction valued at $2.5 billion, funded with cash and stock. While the acquisition reduced its concentration to Hilton to 85% of rooms from 100%, the timing of the transaction also reduced Park's financial flexibility when it entered this pandemic situation and increased Park's effective leverage (debt + preferred/gross assets) and net debt/EBITDA to 31.0% and 4.9x at December 31, 2019 from 27.3% and 3.7x at December 31, 2018, respectively. Positively, the new $500 million senior secured debt issuance will provide Park with additional liquidity to navigate the near-term impacts of the coronavirus while its hotel operations remain largely closed. However, Park's unencumbered assets pool declined to 37.1% of gross assets pro-forma for the debt issuance and credit facility amendment from 68.7% at March 31, 2020. Concurrent with the transaction, Park also amended its unsecured $2.37 billion credit facility to be secured by the same subsidiaries and their assets that secured the new senior secured notes, including some of Park's largest assets such as the New York Hilton and the Chicago Hilton, obtained a temporary suspension of the credit facility's covenant tests and extended its $1.0 billion revolver through the end of 2021. The credit facility is comprised of a $1.0 billion revolver, term loans of $700 million maturing in December 2021 and $670 million maturing in September 2024. Proforma for the new $500 million senior secured notes and the secured credit facility, Park's secured debt to gross assets increased to 40.2% from 18.8% at March 31, 2020. Park's speculative grade liquidity of SGL-4 reflects Moody's expectation that Park might need to rely on external sources to meet its obligations in the coming 12-months, as evidenced by its fully-drawn $1.0 billion revolver to date, which is due in December 2021, along with another $700 million in term loans that will also mature at the end of 2021. Pro-forma for the new senior secured notes, Park had $1.8 billion of unrestricted cash on hand at March 31, 2020. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Ratings could be downgraded should the EBITDA decline meaningfully, such that its net debt/EBITDA remains above 6.5x on a sustained basis, fixed charge coverage falls below 3.0x or secured debt increases significantly. Material deterioration in Park's liquidity profile such that Park fails to address its 2021 debt maturity by mid-2021 or signs of sustained deteriorating operating performance could also lead to downward rating pressure. Although not likely given the negative outlook, ratings could be upgraded if net debt/EBITDA is sustained closer to 5.0x and fixed charge coverage is in excess of 3.5x on a sustained basis. The rating upgrade would also require that Park improves its debt maturity ladder, maintains secured debt under 25% of gross assets and liquidity remains strong throughout an industry and economic cycle. The principal methodology used in these ratings was REITs and Other Commercial Real Estate Firms published in September 2018. Park Intermediate Holdings LLC is a direct wholly-owned subsidiary of Park Hotels Park Hotels & Resorts Inc. (NYSE: PK), which is a publicly traded lodging REIT. Park's portfolio currently consists of 60 premium-branded hotels and resorts with over 33,000 rooms located in prime U.S. markets with high barriers to entry. PEARL RESOURCES: Hires David G. Gullickson as Accountant -------------------------------------------------------- Pearl Resources LLC and Pearl Resources Operating Co. LLC received approval from the U.S. Bankruptcy Court for the Southern District of Texas to employ David Gullickson as accountant. Mr. Gullickson will assist in the preparation of Debtors' monthly operating reports and will provide general accounting services, including maintaining Debtors' book of accounts and generating financial reports. He will charge Debtors at the discounted rate of $10 per hour. Mr. Gullickson disclosed in court filings that he is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. The accountant can be reached at: David G. Gullickson 8725 Fairbend Street Houston, TX 77055 Telephone: (713) 932-7501 About Pearl Resources Pearl Resources, LLC is a privately held company in the oil and gas extraction industry. Pearl Resources and Pearl Resources Operating Co., LLC filed their voluntary petitions under Chapter 11 of the Bankruptcy Code (Bankr. S.D. Tex. Lead Case No. 20-31585) on March 3, 2020. The petitions were signed by Myra Dria, manager and sole member of Pearl Resources Operating and manager of Pearl Resources. At the time of the filing, each Debtor disclosed assets of between $10 million and $50 million and liabilities of the same range. Debtors tapped Walter J. Cicack, Esq., at Hawash Cicack & Gaston, LLP, as legal counsel and David G. Gullickson as accountant. PENN ENGINEERING: Moody's Alters Outlook on B1 CFR to Negative -------------------------------------------------------------- Moody's Investors Service has changed the ratings outlook for Penn Engineering & Manufacturing Corp. to negative from stable and affirmed Penn's B1 corporate family rating and B2-PD probability of default rating. Concurrently, Moody's affirmed the company's B1 senior secured first lien bank debt ratings. RATINGS RATIONALE The negative ratings outlook reflects heightened uncertainty in Penn's end-markets arising from the coronavirus pandemic, including global macroeconomic pressures and the automotive sector in particular, which constitutes the company's largest end-market at more than 40% of total revenue. Moody's believes that the company's key credit metrics will weaken in 2020 into 2021, including debt/EBITDA to more than 5x (from 4.2x at March 2020, including Moody's standard adjustments) and EBITA/interest to about 3.0x (from 3.4x for the same respective time period). At the same time, in affirming the company's current ratings, Moody's asserted that the company's relatively conservative historical financial risk profile, coupled with still good cash flow prospects and backstop liquidity provisions, will enable it to withstand the coming pressures. The rapid and widening spread of the coronavirus outbreak, the deteriorating global economic outlook, low 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 sensitivity to consumer demand and sentiment. More specifically, Penn Engineering's susceptibility to top-line and earnings pressure from global macroeconomic headwinds, particularly in the automotive sector, leave it vulnerable to shifts in market sentiment in these unprecedented operating conditions, and the company remains vulnerable to the lingering adverse impact of the pandemic. 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 Penn Engineering of the breadth and severity of the shock, and the broad deterioration in credit quality it has triggered. Penn's B1 CFR reflects its above average margins due to the high value-add nature of the company's specialty fasteners, and good free cash flow generation from relatively diverse end-markets albeit with a concentration in automotive electronics. Credit constraints include the company's small revenue scale ($636 million in the last twelve months ended March 28, 2020) and meaningful cyclicality in end-markets such as automotive and electronics. The following rating actions were taken: Affirmations: Issuer: Penn Engineering & Manufacturing Corp. Corporate Family Rating, Affirmed B1 Probability of Default Rating, Affirmed B2-PD Senior Secured 1st Lien Bank Credit Facility, Affirmed B1 (LGD3) Outlook Actions: Issuer: Penn Engineering & Manufacturing Corp. Outlook, Changed to Negative from Stable From a corporate governance perspective, Moody's notes that the company is majority-family owned, and as a result has employed financial policies that are comparatively more conservative than many sponsor-owned peers. However, leverage is relatively high at more than 4 times as the company has pursued inorganic growth amid top-line automotive end-market pressures that had preceded the coronavirus outbreak, and will meaningfully increase as a consequence of the coronavirus-related earnings decline. Nonetheless, Moody's believes that the company's track record of debt repayment and proactive actions to contain costs and more efficiently manage operations and working capital in the aftermath of the coronavirus outbreak serve to somewhat mitigate these risks. Event risk persists, nonetheless, in the form of possible future debt-financed dividends to the company's owners. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The company's ratings could be downgraded if there is more material erosion in liquidity than anticipated and leverage (Moody's-adjusted debt/EBITDA) exceeds and is sustained above 6 times, annual free cash flow turns negative, or EBITA/interest is sustained below 2 times. The loss of a major customer, with volumes not replaced, could also drive negative ratings pressure. More aggressive financial policies, including a sizable debt-financed dividend, would also exert downward ratings pressure. Conversely, although not anticipated over the near-term, ratings could be upgraded following meaningful revenue growth through the acquisition of new customers accompanied by positive free cash flow generation such that debt/EBITDA improves to less than 3.5 times and EBITA/interest grows to greater than 3.5 times, both on a sustained basis. Maintenance of a good liquidity profile would also be required to support a prospective ratings upgrade. The principal methodology used in these ratings was Manufacturing Methodology published in March 2020. Headquartered in Danboro, Pennsylvania, Penn Engineering & Manufacturing Corp. is a manufacturer of high performance, specialty fasteners used in a diversified range of industries. Penn is a private company majority family-owned. For the last twelve-month period ended March 28, 2020, revenues exceed $630 million. PENNGOOD LLC: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Penngood LLC 1100 15th Street, NW 4th Floor Washington, DC 20005 Business Description: Penngood LLC -- https://www.penngood.com -- is a strategic communications firm specializing in total health. The Debtor previously sought bankruptcy protection on Feb. 15, 2016 (Bankr. D.C. Case No. 16- 00051). Chapter 11 Petition Date: May 19, 2020 Court: United States Bankruptcy Court District of Columbia Case No.: 20-00230 Judge: Hon. Martin S. Teel, Jr. Debtor's Counsel: Richard G. Hall, Esq. RICHARD G. HALL 601 King Street Suite 301 Alexandria, VA 22314 Tel: 703-256-7159 E-mail: Richard.Hall33@verizon.net Estimated Assets: $1 million to $10 million Estimated Liabilities: $1 million to $10 million The petition was signed by Clyde Penn, Jr., president and managing member. A copy of the petition containing, among other items, a list of the Debtor's 20 largest unsecured creditors is available for free at PacerMonitor.com at: https://is.gd/9zCD7U PHOENIX PRODUCTS: Committee Taps Dentons Bingham as Legal Counsel ----------------------------------------------------------------- The official committee of unsecured creditors appointed in Phoenix Products, Inc.'s Chapter 11 case received approval from the U.S. Bankruptcy Court for the Eastern District of Kentucky to employ Dentons Bingham Greenebaum LLP as its legal counsel nunc pro tunc to April 13. Dentons Bingham will provide these services to the committee in connection with Debtor's Chapter 11 case: (a) advise the committee with respect to its rights, duties and powers in Debtor's case; (b) assist the committee in its consultations with Debtor; (c) analyze creditors' claims and Debtor's capital structure and negotiate with holders of claims and equity interests; (d) assist the committee in its investigation of the acts, conduct, assets, liabilities and financial condition of Debtor, and of the operation of Debtor's business; (e) assist the committee in its analysis of, and negotiations with Debtor or any other third party concerning matters related to, among other things, the assumption or rejection of certain leases of non-residential real property and executor contracts, asset dispositions, financing transactions and the terms of a plan of reorganization or liquidation for Debtor; (f) advise the committee as to its communications, if any, to the general creditor body; (g) represent the committee at all hearings and other proceedings; (h) review, analyze and advise the committee with respect to applications, orders, statements of operations and schedules filed with the court; and (i) assist the committee in preparing pleadings and applications. The attorneys who will be representing the committee will bill their time at the following rates: John Ames Partner $645 per hour James Irving Partner $460 per hour Christopher Madden Associate $315 per hour Gina Young Associate $255 per hour James Irving, Esq., an attorney at Dentons Bingham, 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: James R. Irving, Esq. Christopher B. Madden, Esq. Gina M. Young, Esq. Dentons Bingham Greenebaum LLP 3500 PNC Tower 101 South Fifth Street Louisville, KY 40202 Telephone: (502) 587-3606 Facsimile: (502) 587-3695 Email: james.irving@dentons.com chris.madden@dentons.com gina.young@dentons.com About Phoenix Products Phoenix Products, Inc. -- https://acstuff.com/ -- provides components and Technical Data Packages (TDP) for the U.S. Government. It has significant, relevant experience in the machining, fabrication, and assembly of Helicopter Main Rotor Blade Shipping and Storage Containers (SSCs), Engine and Propulsion Systems Containers, Aircraft Flight Worthy Components, and Ground Support Equipment (GSE), including Missile SSCs. Its customer base includes the Department of Defense, Defense Logistics Agency, Lockheed Martin, Sikorsky, Rolls-Royce, and other OEMs. Phoenix Products sought protection under Chapter 11 of the Bankruptcy Code (Bankr. E.D. Ky. Case No. 20-60370) on March 18, 2020. The petition was signed by Peggy Wilson, Debtor's chief executive officer. At the time of the filing, Debtor was estimated to have assets of between $500,000 and $1 million and liabilities of between $1 million and $10 million. Judge Gregory R. Schaaf oversees the case. Delcotto Law Group, PLLC is Debtor's legal counsel. PIONEER ENERGY: Taps Munsch Hardt as Special Counsel ---------------------------------------------------- Pioneer Energy Services Corp. and its affiliates received approval from the U.S. Bankruptcy Court for the Southern District of Texas to employ Munsch Hardt Kopf & Harr, P.C. as special counsel nunc pro tunc to April 15. Munsch Hardt will provide legal advice on any matter on which Debtors' bankruptcy counsel, Paul, Weiss, Rifkind, Wharton & Garrison LLP and Norton Rose Fulbright US LLP may have a conflict, or as needed based on specialization, with respect to pending disputes with certain bondholders relating to the restructuring support agreement. The professionals designated to render services to the Debtors will be paid at hourly rates as follows: John Cornwell $480 Ross Parker $480 Thomas Berghman $430 Grant Beiner $270 John Cornwell, Esq., a shareholder of Munsch Hardt, disclosed in court filings that to the best of his knowledge, the firm neither represents nor holds any interest adverse to Debtors and their estates. The firm can be reached through: John D. Cornwell Munsch Hardt Kopf & Harr, P.C. 700 Milam Street, Suite 2700 Houston, TX 77002 Telephone: (713) 222-1470 Facsimile: (713) 222-1475 Email: jcornwell@munsch.com About Pioneer Energy Services 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) on March 1, 2020 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; Ernst & Young LLP is the tax services provider; and Munsch Hardt Kopf & Harr, P.C. is the special conflicts counsel. 