/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/200629.mbx T R O U B L E D C O M P A N Y R E P O R T E R Monday, June 29, 2020, Vol. 24, No. 180 Headlines 35NB LLC: Plan Payments to be Funded by Rental Income 7 HILLS INC: Has Until June 29 to File Amended Plan & Disclosures AAC HOLDINGS: S&P Cuts ICR to 'D' on Chapter 11 Bankruptcy Filing ACER THERAPEUTICS: Chief Medical Officer to Leave Next Month ACHAOGEN INC: Committee-Backed Plan Confirmed by Judge ADVANCED GREEN: Cochise Investments Objects to Disclosure Statement AEROVIAS DE INTEGRACION: Hires Brigard Urrutia as Special Counsel AFFORDABLE CARE: Moody's Confirms Caa2 CFR, Outlook Stable AIR CANADA: S&P Rates C$840MM Second-Lien Secured Notes 'B+' ALLIANCE RESOURCE: Moody's Alters Outlook on Ba3 CFR to Negative ALPHA ENTERTAINMENT: McMahon Cashed $1.35M Before Closing AMERICAN AIRLINES: S&P Assigns 'B+' Rating to $500M Term Loan B ANGELS TOUCH: Unsec. to Get Paid from 1st Community's Loan Proceeds ANIXTER INT'L: Fitch Cuts LT IDR to BB- on Acquisition Closure ANIXTER INTERNATIONAL: S&P Cuts ICR to BB-; Rating Off Watch Neg. APC AUTOMOTIVE: Gets Court Approval for $30M Chapter 11 Funding APTEAN INC: Moody's Affirms B3 CFR, Outlook Stable ARUBA INVESTMENTS: Fitch Assigns B+ IDR, Outlook Stable ARUBA INVESTMENTS: Moody's Rates First Lien Term Loans 'B1' ASCENA RETAIL: In Talks With Lenders on Potential Bankruptcy AVSC HOLDING: Moody's Cuts CFR to Caa3, Outlook Negative BANTEC INC: Brings UVC Robotic Cleaning Systems to Covid-19 Fight BIONIK LABORATORIES: Launches InMotion Connect Platform BLACKWOOD REDEVELOPMENT: Agrees to Reduce List Price to $3.995M BLUESTEM BRANDS: Unsec. Creditors to Recover Less Than 1% in Plan BOARDRIDERS INC: Moody's Alters Outlook on Caa1 CFR to Negative BOART LONGYEAR: S&P Lowers ICR to 'SD' on Secured Note Amendment BORR DRILLING LTD: Obtains Financial Lifeline By Restructuring Deal BOULDER CAB: Voluntary Chapter 11 Case Summary BRISTOW GROUP: S&P Raises 7.75% Senior Unsecured Note Rating to 'B' CALIFORNIA RESOURCES: Widens Net Loss to $1.7B in First Quarter CAMBER ENERGY: Raises $6M Through Sale of Series C Pref. Stock CANCER GENETICS: Incurs $1.2 Million Net Loss in First Quarter CARLSON TRAVEL: Moody's Lowers CFR to Caa3, Outlook Negative CARNIVAL CORP: S&P Cuts ICR to BB-; Ratings Remain on Watch Neg. CARPENTERS TECHNOLOGY: Moody's Cuts CFR to Ba3, Outlook Negative CATHEDRAL PLACE: Case Summary & 2 Unsecured Creditors CENTRIC BRANDS: Hires Hilco Real Estate as Consultant CENTRIC BRANDS: Unsecured Creditors to Receive Nothing in Plan CIRCLE BAR T: July 16 Plan & Disclosure Hearing Set COLUMBIA NUTRITIONAL: Unsecureds Owed $8.7M to Get At Least $1M COMMSCOPE INC: S&P Rates $700 Million Senior Unsecured Notes 'B-' COMSTOCK RESOURCES: Issues $500-Mil. 9.75% Senior Notes Due 2026 COMSTOCK RESOURCES: S&P Upgrades ICR to 'B-'; Outlook Stable CREATIVE HAIRDRESSERS: Sale to Tacit Salon Approved by Court CUMULUS MEDIA: Moody's Alters Outlook on B2 CFR to Negative DELPHI TECHNOLOGIES: Moody's Reviews B2 CFR Amid BorgWarner Deal DISH NETWORK: Moody's Lowers CFR to B1, Outlook Stable ELECTRONICS FOR IMAGING: Moody's Cuts CFR to Caa1, Outlook Neg. ELMHURST INVESTORS: Case Summary & 3 Unsecured Creditors ENERPAC TOOL: Moody's Withdraws Ba3 CFR on Debt Repayment ENSONO LP: Moody's Rates $76MM Add-On Secured Term Loan 'B2' ENTERPRISE DEVELOPMENT: Moody's Confirms Caa1 CFR, Outlook Negative ENVIVA PARTNERS: Fitch Affirms BB- Issuer Default Rating FENCEPOST PRODUCTIONS: Hires BerganKDV as Accountant FOLSOM FARMS: George Objects to Disclosure Statement FRANCHISE SERVICES: Delaware Bankr. Court Diverged From 5th Circuit GARDNER DENVER: S&P Rates New $400MM Senior Secured Term Loan 'BB+' GIBSON ENERGY: Moody's Assigns Ba2 Rating on C$650MM Unsec. Notes GNC HOLDINGS: Fitch Cuts LT IDR to 'D' on Chapter 11 Filing GOLDEN COMMUNICATIONS: Case Summary & 8 Unsecured Creditors GOODNO'S JEWELRY: July 23 Plan Confirmation Hearing Set GREEN PLAINS: Completes Debt Refinancing GRUPO FAMSA: Case Summary & 20 Largest Unsecured Creditors GRUPO FAMSA: Files Voluntary Chapter 11 Bankruptcy Petition HANJIN INTERNATIONAL: S&P Keeps 'CCC+' ICR on Watch Negative HB2 LLC: Plan of Reorganization Confirmed by Judge HELMUTH REAL: Voluntary Chapter 11 Case Summary HI-CRUS INC: Expects to File for Bankruptcy Protection HOLY REDEEMER: Fitch Downgrades IDR to BB+, Outlook Stable HOLY REDEEMER: Moody's Cuts Rating on $45MM Debt to Ba2 ICONIX BRAND: Iconix China to Sell Starter China for $16 Million IDEANOMICS INC: Regains Compliance with Nasdaq Min. Bid Price Rule INDIANA REGIONAL: Moody's Cuts Bond Rating to Ba3, Outlook Neg. INTELSAT CONNECT: Hires Ankura Consulting As Financial Advisor INTELSAT CONNECT: Hires Willkie Farr as Co-Counsel INTELSAT CONNECT: Seeks to Hire Sands Anderson as Co-Counsel INTELSAT ENVISION: Hires Crenshaw Ware as Conflicts Counsel INTELSAT ENVISION: Hires Province Inc. as Financial Advisor INTELSAT JACKSON: Hires Quinn Emanuel as Special Counsel INTELSAT JACKSON: Seeks to Hire Spotts Fain as Counsel INTELSAT LUXEMBOURG: Hires Berkeley Research as Financial Advisor INTELSAT LUXEMBOURG: Hires Jenner & Block as Counsel INTELSAT LUXEMBOURG: Hires Ronald Page as Virginia Counsel INTELSAT S.A.: Hires Alvarez & Marsal as Restructuring Advisor INTELSAT S.A.: Hires Evercore Group as Investment Banker INTELSAT S.A.: Hires KPMG LLP to Provide Audit Services INTELSAT S.A.: Hires Kutak Rock as Co-Counsel INTELSAT S.A.: Hires PJT Partners as Investment Banker INTELSAT S.A.: Hires Stretto as Administrative Advisor INTERPACE BIOSCIENCES: Posts $9.3 Million Net Loss in 1st Quarter J.C. PENNEY: $450 Million DIP Financing Has Court Approval J.C. PENNEY: Four Alabama Sites Included in 154-Store Closures J.C. PENNEY: Reopens Niles, Ohio Location JASON INC: Moody's Cuts PDR to D-PD on Chapter 11 Filing JASON INDUSTRIES: Enters Chapter 11 With Plan to Cut Debt by $250M JETBLUE AIRWAYS: Pulls Together Efforts to Prevent Furloughs JRV GROUP: RV World Objects to Disclosure & Plan KEYSTONE FILLER: July 24 Plan Confirmation Hearing Set KNOWLTON DEVELOPMENT: S&P Alters Outlook to Stable, Affirms B- ICR LATAM AIRLINES: Hires Claro & Cia as Special Counsel LATAM AIRLINES: Hires Ordinary Course Professionals LATAM AIRLINES: Hires PJT Partners as Investment Banker LATAM AIRLINES: Hires Prime Clerk LLC as Administrative Advisor LATAM AIRLINES: Seeks to Hire Cleary Gottlieb as Counsel LATAM AIRLINES: Seeks to Hire FTI Consulting as Financial Advisor LATAM AIRLINES: Seeks to Hire Ocean Tomo as IP Valuation Consultant LATAM AIRLINES: Seeks to Hire Togut Segal as Co-Counsel LEVEL SOLAR: June 30 Plan Confirmation Hearing Set M9 DEFENSE: Case Summary & 20 Largest Unsecured Creditors MAXAR TECHNOLOGIES: Moody's Rates New $150MM Sec. Notes 'B2' MCGINLEY FUNERAL: Seeks to Hire Morrison Tenenbaum as Counsel MEREDITH CORP: Moody's Assigns Ba3 Rating on New Secured Notes MEREDITH CORP: S&P Rates New $300MM Senior Secured Notes 'BB-' MEREDITH CORP: S&P Rates New $410MM Term Loan 'BB-' MURRAY METALLURGICAL: July 8 Plan Confirmation Hearing Set NA RAIL: Moody's Confirms CFR & Senior Secured Ratings at B2 NAI CAPITAL: Non-Insider Unsecureds to Get Paid from Estate Funds NEOVIA LOGISTICS: Moody's Cuts CFR to Caa2 & Term Loan to Caa1 NEW WAY TRANSPORT: Unsec. Creditors to Receive $25,000 over 5 Years O'LOUGHLIN LTD: June 30 Plan Confirmation Hearing Set OCCIDENTAL PETROLEUM: Fitch Hikes LT IDR to BB, Outlook Stable OCCIDENTAL PETROLEUM: Moody's Cuts CFR & Sr. Unsec. Rating to Ba2 ODYSSEY LOGISTICS: Moody's Cuts CFR to B3, Outlook Negative OMNI BAY COLONY: Unsecureds to Get Full Payment With 3% Interest OMNIQ CORP: Gets $5.5M Orders for Mobile Data Collection Equipment OUTLOOK THERAPEUTICS: Adds New Member to Board of Directors OUTLOOK THERAPEUTICS: Expects to Raise $11.2M from Stock Sale PACE INDUSTRIES: Joint Prepackaged Plan Confirmed by Judge PRAYER TABERNACLE: Case Summary & 20 Largest Unsecured Creditors PREMIER DENTAL: Moody's Lowers CFR to Caa1, Outlook Stable PROFESSIONAL DIVERSITY: Removes Interim Tag from CEO He PROFESSIONAL DIVERSITY: Stockholders Pass All Proposals at Meeting PROVECTUS BIOPHARMACEUTICALS: All Proposals Passed at Meeting PURPLE LINE: Fitch Cuts Rating on $313MM 2016A-D Bonds to B QUALITY DISTRIBUTION: S&P Affirms 'B-' ICR, Alters Outlook to Neg. RAVN AIR GROUP: Gets U.S. Treasury Approval for the CARES Act Sale REMARK HOLDINGS: Delays Filing of Quarterly Report RENAISSANCE INNOVATIONS: Unsecured Creditors to Get 13.5% in Plan RIGHT ON BRANDS: Delays Filing of Form 10-Q Due to COVID-19 RIVERDALE FINANCE: Fitch Affirms BB on $7.5MM Income Tax Bond ROCK POND: AMR Investment Objects to Disclosure Statemen1t RQW - REAL ESTATE: Aug. 13 Plan & Disclosure Hearing Set SEA OAKS: Country Club, Golf Course File for Chapter 11 Protection SILVERLINER LLC: Case Summary & 20 Largest Unsecured Creditors SOULA INC: July 23 Plan Confirmation Hearing Set SUNOPTA INC: Stockholders Pass All Proposals at Annual Meeting SYCAMORE PARTNERS: Talks With J.C. Penny for Possible Buyout TRINITY INDUSTRIES: Fitch Affirms 'BB' LT IDR, Outlook Stable TRUCK HERO: Moody's Confirms B3 CFR, Outlook Stable TUNNEL HILL: S&P Lowers ICR to 'B-' on Expected Operating Weakness UNIT CORP: Fitch Withdraws 'D' LongTerm IDR on Bankruptcy UNITED METHODIST: Unsecureds to Get $17K Per Month for 180 Months USA COMPRESSION: Fitch Affirms BB- LongTerm IDR, Outlook Negative VALERITAS HOLDINGS: Court to Confirm Chapter 11 Plan VERTEX ENERGY: All Four Proposals Passed at Annual Meeting VPR BRANDS: Issues $100K Unsecured Promissory Note to CEO WALTER P SAUER: Plan of Reorganization Confirmed by Judge WHITE'S PLACE: Unsecureds to Receive 100% Via Quarterly Payments YETI INVESTMENT: July 14 Disclosure Statement Hearing Set [*] Bankruptcy Sales During Pandemic Carry Hidden Risks [*] Clothing Stores Tremendously Impacted by Coronavirus Pandemic [*] Hayse Gives Warning Signs of Troubled Law Firms [*] Landlord Considerations with Troubled Healthcare Operators [*] Travel Industry Hit by Layoffs Amid Pandemic [] Jones Day: June Legislative Update on CARES Act [^] BOND PRICING: For the Week from June 22 to 26, 2020 ********* 35NB LLC: Plan Payments to be Funded by Rental Income ----------------------------------------------------- Debtor 35NB LLC filed with the U.S. Bankruptcy Court for the Southern District, Houston Division, a Plan of Reorganization and a Disclosure Statement on May 29, 2020. Class 2 claims of Regions Bank (Construction Loan) consist of the secured claims of Regions Bank, represented by a promissory note dated March 23, 2017 in the original principal amount of $3,587,000, secured by a Deed of Trust executed on even date therewith, granting the holder of the aforementioned obligation a lien on the real property commonly known as 3221 Commercial Circle New Braunfels, Texas 78132. Class 2 claim of Regions Bank (Equipment Loan) consists of the secured claim of Regions Bank, represented by a promissory note dated March 22, 2017 in the original principal amount of $900,000.00, secured by a Deed of Trust executed on even date therewith, granting the holder of the aforementioned obligation a lien on the real property commonly known as 3221 Commercial Circle New Braunfels, Texas 78132, Texas. Class 3 consists of the Secured Claim of County of Comal, Texas. The holder of Class 3 claims will be paid 100% of its claim through income provided by Debtor's continued business income. The Debtor will make monthly payments to this class, which shall be distributed pro rata to the claimants until the Debtor is discharged of its liability on debt. 35NB LLC intends to fund its plan of reorganization through the continued lease of its real property and by entering into a jointly administered plan agreement with its Co-Debtor (Regions Bank Loans), New Braunfels ER LLC, with Court approval. Income from the Debtor's business and jointly administered plan agreement with New Braunfels ER LLC will provide the primary means of funding the Plan. The Debtor is certain that this income will enable it to extinguish the majority of its debt. The Debtor believes the Plan to be feasible. A full-text copy of the Disclosure Statement dated May 29, 2020, is available at https://tinyurl.com/y9rufm5k from PacerMonitor at no charge. The Debtor is represented by: Nelson M. Jones III 440 Louisiana Street, Suite 1575 Houston, Texas 77002 Tel: 713-236-8736 Fax: 713-236-8990 E-mail: njoneslawfirm@aol.com About 35NB LLC 35NB LLC, a company based in Houston, Texas, filed a Chapter 11 petition (Bankr. S.D. Tex. Case No. 20-31457) on March 2, 2020. In the petition signed by Tom Vo, managing member, the Debtor was estimated to have $1 million to $10 million in both assets and liabilities. The Law Office of Nelson M. Jones III serves as the Debtor's bankruptcy counsel. 7 HILLS INC: Has Until June 29 to File Amended Plan & Disclosures ----------------------------------------------------------------- Judge Paul M. Black has entered an order within which Debtor 7 Hills, Inc. shall have until June 29, 2020 to submit the Amended Disclosure Statement and Amended Plan of Reorganization. A copy of the order dated May 29, 2020, is available at https://tinyurl.com/ybungemc from PacerMonitor at no charge. The Debtor is represented by: Andrew S. Goldstein, Esq. Magee Goldstein Lasky & Sayers, P.C. P.O. Box 404 Roanoke, VA 24003-0404 Telephone: (540) 343-9800 Facsimile: (540) 343-9898 About 7 Hills Inc. 7 Hills, Inc., based in Shawsville, VA, filed a Chapter 11 bankruptcy petition (Bankr. W.D. Va. Case No. 19-70804) on June 12, 2019. In the petition signed by Rajendra Patel, president, the Debtor was estimated to have $1 million to $10 million in both assets and liabilities. The Hon. Paul M. Black oversees the case. Andrew S. Goldstein, Esq., at Magee Goldstein Lasky & Sayers, P.C., serves as bankruptcy counsel to the Debtor. AAC HOLDINGS: S&P Cuts ICR to 'D' on Chapter 11 Bankruptcy Filing ----------------------------------------------------------------- S&P Global Ratings lowered its issuer credit rating on U.S.-Based AAC Holdings Inc. to 'D' from 'SD' (selective default). S&P's 'D' issue-level rating on the company's senior secured debt remains unchanged. The downgrade reflects AAC's Chapter 11 bankruptcy filing. According to its press release, the company will continue to operate through the bankruptcy process and has sourced $62.5 million of incremental financing. AAC has struggled due to heightened competition and reimbursement pressure. In addition, a change in Google's search algorithm in 2018 led to a severe decline in the company's admissions due to its heavy reliance on internet marketing to gain new patients. ACER THERAPEUTICS: Chief Medical Officer to Leave Next Month ------------------------------------------------------------ William T. Andrews, M.D., FACP, notified Acer Therapeutics Inc. of his intention to resign from his position as chief medical officer of the Company, effective as of July 8, 2020. About Acer Therapeutics Acer -- http://www.acertx.com/-- is a pharmaceutical company focused on the acquisition, development and commercialization of therapies for serious rare and life-threatening diseases with significant unmet medical needs. Acer's pipeline includes four clinical-stage candidates: emetine hydrochloride for the treatment of patients with COVID-19; EDSIVO (celiprolol) for the treatment of vascular Ehlers-Danlos syndrome (vEDS) in patients with a confirmed type III collagen (COL3A1) mutation; ACER-001 (a taste-masked, immediate release formulation of sodium phenylbutyrate) for the treatment of various inborn errors of metabolism, including urea cycle disorders (UCDs) and Maple Syrup Urine Disease (MSUD); and osanetant for the treatment of induced Vasomotor Symptoms (iVMS) where Hormone Replacement Therapy (HRT) is likely contraindicated. Each of Acer's product candidates is believed to present a comparatively de-risked profile, having one or more of a favorable safety profile, clinical proof-of-concept data, mechanistic differentiation and/or accelerated paths for development through specific programs and procedures established by the FDA. Acer reported a net loss of $29.42 million for the year ended Dec. 31, 2019, compared to a net loss of $21.28 million for the year ended Dec. 31, 2018. As of March 31, 2020, the Company had $16.14 million in total assets, $2.05 million in total liabilities, and $14.09 million in total stockholders' equity. BDO USA, LLP, in Boston, Massachusetts, the Company's auditor since 2019, issued a "going concern" qualification in its report dated March 18, 2020, citing that the Company has recurring losses and negative cash flows from operations that raise substantial doubt about the Company's ability to continue as a going concern. ACHAOGEN INC: Committee-Backed Plan Confirmed by Judge ------------------------------------------------------ Judge Brendan L. Shannon has entered findings of fact, conclusions of law, and order approving the Disclosure Statement and confirming the First Amended Plan of Liquidation jointly proposed by debtor Achaogen, Inc. and the Official Committee of Unsecured Creditors. The Debtor has proposed the Plan in good faith and not by any means forbidden by law, thereby satisfying 11 U.S.C. Sec. 1129(a)(3). In determining that the Plan has been proposed in good faith, the Court has examined the totality of the circumstances surrounding the formulation of the Plan. The Plan and the agreements implemented by the Plan (including the Committee Settlement and the Proceeds Stipulation, collectively, the "Settlement Agreements") are the result of extensive, arm's-length, good faith negotiations between and among the principal constituencies in this Chapter 11 Case. Furthermore, the Plan is in the best interests of the Estate, creditors, interest holders and other stakeholders. A copy of the order dated May 29, 2020, is available at https://tinyurl.com/y7jvgbcx from PacerMonitor at no charge. About Achaogen Inc. South San Francisco, California-based Achaogen, Inc. -- http://www.achaogen.com/-- is a biopharmaceutical company focused on the discovery, development, and commercialization of innovative antibacterial treatments against multi-drug resistant gram-negative infections. Achaogen sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D. Del. Lead Case No. 19-10844) on April 25, 2019. In the petition signed by CEO Blake Wise, the Debtor disclosed assets of $91.61 million and liabilities of $119.96 million as of Jan. 31, 2019. The case is assigned to Judge Brendan Linehan Shannon. The Debtor tapped Hogan Lovells US LLP as its bankruptcy counsel; Morris, Nichols, Arsht & Tunnell LLP as co-counsel; Meru LLC as financial advisor; Cassel Salpeter & Co., LLC as investment banker; and Kurtzman Carson Consultants LLC as claims, noticing and solicitation agent. Andrew Vara, acting U.S. trustee for Region 3, appointed a committee of unsecured creditors on April 23, 2019. The committee retained Akin Gump Strauss Hauer & Feld LLP and Klehr Harrison Harvey Branzburg LLP as its legal counsel, and Province, Inc., as its financial advisor. ADVANCED GREEN: Cochise Investments Objects to Disclosure Statement ------------------------------------------------------------------- Cochise Investments objects to the Disclosure Statement in support of Chapter 11 Plan of Reorganization jointly proposed by Debtors Advanced Green Innovations, LLC and its wholly owned subsidiaries ZHRO Solutions, LLC and ZHRO Power, LLC, CH4 Powers, LLC, and the Ad Hoc Committee of Certain Creditors dated May 2, 2020. Cochise Investments points out that the Disclosure Statement fails to address valuable undisclosed avoidance claims against Comanche Gas Solutions, LLC, and its principals (who are the Debtors' insiders and intend to serve on its board of directors through the Plan). Conchise Investments asserts that the Disclosure Statement fails to address the significant risk that the Debtors' bankruptcy petitions filed by Terry Kennon, Debtors' "President," were filed without proper authority. Conchise Investments further asserts that the Disclosure Statement fails to address existing turbine technology that threatens the viability of the CMT System. Conchise Investments objects that the Disclosure Statement fails to provide any description regarding how it will fund adversary litigation against Cochise, Dual Fuel, LLC, and Mr. Losch, the benefit of such litigation the Debtors expect to achieve, and an analysis showing the use of estate resources to pursue such litigation is appropriate. A full-text copy of Conchise Investments' objection to disclosure statement filed on June 4, 2020, is available at https://tinyurl.com/y829bluf from PacerMonitor.com at no charge. Attorneys for Cochise Investments: Michael A. Jones Philip J. Giles Cody D. Vandewerker ALLEN BARNES & JONES, PLC 1850 N. Central Avenue, Suite 1150 Phoenix, Arizona 85004 Office: (602) 256-6000 Fax: (602) 252-4712 E-mail: mjones@allenbarneslaw.com pgiles@allenbarneslaw.com cvandewerker@allenbarneslaw.com About Advanced Green Innovations Advanced Green Innovations LLC and its subsidiaries are clean energy companies developing and commercializing an array of green technologies. Advanced Green Innovations, LLC, ZHRO Power, LLC, and ZHRO Solutions, LLC sought Chapter 11 protection (Bankr. D. Ariz. Case No. 19-11766, 19-11768, and 19-11771) on Sept. 16, 2019. In the petitions signed by Terry Kennon, president, Advanced Green and ZHRO Solutions were each estimated to have up to $50,000 in assets and $1 million to $10 million in liabilities. ZHRO Power was estimated to have up to $50,000 in assets and $10 million to $50 million in liabilities. The Debtors tapped Michael W. Carmel, Ltd. as their bankruptcy counsel; and Jaburg & Wilk, P.C. as their special counsel. CH4 Power, LLC, the DIP Lender, and the ad hoc committee of creditors are represented by Stinson LLP. The Office of the U.S. Trustee appointed creditors to serve on the official committee of unsecured creditors on Oct. 28, 2019. AEROVIAS DE INTEGRACION: Hires Brigard Urrutia as Special Counsel ----------------------------------------------------------------- Aerovias de Integracion Regional S.A. seeks authority from the United States Bankruptcy Court for the Southern District of New York to employ Brigard Urrutia Abogados S.A.S. as its special Colombian counsel. Brigard's services will include: (a) reviewing and advising on general commercial and legal information sent by the Debtor; (b) advising on corporate and business matters required by the Debtor; (c) advising on matters related to the national and cross-border insolvency regime and reviewing the related effects and risks; (d) advising on aeronautical regulatory matters and monitoring implementation of such measures; (e) advising on the recognition of Chapter 11 proceeding before the Colombian competent insolvency court; (f) drafting and submitting of any filings, motions, petitions or any such documents as required under Colombian laws; (g) advising on various customs and trade matters; (h) advising in connection in certain judicial proceedings; (i) providing legal opinions in aircraft matters, including advising in connection with the Colombian Civil Aviation Authority, as well as aircraft financing; (j) advising on corporate share restructuring and transfers; (k) advising in connection with the Joint Business Agreement with Delta and its approval by the Colombian Civil Aviation Authority; (l) advising on an Interchange Agreement in connection to an aircraft; (m) advising on the matters before the Superintendence of Companies; (n) advising on the handling of exchange matters affecting bank accounts; (o) advising on corporate matters related to Dostrans. Brigard's hourly rates are: Partners $330 - $460 Directors $300 - $315 Senior associates $265 - $295 Mid-level associates $215 - $235 Junior associates $160 - $185 Brigard's fees include: -- Advice in connection with judicial proceedings against Egotur will be billed at a fixed fee of COP $100,000,000; -- Advice in connection with a request made by third parties within a normative review process before the Colombian Civil Aviation Authority will be billed at a fixed fee of COP $6,500,000; -- Advice on corporate share restructuring will be billed at a fixed fee of COP $7,000,000; -- Advice on share transfer between shareholders in Linea Aerea Carguera S.A. will be billed at a fixed fee of COP $5,800,000; -- Advice in connection with the Joint Business Agreement with Delta and its approval by the Colombian Civil Aviation Authority will be billed at a fixed fee of COP $90,000,000; -- Advice related to eight current aircraft financing will be billed at on an hourly basis, with a capped fee of $4,000 for each, except one which is capped at $10,000; -- Advice on the constitution of a movable guarantee on airplane engines will be billed on an hourly basis, with a capped fee of $4,000; -- Advice on an Interchange Agreement in connection to an aircraft will be billed on an hourly basis; -- Advice on a response to be filed before the Superintendence of Companies on foreign exchange matters will be billed at a fixed fee of COP $1,200,000; -- Advice on corporate matters related to Dostrans will be billed at a fixed fee of $1,375. On May 21, 2020, Brigard received a retainer in the amount of $50,000, of which approximately $40,000 was applied to prepetition fees and expenses. Jaime Robledo Vasquez, member of Brigard, assured the Court that the firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code and does not represent any interest adverse to the Debtors and their estates. The firm can be reached at: Jaime Robledo Vasquez Brigard Urrutia Abogados S.A.S. Calle 70 Bis # 4 - 41 Bogota Columbia Tel: (571) 346 2011 Ext: 8774 Email: jrobledo@bu.com About LATAM Airlines LATAM Airlines Group S.A. -- http://www.latam.com/-- is a pan-Latin American airline holding company involved in the transportation of passengers and cargo and operates as one unified business enterprise. LATAM Airlines Group S.A. is the largest passenger airline in South America. Before the onset of the COVID-19 pandemic, LATAM offered passenger transport services to 145 different destinations in 26 countries, including domestic flights in Argentina, Brazil, Chile, Colombia, Ecuador and Peru, and international services within Latin America as well as to Europe, the United States, the Caribbean, Oceania, Asia and Africa. LATAM Airlines Group S.A. and its 28 affiliates sought Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 20-11254) on May 25, 2020. Affiliates in Chile, Peru, Colombia, Ecuador and the United States are part of the Chapter 11 filing. The Debtors disclosed $21,087,806,000 in total assets and $17,958,629,000 in total liabilities as of Dec. 31, 2019. The Hon. James L. Garrity, Jr., is the case judge. Debtors tapped Cleary Gottlieb Steen & Hamilton LLP as general bankruptcy counsel; FTI Consulting as restructuring advisor; and Togut, Segal & Segal LLP and Claro & Cia in Chile as special counsel. Prime Clerk LLC is the claims agent. AFFORDABLE CARE: Moody's Confirms Caa2 CFR, Outlook Stable ---------------------------------------------------------- Moody's Investors Service confirmed the ratings of Affordable Care Holding Corp. including the Corporate Family Rating at Caa2, the Probability of Default Rating at Caa2-PD, and the first lien senior secured bank credit facility at Caa1. At the same time, Moody's changed the outlook to stable from rating under review. This concludes the rating review that was initiated on March 26, 2020. The confirmation of the Caa2 CFR reflects ACH's already high leverage and challenges resulting from the coronavirus pandemic. The rating also reflects the rising refinancing risk as ACH's revolver (now fully drawn) expires in October 2021. The potential for prolonged credit market disruption for highly leveraged companies increases refinancing risk as well as the risk that the company could pursue a transaction that Moody's deems to be a distressed exchange, and hence a default under Moody's definition. That said, ACH's affiliated practice revenues have ramped up in recent weeks as they re-opened supported by PPP loans from the stimulus package. Improved performance at the affiliated practices has a positive impact on ACH's revenue and liquidity. The stable outlook is reflective of Moody's view that volumes will recover toward pre-crisis levels in the next 12-18 months and reflects Moody's view that the default probability is appropriately captured at the current rating level of Caa2. Confirmations: Issuer: Affordable Care Holding Corp. Probability of Default Rating, Confirmed at Caa2-PD, Previously on Review for Downgrade Corporate Family Rating, Confirmed at Caa2, Previously on Review for Downgrade Senior Secured Bank Credit Facility, Confirmed at Caa1 (LGD3), Previously on Review for Downgrade Outlook Actions: Issuer: Affordable Care Holding Corp. Outlook, Changed to Stable from Rating Under Review RATINGS RATIONALE ACH's Caa2 Corporate Family Rating reflects its high financial leverage and weak free cash flow. ACH has limited revenue diversification with roughly 75% of revenue derived from denture services, which is mostly self-pay. The credit profile is also constrained by weaker operational performance resulting from volume declines experienced amidst the coronavirus pandemic. The credit profile also reflects rising refinancing risk (revolver expires in October 2021) and the risk that a significant and prolonged recession in the US could reduce longer-term demand for ACH's products. The rating is supported by ACH's strong market presence as the largest provider of dentures in the US, good geographic diversification across the U.S., and historically positive trends in same-store sales growth. Additionally, ACH has some ability to improve cash flow and liquidity by reducing new office openings and new dentist affiliation investments. Moody's considers ACH to have weak liquidity. The company has historically had negative free cash flow due to growth and acquisition spending. While the company can reduce these expenditures, Moody's expects ACH to have continued negative free cash flow in 2020 due to weakness from the coronavirus pandemic. Liquidity is supported by the company's approximately $55 million of cash as of March 31, 2020, which includes a fully drawn $50 million revolver. ACH has refinancing risk as its revolver expires in October 2021. Moody's considers coronavirus to be a social risk given the risk to human health and safety. Aside from coronavirus, ACH faces other social risks such as the rising concerns around the access and affordability of healthcare services. While Moody's does not consider the dental service organizations to face the same level of social risk as many other healthcare providers, ACH in particular, generates a majority of revenues from fee-for-service, out-of-pocket payments paid directly by patients. Further, ACH had a cybersecurity incident in mid-2019. As a result, the incident has led the company to invest further into its cybersecurity systems and practices, which should allow it to protect itself from future cyber-attacks. From a governance perspective, Moody's views ACH's growth strategy to be aggressive given its history of debt-funded acquisitions and high leverage. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The ratings could be downgraded if Affordable Care experiences prolonged operating disruption related to the coronavirus pandemic or ensuing economic downturn, further erosion of liquidity or refinancing risk increases. The ratings could be upgraded if Affordable Care improves liquidity, successfully refinances its debt maturities, and is able to return volumes to pre-crisis levels. ACH is a U.S. DSO which provides management and dental laboratory services to affiliated dental centers, primarily focused on dentures. Under management service agreements, ACH provides business support services necessary for the administration of the non-clinical aspects of the dental operations, while the affiliated practices, operated by dental practitioners, are responsible for providing dental care to patients. In addition to providing dental facilities (primarily leased from third parties), and dental supplies to the affiliated practices, the company also provides business operations, financial, marketing, and other administrative services. ACH is affiliated with 347 dental offices across 41 U.S. states. The company is owned by Berkshire Partners LLC, and had $277 million of LTM March 31, 2020 net revenue. As a privately-owned company, ACH discloses limited information publicly. The principal methodology used in these ratings was Business and Consumer Service Industry published in October 2016. AIR CANADA: S&P Rates C$840MM Second-Lien Secured Notes 'B+' ------------------------------------------------------------ S&P Global Ratings assigned its 'B+' issue-level rating and '5' recovery rating to Air Canada's proposed C$840 million second-lien secured notes due May 2024. S&P estimates second-lien secured creditors will have similar recovery prospects to unsecured creditors in its default scenario. The company's proposed C$840 million second-lien secured notes due May 2024 have a second lien on the same collateral as the first-lien debt S&P rates for Air Canada. This collateral includes certain real estate, slots, Pacific routes and related slots and gates, and ground service equipment. In its default scenario, S&P assumes the value of this collateral declines 50%-55% from recent appraisals, which it estimates would be sufficient to provide very high (90%-100%; rounded estimate: 95%) recovery to Air Canada's first-lien secured creditors. S&P estimates there will be no collateral remaining for the second-lien secured notes. As a result, the rating agency estimates second-lien secured lenders would receive modest (10%-30%; rounded estimate: 20%) recovery based on the remaining unpledged assets available that it assumes are shared pro rata with Air Canada's unsecured creditors. S&P's issuer credit rating on Air Canada is unchanged. The rating agency believes that, on issuing the proposed C$840 million second-lien notes, Air Canada would have raised approximately C$3 billion of new debt, which excludes about C$1 billion that was drawn under its revolving credit facilities. "In our view, proceeds from recently issued debt, along with Air Canada's C$576 million equity issuance, strengthen the company's liquidity position and provide additional financial flexibility to manage the uncertainty created by the COVID-19 pandemic. However, there is no material effect on our forecast credit measures since we net the majority of Air Canada's cash against debt," S&P said. "The ratings are on CreditWatch with negative implications to reflect the high degree of uncertainty about the timing of Air Canada's recovery from the effects of the COVID-19 pandemic and how severe they will be for the company. We expect to resolve the CreditWatch within the next several months, at which point we expect greater visibility regarding the effects of the outbreak on Air Canada's financial position and timing of a recovery," S&P said. ALLIANCE RESOURCE: Moody's Alters Outlook on Ba3 CFR to Negative ---------------------------------------------------------------- Moody's Investors Service affirmed Alliance Resource Operating Partners, L.P.'s Ba3 Corporate Family Rating and revised the rating outlook to negative from stable on substantially weaker coal industry fundamentals. Moody's also downgraded the company's Speculative Grade Liquidity Rating to SGL-3 from SGL-2. "Moody's expects slumping demand for electricity will lower demand for thermal coal and weaken earnings in 2020, resulting in credit metrics that test the boundaries of the rating" said Ben Nelson, Moody's Vice President -- Senior Credit Officer and lead analyst for Alliance Resource Operating Partners, L.P. Issuer: Alliance Resource Operating Partners, L.P. Speculative Grade Liquidity Rating, Downgraded to SGL-3 from SGL-2 Affirmations: Issuer: Alliance Resource Operating Partners, L.P. Corporate Family Rating, Affirmed Ba3 Probability of Default Rating, Affirmed Ba3-PD Senior Unsecured Regular Bond/Debenture, Affirmed B1, (LGD5) from (LGD4) Outlook Actions: Issuer: Alliance Resource Operating Partners, L.P. Outlook, Changed to Negative from Stable RATINGS RATIONALE The rapid spread of the coronavirus outbreak, deteriorating global economic outlook, low oil prices, and high asset price volatility have created an unprecedented credit shock across a range of sectors and regions. 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 Alliance's exposure to the breadth and severity of the shock and the deterioration in credit quality it has triggered as a result of the company's exposure to the coal sector, which is vulnerable to shifts in market demand and sentiment amid these unprecedented operating conditions. Moody's expects a very challenging year for the thermal coal industry in 2020. Domestic demand for thermal coal has been challenged in recent months by a mild winter season and historically low natural gas prices, which reduced volumes with the company's traditional customers and intensified competition in the region. The export market for thermal coal weakened significantly in 2019 and remains weak in 2020, which, combined with weaker volumes from domestic customers, has further intensified competition in eastern coal basins and depressed pricing by redirecting coal back into the domestic market. Overlaid with these concerns is the global coronavirus outbreak and unprecedented shock to the global economy in the second quarter of 2020. Moody's has observed a sharp decline in the demand for electricity in the United States and, therefore, the demand for thermal coal in Alliance's region. The severity of the decline and pace of the eventual recovery remain highly dependent on an unresolved public health situation, and the specific measures taken to address it. Coal production has received a critical infrastructure designation by the U.S. Department of Homeland Security, but the ability to operate depends on local circumstances, including demand for coal and health and safety conditions of individual mining operations. Moody's expects that Alliance's EBITDA will fall to $275-$300 million in 2020, down from about $600 million in 2019, and pre-distribution free cash flow generation will be reduced substantially. The steep decline in earnings and cash flow generation is driven by substantially lower demand for thermal coal combined with lower prices in domestic and international markets. Uncertainty around the pace and timing of economic recovery, particularly with infection rates increasing in parts of the country that consume coal, increases downside risk. Alliance's credit metrics are expected to weaken meaningfully for the rating, including adjusted financial leverage rising toward or above 2.75x (Debt/EBITDA) from 1.7x for the twelve months ended March 31, 2020. Moody's also believes that investor concerns about the coal industry's ESG profile are intensifying and coal producers will be increasingly challenged by access to capital issues in the early 2020s. An increasing portion of the global investment community is reducing or eliminating exposure to the coal industry with greater emphasis on moving away from thermal coal. The aggregate impact on the credit quality of the coal industry is that debt capital will become more expensive over this horizon, particularly in the public bond markets, and other business requirements, such as surety bonds, which together will lead to much more focus on individual coal producers' ability to fund their operations and articulate clearly their approach to addressing environmental, social, and governance considerations -- including reducing net debt in the near-to-medium term. Alliance reported about $800 million of debt at March 31, 2020. The Ba3 CFR is principally constrained by the challenges of operating with meaningful balance sheet debt in an industry that faces substantial cyclical and structural issues, including: (i) substantial near-term decline in demand for thermal coal following the global outbreak of coronavirus; (ii) ongoing secular decline in the demand for thermal coal in the United States; (iii) volatility in export prices that makes it difficult for companies to maintain export volumes through price cycles; and (iv) rapidly emerging ESG-related issues with an adverse impact on access to capital and, therefore, debt capacity. Alliance's rating is supported by the company's (i) low cost position; (ii) size, scale, and geographic and operational diversity; and (iii) willingness to reduce or eliminate the distribution to unitholders of its master limited partnership during difficult market conditions. Moody's expects the company will take actions to preserve cash flow and maintain credit metrics in the coming quarters. However, given the magnitude and scope of the challenges, the rating could come under pressure if Moody's expects that the company will burn cash or liquidity is likely to be constrained. The rating is particularly vulnerable to further reduction in thermal coal prices, resurgent outbreaks that force the company to halt or lower production at various mining complexes, or coal consumption trends are not expected to show at least modest improvement in 2021. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The negative outlook reflects expectations for weakening credit metrics and narrowing cushion of compliance under financial maintenance covenants. Moody's could downgrade the ratings with expectations for adjusted financial leverage sustained above 2.75x (Debt/EBITDA), negative free cash flow, or further intensification of ESG concerns that call into question the company's ability to handle upcoming debt maturities. Moody's could upgrade the ratings with meaningful improvement in industry conditions, a surge in demand from electric utilities, or expectations for positive cash flow generation amid the stressed pricing environment. Stabilizing the rating outlook would require improvement in coal markets, a clear path to stronger credit metrics, and better understanding of the company's plan to address potential challenges related to access to capital. The SGL-3 reflects adequate liquidity to support operations over the next 12-18 months. Alliance reported roughly $260 million of available liquidity at March 31, 2020, comprised of $30 million of cash and $229 million of availability under its revolving credit facility. The company extended the maturity of its revolving credit facility to 2024 in early March and the commitment will fall from $537.75 million to $459.5 million on May 2021. Moody's expects a narrowing cushion of compliance under financial maintenance covenants in the coming quarters, which, combined with weaker cash flow generation, led to the downgrade in the SGL rating to SGL-3 from SGL-2. Environmental, social, and governance factors have a material impact on Alliance's credit quality. The company is exposed to ESG issues typical for a company in the coal mining industry, including increasing global demand for renewable energy that is detrimental to demand for coal especially in the United States and Western Europe. Moody's believes thermal coal carries a higher ESG risk profile than metallurgical coal, which increases environmental-related risks for Alliance. Moody's regards the coronavirus outbreak as a social risk under the ESG framework given the substantial implications for public health and safety. An outbreak in any one of Alliance's mines could force the company to halt production and thus have negative rating implications. Alliance is a publicly traded company, which is a positive factor in the analysis of governance risk, and a master limited partnership, which is a negative factor because MLPs typically distribute most or all of their free cash flow. Alliance paid more than $500 million in distributions in 2018 and 2019, but is expected to suspend distributions in the following quarters in response to the challenging operating environment. The high proportion of insider ownership, which is 33% of total outstanding shares, is also a negative factor influencing Alliance's governance risk profile. The principal methodology used in these ratings was Mining published in September 2018. ALPHA ENTERTAINMENT: McMahon Cashed $1.35M Before Closing --------------------------------------------------------- XFL News Hub reports that Alpha Entertainment founder and owner Vince McMahon cashed out nearly $1.35 million before XFL shut. "Those outlays, three days before XFL parent company Alpha filed Chapter 11 bankruptcy, went to none of the many hundreds of now creditors who have filed claims totaling about $22.4 million, whether they be players, coaches, ad agencies or stadium operators. Except for one: WWE Entertainment, XFL founder Vince McMahon's own company. According to Alpha bankruptcy filings this week, on that day the XFL paid WWE $602,707.75 for services. Including a payment on March 31, after McMahon had set the wheels in motion for the bankruptcy, the XFL paid WWE, which did back-office work and marketing for the fledgling league, $1.35 million," Daniel Kaplan of The Athletic said. Kaplan goes on to say that WWE was so involved with the league that they were designing the XFL Championship Trophy. "Another former XFL official said the WWE's role went beyond finance and accounting, but to marketing as well. WWE was even designing the trophy for the never held XFL championship game, this source said." WWE defended itself, saying, "Shared services helped us efficiently jump start operations before we staffed up and they have helped us proceed through Chapter 11. Any claim to the contrary is totally uninformed and naive." It should be noted that the XFL and McMahon paid its players and employees for the season before shutting down. The article failed to mention the $6,398,793.54 paid to all its employees, staff, and players on April 9th. Something the AAF did not do when they shutter their league in 2019 after 8 games. Who gets paid? "If the XFL were to be sold, the first $9 million -- if the sale fetches that much -- would go to McMahon. In late March, rather than put in more equity, he lent the money to the XFL, thereby becoming the first in line creditor." The $9 million put in on March 25th by Vince McMahon was 3 days after the league sent its Thank You message to fans for a great season. With the season cut in half, this capital gave the league some breathing room to decide the next course of action. With 20 potential buyers and 6 more interested parties on the way according to Houlihan Lokey, the investment bank involved in the sale. Let's hope the XFL can fetch more than $9 million. More than likely if the XFL sale happens, McMahon will get a fraction of the money he put in back. The big unanswered question will always be, should he have furlough his employees or declared Chapter 11. McMahon declared he was out of the running of the XFL two weeks ago. About Alpha Entertainment Alpha Entertainment LLC, which does business as the "Xtreme Football League" -- https://www.alphaentllc.com/ -- is a professional American football league. The XFL kicked off with games beginning in February 2020. The XFL offered fast-paced, three-hour games with fewer play stoppages and simpler rules. The XFL featured eight teams, 46-man active rosters, and a 10-week regular season schedule, with a postseason consisting of two semifinal playoff games and a championship game. The eight XFL teams were the DC Defenders, the Dallas Renegades, the Houston Roughnecks, the Los Angeles Wildcats, the New York Guardians, the St. Louis BattleHawks, the Seattle Dragons, and the Tampa Bay Vipers. Alpha Entertainment LLC, based in Stamford, CT, filed a Chapter 11 petition (Bankr. D. Del. Case No. 20-10940) on April 13, 2020. In its petition, the Debtor was estimated to have $10 million to $50 million in both assets and liabilities. The petition was signed by John Brecker, independent manager. The Hon. Laurie Selber Silverstein oversees the case. The Debtor hired Young Conaway Stargatt & Taylor, LLP; and Donlin Recano & Company, Inc., as claims agent and administrative advisor. AMERICAN AIRLINES: S&P Assigns 'B+' Rating to $500M Term Loan B --------------------------------------------------------------- S&P Global Ratings assigned its 'B+' issue-level rating and '1' recovery rating to American Airlines Inc.'s proposed $500 million term loan B due 2024 and $1.5 billion secured notes due 2025. The '1' recovery rating indicated S&P's expectation that lenders would receive very high (90%-100%; rounded estimate: 95%) recovery of their principal in the event of a payment default. S&P also reassessed all existing recovery ratings and rounded estimates because of the higher level of secured debt in the capital structure, which includes the proposed transactions as well as the proposed $4.75 billion government