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. PLAYPOWER INC: Bank Debt Trades at 17% Discount ------------------------------------------------ Participations in a syndicated loan under which PlayPower Inc is a borrower were trading in the secondary market around 83 cents-on-the-dollar during the week ended Fri., May 15, 2020, according to Bloomberg's Evaluated Pricing service data. The $400.0 million facility is a Term loan. The facility is scheduled to mature on May 10, 2026. As of May 15, 2020, the amount is fully drawn and outstanding. The Company's country of domicile is United States. QUANTUM CORP: Revolver Amendment Deadline Extended to June 19 ------------------------------------------------------------- Quantum Corporation previously entered into the First Amendment to the Amended and Restated Revolving Credit and Security Agreement, dated as of Dec. 27, 2018, among the Company, Quantum LTO Holdings, LLC, the lenders from time to time party thereto, and PNC Bank, National Association, as administrative agent for those lenders. The Revolver Amendment requires that the Company enter into a further amendment to the Revolving Credit Agreement by May 15, 2020, providing for, among other things, a re-set of the financial covenants set forth in the Revolving Credit Agreement. On May 15, 2020, the administrative agent under the Revolving Credit Agreement agreed to extend the Revolver Amendment Deadline to June 19, 2020. About Quantum Corp. Based in San Jose, California, Quantum Corp. (NYSE:QTM) -- http://www.quantum.com-- provides technology and services that stores and manages video and video-like data delivering the industry's top streaming performance for video and rich media applications, along with low cost, high density massive-scale data protection and archive systems. The Company helps customers capture, create and share digital data and preserve and protect it for decades. Quantum reported a net loss of $42.80 million for the year ended March 31, 2019, a net loss of $43.35 million for the year ended March 31, 2018, and a net loss of $2.41 million for the year ended March 31, 2017. As of Dec. 31, 2019, the Company had $165.30 million in total assets, $360.8 million in total liabilities, and a total stockholders' deficit of $195.5 million. RENNOVA HEALTH: Delays Filing of Quarterly Report Due to COVID-19 ----------------------------------------------------------------- Rennova Health, Inc. has determined to rely on the Securities and Exchange Commission's Order under Section 36 of the Securities Exchange Act of 1934 Modifying Exemptions from the Reporting and Proxy Delivery Requirements for Public Companies dated March 25, 2020 (Release No. 34-88465) to delay the filing of its Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 due to circumstances related to the coronavirus. Rennova said, "The COVID-19 pandemic and the steps taken by governments to seek to reduce the spread of the virus continue to have a severe impact on the economy and the health care industry in particular. Our hospitals and the rest of our business continue to experience disruptions due to the pandemic for the reasons described in our Current Report on Form 8-K filed with the Securities and Exchange Commission on March 30, 2020. These disruptions are causing the Report, which is due on May 15, 2020, to be delayed. Consequently, the Company is unable to file the Report timely. The Company anticipates that it will file the Report no later than June 29, 2020, which is 45 days after the original due date of the Report." In light of the current COVID-19 pandemic, the Company will be including the following Risk Factor in its Annual Report on Form 10-K for the year ended Dec. 31, 2019, as it may be updated to reflect subsequent events affecting the Company: "The current and potential effects of the coronavirus pandemic may materially adversely impact our business, results of operations and financial condition. "The coronavirus pandemic and the steps taken by governments to seek to reduce its spread have severely impacted the economy and the health care industry in particular. Hospitals have especially been affected. Small rural hospitals, such as ours, may be overwhelmed by patients if conditions worsen in their local areas. Staffing costs, and concerns due to the potential exposure to infections, may increase, as may the costs of needed medical supplies necessary to keep the hospitals open. Doctors and patients may defer elective procedures and other health care services. Travel bans, social distancing and quarantines may limit access to our facilities. Business closings and layoffs in our local areas may result in the loss of insurance and adversely affect demand for our services, as well as the ability of patients and other payers to pay for services as rendered." Receives $7.4 Million in Relief Funds The Company is providing the following update on receipt of Provider Relief Funds from the United States Department of Health and Human Services provided to eligible healthcare providers out of the $100 billion Public Health and Social Services Emergency Fund provided for in the Coronavirus Aid, Relief, and Economic Security Act. The funds are allocated to eligible healthcare providers for expenses and lost revenue attributable to the COVID-19 pandemic. The funds are being released in tranches, and HHS partnered with UnitedHealth Group to distribute the initial $30 billion in funds by direct deposit to providers. To date, Company-owned facilities have received approximately $7,400,000 in relief funds. It is not known if or when Company-owned facilities will receive any additional funding, although rural providers are named as a segment of specific providers that will receive additional relief from funds which have not been distributed to date. The fund payments are grants, not loans, and HHS will not require repayment, but providers are restricted and the funds must be used only for grant approved purposes. About Rennova Health Rennova Health, Inc. -- http://www.rennovahealth.com/-- operates three rural hospitals in Tennessee and provides diagnostics and supportive software solutions to healthcare providers. Rennova Health reported a net loss to common shareholders of $245.9 million for the year ended Dec. 31, 2018, compared to a net loss to common shareholders of $108.53 million for the year ended Dec. 31, 2017. As of Sept. 30, 2019, the Company had $16.57 million in total assets, $76.46 million in total liabilities, $5.83 million in redeemable preferred stock - Series I-1, $1.94 million in redeemable preferred stock - Series I-2, and a total stockholders' deficit of $67.66 million. Haynie & Company, in Salt Lake City, Utah, the Company's auditor since 2018, issued a "going concern" qualification in its report dated Oct. 18, 2019, on the consolidated financial statements for the year ended Dec. 31, 2018, citing that the Company has significant net losses, cash flow deficiencies, negative working capital and an accumulated deficit. These conditions raise substantial doubt about the Company's ability to continue as a going concern. ROYALE ENERGY: Posts $384K Net Income in First Quarter ------------------------------------------------------ Royale Energy, Inc. reported net income of $384,362 on $383,814 of total revenues for the three months ended March 31, 2020, compared to a net loss of $2.64 million on $973,276 of total revenues for the three months ended March 31, 2019. As of March 31, 2020, the Company had $19.88 million in total assets, $17.77 million in total liabilities, $21.64 million in convertible preferred stock, and a total stockholders' deficit of $19.54 million. At March 31, 2020, the Company had current assets totaling $6,435,227 and current liabilities totaling $10,985,674, a $4,550,447 working capital deficit. The Company had $779,218 in cash and $1,760,841 in restricted cash at March 31, 2020, compared to $1,031,014 in cash and $2,845,515 in restricted cash at Dec. 31, 2019. Net cash provided by operating activities totaled $298,442 and compared to $595,876 used for the three months ended March 31, 2020 and 2019, respectively. This increase in cash used was mainly due to a loss on the sale of assets during the period in 2019. Net cash used by investing activities totaled $1,499,655 and $322,789 for the three months ended March 31, 2020 and 2019, respectively. Net cash used by financing activities totaled $135,257 and compared to net cash of $53,320 provided for the three months ended March 31, 2020 and 2019, respectively. Royale Energy said, "The primary sources of liquidity have historically been issuances of common stock and operations. There are factors that give rise to substantial doubt about the Company's ability to meet liquidity demands, and we anticipate that our primary sources of liquidity will be from the issuance of debt and/or equity, the sale of oil and natural gas property participation interests through our normal course of business and the sale of non-strategic assets. "The Company's 2020 financial statements reflect a working capital deficiency of $4,550,447 and a net loss from operations of $889,959. These factors raise substantial doubt about our ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. "Management's plans to alleviate the going concern by cost control measures that include the reduction of overhead costs and the sale of non-strategic assets. There is no assurance that additional financing will be available when needed or that management will be able to obtain financing on terms acceptable to the Company and whether the Company will become profitable and generate positive operating cash flow, which may be more difficult in light of the volatility created during the COVID-19 pandemic. If the Company is unable to raise sufficient additional funds, it will have to develop and implement a plan to further extend payables, attempt to extend note repayments, and reduce overhead until sufficient additional capital is raised to support further operations. There can be no assurance that such a plan will be successful." Royale Energy further stated, "In late 2019 and continuing into 2020, there was a global outbreak of novel coronavirus (COVID-19) that has resulted in changes in global supply and demand of certain mineral and energy products. While the direct and indirect negative impacts that may affect the Company cannot be determined, they could have a prospective material impact to the Company's operations, cash flows, and liquidity, primarily related to the decline in product price, in part, as a result of a decline in demand related to "shelter-in-place" orders by various governmental bodies. "Our major market risk exposure relates to pricing of oil and gas production, which during the period in 2020 resulted in historically low prices due to stay at home orders. The prices we receive for oil and gas are closely related to worldwide market prices for crude oil and local spot prices paid for natural gas production. Prices have been volatile for the last several years and have become even more unpredictable in the current period. We expect that volatility to continue. Our monthly average oil and condensate prices ranged from a high of $60.99 per barrel to a low of $29.93 per barrel and our monthly average natural gas prices ranged from a high of $2.93 per Mcf to a low of $2.31 per Mcf for the first three months of 2020". A full-text copy of the Quarterly Report is available for free at the Securities and Exchange Commission's website at: https://is.gd/nzkucP About Royale Energy Headquartered in El Cajon, CA, Royale Energy -- http://www.royl.com -- is an independent oil and gas producer which also has operations in the area of turnkey drilling. Royale Energy owns wells and leases in major geological basins located primarily in California, Texas, Oklahoma, Colorado, and Utah. Royale Energy offers fractional working interests and seeks to minimize the risks of oil and gas drilling by selling multiple well drilling projects which do not include the use of debt financing. Royale Energy reported a net loss of $348,383 for the year ended Dec. 31, 2019, compared to a net loss of $23.50 million on $3.28 million of total revenues for the year ended Dec. 31, 2018. As of Dec. 31, 2019, the Company had $20.59 million in total assets, $18.92 million in total liabilities, and $1.67 million in total stockholders' equity. Moss Adams LLP, in San Diego, California, the Company's auditor since 2019, issued a "going concern" qualification in its report dated March 30, 2020 citing that the Company has suffered recurring losses from operations and has a net capital deficiency that raise substantial doubt about its ability to continue as a going concern. SAMSON OIL: Posts $8.35 Million Net Income in Third Quarter ----------------------------------------------------------- Samson Oil & Gas Limited reported net income of $8.35 million on $2.07 million of total oil and gas income for the three months ended March 31, 2020, compared to a net loss of $3.80 million on $2.48 million of total oil and gas income for the three months ended March 31, 2019. For the nine months ended March 31, 2020, the Company reported net income of $1 million on $9.21 million of total oil and gas income compared to a net loss of $5.15 million on $9.08 million of total oil and gas income for the nine months ended March 31, 2019. As of March 31, 2020, the Company had $44.05 million in total assets, $52.64 million in total liabilities, and a total stockholders' deficit of $8.58 million. Samson Oil said, "We do not generate adequate revenue to satisfy our current operations, we continue to have negative cash flows from operations, and we have incurred significant net operating losses during the past two fiscal years which raise substantial doubt about our ability to continue as a going concern. Our financial statements have been prepared on the going concern basis, which contemplates the continuity of normal business activities and the realization of assets and settlement of liabilities in the normal course of business. We are in breach of several of our covenants related to the Credit Agreement resulting in our borrowings payable of $33.5 million being classified in current liabilities. "Our ability to continue as a going concern is dependent on the re-negotiation of the Credit Agreement, the sale or refinancing of our oil and gas assets and/or raising further capital. These factors raise substantial doubt over our ability to continue as a going concern and therefore whether we will realize our assets and extinguish our liabilities in the normal course of business and at the amounts stated in the financial statements. "We are seeking a waiver of our breaches of the Credit Agreement from our Lender and thereafter plan to increase our cash flows from operations through the successful development of the Foreman Butte project and reducing our operating and general and administrative costs. In addition, we have been negotiating a potential transaction to divest substantially all of our oil and gas assets. If those negotiations are successful and the transaction effected, we believe it will result in proceeds not less than our obligations under the Credit Agreement and to our vendors. "However, there can be no assurances that we will successfully obtain a waiver, divest our oil and gas assets or increase our cash flows from operations. Given our current financial situation we may be forced to accept terms on some or all of these transactions that are less favorable than would be otherwise available." The Company used $0.5 million of cash flow from our operations during the nine month period ended March 31, 2020, compared to $0.2 million of cash used in operations during the comparative period in the prior year. These cash outflows can be primarily attributed to higher LOE costs in the first two fiscal quarters, higher interest expenses related to its Credit Agreement and a proposed settlement with the NDIC of $2.1 million recorded in general and administrative expense, which, aggregated with LOE costs and interest expense, equaled $16.2 million compared to $12.5 million for the same period in the prior year. Cash flows used in investing activities during the nine month period ended March 31, 2020, was $44,289 compared to cash flow provided by investing activities of $80,490 in the prior year. During the nine month period ended March 31, 2020, the Company was not engaged in any significant capital drilling projects. During the nine month period ended March 31, 2019, the Company recorded $1.0 million of other income related to the failed sale with Eagle Energy Partners I, LLC, where they forfeited a nonrefundable deposit of the same amount. A full-text copy of the Quarterly Report is available for free at the Securities and Exchange Commission's website at: https://is.gd/bkAjw8 About Samson Oil Headquartered in Perth, Western Australia, Samson Oil & Gas Limited -- http://www.samsonoilandgas.com/-- is an independent energy company primarily engaged in the acquisition, exploration, exploitation and development of oil and natural gas properties, primarily with a focus in Montana and North Dakota. Samson Oil reported a net loss of $7.15 million for the fiscal year ended June 30, 2019, compared to a net loss of $6.04 million for the fiscal year ended June 30, 2018. As of Dec. 31, 2019, the Company had $35.68 million in total assets, $52.90 million in total liabilities, and a total stockholders' deficit of $17.22 million. Moss Adams LLP, in Denver, Colorado, the Company's auditor since 2017, issued a "going concern" qualification in its report dated Oct. 15, 2019, citing that the Company is in violation of its debt covenants, incurred a net loss from operations, has cash outflows from operations, and its current liabilities exceed its current assets as of and for the year ended June 30, 2019. These conditions raise substantial doubt about the Company's ability to continue as a going concern. SAVVY TRANSPORTATION: Hires Schneider and Stone as Legal Counsel ---------------------------------------------------------------- Savvy Transportation Group, LLC received approval from the U.S. Bankruptcy Court for the Northern District of Illinois to employ Schneider & Stone as its legal counsel nunc pro tunc to March 13. Schneider & Stone will assist Debtor in the preparation of its Chapter 11 plan and will provide other legal services in connection with its Chapter 11 case. The firm's hourly rates are as follows: Attorneys $375 Paralegals $175 Ben Schneider, Esq., and Matthew Stone, Esq., the attorneys who will be providing the services, are "disinterested persons" within the meaning of Section 101(14) of the Bankruptcy Code. Ben Schneider may be reached at: Ben Schneider, Esq. Schneider & Stone 8424 Skokie Blvd., Suite 200 Skokie, IL 60077 Telephone: (847) 933-0300 Email: ben@windycitylawgroup.com About Savvy Transportation Group Savvy Transportation Group, LLC, an Illinois-based transportation company, sought protection under Chapter 11 of the Bankruptcy Code (Bankr. N.D. Ill. Case No. 20-07224) on March 13, 2020, listing under $1 million in both assets and liabilities. Debtor is represented by Schneider & Stone. SEDGWICK CLAIMS: Moody's Rates $300MM Senior Sec. Term Loan 'B2' ---------------------------------------------------------------- Moody's Investors Service has assigned a B2 rating to a $300 million senior secured term loan being issued by Sedgwick Claims Management Services, Inc. (Sedgwick, corporate family rating B3). Sedgwick will use net proceeds from the offering to add liquidity to its balance sheet. The rating outlook for Sedgwick is unchanged at stable. RATINGS RATIONALE For insurance service companies, the coronavirus-related economic downturn is dampening revenues, earnings and cash flows. The company will see claim volumes slow in sectors with sharply reduced economic activity, although the degree will depend on the extent and duration of the downturn. However, service companies such as Sedgwick benefit from the mandatory nature of claims processing. Sedgwick maintains a $400 million revolving credit facility, and this debt issuance adds cash to its balance sheet to provide additional liquidity to operate in the current environment. Moody's expects that Sedgwick will limit discretionary spending, including acquisitions, in the quarters ahead to protect its credit profile. Sedgwick's ratings reflect its diverse client base, broad product and geographic spread, and strong historical organic revenue growth. As a service provider to corporations, insurance companies and governmental entities, Sedgwick benefits from long-term contracts, recurring earnings, relatively high switching costs for clients, and a somewhat variable cost structure. These strengths are tempered by Sedgwick's high financial leverage, modest interest coverage, and low free-cash-flow-to-debt ratio. Sedgwick is also subject to execution and integration risk related to its recently closed acquisition of York and its 2018 acquisition of Cunningham Lindsey. Moody's expects integration costs and higher interest expense to reduce Sedgwick's free cash flow over the next few quarters. Giving effect to the proposed financing, Moody's estimates that Sedgwick's pro forma debt-to-EBITDA ratio will be around 7.5x, which is high for its rating category. The company's (EBITDA - capex) interest coverage will be about 1.5x and its free-cash-flow-to-debt ratio in the low single digits. These metrics include the rating agency's adjustments for operating leases, pensions, run-rate earnings from acquisitions, certain non-recurring items, and excess cash held to boost liquidity during the economic downturn. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Factors that could lead to a rating upgrade include: (i) debt-to-EBITDA ratio below 6x, (ii) (EBITDA - capex) coverage of interest exceeding 2x, and (iii) free-cash-flow-to-debt ratio exceeding 4%. Factors that could lead to a rating downgrade include: (i) debt-to-EBITDA ratio above 7.5x, (ii) (EBITDA - capex) coverage of interest below 1.2x, (iii) free-cash-flow-to-debt ratio below 2%, or (iv) a significant loss of revenue and decline in EBITDA resulting from the economic downturn. Moody's has assigned the following rating (and loss given default (LGD) assessment): $300 million six-year backed senior secured term loan at B2 (LGD3). The following ratings remain unchanged: Corporate family rating at B3; Probability of default rating at B3-PD; $400 million backed senior secured first-lien revolving credit facility maturing in December 2023 at B2 (LGD3); $2.3 billion backed senior secured first-lien term loan maturing in December 2025 at B2 (LGD3); $1.1 billion backed senior secured first-lien term loan maturing in September 2026 at B2 (LGD3). The outlook for Sedgwick is stable. The senior secured credit facilities are also available to Sedgwick affiliate Lightning Cayman Merger Sub, Ltd. Sedgwick also maintains an $890 million unsecured term loan maturing December 2026 that was privately placed with lenders who are not affiliated with the equity owners. The principal methodology used in these ratings was Insurance Brokers and Service Companies published in June 2018. Sedgwick is a leading global provider of technology-enabled risk, benefits and integrated business solutions. The company processes claim in casualty, property, marine, benefits and other lines for insurance and reinsurance companies, self-insured corporations and government entities. Operating through some 900 offices in 65 countries, Sedgwick generated revenues of approximately $3.5 billion in 2019. SERVICE PROPERTIES: Moody's Cuts Senior Unsecured Rating to Ba1 --------------------------------------------------------------- Moody's Investors Service downgraded the ratings of Service Properties Trust including its senior unsecured rating to Ba1 from Baa3. Concurrently, Moody's assigned a Ba1 corporate family rating and a speculative grade liquidity rating of SGL-3. The ratings outlook remains negative. The ratings downgrade to Ba1 reflects liquidity pressures surrounding near-term 2021 debt maturities that are heavily dependent on hotel asset sales or additional revolver borrowings for repayment. Additionally, lodging demand is not expected to recover fully next year, and is difficult to predict as the coronavirus continues to spread, resulting in uncertain consequences for SVC at this stage. As a result, Moody's does not expect the company to be able to restore credit metrics back to the requirements for a Baa3 rating in the medium-term. Downgrades: Issuer: Service Properties Trust Senior unsecured debt, Downgraded to Ba1 from Baa3 Senior unsecured debt shelf, Downgraded to (P)Ba1 from (P)Baa3 Senior subordinate shelf, Downgraded to (P)Ba2 from (P)Ba1 Junior subordinate shelf, Downgraded to (P)Ba2 from (P)Ba1 Preferred shelf, Downgraded to (P)Ba3 from (P)Ba1 Preferred shelf non-cumulative, Downgraded from (P)Ba3 from (P)Ba1 The following ratings were assigned: Issuer: Service Properties Trust Corporate family rating at Ba1 Speculative grade liquidity rating at SGL-3 Outlook Actions: Issuer: Service Properties Trust Outlook Negative RATINGS RATIONALE The rapid and widening spread of the coronavirus outbreak, deteriorating global economic outlook, falling oil prices, and asset price declines are creating a severe and extensive credit shock across many sectors, regions and markets. The combined credit effects of these developments are unprecedented. The commercial lodging real estate segment has been one of the sectors most affected by the shock given the sensitivity to consumer demand and sentiment. The lodging sector has seen an unprecedented decline in occupancy due to large-scale cancellations and reduced travel demand. Its action in part reflects the impact on SVC, the breadth and severity of the shock, and the broad deterioration in credit quality it has triggered. The REIT's SGL-3 rating reflects its adequate liquidity profile though with tight cushion related to its $400 million February 2021 debt maturity, given meaningful cash flow pressure over the next twelve months. Moody's expects the company to repay the note maturity with borrowings on the revolver, leaving the company with minimal available liquidity for the remainder of 2021. As of March 31, 2020, liquidity was supported by approximately $542 million in availability on the revolver and $55 million in cash on hand. Furthermore, in May 2020, the company amended its credit agreement in order to waive two financial covenants, in exchange for a pledge of equity interests of subsidiaries owning properties with gross book value equal to 2x amounts outstanding on the facility ($900 million outstanding as of May 2020, $1.8 billion in assets pledged). Additionally, the amended credit agreement requires maintenance of minimum unrestricted liquidity of $125 million, in cash or revolver availability and allows for a 50 bps higher interest rate on outstanding borrowings. Proceeds from asset sales or additional capital raises will require mandatory repayment of the revolver or term loan over the waiver period. The ratings downgrade also reflects the material change in capital structure, and temporary shift away from an unsecured funding strategy. Given the current environment, Moody's expects the company will likely use additional secured debt financing to fund capital needs on a go-forward basis. SVC's credit profile had weakened prior to the coronavirus outbreak due to its debt-funded acquisition of the net lease retail portfolio from Spirit MTA REIT in September 2019. Moody's downgrade of the company in September 2019 reflected the expectation for deteriorating credit metrics as well as the timely execution of planned asset sales in order to reduce post-acquisition leverage. At this time, Moody's does not expect SVC's planned asset sales to materialize until 2021 at the earliest. With the company's EBITDA expected to fall substantially in 2020 due to earnings pressure related to the pandemic, leverage is likely to increase further in the coming months and fall outside of its expectations for an investment grade credit on a sustained basis, albeit mitigated by cost saving initiatives. Such measures include a temporary reduction in its quarterly dividend and the limitation of capex spend for maintenance capital for projects underway and other contractual obligations. However, Moody's does not foresee a path for SVC to deleverage the balance sheet back to prior levels over the medium-term, absent a strong recovery to the lodging sector over the next year. The negative outlook reflects near-term liquidity pressures as well as the increased risk of material revenue and earnings loss as travel restrictions being put in place across the US related to the spread of the COVID-19 coronavirus cause significant declines in occupancy and revenue per available room. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS A ratings upgrade is unlikely and would require material improvement in the overall lodging outlook. Additionally, Net Debt/EBITDA below 6.5x on a sustained basis, fixed charge coverage above 3x on a sustained basis, a return to a fully unsecured funding strategy and demonstration of improving earnings stability through the economic and real estate cycle, would be needed for an upgrade. Ratings could be downgraded should the company fail to maintain adequate liquidity cushion in the coming months, given significant near-term maturities. Additionally, failure to restore credit metrics to previous levels by the end of 2021 could also lead to downward ratings pressure. The principal methodology used in these ratings was REITs and Other Commercial Real Estate Firms published in September 2018. SFKR LLC: Texas National Bank Objects to Disclosure Statement ------------------------------------------------------------- Texas National Bank filed an objection to Disclosure Statement submitted by SFKR, LLC. Texas National Bank points out that the Disclosure Statement fails to adequately describe the available assets and their value. Texas National Bank further points out that the Disclosure Statement fails to adequately describe the scheduled claims. Texas National Bank complains that the Disclosure Statement fails to disclose the estimated return to creditors under a Chapter 7 Liquidation. Texas National Bank asserts that the Disclosure Statement fails to adequately describe the estimated administrative expenses, including attorneys’ and accountants’ fees. According to Texas National Bank, the Disclosure Statement fails to disclose the collectability of the notes payable to the debtor, and financial information, valuations and projections relevant to a creditor’s decision to accept or reject the plan. Texas National Bank points out that the Disclosure Statement fails to adequately describe the risks posed to creditors’ under the plan. Texas National Bank further points out that the Disclosure Statement fails to disclose the actual or projected realizable value from recovery of preferential or otherwise voidable transfers. Texas National Bank complains that the Disclosure Statement fails to disclose tax attributes of the debtor. Texas National Bank asserts that the Disclosure Statement includes misleading information regarding requirements for confirmation, voting procedures and financial history. Attorneys for Texas National Bank: Glen Patrick MCNALLY & PATRICK L.L.P 100 E. Ferguson St., Ste 400 Tyler, Texas 75702 Tel: 903/597-6301 Fax: 903/597-6302 About SFKR LLC SFKR, LLC, is a privately held company based in Tyler, Texas. Its business consists of the ownership of a number of pieces of commercial property. SFKR, LLC, sought Chapter 11 protection (Bankr. E.D. Tex. Case No. 19-60674) on Oct. 1, 2019. In the petition signed by Shahzad Asghar, managing member, the Debtor was estimated to have assets in the range of $0 to $50,000 and $1 million to $10 million in debt. The case is assigned to Judge Bill Parker. The Debtor tapped Eric A. Liepins, Esq., at Eric A. Liepins, as counsel. SGR WINDDOWN: Seeks to Extend Exclusivity Period to Aug. 3 ---------------------------------------------------------- SGR Winddown, Inc. and its affiliates asked the U.S. Bankruptcy Court for the District of Delaware to extend the exclusive period for filing its Chapter 11 plan through Aug. 3, and the period for soliciting plan acceptances through Sept. 30. The companies told the court that negotiations with the official committee of unsecured creditors and lenders are proceeding in earnest but have not yet been concluded, and issues with litigation parties have impeded their efforts to prepare and file a plan. About SGR Winddown, Inc. Sugarfina Inc. -- https://www.sugarfina.com/ -- operates an "omnichannel" business involving design, assembly, marketing and sale of confectionary items through a retail fleet of 44 "Candy Boutiques", including 11 "shop in shops" within Nordstrom's department stores, a wholesale channel, e-commerce, international franchise, and a corporate and custom channel. Its offerings are sourced from the finest candy makers in the world and include such iconic varieties as Champagne Bears, Peach Bellini, Sugar Lips, Green Juice Bears and Cold Brew Bears. The Debtors employ 335 people, including 71 individuals at their headquarters in El Segundo, Calif. Sugarfina, Inc. and two affiliates sought Chapter 11 protection (Bankr. D. Del. Lead Case No.19-11973) on Sept. 6, 2019. At the time of the filing, the Debtor disclosed assets of between $10 million and $50 million and liabilities of the same range. The Hon. Mary F. Walrath is the case judge. The Debtors tapped Morris James LLP as counsel, and Force Ten Partners, LLC as financial advisor. BMC Group Inc. is the claims agent. Andrew Vara, acting U.S. trustee for Region 3, appointed a committee of unsecured creditors on Sept. 17, 2019. The committee tapped Bayard, P.A. as its legal counsel, and Province, Inc. as its financial advisor. On Oct. 31, 2019, Sugarfina Inc., et al., consummated the sale of substantially all their assets to Sugarfina Acquisition Corp. The Debtors changed their names to SGR Winddown, Inc., et al., following the sale. SIT-CO LLC: Seeks Approval to Hire Bankruptcy Attorney ------------------------------------------------------ Sit-Co, LLC seeks approval from the U.S. Bankruptcy Court for the Southern District of Indiana to employ John Andrew Goodridge, Esq., to handle its Chapter 11 case. Mr. Goodridge will provide these professional services: (a) advise Debtor of its duties and powers in Debtor's bankruptcy case; (b) assist in investigating the facts, conduct, assets, liabilities and the financial condition of Debtor, the operation of Debtor's business, and other matters relevant to the case or the formulation of a Chapter 11 plan; (c ) participate in the preparation of a plan and disclosure statement; and (d) assist Debtor in negotiating orders of adequate protection as to secured creditors. Debtor will pay the attorney $250 per hour for his services. Mr. Goodridge is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code, according to court filings. Mr. Goodridge holds office at: John Andrew Goodridge, Esq. 1925 W Franklin St. Evansville, IN 47712 Telephone: (812) 423-5535 Facsimile: (812) 423-7370 About Sit-Co LLC Sit-Co, LLC, is a multi-faceted company providing solutions for businesses. Since 2004, the company has built a wireless network covering eight counties in Southern Indiana. In 2008, the company built a state-of-the-art data center offering co-location, private cloud, disaster recovery and data backup services. In 2010, the company deployed a business VOIP system providing phone service in 22 states. Its latest venture is the construction of Enterprise and FTTH networks throughout the tri-state area. Sit-Co filed a Chapter 11 petition (Bankr. S.D. Ind. Case No. 19-70172) on Feb. 14, 2019. At the time of the filing, Debtor estimated up to $50,000 in assets and $1 million to $10 million in liabilities. The case is assigned to Judge Basil H. Lorch III. Sandra D. Freeburger, Esq., at Deitz, Shields & Freeburger, LLP, is Debtor's legal counsel. SM-T.E.H. REALTY: Gets Interim Approval to Hire Property Manager ---------------------------------------------------------------- SM-T.E.H. Realty 4, LLC received interim approval from the U.S. Bankruptcy Court for the Eastern District of Missouri to employ Lexington Realty International, LLC to manage its real property in Missouri. The property is a 300-unit multi-family apartment complex located at 4015 Brittany Circle, St. Louis. Under the terms of the property management agreement, the compensation Lexington will receive consists of an amount equal to 5 percent of gross revenue from the property, with a minimum fee of $5,000 per month. Jeffery Bidnick, a manager at Lexington, 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: Jeffery Bidnick Lexington Realty International, LLC 911 East County Line Road, Suite 203 Lakewood, NJ 08701 Telephone: (732) 415-6886 Facsimile: (732) 363-8006 Email: info@lexingtonco.com About SM-T.E.H. Realty 4 SM-T.E.H. Realty 4, LLC, is a single asset real estate (as defined in 11 U.S.C. Section 101(51B)), whose principal assets are located at 4015 Brittany Circle Bridgeton, Mo. SM-T.E.H. Realty 4 sought protection under Chapter 11 of the Bankruptcy Code (Bankr. E.D. Mo. Case No. 20-42148) on April 21, 2020. The petition was signed by Michael Fein, Debtor's manager. At the time of the filing, Debtor disclosed estimated assets of $10 million to $50 million and estimated liabilities of the same range. Judge Kathy A. Surratt-States oversees the case. The Debtor tapped Steven M. Wallace, Esq., at Silver Lake Group, Ltd. as its counsel. SM-T.E.H. REALTY: Seeks to Hire Silver Lake Group as Legal Counsel ------------------------------------------------------------------ SM-T.E.H. Realty 4, LLC seeks approval from the U.S. Bankruptcy Court for the Eastern District of Missouri to employ Silver Lake Group, Ltd. as its legal counsel. Silver Lake Group will provide these services in connection with Debtor's Chapter 11 case: (a) advise Debtor with respect to matters in litigation affecting the continued operation of its business and property; (b) assist Debtor in the formulation, presentation and implementation of its Chapter 11 plan; (c) assist Debtor in connection with any potential sale of its assets; (d) represent Debtor in connection with actions under Chapter 5 of the Bankruptcy Code; (e) object to claims, when appropriate; and (f) provide other legal services including, without limitation, the defense of contested matters. The firm received a retainer of $35,000, of which $1,717 was used to pay the filing fee. Steven Wallace, Esq., the firm's attorney who will be handling the case, disclosed in court filings that the firm is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. Silver Lake Group can be reached through: Steven M. Wallace, Esq. Silver Lake Group, Ltd. 6 Ginger Creek Village Drive Glen Carbon, IL 62034 Telephone: (618) 692-5275 Email: steve@silverlakelaw.com About SM-T.E.H. Realty 4 SM-T.E.H. Realty 4, LLC, is a single asset real estate (as defined in 11 U.S.C. Section 101(51B)), whose principal assets are located at 4015 Brittany Circle Bridgeton, Mo. SM-T.E.H. Realty 4 sought protection under Chapter 11 of the Bankruptcy Code (Bankr. E.D. Mo. Case No. 20-42148) on April 21, 2020. The petition was signed by Michael Fein, Debtor's manager. At the time of the filing, Debtor disclosed estimated assets of $10 million to $50 million and estimated liabilities of the same range. Judge Kathy A. Surratt-States oversees the case. The Debtor tapped Steven M. Wallace, Esq., at Silver Lake Group, Ltd. as its counsel. SMI COMPANIES: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: SMI Companies Global, Inc. 1456 Highway 317 South Franklin, LA 70538 Business Description: SMI Companies Global, Inc. is an equipment fabricator in the oil and gas industry. Chapter 11 Petition Date: May 20, 2020 Court: United States Bankruptcy Court Western District of Louisiana Case No.: 20-50419 Judge: Hon. John W. Kolwe Debtor's Counsel: Tom St. Germain, Esq. WEINSTEIN & ST. GERMAIN 1414 NE Evangeline Thruway Lafayette, LA 70501 Tel: (337) 235-4001 Total Assets: $20,924 Total Liabilities: $1,585,039 The petition was signed by Vaughn S. Lane, 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/67iInv SPECIALTY BUILDING: Bank Debt Trades at 16% Discount ----------------------------------------------------- Participations in a syndicated loan under which Specialty Building Products Holdings LLC is a borrower were trading in the secondary market around 85 cents-on-the-dollar during the week ended Fri., May 15, 2020, according to Bloomberg's Evaluated Pricing service data. The $500.0 million facility is a Term loan. The facility is scheduled to mature on October 1, 2025. As of May 15, 2020, $493.8 million of the loan remains outstanding. The Company's country of domicile is United States. SRAX INC: Needs More Significant Capital to Remain Going Concern ---------------------------------------------------------------- SRAX, Inc. filed its quarterly report on Form 10-Q, disclosing a net loss of $3,003,000 on $351,000 of revenues for the three months ended March 31, 2020, compared to a net loss of $5,786,000 on $592,000 of revenues for the same period in 2019. At March 31, 2020, the Company had total assets of $19,900,000, total liabilities of $9,983,000, and $9,917,000 in total stockholders' equity. The Company said, "In connection with preparing consolidated financial statements for the year ended December 31, 2019 and three months ended March 31, 2020, management evaluated whether there were conditions and events, considered in the aggregate, that could raise substantial doubt about the Company's ability to continue as a going concern within one year from the date that the financial statements are issued. Based on its evaluation, management concluded that without raising significant capital, there is substantial doubt that the Company will continue as a going concern past September 30, 2020." A copy of the Form 10-Q is available at: https://is.gd/bpweVH SRAX, Inc., a digital marketing and data technology company, provides tools to reach and reveal audiences with marketing and advertising communication in the United States. The company markets and sells its services through its in-house sales team, as well as through industry specific events. The company was formerly known as Social Reality, Inc. and changed its name to SRAX, Inc. in August 2019. SRAX, Inc. was founded in 2009 and is headquartered in Los Angeles, California. STANDARD INDUSTRIES: Moody's Rates $250MM Unsec. Notes 'Ba2' ------------------------------------------------------------ Moody's Investors Service assigned a Ba2 rating to Standard Industries Inc.'s proposed issuance of $250 million of senior unsecured notes due 2027. The issuance is an add-on to the company's existing $500 million notes due 2027. Standard's Ba2 Corporate Family Rating, Ba2-PD Probability of Default Rating and the existing Ba2 rating on the company's senior unsecured notes are not impacted by the proposed