loan secured by the company's frequent flyer program expected to close at the end of June 2020. As a result, S&P took the following rating actions on the company's existing issues: -- Affirming S&P's 'B+' rating on the company's existing first-lien term loan secured by slots, gates, and routes (SGR) at London Heathrow. The recovery rating remains unchanged at '1', but it is revising its recovery percentage to 90% from 95%. -- Lowering S&P's ratings on American's revolvers and term loans secured by SGR in Latin America airports (the former) and slots at Washington National and New York LaGuardia airports (the latter) to 'B' from 'B+'. The recovery rating on both is revised to '2' from '1', indicating S&P's expectation that lenders would receive substantial (70%-90%) recovery of their principal in a payment default, with a rounded estimate of 80% on the former and rounded estimate of 70% on the latter." -- Lowering S&P's rating on the company's revolver and term loan secured by spare parts to 'B-' from 'B+'. The recovery rating is revised to '3' from '1', indicating S&P's expectation that lenders would receive meaningful (50%-70%; rounded estimate: 65%) recovery of their principal in the event of a payment default." -- Affirming S&P's 'CCC' rating on American's outstanding unsecured notes. The '6' recovery rating remains unchanged, indicating S&P's expectation that lenders would receive negligible (0%-10%) recovery of their principal in the event of a payment default. However, S&P is revising the rounded recovery percentage to 5% from 0%. The term loan B and secured notes are secured on a first-lien basis by takeoff and landing slots, foreign gate leaseholds, and route authorities at certain airports in Mexico, Australia, Canada, the Caribbean, Central America, China, Hong Kong, Japan, South Korea, and Switzerland, and on a second-lien basis by certain SGR at London's Heathrow Airport and certain airports in Europe. S&P bases its ratings on the credit quality of American and its analysis of recovery prospects for lenders in a hypothetical bankruptcy scenario. International routes are rights granted by the U.S. Department of Transportation, and can be (and have been) sold from one airline to another. Takeoff and landing slots are held at some U.S. and international airports. Appraisers value such collateral as a business operated by the airline currently using them by estimating future earnings or cash flows and discounting them to arrive at a value. In its recovery analysis, S&P assumes the proposed collateral remains under the control of American in bankruptcy because they are important sources of earnings and cash flow with good growth potential. ISSUE RATINGS--RECOVERY ANALYSIS Key Analytical Factors -- The proposed senior secured term loans and notes will be collateralized by route authorities and airport landing and take-off slots, used by American to provide services between the U.S. (excludes New York LaGuardia Airport and Ronald Reagan Washington National Airport) and certain international airports, including airports in Asia, Australia, Central America, Mexico, Caribbean, Canada and Switzerland. Proceeds will be used for the repayment of the $1 billion 364-day delayed drawn term loan facility, with the rest for other general corporate purposes. -- The declines in recovery assessment on the existing credit facilities, namely the term loans and revolvers collateralized by slots/gates/routes at Latin America, and spare parts, are mostly driven by the new $4.75 billion term loan that is secured by American's AAdvantage Loyalty Program. While this debt does not have a priority claim to other assets, S&P expects the company to continue to honor the obligation under the loyalty program through a bankruptcy restructure, which will reduce the enterprise value available to cover other obligations. In S&P's view, the value of the loyalty program is intrinsically embedded in the company's business and already captured in the Discrete Asset Valuation analysis that the rating agency uses to value the firm. To factor this new claim into its recovery waterfall, S&P effectively treats it as a priority claim and has proportionally reduced the assumed recovery value of the assets available to other creditors. -- S&P continues to expect negligible recovery for the existing unsecured notes in a hypothetical Chapter 11 proceeding. Value available for the unsecured notes is diluted by the incremental secured debt associated with the proposed financing transaction, as well as promissory notes under the CARES Act payroll protection program, and American's large unfunded pension and other post-employment benefits (OPEB), which S&P expects to have an unsecured claim in restructuring, as is a portion of the capacity service agreements. -- In addition, S&P believes the $4.75 billion of senior secured loan expected through the CARES Act loan program would further disadvantage the existing unsecured noteholders given their more senior position in the payment waterfall. Simulated Default Scenario -- S&P's simulated default scenario assumes a default in 2022, reflecting a significant decline in cash flow from impaired demand for air travel, and a prolonged economic downturn. -- S&P has valued the company on a discrete asset basis since certain creditors receive priority claims against specific assets. S&P expects lenders would pursue the specific collateral pledged to them. -- S&P's analysis reflects its estimate of the value of the various assets at default based on net book value for current assets and appraisals for aircraft, routes, landing/takeoff slots and spare parts, after adjusting for asset-specific realization rates in a distressed scenario. Any residual value after satisfying the respective secured debt would flow to benefit the unsecured claims. Simplified Waterfall -- Simulated year of default: 2022 -- Net Enterprise Value (after 5% admin. costs): $28.9 bil. -- Valuation split in % (Obligors/Equipment and Aircraft): 44/56 -- Value available to 2013 credit facilities including 2013 revolver and term loan (secured by SGR in Latin America airports): $2,071 mil. -- 2013 credit facilities claims: $2,623 mil. -- Estimated recovery through deficiency claims: $59 mil. -- Recovery expectations: 70% to 90% (rounded estimate 80%) -- Value available to 2014 credit facilities including 2014 revolver and term loan(secured by SGR in London Heathrow airport): $2,692 mil. -- 2014 credit facilities claims: $2,945 mil. -- Estimated recovery through deficiency claims: $27 mil. -- Recovery expectations: 90% to 100% (rounded estimate 90%) -- Value available to the proposed SGR secured first-lien debt claims (secured by various international SGRs): $2,939 mil. -- Non-US SGR secured first-lien debt claims: $2,103 mil. -- Recovery expectations: 90% to 100% (rounded estimate 95%) -- Value available to December 2016 credit facilities (secured by SGR in Washington National and New York LaGuardia airports): $894 mil. -- December 2016 credit facilities claims: $1,245 mil. -- Estimated recovery through deficiency claims: $37 mil. -- Recovery expectations: 70% to 90% (rounded estimate 70%) -- Value available to the spare parts term loan and revolver: $894 mil. -- Spare parts first-lien debt claims: $1,463 mil. -- Estimated recovery through deficiency claims: $60 mil. -- Recovery expectations: 50% to 70% (rounded estimate 65%) -- Value available to unsecured claims: $1,412 mil. -- Total senior unsecured claims: $3,792 mil. -- Other non-debt unsecured claims (including pari-passu secured deficiency claims): $9,541 mil. -- Recovery expectations: 0% to 10% (rounded estimate 5%) Notes: All debt amounts include six months of prepetition interest. Collateral value equals asset pledge from obligors after priority claims plus equity pledge from non-obligors after non-obligor debt. S&P rates the company's equipment trust certificates although under different criteria; those ratings are not included in this analysis. ANGELS TOUCH: Unsec. to Get Paid from 1st Community's Loan Proceeds ------------------------------------------------------------------- An Angel's Touch LLC, a New Mexico limited liability company, filed with the U.S. Bankruptcy Court for the District of New Mexico a Disclosure Statement describing Plan of Reorganization dated June 4, 2020. The Debtor is managed by Philip C. Warfield, and Nichole Jones, its sole members. Prepetition, the Debtor paid Mr. Warfield and Ms. Jones $50,000 per year, paid for life insurance for Mr. Warfield and Ms. Jones, and also paid certain of their personal expenses. Since filing the bankruptcy case, the Debtor has ceased paying personal expenses of its managing members, and has reduced payments to Ms. Jones and Mr. Warfield to $3,000 per month per person. Post-confirmation, the Debtor intends to continue to pay Ms. Jones and Mr. Warfield $3,000 per month, but may increase that amount if the Debtor's business is profitable enough to warrant doing so. The Debtor intends to continue paying for life insurance as a benefit for Ms. Jones and Mr. Warfield, but does not intend to pay personal expenses for them. Under the Plan, the shares of the Debtor's former equity holders shall be canceled. Philip C. Warfield shall collectively make a capital contribution in the amount of $600,000, representing proceeds of a loan from First Community Bank of Las Vegas as a condition to effectiveness of the Plan. In exchange for the capital contribution, Mr. Warfield will receive a 51% interest in the reorganized debtor, and Ms. Nichole Jones will receive a 49% interest therein. Class 8 Claims consist of the general unsecured non-priority claims against the Debtor not otherwise classified. Class 8 Claims will receive on the Effective Date a pro rata distribution from the remaining proceeds of the capital contribution of Philip C. Warfield of $600,000, proceeds of the loan from First Community Bank of Las Vegas, after payments from the same for Administrative Expenses, Unclassified Priority Tax Claims, and Class 2 and 3 Claims. Class 8 is Impaired. The Class 9 Unsecured Claim of Phillip C. Warfield will receive no payment. Class 9 is Impaired. The majority of payments under the Plan will occur on the Effective Date as a result of proceeds of a loan to be obtained by Philip C. Warfield from 1st Community Bank of Las Vegas. A full-text copy of the Disclosure Statement dated June 4, 2020, is available at https://tinyurl.com/y8ysezk7 from PacerMonitor.com at no charge. Attorneys for the Debtor: ASKEW & WHITE, LLC Daniel A. White 1112 Central Ave. SW, Ste. 1 Albuquerque, NM 87102 Tel: (505) 433.3097 Fax: (505) 717.1494 E-mail: dwhite@askewwhite.com About An Angel's Touch An Angel's Touch LLC, which provides non-emergency transportation services, sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D.N.M. Case No. 19-11394) on June 11, 2019. In the petition signed by its managing member, Nichole Jones, the Debtor was estimated to have assets of less than $500,000 and debts of $10 million. Judge Robert H. Jacobvitz is assigned to the case. Askew & Mazel, LLC, serves as Debtor's counsel. ANIXTER INT'L: Fitch Cuts LT IDR to BB- on Acquisition Closure -------------------------------------------------------------- Fitch Ratings has downgraded the Long-Term Issuer Default Ratings of Anixter International, Inc. and Anixter, Inc. to 'BB-' and has removed the Rating Watch Negative. Fitch has also withdrawn the IDRs for both entities. Fitch has additionally downgraded AXE's 5.5% senior unsecured notes due 2023 and the 6.0% senior unsecured notes due 2025 to 'BB-'/'RR4' and assigned a rating of 'B'/'RR6' to WESCO International Inc.'s approximately $540 million of preferred shares. The rating actions reflect the closing of the acquisition of Anixter by WCC and the application of Fitch's Parent-Subsidiary Criteria to equalize the IDR of the two entities. WESCO's IDR of 'BB-' is driven by the significant increase in leverage that occurred from the issuance and assumption of approximately $3.9 billion of debt to purchase Anixter International, coupled with weak end markets as a result of the coronavirus outbreak and low commodity prices. The company is targeting a net leverage ratio of less than 3.5x within three years; however, this is largely contingent on the full recovery of end markets and the repayment of a significant amount of debt. Fitch believes the company will be able to de-lever relatively quickly following the close of the transaction as FCF generally remains stable during downturns due to the selloff of working capital, which will allow the company to deploy cash towards reducing revolver balances and repaying upcoming 2021 bond maturities. Supporting factors for the rating include a significant increase in size and scale, and a strengthened market position from the combination of the two businesses. KEY RATING DRIVERS High Post-Transaction Leverage: Fitch expects that WCC's leverage (total debt with equity credit/EBITDA) will be elevated in the mid- to high-7x range on a pro forma basis at YE 2020, due to debt issued to buy Anixter International, including preferred shares, and expected double-digit revenue declines from the impact of coronavirus. The company has a net leverage target of less than 3.5x within three years of close; however, the current economic disruption could delay the anticipated timeline. Fitch expects leverage to decline materially to the mid-4x range by YE 2022 and below 4.0x by YE 2023 as sales recover, cost synergies are realized, and the company uses FCF to repay upcoming bond maturities and ABL revolver balances. Stable Cash Flow Generation: WESCO has consistently generated strong FCF, which Fitch views as a positive credit driver. Cash generation is typically counter-cyclical for distributors as they have the flexibility to unload inventory while scaling back purchases in periods of downturn. Fitch expects WCC will have FCF margins above 2% in 2020 as the company liquidates working capital. Consolidated FCF will be modestly lower in 2021 and 2022 as the company spends cash on restructuring and capex to integrate Anixter and achieve cost synergies. Fitch believes long-term FCF margins will stabilize between 2.5% and 3.0% of annual revenue. Current Headwinds: Fitch believes that WESCO will experience a moderate impact from the coronavirus outbreak, with sales to industrial and construction end markets likely to be to most affected in the near term. Fitch estimates organic 2020 sales are likely to decline by mid-teen digits before mostly recovering in 2021. This will lead to higher near-term leverage; however, the company's counter-cyclical cash flow should allow it to maintain financial flexibility and repay debt including $500 million of unsecured notes due December 2021. Increased Diversification: The merger with Anixter International increases the consolidated company's diversification, as legacy WCC was somewhat concentrated in the industrial and construction end markets. AXE's focus on data communications provides a complementary and more stable business. Both companies are well diversified by customer, with no customer totaling more than 4% of revenue. The majority (>70%) of the pro forma company's revenue is generated in the U.S.; however, Anixter's larger international presence expands legacy WESCO's geographic footprint which could lead to cross selling opportunities. Narrow Operating Margins: WCC's EBITDA margins have averaged about 5% over the last three years, which is relatively weak but in line with industry peers. The merger with Anixter does not fundamentally change the company's profitability profile; however, management believes it can achieve cost synergies of $200 million or more within three years mainly through supply chain, facility, and administrative consolidation. Through the medium term this should drive EBITDA margins towards 6%, with potential additional upside. Strong Market Position: Fitch believes WCC's top market position in the electrical distribution industry is a strong positive factor of the credit profile. The combination with Anixter solidifies the company as the number one electrical and data communication distributor in North America with a market share of approximately 13%. The overall market remains highly fragmented, with few competitors with meaningful market share. Fitch expects that WESCO will resume its acquisitive posture once the integration with Anixter is complete and the company is on track for its leverage reduction targets. Increased Size and Scale: WCC's purchase of Anixter effectively doubles the company's size, which has beneficial impacts on the operating profile. Fitch believes there are modest competitive advantages provided by increased scale, including cost savings from a consolidated supply chain and increased market position defensibility through broad customer and supplier relationships. Aside from the company's projected cost synergies, there could be additional benefits from revenue synergies that accelerate growth. DERIVATION SUMMARY WESCO has an operating profile similar to IT focused distributors such as Avnet, Inc. (BBB-/Stable), Ingram Micro Inc. ('BBB-'/Stable) and Arrow Electronics, Inc. ('BBB-'/Stable) with EBITDA margins in the mid-single digits and counter-cyclical free cash flow. However, post-acquisition leverage is expected to be significantly higher. Compared to more industrial focused distributors such as W.W. Grainger, Inc. (NPR) and HD Supply, Inc. (NPR), WESCO has greater scale, significantly slimmer profitability margins, higher leverage and comparable end-market cyclicality. KEY ASSUMPTIONS Fitch's Key Assumptions Within its Rating Case for the Issuer -- Organic revenue declines by mid- to high-teen percentage in 2020 due to coronavirus impacts before rebounding mostly in 2021 and resuming growth in mid-single digits by 2022; -- Operating margins decline modestly in 2020 due to lower revenue, but cost synergies are gradually realized with EBITDA margins sustaining above 6% by 2023; -- Working capital reduction provides a cash inflow in 2020 and 2021 as the company unloads inventory and reduces purchases. Working capital is a usage of cash in 2022 and beyond as the company focuses on growth initiatives; -- The company spends approximately $140 million from 2020 to 2022 to achieve cost synergies; -- Capex is elevated in 2020 and 2021 to facilitate growth efforts, mostly centered around IT investments. Capex returns to approximately 0.5% in 2022; -- WCC repays all upcoming bond maturities with FCF; -- Excess cash flow is used to moderately repay AR and ABL facility borrowings; -- Total debt with equity credit at YE 2020 is approximately $5.4 billion. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- The company successfully executes on its deleveraging strategy, with leverage (total debt with equity credit/operating EBITDA) sustaining below 4.0x and FFO leverage sustaining below 4.5x; -- EBITDA margins sustain above 6%; -- FCF margins sustain above 3.5%. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- Leverage sustains above 5.0x; -- FFO Interest coverage sustains below 2.5x; -- FCF margins are consistently below 2%; -- Excess cash is used for share repurchases as opposed to debt repayment. 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 Liquidity: As of March 31, 2020, WESCO had sufficient liquidity of $790 million, comprised of $343 million of available cash and $447 million of ABL revolver availability, net of $100 million in borrowings, letters of credit and borrowing base reserves. The company had no available capacity under its AR securitization facility. Debt Structure: WCC's capital structure as of March 31, 2020 consisted of $100 million outstanding on a $600 million ABL facility, a fully drawn $600 million AR securitization facility, $850 million of senior unsecured notes, and $39 million of other debt. In May, 2020 WCC issued $1.5 billion of 7.125% senior unsecured notes due in 2025 and $1.325 billion of 7.250% senior unsecured notes due in 2028 to fund the Anixter 2023 and 2025 note tender offer and the remaining cash purchase price. WCC upsized its ABL revolver and AR securitization to approximately $1.1 billion and $1.025 billion, respectively, in coordination with the close of the Anixter merger, and issued approximately $540 million of preferred stock to existing Anixter shareholders. Fitch assigns 50% equity credit to the preferred shares. 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. Anixter International Inc. - LT IDR BB-; Downgrade - LT IDR WD; Withdrawn WESCO International, Inc. - Preferred; LT B; New Rating Anixter Inc. LT IDR BB-; Downgrade - LT IDR WD; Withdrawn - Senior unsecured; LT BB-; Downgrade ANIXTER INTERNATIONAL: S&P Cuts ICR to BB-; Rating Off Watch Neg. ----------------------------------------------------------------- S&P Global Ratings lowered its issuer credit rating on Illinois-based Anixter International Inc. to 'BB-' from 'BB', in line with the issuer credit rating on Pennsylvania-based WESCO International Inc., and removed the rating from CreditWatch negative. The outlook is stable. S&P lowered its issue-level ratings on Anixter Inc.'s 5.50% senior notes due 2023 and 6.00% senior notes due 2025 to 'B+' from 'BB' and revised the recovery rating to '5' from '4'. S&P also withdrew its issue and recovery ratings on Anixter Inc.'s 5.125% senior notes due 2021 because this rated debt has been defeased. Subsequently, S&P withdrew its issuer credit ratings on Anixter International Inc. and Anixter Inc. The rating actions follow the closing of WESCO International Inc.'s acquisition of Anixter International Inc. Now that this transaction has closed, Anixter has become a wholly owned subsidiary of WESCO International. "Under our group rating methodology, we consider Anixter Inc. a core subsidiary to the WESCO group, given our expectation that Anixter will be highly integrated into new parent WESCO International's identity and operating strategy. Based on this classification, we lowered our issuer credit rating on Anixter to 'BB-,' to equalize it with the rating on WESCO International. We subsequently withdrew our issuer credit ratings on Anixter International and Anixter Inc.," S&P said. In S&P's view, Anixter Inc.'s legacy notes have weaker recovery prospects in the new WESCO capital structure In the combined capital structure, unsecured notes issued by WESCO Distribution Inc. now benefit from unsecured guarantees provided by parent WESCO International Inc. and Anixter Inc. In contrast, Anixter Inc.'s legacy unsecured notes do not benefit from guarantees by WESCO Distribution or WESCO International. As a result, Anixter Inc.'s legacy unsecured notes would not have a claim to the value of the WESCO entities (which represent about half of the combined company's value) but the WESCO unsecured debtholders would have a pari passu claim to Anixter's value. In S&P's updated recovery analysis, it projects about $658 million of value would be available to Anixter Inc.'s legacy unsecured notes, which it estimates, given its small proportional share of claims, would be sufficient to provide about 15% coverage of its unsecured claims. APC AUTOMOTIVE: Gets Court Approval for $30M Chapter 11 Funding --------------------------------------------------------------- Vince Sullivan, writing for Law360 reports that car and truck parts manufacturer APC Automotive Technologies obtained court approval on June 5, 2020 to access bankruptcy financing worth $30 million provided by its present lenders as it pursues a prepackaged Chapter 11 plan to cut about $300 million worth of debt. During a first-day hearing conducted by phone and video conference, debtor attorney Jonathan S. Henes of Kirkland & Ellis LLP said the company was facing severe liquidity constraints in the beginning of 2020 and was pushed off the insolvency cliff by the global outbreak of COVID-19. The debtor-in-possession funding, which comes in the form of a $90 million asset-based loan that will roll up to satisfy prepetition ABL debt and a $50 million new money term loan, will be used to finance APC's operational needs during the bankruptcy case, and will also convert into post-bankruptcy loans to provide the capital needed once the debtor emerges from Chapter 11, Henes said. "With this prepackaged plan, we do have what the company needs to really grow," Henes told the court. "We will be reducing our debt significantly and have new liquidity coming in. This is what the company needs right now." U.S. Bankruptcy Judge Christopher S. Sontchi granted interim approval of the DIP package, which allows for the roll-up of the $90 million in ABL debt and access to $30 million of the new money term loan, overruling an objection from the Office of the United States trustee to the roll-up on the first day of the case. Trustee representative Rosa Sierra said the first-day roll-up of such a significant amount of prepetition debt was not needed to avoid any immediate harm to the debtor. Judge Sontchi said the lender agreed to certain protections for the debtor in the DIP documents, including preserving the ability to clawback the roll-up portion of the financing if needed. He also said there is no concern from the court that the lenders are trying to materially improve their collateral position within the debtor's debt structure. APC, which makes brake, chassis, emission and exhaust parts for cars and trucks, filed for bankruptcy protection Wednesday after several months of liquidity problems were worsened by the coronavirus outbreak. In late 2019, the debtor completed an out-of-court restructuring that converted $125 million of second-lien debt into preferred equity in the company and obtained $50 million in new cash contributions from some of the term loan lenders holding $315 million of debt and from its equity sponsors, according to court filings. Under the terms of its prepackaged plan, about $290 million of term loan debt will be converted into the equity in a reorganized APC. The plan has the support of 80% of its term loan lenders and all of its ABL lenders. About APC Automotive Technologies APC Automotive Technologies Intermediate Holdings, LLC, are aftermarket suppliers of brake, chassis, exhaust, and emissions parts for passenger vehicles, trucks, and commercial vehicles. The Debtors were formed through the merger of two companies in 2017, AP Exhaust and Centric. APC Automotive Technologies Intermediate Holdings, LLC and its 13 affiliates sought Chapter 11 protection (Bankr. D. Del. Case No. 20-11466) on June 3, 2020. Templar Energy was estimated to have $100 million to $500 million in assets and $500 million to $1 billion in liabilities. Jonathan S. Henes, P.C. of Kirkland & Ellis LLP and Kirkland & Ellis International LLP serves as the Debtors' general bankruptcy counsel; Domenic E. Pacitti, Esq., Morton R. Branzburg, Esq., and Michael W. Yurkewicz, Esq. of Klehr Harrison Harvey Branzburg LLP serve as the local bankruptcy counsel. Jefferies Group LLC acts as the Company's financial advisor and Weinsweigadvisors LLC as restructuring advisor. Ernst & Young LLP is acting as the Company's tax advisor; and Bankruptcy Management Solutions, INC. serves as the Company's notice, claims and balloting agent. APTEAN INC: Moody's Affirms B3 CFR, Outlook Stable -------------------------------------------------- Moody's Investors Service affirmed Aptean, Inc.'s B3 Corporate Family Rating (CFR), B3-PD Probability of Default Rating (PDR) and B2 instrument rating on the existing senior secured first lien credit facilities. Concurrently, Moody's assigned a B2 rating to Aptean's new $80 million incremental senior secured first lien term loan. The new term loan is non-fungible with the existing first lien debt. The outlook is stable. Proceeds from the new $80 million term loan will be used to fund the acquisition of WorkWise Software, an enterprise resource planning (ERP) and client relationship management (CRM) solutions provider for mid-sized discrete manufacturing businesses, as well as pay related fees and expenses and add cash to the balance sheet for future M&A opportunities. Assignments: Issuer: Aptean, Inc. Senior Secured Bank Credit Facility, Assigned B2 (LGD3) Affirmations: Issuer: Aptean, Inc. Corporate Family Rating, Affirmed B3 Probability of Default Rating, Affirmed B3-PD Senior Secured Bank Credit Facilities, Affirmed B2 (LGD3) Outlook Actions: Issuer: Aptean, Inc. Outlook, Remains Stable RATINGS RATIONALE Aptean's B3 CFR reflects the company's very high leverage, small scale and weak free cash flow as a result of large restructuring and business optimization expenses. The company's aggressive financial policies, a key corporate governance consideration under Moody's ESG framework, also constrain the rating. Pro forma for the proposed acquisition, the company's leverage is estimated at 8.8x debt-to-EBITDA as of March 31, 2020 (Moody's adjusted, excluding unrealized synergies and expensing software development costs). Moody's believes that Aptean will maintain a highly leveraged capital structure primarily because of the issuer's appetite for debt funded acquisitions. Since its LBO in April 2019, Aptean completed seven acquisitions financed with incremental debt, including the currently proposed transaction. These purchases also resulted in breakeven free cash flow generation as Aptean incurred sizable restructuring and business optimization costs. Moody's expects the COVID-19 pandemic and economic recession to have a limited impact on Aptean's operating performance in 2020 due to the mission-critical nature of the company's offerings and a high portion of recurring revenue. Moody's projects that total revenue will decline in the low single digit range because of the drop in new license sales and lower services revenue resulting from reduced on-site services activity, largely offset by strong SaaS revenue growth. Aptean's track record of integrating the acquired businesses and realizing planned cost synergies should enable the company to reduce leverage to below 8x debt-to-EBITDA by the end of 2020 and generate stronger free cash flow should it decide to put the M&A activity on pause. Aptean benefits from a differentiated product positioning as a provider of vertical-focused ERP systems to small and medium size businesses in a select number of industries, with functionality and modules tailored to the verticals' requirements. Aptean continues to invest in development of software-as-a-service ("SaaS") products and sales resources. These actions have resulted in stronger bookings and accelerated recurring revenue growth. The stable outlook reflects the expectation that Aptean's operating performance will be resilient to the economic recession in 2020. In addition, Moody's expects Aptean to successfully integrate the planned acquisition and achieve cost synergies such that debt-to-EBITDA declines to below 8x by the end of 2020. The outlook also reflects Moody's expectation that Aptean will maintain at least adequate liquidity over the next 12-18 months. The rapid spread of the coronavirus outbreak, deteriorating global economic outlook, low oil prices, and high asset price volatility have created an unprecedented credit shock across a range of sectors and regions. Moody's regards the coronavirus outbreak as a social risk under its ESG framework, given the substantial implications for public health and safety. Moody's projects Aptean's liquidity to remain adequate over the next 12-18 months. Pro forma for the proposed transaction, the company will have a cash balance of over $50 million, a portion of which is earmarked for future tuck-in acquisitions. Moody's expects Aptean to generate positive free cash flow, but the level will likely remain suppressed by acquisition and restructuring expenses. Aptean's liquidity is also supplemented by a $50 million revolving credit facility which Moody's expects will remain undrawn. The revolving facility contains a springing maximum first lien net leverage ratio covenant set at 8.1x (springing at 35%). Moody's does not project the covenant to be tested and expects Aptean to maintain a sufficient cushion at all times. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The ratings could be upgraded if Aptean demonstrates a commitment to more conservative financial policies, while maintaining its debt-to-EBITDA below 6x and free cash flow to debt above 5% with good liquidity. The rating could be downgraded if the economic recession results in more pronounced organic revenue decline than currently anticipated, or aggressive financial policies and debt financed acquisitions are expected to sustain leverage above 8x without a path to deleveraging. Weakening liquidity and sustained negative free cash flow could also result in a downgrade. Aptean is a provider of vertical-focused ERP systems and related products primarily to SME customers. For the last twelve months ended March 31, 2020 pro forma revenue was $310 million. Aptean is owned by TA and Vista. The principal methodology used in these ratings was Software Industry published in August 2018. ARUBA INVESTMENTS: Fitch Assigns B+ IDR, Outlook Stable ------------------------------------------------------- Fitch Ratings has assigned a 'B+' Issuer Default Rating to Aruba Investments, Inc. (Aruba) with as Stable Outlook. Fitch has also assigned a 'BB+'/'RR1' rating to the company's first lien revolver and term loans and a 'B-'/'RR6' to its senior unsecured notes. Aruba's ratings are informed by its niche specialty chemicals position as the leading global producer of nitroalkanes, the geographic diversity and growing product breadth within its end markets, as well as its strong FCF generation. The impact from coronavirus is expected to have a relatively reduced effect on the company as many of its chemical products are additives in products that have increased in demand during the pandemic, which will continue to hedge the overall impacts of coronavirus on what has traditionally been a recession resilient product line. The Stable Outlook reflects Fitch's expectations that the company maintains sufficient liquidity in the current environment, debt reduction will be prioritized over distributions, FFO fixed charge coverage will remain around 3.0x in 2020 and improves thereafter. KEY RATING DRIVERS Balanced Impact from Coronavirus: Demand in Aruba's Life Sciences and Home and Personal segments are supported during the coronavirus pandemic by its chemistries used in products that have increased in demand to combat the spread of coronavirus, including hand sanitizers and surface cleaners, as well as diagnostic testing kits. Demand for these products has offset softer demand in certain Industrial end markets that have been weakened by the resulting economic contraction from coronavirus. This balance, coupled with the company's improving share of direct customer relationships, geographic and end market diversity provides revenue resistance in economic downturns. Supporting Aruba's ability to maintain production is its classification as an essential business by U.S. federal and local governments, which has allowed all of its facilities to remain in operation. Aruba's resilience through early stage of the coronavirus pandemic is evidenced through a 1Q20 YoY increase in overall sales of 6.4% and led by the Life Sciences and Home and Personal Care segments that combined for an increase in sales of 26.2%. Global Producer of Nitroalkanes: Aruba is the only global commercial producer of nitroalkane and the only manufacturer in the world to use propane nitration technology, which can yield a highly specialized nitroalkane derivate product portfolio. It is often the only supplier for many of its key products, resulting in a captive customer base for which no direct substitutes with similar attributes often exist. The majority of Aruba's end markets are characterized by high switching costs with Aruba having a low share of end product costs, as well as, products spec'd into formulations and processes that help contribute to the longevity of customer relationships. As a niche producer in the additives industry, Aruba enjoys significant scale and technical expertise barriers to prospective entrants. Steady Cash Generation: Aruba generated $57 million of FCF in 2019 and within Fitch's forecast period with the exception of 2020, where FCF is affected by a $70 million planned dividend, FCF is expected to be positive. The company has undertaken a number of cost saving initiatives in recent years including numerous SG&A rationalizations, the closure of the company's less economic Niagara Falls, NY repackaging facility and the relocation of these functions to Sterlington, LA, the purchase of an ammonia terminal and pipeline, which secures a more cost-effective source for ammonia and the purchase of water treatment assets from a third party. These cost savings initiatives support Aruba's high EBITDA margins (40.5% in 2019), its ability to generate FCF and in turn reduce leverage, which is expected to decrease from 5.4x in 2019 throughout the forecast period. Limited Raw Material Input Price Risk: Aruba utilizes over 100 different raw materials as inputs into its chemistries. The most prominent of these are propane, ammonia, formaldehyde, hydrogen and natural gas. Most of these inputs are directly or indirectly linked to natural gas prices (e.g. ammonia production uses natural gas, propane can be a co-product of natural gas processing, and formaldehyde is indexed to methanol, which is tied to natural gas). Aruba's Sterlington, LA site is strategically located to take advantage of raw material security through the abundance of U.S. Shale production in the region. Risks to Aruba arising from fluctuations in raw material input costs are reduced through Aruba's ability to pass cost increases through to customers. Strong Liquidity Position: Fitch's rating is predicated on the proposed Term Loan B refinancing occurring, which pushes out the maturity for Aruba's term loans from 2022 to 2025. This removes the near-term refinancing risk for these facilities and leaves only Aruba's revolving facility maturing in the near term. Maturing in 2021, Fitch considers the revolving facility to having low refinancing risk under Aruba's improving leverage and cash flow generation strength. Fitch notes the revolving facility has remained undrawn through the coronavirus pandemic, which was atypical for chemical companies, and demonstrative of Aruba's sound liquidity position. Repositioning Towards Higher Growth End Markets: Aruba has invested in shifting its sales mix towards the higher growth end markets of Life Sciences and Personal care, with 50% of sales now attributable to these markets. The shift has been supported by greater organic growth trends and investments in the respective end markets. The continued rebalancing towards these end markets, which offer more pricing power and greater potential to increase product breath through new market demands, provides a revenue growth pathway that can continue to provide high margin business. DERIVATION SUMMARY At the 'B+' rating level, Aruba compares well against rated peers Kronos Worldwide Inc. (B+/Stable), TPC Group Inc. (B-/Negative) and Tronox Limited in terms of EBITDA margin, FFO interest coverage and FCF generation. It is towards the lower end of the peer group in terms of size based on revenue and around the mid-point in terms of gross leverage. At $332 million 2019 revenues, Aruba is significantly smaller than Kronos Worldwide at $1.7 billion and public chemical peer Tronox Holdings at $2.6 billion. Aruba's EBITDA margins in the 30%-40% range are at the top end of the peer group, notably higher than Kronos Worldwide, Inc. (volatile margins between approximately 10%-25%) and chemical peer Tronox Holdings' (18%-25%). Aruba also exceeds 'B-' rated chemicals peer TPC Group's margins in the low-mid teens. Aruba's high EBITDA margins reflect its products' barriers to entry and high switching costs. Aruba's total debt to EBITDA has decreased in recent years from a high of 8.9x in 2017, where it was at the top end of the peer group only below Tronox Holdings'. Over the last two years through primarily EBITDA growth, Aruba has moved towards the middle of the peer group at around 5.0x, but still well above the low leverage level Kronos Worldwide at around 2.0x. KEY ASSUMPTIONS Fitch's Key Assumptions Within Its Rating Case for the Issuer: -- Sales growth is driven by gains in Life Sciences and Home and Personal Care throughout the forecast period while Custom Chemicals and Industrial Specialties decline in 2020 before moderating in later years; -- SG&A and CoGS decline slightly in 2020 reflecting execution of cost savings initiatives; -- Excess cash of $40 million, $30 million and $50 million is used to reduce term loan balances in 2020, 2021 and 2023, respectively; -- Capex reduces to $25 million in 2021 reflecting the completion of major capital investments in 2020 and grows at inflation through the forecast period; -- Recently completed a $70 million dividend and $21.3 million outstanding bond repayment, both financed from cash on the balance sheet. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- Continued revenue growth and end market diversification led by the Life Sciences and Personal Care, while maintaining EBITDA margins around 40%; -- Demonstrated prioritization of debt reduction over shareholder distributions; -- Debt reduction leading to total debt/EBITDA below 4.0x. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- FFO interest charge coverage sustained below 2.5x; -- Weakening in EBITDA margins and FCF resulting in total debt/EBITDA sustained above 5.5x; -- Impacts from coronavirus are greater than expected leading to weakening overall performance and recovery; -- Failing to complete the proposed Term Loan B refinancing or completing the refinancing with meaningfully different terms than those currently proposed. LIQUIDITY AND DEBT STRUCTURE Liquidity analysis is based on the proposed Term Loan B refinancing transaction outlined below that is planned to launch on June 22 or June 23. This refinances the USD and EUR term loan tranches that mature in February 2022 and have $480 million outstanding at 1Q20 with $498 million of similarly split USD and EUR term loans maturing in 2025. Adequate Liquidity: As of December 2019, Aruba had $90 million of cash available for use. Working capital requirements are manageable, and Aruba can utilize its cash balance as well as its $65 million revolver, which is undrawn net of $4.3 million letters of credit, for any short- or medium-term liquidity needs. High margins and modest capital expenditure requirements have supported FCF growth in recent years up to $57 million for 2019. FCF, while expected to decline in 2020 largely as a result of a planned $70 million divided, is expected to remain positive in later years of the forecast and substantial cash generation is expected to support liquidity and ability to repay debt. Maturity Wall Deferred: In the proposed Term Loan B refinancing transaction, Aruba is expected to successfully extend the maturity of this debt from 2022 to 2025. This reduces medium term refinancing risk, which was manageable to begin with as Aruba's only near-term refinancing is its currently undrawn revolver maturing in November 2021. Fitch expects Aruba to gradually reducing the outstanding balance on its term loans in excess of the mandatory 1% of principal annual amount with discretional reductions funded through cash flow generation. Recovery Analysis Fitch's recovery analysis uses a consolidated approach and a $107 million going concern EBITDA. This approximates a bottom-cycle EBITDA in the Stress Case and acknowledges the potential impacts of coronavirus may be more amplified and last for longer than expected. Fitch estimates the going concern enterprise value (EV) to be approximately $642 million. This is greater than the liquidation value, which includes the value of Aruba's IP discounted at 50%. After a 10% adjustment for administrative claims, $578million remains for creditors, well under the $1.2 billion Golden Gate Capital acquired Aruba for in 2015. An EV multiple of 6.0x is applied reflecting the high margins and market leading position of Aruba's products. The 6.0x multiple is comparable to the range of historical bankruptcy case study exit multiples for peer companies, which ranged from 5.2x-7.7x and in line with the median of 5.9x. With an assumed fully drawn revolving facility and the completion of the $498 million Term Loan B refinancing including the associated $21.3 million bond repurchase, the EV approach results in a recovery rating of 'BB+'/'RR1' to the first lien facilities, which is three notches up from the recommended indicative ratings for Aruba, and a 'B-'/'RR6' to the unsecured notes, two notches below the rating. SUMMARY OF FINANCIAL ADJUSTMENTS 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. ARUBA INVESTMENTS: Moody's Rates First Lien Term Loans 'B1' ----------------------------------------------------------- Moody's Investors Service assigned a B1 rating to Aruba Investments, Inc.'s (dba ANGUS Chemical Company) first lien term loans after the proposed $18 million term loan add-on and maturity extension from 2022 to 2025. Moody's also assigned a B1 rating to the $60 million Tranche A revolving credit facility, which will be extended to 2024, and the $15.6 million Tranche B revolving credit facility terminating in 2021. All other ratings including the B2 Corporate Family Rating (CFR) are unchanged. The outlook is negative. "The proposed transaction would allow ANGUS to extend its maturity profile for the term loans and revolving credit facility and reduce refinancing risk, though the payment of a dividend to its sponsor partially offsets the benefits as it reduces cash balances available for future deleveraging," said Domenick R. Fumai, Vice President and lead analyst for Aruba Investments, Inc. Assignments: Issuer: Aruba Investments, Inc. Senior Secured 1st Lien Term Loan B, Assigned B1 (LGD3) Senior Secured 1st Lien Rev Credit Facility, Assigned B1 (LGD3) RATINGS RATIONALE Moody's views ANGUS' proposed term loan and revolving credit facility extension as modestly credit positive since it reduces refinancing risk and extends the company's maturity profile. Notwithstanding the benefits of the maturity extension, total debt will slightly increase as a result of the incremental borrowing. The company will also issue a $70 million dividend to its sponsor, Golden Gate Capital, which reduces cash balances available for future deleveraging. The B2 CFR reflects ANGUS' strong EBITDA margins and continued free cash flow generation despite the negative impact of recessionary global macroeconomic conditions ANGUS' business profile is characterized by geographic diversity and solid market positions serving a varied number of end markets, including several fairly defensive end markets such as pharmaceutical, life sciences and HPC (home and personal care), which have performed well through the first quarter of 2020 offsetting exposure to its industrial-related industries. The company enjoys multiple barriers to entry including advanced formulations and backward integration that support strong profitability and attractive EBITDA margins. ANGUS' rating is constrained by elevated leverage, though the company continues to make progress on debt reduction having recently repaid the $14 million Dow seller note in 1Q20. Adjusted Debt/EBITDA is 5.4x as of March 31, 2020 and Moody's forecasts that leverage will increase modestly in 2020. The lack of scale and significant operational concentration with dependence on two plants are additional considerations limiting the rating. The rating also includes the risks associated with private equity ownership. Moody's expects ANGUS to have good liquidity over the next 12 months with available cash on the balance sheet, positive free cash flow generation and access to the revolving credit facility. As of March 31, 2020, the company had about $79 million of cash and $61 million of availability with no outstanding borrowings under its revolving credit facility including $4.3 million in outstanding letters of credit. Moody's expects ANGUS to have more moderate cash balances in the range of $18-$20 million following the payment of the dividend, which should still be more than sufficient to cover operations. The term loan does not contain financial maintenance covenants. The negative outlook reflects Moody's expectations that several of ANGUS' end markets, including paints and coatings, metalworking fluids, synthetic rubber and electronics, will suffer from weaker demand in 2020 as economic growth falters due to the coronavirus pandemic and result in some weakening of credit metrics in 2020. While these market segments account for just over half of the company's sales, other more resilient end markets such as pharmaceutical, life sciences and HPC should be less susceptible to the current downturn and allow the company to generate sufficient EBITDA to keep leverage below 6.5x and positive free cash flow in 2020, unless the global economic conditions worsen more than currently anticipated. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Moody's would likely consider a downgrade if leverage is above 6.5x and free cash flow is negative for a sustained period, there is a significant deterioration in liquidity, or if the company is unable to refinance its revolving credit facility due in November 2021 before year-end. Although not likely over the next 12 months, Moody's would consider an upgrade if financial leverage, including Moody's standard adjustments, is sustained below 5.0x, revenue and free cash flow growth remain positive and the private equity sponsor demonstrates a commitment to more conservative financial policies. ESG CONSIDERATIONS Moody's also evaluates environmental, social and governance factors in the rating consideration. As a specialty chemicals company, environmental risks are categorized as moderate. However, the chemical properties of several key raw materials, including ammonia, propane and formaldehyde, could result in future product and environmental liability claims if improperly handled. ANGUS does not currently have any substantial litigation or remediation related to environmental issues. ANGUS has clearly stated sustainability and environment, health and safety policies on its website. Several of the company's products are important chemical intermediates in the pharmaceutical and life sciences industries. Governance risks are elevated due to private equity ownership by Golden Gate Capital, which includes a board of directors with majority representation by members affiliated with Golden Gate Capital, and reduced financial disclosure requirements as a private company. ANGUS also has high financial leverage and a fairly aggressive financial policy compared to most public companies. Debt capital is currently comprised of a rated $65 million first lien senior secured revolving credit facility due November 2021, $224 million first lien senior secured term loan B due 2022 ($215 million outstanding), $280 million first lien senior secured term loan B (Euro-denominated; $265 outstanding) due 2022, and $204 million senior unsecured notes due 2023. The proposed transaction extends the first lien senior secured term loans to 2025 and increases the amount to $224 million while the Euro-denominated term loan is also increased to $274 million from $265 million. The Tranche A revolving credit facility of $60 million is expected to be extended to November 2024, and the Tranche B facility of 15.6 million will terminate in November 2021. The Caa1 rating on the senior unsecured notes reflects effective subordination to the much larger senior secured credit facilities and structural subordination with regard to the company's foreign subsidiaries. The company's German facility is held in one of its foreign subsidiaries. Aruba Investments, Inc. is a holding company that owns ANGUS Chemical Company. Headquartered in Buffalo Grove, IL, ANGUS produces performance additives for end markets including paints and coatings, pharmaceuticals, metalworking fluids, personal care, agriculture, and biocides. Golden Gate Capital purchased the company from Dow Chemical in a leveraged transaction which closed in February 2015. ANGUS generated approximately $337 million in revenue for the twelve months ending March 31, 2020. ASCENA RETAIL: In Talks With Lenders on Potential Bankruptcy ------------------------------------------------------------ Bloomberg News reports that Ascena Retail Group is in talks with lenders for a possible Chapter 11 filing due to the disruption brought by COVID-19 pandemic on business. The bankruptcy filing could come as soon as July and allow the company to keep some of its brands operating while it seeks to sell others, according to the report. Ascena reportedly could sell three of its brands including Catherines in a court-supervised sale process, while keeping Ann Taylor and Loft as part of the company when it emerges from bankruptcy. About Ascena Retail Group Ascena Retail Group, Inc. (Nasdaq: ASNA) -- http://www.ascenaretail.com/-- is a national specialty retailer offering apparel, shoes, and accessories for women under the Premium Fashion (Ann Taylor, LOFT, and Lou & Grey), Plus Fashion (Lane Bryant, Catherines and Cacique), and Value Fashion (Dressbarn) segments, and for tween girls under the Kids Fashion segment (Justice). Ascena, through its retail brands, operates ecommerce websites and approximately 2,800 stores throughout the United States, Canada, and Puerto Rico. Ascena Retail reported a net loss of $661.4 million for the fiscal year ended Aug. 3, 2019, a net loss of $39.7 million for the year ended Aug. 4, 2018, and a net loss of $1.06 billion for the year ended July 29, 2017. As of Feb. 1, 2020, the Company had $3.07 billion in total assets, $2.99 billion in total liabilities, and $76.6 million in total equity. * * * As reported by the TCR on March 20, 2020, S&P Global Ratings raised its issuer rating on Ascena Retail Group Inc. to 'CCC-' from 'SD' and maintained the 'D' rating on the term loan due August 2022. "The rating action reflects our view of the likelihood of a conventional default or a broad-based restructuring of Ascena's capital structure in the next six months. Our opinion considers the company's unsustainable capital structure, its still significant debt burden following the repurchases, and our expectation for weak performance amid a highly challenging operating environment. The rating also reflects our view that the recent coronavirus outbreak in the U.S. will further pressure store traffic and limit conventional refinancing prospects," S&P said. As reported by the TCR on April 16, 2020, Moody's Investors Service downgraded Ascena Retail Group, Inc.'s corporate family rating to Caa3 from Caa2. Ascena's Caa3 CFR is constrained by Moody's view that default risk is elevated as a result of the company's high leverage, 2022 debt maturities, and expectations for declining earnings over the next 12-18 months. AVSC HOLDING: Moody's Cuts CFR to Caa3, Outlook Negative -------------------------------------------------------- Moody's Investors Service downgraded AVSC Holding Corp.'s Corporate Family Rating to Caa3 from Caa2 and its Probability of Default Rating from Caa3-PD from Caa2-PD. At the same time, Moody's also downgraded the company's first lien senior secured credit facility (revolver and term loan) to Caa3 from Caa2 and confirmed the ratings on the company's second lien term loan at Ca. The outlook was changed to negative from rating under review. This action concludes the review for downgrade initiated on March 27, 2020. The downgrade to Caa3 CFR and negative outlook reflects extremely challenging conditions in the meeting and events industry due to the COVID-19 pandemic, uncertainties when global travel restrictions will be lifted and containment measures eased and Moody's expectation for prolonged industry recovery. Despite the company's actions to right-size the cost structure to combat the effects of the coronavirus, the largely shut-down global meeting and events business has left the company with a highly levered and unsustainable capital structure. PSAV had approximately $130 million of balance sheet cash as of May 30, 2020 and its revolving credit facility was largely drawn. Based on estimated monthly cash burn of around $30-35 million and the uncertainty around management's ability to replenish its cash reserves and maintain covenant compliance raises the company's default risk significantly. The company's existing debt is trading at significant discounts to par, which may lead to debt restructuring or a distressed exchange. Downgrades: Issuer: AVSC Holding Corp. Corporate Family Rating, Downgraded to Caa3 from Caa2 Probability of Default Rating, Downgraded to Caa3-PD from Caa2-PD Senior Secured 1st Lien Bank Credit Facility, Downgraded to Caa3 (LGD3) from Caa2 (LGD3) Confirmations: Issuer: AVSC Holding Corp. Senior Secured 2nd Lien Bank Credit Facility, Confirmed at Ca (LGD6) Outlook Actions: Issuer: AVSC Holding Corp. Outlook, Changed to Negative from Rating Under Review RATINGS RATIONALE PSAV's Caa3 CFR reflects the company's highly leveraged capital structure, elevated risk of a potential default and severe operating headwinds due to drop off in the number of meetings and events. The meetings and events sector has been one of the sectors most significantly affected by the shock given its exposure to travel restrictions and the COVID-19 containment measures. Moody's expects the industry to remain challenged for a longer period of time, as the severity and duration of the pandemic and travel restrictions are uncertain, particularly given the threat of an increase in the number of infections across the US and other countries. Over the last several months the company has taken significant cost actions to furloughed more than 70% of its workforce while reducing wages for others, drastically cut venue incentive payments, hotel commissions and other operating and capital expenditures. Moody's expects revenue to be down by more than 90% in the second quarter of 2020 and the company will burn around $30-35 million of cash per month, beginning in June 2020. As a result, Moody's believes that the company will face heightened risk of near-term default if liquidity is not proactively addressed. The rapid spread of the coronavirus outbreak, deteriorating global economic outlook, low oil prices, and high asset price volatility have created an unprecedented credit shock across a range of sectors and regions. 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 PSAV of the deterioration in credit quality it has triggered, given its exposure to the meeting and events industry, which has left it vulnerable to shifts in market demand and sentiment in these unprecedented operating conditions. The negative outlook reflects Moody's expectation of weakened credit metrics and liquidity, compounded by the uncertainty of the time and trajectory of the economic recovery. A debt restructuring or an event of default is very likely if the company does not proactively address its capital structure or shore-up its near-term liquidity. Moody's expects PSAV to have very weak liquidity over the next 12-15 months. Sources of liquidity consist of approximately $130 million in unrestricted balance sheet cash as of May 30, 2020 and its expectation for cash flow deficit of $30-35 million per month. The company's $135 million revolving credit facility has been largely drawn, net of approximately $16.8 million of letters of credit outstanding. The company has also significantly curtailed its capital spending and will tightly manage its working capital needs in the coming months. Moody's expects that projected EBITDA deterioration and cash erosion will increase the risk of a potential default in the third quarter of 2020. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The ratings could be downgraded if continued deterioration in liquidity, including sustained negative free cash flow and inability to secure additional financing leads to a default or formal debt restructuring. The ratings could also be downgraded if Moody's recovery expectations on the company's debt instruments were to weaken. Moody's could consider an upgrade if the company addresses its near-term liquidity stress on commercially viable terms, demonstrates improvement in operating results, reduces its indebtedness to a more sustainable level and maintains at least adequate liquidity. AVSC Holding Corp., operating under the primary brand name PSAV, is a leading provider in the audiovisual and event experiences industry delivering creative production, advanced technology and staging to help its customers deliver more dynamic and impactful experiences at their meetings, trade shows and special events. PSAV is the event technology provider of choice at leading hotels, resorts and convention centers. Its business model is based on long-term partnerships with these venues, which establish PSAV as the exclusive on-site provider of event technology services. Following the August 2018 leveraged buyout, PSAV is majority owned by affiliates of Blackstone Group, Inc. The company generated approximately $2.86 billion in annual pro forma revenue in 2019. The principal methodology used in these ratings was Business and Consumer Service Industry published in October 2016. BANTEC INC: Brings UVC Robotic Cleaning Systems to Covid-19 Fight ----------------------------------------------------------------- Bantec, Inc., expanded its offerings with CleanSmart. Bantec will now market and sell robotics that ultimately help businesses and building owners combat Covid-19. The robots possess the ability to communicate necessary Covid-19 messages to employees and customers, provide UVC light and spray disinfection, automatically dock and recharge, enable remote video calling, autonomously navigate, measure social distancing, and take people's temperatures. According to a BCC Research report from 2019, the global market for UV disinfection equipment is estimated to surpass $4 billion by 2023. This report does not include the exponential growth in the disinfection equipment market due to COVID-19. This global pandemic has created a massive increase in the demand for cleaning and monitoring equipment, and we believe that the new line of equipment from CleanSmart and Bantec is a perfect solution to help fill this need. Michael Bannon, Bantec's chairman and CEO stated: "We are excited to bring robots to the Covid-19 fight. Imagine this: a customer walks into a bank and is greeted by a robot; the robot instructs the customer to maintain the proper social distance and determines whether or not the customer is wearing a mask while measuring the customer's temperature. If the customer's temperature is above normal and/or the customer is not wearing a mask, the robot will politely ask the customer to please leave the bank. If the customer's temperature is normal and is wearing a mask, the robot will instruct the customer what to do next and inform the customer that there is a cleaning station nearby where the customer can sanitize his or her hands. During and after bank hours, the robots will clean surfaces and disinfect the bank interior with UVC light and spray disinfectant." About Bantec Bantec, Inc., a product and service company, through its subsidiaries and divisions, sells drones and related products manufactured by third parties to various parties, including facility managers, engineers, maintenance managers, purchasing managers and contract officers who work for hospitals, universities, manufacturers, commercial businesses, local and state governments and the US Government. The Company also offers technical services related to drone utilization. As of Dec. 31, 2019, the Company had $1.01 million in total assets, $16.45 million in total liabilities, and a total stockholders' deficit of $15.44 million. Salberg & Company, P.A., in Boca Raton, Florida, the Company's auditor since 2017, issued a "going concern" qualification in its report dated Feb. 6, 2020 citing that the Company has a net loss and cash used in operations of $7,115,159 and $1,105,330, respectively, for the year ended Sept. 30, 2019 and has a working capital deficit, stockholders' deficit and accumulated deficit of$13,632,338, $14,895,354 and $26,746,451 respectively, at Sept. 30, 2019. The Company is also in default on certain promissory notes. These matters raise substantial doubt about the Company's ability to continue as a going concern. BIONIK LABORATORIES: Launches InMotion Connect Platform ------------------------------------------------------- BIONIK Laboratories Corp. has launched its InMotion Connect platform, a comprehensive solution to meet the data connectivity and analytics needs of hospitals and healthcare facilities nationwide. InMotion Connect is a cloud-based data analytics solution that securely streams and stores anonymized data from all connected InMotion robotics devices to BIONIK's cloud server hosted by Amazon AWS, providing contextual and relevant data to reach hospital clinicians and management teams when it matters the most. It combines real-time data of each InMotion robotic device with the deep clinical knowledge and expertise of BIONIK's clinical specialists to collaboratively partner with each clinic to promote utilization of the robotic devices and support clinician engagement, with the goal of enhancing patient care. Reporting capabilities in the platform focus on deep data analytics with customizable and adaptive dashboards to support effective decision making for clinicians and for hospital management. Mercy Rehabilitation Hospital Oklahoma City, a Kindred Hospital Rehabilitation Services managed site, is BIONIK's flagship deployment of InMotion Connect. The deployment follows a pilot program with Kindred where more than 20 hospitals participated in an initiative to use data to empower on-site and hospital system-wide decision making to drive better technology adoption. Cloud-based data analytics were combined with BIONIK's clinical specialists to collaboratively partner with local staff to drive optimal use of InMotion technology, while the resulting data was utilized by both local and corporate hospital management to support better utilization of the robots as well as improved patient outcomes. "We're pleased to partner with BIONIK for the launch of InMotion Connect and to deploy their innovative platform at Mercy Rehab Oklahoma City. The value add of being able to manage patient treatment remotely is even more important today than ever before, and we believe BIONIK's Connect platform provides the robust capabilities our clinicians need to ensure optimal patient outcomes," said Russ Bailey, chief operating officer, Kindred Rehabilitation Hospitals. The Company believes that technology adoption can be one of the biggest barriers for the successful implementation of new systems within clinics. InMotion Connect has been designed by BIONIK to provide valuable and insightful data that is expected to help maximize technology adoption and increase asset utilization, better engage clinicians and management teams, lead to better patient outcomes, and increase returns on investment. "At BIONIK, we emanate solutions. InMotion Connect targets the critical need to improve technology adoption at each rehabilitation clinic that can be monitored through the platform to ensure that the state-of-the-art rehabilitation methods are effectively in use across the hospital network. The single platform that can be accessed anywhere, anytime, helps increasing technology adoption due to convenience and ease-of-use for the clinician, hospital management and headquarter teams," said Dr. Eric Dusseux, CEO, BIONIK. "It is another new step for BIONIK, updating the traditional neurorehabilitation process, and sowing the seeds of the future, allowing our clients to benefit from our data solution to improve technology productivity and increase return on assets." About BIONIK Laboratories Corp. Headquartered in Toronto, Ontario Canada, BIONIK Laboratories -- http://www.BIONIKlabs.com/-- is a robotics company focused on providing rehabilitation and mobility solutions to individuals with neurological and mobility challenges from hospital to home. The Company has a portfolio of products focused on upper and lower extremity rehabilitation for stroke and other mobility-impaired patients, including three products on the market and three products in varying stages of development. BIONIK reported a net loss and comprehensive loss of US$10.55 million for the year ended March 31, 2019, compared to a net loss and comprehensive loss of US$14.62 million for the year ended March 31, 2018. As at Dec. 31, 2019, the Company had $32.11 million in total assets, $2.66 million in total current liabilities, and $29.45 million in total shareholders' equity. MNP LLP, in Toronto, Ontario, the Company's auditor since 2015, issued a "going concern" qualification in its report dated June 25, 2019, citing that the Company's accumulated deficit, recurring losses and negative cash flows from operations raise substantial doubt about its ability to continue as a going concern. BLACKWOOD REDEVELOPMENT: Agrees to Reduce List Price to $3.995M --------------------------------------------------------------- Debtor Blackwood Redevelopment Co., Inc., filed a First Modified Disclosure Statement describing its Chapter 11 Plan of Liquidation dated June 2, 2020. The main component of the Debtor's Chapter 11 case is the liquidation of the Debtor's real property located at 109 N. Black Horse Pike, Blackwood, New Jersey. This sale is also a salient term of the Prinsbank Consent Order (supra) and the Second Stipulated Order (supra). Accordingly, on Oct. 10, 2019, the Debtor entered into a listing agreement with Binswanger of Pennsylvania, Inc. Binswanger's retention was approved by the Court on Oct. 30, 2019. Upon retention, Boyle and Binswanger promptly met at the subject location to gather photographic and drone video images of the Debtor's property and the catering facility to commence marketing the assets. Although the catering company, the Palace, and the liquor license holding company, J.A.L.C. are not currently in bankruptcy, the owners of those entities agreed to market the real estate as a turnkey catering facility and banquet hall, along with the liquor license for a complete package. Since the beginning of the marketing efforts were commenced by Binswanger, 29 interest parties requested information from Binswanger concerning the property. But, no showings and no interest in discussing a sale has commenced with any of the parties. This is due in large part to the Covid-19 pandemic imposing social distancing guidelines, stay-at-home orders, and uncertainty as to catering operations in the near future. To renew interest in the property and to provide for a cushion for a prospective purchaser to rebuild a book-of-business following the cancellations from the pandemic, the parties recently agreed to reduce the list price of the real estate, catering hall and liquor license to $3,995,000 and a new marketing campaign launched on May 27, 2020. According to the agreements with the secured creditors, the sale of the Debtor's assets must take place by Sept. 30, 2020. The Plan will be funded by the liquidation of the Debtor's assets located at 109 North Black Horse Pike, Blackwood, New Jersey, reserving the right to file any adversary complaints to recover funds to the Debtor's Bankruptcy Estate, if any claims become known. A full-text copy of the First Modified Disclosure Statement and Liquidating Plan dated June 2, 2020, is available at https://tinyurl.com/y75ov95f from PacerMonitor at no charge. The Debtor is represented by: Carrie J. Boyle, Esq. Boyle & Valenti Law, P.C. 10 Grove Street, 2nd Floor Haddonfield, NJ 08033 Tel: (856) 499-3335 E-mail: cboyle@b-vlaw.com About Blackwood Redevelopment Blackwood Redevelopment Co. Inc., based in Blackwood, NJ, filed a Chapter 11 petition (Bankr. D.N.J. Case No. 19-15937) on March 25, 2019. In the petition signed by Daniel Riiff, president, the Debtor disclosed $1,400,000 in assets and $4,342,768 in liabilities. Scott H. Marcus, Esq., at Nehmad Perrillo Davis & Goldstein, PC, serves as bankruptcy counsel to the Debtor. BLUESTEM BRANDS: Unsec. Creditors to Recover Less Than 1% in Plan ----------------------------------------------------------------- Bluestem Brands, Inc. and its debtor affiliates filed with the U.S. Bankruptcy Court for the District of Delaware a Joint Chapter 11 Plan and a Disclosure Statement on May 29, 2020. The Debtors have the support -- evidenced by $125 million of postpetition financing commitments and an executed stalking horse purchase agreement -- from their prepetition lenders to implement a value-maximizing transaction that deleverages the Company. This going-concern transaction will inure to the benefit of all stakeholders. On the Petition Date, the Debtors filed bidding procedures, with a "stalking horse" bid in hand, which set forth a marketing and auction process for the Debtors' assets and set a floor for the value of the Debtors' estates. The bidding procedures set forth a process that enables the Debtors to expeditiously sell their assets, including through a chapter 11 plan, and emerge from chapter 11 shortly thereafter. Such a sale of all or substantially all of the Debtors' assets provides substantial recoveries for stakeholders, and is in the best interest of the Debtors' estates. Holders of Class 5 General Unsecured Claims estimated to total between $25 million and $43 million will recover less than 1 percent. In accordance with Article III of the Plan, each Holder of a General Unsecured Claim will receive, its Pro Rata share of the General Unsecured Claims Recovery and if such Holder votes to accept the Plan, the holder will be deemed a released party; provided, however, that notwithstanding the foregoing, such Holder shall receive a Cash payment (if any) in an amount at least equal to the amount such Claim would so receive if the applicable Debtor were liquidated under chapter 7 of the Bankruptcy Code as of the Effective; provided, further, however, that, for the avoidance of doubt, no Prepetition Term Loan Lender has agreed to waive any Prepetition Term Loan Deficiency Claim that it may choose to assert as a General Unsecured Claim in relation to its Prepetition Term Loan Claims. Class 8 Interests in Northstar Holdings will be canceled, released, and extinguished, and will be of no further force or effect. No holder of allowed interests in Northstar Holdings will be entitled to any recovery or distribution under the Plan on account of such interests. The Debtors or Reorganized Debtors, as applicable, will enter into any transaction and will take any actions as may be necessary or appropriate to effect the transactions in the Plan, including, as applicable, the actions set forth in the restructuring transactions memorandum or in connection with any sale transaction, as applicable, and may take all actions as may be necessary or appropriate to effectuate the restructuring transactions. The Reorganized Debtors will fund distributions under the Plan from the following sources: (1) cash on hand, including cash from operations and proceeds of any sales of Estate assets, including any third-party sale transaction and/or the stalking horse APA sale transaction, (2) the assumption of liabilities, if any, in connection with a sale transaction, (3) as backstop party to certain Plan distributions, (4) the issuance and distribution of New Interests, if any, and (5) the proceeds of the Exit Facility, if any. A full-text copy of the Disclosure Statement dated May 29, 2020, is available at https://tinyurl.com/yad29a4g from PacerMonitor at no charge. Co-Counsel to the Debtors: Edward O. Sassower, P.C. KIRKLAND & ELLIS LLP KIRKLAND & ELLIS INTERNATIONAL LLP 601 Lexington Avenue New York, New York 10022 Telephone: (212) 446-4800 Facsimile: (212) 446-4900 - and - Patrick J. Nash, P.C. W. Benjamin Winger KIRKLAND & ELLIS LLP KIRKLAND & ELLIS INTERNATIONAL LLP 300 North LaSalle Street Chicago, Illinois 60654 Telephone: (312) 862-2000 Facsimile: (312) 862-2200 - and - M. Blake Cleary Jaime Luton Chapman Joseph M. Mulvihill YOUNG CONAWAY STARGATT & TAYLOR, LLP Rodney Square 1000 North King Street Wilmington, Delaware 19801 Telephone: (302) 571-6600 Facsimile: (302) 652-4400 E-mail: mbcleary@ycst.com jchapman@ycst.com About Bluestem Brands Bluestem Brands, Inc. and its affiliates -- https://www.bluestem.com/ -- are a direct-to-consumer retailer that offers fashion, home, and entertainment merchandise through internet, direct mail, and telephonic channels under the Orchard and Northstar brand portfolios. Headquartered in Eden Prairie, Minnesota, Bluestem employs 2,200 individuals and owns and/or lease warehouses, distribution centers, and call centers in 10 other states, including New Jersey, Massachusetts, Georgia, and California. The company's supply chain consists of name-brand vendors -- e.g., Michael Kors, Samsung, Keurig, Dyson -- as well as private label and non-branded sources based in the United States and abroad. Bluestem Brands, Inc., based in Eden Prairie, MN, and its debtor-affiliates sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 20-10566) on March 9, 2020. In its petition, Bluestem Brands was estimated to have $500 million to $1 billion in both assets and liabilities. The petition was signed by Neil P. Ayotte, executive vice president, general counsel and secretary. The Hon. Mary F. Walrath oversees the case. YOUNG CONAWAY STARGATT & TAYLOR, LLP, and KIRKLAND & ELLIS LLP, KIRKLAND & ELLIS INTERNATIONAL LLP as counsels; FTI CONSULTING, INC., as financial advisor; RAYMOND JAMES & ASSOCIATES, INC., as investment banker; IMPERIAL CAPITAL LLC, as restructuring advisor; and PRIME CLERK LLC as claims and noticing agent. BOARDRIDERS INC: Moody's Alters Outlook on Caa1 CFR to Negative --------------------------------------------------------------- Moody's Investors Service changed Boardriders, Inc.'s outlook to negative from stable. At the same time, Moody's affirmed Boardriders' ratings, including the Caa1 corporate family rating, Caa1-PD probability of default rating, and Caa1 senior secured term loan rating. The outlook change to negative reflects the significant deterioration in earnings and cash flow resulting from the unprecedented disruptions caused by the Coronavirus, which led to temporary store closures worldwide and declines in discretionary consumer spending. While supported by around $100 balance sheet cash and $15 million of excess revolver availability as of May 20, 2020, liquidity is weak due to Moody's expectation for negative free cash flow and financial covenant pressures over the very near term. Cushion under Boardriders' net leverage covenant was already very tight at the end of January 2020. The affirmation of the Caa1 reflects Moody's belief that Boardriders has the ongoing support of its sponsor, Oaktree Capital Management, L.P., and that it has been in active discussions with lenders concerning covenant levels and potential incremental liquidity needs. Moody's took the following rating actions: Affirmations: Issuer: Boardriders, Inc. Probability of Default Rating, Affirmed Caa1-PD Corporate Family Rating, Affirmed Caa1 Senior Secured Bank Credit Facility, Affirmed Caa1 (LGD3) Outlook Actions: Issuer: Boardriders, Inc. Outlook, Changed to Negative from Stable RATINGS RATIONALE The rapid spread of the coronavirus outbreak, deteriorating global economic outlook, low oil prices, and high asset price volatility have created an unprecedented credit shock across a range of sectors and regions. 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 Boardriders of the deterioration in credit quality it has triggered, given its exposure to temporary store closures and discretionary consumer spending, which has left it vulnerable to shifts in market demand and sentiment in these unprecedented operating conditions. Boardriders' Caa1 rating is constrained by Moody's expectation for deteriorating operating performance and credit metrics over the very near term as a result of the unprecedented disruptions caused by the Coronavirus, which led to temporary store closures worldwide and declines in discretionary consumer spending. While supported by balance sheet cash and modest excess revolver availability, liquidity is weak due to Moody's expectation for negative free cash flow and financial covenant pressures over the very near term, which were already under pressure due to ongoing synergy-related cash outlays related to the 2018 acquisition of Billabong, and planned increased growth-related investments. While acquisition synergies have been significant, the costs to obtain these savings was high. Positive consideration is given to the strategic benefits of the Billabong acquisition, which combined the two premier companies in the global action sports apparel industry with complementary business philosophies, product offerings and geographic footprints. With a portfolio of well-known brand names, the combined company holds a solid market position in a highly fragmented global industry. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Ratings could be downgraded if liquidity erodes through greater than expected cash flow burn, covenant violations, or if its probability of default otherwise increases. A ratings upgrade would require a return to revenue and earnings growth, with adequate liquidity including ample covenant cushion and positive free cash flow. Metrics include Moody's EBITA/Interest maintained over 1.25x. Boardriders, Inc. designs and distributes branded apparel, footwear, accessories, and related products under six primary brands including Quiksilver, Billabong, ROXY, DC Shoes, RVCA and Element. The company is majority owned by funds managed by Oaktree Capital Management, L.P. The principal methodology used in these ratings was Apparel Methodology published in October 2019. BOART LONGYEAR: S&P Lowers ICR to 'SD' on Secured Note Amendment ---------------------------------------------------------------- S&P Global Ratings lowered its issuer credit rating on U.S.-based drilling services provider and manufacturer Boart Longyear Ltd. (BLY) to 'SD' (selective default) from 'CC'. S&P is lowering its issue-level rating on the company's senior secured notes to 'D' from 'CC'. The unsecured notes are rated 'C', with a '6' recovery rating. The downgrade follows BLY's conversion of the June 2020 and December 2020 interest payments due on its senior secured notes to PIK interest from cash interest. The company will pay 12.0% and 14.5% PIK interest in June and December, respectively, rather than the previous 10.0% rate. While these payments will have a higher interest rate, S&P considers this modification a selective default since investors are receiving less than they were originally promised under the security, partly because the amendment will delay the timing of the interest payments. S&P expects to reevaluate its rating on BLY and the company's capital structure in the coming week. The issuer credit rating will likely remain in the 'CCC' category, given unsustainable debt leverage and its view that BLY will have difficulty meeting its financial obligations under current weak market conditions and because of weak cash flow generation. BORR DRILLING LTD: Obtains Financial Lifeline By Restructuring Deal ------------------------------------------------------------------- Seeking Alpha reported in early June that Borr Drilling (NYSE:BORR) reached a debt restructuring deal with lenders and shipyards that will improve liquidity by more than $315 million to Q1 2022. Borr will delay delivery of five newbuild jack-up rigs until mid-2022, which will improve its liquidity by $190 million, defer certain interest payments until 2022, for liquidity improvement of $60 million, and defer debt amortization in 2021 of $65 million until maturity of the loans in Q2 2022. The company says the amended financing package gives a required cash breakeven bareboat contribution in 2021 at only ~$20,000 per day per rig based on just 12 rigs in operation. About Borr Drillng Ltd. Borr Drilling Limited operates as an offshore drilling contractor to the oil and gas industry worldwide. The company operates a fleet of 27 jack-up drilling rigs. It provides drilling services to the oil and gas exploration and production companies, including integrated oil companies, state-owned national oil companies, and independent oil and gas companies. The company was formerly known as Magni Drilling Limited. Borr Drilling Limited was founded in 2016 and is based in Hamilton, Bermuda. BOULDER CAB: Voluntary Chapter 11 Case Summary ---------------------------------------------- Debtor: Boulder Cab, Inc. d/b/a Deluxe Taxicab Service 6055 Emerald Ave. Las Vegas, NV 89122 Business Description: Boulder Cab, Inc. -- http://www.deluxetaxicabservice.com-- is a taxi company that provides a fleet of top of the line vehicles available to travel throughout the Las Vegas area. The company offers around the clock, door-to-door airport transportation from anywhere in Las Vegas & Henderson areas, as well as Boulder City to and from the airport. Chapter 11 Petition Date: June 25, 2020 Court: United States Bankruptcy Court District of Nevada Case No.: 20-13069 Debtor's Counsel: Candace C. Carlyon, Esq. CARLYON CICA CHTD. 265 E. Warm Springs Road Suite 107 Las Vegas, NV 89119 Tel: 702-685-4444 E-mail: ccarlyon@carlyoncica.com Estimated Assets: $500,000 to $1 million Estimated Liabilities: $1 million to $10 million The petition was signed by Richard Flaven, president. A copy of the petition is available for free at PacerMonitor.com at: https://is.gd/y6ZvpA BRISTOW GROUP: S&P Raises 7.75% Senior Unsecured Note Rating to 'B' ------------------------------------------------------------------- S&P Global Ratings raised its issue-level rating on Bristow Group Inc.'s 7.75% senior unsecured notes due 2022 to 'B' from 'B-' and removed the rating from CreditWatch, where S&P placed it with positive implications on Jan. 28, 2020, following the close of the company's merger. S&P also revised its recovery rating on the notes to '2' from '3'. "We had placed our rating on the notes on CreditWatch with positive implications following the merger announcement to reflect the likelihood that we would revise our recovery rating and raise our issue-level rating upon the close of the deal. We based this on Bristow's proposed pro forma capital structure, which included a lower amount of priority debt, as well as the additional collateral value from the legacy-Bristow fleet," S&P said. The merger closed on June 11, 2020, and the legacy Bristow Group (now Bristow Holdings U.S. Inc.) became a wholly owned subsidiary of Era Group Inc. (now Bristow Group Inc.). The company's final capital structure was largely in line with S&P's previous expectations, including the retirement of legacy Era's $125 million revolving credit facility and the extinguishment of legacy Bristow's $75 million term loan. This rating action does not affect S&P's 'B-' issuer credit rating on Bristow Group. ISSUE RATINGS--RECOVERY ANALYSIS S&P rates Bristow Group's $144 million 7.75% senior unsecured notes due December 2022 'B' with a '2' recovery rating. Key analytical factors -- S&P's simulated default scenario assumes an extended period of weak oil and gas commodity prices worldwide that leads to a major cutback in exploration and production spending, long delays in the start-up of offshore projects, and correspondingly reduced demand for helicopter services, which is exacerbated by excess equipment capacity in the market. -- S&P has valued Bristow on a discrete asset valuation (DAV) basis due to the asset-heavy nature of its business. S&P assumes 10% dilution per year on the value of all aircraft and a 50% value realization rate. -- S&P's recovery analysis assumes a 60% draw on the company's $80 million asset-based lending (ABL) facility. -- S&P's analysis accounts for the company's scheduled debt amortization. Simulated default assumptions -- Simulated year of default: 2022 -- Insolvency jurisdiction rank: A Simplified waterfall -- Net enterprise value (after 7% in administrative costs): $812 million -- Collateral available to secured and priority claims: $624 million -- Total senior secured claims: $624 million -- Recovery expectations: Not applicable -- Total value available to unsecured claims: $189 million -- Total unsecured claims: $150 million -- Recovery expectations: 70%-90% (rounded estimate: 85%) Note: All debt amounts include six months of prepetition interest. S&P caps its recovery rating on Bristow's unsecured debt at '2' due to its 'B-' issuer credit rating on the company. CALIFORNIA RESOURCES: Widens Net Loss to $1.7B in First Quarter --------------------------------------------------------------- California Resources Corporation reported a net loss of $1.74 billion on $573 million of total revenues for the three months ended March 31, 2020, compared to a net loss of $44 million on $690 million of total revenues for the three months ended March 31, 2019. As of March 31, 2020, the Company had $4.97 billion in total assets, $543 million in total current liabilities, $4.86 billion in long-term debt, $135 million in deferred gain and issuance costs, $715 million in other long-term liabilities, $816 million in mezzanine equity, and a total deficit of $2.09 billion. California Resources said, "Our liquidity and ability to meet our debt obligations have been negatively impacted by the sharp decrease in commodity prices as a result of the Coronavirus Disease 2019 (COVID-19) pandemic and by the actions of foreign producers. Our primary sources of liquidity and capital resources are cash flow from operations and available borrowing capacity under our Credit Agreement with JPMorgan Chase Bank, N.A., as administrative agent, and certain other lenders (2014 Revolving Credit Facility). As of March 31, 2020, we had available liquidity of $395 million, consisting of $67 million in unrestricted cash and $328 million of available borrowing capacity under our 2014 Revolving Credit Facility (before a $150 million month-end minimum liquidity requirement). On April 30, 2020, our 2014 Revolving Credit Facility was amended to reduce the limit on our revolving credit facility from $1 billion to $900 million, among other things. Our ability to borrow under our 2014 Revolving Credit Facility is limited by our ability to comply with its covenants, including quarterly financial covenants, and by our borrowing base. Pursuant to a semi-annual borrowing base redetermination, our borrowing base was reduced from $2.3 billion to $1.2 billion effective as of May 18, 2020, with no further reduction in our ability to borrow under the 2014 Revolving Credit Facility. As of May 31, 2020, we had available liquidity of $165 million, consisting of $148 million in unrestricted cash and $17 million of available borrowing capacity under our 2014 Revolving Credit Facility (before a $150 million month-end minimum liquidity requirement). However, the Forbearance Agreements do not permit us to make any drawings under the 2014 Revolving Credit Facility until the expiration of the forbearance period described below. We expect that operating cash flow and expected available credit capacity will not be sufficient to meet our commitments over the next twelve months." On June 15, 2020, the Company did not make an interest payment of approximately $72.3 million on its 8% Senior Secured Second Lien Notes due 2022 (Second Lien Notes). The indenture governing the Second Lien Notes provides for a 30-day grace period, which will expire on July 15, 2020. A failure to pay the interest within the 30-day grace period would constitute an event of default under the Second Lien Notes Indenture and cross defaults under our other debt instruments and agreements. "We are actively discussing the terms of a restructuring with our creditors and other stakeholders with the objective of reaching an agreement before the forbearance period under the Forbearance Agreements expires on June 30, 2020. There can be no assurances that an agreement regarding a restructuring will be reached by the end of the forbearance period or at all or that we will be able to successfully restructure our indebtedness. In addition, no assurances can be given as to what values, if any, will be ascribed to each of our securities or what type or amounts of distributions, if any, our various stakeholders would receive in any restructuring. Any restructuring could result in holders of certain liabilities and/or securities, including common stock, receiving no distribution on account of their claims or interest," the Company stated. A full-text copy of the Quarterly Report is available for free at the Securities and Exchange Commission's website at: https://is.gd/y34sGU About California Resources California Resources Corporation -- http://www.crc.com-- is an oil and natural gas exploration and production company headquartered in Los Angeles, California. CRC operates its resource base exclusively within the State of California, applying complementary and integrated infrastructure to gather, process and market its production. California Resources reported a net loss attributable to common stock of $28 million for the year ended Dec. 31, 2019, compared to net income attributable to common stock of $328 million for the year ended Dec. 31, 2018. * * * In March 2019, S&P Global Ratings lowered the issuer credit rating on the company to 'CC' from 'CCC+'. The downgrade follows the company's announcement of a potential exchange transaction that aims to swap CRC's 8% second-lien notes due 2022, 5.5% unsecured notes due 2021, and its 6% unsecured notes due 2024 into two packages of new securities including a) "RoyaltyCo" notes and RoyaltyCo Class B shares or b) 1.75 lien term loan and CRC warrants. As reported by the TCR on April 6, 2020, Moody's Investors Service downgraded California Resources Corp.'s Corporate Family Rating to Caa3 from Caa1. The rating actions reflect CRC's elevated restructuring risk, including the potential for a bankruptcy filing or distressed exchange, following its failed attempt to execute a debt for debt exchange in March. CAMBER ENERGY: Raises $6M Through Sale of Series C Pref. Stock -------------------------------------------------------------- Camber Energy, Inc. sold 630 shares of its Series C Redeemable Convertible Preferred Stock to an institutional investor in consideration for $6 million (a 5% original issue discount to the $10,000 face value of such preferred stock). The Company plans to use the funds raised to pay operating expenses and expenses in connection with the merger contemplated by that certain Agreement and Plan of Merger entered into between the Company and Viking Energy Group, Inc. on Feb. 3, 2020, as amended from time to time, and subject to the parties coming to an agreement on terms and conditions relating to such advance, to advance a substantial portion of such funds to Viking, in anticipation of the Merger. The Company recently received comments from the Securities and Exchange Commission on its initial draft Registration Statement on Form S-4 and plans to turn its attention to addressing such comments and re-filing the updated Form S-4 after the filing of the Company's annual report on Form 10-K, which the Company plans to file later this week. The Company's goal is still to close the Merger by late summer, as previously disclosed. In connection with sale of the Series C Preferred Stock to the institutional investor, such investor (who held all 2,566 outstanding shares of the Company's Series C Preferred Stock prior to the sale of the 630 new shares of preferred stock described above), entered into an amendment agreement with the Company. Pursuant to such agreement, the investor agreed to waive the requirement previously set forth in the purchase agreement entered into with such investor in February 2020, pursuant to which the investor purchased 525 shares of Series C Preferred Stock for $5 million, which would have required the Company to redeem all 525 of such shares of Series C Preferred Stock, for 110% of their face value (an aggregate of $5,775,000), in the event that the Merger did not close. As a result of such amendment, the $5,000,000 paid by the investor to the Company for the purchase of the 525 shares of Series C Preferred Stock on Feb. 3, 2020 will be released from temporary equity and included in permanent equity in the Company's June 30, 2020 balance sheet. Notwithstanding such amendment, the June 22, 2020 purchase agreement entered into with the investor requires, similar to as the prior terms of the February 2020 purchase agreement, that the Company redeem all 630 shares of Series C Preferred Stock sold to the investor at 110% of their face value, in the event the Merger does not close (which repurchase obligation totals $6,930,000). Louis G. Schott, interim CEO of the Company, stated, "We believe with this cash infusion, we will have sufficient capital to close the merger with Viking, and plan to continue to work towards closing such merger in the weeks ahead. Additionally, with the change in the presentation of the prior Series C Preferred Stock sold in February 2020 from temporary equity, to permanent equity, on the Company's June 30, 2020 balance sheet, we anticipate increasing our stockholders' equity as of June 30, 2020 to a level sufficient to meet the NYSE American's continued listing standards." About Camber Energy Based in Houston, Texas, Camber Energy -- http://www.camber.energy -- is primarily engaged in the acquisition, development and sale of crude oil, natural gas and natural gas liquids from various known productive geological formations, including from the Hunton formation in Lincoln, Logan, Payne