transaction. The outlook remains stable. Moody's views the proposed transaction as credit positive since most of the proceeds from the $250 million add-on will be used to repay the balance of the company's 2023 notes, at which time the rating for these notes will be withdrawn. This will push all refunding risk to late 2024. The balance of the proceeds will be used to add cash to the balance sheet and to pay related fees and expenses in essentially a leverage neutral transaction. "Standard has done a good job in extending its maturity profile," according to Peter Doyle, a Moody's VP-Senior Analyst. "However, Standard faces a massive wall of maturing debt beginning in late 2024 when about 20% of the company's debt comes due every year for the next five years." The following ratings/assessments are affected by its action: Assignments: Issuer: Standard Industries Inc. Senior Unsecured Regular Bond/Debenture, Assigned Ba2 (LGD4) RATINGS RATIONALE Standard's Ba2 CFR reflects Moody's expectation that the company will benefit from an economic recovery beginning in late 2020 or early 2021, even though revenue and earnings will be at lower levels than the previous year. Moody's believes that roofing repair products experience less demand volatility than other building products due to their nondiscretionary nature. The upfront costs for roof repair or replacement are worth the investment compared to the potential costs of repairing long-term damage from water and resulting property damage. Also, many other home repair and remodeling decisions can be postponed with little risk of marginal cost. For 2021, Moody's Global Macro Outlook incorporates a 4.5% growth in GDP for the US, from which Standard derives the majority of its revenue and most of its earnings and cash flow, and a 4.7% growth rate for the Euro area, Standard's second largest market. Further supporting Standard's credit profile is the company's very good liquidity, including Moody's expectation of free cash flow (prior to dividends) as the company reduces costs, works though inventory and reduces capital expenditures. Free cash flow, about $500 million of cash on hand (excluding the cash that can be utilized to repay revolver borrowing) and availability under the company's $650 million revolving credit facility is more than sufficient to contend with ongoing economic uncertainty. Moody's forecasts include a scenario in which Standard's leverage deteriorates to the range of 5.5x -- 6.0x from 4.6x at FYE19. Standard Industries has a debt structure (five long-term notes) that does not lend itself to deleveraging. The very high leverage is Standard's greatest credit challenge. Moody's estimate of leverage is a result of an anticipated revenue decline, earnings contraction, and repayment of all revolver borrowings. 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 including the demand for replacement of residential roofs, insulation, and glass fiber materials. Moody's regards the coronavirus outbreak as a social risk under its ESG framework, given the substantial implications for public health and safety. Governance risks Moody's considers in Standard's credit profile include an aggressive financial policy, evidenced by its high leverage, dividends and potential for debt financed acquisitions. Standard has no independent directors on its Board of Directors. The stable outlook reflects Moody's expectation that Standard will benefit from a recovery in its global end markets and improve credit metrics while maintaining its very good liquidity profile. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Factors that could lead to an upgrade: Moody's view over the intermediate term will limit upward rating movement. Over the long-term Standard could be considered for an upgrade if it achieves the following (all ratios incorporate Moody's standard adjustments): - Debt-to-LTM EBITDA maintained below 3.0x - A very good liquidity profile is preserved - Ongoing trends in end markets sustain organic growth Factors that could lead to a downgrade: Standard fails to improve its operations and credit metrics remain below the following (all ratios incorporate Moody's standard adjustments): - Debt-to-LTM EBITDA sustained above 4.25x - EBITA margin trending towards 10% - The company's liquidity profile deteriorates Standard Industries Inc., headquartered in Parsippany, NJ, is the leading manufacturer and marketer of roofing products and accessories with operations primarily in North America and Europe. The company manufactures and sells residential and commercial roofing and waterproofing products, insulation products, aggregates, specialty construction and other products. Standard Industries is privately owned and does not disclose financial information publicly. The principal methodology used in these ratings was Manufacturing Methodology published in March 2020. STAPLES INC: Bank Debt Trades at 16% Discount --------------------------------------------- Participations in a syndicated loan under which Staples Inc is a borrower were trading in the secondary market around 84 cents-on-the-dollar during the week ended Fri., May 15, 2020, according to Bloomberg's Evaluated Pricing service data. The $300.0 million facility is a Term loan. The facility is scheduled to mature on September 12, 2024. As of May 15, 2020, the amount is fully drawn and outstanding. The Company's country of domicile is United States. SUPERCONDUCTOR TECHNOLOGIES: Has $1.1MM Loss for March 28 Quarter ----------------------------------------------------------------- Superconductor Technologies Inc. filed its quarterly report on Form 10-Q, disclosing a net loss of $1,079,000 on $184,000 of total revenues for the three months ended March 28, 2020, compared to a net loss of $2,335,000 on $0 of total revenues for the three months ended March 30, 2019. At March 28, 2020, the Company had total assets of $2,533,000, total liabilities of $700,000, and $1,833,000 in total stockholders' equity. The Company said, "We have incurred significant net losses since our inception and have an accumulated deficit of $330.1 million. In 2019, we incurred a net loss of $9.2 million and had negative cash flows from operations of $8.8 million. In the three months ended March 28, 2020, we incurred a net loss of $1.1 million and had negative cash flows from operations of $1.5 million. At March 28, 2020, we had $1.8 million in cash and cash equivalents compared to $0.7 million in cash and cash equivalents as of December 31, 2019. Our cash resources may therefore not be sufficient to fund our business through the end of the current fiscal year. From March 3, 2020 through March 16, 2020, 5,551,716 warrants were exercised for common shares of our stock in connection with our October 2019 financing, providing us with $1.4 million. Our cash resources may therefore not be sufficient to fund our business through the end of the current fiscal year. Therefore, unless we can successfully implement our strategic alternatives plan including, among others, a strategic investment financing which would allow us to pursue our current business plan to commercialize the Conductus wire platform, a business combination such as our merger with Clearday, or a sale of STI, we will need to raise additional capital during this fiscal year ending December 31, 2020 to maintain our viability. Additional financing may not be available on acceptable terms or at all. If we issue additional equity securities to raise funds, the ownership percentage of our existing stockholders would be reduced. New investors may demand rights, preferences or privileges senior to those of existing holders of common stock. These factors raise substantial doubt about our ability to continue as a going concern." A copy of the Form 10-Q is available at: https://is.gd/VfJOao Superconductor Technologies Inc., together with its subsidiaries, develops, produces, and commercializes high temperature superconductor materials and related technologies in the United States. It is also involved in developing Conductus(R) superconducting wire for power applications. The company was founded in 1987 and is headquartered in Austin, Texas. TADA VENTURES: Unsecureds Will be Paid in Full Over 60 Months ------------------------------------------------------------- Tada Ventures, LLC submitted a Plan of Reorganization and Disclosure Statement. Tada's assets are valued at $523,121.54. ECapital Loan Fund II, LLC, in Class 1 will receive monthly cash payments of its allowed claim based on a 10-year amortization with interest bearing at the rate of seven percent per annum. Payments will commence upon the Effective Date and with subsequent payments being paid on the same day of each month for a period of 24 months with the remaining Claim due upon the expiration of the 24-month term. This class is impaired. Holders of allowed Small Business Administration Claim in Class 2 will receive monthly Cash Payments of $7,890.50 with payments commencing 30 days after the Effective Date and with subsequent payments being paid on the same day of each month until the Claims are paid in full. Interest will accrue on the Claims at the rate of 2.5 percent per annum from the Effective Date and all other provisions of the underlying promissory note and security agreement shall remain in effect except for those provisions expressly provided for. This class is impaired. Holders of Allowed Priority Claims in Class 4 shall be paid in Cash within thirty days following the Effective Date. In the event of any failure of the Reorganized Debtor to timely make its required plan payments, which shall constitute an event of default under the Plan as to these Claimants, they shall send Notice of Default to the Reorganized Debtor. If the default is not cured within thirty (30) days of the date of such notice, the Holders of Allowed Claims may proceed to collect all amounts owed pursuant to state law without further recourse to the Bankruptcy Court. This class is impaired. Holders of General Unsecured Claims shall paid Pro Rata in Cash with monthly payments over a term of 60 months 30 days following the Effective Date with payments being paid on the same day of each month until the Claims are paid in full. In the event of any failure of the Reorganized Debtor to timely make its required plan payments, which shall constitute an event of default under the Plan as to these Claimants, they shall send Notice of Default to the Reorganized Debtor. If the default is not cured within thirty (30) days of the date of such notice, the Holders of Allowed Claims may proceed to collect all amounts owed pursuant to state law without further recourse to the Bankruptcy Court. This class is impaired. Payments and distributions under the Plan will be funded the continued operations of the Debtor, including a capital contribution by equity interest holders in the amount of $300,000.00, and lease agreement between RCPF to pay base rent and to maintain a minimum operating balance of $43,216 per month for a term of five (5) years commencing April 2020. A full-text copy of the Disclosure Statement dated April 29, 2020, is available at https://tinyurl.com/ya9au5hf from PacerMonitor.com at no charge. Attorneys for the Debtor: Adam Corral Susan Tran Brendon Singh CORRAL TRAN SINGH, LLP 1010 Lamar, Suite 1160 Houston TX 77002 Tel: (832) 975-7300 Fax: (832) 975-7301 E-mail: Susan.Tran@ctsattorneys.com About TADA Ventures TADA Ventures, LLC owns in fee simple the Katy Commerce Center in Katy, Texas, an executive suite and business office. The property has an appraised value of $3.50 million. TADA Ventures sought protection under Chapter 11 of the Bankruptcy Code (Bankr. S.D. Texas Case No. 19-31845) on April 1, 2019. At the time of the filing, the Debtor disclosed $3,523,706 in assets and $2,337,345 in liabilities. The case has been assigned to Judge David R. Jones. Corral Tran Singh LLP is the Debtor's legal counsel. TALEN ENERGY: Fitch Rates $400MM Senior Secured Notes 'BB/RR1' -------------------------------------------------------------- Fitch Ratings has assigned a 'BB'/'RR1' rating to Talen Energy Supply's issuance of $400 million senior secured notes due 2028. Recovery Ratings 1 indicates outstanding recovery (in the range of 91% to 100%) in the event of default. The notes are secured by a first-priority lien on substantially all of the property and assets of Talen and the guarantor subsidiaries. The notes will be pari passu with Talen's existing senior secured debt, which consists of a $690 million revolving credit facility due 2024 (subject to successful voluntarily termination and prepayment of a portion of revolver), $497 million senior secured term loan due 2026, $750 million secured notes due 2027, $470 million secured notes due 2028 and $135 million inventory repurchase obligations as of March 31, 2020. The net proceeds from the issuance will be used to repay all of the borrowings outstanding under the revolving credit facility, prepay a portion of the senior secured term loan due 2026, and for general corporate purposes, which may include repayment of additional indebtedness. Fitch rates Talen's Long-Term Issuer Default Rating at 'B' with a Stable Outlook. Talen's IDR reflects its elevated leverage and high business risk associated with owning a largely uncontracted power generation fleet. Talen's EBITDA is highly sensitive to the changes in the energy and capacity prices, in particular in PJM. Given the already announced PJM capacity auction results, existing hedges and current forward curves, Fitch expects 2020 to be a thorough year for EBITDA and FCF generation. Subsequently, Fitch expects EBITDA and FCF to improve in 2021 and 2022. The ratings also reflect the private equity owners' commitment to manage to a more conservative capital structure as well as take into account a covenant limitation that restricts distributions to the owners until total leverage ratio (as defined in the credit agreement) is 4.5x or less. KEY RATING DRIVERS Bolstering Liquidity Amid Uncertainty: The economic downturn and capital market volatility driven by the ongoing coronavirus pandemic has created challenging capital market conditions for speculative grade issuers such as Talen. Given the circumstances, Fitch views the announced debt issuance as a prudent move by Talen to bolster liquidity even though it increases permanent debt and, consequently, results in higher near-term leverage than Fitch's prior expectations. Talen plans to use $245 million of the net proceeds to pay down outstanding revolver borrowings and to voluntarily reduce revolver commitments by $310 million. A portion of the net proceeds could be used along with cash on hand to repay $131 million of Pennsylvania Economic Development Financing Authority Muni