and Okfuskee Counties, in central Oklahoma; the Cline shale and upper Wolfberry shale in Glasscock County, Texas; and Hutchinson County, Texas, in connection with its Panhandle acquisition which closed in March 2018. As of Dec. 31, 2019, Camber Energy had $5.10 million in total assets, $2.02 million in total liabilities, and $3.08 million in total stockholders' equity. For the nine months ended Dec. 31, 2019, the Company reported a net loss of $3.40 million. At Dec. 31, 2019, the Company's total current assets of $2.4 million exceeded its total current liabilities of approximately $2.0 million, resulting in working capital of $0.4 million, while at March 31, 2019, the Company's total current assets of $8.2 million exceeded its total current liabilities of approximately $2.1 million, resulting in working capital of $6.1 million. The reduction from $6.1 million to $0.4 million is due to losses from continuing operations and costs incurred with the merger and ultimate divestiture of Lineal, including funds loaned to Lineal in connection with such divestiture. The Company said the factors above raise substantial doubt about its ability to continue to operate as a going concern for the twelve months following the issuance of these financial statements. The Company believes that it will not have sufficient liquidity to meet its operating costs unless it can raise new funding, which may be through the sale of debt or equity or unless it closes the Viking Merger, which is scheduled to be closed by June 30, 2020, extendable up to Dec. 31, 2020 under certain circumstances, the completion of which is the Company's current plan. There is no guarantee though that the Viking merger will be completed or other sources of funding be available. CANCER GENETICS: Incurs $1.2 Million Net Loss in First Quarter -------------------------------------------------------------- Cancer Genetics, Inc. reported a net loss of $1.18 million for the three months ended March 31, 2020, compared to a net loss of $4.62 million for the three months ended March 31, 2019. The Company reported total revenue from continuing operations of $1.4 million for the first quarter of 2020 compared to revenue of $1.8 million in the first quarter of 2019 (which included $0.3 million from an IP license arrangement unrelated to the Discovery Services business unit), a decrease of approximately $0.4 million or 21.7%. Gross profit decreased to $0.6 million or 42.9% in the first quarter of 2020, compared to $0.8 million or 45.0% in the first quarter of 2019. While the overall gross margin decreased by 2.1 percentage points primarily as a result of the high margin revenue recorded from the IP license transaction, the Discovery Services business unit gross margin increased from $0.5 million or 34.2% in the first quarter of 2019 to $0.6 million or 42.9% in the first quarter of 2020 principally due to a reduction in outsourcing costs offset by a slight seasonal effect on revenue. The remaining costs are relatively consistent in the comparable periods for the Discovery Services business unit. Total operating expenses for the first quarter of 2020 were approximately $1.9 million, a decrease of 4.7% compared to $2.0 million during the first quarter of 2019. The decrease in total operating expenses was partially due to decreased corporate costs, partially offset by higher sales and marketing spend in the Discovery Services business unit compared to the first quarter of 2019. Cash and cash equivalents totaled approximately $3.9 million as of March 31, 2020, including restricted cash. As of March 31, 2020, the Company had $14.28 million in total assets, $7.90 million in total liabilities, and $6.38 million in total stockholders' equity. John A. Roberts, chief executive officer of Cancer Genetics stated, "In Q1 2020, our Discovery Services business unit remained stable, and believe it will continue to experience year-over-year revenue growth in 2020, consistent with prior years. Our operating costs associated with the disposition of certain business assets in 2019 and the related financial statement audit for 2019 were greater than expected in Q1 2020. While we anticipate that certain expenses related to these events will continue in Q2 2020, given the one-time occurrence of these transactions, we expect operating costs to be significantly reduced in the second half of 2020." "Efforts have accelerated to identify strategic and collaboration partners so that we can execute our plans to further enhance value for our shareholders. We intend to transform the business significantly by continuing to improve our balance sheet and refocusing the business on precision and translational medicine. We feel these actions will move our business into the emerging area of drug discovery and novel therapies. As previously reported, various strategic options are being evaluated. We are pleased to report that our vivoPharm business continues to operate efficiently, allowing us to take a thoughtful and methodical approach in regards to a future transaction," Mr. Roberts stated. "In summary, the Company's management and Board of Directors are committed to evaluating all potential strategic opportunities and to pursuing the path most likely to create both near and longer-term value for Cancer Genetics' shareholders. We look forward to keeping shareholders apprised of our progress," Mr. Roberts concluded. A full-text copy of the Quarterly Report is available for free at the Securities and Exchange Commission's website at: https://is.gd/q0zgNH About Cancer Genetics Through its vivoPharm subsidiary, the Cancer Genetics -- www.cancergenetics.com -- offers proprietary preclinical test systems supporting clinical diagnostic offerings at early stages, valued by the pharmaceutical industry, biotechnology companies and academic research centers. The Company is focused on precision and translational medicine to drive drug discovery and novel therapies. vivoPharm specializes in conducting studies tailored to guide drug development, starting from compound libraries and ending with a comprehensive set of in vitro and in vivo data and reports, as needed for Investigational New Drug filings. vivoPharm operates in The Association for Assessment and Accreditation of Laboratory Animal Care International (AAALAC) accredited and GLP compliant audited facilities. Cancer Genetics reported a net loss of $6.71 million for the year ended Dec. 31, 2019, compared to a net loss of $20.37 million for the year ended Dec. 31, 2018. Marcum LLP, in Houston, Texas, the Company's auditor since 2019, issued a "going concern" qualification in its report dated May 29, 2020, citing that the Company has minimal working capital, has incurred significant losses and needs to raise additional funds to meet its obligations and sustain its operations. These conditions raise substantial doubt about the Company's ability to continue as a going concern. CARLSON TRAVEL: Moody's Lowers CFR to Caa3, Outlook Negative ------------------------------------------------------------ Moody's Investors Service downgraded Carlson Travel, Inc.'s Corporate Family Rating to Caa3 from B3 and Probability of Default Rating to Caa3-PD from B3-PD. Concurrently, Moody's downgraded the ratings on the company's senior secured notes to Caa3 from B2 and downgraded its senior unsecured notes to Ca from Caa2. The outlook remains negative. The downgrade to Caa3 CFR and negative outlook reflects Moody's expectation that a meaningful recovery in corporate travel is unlikely over the near term, due to lingering safety concerns and the discretionary nature of business travel spending in the midst of an economic slowdown. Since early March, the company has reduced annual cash spend by at least $320 million through employee actions and curtailing capital expenditures to combat the effects of the coronavirus, and prudently managed its liquidity between the period of March to May. However, the precipitous decline in business travel has left the company with a highly levered and unsustainable capital structure. Carlson Travel had approximately $225 million of balance sheet cash as of May 30, 2020 and its revolving credit facilities were largely drawn. Based on estimated monthly cash burn of around $25-30 million (before any debt service cost) and the uncertainty around management's ability to obtain covenant waivers and to replenish its cash reserves, the company's default risk is raised significantly. The company's current bonds are trading at significant discounts to par, which also raises the potential for debt restructuring or a distressed exchange. Downgrades: Issuer: Carlson Travel, Inc. Corporate Family Rating, Downgraded to Caa3 from B3 Probability of Default Rating, Downgraded to Caa3-PD from B3-PD Senior Secured Regular Bond/Debenture, Downgraded to Caa3 (LGD3) from B2 (LGD3) Senior Unsecured Regular Bond/Debenture, Downgraded to Ca (LGD5) from Caa2 (LGD5) Outlook Actions: Issuer: Carlson Travel, Inc. Outlook, Remains Negative RATINGS RATIONALE The rapid and widening spread of the coronavirus outbreak, the deteriorating global economic outlook, falling oil prices and asset price declines are creating a severe and extensive credit shock across many sectors, regions and markets. The combined credit effects of these developments are unprecedented. The global travel sector has been one of the sectors most significantly affected by the shock given its exposure to travel restrictions and sensitivity to business and consumer demand and sentiment. Specifically, Carlson Travel is vulnerable to shifts in market sentiment in these unprecedented operating conditions, and the company remains vulnerable to the outbreak continuing to spread. Moody's regards the coronavirus outbreak as a social risk under its ESG framework, given the substantial implications for public health and safety. The actions reflect the impact on Carlson Travel of the breadth and severity of the shock, and the broad deterioration in credit quality it has triggered. Carlson Travel's Caa3 CFR reflects the company's highly leveraged capital structure, elevated risk of a potential default and severe operating headwinds due to devastating effects of the pandemic on global travel. Meaningful recovery for business travel is unlikely in the near to medium term. Moody's believes that ongoing travel restrictions amid health and safety issues will be the primary headwinds for the corporate travel budgets to return to more "normal" levels. As organizations adopt virtual meetings that have been in place during the pandemic as part of their normal operations going forward, there is a high probability that overall travel & entertainment budgets will be depressed compared to prior levels. The risk of more challenging downside scenarios remains high, and the severity and duration of the pandemic and travel restrictions remain highly uncertain, particularly given the threat of an increase in the number of infections as social distancing practices across the US and other countries become less stringent in upcoming weeks and beyond. Early in the first quarter of 2020, the company took immediate actions to right size the cost structure amid declining transactional volumes. Though the company's cost structure is highly variable, Moody's projects that the company will likely burn through a significant portion of its cash reserves over the next few quarters and will need to obtain a covenant waiver in the second quarter of 2020. Moody's deems the company's capital structure unsustainable and expects the company will face the risk of a default or debt restructuring by the end of 2020. The negative outlook reflects Moody's expectation of weakened credit metrics and liquidity, compounded by the uncertainty of the time and trajectory of the recovery. A debt restructuring, covenant breach or an event of default is very likely if the company does not proactively address its capital structure or shore-up its near-term liquidity. Moody's expects Carlson Travel to have very weak liquidity over the next 12-15 months. Sources of liquidity consist of approximately $225 million of balance sheet cash as of May 30, 2020 and Moody's expectation for a cash flow deficit of $25-30 million per month before any debt service payments. The company's revolving USD and multi-currency revolving credit facilities remain largely drawn. The bank agreement contains a minimum EBITDA covenant, which is tested quarterly. Moody's projects the company will breach the covenant in the second quarter of 2020. Management is currently working with its stakeholders and outside parties for additional sources of liquidity, including potential liquidity under government loans in the U.S. and other jurisdictions. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The ratings could be downgraded if the company is unable to obtain a covenant waiver from its lenders, liquidity continues to deteriorate, including sustained negative free cash flow and inability to secure additional financing leads to a default or formal debt restructuring. The ratings could also be downgraded if Moody's recovery expectations on the company's debt instruments were to weaken. Moody's could consider an upgrade if the company demonstrates improvement in operating results, reduced its indebtedness to a more sustainable level and maintains at least adequate liquidity. Formed in 1997, Carlson Travel is a leading global B2B4E (Business-to-Business-for-Employees) travel management platform serving corporations of all sizes as well as government institutions around the world. In 2019 CWT reported net revenues of $1.5 billion. Carlson Travel operates in nearly 145 countries and territories worldwide, with around 16,000 employees in its wholly owned operations. The company provides the following services: (i) Corporate Traveler Services, providing both online and full-service offline travel bookings for corporate and government clients; (ii) Meetings & Events Services, assisting clients to create and manage meetings and events on a cost effective basis; and (iii) RoomIT hotel distribution services, providing a comprehensive hotel inventory and booking solution for clients and their business travelers, as well as distribution platform for over 800,000 hotels. CWT is wholly owned and has been operated by the Carlson Family for many years. The principal methodology used in these ratings was Business and Consumer Service Industry published in October 2016. CARNIVAL CORP: S&P Cuts ICR to BB-; Ratings Remain on Watch Neg. ---------------------------------------------------------------- S&P Global Ratings lowered its issuer credit rating on global cruise operator Carnival Corp. to 'BB-' from 'BBB-', its issue-level rating on its secured notes to 'BB+' from 'BBB-', and its issue-level rating on its unsecured debt to 'BB-' from 'BBB-'. S&P also assigned its '1' recovery rating to the secured notes and its '3' recovery rating to the unsecured debt. All of S&P's ratings on the company remain on CreditWatch, where it initially placed them with negative implications on March 10, 2020. At the same time, S&P assigned its 'BB+' issue-level rating and '1' recovery rating to the company's proposed $1.5 billion of secured term loans and placed the issue-level rating on CreditWatch with negative implications. S&P expects Carnival's credit measures to remain very weak through 2021 because of its plans for a gradual reintroduction of capacity and the rating agency's forecast for continued weak demand. We forecast that the company's credit measures will remain very weak through 2021 and anticipate that its adjusted leverage may potentially exceed 10x in 2021 following a significant deterioration in its performance in 2020 due to the temporary suspension of its operations since mid-March. S&P's updated forecast reflects its expectation that Carnival may begin to bring its capacity back online in a phased manner as early as September 2020. Resuming its operations in a phased manner may help the company better align its supply and demand, target easily accessible homeports, and better manage its itineraries because S&P believes the company's initial itineraries will be limited due to continued port closures and local government and health authority requirements. Additionally, S&P believes it may take multiple months for Carnival to bring all of its ships back into service and expect that the coronavirus pandemic will lead the company to accelerate the removal of its older ships and delay new ship deliveries. S&P's updated forecast for 2021 assumes very high leverage, which compares with its previous estimate that Carnival would improve its leverage back to the mid- to high-3x area in 2021. S&P now expects the company's EBITDA to be significantly more negative in 2020 because of expenses to repatriate its guests and crew that were higher than the rating agency anticipated and the incremental expenses associated with its need to keep more ships out of service for longer than the rating agency had previously assumed. Currently, S&P believes Carnival's recovery will be much slower in 2021 given its plan to return to service in phases. S&P's revised 2021 forecast now contemplates: -- Net revenue yields decline by about 10%-20% from 2019 levels because of weaker expected demand and customer utilization of future cruise credits. This compares with S&P's prior forecast for 2021 net yields of about 6%-8% below 2019 levels; -- Total revenue remains 25%-30% below 2019 levels because of weaker net revenue yields, a gradual reintroduction of capacity that reduces available lower berth days compared with 2019, and S&P's expectation that Carnival may operate at much lower occupancy as it resumes its operations. S&P believes the company's capacity will not reach 2019 levels by the end of 2021 because of management's plan for a phased return to service as it tries to manage its supply with demand, determine available itineraries, and accelerate its disposal of older ships (Carnival indicated it intends to dispose of at least six ships); -- S&P believes cruise operators will implement social distancing and other health and safety measures on their ships to reduce the spread of the virus. It believes these social distancing measures may limit the maximum potential occupancy of the ships and potentially reduce their operators' profitability and cash flow. S&P also believes that lower demand and lingering travel fears may hurt their occupancy; -- Net cruise costs per available lower berth day (ALBD), excluding fuel, remain elevated above 2019 levels into 2021 given the incremental expenses associated with keeping ships out of service and the costs related to bringing them back online. This compares with S&P's prior forecast that 2021 net cruise costs would be flat to slightly below 2019 levels; -- S&P believes Carnival may be able to limit its margin compression as it ramps up its fleet. Specifically, S&P anticipates the company could maintain reduced levels of marketing and selling expenses, particularly because it will have fewer ships to market, and believe it could manage certain ship-level expenses--like fuel, food, and crew payroll--to align with its potential reduced ship occupancy; -- These assumptions translate into EBITDA that is 50%-60% below 2019 levels; -- Given S&P's significantly more negative forecast for EBITDA in 2020 and slower recovery in 2021, it now estimates its debt levels will be materially higher in 2021 at about $25 billion as of the end of the year, which compares with its prior forecast for debt of about $20 billion; and -- Nevertheless, S&P believes there continues to be a high degree of variability in its currently contemplated recovery path, particularly with respect to how its consumers will respond to continued flare-ups or waves of the virus in the absence of a vaccine or effective treatment. Although the consensus among health experts is that the pandemic may now be at, or near, its peak in some regions, it will remain a threat until a vaccine or effective treatment is widely available, which may not occur until the second half of 2021. "We believe that in 2022, Carnival may generate sufficient EBITDA to reduce its adjusted leverage below 6x if its demand begins to recover and net yields improve closer to 2019 levels while its net cruise costs per ALBD (excluding fuel) moderate closer to 2019 levels. If the company improved its adjusted leverage to this level, we would view it as in line with our current 'BB-' issuer credit rating," S&P said. S&P believes Carnival's scale offers it less protection from cash flow volatility given its industry's high capital intensity and its need to take delivery of ordered ships regardless of its operating environment. The cruise industry is highly capital intensive and operators generally must commit to new ship deliveries at least a few years in advance. While the operators generally obtain financing commitments for the ships before their delivery, which provides them with liquidity in case their cash flow declines, the incremental debt can significantly weaken their credit measures during periods of operating weakness because their debt balances increase while their EBITDA declines. Prior to the pandemic, S&P believed Carnival benefitted from its large scale in terms of cash flow generation because it could internally fund at least four to five large ship purchases each year with internally generated funds. Given its very negative EBITDA this year and S&P's expectation that it will likely take multiple years for Carnival's cash flow to recover to pre-pandemic levels, the rating agency believes the company's planned ship orders will materially slow the recovery in its credit measures because its capital expenditures (capex) for new ships will likely exceed its EBITDA potentially through 2022. S&P expects ship deliveries across the industry to be delayed by a few months, at least over the next few years, due--in part--to the temporary closure of shipyards to prevent the spread of the coronavirus. S&P believes Carnival will also accelerate the removal of older ships from its fleet over the next few quarters to help manage its supply and demand. During periods of steeply declining demand, the incremental capacity from new ships can exacerbate industry pricing pressure as operators try to match their supply with demand. Although operators can take ships out of service to manage their capacity, they still incur expenses to keep the ships laid up. Although these expenses are relatively minimal on a per-ship basis, for Carnival--which has a large fleet of just over 100 ships,-- the expenses associated with keeping their ships out of service weigh on profitability. "Because we believe the cruise industry may face an extended period of weak demand, we believe the company's attempts to manage its supply and demand may translate into lower-than-historical EBITDA margin for a few years. Specifically, we believe Carnival's EBITDA margin may remain below its historical level -the mid- to high-20% area for an extended period," S&P said. "We believe Carnival has sufficient sources of liquidity to fund its liquidity needs over the next year. Notwithstanding our forecast that its credit measures will remain very weak through 2021, we believe Carnival has sufficient sources of liquidity to fund its cash needs over the next year," the rating agency said. As of May 31, 2020, Carnival had $7.6 billion of available liquidity. S&P believes this liquidity, in conjunction with the proceeds from its proposed $1.5 billion term loan and committed ship financing (which typically covers around 80% of the cost of a ship at delivery), should be sufficient to cover the company's cash needs for the remainder of the current fiscal year (Carnival's fiscal year ends Nov. 30, 2020) and into 2021. The company's cash uses include: -- Between $5 billion and $6 billion of negative operating cash flow in 2020 due to materially negative EBITDA and a large working capital cash outflow. S&P expects Carnival's working capital to be a material cash outflow of between $2 billion and $3 billion this year, a large portion of which the rating agency believes the company recognized in the second quarter. This is because S&P assumes the company's customer deposits will decline significantly by the end of the year due to a heightened level of cash refunds associated with its cancelled cruises and reflects the rating agency's expectation for lower pricing on the cruises booked in the second half of fiscal year 2020. S&P believes the company's operating cash flow may remain negative in early 2021 as it continues to phase in capacity and ramp up its operations; -- S&P estimates for capex of modestly below $4 billion in 2020 and modestly higher than $4 billion of capex in 2021. Carnival previously had five ships scheduled for delivery in 2020, though S&P believes delays may shift the timing of this capex to future periods; and -- About $1.2 billion of debt maturities in the second half of 2020 and about $1.3 billion in the first half of 2021. S&P's estimate for the company's debt maturities is net of approximately $600 million in certain ship loan amortization payments that Carnival is not expected to begin repaying until either March or May 2021. Environmental, social, and governance (ESG) credit factors for this credit rating change: -- Health and safety "The CreditWatch listing reflects the substantial uncertainty around Carnival's recovery path for later this year and into 2021. In resolving the CreditWatch, we will assess the company's ability to resume operation this year and its prospects for improving its profitability and reducing its very high leverage. Furthermore, we plan to assess how the pandemic might alter the level of travel or cruise demand over the longer term," S&P said. "We could lower our ratings on Carnival if we no longer believe it can recover and generate sufficient operating cash flow to begin to significantly reduce its very high adjusted leverage or if the company's liquidity position deteriorates," the rating agency said. CARPENTERS TECHNOLOGY: Moody's Cuts CFR to Ba3, Outlook Negative ---------------------------------------------------------------- Moody's Investors Service downgraded Carpenter Technology Corporation's Corporate Family Rating (CFR) to Ba3 from Ba1, its Probability of Default rating to Ba3-PD from Ba1-PD and its senior unsecured notes ratings to Ba3 from Ba1. The Speculative Grade Liquidity rating was downgraded to SGL-3 from SGL-2. The outlook was changed to negative from stable. "The downgrade to Ba3 in the CFR reflects the significant deterioration expected in Carpenter's operating performance and metrics as a result of coronavirus related disruptions on manufacturers in key end markets and the supply chains that serve them, particularly aerospace, which accounts for roughly 59% of revenues excluding surcharges" said Carol Cowan, Moody's Senior Vice President and lead analyst for Carpenter. "Additionally, the falloff in profitability and EBITDA will be more pronounced than revenues due to the substantive value-added component of specialty alloys into its markets served such as aeroengines" Cowan added. Downgrades: Issuer: Carpenter Technology Corporation Corporate Family Rating, Downgraded to Ba3 from Ba1 Probability of Default Rating, Downgraded to Ba3-PD from Ba1-PD Speculative Grade Liquidity Rating, Downgraded to SGL-3 from SGL-2 Senior Unsecured Regular Bond/Debenture, Downgraded to Ba3 (LGD4) from Ba1 (LGD4) Outlook Actions: Issuer: Carpenter Technology Corporation Outlook, Changed To Negative From Stable RATINGS RATIONALE The rapid and widening spread of the coronavirus outbreak, deteriorating global economic outlook, falling oil prices, and asset price declines are creating a severe and extensive credit shock across many sectors, regions and markets. The combined credit effects of these developments are unprecedented. The commercial aviation, automotive and energy sectors are amongst sectors most significantly affected by the shock given the exposure to declining passenger traffic, travel restrictions and sensitivity to consumer demand and sentiment. More specifically, Carpenter's substantial exposure to the aerospace and defense sector (roughly 59% of revenues excluding surcharges and automotive roughly 6% of revenues net of surcharges makes the company vulnerable to the material drop in build and production rates as well as the decline in drilling activity across these industries in these unprecedented operating conditions. Moody's regards the coronavirus outbreak as a social risk under its ESG framework, given the substantial implications for public health and safety. The action reflects the impact on of the breadth and severity of the shock, and the broad deterioration in credit quality it has triggered. Carpenters Ba3 CFR considers the company's strong position in the specialty metals markets as a producer of high strength, high temperature, corrosion resistant alloys. The company's, technological capabilities, which allow it to provide necessary products such as special alloys and titanium products for demanding end use industries such as aerospace, oil & gas drilling - particularly directional drilling - and medical applications are also acknowledged. These attributes position the company to achieve stronger performance in the markets served, although the duration of recovery time remains uncertain and is expected to be extended in the aerospace and transportation segments. Carpenter participates in the following market segments: Aerospace and Defense, Medical, Transportation, Energy, and Industrial and Consumer. In the Aerospace and Defense segment, with respect to product mix within that segment, approximately 40% is engines, 20% fasteners, 30% structural and 10% defense although these percentages can fluctuate depending on build rates. As Carpenter has a June 30 fiscal year-end, its 2020 performance will remain reasonable although the 4th quarter will be more materially impacted on the production curtailments in aerospace, the ongoing issues with and grounding of the Boeing 737 MAX and automotive (domestic auto production curtailed from roughly mid-March to mid-May) and ramp up will be slow in these industries. Additionally, the postponement of elective surgeries in the recent months will impact the company's sales to medical end markets although this is expected to show improving trends over the balance of calendar 2020. The company's exiting of its Amega West oil and gas business will remove this drain on earnings. Recovery in aerospace is expected to be protracted over a period of several years. Given that Moody's expects EBITDA to fall significantly more than revenues given the value-added component in the aerospace and defense segment, leverage, as measured by the debt/EBITDA ratio (including Moody's standard adjustments for pension and leases) is expected to exceed 12% in fiscal 2021 and remain above 5x in 2022. Moody's has assumed EBITDA of around adjusted $320 million in 2020. Adjusted EBITDA for the three quarters to March 31, 2020 was $283 million. In response to the coronavirus, the company has taken a number of steps including a review of capital investments, which is expected to improve cash flow by $50 million in fiscal 2021 and a 20% reduction in global salaried positions among other actions. These actions are expected to yield roughly $60/$70 million in cost savings. Carpenter is expected to be modestly free cash flow generative in 2020 and 2021 on working capital benefits and the reduction of inventory. The SGL-3 Speculative Grade Liquidity rating considers the company's adequate liquidity profile. This was comprised of $93 million in cash at March 31, 2020 and $224 million of availability under its $400 million revolving credit facility (RCF) after considering $170 million in borrowings and $5.9 million in Letters of Credit issued. Given the expectation of free cash flow generation in fiscal 2020, some level of repayment under the RCF is anticipated. Carpenter's $250 million 5.2% notes mature in July 2021. Inability to refinance would impact the liquidity profile. The negative outlook contemplates that improvement in key end markets, most importantly aerospace and defense, will be more protracted than currently anticipated and that improving trends over the next 12 -- 18 months will be slow with risk to a more protracted recovery time frame. Carpenter, like others in the steel, specialty metals and alloys industry are engaged in manufacturing processes that are energy intensive and produce carbon dioxide and greenhouse gases. The company, together with others in its industry faces numerous environmental regulations and pressures to reduce greenhouse gas and air pollution emissions, among a number of other sustainability issues and will likely incur costs to meet increasingly stringent regulations. Carpenter, as a US company, is subject to numerous regional, state and Federal regulations, including but not limited to the Clean Air Act, the Clean Water Act, the Comprehensive Environmental Responsible Compensation & Liabilities Act (CERCLA). From a social perspective, a portion of Carpenter's workforce is covered by various collective bargaining agreements. From a governance perspective, the company has evidenced a conservative and disciplined approach to its capital structure. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Moody's would consider an upgrade of Carpenter's credit ratings if leverage (adjusted debt/EBITDA) improves, on a sustainable basis, to below 3.5x, interest coverage, on a sustainable basis (adjusted EBIT/Interest) increases to above 3x and an adjusted EBIT margin to above 7% on a sustained basis. Expectations of sustainable positive Moody's adjusted free cash generation is also a prerequisite the ratings upgrade. Carpenter's ratings could be downgraded if liquidity, measured as cash plus revolver availability, evidences a material deterioration. Expectations of significantly prolonged production rate cuts by the company's key customers or an extended slump in the aerospace markets beyond what is currently contemplated (approximately 2-3 years) could lead to negative pressure on the ratings. Quantitatively, ratings could be downgraded if the adjusted EBIT margin is expected to be sustained below 5%, (Cash flow from operations less dividends)/debt is sustained below 20% or free cash flow is negative. Carpenter Technology Corporation, headquartered in Philadelphia, PA, is a producer and distributor of specialty materials, including stainless steel, titanium alloys and specialty alloys. The company operates through two business segments: Specialty Alloys Operations (SAO) and Performance Engineered Products (PEP), with the SAO segment contributing the bulk of the revenues and earnings. The company continues to focus on strategic investments in metal powder solutions and additive manufacturing capability. Revenues for the twelve months ended March 31, 2020 were $2.4 billion. The principal methodology used in these ratings was Steel Industry published in September 2017. CATHEDRAL PLACE: Case Summary & 2 Unsecured Creditors ----------------------------------------------------- Debtor: Cathedral Place LLC 15 Washington Avenue Portland, ME 04101 Case No.: 20-20243 Business Description: Cathedral Place LLC is a Single Asset Real Estate (as defined in 11 U.S.C. Section 101(51B)). It is the owner of fee simple title to a property located at 15 Washington Avenue Portland, ME having a comparable sale value of $1.8 million. Chapter 11 Petition Date: June 26, 2020 Court: United States Bankruptcy Court District of Maine Judge: Michael A. Fagone Debtor's Counsel: J. Scott Logan, Esq. LAW OFFICE OF J. SCOTT LOGAN, LLC 75 Pearl Street Portland, ME 04101 Tel: 207-699-1314 Email: scott@southernmainebankruptcy.com Total Assets: $1,802,000 Total Liabilities: $1,524,600 The petition was signed by Edward F. Walsh, Sr., manager. A copy of the petition containing, among other items, a list of the Debtor's two unsecured creditors is available for free at PacerMonitor.com at: https://is.gd/8Dny6g CENTRIC BRANDS: Hires Hilco Real Estate as Consultant ----------------------------------------------------- Centric Brands Inc. and its affiliated debtors seek approval from the United States Bankruptcy Court for the Southern District of New York to hire Hilco Real Estate, LLC as their real estate consultants. Centric Brands require Hilco to: (a) meet with the Debtors to ascertain the Debtors' goals, objectives and financial parameters; (b) mutually agree with the Debtors with respect to a strategic plan for restructuring, assigning, subleasing or terminating the Leases (the "Strategy"); (c) negotiate, on the Debtors' behalf, the terms of restructuring, assignment, sublease and termination agreements with third parties and the landlords under the Leases, in accordance with the Strategy; (d) provide written reports periodically to the Debtors regarding the status of such negotiations; and (e) assist the Debtors in closing the pertinent Lease restructuring, assignment, subleasing and termination agreements. Hilco will be compensated as follows: (a) Restructuring. For each Lease that becomes a Restructured Lease, Hilco shall earn a fee equal to a base fee of $1,000 plus the aggregate Restructured Lease Savings5 multiplied by 5.25 percent. Separately, if a Restructured Lease has less than three (3) years of committed term remaining and Hilco secures Restructured Lease Savings for the balance of the remaining committed term, to the extent the Debtors extend such Restructured Lease term at a later date, Hilco's Restructured Lease Savings Fee shall continue to be paid based on such additional term (not to exceed three (3) years in total), calculated as the difference between the original Lease rent and the rent negotiated by Hilco, until such original Restructured Lease Savings cease or three (3) years has passed since the Lease was deemed a Restructured Lease. The amounts payable on account of a Restructured Lease shall be paid in a lump sum upon closing of the transaction having the effect of restructuring the Lease. (b) Term Shortening/Termination. For each Lease that becomes a Term Shortened Lease,6 Hilco shall earn a fee equal to (i) where the term is shortened by at least six (6) months, the greater of one (1) month of gross rent under such Term Shortened Lease or $10,000, or (ii) where the term is shortened less than six (6) months, one-half (1/2) month of gross rent under such Term Shortened Lease. If Hilco secures Restructured Lease Savings that are separate and distinct from savings derived from terminating or shortening the term of a Lease, Hilco shall earn the applicable Restructured Lease Savings Fee on account of such Restructured Lease Savings. The amounts payable on account of a Term Shortened Lease shall be paid in a lump sum upon closing of the transaction having the effect of terminating the Lease. (c) Initial Fee. Upon execution of the Engagement Agreement, an initial fee of $50,000 became payable by the Debtors to Hilco. The Initial Fee was earned in full upon execution of the Engagement Agreement and is non-refundable; provided, however, that Hilco shall offset the Initial Fee against earned Restructured Lease Savings Fees and Term Shortened Lease Fees at a rate of $.25 on the dollar; provided, however, further, that in no event shall Hilco have any obligation to refund any portion of the Initial Fee. (d) Expenses. Pursuant to the Engagement Agreement, the Debtors are responsible for reimbursing Hilco for all reasonable, documented (through receipts or invoices) out-of-pocket expenses incurred by Hilco in connection with its performance of its services under the Engagement Agreement. Hilco is a "disinterested person" as that term is defined in section 101(14) of the Bankruptcy Code, according to court filings. Hilco can be reached through: Sarah Baker Hilco Real Estate, LLC 5 Revere Drive, Suite 206 Northbrook, IL 60062 Tel. (847) 504-2462 Email: sbaker@hilcoglobal.com About Centric Brands Centric Brands Inc. designs, produces, merchandises, manages and markets kidswear, accessories, and men's and women's apparel under owned, licensed and private label brands. Currently, the company and its affiliates license over 100 brands, including AllSaints, BCBG, Buffalo, Calvin Klein, Disney, Frye, Herve Leger, Jessica Simpson, Joe's, Kate Spade, Kenneth Cole, Marvel, Michael Kors, Nautica, Nickelodeon, Spyder, Timberland, Tommy Hilfiger, Under Armour, and Warner Brothers. The companies sell licensed products through both retail and wholesale channels. Centric Brands and its affiliates sought protection under Chapter 11 of the Bankruptcy Code (Bankr. S.D.N.Y. Lead Case No. 20-22637) on May 18, 2020. As of March 31, 2020, Debtors disclosed $1,855,722,808 in total assets and $2,014,385,923 in total liabilities. Judge Sean H. Lane oversees the cases. The Debtors tapped Ropes & Gray, LLP as bankruptcy counsel; PJT Partners, Inc. as investment banker; Alvarez & Marsal, LLC as financial advisor; and Prime Clerk, LLC as notice, claims and balloting agent. CENTRIC BRANDS: Unsecured Creditors to Receive Nothing in Plan -------------------------------------------------------------- Centric Brands Inc. and its debtor affiliates filed with the U.S. Bankruptcy Court for the Southern District of New York a Disclosure Statement describing Joint Chapter 11 Plan of Reorganization dated May 29, 2020. Holders of Class 3 First Lien Term Loan Claims in the amount of [$_] will receive (i) the face amount of its allowed First Lien Term Loan Claim in indebtedness under the Exit First Lien Term Loan Facility; and (ii) its Pro Rata share of 30 percent of the Reorganized Centric Equity Interests, subject to dilution by the Management Incentive Plan (if any). Holders of Class 4 Second Lien Secured Claims in the amount of $724.2 million will receive each receive its pro rata share of 70 percent of the Reorganized Centric equity interests, subject to dilution by the Management Incentive Plan (if any). 2024 Convertible Notes Claims in Class 5 will be canceled, released, discharged, and extinguished as of the Effective Date, and will be of no further force or effect, and holders of 2024 Convertible Notes Claims will not receive any distribution on account of such 2024 Convertible Notes Claims. Class 7 General Unsecured Claims will be canceled, released, discharged, and extinguished as of the Effective Date, and will be of no further force or effect, and Holders of General Unsecured Claims will not receive any distribution on account of such General Unsecured Claims. Class 11 Centric Interests will be canceled without any distribution on account of such Interests. The Reorganized Debtors will fund distributions under the Plan with (a) Cash on hand; (b) the issuance and distribution of Reorganized Centric Equity Interests; (c) proceeds from the Exit First Lien Revolving Loan Facility; (d) proceeds from the Exit Securitization Facility; and (e) proceeds from the Exit First Lien Term Loan Facility. On the Effective Date, Reorganized Centric and each of the other Reorganized Debtors will be a private company. Reorganized Centric and any of the Reorganized Debtors will take all necessary action immediately on or after the Effective Date to suspend any requirement to (a) be a reporting company under the Securities Exchange Act and (b) file reports with the Securities and Exchange Commission. On the Effective Date either (i) the Reorganized Debtors will enter into a new securitized facility with PNC, on terms reasonably acceptable to the Debtors and the Required Consenting Creditors, (ii) the Reorganized Debtors will enter into a new receivables facility with third parties (other than PNC), on terms reasonably acceptable to the Debtors and the Required Consenting Creditors or (iii) the Exit First Lien Revolving Loan Facility will be modified. A full-text copy of the Disclosure Statement dated May 29, 2020, is available at https://tinyurl.com/y8nuymcw from PacerMonitor at no charge. The Debtors are represented by: Ropes & Gray LLP 1211 6th Ave New York, NY 10036 Attn: Gregg M. Galardi Cristine Pirro Schwarzman E-mail: Gregg.Galardi@ropesgray.com Cristine.Schwarzman@ropesgray.com About Centric Brands Centric Brands Inc. designs, produces, merchandises, manages and markets kidswear, accessories, and men's and women's apparel under owned, licensed and private label brands. Currently, the company and its affiliates license over 100 brands, including AllSaints, BCBG, Buffalo, Calvin Klein, Disney, Frye, Herve Leger, Jessica Simpson, Joe's, Kate Spade, Kenneth Cole, Marvel, Michael Kors, Nautica, Nickelodeon, Spyder, Timberland, Tommy Hilfiger, Under Armour, and Warner Brothers. The companies sell licensed products through both retail and wholesale channels. Centric Brands and its affiliates sought protection under Chapter 11 of the Bankruptcy Code (Bankr. S.D.N.Y. Lead Case No. 20-22637) on May 18, 2020. As of March 31, 2020, Debtors disclosed $1,855,722,808 in total assets and $2,014,385,923 in total liabilities. Judge Sean H. Lane oversees the cases. The Debtors tapped Ropes & Gray, LLP as bankruptcy counsel; PJT Partners, Inc. as investment banker; Alvarez & Marsal, LLC as financial advisor; and Prime Clerk, LLC as notice, claims and balloting agent. CIRCLE BAR T: July 16 Plan & Disclosure Hearing Set --------------------------------------------------- On May 26, 2020, debtor Circle Bar T Demolition and Grading, Inc., filed with the U.S. Bankruptcy Court for the District of South Carolina a motion for conditional approval of the disclosure statement and a request to combine the hearing on final approval of the disclosure statement and confirmation of the plan. On May 29, 2020, Judge David R. Duncan granted the motion and ordered that: * The disclosure statement filed by Circle Bar T Demolition and Grading, Inc. is conditionally approved. * July 1, 2020, is fixed as the last day for all creditors and other parties in interest entitled to vote on the Plan to file their written acceptance or rejection of the Plan. * July 16, 2020 at 11:00 a.m. at the United States Bankruptcy Courthouse, 1100 Laurel Street, Columbia, South Carolina, at which the Court will consider whether an extension of time to confirm the plan should be finally approved. * July 16, 2020 at 11:00 a.m. is the hearing to consider final approval of the Disclosure Statement and confirmation of the Plan. * June 30, 2020, is fixed as the last day for any creditor or party in interest that wishes to object to confirmation of the Plan to file and serve the objection. A copy of the order dated May 29, 2020, is available at https://tinyurl.com/yas6ohcv from PacerMonitor at no charge. About Circle Bar T Demolition Circle Bar T Demolition and Grading, Inc., sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D.S.C. Case No. 19-04350) on Aug. 16, 2019. In the petition signed by Tom Coker Lee, president, the Debtor was estimated to have assets of between $100,001 and $500,000 and liabilities of between $500,001 and $1 million. The case is assigned to Judge David R. Duncan. The Debtor is represented by Eddye L. Lane, Esq., and J. Carolyn Stringer, Esq. No official committee of unsecured creditors has been appointed in the Debtor's case. COLUMBIA NUTRITIONAL: Unsecureds Owed $8.7M to Get At Least $1M --------------------------------------------------------------- Debtor Columbia Nutritional, LLC, a Washington limited liability company, filed with the U.S. Bankruptcy Court for the Western District of Washington at Tacoma a Plan of Reorganization and a Disclosure Statement on June 4, 2020. Class 7 General Unsecured Claims total $8,700,000. Class 7 will receive a total of: (1) $1,000,000 plus interest at the Plan Interest Rate, to be paid pro rata to holders of allowed unsecured claims in equal monthly installments over five years; plus (2) 50% of the net proceeds, if any, received from the pursuit of the Debtor's claims against anyone, including avoidance claims for preferential and fraudulent transfers under Chapter 5 of the Bankruptcy. This class is impaired and entitled to vote. Class 8 membership interests in the Debtor will be cancelled upon confirmation of the Plan and the members will receive no distribution on account of their current membership interests. This class is impaired, is not entitled to vote, and is deemed to have rejected the Plan. Upon confirmation of the Plan, new membership interests will be issued to the DIP Lenders and those investors providing new capital to the Reorganized Debtor. The DIP Lenders' loans totaling $700,000, plus accrued interest, fees, and other charges, will be converted to equity, and the investors’ capital contribution of $800,000 will be issued their pro rata share of membership interests in the Reorganized Debtor. The Debtor has resolved many of its operational issues during Chapter 11 and is now experiencing an increase in profitability. Since the filing of its Chapter 11 petition, the Debtor has collected many of its older accounts receivable, has generated and continues to generate substantial new business and accounts, and has increased its cash position from a balance of approximately $37,000 as of the petition date, to over $600,000 as of May 22, 2020, and there has been no material change in the value of inventory and receivables. During that same time period, the Debtor has and continues to make significant adequate protection payments of $50,000 per month to CSB, reducing the principal balance on the CSB loans by $200,000 as of June 4, 2020. A full-text copy of the Disclosure Statement dated June 4, 2020, is available at https://tinyurl.com/yc898xrw from PacerMonitor.com at no charge. The Debtor is represented by: SUSSMAN SHANK LLP Thomas W. Stilley Susan S. Ford Jesse C. Stewart About Columbia Nutritional Columbia Nutritional, LLC -- https://www.columbianutritional.com/ --is a contract manufacturer of dietary supplements based in the Pacific Northwest. Columbia Nutritional filed a voluntary petition under Chapter 11 of the Bankruptcy Code (Bankr. W.D. Wash. Case No. 20-40353) on Feb. 6, 2020. In the petition signed by COO Brea Viratos, the Debtor was estimated to have $1 million to $10 million in assets and $10 million to $50 million in liabilities. Judge Brian D. Lynch oversees the case. Thomas W. Stilley, Esq., at Sussman Shank LLP, serves as the Debtor's legal counsel. COMMSCOPE INC: S&P Rates $700 Million Senior Unsecured Notes 'B-' ----------------------------------------------------------------- S&P Global Ratings assigned its 'B-' issue-level rating and '5' recovery rating to Hickory, N.C.