bonds, which are subject to mandatory repurchase and optional remarketing in September 2020. Fitch had previously assumed that Talen would be successful in remarketing these bonds but now market conditions remain uncertain. Increase in Near-term Leverage: Given the new debt issuance, Fitch expects 2020 gross adjusted debt to EBITDA to increase to approximately 7.6x. Given its highly hedged position, Fitch expects Talen to generate EBITDA within management's revised guidance range of $495 million to $645 million in 2020, which was lowered by $30 million in the first quarter earnings conference call to reflect exit from Northeast Gas Generation. The 2020 FCF guidance range was left unchanged at $0 million to $120 million. Fitch expects a rebound in EBITDA in 2021 and 2022 reflecting the recent strength in PJM energy prices, already announced PJM auction results and a decline in BRA results for the 2022/2023 planning year. Fitch expects management to continue to exercise tight O&M and capex control to be able to remain FCF positive 2020 onwards. Fitch also assumes that Talen will pay down 2021-2022 maturing debt using cash on hand. As a result, Fitch expects total adjusted debt to EBITDA to improve to high 5.0x by 2022. Fitch includes only recourse debt in its leverage calculation and includes distribution from Lower Mt. Bethel - Martins Creek non-recourse subsidiary in its adjusted EBITDA calculation. According to its projections, Fitch does not expect Talen to make a distribution to its owners over 2019-2022. High Commodity Exposure: Similar to other merchant power generation companies, Talen's generation fleet is exposed to changes in energy and capacity prices, which creates volatility in EBITDA and FCF. A three-year ratable hedging policy and receipt of capacity revenues, which comprise approximately 20%-25% of gross margin, mitigate commodity exposure to some extent. As of April 21, 2020, Talen was 87% hedged for expected 2020 generation, followed by 49% hedged for 2021 and 24% for 2022. PJM is by far the largest market for Talen with 75% of its MWs located in this region. Low natural gas prices, persistently weak peak demand growth, and continued build-up of natural gas fired capacity in the region have depressed energy prices. However, forward natural gas prices have strengthened recently providing opportunities for management to layer in additional hedges. The timing of the next base residual auction for 2022/2023 planning year remains uncertain. Recovery Analysis: The individual debt instrument ratings at Talen are notched above or below the IDR as a result of the relative recovery prospects in a hypothetical default scenario. Fitch values the power-generation assets that guarantee the debt at Talen using a net present value analysis. A similar NPV analysis is used to value the generation assets that reside in nonguarantor subsidiaries, and the excess equity value is added to the parent recovery prospects. The generation asset NPVs vary significantly based on future gas price assumptions and other variables, such as the discount rate and heat rate forecasts in PJM, Electric Reliability Council of Texas region and the Northeast. For the NPV of generation assets used in Fitch's recovery analysis, Fitch uses the plant valuation provided by its third-party power market consultant, Wood Mackenzie, as well as Fitch's own gas price deck and other assumptions. The NPV analysis for Talen's generation portfolio yields approximately $200/kW for PJM Coal, $650/kW for Susquehanna nuclear and an average of $400/kW for the natural gas generation assets in ERCOT. The recovery analysis yields 'RR1' for the first lien senior secured debt and 'RR4' rating for the senior unsecured notes. DERIVATION SUMMARY Talen is unfavorably positioned compared to Vistra Energy Corp. (Vistra, BB/Positive) and Calpine Corp. (B+/Stable) with respect to size, asset composition and geographic exposure. Vistra is the largest independent power producer in the country with approximately 39 GW of generation capacity compared to Calpine's 26 GW and Talen's 15 GW. Talen has a modest retail business focused on commercial and industrial customers and lacks the scale that Vistra has from its ownership of large and well entrenched retail electricity businesses. Fitch views retail as a high-margin business that offers an effective sales channel and a partial hedge for wholesale generation. Calpine's younger and predominant natural gas fired fleet bears less operational and environmental risk as compared to nuclear and coal generation assets owned by Vistra and Talen. In addition, Calpine's EBITDA is much more resilient to changes in natural gas prices and heat rates in contrast to its peers. Talen's forecasted leverage is the highest resulting in the lowest rating among its peers. Fitch forecasts Talen's debt-to-EBITDA leverage ratio (excluding non-recourse subsidiaries) at 5.9x in 2022, which is weaker than Calpine's 4.5x-5.0x and significantly weaker than Vistra's 3.0x. KEY ASSUMPTIONS Fitch's Key Assumptions Within its Rating Case for the Issuer Include: -- Modest recovery in energy prices in PJM and ERCOT over current levels; -- PJM capacity auction results as announced and assuming an approximately 20% decline in auction results for the 2022/23 auction; -- No dividend to the owners over its forecast period of 2019 - 2022; -- 2020 - 2024 maturities paid using cash on hand and FCF generated over this period. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- Execution of deleveraging as per management's stated goal such that recourse debt-to-adjusted EBITDA is below 4.5x on a sustainable basis; -- Stronger than expected capacity and energy prices in PJM could improve the recovery valuation leading to a one-notch upgrade for the senior unsecured debt. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- Weaker power demand and/or higher than expected power supply depressing wholesale power prices in its core regions; -- Unfavorable changes in regulatory construct/rules in the markets in which Talen operates; -- Negative FCF generation on a sustained basis; -- Total adjusted debt/EBITDA above 7.0x and FFO fixed charge coverage below 2.0x on a sustained basis; -- Any incremental secured leverage and/or deterioration in NPV of the generation portfolio will lead to downward rating pressure for the senior unsecured debt. BEST/WORST CASE RATING SCENARIO International scale credit ratings of Non-Financial Corporate issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. LIQUIDITY AND DEBT STRUCTURE Adequate Liquidity: As of March 31, 2020, Talen had approximately $1.2 billion of liquidity available, including $410 million of unrestricted cash and availability under the $1 billion revolving credit facility and $200 million of alternate LC facilities. Talen's revolving credit facility matures in March 2024 but the commitments step down to $860 million on June 1, 2020 and $690 million on June 1, 2022. Talen will be voluntarily terminating a portion of the commitments after completion of the new note issuance such that $690 million of revolver will be committed going forward. Further optimization of balance sheet by using first lien structures for hedging can also reduce cash and LC support needed for collateral postings. Talen's next significant debt maturity is in 2025, when $543 million of 6.50% senior unsecured notes become due. Other maturities include $131 million of PEDFA municipal bonds subject to mandatory repurchase and optional remarketing in September 2020 and approximately $155 million of senior unsecured notes due over 2021 - 2024, which Fitch expects to be paid using FCF. SUMMARY OF FINANCIAL ADJUSTMENTS Fitch adjusts revenues and costs of sales contained in the published financial statements for unrealized mark to market gains and losses in order to arrive at adjusted EBITDA. In addition, Fitch includes only recourse debt in its leverage calculation and includes distribution from Lower Mt. Bethel - Martins Creek non-recourse subsidiary in its adjusted EBITDA calculation. 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. TRITON DOWNTOWN: Bank Debt Trades at 17% Discount -------------------------------------------------- Participations in a syndicated loan under which Triton Downtown LLC is a borrower were trading in the secondary market around 83 cents-on-the-dollar during the week ended Fri., May 15, 2020, according to Bloomberg's Evaluated Pricing service data. The $44.0 million facility is a Term loan. The facility is scheduled to mature on August 16, 2023. As of May 15, 2020, the amount is fully drawn and outstanding. The Company's country of domicile is United States. U.S. RENAL CARE: S&P Downgrades ICR to 'B-' on Underperformance --------------------------------------------------------------- S&P Global Ratings lowered the issuer credit rating on U.S. Renal Care Inc. (USRC) one notch to 'B-'. S&P also lowered the issue-level rating for the first-lien credit facility and unsecured notes to 'B-' and 'CCC', respectively. The downgrade reflects that discretionary cash flow is below S&P's prior expectations, falling below 2% of debt on a sustained basis. The company's cash flow fell below S&P's earlier expectations for reasons that suggest to the rating agency that it will sustain it at this weaker level. The key elements that suggest this new expectation include (1) the shift of more commercially insured patients to in-network rates compared with higher out-of-network rates, (2) the loss of cash flow from the sale of 90% of its Guam operation, which generated approximately $10 million of EBITDA less NCI in 2019, and (3) more aggressive de novo spending. S&P believes there is additional risk to cash flow from the COVID-19 pandemic, though it is not the key driver for the downgrade. S&P now estimates the normalized annual discretionary cash flow in the $10 million-$20 million range over the next few years, equating around 1% of reported debt, as compared with the rating agency's prior estimate of 3%-4%. The commercial payor mix shift to in-network from out-of-network is a key overhang. The shift from out-of-network to in-network with commercial payors accelerated in the second half of 2019, leading to EBITDA underperformance against S&P's initial projection. USRC's gross revenue per treatment (RPT) dropped by $5 to $366 in 2019 driven by a reduction in commercial RPT of more than $100 year over year. S&P sees risks for further RPT pressure as more commercial patients are pushed to in-network status. For 2020, S&P expects consolidated gross RPT of $355. The Guam operation sale boosts the company's liquidity, but reduces its operating cash flow in the near term. USRC sold its Guam operation to Fresenius in late 2019. While the divestiture strengthens the company's liquidity significantly, S&P believes it will likely deploy the proceeds toward de novo growth, rather than paying down debt. If that's the case, S&P does not expect the company to be able to offset the lost $10 million in EBITDA within the next year or two through de novos, because it typically takes 18-24 months for a new clinic to reach maturity The company has an aggressive growth strategy with high leverage. "We expect adjusted leverage will remain above 7x for the next few years. We are uncertain if the company will generate a good return on its investment in newly opened clinics given the time it takes to ramp up as well as reimbursement pressure. Furthermore, despite the uncertainties related to the COVID-19 pandemic, USRC still intends to grow aggressively in 2020 at a level higher than our earlier expectations. We model annual capital expenditures of $60 million (half maintenance, half growth) compared with our prior estimate of $50 million per year," S&P said. Longer term, potential payor mix shift from high unemployment could pressure earnings, given the company's dependence on commercial insured treatments. The recent increase in unemployment due to the COVID-19 pandemic is a significant risk to USRC's earnings. The magnitude of this risk will be influenced by the pandemic's severity and duration, which S&P can't predict. However, for illustrative purposes, S&P estimates that for every 100 basis points (bps) of treatment volume shift to Medicare from commercial payors, could result in a $20 million EBITDA reduction (before noncontrolling interest [NCI]). This estimate does not consider partial mitigation of some newly unemployed patients buying insurance coverage on the health care exchanges thru the Affordable Care Act. Ratings are supported by liquidity and steady demand. USRC has an undrawn revolver ($150 million total capacity), over $200 million in cash (including the Guam sales proceeds), and earnings from ongoing operations. This leaves a good cushion to cover roughly $150 million in annual interest expense and $60 million in annual capital expenditures. Furthermore, the company will receive a nonrecurring cash benefit from the CARES Act, which is intended to be used to offset higher cost from COVID-19. Additionally, the ratings benefit from the nondiscretionary nature of dialysis treatments that creates steady demand even in a pandemic-induced economic recession. The stable rating outlook reflects S&P's expectation that USRC's discretionary cash flow will remain between 0% and 2% of debt on a sustained basis. S&P could lower the rating if discretionary cash flow, before growth capital expenditures, dips below zero (from our current projection of around $50 million) on a sustained basis, leading the rating agency to believe the capital structure is unsustainable. This could happen if adjusted EBITDA margins fall to about 22% from a rate cut from commercial insurance payors, an unfavorable payor mix shift due to high unemployment, and/or adverse regulatory changes. S&P could consider a higher rating if it is more certain that discretionary cash flow, after growth capital expenditures, will achieve, and remain above 2% of debt on a sustained basis. This would likely require adjusted EBITDA margins to increase to about 26%, such that discretionary cash flow increases to a sustainable level of at least $40 million, assuming there's no additional debt issuance. ULTRA PETROLEUM: Fitch Cuts LT IDR to 'D', Then Withdraws Ratings ----------------------------------------------------------------- Fitch Ratings has downgraded the Issuer Default Rating for Ultra Petroleum Corp. and Ultra Resources, Inc. to 'D' from 'CCC'. In addition, Fitch has downgraded Ultra Resource's secured revolver and term loan to 'CCC-'/'RR2' from 'B'/'RR1', senior secured second lien notes to 'C'/'RR6' from 'CCC'/'RR4', and senior unsecured notes to 'C'/'RR6' from 'CC'/'RR6'. Fitch is withdrawing Ultra's ratings for commercial