-based telecom equipment and components provider CommScope Inc.'s new eight-year, $700 million senior unsecured notes. CommScope intends to use proceeds from the issuance to redeem existing unsecured notes. The '5' recovery rating reflects S&P's expectation of modest recovery (10%-30%; rounded estimate: 10%) in a payment default. "Our issuer credit rating on CommScope remains 'B' with a negative outlook. Our rating and outlook on the firm reflect our view that macroeconomic weakness related to COVID-19 may delay carrier capital spending, particularly on 5G infrastructure, which could lead EBITDA to stagnate at current levels and leave leverage in the high 7x area for a prolonged period," S&P said. Sizable cash balances, a lack of near-term maturities, and potential demand growth from wired network investment provide support to the rating. Issue Ratings - Recovery Analysis Key analytical factors -- S&P's '2' and '5' recovery ratings on the firm's secured and unsecured debt, respectively, are unchanged. -- S&P's simulated default scenario assumes a payment default in 2023 due to reduced investment in communication infrastructure by the company's large cable and wireless customers during a global downturn. It also assumes slower-than-expected adoption of advanced communications technologies in emerging markets. -- S&P assumes CommScope repays $1.2 billion of its term loan by 2023, consistent with its commitment to reduce leverage. -- S&P values the company as a going concern because the rating agency believes the company would likely be reorganized rather than liquidated following a default due to its market position, brand, customer relationships, and intellectual property. -- S&P applies a 6.5x multiple to an estimated distressed emergence EBITDA of $680 million to estimate a gross recovery value of $4.4 billion. This multiple is at the higher end of the 5x-7x range S&P typically uses for technology hardware companies, given CommScope's market-leading products and customer relationships. Simulated default assumptions -- Simulated year of default: 2023 -- EBITDA at emergence: $680 million -- EBITDA multiple: 6.5x -- ABL 60% drawn at default Simplified waterfall -- Net enterprise value (after 5% administrative costs): $4.2 billion -- Priority claims (ABL): $610 million -- Valuation split (obligors/nonobligors): 60%/40% -- Collateral value available to secured lenders: $3.0 billion -- Secured debt claims: $4.5 billion -- Recovery expectations: 70%-90% (rounded estimate: 70%) -- Value available to unsecured lenders: $580 million -- Senior unsecured debt claims: $4.1 billion -- Recovery expectations: 10%-30% (rounded estimate: 10%) Note: All debt amounts include six months of prepetition interest. Collateral value equals asset pledge from obligors less priority claims plus equity pledge from nonobligors after nonobligor debt. COMSTOCK RESOURCES: Issues $500-Mil. 9.75% Senior Notes Due 2026 ---------------------------------------------------------------- Comstock Resources, Inc. issued $500.0 million aggregate principal amount of its 9.75% senior notes due 2026 in a public offering pursuant to an Indenture, dated as of June 23, 2020, as supplemented by a First Supplemental Indenture, dated as of June 23, 2020, between the Company and American Stock Transfer & Trust Company, LLC, as trustee. In addition, all of the Company's subsidiaries entered into the Indenture pursuant to which the subsidiaries agreed to unconditionally guarantee the Company's obligations under the Indenture and Notes. The Notes will mature on Aug. 15, 2026 and accrue interest at a rate of 9.75% per annum, payable semi-annually on February 15 and on August 15 of each year, commencing on Aug. 15, 2020. The Company has the option to redeem all or a portion of the Notes at any time prior to Aug. 15, 2021 at a price equal to 100% of the principal amount of the Notes redeemed plus accrued and unpaid interest to the redemption date plus a "make-whole" premium. At any time on or after Aug. 15, 2021, the Company may redeem the Notes, in whole or in part, at the redemption prices set forth in the Indenture. At any time before Aug. 15, 2021, the Company may also redeem up to 35% of the aggregate principal amount of the Notes at a redemption price not greater than the net cash proceeds from certain equity offerings at the redemption price specified in the Indenture, plus accrued and unpaid interest, if any, to the date of redemption, with the proceeds of certain equity offerings. Upon the occurrence of a Change of Control (as defined in the Indenture), each holder of Notes may require the Company to repurchase all or a portion of the Notes in cash at a price equal to 101% of the aggregate principal amount of the Notes to be repurchased, plus accrued and unpaid interest, if any, thereon to the date of repurchase. The Indenture contains covenants that limit, among other things, the Company's and its restricted subsidiaries' ability to (1) incur or guarantee additional debt or issue disqualified capital stock, (2) pay dividends or make other distributions on capital stock, (3) repurchase or redeem capital stock, (4) prepay, redeem or repurchase subordinated debt, (5) make certain investments, (6) create liens, (7) enter into transactions with affiliates, (8) sell assets, (9) issue or sell preferred stock of certain subsidiaries, and (10) engage in mergers or consolidations. These covenants are subject to a number of important exceptions or qualifications. About Comstock Resources Comstock Resources, Inc. -- http://www.comstockresources.com/-- is an independent energy company based in Frisco, Texas engaged in oil and gas acquisitions, exploration and development, and its assets are primarily located in Texas, Louisiana and North Dakota. The Company's stock is traded on the New York Stock Exchange under the symbol CRK. As of March 31, 2020, Comstock Resources had $4.64 billion in total assets, $3.08 billion in total liabilities, $207.08 million in series A 10% convertible preferred stock, $175 million in series B 10% convertible preferred stock, and $1.17 billion in total stockholders' equity. * * * As reported by the TCR on April 13, 2020, Moody's Investors Service downgraded Comstock Resources, Inc.'s Corporate Family Rating to Caa1 from B2. "Comstock's rating downgrade reflects weakened liquidity because of heavy reliance on the revolver which limits flexibility compounded by challenges from the weak natural gas price environment," said Jonathan Teitel, Moody's analyst. COMSTOCK RESOURCES: S&P Upgrades ICR to 'B-'; Outlook Stable ------------------------------------------------------------ S&P Global Ratings raised its issuer credit rating on U.S.-based oil and gas exploration and production (E&P) company Comstock Resources Inc. to 'B-' from 'CCC+' and its issue-level rating on its unsecured debt to 'B-' from 'CCC+'. At the same time, S&P is removing all of its ratings on the company from CreditWatch, where it placed them with positive implications on June 16, 2020. The upgrade primarily reflects significant improvement in Comstock's liquidity position and financial leverage following the recent funding of the company's $500 million 2026 notes add-on and successful offering of about $200 million of common stock in May. The notes issuance reduces pro forma revolver borrowings to $809 million (a 58% draw on the $1.4 billion borrowing base), compared to $1.25 billion outstanding (almost 90% draw) at the end of the first quarter. As a result, RBL availability will increase to almost $600 million from $150 million. Furthermore, the company's recent common stock offering facilitated the redemption of $210 million of its series A preferred stock, which improves S&P's assessment of financial leverage because S&P treats the preferred stock as a debt-like instrument. Due to these factors, S&P is now forecasting average funds from operations (FFO)-to-debt close to 20% and debt to EBITDA of around 3.5x. Additionally, S&P expects Comstock to generate free cash flow of over $100 million in 2020 and a meaningful amount in 2021, which should enable further pay-downs on its RBL facility." There are no near-term debt maturities as Comstock's RBL facility does not expire until 2024 and its nearest bond maturity is not until 2025. The company has hedged approximately 50% of its forecast 2020 and 2021 natural gas production and the majority of its oil production this year, which lessens the impact of commodity price volatility. From a business risk standpoint, Comstock continues to build on its Haynesville asset base of over 300,000 net acres along with approximately 1.4 billions of cubic feet equivalent per day (Bcfe/d) of production in the first quarter of 2020 and 5.4 trillion cubic feet equivalent (Tcfe) of proved reserves (98% gas, 65% developed) as of year-end 2019. Since its acquisition of Covey Park in mid-2019, the company has increased scale while achieving management's targeted synergies and cost savings, with first quarter operating costs down to approximately $0.50/mcfe from $0.68/mcfe in the second quarter of 2019. The company is operating more efficiently, with lower overhead and drilling and completion (D&C) costs per foot, as well as better access to gulf coast demand centers. Still, notwithstanding its non-operated Bakken assets, Comstock's strategy focuses on historically less-profitable natural gas production concentrated in one operating region exposing it to basis volatility and benchmark commodity pricing fluctuations. S&P also incorporates Comstock's high initial production decline rates and significant percentage of proved undeveloped reserves (PUDs) in its vulnerable assessment of its business risk. The stable outlook incorporates Comstock's lack of near-term debt maturities, low-cost structure, and sizeable hedge book. S&P expects liquidity to continue to improve over the next two years as the company generates meaningful free cash flow. "We could lower our rating on Comstock if its liquidity deteriorates, if we come to view its capital structure as unsustainable, or if we believe there is a significant probability it will undertake a debt exchange we would view as distressed," S&P said. "We could raise our rating on Comstock if it substantially reduces its outstanding revolver borrowings while expanding its production base and sustaining FFO-to-debt and debt-to-EBITDA ratios of more than 20% and less than 3.5x, respectively. We believe this scenario could occur if commodity prices improve and the company does not encounter any unforeseen operational issues," the rating agency said. CREATIVE HAIRDRESSERS: Sale to Tacit Salon Approved by Court ------------------------------------------------------------ Liz Hodges, writing for Valdosta Daily Times, reports that leading salon operator Creative Hairdressers Inc. announced that it received approval on June 5, 2020 to sell the substantial of its assets to HC Salon Holdings, an affiliate of Tacit Salon Holdings LLC. Creative will still continue operations and plans to reopen stores in phased approach with procedures put in place to ensure the safety of guests and salon professionals. "We are pleased to have navigated this stage of the process and have a new financial partner who is committed to support the business and help us rebound post-crisis," said Phil Horvath, President of Creative Hairdressers, Inc. "We are excited to move forward and focus on re-opening many of our salons, which we will do safely and in accordance with all state and municipal guidelines in the weeks ahead. We especially look forward to welcoming back our talented and creative salon professionals, and to serving our loyal customers in the very near future." On April 23, 2020, Creative Hairdressers announced a plan to significantly reduce its debt obligations and establish a sound financial platform for long-term growth. In order to implement the plan, the Company voluntarily filed for protection under Chapter 11 in the United States Bankruptcy Court for the District of Maryland. "We are pleased to begin a new chapter as the company resets and lays plans for a successful future," stated Seth Gittlitz, Chief Executive Officer of Tacit Salon Holdings, LLC. "The near-term objective is reopening safely and bringing back our salon professionals and staff to serve customers, and be well-positioned to seize growth opportunities over the longer term." About Creative Hairdressers Creative Hairdressers, Inc. -- http://www.ratnerco.com/-- operates over 750 salons nationwide under the trade names Hair Cuttery, BUBBLES, and Salon Cielo. The company began in 1974 to create a quality whole-family salon where stylists could make a good living. Today, the family of salons continues to share this commitment with a transparent, people-first culture that offers the best career trajectory in the industry for salon professionals, field leaders and corporate employees. Creative Hairdressers and Ratner Companies, L.C., sought Chapter 11 protection (Bankr. D. Md. Case No. 20-14583 and 20-14584) on April 23, 2020. Creative Hairdressers was estimated to have $1 million to $10 million in assets and $10 million to $50 million in liabilities. Creative Hairdressers is represented by Shapiro Sher Guinot & Sandler. Carl Marks Advisors is acting as strategic financial advisor to assist the Company in the process. A&G Realty Partners is the real estate advisor. Epiq Bankruptcy Solutions is the claims agent. The buyer, HC Salon Holdings, is an affiliate of Tacit Salon Holdings. HC Salon Holdings, Inc., is represented by DLA Piper LLP (US). CUMULUS MEDIA: Moody's Alters Outlook on B2 CFR to Negative ----------------------------------------------------------- Moody's Investors Service affirmed Cumulus Media New Holdings Inc.'s B2 Corporate Family Rating, B2-PD Probability of Default, and B2 rating for the senior secured term loan and senior secured notes. The outlook was changed to negative from stable. The negative outlook for Cumulus reflects the impact of the economic recession arising from the coronavirus outbreak which Moody's expects will materially impact radio advertising revenue in the near term and lead to higher leverage levels and lower cash outflow from operations. While Cumulus is projected to maintain sufficient liquidity and benefits from the closing of a recent asset sale in Maryland, operating cash flow is projected to deteriorate significantly in the near term. As a result, the Speculative Grade Liquidity rating was downgraded to SGL-3 from SGL-2. Affirmations: Issuer: Cumulus Media New Holdings Inc. Corporate Family Rating, affirmed at B2 Probability of Default Rating, affirmed at B2-PD Senior Secured 1st lien Term Loan due 2026, affirmed at B2 (LGD4) from (LGD3) Gtd Senior Secured 1st lien Global Notes due 2026, affirmed at B2 (LGD4) from (LGD3) Downgrades: Speculative Grade Liquidity Rating, Downgraded to SGL-3 from SGL-2 Outlook Actions: Issuer: Cumulus Media New Holdings Inc. Outlook, changed to Negative from Stable RATINGS RATIONALE Cumulus's B2 CFR reflects the high leverage level of 5.7x (as of Q1 2020 excluding Moody's standard lease adjustments) and Moody's projection that leverage levels will increase substantially in the near term due to the impact of the coronavirus outbreak on the economy. The radio industry is also being negatively affected by the shift of advertising dollars to digital mobile and social media as well as heightened competition for listeners from a number of digital music providers. Secular pressures and the cyclical nature of radio advertising demand have the potential to exert substantial pressure on EBITDA performance over time. Cumulus is expected to take aggressive cost cutting actions and will be focused on preserving liquidity in the near term. Revenue from sports programming declined in Q1 2020 due to the pandemic and sports related revenues may be further impacted if sporting events are unable to resume operations in the near term. Cumulus benefits from its position as the third largest radio broadcaster in the US with stations in 87 markets, ownership of the Westwood One network which provides syndicated radio programming in addition to a small but growing local digital marketing services platform. The company also benefits from a geographically diversified footprint with strong market clusters in most of the areas it operates which enhances its competitive position. The geographically diversified footprint may support performance if some markets are less impacted by the pandemic and not subject to additional health restrictions. A diversified format offering of music, news, and sports as well as digital growth initiatives are also positives to the credit profile. The rapid spread of the coronavirus outbreak, deteriorating global economic outlook, low oil prices, and high asset price volatility have created an unprecedented credit shock across a range of sectors and regions. 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 Cumulus of the deterioration in credit quality it has triggered, given its exposure to advertising spending, which has left it vulnerable to shifts in market demand and sentiment in these unprecedented operating conditions. A governance impact that Moody's considers in Cumulus's credit profile is the relatively conservative financial strategy focused on debt reduction. Since emerging from bankruptcy in 2018, Cumulus has used free cash flow and proceeds from several asset sales to reduce outstanding debt by over $275 million prior to the $60 million ABL draw in Q1 2020. Cumulus is a publicly traded company listed on the Nasdaq Global Market. The SGL-3 Speculative Grade Liquidity Rating reflects adequate liquidity with $106 million of cash on the balance sheet and access to a $100 million ABL facility due March 2025 (not rated by Moody's) with $60 million drawn as of Q1 2020. The net proceeds of the recently completed land sale in Maryland support liquidity in the near term, but are required to be used to repay debt within the next year or be reinvested back into the business. Cumulus spent $27 million in capex as of LTM Q1 2020 and plans to reduce capex significantly in the near term to help preserve liquidity. Cumulus has not paid a dividend since emerging from bankruptcy. Free cash flow as a percentage of debt was 7% LTM Q1 2020, but Moody's expects FCF will decline materially in the near term before improving to above 5% of debt in 2021. The term loan is covenant lite. Moody's expects that Cumulus will remain in compliance with the 1x fixed charge coverage ratio covenant for the ABL revolver that is applicable when average excess availability of the facility is less than the greater of 12.5% of the total facility or $5 million. The negative outlook reflects Moody's view that Cumulus will experience significant declines in revenues and EBITDA in the next few quarters due to the impact of the coronavirus outbreak on the economy and radio advertising revenue. The outlook also incorporates Moody's expectation for Cumulus's debt-to-EBITDA leverage to increase substantially and liquidity position to deteriorate in the near term. Political advertising revenue is projected to support results as the election approaches towards the end of 2020. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The ratings could be downgraded if Moody's expects that Cumulus's leverage will be sustained above 5.75x due to underperformance, audience and advertising revenue migration to competing media platforms, or ongoing economic weakness. A free cash flow to debt ratio in the low single-digits or a weakened liquidity profile could also lead to a downgrade. An upgrade for Cumulus is not expected in the near term due to the impact of the pandemic and Moody's projection of higher leverage in the near term. However, the ratings could be upgraded if leverage declined below 4.25x, as calculated by Moody's, with a good liquidity profile and a high single-digit percentage of free cash flow to debt ratio. Positive organic revenue growth and expanding EBITDA margins would also be required in addition to confidence that the company would maintain financial policies consistent with a higher rating level. Headquartered in Atlanta, GA, Cumulus Media New Holdings Inc. is one of the largest radio broadcasters in the U.S. with 424 stations in 87 markets, a nationwide network serving approximately 8,000 broadcast affiliates, and numerous digital channels. Cumulus emerged from Chapter 11 bankruptcy protection in June 2018. The company reported $1.1 billion of net revenue during the LTM period ending in Q1 2020. The principal methodology used in these ratings was Media Industry published in June 2017. DELPHI TECHNOLOGIES: Moody's Reviews B2 CFR Amid BorgWarner Deal ---------------------------------------------------------------- Moody's Investors Service place the ratings of Delphi Technologies PLC's on review for upgrade- including Corporate Family Rating and Probability of Default Rating at B2 and B2-PD, respectively; and senior unsecured rating at B3. The Speculative Grade Liquidity Rating is revised to SGL-2 from SGL-3. On Review for Upgrade: Issuer: Delphi Technologies PLC Corporate Family Rating, Placed on Review for Upgrade, currently B2, Previously Under review for Downgrade Probability of Default Rating, Placed on Review for Upgrade, currently B2-PD, Previously Under review for Downgrade Senior Unsecured Regular Bond/Debenture, Placed on Review for Upgrade, currently B3 (To LGD4 from LGD5), Previously Under review for Downgrade Upgrades: Issuer: Delphi Technologies PLC Speculative Grade Liquidity Rating, Upgraded to SGL-2 from SGL-3 The $1.25 billion bank credit facility is not rated by Moody's. Outlook: Issuer: Delphi Technologies PLC Outlook, Remains Rating Under Review RATINGS RATIONALE / FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The review takes into account the progress in BorgWarner Inc.'s (BorgWarner) planned acquisition of Delphi, as well as the increasing likelihood that BorgWarner will take on at least some of Delphi's senior unsecured debt as its own obligation. After BorgWarner agreed to acquire Delphi in January 2020, both sides have moved towards a closing. For example, both companies resolved a dispute around Delphi's full draw down on its $500 million revolving credit facility in March 2020. In addition, BorgWarner completed a $1.1 billon unsecured bond offering to partially fund the acquisition of Delphi and refinance other debt. Moody's believes the actions demonstrate a high likelihood of the transaction closing, which is expected in the second half of 2020. Under the amended terms of the agreement, Delphi Technologies stockholders would receive a fixed exchange ratio of 0.4307 shares of BorgWarner common stock per Delphi Technologies share (down from 0.4534 shares). This exchange implies the issuance of additional debt to refinance Delphi's existing debt or the assumption of some or all of Delphi's debt. The review will consider Delphi's organizational position within BorgWarner and the form of support that BorgWarner would provide the debtholders. Under a full, unconditional guarantee of BorgWarner, the rating on Delphi's senior unsecured debt would be upgraded to the same as senior unsecured level as BorgWarner, now Baa1, by virtue of credit substitution. However, to the extent the Delphi debt is not supported and in the absence of sufficient financial information about Delphi, Moody's would withdraw Delphi's ratings. BorgWarner is a Tier 1 supplier of automotive engine and drivetrain products, and the emissions controls around engine efficiency and reduced emissions, and has a record of outperforming global automotive industry production. The company already has a backlog of products around vehicle electrification, likely to contribute as soon as next year. Delphi's credit metrics are expected to weaken over the near term, as restructuring programs are likely to be offset by the impact of OEM production shut downs and meaningfully lower automotive demand. Delphi'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. Delphi is addressing this risk through the development of engine components that support this trend. The principal methodology used in these ratings was Automotive Supplier Methodology published in January 2020. BorgWarner Inc. headquartered in Auburn Hills, MI, is a global tier-1 automotive supplier focused on engine and drivetrain products. The company operates manufacturing facilities serving customers in the Americas, Europe, and Asia, and is an original equipment supplier to every major automotive OEM in the world. Net sales for the LTM period ending March 31, 2020 approximated $9.9 billion. Delphi Technologies PLC is a leading global automotive supplier of engine management systems and aftermarket parts. Components include advanced fuel injection systems, actuators, valvetrain products, sensors, electronic control modules and power electronics technologies. Revenues for the LTM period ending March 31, 2020 were approximately $4.2 billion. DISH NETWORK: Moody's Lowers CFR to B1, Outlook Stable ------------------------------------------------------ Moody's Investors Service downgraded DISH Network Corporation's corporate family rating (CFR) to B1 from Ba3, probability of default (PDR) rating to Ba3-PD from Ba2-PD and senior unsecured debt ratings to B1 from Ba3. Moody's also downgraded DISH DBS Corporation's, a wholly-owned subsidiary of DISH Network, ("DBS") CFR to B2 from B1, PDR rating to B1-PD from Ba3-PD, senior unsecured debt ratings to B2 from B1 and assigned a B2 rating to DBS's proposed new $1 billion of senior unsecured notes. DISH's speculative grade liquidity (SGL) rating is unchanged from SGL-2. The actions conclude the review initiated on July 29, 2019 prompted by DISH's and DISH DBS's already limited financial capacity for higher debt and leverage for their present credit ratings and an agreement reached by DISH, the Department of Justice (DOJ), T-Mobile USA, Inc. (T-Mobile, Ba2 CFR) and Sprint Corporation to acquire Sprint's prepaid wireless service businesses and wireless spectrum assets. The outlook is stable. Assignments: Issuer: Dish DBS Corporation Senior Unsecured Regular Bond/Debenture, Assigned B2 (LGD4) Downgrades: Issuer: Dish DBS Corporation Probability of Default Rating, Downgraded to B1-PD from Ba3-PD Corporate Family Rating, Downgraded to B2 from B1 Senior Unsecured Regular Bond/Debenture, Downgraded to B2 (LGD4) from B1 (LGD4) Issuer: Dish Network Corporation Probability of Default Rating, Downgraded to Ba3-PD from Ba2-PD Corporate Family Rating (Local Currency), Downgraded to B1 from Ba3 Senior Unsecured Conv./Exch. Bond/Debenture, Downgraded to B1 (LGD5) from Ba3 (LGD5) Outlook Actions: Issuer: Dish DBS Corporation Outlook, Changed to Stable from Rating Under Review Issuer: Dish Network Corporation Outlook, Changed to Stable from Rating Under Review RATINGS RATIONALE The downgrade of DISH's and DBS's ratings is due to the overall need for capital to refinance and repay DBS debt and deleverage the company as its revenues shrink due to secular industry pressure. It reflects uncertainty surrounding raising capital to fund the build out and startup costs of the company's planned state of the art US wireless Internet of Things (IoT) broadband network. Moody's believes that there is increased risk burdened by bondholders as DISH continues with its plan to build out a state of the art 5G IoT broadband network until it secures a material equity investment and/or partner. Moody's also believes risk is rising due to the continuing secular decline of DBS's pay-TV subscriber base. Its expectations are for worsening operating performance at DBS that may outpace debt reduction, as well as thinning liquidity for the consolidated company since the company does not have a revolving credit facility. Moody's believes that both DISH and DBS are dependent upon accommodating capital markets. Moody's expects leverage to increase at the DBS level, in spite of the recent debt repayment in excess of $1 billion, as Moody's expects EBITDA to decline in the mid-to-high single digit percentage range over the next 12-18 months. Over the years, DISH has spent more than $21 billion to acquire a significant amount of wireless spectrum, and has options to acquire more spectrum. The company has acquired its spectrum mostly using cash flows generated from DBS and leveraging DBS's balance sheet over the years. The company has estimated that it will need $10 billion to complete the national build 5G out of its state of the art 5G network. This has been a great source of debate as it pales in comparison to even maintenance spending by existing US wireless companies. While Moody's appreciates the materially lower costs associated with the significant efficiencies of a modern wireless network which uses the cloud to virtualize the network and constructing a network without the need to maintain consistent service to a large subscriber base at the same time, Moody's is concerned and biased towards a potentially unexpected and materially higher cost to complete the build out, particularly as Moody's adjusts debt for leases and include vender financing. A weakness for DBS bondholders is the fact that they have no recourse to DISH and its spectrum and other assets. Moody's believes the deterioration of the DBS business will provide limited if any capacity for DISH to continue funding its 5G build out strategy using DBS's cash flows and balance sheet (beyond the intercompany leasing of satellites and equipment that DISH acquired from Echostar in 2019) due to the larger DBS debt maturities over the next two years. Despite the pressure, DBS still generates roughly $1 billion of free cash flow annually, but cash flow, along with revenue and EBITDA, have been steadily declining since 2016. While DBS management has done a good job at containing subscriber losses, particularly compared to its closest peer DIRECTV (owned by Baa2-rated AT&T), and has been paying down debt and deleveraging from its highs, the underlying subscriber numbers point to a steady secular decline in linear video revenues. Moody's believes that the company's satellite pay-TV segment will continue to generate solid free cash flows through the medium-term. The trajectory of the tail of cash flows beyond that is unpredictable due to the rapidly changing television ecosystem and consumption habits verses the counter moves to contain programming and operating costs. In addition, the quarter ending March 31, 2020 marked the first time DBS's 'Sling TV', the industry's first over-the-top (OTT) internet-delivered video service, experienced a decline in subscribers' quarter-over-quarter (as well as year-over-year). Sling's business model is an ad-based model, but Moody's believes that it can only prove successful if it can reach scale which in its view will prove challenging without an industry shake out of some of Sling's virtual MVPD competitors. Over the longer term, Sling faces the same pressures that the satellite pay-TV business faces unless network affiliate costs are contained or it can go full network a-la-carte. Moody's believes management will continue managing costs aggressively at DBS and harvest cash flows for the foreseeable future to repay maturing debt. Moody's forecasts leverage at the DBS level (excluding DISH Network's $4 billion of convertible debt) will remain above 4.0x over the next 18-24 months, as debt repayment will not be enough to keep up with EBITDA declines. DISH and DBS have repaid DBS debt maturities as they came due (rather than refinancing them at DBS). However, Moody's does not expect DBS to generate enough cash or have enough cash on hand to meet its $2 billion principal payment each in June 2021 and July 2022. Therefore, Moody's believes the company will need to access the capital markets to refinance a portion of the amount which exceeds free cashflow. Moody's estimates the company will need to refinance approximately half of each of those maturities. Moody's believes that the newly proposed $1 billion of notes and free cashflow over the next year will be sufficient to repay the 2021 maturity. The company has many options to refinance the shortfall in cash for the 2022 maturity, including issuing debt at the DISH parent level as they have proven they will do before, issuing additional pari passu unsecured debt at DBS if the market will facilitate that, but if not, it is its view that there is a distinct and growing possibility that DBS may need to issue secured debt at the DBS level for the first time, which would prime the unsecured bonds and could start putting negative pressure on the unsecured debt ratings. New secured debt would subordinate the existing senior unsecured DBS bond holders (currently about $9.5 billion outstanding) which could eventually have a negative impact on the credit ratings of those notes even apart from any potential action taken on the CFR. Moody's believes that DISH was in a strong bargaining position in the negotiations between T-Mobile and the US Department of Justice and therefore has gotten very good value in the terms of its acquisition. However, Moody's believes that DBS's cash flows will be earmarked for DBS debt repayment for the foreseeable future, and will not be a material source of capital for DISH over the next several years for its wireless IoT network buildout plans. Sourcing needed capital is the primary near to medium term uncertainty and risk when assessing the future credit risk, particularly if new capital funding sources rely on raising additional debt. Moody's has noted for some time that the absence of a well-capitalized equity investor or partner could put pressure on credit ratings by 2020, given the 2021 and 2022 maturities and government mandated spectrum build out schedule. Notwithstanding that uncertainty, Moody's believes that the deal with T-Mobile, which provides access to its wireless network through a seven-year MVNO arrangement as well as an agreement with the Federal Communications Commission for a more flexible build out, is a material strategic benefit for DISH's plan and will provide an elegant solution for tackling the build out path and provide flexibility to relieve pressure points in building an organic network. This tempers the more significant negative pressure on DISH's credit profile for now. Moody's expects the acquisition of Sprint's 9 million prepaid Boost customers and the right to acquire other potentially decommissioned assets to close along with the MVNO deal soon. The subscribers acquired are less material to the credit as these subscribers typically have higher churn rates and the subscriber base is unlikely to impact results materially over the near term. The acquisition is expected to be funded with $1.4 billion of cash on hand, $1 billion of which was raised from an equity offering. As of 3/31/20 Dish had $3.38 billion of cash and marketable securities. In the absence of an equity investor or partner, DISH will need to be creative in order to continue funding and completing the build out of its wireless 5G network. If the company's share price is unattractively valued, raising equity through a secondary offering or convertible debt is less likely in its view, and issuing debt at the DISH level is more likely. Since the assets at DISH generate minimal cash flows relative to the capital needed for the buildout, debt raised at the DISH level (as well as the existing $4 billion) would will need to be serviced by the DISH capital raise or DBS cashflows until the wireless network is operational and generating free cash flow in the distant future. Additionally, the effort and journey to create a competitive fourth mobile carrier will be expensive and a laborious startup business, though over the long-term Moody's believes that DISH is targeting wholesale and commercial 5G applications rather than targeting significant direct consumer opportunities, so Moody's believes there are likely stronger competitive opportunities particularly from a commercial aspect. While Moody's believes it will be a huge strategic and operationally undertaking for the company, the company has a successful entrepreneurial track record of building its pay TV from scratch. Also, Moody's believes that the company acquired its spectrum assets at attractive purchase prices and has the capacity to raise some additional capital against the spectrum value ($4 billion of convertible debt currently resides at DISH Network) at DISH Network where consolidated leverage stood at 5.5x (with Moody's standard adjustments) as of March 31, 2020. Additional contingent overhang on the credit lies in two other matters: 1) the option to acquire additional 800 Mhz spectrum from T-Mobile for $3.6 billion in three years or forfeit a $72 million penalty or option fee; and 2) the approximately $3.2 billion from the yet to be settled dispute with the FCC over the AWS auction disallowed DISH discount, which as it stands, exposes DISH to the difference between $3.2 billion and the amount of the high bid (if lower than $3.2 billion) from a re-auction of that spectrum. Moody's believes that the dispute could potentially work out more favorably for DISH, such as handing the spectrum back to DISH as well as the approximate $500 million of penalties paid to the FCC related to the dispute. The stable outlook for DISH reflects its comfort that the proposed notes issuance at DBS will provide adequate liquidity for DBS for the next 12 to 18 months until the 2022 maturity. However, Moody's still has concerns that DISH will issue debt or debt-like securities in the absence of a new equity investor to finance the wireless 5g startup. Moody's also has medium-term concerns regarding the narrowing of flexibility and options to monetize the spectrum to a build out rather than a potential sale, with the deal with the DOJ limiting outright sales of the company's spectrum assets since the intent was for DISH to become the nation's fourth national competitor. DISH's SGL-2 rating reflects the significant cash use events expected to occur in the next 12 months. While cash & cash equivalents on balance sheet as of March 31, 2020 totaled $3.38 billion, Moody's views pro forma cash of around $800 million after taking into account the Boost acquisition of $1.4 billion and May 2020 DBS debt repayment of $1.1 billion. With the $1 billion debt issued from the current proposed notes offering proceeds and its expectation for DBS to generate at least $900 million of FCF in 2020 and around $450 million in the first six months of 2021, there will a total of $3.15 billion when you include pro forma starting cash. Moody's anticipates DISH to spend up to $1 billion or more for the 5G build out through June 2021, leaving around $2.15 billion plus some moderate cash flow at DISH which be expect will be sufficient to meet DBS's $2 billion bond maturing in June 2021. The company has no revolver in place, but Moody's believes that the company has significant alternate liquidity potential with debt capacity at DISH Network, given the $4 billion of debt outstanding which is far less than the perceived value of the spectrum assets it has accumulated over the years. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Given the capital needs of the company, secular pressures and start up nature of the 5G build out, a rating upgrade is unlikely. An upgrade could occur if: 1) material equity capital is raised from a strategic investor, such that little or no additional debt is likely to be needed to complete the company's IoT vision; and 2) the company repays DBS's 2021 maturity and can manage its maturities in 2022 and beyond with senior unsecured debt rather than secured debt, and demonstrates that it can pace the secular pressure with continuing ability to reduce debt and leverage. Ratings may be downgraded further if DISH Network engages in further acquisitions and spectrum purchases with debt or cash on hand such that consolidated leverage is sustained over 6.0x (including Moody's adjustments) and there is no definitive agreement with a large, financially strong, strategic partner to fund its wireless build. For DBS, its senior unsecured ratings could be downgraded further if unsecured debt is refinanced with secured debt, or all its ratings could face a downgrade if leverage is sustained above 4.5x beyond 2021, subscriber losses decline at a faster pace than historical trends, or liquidity becomes constrained even further. The principal methodology used in these ratings was Pay TV published in December 2018. DISH DBS Corporation is a wholly owned subsidiary of DISH Network Corporation ("DISH") and is a direct broadcast satellite (DBS) pay-TV provider and internet pay-TV provider via its SLING TV operation, with about 11.3 million subscribers as of 3/31/2020. Revenue for LTM March 31, 2020 was $12.8 billion, down from $13.6 billion for fiscal year 2018. Pro forma revenue for the Boost acquisition is approximately $15.5 billion. ELECTRONICS FOR IMAGING: Moody's Cuts CFR to Caa1, Outlook Neg. --------------------------------------------------------------- Moody's Investors Service downgraded Electronics for Imaging, Inc.'s Corporate Family Rating to Caa1 from B3 and Probability of Default Rating to Caa1-PD from B3-PD. As part of the rating action, Moody's also downgraded the 1st lien senior secured credit facility to B3 from B2 and the 2nd lien senior secured term loan to Caa3 from Caa2. The outlook was changed to negative from stable. The downgrades and negative outlook reflect Moody's view that adjusted leverage will remain elevated with weakened liquidity for an extended period while EFI recovers from the expected significant revenue decline in 2020 as a result of the coronavirus outbreak and global economic recession. Rating actions for Electronics for Imaging, Inc. are summarized below: Corporate Family Rating -- Downgraded to Caa1 from B3 Probability of Default Rating -- Downgraded to Caa1-PD from B3-PD Guaranteed senior secured 1st lien revolver -- Downgraded to B3 (LGD3) from B2 (LGD3) Guaranteed senior secured 1st lien term loan -- Downgraded to B3 (LGD3) from B2 (LGD3) Guaranteed senior secured 2nd lien term loan -- Downgraded to Caa3 (LGD5) from Caa2 (LGD5) Outlook Actions: Outlook -- Changed to Negative from Stable RATINGS RATIONALE The Caa1 CFR reflects Moody's view that as revenues recover from a significant decline in 2020 as a result of COVID-19 and the global economic recession, improvements in adjusted leverage and liquidity will fall short of Moody's original base case forecast through 2022. Moody's believes revenue declines and adjusted EBITDA shortfalls beginning in 1Q20 and for the remainder of 2020 will result in very high leverage and negative free cash flow. Moody's expects revenue to decline by (35%) or more in 2020 compared to 2019, and although adjusted EBITDA is estimated to decline by only (10%) compared to 2019, leverage will be elevated at over 8.5x (Moody's adjusted including a portion of targeted synergies, or more than 11x with no synergies) by the end of 2020 given the combined impact of lower EBITDA and higher debt balances. There is further downside risk in the event demand for IT hardware and related software remains depressed beyond 2020 in a scenario in which COVID-19 is not contained. To the extent leverage remains elevated while revenues and EBITDA remain depressed, there would be additional pressure on ratings and Moody's could view the debt structure as unsustainable. The rapid and widening spread of the coronavirus outbreak, deteriorating global economic outlook, falling oil prices, and asset price declines are creating a severe and extensive credit shock across many sectors, regions and markets. The combined credit effects of these developments are unprecedented. The IT Hardware and related software sectors have been affected by the shock given their sensitivity to global business demand and sentiment. More specifically, the weaknesses in EFI's credit profile, including its exposure to global economies have left it vulnerable to shifts in market sentiment in these unprecedented operating conditions and EFI remains vulnerable to the outbreak continuing to spread. Moody's regards the coronavirus outbreak as a social risk under Moody's ESG framework, given the substantial implications for public health and safety. Despite roughly 70% of the initial $90 million of targeted cost cuts being realized as of June 2020 and plans for a 50% increase in targeted cost synergies, adjusted EBITDA and free cash flow in 2021 will remain below Moody's initial base case scenario when ratings were assigned last year while debt balances have increased. Consequently, Moody's believes that leverage for EFI will remain very high above 8x (Moody's adjusted and partial credit to synergies) through the end of 2021 with negative free cash flow in 2020 and only modest free cash flow in 2021. EFI's liquidity is adequate in the near-term with limited revolver availability and Moody's conservative expectation that cash balances will decrease to roughly $50 million by the end of 2020 from just above $100 million, absent additional asset sales or an equity injection. In 1Q2020, revenues for the Inkjet business (58% of total 2019 revenues) declined 18% compared to the 1Q2019. As customers cut back on capital spending, equipment sales declined notably in March which is typically EFI's biggest month for the quarter. Looking forward, Moody's expects continued weak demand will contribute to steeper revenue declines for Inkjet equipment and software for the remainder of 2020. Although revenues from ink and supply sales provide high margin recurring revenue streams, they represent less than 40% of total revenues. In the first year following the July 2019 buyout, EFI succeeded in realizing $65 million of the initial $90 million of targeted cost synergies through elimination of redundant positions, consolidation of purchasing and service functions, relocation of some operations, and shedding of costs related to being a public company. As a result, Moody's expects adjusted EBITDA (excluding addbacks for additional cost synergies) for 2020 will erode by only (10%) compared to pro forma 2019 levels. EFI believes it can extract another $80 million of annual cost savings allowing EFI to approach its original EBITDA plan despite significant revenue shortfalls. The Caa1 CFR incorporates Moody's view that EFI will need more time to reach original base case projections for revenue, liquidity and adjusted debt to EBITDA in the face of an expected 35% revenue decline from $918 million reported in 2019 with limited liquidity. EFI indicates that it has maintained funding for key products expected to be launched in early 2021 that should support a return to top line gains as demand returns. EFI has adequate liquidity in the near term with just over $100 million of cash currently, but Moody's conservatively expects cash balances will decrease to roughly $50 million by the end of 2020. There is effectively no availability under the $100 million revolver due 2024. When advances under the current revolver exceed $40 million, EFI's springing 6.60x first lien leverage test (as defined) is triggered. Moody's expects free cash flow to be negative in 2020. The company sold its Fremont headquarters for $37.5 million of net proceeds and recently sold certain business bringing in another $7.5 million. In addition, EFI has been able to raise a low interest government loan in Europe. Required debt payments include $8.75 million of annual term loan amortization plus net proceeds from recent assets sales less amounts reinvested. EFI's financial sponsor, Siris Capital Group, contributed $814 million of equity or over 40% of initial capital at closing in July 2019 and has over $170 million of follow-on capital available to support EFI, which Moody's does not include as committed liquidity. In addition to social risks from the coronavirus outbreak, governance risk is another key consideration given EFI's ownership by a financial sponsor. Private equity ownership often leads to debt financed distributions or M&A to enhance equity returns. Lack of public financial disclosure and the absence of board independence are also incorporated in EFI's credit profile. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The negative outlook for EFI is driven by significant uncertainty regarding the depth and duration of the current economic recession as well as the decline in global business spending for IT hardware and related software which will result in significant revenue declines over the next year. To the extent timing of a rebound from the COVID-19 outbreak is in line with Moody's base case scenario and demand for IT equipment, including inkjet printers, and related software returns, EFI would be better positioned in the Caa1 CFR, and the outlook could be revised to stable. EFI has made progress in realizing targeted synergies in its first year following the July 2019 buyout, as well as its efforts to preserve liquidity by cutting operating expenses, limiting capital spending, and selling non-core assets. An upgrade is not likely in the near term given the negative outlook; however, ratings could be upgraded if EFI realizes most of its targeted cost synergies for 2020 and EFI maintains consistent top line growth with adjusted debt to EBITDA improving to less than 6.5x (with limited addbacks to EBITDA). EFI will also need to maintain good liquidity with a largely undrawn revolver and adjusted free cash flow to debt being sustained in the mid-single digit percentage range. Ratings could be downgraded if liquidity deteriorates, Moody's expects adjusted debt to EBITDA will be sustained above 8x (with limited addbacks to EBITDA) after 2021 reflecting a continuing negative impact from the COVID-19 outbreak, competitive pressures, or inability to realize additional cost synergies. There would be downward pressure on ratings if adjusted EBITDA margins deteriorate or if adjusted free cash flow to debt is not on track to reach the mid-single digit percentage range. Electronics for Imaging, Inc., based in Fremont, CA, is a global technology platform providing digital imaging solutions for the printing, packaging, and imaging industries. The company's offerings include industrial printers, proprietary ink, production software and workflow suites, as well as digital front ends. In July 2019, Siris Capital Group, LLC took EFI private in a transaction valued at roughly $1.7 billion. The principal methodology used in these ratings was Diversified Technology published in August 2018. ELMHURST INVESTORS: Case Summary & 3 Unsecured Creditors -------------------------------------------------------- Debtor: Elmhurst Investors, LLC c/o Kevin Palmer 10320 Orland Parkway Orland Park, IL 60467 Business Description: Elmhurst Investors, LLC is a Single Asset Real Estate (as defined in 11 U.S.C. Section 101(51B)). It is the owner of fee simple title to a property located at 621-633 W. North Ave., Elmhurst, IL, 60126 having a current value of $8.95 million. Chapter 11 Petition Date: June 24, 2020 Court: United States Bankruptcy Court Northern District of Illinois Case No.: 20-12886 Judge: Hon. Carol A. Doyle Debtor's Counsel: David P. Lloyd, Esq. DAVID P. LLOYD, LTD. 615B S. LaGrange Rd. La Grange, IL 60525 Tel: 708-937-1264 E-mail: info@davidlloydlaw.com Total Assets: $8,950,000 Total Liabilities: $9,752,000 The petition was signed by Nader Elkayyal, manager. A copy of the petition containing, among other items, a list of the Debtor's three unsecured creditors is available for free at PacerMonitor.com at: https://is.gd/R4DI5Z ENERPAC TOOL: Moody's Withdraws Ba3 CFR on Debt Repayment --------------------------------------------------------- Moody's Investors Service withdrew its ratings for Enerpac Tool Group Corp., including the company's Ba3 corporate family rating and Ba3-PD probability of default rating, following the announced redemption of all outstanding 5.625% Senior Notes due 2022 (previously rated B1) funded through borrowings under the company's revolving credit facility. Withdrawals: Issuer: Enerpac Tool Group Corp. Probability of Default Rating, Withdrawn, previously rated Ba3-PD Speculative Grade Liquidity Rating, Withdrawn, previously rated SGL-2 Corporate Family Rating, Withdrawn, previously rated Ba3 Outlook Actions: Issuer: Enerpac Tool Group Corp. Outlook, Changed to Rating Withdrawn from Stable RATINGS RATIONALE Enerpac, headquartered in Menomonee Falls, Wisconsin, is an industrial tools and services company involved in the design, manufacture and distribution of branded hydraulic and mechanical tools, as well as providing services and tool rental to the industrial, maintenance, infrastructure, oil & gas, energy and other markets. Annual revenues exceed $550 million. ENSONO LP: Moody's Rates $76MM Add-On Secured Term Loan 'B2' ------------------------------------------------------------ Moody's Investors Service has assigned a B2 to Ensono, LP's $76 million add-on senior secured first lien term loan under its existing credit agreement. Ensono's existing senior secured first lien credit facility consists of a $460 million 7-year term loan and a $60 million 5-year revolver. Proceeds from the add-on term loan will be used to repay the company's outstanding revolver borrowings and fund cash to the balance sheet. The resulting liquidity enhancement will support currently steady customer contract growth in mainframe managed services offerings. All other ratings including the company's B3 corporate family rating and stable outlook are unchanged. Assignments: Issuer: Ensono, LP Senior Secured First Lien Bank Credit Facility, Assigned B2 (LGD3) RATINGS RATIONALE Ensono's B3 CFR reflects its modest scale, solid growth, high but stabilizing leverage (Moody's adjusted), customer concentration and Moody's expectation of diminishing negative free cash flow over time as capital intensity declines and becomes more success-based in nature. The company benefits from a stable base of contracted recurring revenue and a solid position within the market for managed mainframe and midrange computer services, largely for Fortune 1000 enterprises with less than $10 billion in annual revenue. The compelling cost reduction benefits to on-premise IT managers from outsourcing mainframe operations will continue to fuel Ensono's steady growth. Moody's believes the magnitude of these cost benefits in the company's mainframe managed services offerings are contributing to a stable to growing sales funnel and higher bookings trends. Ensono's capital intensity will fall over time given its end market focus and systems integrator-like business model. This model benefits from longer contract terms of 4-7 years versus the three-year average terms of retail colocation providers and shorter terms of managed hosting providers. Moody's believes the company's business model will support steady and increasing positive free cash flow with growing scale. As a scaled hybrid IT managed services provider, Ensono is also targeting growth from traditional hybrid private cloud and asset-light public cloud services end markets. Ensono aims to standardize and highly automate a service delivery model that facilitates true hybrid IT solutions across different applications and infrastructure platforms, including mainframe, private cloud and public cloud utilizing a single interface. Moody's expects Ensono's debt/EBITDA (Moody's adjusted) to approach 5.5x at year-end 2020, slightly below the level at year-end 2019. Moody's expects Ensono to have good liquidity over the next 12 months. Pro forma for the $76 million senior secured first lien term loan add-on, the company would have had $94 million of cash on the balance sheet and full availability under its $60 million revolver as of March 31, 2020. The revolver includes a maximum first lien net leverage covenant when the company's revolver utilization exceeds 30%, or $18 million. While under some of its forecast scenarios Ensono could approach breakeven free cash flow in 2020, Moody's expects the trend towards free cash flow will likely be delayed into future years. The instrument ratings reflect both the probability of default of Ensono, as reflected in the B3-PD probability of default rating, an average expected family recovery rate of 50% at default, and the loss given default assessment of the debt instruments in the capital structure based on a priority of claims. The senior secured first lien credit facilities are rated B2 (LGD3), one notch higher than the B3 corporate family rating, given the loss absorption provided by the 2nd lien facility, rated Caa2 (LGD6). The senior secured credit facilities are guaranteed on a senior secured basis by all current and future domestic restricted subsidiaries. The rapid and widening spread of the coronavirus outbreak, the deteriorating global economic outlook, falling oil prices and asset price declines are creating a severe and extensive credit shock across many sectors, regions and markets. The combined credit effects of these developments are unprecedented. The global communications infrastructure industry globally is expected to be more resilient than many sectors as the spread of the coronavirus outbreak widens and the global economic outlook deteriorates. Moody's regards the coronavirus outbreak as a social risk under its ESG framework, given the substantial implications for public health and safety. The stable outlook reflects Moody's view that Ensono will produce strong revenue and EBITDA growth, benefit from reducing capital intensity over time and maintain steady to improving leverage. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Moody's could upgrade Ensono's ratings if leverage (Moody's adjusted) were to fall below 5x on a sustainable basis and if the company generates positive free cash flow on a sustainable basis. Moody's could downgrade Ensono's ratings if liquidity becomes strained or if leverage (Moody's adjusted) stays above 6x for an extended period. The principal methodology used in this rating was Communications Infrastructure Industry published in September 2017. Headquartered in the Chicago area, Ensono is a hybrid IT managed service provider focused on mission critical workloads for enterprise customers. The company supports mainframe, infrastructure, private cloud, and public cloud solutions primarily in the US and Europe, with a differentiated expertise in legacy mainframe systems. ENTERPRISE DEVELOPMENT: Moody's Confirms Caa1 CFR, Outlook Negative ------------------------------------------------------------------- Moody's Investors Service confirmed The Enterprise Development Authority's Caa1 Corporate Family Rating, Caa1-PD Probability of Default Rating, and Caa1 senior secured note rating. These rating actions conclude the review for downgrade initiated on March 25, 2020. The outlook is negative. The confirmation of CEDA's ratings considers that several favorable developments have occurred since Moody's March 25 rating action that have favorable credit implications for EDA, specifically with respect to Moody's initial cash burn and covenant compliance concerns when the coronavirus pandemic led to a closure of the casino. First, Hard Rock Hotel & Casino Sacramento at Fire Mountain (Fire Mountain) re-opened on May 21, approximately six weeks sooner than Moody's original expectation that regional casinos in the US would open around July 1. Second, despite reduced capacity and social distancing restrictions, Fire Mountain's initial results since opening indicate that strong pent-up demand, and significantly lower expenses will provide a significant amount of EBITDA flow through. Third, EDA received covenant waivers for the March and June quarters. Despite the partial nature of Fire Mountain opening because of ongoing social distancing restrictions and requirements, Moody's expects initial revenue results will be strong, and given the company's substantially reduced expense base, the flow through to EBITDA will also be strong as well as higher than it has been historically under normal operating conditions. This will take the pressure off EDA's need to use its current liquidity to support ongoing operations as well as increase the likelihood that the company will meet the $75 million minimum EBITDAM covenant requirement beginning with the quarter ended September 30, 2020. Although the company was not able to meet the $75 million minimum EBITDAM covenant for the March 31, 2020 quarter, it did receive waivers for March and June quarter. The negative outlook considers the inherent uncertainty that EDA and other gaming companies still face regarding longer-term gaming demand. While initial results from casino re-openings suggest a significant amount of pent-up demand, and possibility of longer-term benefits related to substantial reduced operating expenses, EDA remains vulnerable to the social and economic challenges created by the coronavirus, including efforts to contain the coronavirus along with the potential for a slow economic recovery. Additionally, debt-to-EBITDA leverage is expected to remain high on a Moody's adjusted basis and likely to remain around 6.0x or more over the next 12-month period. Confirmations: Issuer: The Enterprise Development Authority Probability of Default Rating, Confirmed at Caa1-PD Corporate Family Rating, Confirmed at Caa1 Senior Secured Regular Bond/Debenture, Confirmed at Caa1 (LGD4 from LGD3) Outlook Actions: Issuer: The Enterprise Development Authority Outlook, Changed To Negative From Rating Under Review RATINGS RATIONALE EDA's credit profile reflects the meaningful earnings challenge over the next few months expected from efforts to contain the coronavirus and the potential for a slow recovery. The company's single asset profile, relatively small scale in terms of revenue, and Hard Rock Hotel & Casino - Sacramento at Fire Mountain's short operating and earnings history (opened October 2019) create credit risk. Moody's also expects distributions to the tribe will be a drain on cash and reduce financial flexibility to fund debt service and reinvestment. Positive rating consideration is given to a $40 million promissory note from Hard Rock Seminole that it will make funds available to EDA to pay interest for the nine-month period after the funded interest reserve is used. This would provide some credit protection for EDA through June 2020. EDA's affiliation with the highly successful and recognizable Hard Rock brand, and Fire Mountain's close proximity to Sacramento, CA along with its favorable demographics provide support for visitation and revenue. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS A ratings upgrade is unlikely given the relatively weak operating environment and continuing uncertainty related to the coronavirus pandemic. An upgrade would require a high degree of confidence on Moody's part that the gaming sector has returned to a period of long-term stability, and that EDA demonstrates the ability to generate positive free cash flow and operate at a debt/EBITDA level of 6x or lower. Ratings could be downgraded to the extent earnings or liquidity declines will be deeper or more prolonged because of actions to contain the spread of the coronavirus, noticeable and material reductions in consumer spending, or weak visitation including if competition increases. Enterprise Development Authority is an unincorporated governmental instrumentality of the Estom Yumeka Maidu Tribe of the Enterprise Rancheria. EDA, in conjunction with Hard Rock Sacramento FM, LLC developed a Class III tribal gaming facility and hotel called the Hard Rock Sacramento Fire Mountain casino on 40 acres of gaming eligible trust land located within a 900-acre Sports and Entertainment Zone in Yuba County, CA. Fire Mountain opened October 2019. The company projected annual revenue of slightly more than $200 million in its development plan. The principal methodology used in these ratings was Gaming Industry published in December 2017. ENVIVA PARTNERS: Fitch Affirms BB- Issuer Default Rating -------------------------------------------------------- Fitch Ratings has affirmed Enviva Partners LP's Long-Term Issuer Default Rating at 'BB-' and senior unsecured rating at 'BB-'/'RR4'. The Rating Outlook remains Stable. EVA recently announced that it will acquire the Waycross plant from Innogy SE and affiliates and the Greenwood plant from its sponsor for $375 million. In association with the transactions, EVA's sponsor also assigned five long-term take-or-pay contracts that will underpin the total expected production capacity of 1.4 million metric tons per years of the two acquired plants. The acquisition and dropdown continue to diversify EVA's customer base and boost future cash flow. EVA financed the transactions with a balanced mix of equity and debt funding, using equity proceeds of about $200 million and planning to fund the remaining $175 million under its $350 million revolver. The draw on the revolver is expected to be temporary. Fitch forecasts EVA's leverage (total debt/adjusted EBITDA) to elevate above 4.5x at YE20 but improve to 4.0x -4.2x by YE21. Fitch notes that the planned dropdowns in future periods will require larger funding needs from both the debt and equity capital markets to maintain leverage below Fitch's negative rating sensitivity of 4.3x. Given EVA's current leverage threshold, Fitch will continue to closely monitor EVA's execution of funding future transactions that are supported by long-term take-or-pay contracts using a balanced mix of equity and debt. KEY RATING DRIVERS Elevated Leverage in the Near-Term: Following the announced acquisition and dropdown transaction, Fitch forecasts that EVA's leverage will be above 4.5x in 2020 but will improve to 4.0x-4.2x in YE21. EVA was able to execute on its $200 million equity offerings to fund the Waycross plant acquisition and Greenwood dropdown on an approximately 50/50 equity-debt mix. The remaining $175 million balance for the transaction is expected to be funded with debt. Fitch notes that the planned dropdowns in future periods will continue to require larger funding needs from both the debt and equity capital markets to maintain leverage below Fitch's negative rating sensitivity of 4.3x. Given EVA's current leverage threshold, Fitch will continue to closely monitor the execution of funding future transactions under a balanced mix of equity and debt. While Fitch acknowledges that these two transactions will elevate leverage above 4.0x through 2021, the dropdown assets are viewed as strong assets underpinned by take-or-pay contracts that will boost EVA's production volume and provide stable future cash flow in the longer term. Fitch does not expect any further dropdowns for EVA in 2020. Volume Growth Under Long-Term Contracts: With the associated Off-Take Contracts and the Acquired Waycross Contracts, the production from the Greenwood plant and the Waycross plant is expected to be fully contracted through 2035. On a pro forma basis, EVA will have a weighted average remaining term of approximately 12.7 years and contracted revenue backlog of approximately $15.5 billion for its overall contract portfolio. These contracts are primarily take-or-pay contracts with a fixed price for the entire term of the contract subject to annual inflation-based adjustment and price escalation, which offer some downside protection in raw materials and shipping cost. While most of the EVA's production ramp is primarily driven by its long-term take or pay contracts backlog, Fitch notes that EVA also has exposure with certain counterparties through short-term contracts. A slower than expected growth from those customers can be detrimental to EVA's projected cash flow. While the newly signed contracts will continue to grow EVA's robust contract backlog, Fitch notes that certain EVA's contracts provide the customer with a right of termination for various events of convenience or changes in law or policy. Fitch notes that there has been no termination of contracts in the past or during 2020 and does not expect any early termination from EVA's counterparties in its rating case. Additionally, some of the EVA's contracts are also protected by early termination payments. All of the EVA's contracts are take-or-pay, with some also protected by early termination payments. Increased Customer Diversification: Fitch highlights that the customer base of EVA will continue to diversify with additional contracts commencing in 2020 and in 2021. Customer diversification will further increase in 2021 as some of the signed contracts for the Asian market begin. In 2019, EVA generated approximately 90% of its revenue from three major customers: Drax Power Limited (Drax Group Holdings Ltd; BB+/Stable), Orsted Bioenergy & Thermal Power A/S (Orsted; BBB+/Stable) and Lynemouth Power Limited (NR). Fitch expects EVA's customer diversity to increase in 2020 with seven customers accounting for more than approximately 90% of its revenue. Fitch expects EVA's customer diversity to increase in 2020. In addition, Fitch believes that the level of counterparty risk for EVA is mainly reflected by the economic incentives such as government subsidies that allow EVA's customers to operate their biomass plants using wood pellets until the end of their contracts with EVA. For instance, Drax currently receives government subsidies to generate power on biomass until 2027, and has converted four coal-fired units into biomass plants. EVA is one of the several wood pellets suppliers for these four biomass units. Orsted, the largest power producer in Denmark, has converted its Asnaes coal power plant to Biomass plant under state-aid approval from the European Commission. Lynemouth Power Limited is also a coal-fired power plant that was converted into a biomass plant. Regulatory Environment Remains Supportive: The regulatory environment in the jurisdictions that EVA serves, in Fitch's view, should remain fundamentally favorable for the company and the biomass industry in the near term. EVA's major customers are European utilities and power generators counterparties that are subjected to the EU and UK environmental laws, which aim to reduce greenhouse gas emissions for the power sector and meet specific carbon-reduction goals through mandating an increase in renewable energy usage. To achieve the mandate, the government offers incentives for renewable energy projects, which include subsidizing and funding coal-fired power generation companies such as EVA's top customers to co-fire biomass in their coal plants and/or fully convert their coal plants to biomass plants. Moreover, the Japanese market has environmental frameworks in place that demonstrate support for increased use of renewable power generation in the future. Limited Size and Scale: EVA exhibits a small scale of operation with expected annual EBITDA of less than $300 million in the near term. Given its limited operational and business profile, EVA has a higher exposure to the financial effect of negative industry trends and events relative to larger companies with a greater breadth of operations. Larger companies also have a demonstrated advantage in efficiently accessing debt and equity capital markets to fund growth. Fitch generally believes that MLPs operating in niche markets like EVA could also be disadvantaged in accessing capital market debt and equity when needed. However, there is a clear visibility of significant growth for EVA upon the successful execution of future dropdowns in the near term. Further, EVA is mitigated from construction risk as the planned dropdown assets are constructed at the joint venture that is formed between EVA's sponsor Enviva Holdings, LP and John Hancock Life Insurance, and sold to EVA through dropdown transactions. Recontracting Risk in the Long Run: EVA does not face any significant recontracting risk for its top customers in the near future, given the weighted average duration of the contracts. However, Fitch recognizes this risk, though not an immediate credit concern will be largely affected by external factors including the availability of government subsidies for producers at the end of those contracts' lives, as well as the competitive landscape of the market. However, Fitch also believes that some of the negative financial impact resulting from the recontracting risk can be partially offset by EVA's existing and future expansion efforts into the Japanese market. DERIVATION SUMMARY EVA is a master limited partnership that supplies utility-grade wood pellets to major power generators across the globe. EVA's cash flow is mainly supported by long-term take-or-pay contracts with utilities and power generators that are currently subsidized by their local government to produce electricity using renewable energy sources such as biomass. There are limited publicly traded comparable companies for EVA given the size of the biomass sector as well as the competitive landscape. EVA exhibits much smaller scale of operations with expected annual EBITDA of less than $300 million in the near term. While Fitch generally views midstream entities with annual EBITDA of less than $300 million to be consistent with 'B' category, EVA's 'BB-' ratings are reflective of its superior leverage of 4.0x-4.5x, long-term take-or-pay contract profile and a supportive regulatory environment for the biomass industry. Atlantica Yield (AY;BB/Stable) is a comparable for EVA in the renewable energy space. AY is a dividend, growth-oriented company that owns and manages a diversified portfolio of contracted assets underpinned by long-term contracts with credit-worthy counterparties in the power and energy markets. Like EVA, AY generates cash flow under contract prices with counterparties that benefit from supportive government policies. However, AY is larger than EVA by size and cash flow. Additionally, EVA also has a higher FFO leverage than AY's high-3x leverage but is in line with the negative sensitivity of 4.0x for the higher rated yieldco. Sunoco LP (BB/Negative) is a comparable within the midstream space, given that Sunoco also operates in a highly fragmented, competitive wholesale motor fuel sector. Similar to EVA, Sunoco also has 15-year, take-or-pay fuel supply agreement with a 7-Eleven subsidiary under which Sunoco will supply approximately 2.2 billion gallons of fuel annually. While EVA has a lower leverage relative to Sunoco's 5.0x leverage, EVA is one-third the size of Sunoco. Additionally, Fitch also does not expect Sunoco to have major funding needs in the near term. KEY ASSUMPTIONS Fitch's Key Assumptions Within the Agency's Rating Case for the Issuer -- Revenue and EBITDA growth driven by growing wood pellet export volumes as well as annual inflation and price adjustment under existing and new contracts; accretive cash flow from future dropdown transactions; -- Completion of the Greenwood and Waycross acquisitions; -- Future dropdowns are assumed in forecast periods consistent with historical 50/50 mix of equity and debt funding to maintain leverage in the range of 3.8x-4.2x; -- Capex aligns with management's forecast; -- Regulatory environment remains supportive for the biomass industry in the jurisdiction that EVA's customers operate in; -- Moderate growth in unit distribution in forecast periods while maintaining distribution coverage above 1.0x. RATING SENSITIVITIES Factors that could, individually or collectively, lead to a positive rating action/upgrade: -- Continued increase in size and scale of operations with increased geographic diversity; -- Leverage and distribution coverage sustain at 3.0x-3.3x and above 1.0x, respectively. Factors that could, individually or collectively, lead to a negative rating action/downgrade: -- Significant credit event with counterparties, including multi-notch downgrade at EVA's major counterparties, which will impair future cash flow into EVA; -- Unfavorable changes in regulatory environment with regard to treatment and subsidies supporting biomass power generation as renewable generation; -- Capex spending or unfavorable dividend policy that significantly reduces liquidity or increases leverage; -- Leverage above 4.3x and distribution below 1.0x on a sustained basis can result in a negative rating action. 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 Near-Term Liquidity Adequate: As of March 31, 2020, EVA had approximately $5 million of unrestricted cash and $280 million available under its $350 million revolving credit facility for a total liquidity of $285 million. The revolving credit facility has a maturity date of October 2023. Fitch expects the company to have adequate liquidity to fund its working capital and dividend distribution in the near term. EVA plans to fund the remaining $175 million under its $350 million revolver, but the draw on the revolver is expected to be temporary. 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 Enviva Partners, LP: Group Structure: 4 EVA has an ESG Relevance Score of 4 for Group Structure and Financial Transparency as the company operates under a somewhat complex group structure as a private-equity backed midstream. This has a negative impact on the credit profile and is relevant to the rating in conjunction with other factors. 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. FENCEPOST PRODUCTIONS: Hires BerganKDV as Accountant ---------------------------------------------------- Fencepost Productions, Inc. and its debtor-affiliates seek approval from the United States Bankruptcy Court for the District of Kansas to employ BerganKDV as its accountants. The Debtors propose to engage BerganKDV to perform tax-preparation and advisory services consisting of the following: a) preparation of corporate income tax returns for 2019, consolidated annual audit, and any related filings; b) any services necessarily related to the foregoing; and c) any tax or accounting services which may be required by Debtors in connection with their reorganization efforts. Gary Hawkins, member of BerganKDV, assures the court that his firm has no connection with the Debtors and does not represent any interest to the estate in the matters for which it is to be employed. The accountant can be reached through: Gary Hawkins, CPA BerganKDV 3550 NE Ralph Powell Rd. Lee's Summit, MO 64064 Phone:(816) 525-9699 Fax: (816) 525-2590 About Fencepost Productions, Inc. Fencepost Productions, Inc. -- http://www.fencepostproductions.com -- is a designer and distributor of men's, women's, and youth outdoor apparel under its brands Staghorn River, Willow Trails, and Northern Outpost. Fencepost Productions, Inc. sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D. Kan. Case No. 19-22623) on Dec. 18, 2019. In the petition signed by Matthew Gray, president, the Debtor estimates $1 million to $10 million in assets and $10 million to $50 million in liabilities. Jonathan A. Margolies, Esq. at Mcdowell Rice Smith & Buchanan is the Debtor's counsel. FOLSOM FARMS: George Objects to Disclosure Statement ---------------------------------------------------- Frank E. George, Jr., Pamela K. George, Gerald R. George and Ruth E. George object to the Disclosure Statement filed by debtor Folsom Farms, LLC on May 18, 2020. The Georges assert in their objection that: * The Disclosure Statement fails to identify the mortgage broker, if any, that the Debtor is working with, nor does it identify the lender, the costs of the loan the Debtor will incur and the source for payment of those costs. * The Disclosure Statement fails to include any information regarding the terms of the loan including, Without limitation, the amount of the loan, the expected interest rate, the expected amount of the periodic payments or the expected maturity date. * The Disclosure Statement fails to include any information regarding the risk factors regarding consummation of the loan. There is no information regarding the impact of the COVID-19 pandemic on the timing of loan processing, loan approval and funding of the loan. * The Disclosure Statement fails to provide an analysis of the feasibility of loan approval. Without such an analysis, a Creditor has no information from which to evaluate the likelihood of loan approval. * The Disclosure Statement contains no information on the mortgage broker, if any, the lender, essential terms of the loan, the cost of the loan and the source of payment of those costs, the underwriting requirements of the lender, the risk factors related to the loan, the feasibility of loan approval and information regarding the managing member of Debtor should be disclosed as more particularly detailed in Sections 5.1 through 5.7. A full-text copy of George's objection to the Disclosure Statement dated June 2, 2020, is available at https://tinyurl.com/y89vojfm from PacerMonitor at no charge. Attorney for AMR Investment: Robert A. Smejkal 800 Willamette St., Suite 800 Eugene, Oregon 97401 Tel: (541) 345-3330 E-mail: bob@attomeysmejkal.com About Folsom Farms Folsom Farms, LLC, is a single asset real estate debtor (as defined in 11 U.S.C. Section 101(51B). Folsom Farms sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D. Ore. Case No. 20-30575) on Feb. 19, 2020. At the time of the filing, the Debtor was estimated to have assets of between $1 million and $10 million and liabilities of the same range. Judge Peter C. McKittrick oversees the case. Sally Leisure, Esq., at SRL Legal, LLC, is the Debtor's legal counsel. FRANCHISE SERVICES: Delaware Bankr. Court Diverged From 5th Circuit ------------------------------------------------------------------- Shmuel Vasser of Dechert LLP wrote an article on JDSupra titled "Delaware Bankruptcy Court Diverges from Fifth Circuit: Minority Shareholder’s Blocking Right Invalidated and Fiduciary Duty Imposed" In a recent bench ruling, the Delaware bankruptcy court denied a motion to dismiss a chapter 11 bankruptcy filing, notwithstanding the fact that the filing contravened an express bankruptcy-filing blocking right, or "golden share," held by certain preferred shareholders. The Court diverged from the Fifth Circuit’s holding in In re Franchise Services of North America, Inc., in which the Fifth Circuit, applying Delaware law, concluded that a minority shareholder was not prevented from exercising its voting right to prevent a corporation from filing for bankruptcy, and that the blocking right as exercised did not impose a fiduciary duty on the shareholder because the shareholder did not exercise "actual control" over the corporation's board. The Delaware bankruptcy court, however, declined to follow Franchise Services, and concluded that, under Delaware law, a blocking right as exercised by the preferred shareholder would create a fiduciary duty that, "with the debtor in the zone of insolvency, is owed not only to other shareholders, but also to all creditors." Addressing an issue left unanswered by the Fifth Circuit, the Court also found that federal public policy requires courts to consider what is "in the best interest of all" and favors debtors' constitutional right to file bankruptcy, especially where the blocking party "has said clearly it is not considering the rights of others in its decision to file the motion to dismiss." In re Pace Industries, LLC, Transcript of Hearing, Case No. 20-10927 (MFW) (Bankr. D. Del. May 5, 2020). Background Pace Industries, an aluminum and zinc manufacturer, had been experiencing severe liquidity issues during the period leading up to its filing for chapter 11 relief and, as a result of the COVID-19 pandemic, the company had closed its plants and furloughed most of its employees. At the time of its bankruptcy filing, it had less than $150,000 in cash. Pace Industries filed its petition for relief without consent from certain preferred shareholders who, after investing US$37 million in the company, had negotiated the addition of certain provisions into the LLC agreement, which prohibited the board of directors from filing for bankruptcy without the preferred shareholders’ consent. Consequently, Macquarie, the majority holder of the preferred stock, filed a motion to dismiss, arguing that the Court lacked subject matter jurisdiction over the debtors’ bankruptcy petition because the debtors had no authority to file without the shareholders’ consent, as required by Delaware law. Delaware Law Creates Fiduciary Duty Under Delaware law, a minority shareholder owes a fiduciary duty to a company if it exercises actual control over the company. Macquarie argued that the shareholders could not owe a fiduciary duty to the company under Delaware law, as having a bankruptcy-filing control right does not equate to exercising the requisite degree of control over the company. Like in Franchise Services, Macquarie contended that, if anything, the fact that the debtors filed without obtaining the preferred shareholders’ consent only demonstrated that they did not, in fact, control the debtors. The Court disagreed, concluding that, "contrary to the Fifth Circuit's interpretation of [Delaware] law," the blocking right exercised by Macquarie demonstrated a level of control sufficient to impose a fiduciary duty on the part of the preferred shareholders. The Court also noted the importance of the particular circumstances of each case in determining the existence of a fiduciary duty. Here, in addition to the preferred shareholders' exercise of the blocking right, the fact that the debtors had no liquidity at the time of filing, were in "the zone of insolvency," and could not pay their debts as they came due in the absence of a DIP loan were all factors that the Court believed support its conclusion that the preferred shareholders did owe a fiduciary duty to the debtors. The Court found it clear that Macquarie was not fulfilling its fiduciary duty, as demonstrated by its own statement that "it is not considering the rights of others in its decision to file the motion to dismiss." Federal Public Policy Supports Debtors' Right to File Bankruptcy Macquarie argued that an equity holder, as opposed to a creditor, may retain bankruptcy-filing blocking rights that are explicitly set forth in a company's corporate governance documents, as permitted by Delaware law and that the Court had no choice but to dismiss a bankruptcy petition because it was filed by parties who lacked authority to do so under state law. Macquarie also relied on the Fifth Circuit's holding in Franchise Services, where a minority shareholder was allowed to exercise its blocking rights to prevent a corporation from filing for bankruptcy, despite the fact that the shareholder was controlled by a creditor of the corporation. The Court, however, agreed with the Debtors that the bankruptcy filing was in the best interests of the debtors and would also benefit most stakeholders. Considering the severe financial circumstances of Pace Industries at the time of filing, the Court noted that there was "no contest that the debtor needs a bankruptcy," and that blocking the debtors' "access to the Bankruptcy Code and Bankruptcy Courts would violate the federal public policy." Although it acknowledged that there is no case law directly aligned with the facts of this case, the Court stated that it was "prepared to be the first court to do so," and it expressly declined to follow Fifth Circuit precedent in Franchise Services, finding "no reason to conclude that a minority shareholder has any more right to block a bankruptcy—the constitutional right to file a bankruptcy by a corporation—than a creditor does." Ultimately, the Court declined to "bind the debtor-in-possession to a course of action without regard to the impact on the bankruptcy estate, other parties with a legitimate interest in the process, or the debtor-in-possession’s fiduciary duty to the estate." Conclusion Although there is no published opinion, the Court's holding marks an important split in authority between the Delaware Bankruptcy Court and the Fifth Circuit on the correct application of Delaware law and federal public policy to this issue. Those shareholders considering whether to exercise a "golden share" by blocking a Delaware-incorporated company's bankruptcy filing should remain wary of the split and of the Delaware bankruptcy court’s imposition of fiduciary duties on a minority shareholder who attempted to exercise its blocking right—a right explicitly set forth in the incorporation documents and expressly invalidated by the Court. GARDNER DENVER: S&P Rates New $400MM Senior Secured Term Loan 'BB+' ------------------------------------------------------------------- S&P Global Ratings assigned its 'BB+' issue-level rating and '3' recovery rating to Gardner Denver Inc.'s (subsidiary of Ingersoll-Rand Inc.) proposed $400 million senior secured term loan due 2027. The '3' recovery rating indicates S&P's expectation for meaningful (50%-70%; rounded estimate: 50%) recovery in the event of a default. "We believe Gardner Denver Inc. will use the proceeds from this loan to add cash to its balance sheet and strengthen its liquidity position amid uncertainty in the macroeconomic environment. Because we net the company's available surplus cash and cash equivalents against its debt in our debt calculations, we believe the transaction will be leverage neutral at the onset," S&P said. S&P recently revised its outlook on Garner Denver to negative from stable due to the macroeconomic headwinds associated with COVID-19 and its expectation for relatively high debt leverage in 2020. GIBSON ENERGY: Moody's Assigns Ba2 Rating on C$650MM Unsec. Notes ----------------------------------------------------------------- Moody's Investors Service (Moody's) rated Gibson Energy Inc.'s (Gibson) C$650 million senior unsecured notes ($325 million due 2025 and $325 million due 2027) offering Ba2. All of Gibson's other ratings remain unchanged, including the Ba2 corporate family rating (CFR), Ba2-PD probability of default rating, Ba2 senior unsecured notes rating and the SGL-3 Speculative Grade Liquidity Rating. The proceeds of the notes offering will be used to redeem the C$600 million notes due 2024 and to repay revolver drawings. "The coronavirus outbreak will have limited impact on Gibson because 60% of its cash flow is from take-or-pay contracts," said Paresh Chari Moody's analyst. "There will be a minimal impact on cash flow from oil sands shut-ins and from the weak performance in Q2 at the Moose Jaw refinery which should modestly recovery through the year." Assignments: Issuer: Gibson Energy Inc. Senior Unsecured Regular Bond/Debenture, Assigned Ba2 (LGD3) RATINGS RATIONALE Gibson's Ba2 CFR is supported by 1) stable cash flow from its oil terminals and infrastructure business, which will represent about 80% of EBITDA in 2020; 2) take-or-pay (60% of cash flow) and fee-based contracts with mostly investment grade counterparties with a 10 year average remaining contract life; and 3) strong adjusted debt/EBITDA of between 3x and 3.5x. Gibson is challenged by 1) its small size compared to other North American midstream rated companies (2020 EBITDA of around US$300 million, roughly half the Ba2-rated average and one-fifth the Ba1-rated average); 2) concentration risk because Gibson's tanks and terminals are largely located in Hardisty, Alberta, exposing the company to physical risk and to the economics of Western Canadian oil; 3) sizeable growth capex that leads to significant negative free cash flow through 2021 that will be funded with debt; and 4) the volatility of cash flow from its Wholesale segment (20% of cash flow), which is exposed to commodity price risk. The rapid and widening spread of the coronavirus outbreak, deteriorating global economic outlook, falling oil and natural gas prices, and asset price declines are creating a severe and extensive credit shock across many sectors, regions and markets. The combined credit effects of these developments are unprecedented. The E&P sector has been one of the sectors most significantly affected by the shock given its sensitivity to demand and oil and natural gas prices, which in turn has affected certain midstream providers given their exposure to E&P production volumes. The action reflects the limited impact on Gibson despite the continuing spread of the coronavirus and oil demand remaining weak. Gibson's senior unsecured notes are rated Ba2, at the CFR, because almost the entire capital structure is senior unsecured, including the C$750 million revolving credit facility. The unrated C$100 million unsecured subordinated convertible debentures rank below all of the senior unsecured debt in the capital structure. Gibson's liquidity is adequate (SGL-3), with sources of about C$800 million and uses of about C$350 million. At March 31, 2020 and pro forma for the close of the notes offering, the company had C$55 million in cash and full availability under its C$750 million senior unsecured revolving credit facility due February 2025. Uses include its expectation of negative free cash flow of about C$250 million through to Q2 2021 and the July 2021 maturity of Gibson's C$100 million subordinated convertible debentures. Moody's expects Gibson to be in compliance with its financial covenant during this period. Alternative sources of liquidity are good, as all assets remain unencumbered. The stable outlook reflects its expectation that debt to EBITDA will remain under 4x in 2020 and 2021, and distribution coverage will remain above 1x. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The ratings could be upgraded if Gibson increases the diversity of its business, adjusted EBITDA grows towards C$700 million (C$460 million LTM Mar-20), debt to EBITDA is below 3.5x (3x LTM Mar-20), and distribution coverage is above 1.3x (1.9x LTM Mar-20). The ratings could be downgraded if debt to EBITDA trended towards 4.5x (3x LTM Mar-20) or if distribution coverage was below 1x (1.9x LTM Mar-20). Gibson Energy Inc. is a Calgary, Alberta-based midstream company engaged in the movement, storage, optimization, processing, and gathering of crude oil and refined products. The principal methodology used in these ratings was Midstream Energy published in December 2018. GNC HOLDINGS: Fitch Cuts LT IDR to 'D' on Chapter 11 Filing ----------------------------------------------------------- Fitch Ratings has downgraded the Long-Term Issuer Default Rating of GNC Holdings, Inc. to 'D' from 'CC' following the company's Chapter 11 bankruptcy protection filing on June 23, 2020. There was approximately $1.2 billion in total debt outstanding on the petition date, including GNC's convertible preferred equity which Fitch treats as debt and $60 million of borrowings on its $80 million asset-based loan. GNC is pursuing several bankruptcy emergences paths. Some of GNC's existing secured lenders, in addition to Harbin Pharmaceutical Group Holding Co., Ltd, which is already GNC's largest shareholder at approximately 40%, and partner in its China operation, have offered $760 million to buy the entire business. GNC will pursue this option while seeking higher bids in a marketing process. Alternatively, should no sale be consummated, the company has entered into a restructuring support agreement with approximately 90% of secured lenders which would allow GNC to emerge as a stand-alone entity. To support operations during the bankruptcy process, the company has obtained $100 million in debtor-in-possession financing in addition to $30 million in additional commitments from its existing revolving credit facility. The company has indicated it expects to use DIP financing to pay off its $60 million of outstanding prepetition ABL borrowings. GNC's bankruptcy resulted from its inability to address upcoming maturities, including approximately $160 million of convertible notes due August 2020; the company also had approximately $450 million of term loans due March 2021. GNC originally expected to complete its refinancing process by the end of 2019. However, the process continued into 2020 and was further delayed by the coronavirus pandemic, first in China, where potential financing partners were based, and then the U.S. The pandemic also complicated already challenged operations, with significant declines in near-term sales impacting GNC's cash position and obscuring longer-term projections. KEY RATING DRIVERS GNC's bankruptcy follows a multiyear decline in EBITDA, which fell to the $200 million range in 2018/2019 from around $530 million in 2013, largely due to revenue declines of around $560 million to $2.07 billion in 2019 from the $2.63 billion base in 2013. The impact of EBITDA declines on leverage was exacerbated by the decision to execute debt-financed share buybacks in 2015 and 2016. The company undertook a number of steps in recent years to stabilize operations, including a product pricing reset and revamp of its loyalty program. The company also closed underperforming stores and entered into a joint venture to build a business in China. Since 2016, the company also took steps to reduce debt, using internally generated cash flow as well as proceeds from asset sales, including certain manufacturing assets. Fitch continues to believe that despite its challenges, GNC has a viable position in the retail marketplace, as a segment leader in the vitamin, mineral and health supplement space with good brand recognition, a sticky customer base, and positive cash flow. This is demonstrated by around half of GNC's sales being derived from private and owned brands, around 80% of sales being derived from loyalty program members, and GNC's generation of approximately $80 million in FCF in 2019, after $83 million in cash interest expense paid. DERIVATION SUMMARY GNC's downgrade to 'D' follows the company's announcement that it has filed for Chapter 11 bankruptcy protection as of June 22, 2020. GNC's bankruptcy resulted from its inability to address upcoming maturities, including approximately $160 million of convertible notes due August 2020; the company also had approximately $450 million of term loans due in March 2021. GNC originally expected to complete its refinancing process by the end of 2019. However, the process continued into 2020 and was further delayed by the coronavirus pandemic in China, where potential financing partners were based, and then the U.S. The pandemic also complicated already challenged operations, with significant declines in near-term sales impacting GNC's cash position and obscuring longer-term projections. Other low-rated retailers in Fitch's coverage include Rite Aid Corporation. Rite Aid's 'B-'/Stable' rating reflects continued operational challenges, which have heightened questions regarding the company's longer-term market position and the sustainability of its capital structure. Persistent EBITDA declines have led to negligible to modestly negative FCF and elevated adjusted debt/EBITDAR in the low- to mid-7.0x range, despite some signs of pharmacy sales stabilization over the past year. Fitch believes that operational challenges include both a challenged competitive position in retail and, more recently, sector-wide gross margin contraction resulting from reimbursement pressure. These concerns are mitigated by Rite Aid's strong liquidity, supported by a borrowing base of pharmaceutical inventory and prescription files, and limited near-term maturities. RATING SENSITIVITIES Not applicable 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 GNC had cash and cash equivalents of $137 million as of March 31, 2020. As of June 23, 2020, the company had drawn approximately $60 million on its $80 million ABL, and has received commitments for a $100 million DIP revolving credit facility as well as commitments for an additional $30 million of borrowing headroom under its ABL. Prepetition debt is approximately $1.2 billion, inclusive of the $60 million ABL draw, $275 million in FILO Term Loans , $411 million in Term Loan B-2, $158 million in convertible notes and $300 million in convertible preferred equity, which Fitch includes as debt. GNC is pursuing multiple bankruptcy exit paths. Approximately 90% of term B-2 lenders have agreed to equitize their debt in a plan which would allow the company to reorganize as a standalone business. Alternatively, a majority of secured lenders alongside GNC largest shareholder Harbin have offered $760 million to purchase the business. This deal would include $475 million in funds to be distributed amongst the prepetition FILO ($275 million) and B-2 lenders ($411 million in debt) as well as $210 million in new second-lien notes for Term Loan B-2 holders. The company plans to pursue both paths while seeking higher bids in an auction process. RECOVERY Fitch's recovery analysis is based on a going-concern value of $750 million, versus approximately $350 million from an orderly liquidation of assets, composed primarily of inventory, receivables, and owned property and equipment. Post-default EBITDA was estimated at $150 million, similar to Fitch's 2021 EBITDA forecast. The analysis uses a 5.0x enterprise value/EBITDA multiple, consistent with the 5.4x median multiple for retail going-concern reorganizations. The multiple considers GNC's historically strong position in a good category, recent competitive encroachment by alternate channels and operational missteps. The $750 million value compares with the $760 million stalking-horse bid GNC has received for the company from a consortium of lenders and Harbin. After deducting 10% for administrative claims, the remaining $675 million would lead to full recovery for the ABL revolver and ABL FILO term loan, which are therefore rated 'CCC'/'RR1'. The ABL revolver and ABL FILO term loan are secured by a first lien on assets comprising domestic inventory and receivables with a second lien on other domestic assets, though the ABL would receive priority payment in default. ABL revolver availability is governed by a borrowing base, which includes domestic inventory and receivables; the ABL was $60 million drawn as of the petition date. The company's term loan B-2 would have superior recovery prospects (71%-90%) and is therefore rated 'CCC-'/'RR2'. GNC's convertible preferred equity, which is subordinate to its term loans and unsecured notes, would have poor recovery prospects (0%-10%) and is therefore rated 'C'/'RR6'. SUMMARY OF FINANCIAL ADJUSTMENTS Fitch adjusts for non-cash stock-based compensation and restructuring. For example, stock-based compensation and restructuring charges totaled $4.6 million and $2.9 million respectively in 2019. 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). General Nutrition Centers, Inc. - LT IDR D; Downgrade - Senior secured; LT CCC; Downgrade - Senior secured; LT CCC-; Downgrade GNC Holdings, Inc. - LT IDR D; Downgrade - Preferred; LT C; Affirmed GOLDEN COMMUNICATIONS: Case Summary & 8 Unsecured Creditors ----------------------------------------------------------- Debtor: Golden Communications Inc. 3420 Irvine Avenue Newport Beach, CA 92660 Business Description: Established in 1996, Golden Communications Inc. -- https://www.goldencomm.com -- is a provider of website development services. Based in Newport Beach in sunny Orange County, the Company has been serving Southern California and the Los Angeles area since its inception. Chapter 11 Petition Date: June 26, 2020 Court: United States Bankruptcy Court Central District of California Case No.: 20-11837 Judge: Hon. Erithe A. Smith Debtor's Counsel: Marc C. Forsythe, Esq. GOE FORSYTHE & HODGES LLP 18101 Von Karman Avenue Suite 1200 Irvine, CA 92612-7127 Tel: (949) 798-2460 E-mail: mforsythe@goeforlaw.com Estimated Assets: $500,000 to $1 million Estimated Liabilities: $1 million to $10 million The petition was signed by Jason M. Lavin, chief executive officer. A copy of the petition containing, among other items, a list of the Debtor's eight unsecured creditors is available for free at PacerMonitor.com at: https://is.gd/D9JZdd GOODNO'S JEWELRY: July 23 Plan Confirmation Hearing Set ------------------------------------------------------- Debtor Goodno's Jewelry, Inc., filed with the U.S. Bankruptcy Court for the Western District of Oklahoma an application for ex parte order finding that the Combined Disclosure Statement and Plan of Liquidation provides adequate information. On June 2, 2020, Judge Janice D. Loyd granted the application and ordered that: * The Combined Disclosure Statement And Plan Of Liquidation is conditionally approved. * July 15, 2020, is the last day by which holders of claims and interests may accept or reject the Plan. * July 10, 2020, is the last day for filing objections to the Plan. * July 23, 2020, at 9:30 a.m. before Honorable Judge Janice D Loyd, 2nd floor courtroom is the hearing to consider final approval of the Plan. A copy of the order dated June 2, 2020, is available at https://tinyurl.com/ybf25sr8 from PacerMonitor at no charge. The Debtor is represented by: B DAVID SISSON, OBA # 13617 Law Offices of B David Sisson 305 E Comanche St. /P O Box 534 Norman OK 73070-0534 Tel: (405) 447-2521 Fax: (405) 447-2552 E-mail: sisson@sissonlawoffice.com About Goodno's Jewelry Goodno's Jewelry, Inc., sought protection under Chapter 11 of the Bankruptcy Code (Bankr. W.D. Okla. Case No. 19-14103) on Oct. 5, 2019. At the time of the filing, the Debtor was estimated to have assets of between $100,001 and $500,000 and liabilities of between $50,001 and $100,000. GREEN PLAINS: Completes Debt Refinancing ---------------------------------------- Green Plains Partners LP (NASDAQ:GPP) and Green Plains Inc. (NASDAQ:GPRE) announced in early June 2020 the successful refinancing of the partnership's debt facility which was arranged by Bank of America. The loan was approved by all of its existing lenders and became effective on June 4, 2020. "Green Plains Partners continues to maintain ample liquidity and strong cash flow supported by long-term minimum volume commitments," said Todd Becker, president and chief executive officer of Green Plains Partners. "The closing of this transaction and repayment of debt over the next 18 months will be beneficial to all stakeholders, allowing us to allocate capital toward potential increases in future distributions." The new loan will mature on December 31, 2021, and includes a $130.0 million term loan and a $5.0 million revolving credit facility. Interest on the loan is Libor based with a 1.00% floor, plus 450 to 525 basis points depending on certain conditions. The term loan requires a principal payment of $7.5 million on July 15, 2020 and $2.5 million in monthly principal amortization thereafter, with a step up to approximately $3.2 million beginning May 2021. The loan is secured by substantially all of the assets of the partnership. About Green Plains Partners Green Plains Partners LP (NASDAQ: GPP) provides fuel storage and transportation services. The Company was founded in 2015 and is headquartered in Omaha, Nebraska. Green Plains Partners LP is a subsidiary of Green Plains Inc. GRUPO FAMSA: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Grupo Famsa, S.A.B. de C.V. Av. Pino Suarez, 1202 Norte, 3rd Fl. Unidad A., Zona Centro Monterrey, Nuevo Leon 64000 Business Description: Grupo Famsa, S.A.B. de C.V. is a variable capital public stock corporation under the laws of Mexico, originally organized on Dec. 27, 1979 under the name Corporacion Famsa, S.A. The Debtor is not a public reporting company in the United States pursuant to the Securities Exchange Act of 1934. The Debtor is the parent company of several non-debtor subsidiaries, both in the United States and Mexico, which operate in the retail and banking sectors. Visit https://www.grupofamsa.com for more information. Chapter 11 Petition Date: June 26, 2020 Court: United States Bankruptcy Court Southern District of New York Case No.: 20-11505 Judge: Hon. Shelley C. Chapman Debtor's Counsel: Pedro A. Jimenez, Esq. Shlomo Maza, Esq, Derek D. Cash, Esq. PAUL HASTINGS LLP 200 Park Avenue New York, NY 10166 Tel: (212) 318-6000 Email: pedrojimenez@paulhastings.com shlomomaza@paulhastings.com Debtor's Financial Advisor: ALFARO, DAVILA & SCHERER Debtor's Noticing, Balloting, & Claims Administration Agent: EPIQ CORPORATE RESTRUCTURING, LLC 777 Third Avenue, 12th Floor New York, NY 10017 https://dm.epiq11.com/case/famsa/dockets Estimated Assets: $1 billion to $10 billion Estimated Liabilities: $1 billion to $10 billion The petition was signed by Luis Gerardo Villareal, Board Member. A copy of the petition is available for free at PacerMonitor.com at: https://is.gd/pJvGLN List of Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ----------------- 1. Bancomext SNC Bank Loan Mex$3,398,609,238 Alejandro Fresan Hernandez Periferico Sur 4333, Colonia Jardines en la Montana Delegacion Tlalpan Ciudad de Mexico, C.P.14210 Tel: +52 (55) 5449-9452 Email: afresan@bancomext.gob.mx 2. Multiva Bank Loan Mex$895,927,505 Marcelo Garcia Rendon Cerrada de Tecamachalco 45 3ER Piso, Col. Reforma Social Del. Miguel Hidalgo Ciudad de Mexico, C.P. 11650 Tel: +52 55-5284-6203 Email: marcelo.garcia@multiva.com.mx 3. Grupo Financiero Local Debt Mex$360,408,982 Monex-Trustee Rebeca Erivez Av. Paseo de la Reforma, No. 2, Col. Juarez, Del. Cuauhtemoc, Ciudad de Mexico, C.P. 06600 Tel: +52 (55) 5231 0564 Email: rerivess@monex.com.mx 4. Whirlpool Mexico Supplier Mex$239,622,794 S De RL De CV Jose Hugo Cavazos Calle Margarita #203 C,P.66600 Apodaca Nuevo Leon Tel: 81 83 29 22 80 Email: jose_hugo_cavazos@whirlpool.com 5. Radiomovil Dipsa SA CV Supplier Mex$198,674,260 Isela Sarabia Mendez Calle Lago Zurich # 245 C.P.11529 Miguel Hidalgo Ciudad de Mexico Tel: (55) 25-81-37-00 Email: isela.sarabia@telcel.com 6. Mabe Mexico S De RL De CV Supplier Mex$187,063,298 Tatiana Muro Calle Paseo de las Palmas #100 C.P.11000 Seccion Miguel Hidalgo Ciudad de Mexico Tel: (81) 1224 0427 Email: tatiana.muro@mabe.com.mx 7. Banco Del Bajio Bank Loan Mex$170,983,263 Gerardo Roman Ugarte Av. Manuel J. Clouthier, No. 508, Col. Jardines del Campestre, Leon, Guanajuato, C.P. 37128 Tel: +52 (81) 12531921 Email: groman@bb.com.mx 8. Intercam Banco SA IBM Bank Loan Mex$150,356,070 Jorge Luis Haas Diaz Calzada del Valle Alberto Santos 205, Del Valle, 66220 Monterrey, N.L. Tel: +52 (81) 86761600 ext 1831 Email: jhaas@intercam.com.mx 9. Cardif Mexico Supplier Mex$118,477,116 Jorge Rodriguez Reyna Paseo de las Palmas # 425, 525 y 504 C.P.11000 Delegacion Miguel Hidalgo Ciudad de Mexico Tel: (55) 22-82-20-83 Email: jorge.rodriguez@cardif.com.mx 10. Competition Team Supplier Mex$68,907,022 Technology Mexico Mauro Ibarra DR ATL 2031 402 C.P.22010 Tijuana Baja California Tel: (664) 627-7473 Email: mauro.ibarra@foxconn.com 11. Koblenz Electrica SA De CV Supplier Mex$38,520,204 Ricardo Garcia Ciencia 28 28 C.P. 54730 Cuautitlan IzcaliEstado de Mexico Tel: (55) 58-64-03-00 y(55) 58-72-12-78 Email: garciari@koblenz-electric.com 12. Motoroad Sa De CV Supplier Mex$33,586,886 Juan Ochoa Av. 1 de mayo 226 C.P. 53500 Naucalpan Estado de Mexico Tel: 5357-3233 y 2122-7100 Email: jochoa@carabela.com.mx 13. Tempur Sealy Mexico Supplier Mex$26,285,226 Rafael Landeros Alvarado Circuito Alfonso Gomez de Orozco # 113 C.P.50200 Toluca Estado de Mexico Tel: (722) 273-18-10 y (722) 273-18-16 Email: Rafael.Landeros@tempursealy.com 14. LG Electronics Mexico Supplier Mex$26,028,505 SA DE CV Ivan Morales Sor Juana Ines de la Cruz # 555555 CP.54033 Tlalneplanta Estado de Mexico Tel: (55) 53-21-19-00 Email: ivan.morales@lge.com 15. Merry Tech Internacional Supplier Mex$24,736,871 SA De CV Marina Espinosa Cochimies 18480 C. P. 22216 Tijuana Baja California Tel: (664) 625 1552 Email: mespinosa@merrytech.com.mx 16. Pactech Retail S Supplier Mex$19,972,658 De RL CV Miguel Angel Silva Circulito Josefa Ortiz de Dominguez MZA 7 C.P.55069 Ecatepec de Morelos Estado de Mexico Tel: (55) 29-46-97-80 Email: miguel.silva@pactechretail.com.mx 17. Lead Lite Sapi CV Creditor Mex$15,687,550 Gonzalo Carral Prolongacion 5 de Mayo bod.4 C.P. 53370 Naucalpa Estado de Mexico Tel: 55-58-81-93-19 Email: gonzalo.carral@pleuslite.com 18. IMPCO S De RL De CV Supplier Mex$15,108,890 Hector Rocha Ayax 611, Parque Industrial Kalos, Guadalupe, Guadalupe N.L. Tel: (81) 81-44-54-14 Email: hector.rocha@symphonylimited.com 19. Colchones Wendy SA De CV Supplier Mex$14,178,496 Eleno Ortegon Calle 3 140 C.P. 144940 Guadalajara Jalisco Tel: (333)884-20-00(333)884-20-68 Email: eleno.ortegon@wendy.com.mx 20. Continental Tire De Supplier Mex$13,558,763 Mexico SA DE CV Francisco Arguelles Ortiz Credit & Accounts Receivables Manager Finanzas/Tires Continental Tire de Mexico S.A. de C.V. Av. Santa Fe #170, 7 piso Lomas de Santa Fe Mexico City, D.F., 01210 Mexico Tel: + 52 55-1500-0981 Email: francisco.arguelles@conti.com.mx Jorge Enrique Trinidad Tel: (444) 826-88-00 Email: jorge.enrique.de.trinidad.arriaga@conti.com.mx GRUPO FAMSA: Files Voluntary Chapter 11 Bankruptcy Petition ----------------------------------------------------------- Grupo Famsa, S.A.B. de C.V. on June 26, 2020, filed a voluntary petition under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York in order to obtain approval of its prepackaged Chapter 11 plan of reorganization which will permit the Company to complete the refinancing of its outstanding 7.250% senior notes due June 1, 2020 (the "2020 Notes"). The Company received outstanding support from holders of the 2020 Notes voting on its proposed chapter 11 plan, so as to permit Grupo Famsa to confirm the refinancing of the 2020 Notes through the Chapter 11 proceeding. Grupo Famsa intends to seek expeditious approval of the prepackaged Chapter 11 plan of reorganization as quickly as possible. Grupo Famsa will continue to operate in the ordinary course without any disruption to its business and the valuable relationships that the Company maintains with its customers, suppliers and vendors. Importantly, Grupo Famsa's prepackaged Chapter 11 of reorganization will not affect any obligations other than the 2020 Notes, and the Company has filed a number of motions with the court that will allow Grupo Famsa to continue to honor its obligations to all of its customers, suppliers and vendors. To that end, the Company anticipates that its current cash on hand, as well as projected positive cash flow from operations, will be sufficient to fund its operations during the short period of time that Grupo Famsa intends to remain in Chapter 11. Humberto Garza Valdez, CEO of Grupo Famsa, commented, "From the 356 ballots counted, we were pleased to receive the affirmative votes of approximately 96% in principal amount (USD$48.6 million) and more than 98% in number of holders (351) voting on our Chapter 11 plan. This gives us the ability to move forward with the refinancing of the 2020 Notes and proceed with our business as usual (subject to any mandated or necessary closures due to the COVID‐19 outbreak). Furthermore, the Company expects to continue meeting its obligations to its other creditors and employees, who will not be negatively impacted in any way by this process." Mr. Garza Valdez added, "I would like to thank our customers, suppliers and creditors for their continued support during this process. We also appreciate the ongoing loyalty and support of our employees, whose dedication and hard work are critical to our success and to the future of the Company. Our management team is committed to making this refinancing successful and we look forward to an effective and speedy resolution of the chapter 11 proceeding." The Company filed its voluntary Chapter 11 petition in the United States Bankruptcy Court for the Southern District of New York. The main case has been assigned case number 20‐11505. Grupo Famsa --https://www.grupofamsa.com/ -- is a leading Mexican company in the retail sector with more than 49 years of experience in the market, focused on meeting a number of consumption and basic financial services needs of households, through the deployment of an integrated and flexible business platform, comprised of three business units: Famsa Mexico, responsible for operating 379 retail stores in Mexico. Banco Famsa, Offers since 2007 a wide complementary portfolio of financial services to our retail customers and to SMEs as well. Famsa USA, operates a network of 22 retail stores in the United States, oriented to serve the growing Hispanic community. Grupo Famsa became a publicly traded company in 2006, with its stock listed on the Mexican Stock Exchange (Bolsa Mexicana de Valores – "BMV") under the ticker symbol "GFAMSA". HANJIN INTERNATIONAL: S&P Keeps 'CCC+' ICR on Watch Negative ------------------------------------------------------------ S&P Global Ratings kept its 'CCC+' long-term issuer credit rating on Hanjin International Corp. (HIC) and the 'B' issue rating on the company's senior secured term loan ('1' recovery rating) on CreditWatch with negative implications. The ratings were first placed on CreditWatch on March 6, 2020. HIC faces significant debt maturities in the next three to four months. All of the company's debt of US$897 million will mature in September and October 2020. Yet, U.S. dollar funding for the 'CCC+' rated hotel property owner is likely to be difficult with significantly increased spreads. S&P still believes HIC's Wilshire Grand Center (WGC) property in downtown Los Angeles has good asset quality and a competitive location relative to other properties in the area. However, the company will likely face worse funding conditions compared with its refinancing in 2017, considering the pressure facing the U.S. travel industry and hotel operators specifically. HIC continues to benefit from ongoing support from its parent, KAL, which provides some buffer against a sudden default. KAL is currently in discussion with Korea's policy banks and other existing lenders about HIC's refinancing plan as well as funds from new investors. In 2017, HIC refinanced its debt through a US$600 million first-lien term loan B guaranteed by KAL and a US$300 million secured bond guaranteed by the Export-Import Bank of Korea and KAL. Of note, HIC's debt is also secured by the WGC property, which was valued at about US$1.1 billion as of January 2020. S&P currently applies a two-notch uplift to the rating on the company's first-lien secured term loan B, above the 'CCC+' rating on HIC, based on the rating agency's expectation of very high recovery. The COVID-19 pandemic is likely to substantially weaken the company's hotel operations and cash flows in 2020. S&P expects the ramp-up of HIC's hotel business in Los Angeles--opened in late 2017--to be further delayed to beyond 2022 due to the global coronavirus outbreak. HIC had expected its profitability to turn around in 2019 but that has been delayed due to the expense burden of its hotel business and low occupancy rates for its offices. HIC closed its hotel in April and May because of a significant decline in demand. The company's operating performance could come under further pressure if travel restrictions persist beyond the second quarter. S&P's base case assumes that HIC's hotel business gradually recovers toward the end of 2020 as the pandemic is brought under control. S&P expects HIC to have significant discretionary cash flow deficits over the next two to three years. It forecasts the company's EBITDA to be negative US$10 million-US$25 million in 2020, due to substantially weaker occupancy and room rates during the year. HIC's EBITDA should modestly recover to US$10 million-US$20 million in 2021 and US$20 million-US$25 million from 2022 as operations normalize and ramp up again. Still, this level of earnings will not be sufficient to cover the company's annual financing cost of US$40 million-US$65 million over the next two to three years, which remains dependent on refinancing conditions. The company's interest payment in 2019 was US$45.5 million. S&P also sees some uncertainty over KAL's ability to provide timely support to HIC. Currently, 80%-90% of KAL's global passenger routes, accounting for 60%-70% of total revenue, remain suspended. While S&P expects cost-saving measures and strong earnings from KAL's cargo business to help offset some of this pressure, the company's operating performance is still likely to remain under stress during the year. In S&P's view, KAL's weak earnings and fixed cash costs (interest payments, aircraft lease payments, and some labor costs) will continue to pressure its liquidity position over the next six to 12 months. In addition, KAL has a large short-term debt of over Korean won (KRW) 5.0 trillion, including HIC's maturing debt and lease liability, exposing it to volatile funding conditions. That said, KAL has good relationships with Korea's policy banks, as evident from the policy banks' recent KRW1.2 trillion financial aid for KAL, the strong track record of global bond issuances guaranteed by the banks, and loans provided by these banks. The company also plans to raise KRW1.0 trillion-KRW1.2 trillion equity by the end of July to improve its financial metrics and liquidity. CreditWatch S&P is keeping its ratings on HIC on CreditWatch negative, owing to the liquidity pressures and the difficult refinancing environment that HIC and KAL are facing. It intends to resolve the CreditWatch placement within the next three months, pending the group's ability to secure additional capital and HIC's refinancing progress. HB2 LLC: Plan of Reorganization Confirmed by Judge -------------------------------------------------- Judge Brenda T. Rhoades has entered an order confirming the Second Amended Plan combined with Disclosure Statement of debtor HB2, LLC. The Debtor has proposed the Plan in good faith and not by any means forbidden by law for the purpose of providing fair treatment of all Claims against the Debtor and its property. The Plan represents arms-length negotiations between the Debtor and the Debtor's various creditors. Thus, the Plan satisfies Section 1129(a)(3) of the Bankruptcy Code. Claims in Classes 1, and 2 are impaired under the Plan. Impaired Class 1 claim of Bank of Texas voted to accept the Plan in accordance with Section 1126(c). No claimant in Impaired Class 2 Unsecured Creditors returned a ballot, thus that class did not accepted the Plan in accordance with Bankruptcy Code section 1126(c). Although Section 1129(a)(8) has not been satisfied with respect to Classes 2, pursuant to Section 1129(b)(1), the Plan may still be confirmed. A full-text copy of the Combined Chapter 11 Plan and Disclosure Statement dated May 29, 2020, is available at https://tinyurl.com/y7a4t662 from PacerMonitor at no charge. The Debtor is represented by: QUILLING, SELANDER, LOWNDS, WINSLETT & MOSER, P.C. 2001 Bryan Street, Suite 1800 Dallas, Texas 75201 Tel: (214) 880-1805 Fax: (214) 871-2111 John Paul Stanford About HB2 LLC HB2 LLC, d/b/a Integrity Labs, d/b/a Elite Toxicology, LLC, offers medical and diagnostic laboratory services. HB2 LLC filed a Chapter 11 petition (Bankr. E.D. Tex. Case No.19-41323) on May 16, 2019 in Sherman, Texas. In the petition signed by Wade V. Rosenburg, manager, the Debtor was estimated between $1 million and $10 million in both assets and liabilities. The Honorable Brenda T. Rhoades is the case judge. QUILLING, SELANDER, LOWNDS, WINSLETT & MOSER, PC, represents the Debtor. HELMUTH REAL: Voluntary Chapter 11 Case Summary ----------------------------------------------- Debtor: Helmuth Real Estate, LLC 2408 Lincolnway East Goshen, IN 46526 Business Description: Helmuth Real Estate, LLC is a Single Asset Real Estate (as defined in 11 U.S.C. Section 101(51B)). Chapter 11 Petition Date: June 25, 2020 Court: United States Bankruptcy Court Northern District of Indiana Case No.: 20-31046 Debtor's Counsel: Christopher Riley, Esq. RILEY LAW CENTRE LLC P.O. Box 644 Granger, IN 46530 Tel: 574-440-3693 Email: csrileyesq@gmail.com Estimated Assets: $1 million to $10 million Estimated Liabilities: $1 million to $10 million The petition was signed by Shannon Wayne Chupp, chief executive officer. A copy of the petition is available for free at PacerMonitor.com at: https://is.gd/deSuy2 HI-CRUS INC: Expects to File for Bankruptcy Protection ------------------------------------------------------ Hi-Crush Inc. reported a net loss of $146.92 million on $146.41 million of revenues for the three months ended March 31, 2020, compared to a net loss of $6.21 million on $159.91 million of revenues for the three months ended March 31, 2019. Revenues from sales of frac sand totaled $85.7 million in the first quarter of 2020, compared to $77.3 million in the fourth quarter of 2019. Total frac sand volumes sold were 2.5 million tons in the first quarter of 2020, compared to 2.1 million tons in the fourth quarter of 2019. Volumes sold directly to exploration & production companies during the first quarter of 2020 were 63% of the total, compared to 70% in the fourth quarter of 2019 and 63% in the first quarter of 2019. Contribution margin was $8.48 per ton in the first quarter of 2020, compared to $9.02 per ton in the fourth quarter of 2019. General and administrative expenses totaled $12.3 million in the first quarter of 2020, excluding non-recurring expenses of $0.6 million associated with business development activities. General and administrative expenses totaled $11.6 million in the fourth quarter of 2019, excluding $0.1 million of business development activities. As of March 31, 2020, the Company had $953.08 million in total assets, $699.14 million in total liabilities, and $253.94 million in total stockholders' equity. Market and Operational Update During the first quarter of 2020, the oil and natural gas industry, and Hi-Crush, faced a sharp and rapid decline, which was driven by a decrease in crude oil prices and overall oilfield activity, predominantly caused by decisions made by the Organization of Petroleum Exporting Countries and other oil producing nations, and impacts to the demand for crude oil associated with the emerging COVID-19 pandemic. In response to the continued effects on the Company's business and operations caused by the COVID-19 pandemic and decrease in the price of crude oil during the first quarter of 2020, Hi-Crush has taken a number of steps to better align its cost structure with current and expected market demand. The Company has reduced its workforce by approximately 60% since mid-March 2020, lowered expected capital expenditures for full-year 2020 by nearly 40% since initial guidance, and idled three production and three terminal facilities during April 2020. The Company currently operates only its Wyeville facility in Wisconsin and one of its Kermit facilities in West Texas, both at reduced rates of utilization. Working production capacity for Hi-Crush is currently 5.7 million tons per year, out of total nameplate capacity of 17.3 million tons per year. Hi-Crush also adjusted the deployment schedule for its first OnCore Processing mobile frac sand unit due to the deterioration in market conditions experienced by the industry since late-March 2020. The first OnCore unit is deployed for field demonstrations for potential customers at Hi-Crush's Kermit complex in West Texas. Hi-Crush has also delayed completing production of its second OnCore unit until current market conditions improve. Capital Expenditures Total capital expenditures for the first quarter of 2020 were $8.4 million, comprised of $7.9 million of growth capital expenditures and $0.5 million of maintenance capital expenditures. Growth capital expenditures for the first quarter of 2020 were primarily related to the development of the Company's OnCore units and enhancements to its NexStage silo sets. Liquidity As of June 22, 2020, the Company had cash of $34.6 million. The Company borrowed $25.0 million under its senior secured revolving credit facility during March 2020, and repaid all borrowings under the ABL Credit Facility during the second quarter of 2020. Effective June 22, 2020, with the submission of its May 31, 2020 borrowing base certificate under the ABL Credit Facility, the Company was in default under the ABL Credit Facility due to its failure to be in compliance with the springing fixed charge coverage ratio financial covenant under the ABL Credit Facility, which is triggered when the Company's borrowing base decreases below a level specified in the ABL Credit Facility. Due to the Specified Default, Hi-Crush is currently unable to borrow any amounts under the ABL Credit Facility. On June 22, 2020, the Company and certain of its subsidiaries entered into a forbearance agreement and amendment to the ABL Credit Facility with the lenders under the ABL Credit Facility, pursuant to which the ABL Lenders have agreed to forbear from exercising default-related rights and remedies with respect to the Specified Default until July 5, 2020 (which date may be extended with the consent of the ABL Lenders), and have required that the Company make a deposit of $12 million in a cash collateral account as a condition of the Forbearance Agreement. The occurrence or continuation of another event of default under the ABL Credit Facility, a breach of any representation or warranty in the Forbearance Agreement or the failure to comply with any term or agreement in the Forbearance Agreement, will result in the early termination of the forbearance period. The Company has engaged advisors and has been in negotiations with holders of its 9.50% senior unsecured notes due 2026 and the ABL Lenders on terms and conditions of a prearranged bankruptcy filing. Regardless of whether the terms and conditions of a prearranged filing can be agreed upon with the debt holders, the Company expects to file for protection from its creditors under the United States Bankruptcy Code. A full-text copy of the Quarterly Report is available for free at the Securities and Exchange Commission's website at: https://is.gd/RMYnbo About Hi-Crush Hi-Crush Inc. -- http://www.hicrushinc.com-- is a fully-integrated provider of proppant and logistics services for hydraulic fracturing operations, offering frac sand production, advanced wellsite storage systems, flexible last mile services, and innovative software for real-time visibility and management across the entire supply chain. The Company's strategic suite of solutions provides operators and service companies in all major U.S. oil and gas basins with the ability to build safety, reliability and efficiency into every completion. Hi-Crush reported a net loss of $413.56 million for the year ended Dec. 31, 2019, compared to net income of $137.59 million for the year ended Dec. 31, 2018. * * * As reported by the TCR on April 3, 2020, Moody's Investors Service downgraded Hi-Crush Inc.'s Corporate Family Rating to Caa2 from Caa1. Moody's said the downgrade reflects its expectations that in 2020, Hi-Crush's liquidity, profitability and key credit metrics will deteriorate further due to ongoing volatility in the oil and gas end market and the persistent weakness in the frac sand industry. Despite recent mine closures and production cuts, Moody's does not expect a significant recovery in frac sand price anytime soon. HOLY REDEEMER: Fitch Downgrades IDR to BB+, Outlook Stable ---------------------------------------------------------- Fitch Ratings has downgraded to 'BB+' from 'BBB-' Holy Redeemer Health System's (HRHS or Redeemer) Issuer Default Rating (IDR) and the rating on the following bonds issued by Montgomery County Higher Education & Health Authority on behalf of HRHS: -- $78.4 million revenue bonds, series 2016A; -- $45.2 million revenue refunding bonds, series 2014A. The bonds have been removed from Rating Watch Negative and assigned a Stable Rating Outlook. SECURITY Debt payments are secured by a pledge of the gross receipts of the obligated group, a mortgage on Holy Redeemer Hospital and Medical Center (HRHMC), and a debt service reserve fund. ANALYTICAL CONCLUSION The downgrade to 'BB+' from 'BBB-' is driven by HRHS's weak operating profile further stressed by disruptions related to the coronavirus pandemic. In addition, limited cash growth resulting from low profitability contributes to the rating rationale for the downgrade. Prior to the coronavirus outbreak, HRHS posted softer profitability and was already dealing with a host of operating challenges, making the system susceptible to negative impacts to operations. In particular, Redeemer contends with a highly saturated and consolidated market of various large providers in the greater Philadelphia area, impeding the system's ability to grow market share and maintain or improve operating cash flow. As a result of softer operations, the system's unrestricted liquidity has also eroded in recent years, and is additionally allocated heavily toward riskier assets which are vulnerable to market volatility. In prior years, HRHS has somewhat relied on favorable portfolio returns to cushion EBITDA margins and cover its debt service. However, core operating metrics have remained weak during this same timeframe and continuing a downward trend exacerbated by the pandemic. Fitch believes that the deferral of elective procedures and elevated supply and labor costs will accentuate existing pressures in the near term, further hindering HRHS's growth, operational performance, and liquidity profile. Despite these continued pressures, the Stable Outlook reflects HRHS's still adequate balance sheet, combined with Fitch's expectation that HRHS will be able to partially mitigate current operating challenges with cost efficiencies and receive short-term financial benefits from external government funding (i.e. loans, stimulus and advanced payments). The combination of management's efforts and government assistance will allow HRHS to incrementally improve its margins and cash position over the next few years, but Fitch believes that Redeemer's operations and credit profile will ultimately stabilize at a weaker level. The outbreak of coronavirus and related government containment measures worldwide has created an uncertain and negative environment for the entire healthcare system. While HRHS's financial performance through the most recently available data has thus far only shown near-term moderate impairment, material changes in revenue and cost profiles could occur across the sector in the coming months. Easing of restrictions on elective surgeries has begun, which should slowly begin to benefit top line revenues. Fitch's ratings are forward-looking in nature, and Fitch will monitor developments in the sector as a result of the virus outbreak as it relates to severity and duration and incorporate revised expectations for future performance and assessment of key risks. KEY RATING DRIVERS Revenue Defensibility: 'bb' Competitive Market; Solid Payor Mix HRHS's revenue defensibility is midrange, primarily due to a payor mix with moderate concentration to Medicaid and self-pay, accounting for just under 20% of gross revenue in fiscal 2019. The payor mix is partly a reflection of HRHS' location in Montgomery County, which has solid population growth, above national average wealth indicators and below average unemployment rates. This offsets some of the revenue defensibility challenges originating from Redeemer's position as a smaller, independent provider with limited leverage in a highly competitive region of southeastern Pennsylvania. Operating Risk: 'bb' Existing Operating Losses Impaired Further by Coronavirus Pandemic Redeemer's operating risk profile is weak, highlighted by an average operating loss margin of 3% over the past three fiscal years (2017-2019). Third-quarter 2020 interims, which do not include most of the impact from coronavirus, also indicate some additional operating impairment, where HRHS's operating margin is negative 6.4% on an annualized basis. Between short-term loans, government stimulus and cost containment measures, Fitch expects HRHS to somewhat mitigate the negative financial impact of the outbreak that accentuate underlying operating challenges. However, even with these loss mitigations, the system will show operating weakness in the short-term and require time to grow its margins as it navigates the challenges posed by the pandemic. To preserve operating flexibility and cash, management expects capital spending to remain mostly routine, where spending will be below depreciation in the near-term, but increase in later years if operational performance stabilizes. Financial Profile: 'bb' Financial Profile Expected to Weaken Redeemer's financial profile and leverage ratios have been historically strong with cash to adjusted debt above 100% and net adjusted debt to adjusted EBITDA at negative levels during the past five years. However, HRHS' operating performance has been weak in recent years, and will soften further in the near term because of coronavirus. The combination of heightened poor profitability will dilute liquidity ratios and an investment portfolio highly sensitive to a stress scenario could impose additional pressure on unrestricted reserves. Fitch's forward-looking analysis incorporates the impact of HRHS' cost savings, receipt of government stimulus and advance payments, deferral of major capex, and short-term borrowing from the State of Pennsylvania, which will soften, but not offset, the impact of the outbreak and stabilize liquidity and operating metrics at lower levels in the short-term. Fitch also believes an incremental recovery in financial performance should occur once elective procedures ramp-up, but over the next two years, it is likely that weaker core operations will hamper HRHS's ability to grow its balance sheet. ASYMMETRIC ADDITIONAL RISK CONSIDERATIONS There are no asymmetric additional risk considerations affecting the IDR and revenue bond rating determinations. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- Sustained operating EBITDA margins at or above 7% that leads to an Operating Risk driver assessment of 'bbb'; -- A sustainable increase in unrestricted cash and investments that leads to cash-to-adjusted debt being maintained at well above 120%. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- Sustained operating margin compression that persists beyond Fitch's expectations where volumes stay at lower than projected levels and/or operating costs continue to unexpectedly rise; -- Should economic conditions decline further from Fitch's expectations for economic contraction due to the coronavirus outbreak, or should a second wave of infections and longer lockdown periods across parts of the country occur, Fitch would expect to see an even larger GDP decline in 2020 and a weaker recovery in 2021, and HRHS would likely experience rating pressure. CREDIT PROFILE HRHS's obligated group consists of HRHMC, a 239 licensed-bed (163 staffed) acute care hospital in Meadowbrook, PA, approximately 20 miles from downtown Philadelphia; St. Joseph Manor (St. Joseph), a 63 unit assisted living (AL) and 296 bed skilled nursing facility (SNF); Lafayette Redeemer (Lafayette), a Type C (fee for service) continuing care retirement community (CCRC) with 240 independent living units (ILUs), 56 AL beds and 120 SNF beds; hospice and home care operations in Pennsylvania; and HR Physician Services. The obligated group represents about 79% of total system revenues and 95% of total system assets, with the acute care hospital representing just over half the system's revenues. The consolidated system includes a number of non-obligated entities, including home care agencies and senior living facilities. In fiscal 2019, the consolidated system had $421.8 million of total revenues. REVENUE DEFENSIBILITY HRHS currently boasts well-diversified revenue and service lines. These service lines comprise the entire spectrum of inpatient and outpatient services, including acute care, long-term care, and home health and hospice care in both Pennsylvania and New Jersey. HRHS is uniquely positioned as the health care delivery model moves closer to population health management. HRHS has a favorable payor mix with Medicaid and self-pay representing 19.7% of gross revenue in fiscal 2019. Additionally, exposure to government payors is moderate with Medicare and Medicaid accounting for 55.7% of gross revenue combined. HRHS has good revenue diversity given the various services provided. Redeemer's long-term care services business includes private pay from its independent and assisted living programs. However, homecare and hospice services revenue has trailed budgeted expectations mostly due to lower volumes resulting from more strict utilization management from Medicare Advantage plans. HRHS's main acute care facility, HRHMC is located in Meadowbrook, PA in Montgomery County. The primary service area (PSA) consists of parts of Montgomery County, Bucks County and Philadelphia County. The southeastern Pennsylvania healthcare market is highly competitive, experiencing consolidation activity and declining inpatient use rates, and is dominated by a few commercial health insurers (with one payor accounting for more than 40% of the hospital's commercial revenues). Influential competitors with relatively large market shares include University of Pennsylvania Health System and Jefferson Health, which is growing rapidly given recent consolidations. HRHMC's modest market share has been relatively stable over the past three years (10.6% in fiscal 2019) but down from 11.5% in fiscal 2015. HRHS's market strategy is focused on primary care and ambulatory outpatient expansion, home care partnerships (particularly in New Jersey), developing and launching the pending partnership with MD Anderson Cancer Center at Cooper, and growing its eight value-based agreements. HRHMC's accountable care organization (ACO) with Doylestown Hospital, the Community Care Collaborative of Pennsylvania and New Jersey (CCC), with Tier 1 status from the region's health plans was successfully launched on Jan. 1, 2017 and has begun to yield results. Only 32% of Track 1 ACOs earned shared savings in 2018, and CCC was one of them, for which it received $8.1 million in shared savings. HRHMC is continuing to explore ways of expanding its collaboration with Doylestown Hospital, such as in cardiology, rather than duplicate services at the two hospitals. HRHS has collaborative relationships with other providers as well, but much of its current strategy revolves around expanding cancer care through its pending partnership with MD Anderson at Cooper. Leading up to the pandemic, Redeemer has continued to invest in its technology platform and other activities related to building capacity needed to successfully launch the next phase of the relationship, which was expected to be in place before the end of fiscal 2020. Due to the coronavirus, however, the plans for this relationship have slowed with the reasonable expectation that they will pick up again once the system addresses near-term operating pressures. Radiation therapy and infusion encounters had already seen significant increases at HRHS and Redeemer expects sizable increases in cancer care once the partnership and investments come to fruition, including radiation oncology, medical and surgical oncology, and infusion. This relationship, along with Redeemer's strategy to enhance its neuroscience clinical line, is expected to keep additional higher acuity case at HRHMC and provide a buffer against pressured inpatient census. Much of HRHS's recent challenges have originated from decreasing acute care volume, medical and surgical, and in-home care and hospice where Medicare Advantage health plans' more stringent medical management programs increasingly control utilization. Some of the home care decrease was intentional as Redeemer pulled out of unprofitable volume and right-sized operations. However, due to the outbreak, multiple business lines have been impacted differently. Home care has softened further as patients are timider about at-home visits, telehealth has become more popular as patients prefer to receive remote treatment, and demand for hospice care has risen. Montgomery County's population has grown 2.0% over the last five years exceeding the state average, but less than the national average. Wealth levels as measured by median household income also were better than state and national averages in 2018. The greater Philadelphia area is well diversified economically and Fitch does not expect any significant shifts or threats to Redeemer's current payor mix. OPERATING RISK HRHS's operating performance has been pressured over the last several years as evidenced by operating EBITDA margins averaging 3.6% in the three-year period between 2017 and 2019, compared with 7.1% for the five-year period from fiscal 2013-2017. The low profitability in 2018, 2019 and the first three quarters of 2020 is driven by weak revenue growth, admission shifts to observation stays, and soft hospice and home visit volume and reflects Redeemer's limited leverage as an independent provider in a consolidated payor market. Additionally, Redeemer increased physician recruitment in recent years and many of those practices are still in the ramp-up period, but ongoing physician investments have been somewhat slowed by refocusing efforts on dealing with the pandemic. Physician Services' operating losses in fiscal 2019 amounted to $14.6 million of the system's overall $13.6 million consolidated operating losses for the year, significantly higher than Physician Services' loss of $6.1 million in fiscal 2018. Redeemer's operating EBITDA margin through three quarters of 2020 (ended March) was 0.4%, which is well below the 3.3% margin for fiscal 2019. Management expected profitability to improve in the last three quarters, but operating metrics continue to decline, exacerbated by coronavirus disruptions. Because of the Pennsylvania government's mandate to defer elective procedures, HRHS has seen a steep decline in surgical volumes. Management believes that there is still pent up demand for elective procedures, however, and that surgeries will recover to roughly 50% of where they were by June 2020. In addition, ambulatory centers were taken offline to manage coronavirus caseloads and mitigate the spread of the virus, so outpatient revenues have also steeply declined. As volumes have generally decreased across service lines, management has commensurately furloughed workers to manage expenses, but HRHS expects to reinstate positions in areas of the system that show financial recovery. As of May 2020, management reports that there was an outbreak of coronavirus infections at two of its long-term care facilities, where there was a relatively large amount of infections and some deaths. Regular testing has also been implemented for staff, but management indicated there were roughly 100 infections among workers as of May 2020. Management expects that volumes will recover in the near-term as electives ramp up, allowing operating performance to normalize. In addition, HRHS anticipates an operational boost from a rise in oncology volume as it moves toward a partnership with MD Anderson. Prior to the pandemic, HRHS also had a variety of clinical partnerships and ambulatory growth strategies expected to support operations and is continuing to focus on cost of care programs to control expenses. A few examples include better use of outsourcing service contracts, renegotiating contracted service agreements, and redesigning employee health plan programs. Additionally, HRHS has received a sizable amount of external funding from government sources to help mitigate operating challenges, including a $20 million loan from the State of Pennsylvania (HELP Loan), Medicare Advanced Payments of $41.2 million, HHS stimulus payments of roughly $28 million and other CARES Act funding of about $3.9 million. Management projects that by Dec. 31, 2020, all except $2.9 million of the Medicare Advanced Payments will be repaid to CMS, and the HELP Loan will be fully repaid to the state by September. However, HRHS will draw on $10 million of its line of credit to offset the loss of HELP Loan proceeds, as well as retain the CARES Act stimulus payments. Capital spending has been adequate over the past three fiscal years, averaging $29 million per year or 1.3x depreciation. A portion of capital has been funded by the series 2016 bonds, of which approximately $4 million was still available in project funds as of March 30th. However, as Redeemer deals with operating challenges due to the pandemic, material capex is expected to be deferred. Management believes that routine capital will be the main focus in the near-term, and any new projects will be delayed. Average age of plant was 15.4 years as of fiscal 2019, which is somewhat high, but is elevated partially due to long-term care facilities not needing as much capital reinvestment. FINANCIAL PROFILE HRHS's weak financial profile is driven by a decline in overall liquidity and softer operating margins. As of fiscal 2019, unrestricted liquidity was adequate at $179.8 million. However, as of March, unrestricted liquidity fell to $159 million, tempered by an additional $4 million draw on Redeemer's line of credit (the outstanding balance as of March is $10 million). Cash to adjusted debt (which includes 5x operating lease expenses and $12 million pension liability for levels funded below 80%) measured 104% in fiscal 2019. Net adjusted debt to adjusted EBITDA remains negative but softened in fiscal 2019 to negative 0.3x. Fitch's scenario analysis reflects operating EBITDA margins of 1.4% in 2020 and 2021, growing modestly in the following years. Assuming Redeemer can start to recover lost volumes as restrictions on elective procedures ease and its oncology partnership with MD Anderson produces accretive cash flows, Fitch expects operating EBITDA margins to recover to a low range of roughly 5.0% to 5.5% by 2024. Capital expenditures in the scenario analysis reflect modest spending levels in 2021 and 2022 as a result of management preserving cash and refocusing on only routine spending. Fitch did not apply a revenue stress in the rating case as Redeemer's fiscal 2020 results were already stressed at a 1.4% operating EBITDA margin. However, Fitch did apply its standard portfolio stress based on Redeemer's asset allocation, which is heavily balanced toward riskier alternative and private equity investments. In Fitch's model, a 2.3% GDP drop would result in an approximate 18.8% decrease to Redeemer's unrestricted liquidity balances, before recovering to a 5.9% annual return during years with a stable 2% GDP growth. With the portfolio stress and operating EBITDA margin expectations of approximately 5.1%, cash to adjusted debt is roughly 56% (68% cash to debt) and net adjusted debt to adjusted debt is unfavorably positive at 3.1x through the cycle. Given the weak revenue defensibility and weak operating risk assessments, these leverage metrics are in line with below-investment grade categories. These financial indicators thus transition to 'bb' through the cycle in the scenario analysis, driving the downgrade. ASYMMETRIC ADDITIONAL RISK CONSIDERATIONS There are no asymmetric risk considerations affecting the ratings. Until Dec. 31, 2017, HRHS offered a defined benefit pension plan to its employees. The pension has church plan status and is not subject to ERISA, providing HRHS with more flexibility to manage the plan. Effective Dec. 31, 2017, HRHS froze its defined benefit pension plan and realized a one-time non-operating gain of $5.1 million. Redeemer decreased their contribution to the plan in 2019 to $1.6 million (from $5 million in prior years) and investment returns on the plan have not been strong. Consequently, Redeemer reported a lower funded pension status of 73% for the year. HRHS has no swaps outstanding. HRHS currently has a line of credit with a $25 million limit that expires in March 2021. As of March 30, 2020, HRHS had $10 million outstanding on the line, but paid back the proceeds by April 2020. Once the HELP loan from the State of Pennsylvania is paid down by June 30, 2020, Redeemer is expected to tap into its line of credit again sometime in fiscal 2021. HRHS uses the line to manage operating cash flow and specifically to pay its insurance premiums during the fiscal year. Fitch considers Redeemer's growing reliance on its line of credit unfavorably. The lines of credit agreement require HRHS to maintain a minimum 1.1x debt service coverage annually and each has cross default risk to the obligated group's master trust indenture (MTI) debt. The MTI also has a 1.1x debt service coverage covenant. In addition to the sources of information identified in Fitch's applicable criteria specified, this action was informed by information from Lumesis. 