reasons. Fitch's ratings reflect the announcement by Ultra that it has signed a restructuring support agreement and will voluntarily filed for reorganization under Chapter 11 plan of the U.S. Bankruptcy Code on May 14, 2020. The company has reached agreement under the RSA with 100% of the loans under its first lien revolving credit facility, 85% of the loans under the first lien term loan, and 67% of the second lien notes. KEY RATING DRIVERS Voluntary Chapter 11 Filing: On May 14, 2020, Ultra announced that it entered into a restructuring support agreement with lenders under it revolving credit facility and term loan and second lien note holders. The company will voluntarily file for reorganization under Chapter 11 of the U.S. Bankruptcy Code. The company's interest service on the debt coupled with the potential for borrowing base reductions were the primary drivers for the filing. Weaker Credit Metrics: Ultra's 2019 EBITDA declined to $404 million from $504 million in the prior year due to lower production volumes and weaker natural gas prices. The company had significantly reduced capex spending and production is expected to fall further in 2020. Ultra ended the year with leverage at 4.9x. Tightening Liquidity: Ultra's borrowing base was reduced to $1.075 billion on Feb. 14, 2020, with a $100 million commitment attributed to the revolving credit facility. Due to the reduced liquidity, the company has guided capex spending for 2020 at $10 million-$20 million. Proven Vertical Resources and Cost Structure: Ultra has a contiguous position in the Pinedale Field with about 83,000 net acres supportive. While the performance of the horizontal wells has been uneven, Ultra has an established track record of successful vertical exploitation of its acreage with a competitive cost structure. KEY ASSUMPTIONS KEY RECOVERY RATING ASSUMPTIONS The recovery analysis assumes that Ultra would be reorganized as a going-concern in bankruptcy rather than liquidated. Fitch has assumed a 10% administrative claim. Going-Concern Approach Ultra Petroleum's GC EBITDA assumption of $248 million reflects the 2020 base case scenario. This reflects Fitch's assumptions of lower natural gas prices and production over the forecast period. The GC EBITDA estimate reflects Fitch's view of a sustainable, post-reorganization EBITDA level upon which it bases the enterprise valuation. Fitch typically uses the stress case EBITDA assumption for oil and gas exploration and production companies that reflect the industry's move from top of the cycle commodity prices to mid-cycle conditions. However, in this case, the risk of a near-term default under the base case is a more accurate representation given Ultra's weak liquidity, sharply declining production, lower natural gas prices as reflected in the price deck, and historically wide pricing differentials. The assumption also reflects corrective measures taken in the reorganization to offset the adverse conditions that triggered default such as cost cutting and reduced capex spend. An EV multiple of 4.0x EBITDA is applied to the GC EBITDA to calculate a post-reorganization enterprise value. The choice of this multiple considered the following factors: The GC enterprise value multiple of 4x is below the historical E&P sub-sector multiple of 5.8x. The multiple is lower than other natural gas-oriented bankruptcies of 6.7x-6.9x (Atlas Resources, Sabine Oil & Gas, SandRidge Energy) that went through prolonged commodity price decline in 2015-2017 time period to reflect the more challenging energy industry conditions and lack of access to capital markets. The multiple also reflects the pricing discount of natural gas from the Pinedale field to Henry Hub and the expectation that improved pricing over time as additional pipeline capacity is added in the Permian Basin. The going concern enterprise value of the company is $992 million. Liquidation Approach The liquidation estimate reflects Fitch's view of the value of balance sheet assets that can be realized in sale or liquidation processes conducted during a bankruptcy or insolvency proceeding and distributed to creditors. Transactional and asset-based valuation such as recent transactions in similar basins on a $/acre, SEC PV-10. Flowing production, and proved reserve estimates were used to determine a reasonable sales price for the company's assets. The valuations were further adjusted to reflect scale, location, asset quality, and changes in commodity prices from observed transactions. The revolver reflects the actual drawn amount as of Dec. 31, 2019 of $64 million. The revolver and term loan are super senior in the waterfall. The allocation of value in the liability waterfall results in recovery corresponding to RR2 recovery for the first lien revolver and term loan (together $1.033 billion) and a recovery corresponding to RR6 for the senior secured second lien notes ($584 million) and the senior unsecured notes ($375 million). RATING SENSITIVITIES Rating sensitivities are no longer applicable given the ratings withdrawals. 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. 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). Ultra Resources, Inc. - LT IDR D; Downgrade - LT IDR WD; Withdrawn - Senior secured; LT CCC-; Downgrade - Senior secured; LT WD; Withdrawn - Senior unsecured; LT C; Downgrade - Senior unsecured; LT WD; Withdrawn - Senior Secured 2nd Lien; LT C; Downgrade - Senior Secured 2nd Lien; LT WD; Withdrawn Ultra Petroleum Corp. - LT IDR D Downgrade - LT IDR WD Withdrawn UNITED AIRLINES: Bank Debt Trades at 16% Discount ------------------------------------------------- Participations in a syndicated loan under which United Airlines Inc is a borrower were trading in the secondary market around 84 cents-on-the-dollar during the week ended Fri., May 15, 2020, according to Bloomberg's Evaluated Pricing service data. The $1.5 billion facility is a Term loan. The facility is scheduled to mature on April 1, 2024. As of May 15, 2020, $1.5 billion of the loan remains outstanding. The Company's country of domicile is United States. US FARATHANE: Bank Debt Trades at 40% Discount ---------------------------------------------- Participations in a syndicated loan under which US Farathane LLC is a borrower were trading in the secondary market around 60 cents-on-the-dollar during the week ended Fri., May 15, 2020, according to Bloomberg's Evaluated Pricing service data. The bank debt traded around 68 cents-on-the-dollar for the week ended May 8, 2020. The $576.0 million facility is a Term loan. The facility is scheduled to mature on December 23, 2021. As of May 15, 2020, $527.5 million of the loan remains outstanding. The Company's country of domicile is United States. USI INC: S&P Rates New $150MM First-Lien Term Loan 'B' ------------------------------------------------------- S&P Global Ratings said it assigned its 'B' debt rating to Valhalla, N.Y.-based insurance broker USI Inc.'s proposed $150 million first-lien term loan due 2026. S&P also assigned a '3' recovery rating, indicating its expectation of meaningful recovery (50%) in the event of payment default. S&P rates the existing first-lien term loan 'B' with a recovery rating of '3 (50%)', which indicates its expectation for meaningful recovery in the event of a default and the senior unsecured notes 'CCC+' with a recovery rating of '6', which indicates its expectation for negligible recovery (0%) in the event of a default. S&P expects the new first-lien term loan to have terms and pricing identical to the company's existing term loans. The proceeds, in addition to cash from equity (approximately $125 million) issued to the company's financial sponsor, will be used to acquire regional employee benefits and retail insurance brokerage firm Associated Benefits and Risk Consulting (ABRC), concentrated in Minnesota and Wisconsin. S&P believes ABRC will be a good strategic fit for USI, adding to its employee benefits and property/casualty brokerage platform while expanding its geographic footprint into Midwestern states. With a modest increase in both debt ($150 million) and EBITDA (about $25 million) from the acquisition, the ABRC transaction does not affect S&P's expectation of leverage of 7.5x-8.0x (including preferred shares S&P treats as debt) and EBITDA interest coverage of 2.5x-3.0x over the next 12 months. S&P's highly leveraged financial risk profile assessment continues to assume a debt-intensive capital structure comprising debt and debtlike instruments. Including this transaction, S&P expects financial leverage of 8.0x (7.6x excluding preferred treated as debt) with EBITDA interest coverage of about 2.8x pro forma for the trailing 12 months as of March 31, 2020. While revenue may be somewhat volatile from the economic slowdown related to COVID-19, S&P expects the company to manage expenses to offset some of the top-line volatility, enabling it to manage this increased debt load and report metrics in line with the rating agency's current ratings expectations. S&P's 'B' issuer credit rating on USI is unaffected by the new issuance and reflects the company's highly leveraged capital structure and narrow focus in the highly competitive, fragmented, and cyclical middle-market insurance brokerage industry." VERTEX AEROSPACE: S&P Upgrades ICR to 'B+'; Outlook Stable ---------------------------------------------------------- S&P Global Ratings raised its ratings on U.S.-Based Vertex Aerospace Services Corp., including its issuer credit rating, to 'B+' from 'B'. S&P expects Vertex's credit metrics to continue to improve in 2020. Vertex has successfully improved its profitability while maintaining a relatively conservative financial policy, which has led to continued improvement in its credit metrics since S&P first rated the company in May 2018. S&P expects this trend to continue in 2020 and 2021 as the company continues to reduce costs and improve its profitability despite its lower revenue due to the loss of some contracts, including the Columbus Air Force Base support contract. It expects Vertex's revenue to increase in 2021 as the company wins new contracts to replace the ones it lost. S&P also anticipates that the company may undertake some bolt-on acquisitions, though the rating agency does not expect them to materially weaken its credit metrics. S&P estimates that Vertex's debt to EBITDA will improve to the 3.9x-4.3x range in 2020 from 4.5x in 2019. The stable outlook on Vertex reflects S&P's expectation that its credit metrics will remain in line with its current rating as the company continues to improve its profitability following the loss of the Columbus Air Force Base contract in 2019. S&P now expects the company's debt to EBITDA to be in the 3.9x-4.3x range for 2020. "We could lower our rating on Vertex over the next 12 months if its debt to EBITDA weakens above 5x and we expect it to remain there. This would likely occur if the company uses cash on hand and debt to fund a significant dividend to its sponsor or acquisitions. This could also occur if the company loses another significant contract and is unable to replace the lost business or improve its profitability," S&P said. "Although unlikely under its current ownership, we could raise our rating on Vertex over the next 12 months if its debt to EBITDA improves below 4x and we expect it to remain there. This would likely occur due to the company and its sponsor committing to maintain its credit metrics at this level despite potential dividends and acquisitions. An upgrade would also likely depend on the company adding new contracts to further diversify its business while continuing to improve its profitability. We could also upgrade Vertex if it uses its cash on hand to repay additional debt," the rating agency said. VIANT MEDICAL: Bank Debt Trades at 31% Discount ----------------------------------------------- Participations in a syndicated loan under which Viant Medical Holdings Inc is a borrower were trading in the secondary market around 69 cents-on-the-dollar during the week ended Fri., May 15, 2020, according to Bloomberg's Evaluated Pricing service data. The $225.0 million facility is a Term loan. The facility is scheduled to mature on July 2, 2026. As of May 15, 2020, the amount is fully drawn and outstanding. The Company's country of domicile is United States. WINDSTREAM HOLDINGS: Element Fleet Response to Disclosures ---------------------------------------------------------- Element Fleet Corporation responds to the Windstream Holdings, Inc., et al.'s Disclosure Statement and the Solicitation Motion. Element Fleet points out that in paragraph 15 of the Solicitation Motion states that the Plan Supplement will be filed at least 7 days prior to the June 8th voting deadline. However, other places in the Solicitation Motion state that the Plan Supplement will be filed on June 11 -- only four days prior to the requested June 15 confirmation hearing. Element Fleet assumes the references in the Solicitation Motion with respect to the Plan Supplement filing date of June 11 were intended to be to June 1, which is 7 days prior to an anticipated June 8 voting/objection deadline. But even a June 1 filing date for the Plan Supplement is illusory in light of the Debtors' attempt to obtain authority to revise those lists after initially filed for up to 45 days after the Effective Date and is inappropriate, for disclosure purposes, for parties to significant executory contracts with the Debtors, including Element Fleet. Element Fleet further points out that the mechanisms and timing proposed in respect of the Debtors' assumption/rejection decisions render the Disclosure Statement inadequate. Element Fleet complains that the Joint Plan purports to, but cannot, extend Debtors' time to assume or reject and the Disclosure Statement does not disclose the rationale for such. Element Fleet asserts that the Disclosure Statement lacks adequate information with respect to why a cure of defaults must discharge lessor's claims. According to Element Fleet, the Disclosure Statement lacks adequate information with respect to the Debtors’ attempt to impair claimants' set off rights. Attorneys for Element Fleet Corporation: John D. Demmy SAUL EWING ARNSTEIN & LEHR LLP 1270 Avenue of the Americas, Suite 2005 New York, NY 10020 Telephone: (212) 980-7200 E-mail: john.demmy@saul.com About Windstream Holdings Windstream Holdings, Inc., and its subsidiaries provide advanced network communications and technology solutions for businesses across the United States. They also offer broadband, entertainment and security solutions to consumers and small businesses primarily in rural areas in 18 states. Windstream Holding Inc. and its subsidiaries filed for bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 19-22312) on Feb. 25, 2019. The Debtors had total assets of $13,126,435,000 and total debt of $11,199,070,000 as of Jan. 31, 2019. The Debtors tapped Kirkland & Ellis LLP and Kirkland & Ellis International LLP as counsel; PJT Partners LP as financial advisor and investment banker; Alvarez & Marsal North America LLC as restructuring advisor; and Kurtzman Carson Consultants as notice and claims agent. The U.S. Trustee for Region 2 appointed an official committee of unsecured creditors on March 12, 2019. The committee tapped Morrison & Foerster LLP as its legal counsel, AlixPartners, LLP, as its financial advisor, and Perella Weinberg Partners LP as investment banker. WIRECO WORLDGROUP: Bank Debt Trades at 34% Discount --------------------------------------------------- Participations in a syndicated loan under which WireCo WorldGroup Inc is a borrower were trading in the secondary market around 66 cents-on-the-dollar during the week ended Fri., May 15, 2020, according to Bloomberg's Evaluated Pricing service data. The bank debt traded around 71 cents-on-the-dollar for the week ended May 8, 2020. The $135 million facility is a Term loan. The facility is scheduled to mature on September 30, 2024. As of May 15, 2020, the amount is fully drawn and outstanding. The Company's country of domicile is United States. WME IMG: S&P Rates New $260MM Term Loan 'CCC+' ---------------------------------------------- S&P Global Ratings assigned its 'CCC+' issue-level and '3' recovery ratings to a new $260 million term loan (Term B-2) issued by William Morris Endeavor Entertainment LLC and IMG Worldwide Holdings LLC, which are borrower subsidiaries of WME IMG Holdings LLC (WME IMG). WME IMG is a wholly owned subsidiary of Endeavor Operating Company LLC. The Term B-2 debt is pari passu with and has the same maturity as the existing first-lien term loans. The Term B-2 debt bears an interest rate spread of 8.5% over LIBOR. The debt issuance bolsters WME IMG's cash balances and likely extends its liquidity runway to 2021, when operating conditions could improve and enable the company to begin to generate positive cash flow. Liquidity also benefited from the recent sale of an equity investment, which generated proceeds of about $80 million. Incorporating the Term B-2 issuance, WME IMG's total first-lien term loan balance outstanding is about $3.1 billion. Although the incremental secured debt lowers recovery prospects for first-lien lenders, the recovery rating remains '3', indicating meaningful recovery of principal (50%-70%; rounded estimate: 55%) for first-lien lenders in the event of a payment default. All other ratings on WMG IMG, including S&P's 'CCC+' issuer credit rating with a negative outlook, are unchanged. Although the Term B-2 issuance increases liquidity, WME IMG faces significant anticipated stress on revenue and cash flow due to its exposure to events and production. S&P estimates that WME IMG's average monthly cash use (including interest expense and principal amortization) is $90 million-$95 million. Based on pro forma cash balances of about $765 million, S&P estimates WME IMG's liquidity runway to be about eight months in the unlikely and conservative scenario that it generates no revenue. Issue Ratings--Recovery Analysis Key analytical factors -- The first-lien credit facilities, which consist of the revolving credit facility, existing first-lien term loans, and the new Term B-2 issuance, are rated 'CCC+'. -- S&P's simulated default scenario contemplates a payment default occurring in 2021, driven by a protracted economic downturn that causes a decline in media spending across Endeavor's client base, and decreased film and TV production that leads to reduced commissions and package revenue. The challenging operating environment could be compounded by the loss of multiple talent agents and their clients who leave to join a competing firm. -- S&P assumes a reorganization following a default because of the company's expansive client roster and key relationships with rights owners, sponsors, and broadcasters. -- S&P updated recovery analysis incorporates an increase in emergence valuation from the acquisition of On Location Events in January 2020, partly offset by the sale of an equity stake in May 2020, with the net result that emergence valuation is modestly higher than the amount the rating agency published on May 23, 2019. Simulated default assumptions -- Year of default: 2021 -- EBITDA at emergence: $329 million -- EBITDA multiple: 6.5x -- Cash flow revolver: 100% drawn at default Simplified waterfall -- Net recovery value (after 5% administrative expenses): $2.03 billion -- Obligor/nonobligor valuation split: 70%/30% -- Estimated priority debt claims: $86 million -- Estimated first-lien debt claims: $3.38 billion -- Recovery range: 50%-70% (rounded estimate: 55%) Note: All debt amounts include six months of prepetition interest. WOODLAWN COMMUNITY: Trustee Taps Harrison & Held as Special Counsel ------------------------------------------------------------------- Gina Krol, the trustee appointed in the Chapter 11 case of Woodlawn Community Development Corp., received approval from the U.S. Bankruptcy Court for the Northern District of Illinois to employ Harrison & Held LLP to help prepare the necessary documents to reinstate the company's not-for-profit status. Woodlawn's not-for-profit status had been revoked due to its failure to file its Forms 990 for 2016 to 2019, according to court filings. Harrison & Held will be paid a retainer of $3,000 for its services. Jonathan Strouse, Esq., the firm's attorney who will be providing the services, disclosed in court filings that he does not hold any interest adverse to Debtor and its bankruptcy estate. The firm can be reached through: Jonathan E. Strouse Harrison & Held LLP 333 West Wacker Drive, Suite 1700 Chicago, IL 60606 Telephone: (312) 753-6175 Email: jstrouse@harrisonheld.com About Woodlawn Community Development Founded in 1972, Woodlawn Community Development Corp. -- https://www.wcdcchicago.com/ -- manages and develops affordable housing for families in the Greater Metro Chicago area. Woodlawn Community Development filed a Chapter 11 petition (Bankr. N.D. Ill. Case No. 18-29862) on Oct. 24, 2018. In the petition signed by Leon Finney, Jr., president and chief executive officer, Debtor was estimated to have $50 million to $100 million in both assets and liabilities. The Hon. Carol A. Doyle oversees the case. David R. Herzog, Esq., at Herzog & Schwartz, P.C., is Debtor's bankruptcy counsel. WORKHORSE GROUP: Needs More Revenue, Funds to Remain Going Concern ------------------------------------------------------------------ Workhorse Group Inc. filed its quarterly report on Form 10-Q, disclosing a net income of $4,756,691 on $84,300 of net sales for the three months ended March 31, 2020, compared to a net loss of $6,264,172 on $364,182 of net sales for the same period in 2019. At March 31, 2020, the Company had total assets of $44,246,284, total liabilities of $66,242,912, and $21,996,628 in total stockholders' deficit. Workhorse Group said, "The Company has limited revenues and a history of negative working capital and stockholders' deficits. Our existing capital resources are expected to be sufficient to fund our operations through the second quarter of 2020. Unless and until we are able to generate a sufficient amount of revenue, reduce our costs and/or enter into a strategic relationship, we expect to finance future cash needs through public and/or private offerings of equity securities and/or debt financings. If we are not able to obtain additional financing and/or substantially increase revenue from sales, we will be unable to continue as a going concern. These conditions raise substantial doubt about the ability of the Company to continue as a going concern." A copy of the Form 10-Q is available at: https://is.gd/sXPEIG Workhorse Group Inc. designs, manufactures, builds, sells, and leases battery-electric vehicles and aircraft in the United States. It operates through two divisions, Automotive and Aviation. The company also develops cloud-based and real-time telematics performance monitoring systems that enable fleet operators to optimize energy and route efficiency. Its products include electric cargo vans, and medium and light-duty pickup trucks, as well as HorseFly delivery drones systems. The company was formerly known as AMP Holding Inc. and changed its name to Workhorse Group Inc. in April 2015. Workhorse Group Inc. was founded in 2007 and is headquartered in Loveland, Ohio. ZACKY & SONS: Taps Kidder Mathews as Real Estate Broker ------------------------------------------------------- Zacky & Sons Poultry, LLC received approval from the U.S. Bankruptcy Court for the Central District of California to employ Kidder Mathews of California to market and sell its industrial real property located at 1111 Navy Drive, Stockton, Calif. Kidder Mathews will get a 4 percent commission on the gross sale price in the event of a successful sale of the Stockton property, or a 3 percent commission in the event that real estate consultant Stapleton Group, Zacky & Sons or its secured lender Great Rock Capital Partners Management, LLC refers the buyer to Kidder Mathews and no other commission is payable to any third party. Kidder Mathews may cooperate with and share the commission equally with the licensed real estate broker representing the buyer. Bill Niethammer, senior vice president of Kidder Mathews, 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: Bill Niethammer Kidder Mathews of California 455 Capitol Mall, Suite 160 Sacramento, CA 95814 Telephone: (916) 751-3600 (916) 758-3639 Email: bill.niethammer@kidder.com About Zacky & Sons Poultry Zacky & Sons Poultry, LLC -- http://zackyfarms.com/-- is a grower, processor, distributor and wholesaler of poultry products in City of Industry, Calif. It offers turkey and chicken products such as sausages, franks and sliced meat. Zacky & Sons Poultry filed a Chapter 11 petition (Bankr. C.D. Cal. Case No. 18-23361) on Nov. 13, 2018. In the petition signed by Lillian Zacky, managing member, Debtor estimated $50 million to $100 million in assets and liabilities. Judge Robert N. Kwan oversees the case. Debtor hired Levene Neale Bender Yoo & Brill L.L.P. as bankruptcy counsel; GlassRatner Advisory & Capital Group, LLC as financial advisor; and LKP Global Law, LLP as special employment and labor counsel. [^] Recent Small-Dollar & Individual Chapter 11 Filings ------------------------------------------------------- In re Laredo Investments LLC Bankr. D. Nev. Case No. 20-12312 Chapter 11 Petition filed May 13, 2020 See https://is.gd/N5dzmT represented by: Michael J. Harker, Esq. LAW OFFICES OF MICHAEL J. HARKER E-mail: notices@harkerlawfirm.com In re Midwest Training and Ice Center, Inc. Bankr. N.D. Ind. Case No. 20-20990 Chapter 11 Petition filed May 13, 2020 See https://is.gd/s5FIfW represented by: Shawn D. Cox, Esq. HODGES AND DAVIS, P.C. E-mail: scox@hodgesdavis.com In re Dustin Duane Haber Bankr. D.S.D. Case No. 20-40180 Chapter 11 Petition filed May 13, 2020 represented by: Clair R. Gerry, Esq. In re Richard Marvin Cronk Bankr. D. Nev. Case No. 20-12313 Chapter 11 Petition filed May 13, 2020 represented by: David Winterton, Esq. In re Samuel Lee Crilly and Kimberly Deane Crilly Bankr. W.D. Okla. Case No. 20-11637 Chapter 11 Petition filed May 13, 2020 represented by: David B. Sisson, Esq. In re SR Clarke & Associates, LLC Bankr. D. Colo. Case No. 20-13318 Chapter 11 Petition filed May 14, 2020 See https://is.gd/sbu4bF represented by: Jonathan M. Dickey, Esq. BUECHLER LAW OFFICE, L.L.C. E-mail: jonathan@kjblawoffice.com In re Multimedia Advertising Services, LLC Bankr. N.D.N.Y. Case No. 20-60558 Chapter 11 Petition filed May 14, 2020 See https://is.gd/MX22wQ represented by: Peter A. Orville, Esq. ORVILLE & MCDONALD LAW, P.C. E-mail: Peteropc@gmail.com In re Sophie Harrison and Jarrod Harrison Bankr. N.D. Cal. Case No. 20-30404 Chapter 11 Petition filed May 14, 2020 In re Jay B. Reznick Bankr. C.D. Cal. Case No. 20-10905 Chapter 11 Petition filed May 14, 2020 represented by: James Selth, Esq. WEINTRAUB & SELTH, APC In re Dennis F. Vannier and Susan D. Vannier Bankr. W.D. Mo. Case No. 20-30224 Chapter 11 Petition filed May 14, 2020 represented by: David E. Schroeder, Esq. In re Jared Anthony Smith and Andrea Haliburton Smith Bankr. M.D. Tenn. Case No. 20-02565 Chapter 11 Petition filed May 15, 2020 represented by: LEFKOVITZ AND LEFKOVITZ, PLLC In re Michael Stuart Brown Bankr. C.D. Cal. Case No. 20-14485 Chapter 11 Petition filed May 15, 2020 represented by: Michael Chekian, Esq. In re HI Def Machining, LLC Bankr. S.D. Ind. Case No. 20-90573 Chapter 11 Petition filed May 15, 2020 See https://is.gd/qAIwrY represented by: James Guilfoyle, Esq. GUILFOYLE LAW OFFICE, LLP E-mail: james@guilfoylebankruptcy.com In re Ozzie C. McLemore Bankr. S.D. Fla. Case No. 20-15376 Chapter 11 Petition filed May 15, 2020 represented by: Stan Riskin, Esq. In re Benjamin R. McAfee Bankr. N.D. Ohio Case No. 20-31316 Chapter 11 Petition filed May 15, 2020 represented by: Steven L. Diller, Esq. In re Dennis F. Vannier and Susan D. Vannier Bankr. W.D. Mo. Case No. 20-30224 Chapter 11 Petition filed May 14, 2020 In re Christopher Scott Freeman Bankr. S.D. Fla. Case No. 20-15413 Chapter 11 Petition filed May 17, 2020 represented by: Aaron Wernick, Esq. WERNICK LAW, PLLC E-mail: awernick@wernicklaw.com In re Matthew Withington and Martha Cobo Bankr. S.D. Fla. Case No. 20-15425 Chapter 11 Petition filed May 18, 2020 represented by: Chad T. Van Horn, Esq. VAN HORN LAW GROUP, P.A In re Tikran Eritsyan Bankr. C.D. Calif. Case No. 20-10924 Chapter 11 Petition filed May 18, 2020 represented by: Vahe Khojayan, Esq. In re Invest Vegas, LLC Bankr. D. Nev. Case No. 20-12411 Chapter 11 Petition filed May 19, 2020 See https://is.gd/Cl3Mqt represented by: Steven L. Yarmy, Esq. STEVEN L. YARMY - ATTORNEY AT LAW E-mail: sly@stevenyarmylaw.com In re Exscien Corporation Bankr. S.D. Ala. Case No. 20-11364 Chapter 11 Petition filed May 18, 2020 See https://is.gd/AEikpX represented by: Jodi Daniel Dubose, Esq. STICHTER, RIEDEL, BLAIN & POSTLER, P.A. E-mail: jdubose@srbp.com In re Anthony Wilson, Sr. Bankr. S.D. Ala. Case No. 20-11359 Chapter 11 Petition filed May 18, 2020 represented by: Barry Friedman, Esq. In re Gerasimos Alivizatos Bankr. D. Md. Case No. 20-15354 Chapter 11 Petition filed May 19, 2020 represented by: George Roles, Esq. In re WorthFab, LLC Bankr. M.D. Ga. Case No. 20-10466 Chapter 11 Petition filed May 19, 2020 See https://is.gd/8xsCCD represented by: Wesley J. Boyer, Esq. BOYER TERRY LLC E-mail: Wes@BoyerTerry.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. 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