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). HOLY REDEEMER: Moody's Cuts Rating on $45MM Debt to Ba2 ------------------------------------------------------- Moody's Investors Service has downgraded Holy Redeemer Health System's PA's rating to Ba2 from Ba1. The outlook is revised to stable from negative at the lower rating level. This action affects about $45 million of rated debt. RATINGS RATIONALE The downgrade to Ba2 reflects fundamental challenges that HRHS will continue to face as an independent player in a highly consolidated market. Market dynamics will likely contribute to modest operating cash flow margins and relatively high leverage as measured by debt to cash flow even putting aside the effects of the coronavirus outbreak. HRHS will see a material downturn in volume and revenues in fiscal 2020 and fiscal 2021 because of the suspension of elective services due to the outbreak, although federal CARES Act and stimulus grants will likely help to offset reductions in cash flow. Days cash and cash to debt metrics will moderate but will likely remain adequate even after federal and state loans are repaid; these cash measures will help to offset limited operating cash flow margins. That said, although HRHS has begun to reactivate elective services, the ability to return to pre-outbreak levels will remain uncertain. HRHS will continue to face challenges to grow volume and revenue in this highly consolidated greater Philadelphia market with commercial insurer concentration. Management, however, expects that HRHS will benefit from value-based contracts with various payors. In addition, a pending partnership with a national cancer center will help provide an opportunity for service line growth. HRHS's long term care businesses will continue to account for about 25% of total revenues. While this provides some diversification, HRHS will likely see ongoing declines in volume in its home health and hospice services. Although cash measures will likely remain adequate, liquidity risk will be elevated by a relatively high percentage of alternative investments. Covenant cushions will remain somewhat limited although concerns regarding covenant breaches will be mitigated by options to use alternative calculations of debt service in the MTI and other bank documents. The most immediate social risk is the coronavirus outbreak, which resulted in the suspension of non-essential services and has significantly reduced revenues. There is a high degree of uncertainty around the full effects of the suspension, the reactivation of elective services and the recovery period. The ongoing effects of the coronavirus outbreak, deteriorating global economic outlook, 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. RATING OUTLOOK The stable outlook reflects Moody's view that as HRHS reactivates elective services, it will likely be able to sustain adequate days cash and cash to debt measures that will help to offset modest operating cash flow margins. FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATING - Material and sustained volume and enterprise growth - Significant and sustained improvement in operating margins - Increase in absolute investments and the liquidity of investments - Material reduction in leverage FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATING - Inability to return to and sustain pre-outbreak operating cash flow levels - Greater than anticipated decline in days cash or cash to debt levels - Additional debt that results in higher leverage measures - Increasing competitive or payor pressure LEGAL SECURITY Bonds are secured by a gross receipts pledge and a mortgage pledge of the hospital land and buildings. The obligated group currently includes Holy Redeemer Health System and Holy Redeemer Physician Services. In fiscal 2019, the obligated group represented approximately 79% of system revenue. PROFILE HRHS is a Catholic health care system comprised of a medical surgical hospital with 242 licensed acute care beds and 21 long term care beds (located in Meadowbrook, PA, north of Philadelphia), a physician services company, a freestanding ambulatory surgery center, and non-acute care facilities and services provided throughout southeastern Pennsylvania and eleven New Jersey (NJ) counties. These include one standalone skilled nursing facility, one facility with skilled nursing care and assisted care, one retirement community with independent, assisted and skilled nursing care, and five home health agencies along with Medicare certified hospices. METHODOLOGY The principal methodology used in these ratings was Not-For-Profit Healthcare published in December 2018. ICONIX BRAND: Iconix China to Sell Starter China for $16 Million ---------------------------------------------------------------- Iconix China Limited, an indirect wholly-owned subsidiary of Iconix Brand Group, Inc., entered into a share purchase agreement to sell all of the equity interests of Starter China Limited, a wholly-owned subsidiary of Iconix China, for consideration of $16.0 million. The Starter China Sale includes the sale of the Starter brand in the mainland of China, Hong Kong, Taiwan and Macau. The Starter China Sale is anticipated to close on or prior to Sept. 15, 2020, subject to the satisfaction or waiver of customary closing conditions. The sale agreement contains representations, warranties, and covenants of the parties that are customary for transactions of this type. The Company anticipates using the net proceeds from the Starter China Sale to repay amounts due under its existing financing arrangements, and otherwise for general corporate purposes. About Iconix Brand Iconix Brand Group, Inc. owns, licenses and markets a portfolio of consumer brands including: CANDIE'S, BONGO, JOE BOXER, RAMPAGE, MUDD, MOSSIMO, LONDON FOG, OCEAN PACIFIC, DANSKIN, ROCAWEAR, CANNON, ROYAL VELVET, FIELDCREST, CHARISMA, STARTER, WAVERLY, ZOO YORK, UMBRO, LEE COOPER, ECKO UNLTD., MARC ECKO, ARTFUL DODGER, and HYDRAULIC. In addition, Iconix owns interests in the MATERIAL GIRL, ED HARDY, TRUTH OR DARE, MODERN AMUSEMENT BUFFALO and PONY brands. The Company licenses its brands to a network of retailers and manufacturers. Through its in-house business development, merchandising, advertising and public relations departments, Iconix manages its brands to drive greater consumer awareness and brand loyalty. Iconix Brand reported a net loss attributable to the company of $111.51 million for the year ended Dec. 31, 2019, compared to a net loss attributable to the company of $100.52 million for the year ended Dec. 31, 2018. As of March 31, 2020, Iconix Brand had $465.25 million in total assets, $712.25 million in total liabilities, $31.34 million in redeemable non-controlling interest, and a total stockholders' deficit of $278.35 million. BDO USA, LLP, in New York, NY, the Company's auditor since 1998, issued a "going concern" qualification in its report dated March 30, 2020 citing that the Company has suffered recurring losses and has certain debt agreements which require compliance with financial covenants. The COVID 19 pandemic is expected to have a material adverse effect on the Company's results of operation, cash flows and liquidity, including compliance with future debt covenants. These conditions raise substantial doubt about the Company's ability to continue as a going concern. IDEANOMICS INC: Regains Compliance with Nasdaq Min. Bid Price Rule ------------------------------------------------------------------ Ideanomics has received a letter from the NASDAQ Listing Qualifications Staff notifying the Company that it has regained compliance with NASDAQ's minimum bid price requirements for continued listing on the Nasdaq Capital Market. The letter noted that as a result of the closing bid price of the Company's common stock having been at $1.00 per share or greater for at least ten consecutive business days, from June 9, 2020 to June 23, 2020, the Company has regained compliance with Listing Rule 5550(a)(2) and the matter is now closed. About Ideanomics Ideanomics — http://www.ideanomics.com— is a global company focused on facilitating the adoption of commercial electric vehicles and developing next generation financial services and Fintech products. Its electric vehicle division, Mobile Energy Global (MEG) provides financial services and incentives for commercial fleet operators, including group purchasing discounts and battery buy-back programs, in order to acquire large-scale customers with energy needs which are monetized through pre-paid electricity and EV charging offerings. Ideanomics Capital includes DBOT ATS and Intelligenta which provide innovative financial services solutions powered by AI and blockchain. MEG and Ideanomics Capital provide their global customers and partners with better efficiencies and technologies and greater access to global markets. The company is headquartered in New York, NY, and has offices in Beijing, China. Ideanomics reported a net loss attributable to common stockholders of $97.66 million for the year ended Dec. 31, 2019, compared to a net loss attributable to common stockholders of $28.42 million for the year ended Dec. 31, 2018. As of March 31, 2020, the Company had $114.94 million in total assets, $61.06 million in total liabilities, $1.26 million in series A Convertible redeemable preferred stock, $7.15 million in redeemable non-controlling interest, and $45.47 million in total equity. B F Borgers CPA PC, in Lakewood, Colorado, the Company's auditor since 2018, issued a "going concern" qualification in its report dated March 16, 2020 citing that the Company incurred recurring losses from operations, has net current liabilities and an accumulated deficit that raise substantial doubt about its ability to continue as a going concern. INDIANA REGIONAL: Moody's Cuts Bond Rating to Ba3, Outlook Neg. --------------------------------------------------------------- Moody's Investors Service has downgraded Indiana Regional Medical Center's revenue bond rating to Ba3 from Ba2. This action affects approximately $22 million of rated debt. The outlook remains negative at the lower rating level. RATINGS RATIONALE The downgrade to Ba3 reflects Indiana Regional Medical Center's weak operating performance in fiscal 2020, in part due to COVID-19, and an expectation that margins will remain at levels that show variance to budget. Weak performance in 2020 will be compounded by the cumulative effect of multiple years of missing budget due to expense challenges and complications related to a recent EHR implementation. Albeit thin, the debt service coverage covenant is expected to be in compliance for FY 2020. The impact of the suspension of non-essential services during COVID-19 on IRMC's revenue base, a social risk under Moody's ESG classification, will create a larger hurdle to improve and restore profitability. Liquidity will decline in Q1 2021, driven by ongoing cashflow challenges and the repayment of COVID-19 relief loans, resulting in reduced operating flexibility. IRMC's high exposure to the equity markets will place additional pressure on the balance sheet with market volatility. The rating expects that IRMC will implement a long-term recovery plan to address expense, volume, and reimbursement pressures to reach projected improvement. Organic revenue growth, particularly for high-acuity service lines, is expected in 2021 as volumes have increased quickly following the reopening of facilities. While the organization will maintain its leading market position and essentiality as a sole community hospital, IRMC's size relative to other consolidated providers will provide risk in the highly competitive Pittsburgh market. The most immediate social risk is the coronavirus outbreak, which resulted in the suspension of non-essential services and has significantly reduced revenues at IRMC. There is a high degree of uncertainty around the full effects of the suspension given unknowns related to the full recovery period. 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. RATING OUTLOOK The negative outlook reflects its expectation that operating cash flow margins will continue in the low-single digits and liquidity growth will be limited. Failure to resolve operational challenges, an unexpected decline in liquidity or the violation of financial covenants will further pressure the rating. FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGS - Significant and sustained improvement in operating margins - Material long-term strengthening of liquidity and debt coverage - Reduction of the pension liability FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGS - Inability to improve operating performance in post-COVID-19 environment - Decline in absolute unrestricted cash and relative liquidity metrics - Deterioration of system's competitive position or prolonged severe downturn in the economy LEGAL SECURITY The Series 2014A fixed rate bonds are secured by a pledge of gross revenues of the Obligated Group and a mortgage on certain real property. There is a Mortgage provided to Master Trustee, and a Debt Service Reserve Fund for the 2014A Bonds. The Members of the Obligated Group, IRMC and Indiana Healthcare Physician Services d/b/a IRMC Physician Group, are jointly and severally obligated on all Obligations, which are issued pursuant to the Master Indenture. PROFILE Indiana Healthcare Corporation and Affiliates, d/b/a Indiana Regional Medical Center is a single-hospital system with 164 licensed beds, 60 miles northeast of Pittsburgh, in Indiana Borough, PA, the county seat of Indiana County. IRMC is the leading healthcare provider in its primary service area and the county and is designated as a Sole Community Hospital by the Center for Medicare and Medicaid Services of the U.S. Department of Health and Human Services. METHODOLOGY The principal methodology used in these ratings was Not-For-Profit Healthcare published in December 2018. INTELSAT CONNECT: Hires Ankura Consulting As Financial Advisor -------------------------------------------------------------- Intelsat Connect Finance S.A. seeks authority from the U.S. Bankruptcy Court for the Eastern District of Virginia to employ Ankura Consulting Group, LLC effective as of June 1, 2020 to serve as financial advisors to the special committee of the board of directors of Intelsat Connect. Pursuant to the resolutions of the board of directors of Intelsat Connect dated March 27, 2020, two disinterested directors were appointed to the Board of Directors and the Special Committee was established. The Disinterested Directors were appointed to the Special Committee effective April 1, 2020, and constitute the sole members of the Special Committee. To assist the Special Committee in fulfilling its duties under the Resolutions and conducting the Independent Analysis, Intelsat Connect seeks to retain Ankura pursuant to the Engagement Letter, to render independent financial advisory services at the sole direction of the Special Committee. Service Ankura will render are: a. provide forensic and investigatory services related to inter-Debtor and affiliated entity transactions among Intelsat Connect and its affiliates; b. analyse of net operating losses of Intelsat Connect; c. provide expert testimony, to the extent required; and d. perform such other professional services as may be requested by counsel to the Special Committee or the Special Committee and agreed to by Ankura in writing. Ankura's compensation are as follows: a. Fees and Expenses. Intelsat Connect agrees to pay to Ankura the non-refundable fees based on the actual hours expended at its standard hourly rates that are in effect when the Services are rendered. Ankura’s rates generally are revised annually. Ankura's current hourly rates are: Senior Managing Directors $1,015-1,100 Managing Directors $900-990 Senior Directors $760-870 Directors $610-725 Senior Associates $495-575 Associates $410-460 b. Expense Reimbursement. Ankura shall be entitled to reimbursement of actual, reasonable out-of-pocket and direct expenses incurred in connection with the Services to be provided under the Engagement Letter (including for Ankura's reasonable out-of-pocket fees and expenses for outside legal counsel and other third-party advisors) incurred in connection with the Engagement Letter, including the negotiation and performance of the Engagement Letter and the matters contemplated thereby. c. Testimony; Subpoena Requests. If Ankura is requested or required to appear as a witness in any action that is brought by, on behalf of, or against Intelsat Connect or that otherwise relates to the Engagement Letter or the Services rendered by Ankura thereunder, Intelsat Connect agrees to (i) compensate Ankura for its associated time charges at its regular rates in effect at the time and (ii) reimburse Ankura for all documented, actual out-of-pocket expenses incurred by Ankura in connection with such appearance or preparing to appear as a witness, including without limitation, the fees and disbursements of legal counsel of Ankura's choosing. In addition, Ankura will be compensated and reimbursed for any time and expense that Ankura may incur in considering or responding to discovery requests or other formal information requests for documents or information made in connection with any action or in connection with the Services. Philip J. Gund, senior managing director at Ankura, disclosed in court filings that his firm is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. The firm can be reached through: Philip J. Gund 485 Lexington Avenue, 10th Floor New York, NY 10017 Office: +1 212-818-1555 Mobile: +1 516-695-7003 Email: philip.gund@ankura.com About Intelsat S.A. Intelsat S.A. -- http://www.intelsat.com/-- is a publicly held operator of satellite services businesses, which provides a diverse array of communications services to a wide variety of clients, including media companies, telecommunication operators, internet service providers, and data networking service providers. The Company is also a provider of commercial satellite communication services to the U.S. government and other select military organizations and their contractors. The Company's administrative headquarters are in McLean, Virginia, and the Company has extensive operations spanning across the United States, Europe, South America, Africa, the Middle East, and Asia. Intelsat S.A., based in L-1246 Luxembourg, and its debtor-affiliates, filed a Chapter 11 petition (Bankr. E.D. Va. Lead Case No. 20-32299) on May 14, 2020. The petition was signed by David Tolley, executive vice president, chief financial officer, and co-chief restructuring officer. In its petition, the Debtor disclosed $11,651,558,000 in assets and $16,805,844,000 in liabilities. KIRKLAND & ELLIS LLP, and KUTAK ROCK LLP, as counsels; ALVAREZ & MARSAL NORTH AMERICA, LLC as restructuring advisor; PJT PARTNERS LP as investment banker; STRETTO as claims and noticing agent. INTELSAT CONNECT: Hires Willkie Farr as Co-Counsel -------------------------------------------------- Intelsat Connect Finance S.A. seeks authority from the U.S. Bankruptcy Court for the Eastern District of Virginia to employ Willkie Farr & Gallagher LLP as its co-counsel to serve as financial advisors to the special committee of the board of directors of Intelsat Connect effective as of May 13, 2020. Pursuant to the resolution of the board of directors of Intelsat Connect dated March 27, 2020, two disinterested directors were appointed to the Board of Directors and the Special Committee was established. The Disinterested Directors were appointed to the Special Committee effective April 1, 2020, and constitute the sole members of the Special Committee. The Special Committee has been delegated certain authority, which includes: (a) the tasks of reviewing, negotiating, evaluating, and approving strategic transactions; and (b) certain rights, authority, and powers in connection with matters pertaining to a Transaction in which the Special Committee determines in whole or in part may result in Conflict Matters, as defined in the Resolutions. To assist the Special Committee in fulfilling its duties under the Resolutions, Intelsat Connect retained Willkie, pursuant to the Engagement Letter, to render independent services at the sole direction of the Special Committee and to act with respect to Conflict Matters. Prepetition, Willkie provided various legal services relating to the Conflict Matters, including, without limitation: (a) reviewing and analyzing historical transactions; (b) reviewing documents in the Debtors' possession; (c) analyzing potential claims held by Intelsat Connect; (d) advising on board matters; and (e) reviewing and advising on actions of the Debtors affecting Intelsat Connect. Willkie's work in connection with any and all Conflict Matters and in connection with reviewing Transactions remains open and will continue during the pendency of these chapter 11 cases. Willkie's standard hourly rates are: Partners $1,175 to $1,700 Associates/Counsel $390 to $1,150 Law Clerks $265 to $435 Brian S. Lennon, Esq., a partner at Willkie Farr, disclosed in court filings that the firm is "disinterested" as defined in Section 101(14) of the Bankruptcy Code. In accordance with Appendix B-Guidelines for reviewing fee applications filed by attorneys in larger Chapter 11 cases, Mr. Lennon disclosed that his firm has not agreed to a variation of its standard or customary billing arrangements for its employment with the Debtors, and that no Willkie Farr professional has varied his rate based on the geographic location of the Debtors' bankruptcy cases. Mr. Lennon also disclosed that there has been no change in the billing rates, discounts or any other material financial terms from the prepetition period to the postpetition period. and that the Debtors have already approved the firm's budget and staffing plan for the period of May 13, 2020 through June 30, 2020. Willkie Farr can be reached through: Brian S. Lennon, Esq. Willkie Farr & Gallagher LLP 787 Seventh Avenue New York, NY 10019 Tel: (212) 728-8000 Fax: (212) 728-8111 About Intelsat S.A. Intelsat S.A. -- http://www.intelsat.com/-- is a publicly held operator of satellite services businesses, which provides a diverse array of communications services to a wide variety of clients, including media companies, telecommunication operators, internet service providers, and data networking service providers. The Company is also a provider of commercial satellite communication services to the U.S. government and other select military organizations and their contractors. The Company's administrative headquarters are in McLean, Virginia, and the Company has extensive operations spanning across the United States, Europe, South America, Africa, the Middle East, and Asia. Intelsat S.A., based in L-1246 Luxembourg, and its debtor-affiliates, filed a Chapter 11 petition (Bankr. E.D. Va. Lead Case No. 20-32299) on May 14, 2020. The petition was signed by David Tolley, executive vice president, chief financial officer, and co-chief restructuring officer. In its petition, the Debtor disclosed $11,651,558,000 in assets and $16,805,844,000 in liabilities. KIRKLAND & ELLIS LLP, and KUTAK ROCK LLP, as counsels; ALVAREZ & MARSAL NORTH AMERICA, LLC as restructuring advisor; PJT PARTNERS LP as investment banker; STRETTO as claims and noticing agent. INTELSAT CONNECT: Seeks to Hire Sands Anderson as Co-Counsel ------------------------------------------------------------ Intelsat Connect Finance S.A. seeks authority from the U.S. Bankruptcy Court for the Eastern District of Virginia to employ Sands Anderson PC as its co-counsel to render independent services at the sole direction of the special committee of the board of directors of Intelsat Connect effective as of June 4, 2020. Pursuant to the resolution of the board of directors of Intelsat Connect dated March 27, 2020, two disinterested directors were appointed to the Board of Directors and the Special Committee was established. The Disinterested Directors were appointed to the Special Committee effective April 1, 2020, and constitute the sole members of the Special Committee. The Special Committee has been delegated certain authority, which includes: (a) the tasks of reviewing, negotiating, evaluating, and approving strategic transactions; and (b) certain rights, authority, and powers in connection with matters pertaining to a Transaction in which the Special Committee determines in whole or in part may result in Conflict Matters, as defined in the Resolutions. To assist the Special Committee in fulfilling its duties under the Resolutions, Intelsat Connect retained Sands Anderson as co-counsel, pursuant to the Engagement Letter, to render independent services at the sole direction of the Special Committee and to act with respect to Conflict Matters. Sands Anderson's standard hourly rates are: Shareholders $520 to $560 Associates/Counsel $335 to $460 Paralegals $190 to $200 W. Ashley Burgess, Esq., shareholder at Sands Anderson, disclosed in a court filing that his firm does not represent or does not have relationship with any of the Debtor's creditors. In accordance with Appendix B-Guidelines for reviewing fee applications filed by attorneys in larger Chapter 11 cases, Mr. Burgess made the following disclosures: 1. Sands Anderson has not agreed to any variations from, or alternatives to, its standard billing arrangements for this engagement. 2. Sands Anderson professionals in this engagement did not vary their rate based on the geographic location of the Debtors' chapter 11 cases. 3. Sands Anderson has not represented Intelsat Connect in the 12 months prior to the Petition Date. 4. Intelsat Connect has approved Sands Anderson's budget through July 31, 2020. Sands Anderson can be reached through: W. Ashley Burgess, Esq. Sands Anderson PC 1111 East Main Street Post Office Box 1998 Richmond, VA 23218-1998 Main: (804) 648-1636 Fax: (804) 783-7291 Direct: (804) 783-7256 Email: ABurgess@SandsAnderson.com About Intelsat S.A. Intelsat S.A. -- http://www.intelsat.com/-- is a publicly held operator of satellite services businesses, which provides a diverse array of communications services to a wide variety of clients, including media companies, telecommunication operators, internet service providers, and data networking service providers. The Company is also a provider of commercial satellite communication services to the U.S. government and other select military organizations and their contractors. The Company's administrative headquarters are in McLean, Virginia, and the Company has extensive operations spanning across the United States, Europe, South America, Africa, the Middle East, and Asia. Intelsat S.A., based in L-1246 Luxembourg, and its debtor-affiliates, filed a Chapter 11 petition (Bankr. E.D. Va. Lead Case No. 20-32299) on May 14, 2020. The petition was signed by David Tolley, executive vice president, chief financial officer, and co-chief restructuring officer. In its petition, the Debtor disclosed $11,651,558,000 in assets and $16,805,844,000 in liabilities. KIRKLAND & ELLIS LLP, and KUTAK ROCK LLP, as counsels; ALVAREZ & MARSAL NORTH AMERICA, LLC as restructuring advisor; PJT PARTNERS LP as investment banker; STRETTO as claims and noticing agent. INTELSAT ENVISION: Hires Crenshaw Ware as Conflicts Counsel ----------------------------------------------------------- Intelsat Envision Holdings LLC seeks authority from the U.S. Bankruptcy Court for the Eastern District of Virginia to employ Crenshaw, Ware & Martin, PLC as counsel to render independent services on behalf of and at the sole direction of the special committee of the board of managers of Intelsat Envision. Pursuant to the resolution of the board of managers of Intelsat Envision dated March 27, 2020, two disinterested managers were appointed to the Board of Managers and the Special Committee was established. The Disinterested Managers were appointed to the Special Committee effective April 1, 2020, and constitute the sole members of the Special Committee. To assist the Special Committee in fulfilling its duties under the Resolutions, Intelsat Envision retained Crenshaw, pursuant to the Engagement Letter, to render independent services on behalf of and at the sole direction of the Special Committee and to act with respect to Conflict Matters. Crenshaw will also provide certain specific legal services as local counsel, including, but not limited to: (a) providing legal advice and services regarding the Local Rules, practices, precedent, regulations, and procedures and providing substantive and strategic advice on how to accomplish the Intelsat Envision's goals at the sole direction of the Special Committee, bearing in mind that the Court relies on Virginia co-counsel such as Crenshaw to be involved in all aspects of each bankruptcy proceeding; (b) appearing in Court, depositions, and other meetings as necessary at any given time on behalf of the Special Committee as its Virginia counsel; (c) reviewing, commenting, and/or preparing drafts of documents to be filed with the Court to ensure compliance with the Local Rules as co-counsel to Intelsat Envision on behalf of and at the sole direction of the Special Committee and/or served on parties or third parties; and (d) interacting and communicating with the Court's chambers and the Court's Clerk's Office. Crenshaw's standard hourly rates are: Partners $400 Associates $230–$325 Paraprofessionals $100–$150 Donald Schultz, Esq., a partner at Crenshaw, disclosed in a court filing that his firm is a "disinterested person" as defined in section 101(14) of the Bankruptcy Code. In accordance with Appendix B-Guidelines for reviewing fee applications filed by attorneys in larger Chapter 11 cases, Mr. Schultz disclosed that his firm has not agreed to any variations from, or alternatives to, its standard or customary billing arrangements, and that no professional at the firm has varied his rate based on the geographic location of the Debtor's bankruptcy case. Crenshaw has not represented Intelsat Envision in the 12 months prepetition, and is developing a budget and staffing plan from June 4, 2020 through September 4, 2020, Mr. Schultz added. The firm can be reached through: Donald C. Schultz, Esq. David C. Hartnett, Esq. Crenshaw, Ware & Martin, P.L.C. 150 West Main Street, Suite 1500 Norfolk, VA 23510 Tel: (757) 623-3000 Fax: (757) 623-5735 About Intelsat S.A. Intelsat S.A. -- http://www.intelsat.com/-- is a publicly held operator of satellite services businesses, which provides a diverse array of communications services to a wide variety of clients, including media companies, telecommunication operators, internet service providers, and data networking service providers. The Company is also a provider of commercial satellite communication services to the U.S. government and other select military organizations and their contractors. The Company's administrative headquarters are in McLean, Virginia, and the Company has extensive operations spanning across the United States, Europe, South America, Africa, the Middle East, and Asia. Intelsat S.A., based in L-1246 Luxembourg, and its debtor-affiliates, filed a Chapter 11 petition (Bankr. E.D. Va. Lead Case No. 20-32299) on May 14, 2020. The petition was signed by David Tolley, executive vice president, chief financial officer, and co-chief restructuring officer. In its petition, the Debtor disclosed $11,651,558,000 in assets and $16,805,844,000 in liabilities. KIRKLAND & ELLIS LLP, and KUTAK ROCK LLP, as counsels; ALVAREZ & MARSAL NORTH AMERICA, LLC as restructuring advisor; PJT PARTNERS LP as investment banker; STRETTO as claims and noticing agent. INTELSAT ENVISION: Hires Province Inc. as Financial Advisor ----------------------------------------------------------- Intelsat Envision Holdings LLC seeks authority from the U.S. Bankruptcy Court for the Eastern District of Virginia to employ Province, Inc. as financial advisor to render independent services at the direction of Katten Muchin Rosenman LLP in Katten's capacity as counsel to the special committee of the board of managers of Intelsat Envision, effective June 2, 2020. Pursuant to the resolution of the board of managers of Intelsat Envision dated March 27, 2020, two disinterested managers were appointed to the Board of Managers and the Special Committee was established. The Disinterested Managers were appointed to the Special Committee effective April 1, 2020, and constitute the sole members of the Special Committee. Services Province will render are: (a) becoming familiar with and analyzing the Debtors' and Intelsat Envision's assets, liabilities and overall financial condition; (b) reviewing financial and operational information furnished by the Debtors and Special Committee; (c) scrutinizing the economic terms of various agreements, whether historical or proposed; (d) preparing, or reviewing, as applicable, avoidance actions and claim analyses; (e) assisting Katten in reviewing the Debtors' and Intelsat Envision's financial reports; (f) advising Katten on the current state of these chapter 11 cases; (g) if necessary, participating as a witness in hearings before the Court with respect to matters upon which Province has provided advice; and (h) other activities as are approved by Katten. Province's standard hourly rates are: Principal $880 – $975 Managing Director $670 – $790 Senior Director $600 – $670 Director $550 – $600 VP $510 – $550 Senior Associate $430 – $510 Associate $360 – $430 Analyst $240 – $360 Paraprofessional $185 Peter Kravitz, principal at the firm of Province, Inc., disclosed in a court filing that his firm is a "disinterested person" as defined in section 101(14) of the Bankruptcy Code. The firm can be reached through: Peter Kravitz Province, Inc. 2360 Corporate Circle, Suite 330 Henderson, NV 89074 Phone: +1 (702) 685-5555 About Intelsat S.A. Intelsat S.A. -- http://www.intelsat.com/-- is a publicly held operator of satellite services businesses, which provides a diverse array of communications services to a wide variety of clients, including media companies, telecommunication operators, internet service providers, and data networking service providers. The Company is also a provider of commercial satellite communication services to the U.S. government and other select military organizations and their contractors. The Company's administrative headquarters are in McLean, Virginia, and the Company has extensive operations spanning across the United States, Europe, South America, Africa, the Middle East, and Asia. Intelsat S.A., based in L-1246 Luxembourg, and its debtor-affiliates, filed a Chapter 11 petition (Bankr. E.D. Va. Lead Case No. 20-32299) on May 14, 2020. The petition was signed by David Tolley, executive vice president, chief financial officer, and co-chief restructuring officer. In its petition, the Debtor disclosed $11,651,558,000 in assets and $16,805,844,000 in liabilities. KIRKLAND & ELLIS LLP, and KUTAK ROCK LLP, as counsels; ALVAREZ & MARSAL NORTH AMERICA, LLC as restructuring advisor; PJT PARTNERS LP as investment banker; STRETTO as claims and noticing agent. INTELSAT JACKSON: Hires Quinn Emanuel as Special Counsel -------------------------------------------------------- Intelsat Jackson Holdings S.A. seeks authority from the U.S. Bankruptcy Court for the Eastern District of Virginia to employ Quinn Emanuel Urquhart & Sullivan, LLP as its special counsel to render independent legal services at the sole direction of the Jackson Special Committee. Pursuant to the resolution of the board of directors of Intelsat Jackson dated March 27, 2020, two disinterested directors were appointed to the Board of Directors, and the Jackson Special Committee was established. The Jackson Special Committee has been delegated certain authority, which includes: (a) the tasks of reviewing, negotiating, evaluating, and approving a strategic transaction or a series of strategic transactions as determined by the Jackson Special Committee; and (b) certain rights, authority, and powers in connection with any matters pertaining to a Transaction in which the Jackson Special Committee determines in whole or in part may result in conflict matters, as defined in the Resolutions. To assist the Special Committee in fulfilling its duties under the Resolutions, Intelsat Jackson retained Quinn Emanuel, pursuant to the Engagement Letter, to render independent services at the sole direction of the Jackson Special Committee and to act with respect to Conflict Matters. Prepetition, Quinn Emanuel provided various legal services relating to the Conflict Matters, including, without limitation: (a) reviewing and analyzing historical transactions; (b) reviewing documents in the Debtor’s possession; (c) analyzing potential claims held by Intelsat Jackson; (d) advising on board matters; and (e) reviewing and advising on actions of the Debtors affecting Intelsat Jackson. Quinn Emanuel's work in connection with any and all Conflict Matters and in connection with reviewing Transactions remains open and will continue during the pendency of these chapter 11 cases. Quinn Emanuel's standard hourly rates are: Partners $745 to $1,595 Associates/Counsel $625 to $1,270 Law Clerks $355 to $525 Quinn Emanuel received a retainer payment in the amount of $300,000 from Intelsat Jackson to provide compensation for professional services to be performed relating to the Independent Analysis and for the reimbursement of reasonable and necessary expenses. James C. Tecce, Esq., a partner at Quinn Emanuel, disclosed in court filings that her firm is "disinterested" within the meaning of Section 101(14) of the Bankruptcy Code. In accordance with Appendix B-Guidelines for reviewing fee applications filed by attorneys in larger Chapter 11 cases, Mr. Tecce made the following disclosures: 1. Quinn Emanuel and Intelsat Jackson have not agreed to any variations from, or alternatives to, Quinn Emanuel’s standard billing arrangements for this engagement. 2. The hourly rates used by Quinn Emanuel in representing Intelsat Jackson are consistent with the rates that Quinn Emanuel charges other comparable chapter 11 clients, regardless of the location of the chapter 11 case. 3. Quinn Emanuel followed the fee arrangement as stated in the Engagement Letter dated May 7, 2020 4. Intelsat Jackson has approved Quinn Emanuel's budget and staffing plan for the period from May 14, 2020 through June 30, 2020. Quinn Emanuel can be reached through: James C. Tecce, Esq. Quinn Emanuel Urquhart & Sullivan, LLP 51 Madison Avenue, 22nd Floor, New York, NY 10010 Direct Tel: +1 212-849-7199 Email: jamestecce@quinnemanuel.com About Intelsat S.A. Intelsat S.A. -- http://www.intelsat.com/-- is a publicly held operator of satellite services businesses, which provides a diverse array of communications services to a wide variety of clients, including media companies, telecommunication operators, internet service providers, and data networking service providers. The Company is also a provider of commercial satellite communication services to the U.S. government and other select military organizations and their contractors. The Company's administrative headquarters are in McLean, Virginia, and the Company has extensive operations spanning across the United States, Europe, South America, Africa, the Middle East, and Asia. Intelsat S.A., based in L-1246 Luxembourg, and its debtor-affiliates, filed a Chapter 11 petition (Bankr. E.D. Va. Lead Case No. 20-32299) on May 14, 2020. The petition was signed by David Tolley, executive vice president, chief financial officer, and co-chief restructuring officer. In its petition, the Debtor disclosed $11,651,558,000 in assets and $16,805,844,000 in liabilities. KIRKLAND & ELLIS LLP, and KUTAK ROCK LLP, as counsels; ALVAREZ & MARSAL NORTH AMERICA, LLC as restructuring advisor; PJT PARTNERS LP as investment banker; STRETTO as claims and noticing agent. INTELSAT JACKSON: Seeks to Hire Spotts Fain as Counsel ------------------------------------------------------ Intelsat Jackson Holdings S.A. seeks authority from the U.S. Bankruptcy Court for the Eastern District of Virginia to employ Spotts Fain PC as its counsel to render independent services at the sole direction of the special committee of the board of directors of Intelsat Jackson, effective as of May 13, 2020. Pursuant to the resolution of the board of directors of Intelsat Jackson dated March 27, 2020), two disinterested directors were appointed to the Board of Directors, and the Jackson Special Committee was established. The Disinterested Directors were appointed to the Jackson Special Committee effective April 1, 2020, and constitute the sole members of the Jackson Special Committee. The Jackson Special Committee has been delegated certain authority, which includes: (a) the tasks of reviewing, negotiating, evaluating, and approving a strategic transaction or a series of strategic transactions as determined by the Jackson Special Committee; and (b) certain rights, authority, and powers in connection with any matters pertaining to a Transaction in which the Jackson Special Committee determines in whole or in part may result in conflict matters, as defined in the Resolutions. To assist the Special Committee in fulfilling its duties under the Resolutions, Intelsat Jackson subsequently retained Quinn Emanuel, to render independent services at the sole direction of the Jackson Special Committee and to act with respect to Conflict Matters. Intelsat Jackson requests authority to retain Spotts Fain to assist Quinn Emanuel to continue to provide such independent legal services as are necessary and requested by the Jackson Special Committee and to act with respect to Conflict Matters. Prepetition, Quinn Emanuel provided various legal services relating to the Conflict Matters, including, without limitation: (a) reviewing and analyzing historical transactions; (b) reviewing documents in the Debtor's possession; (c) analyzing potential claims held by Intelsat Jackson; (d) advising on board matters; and (e) reviewing and advising on actions of the Debtors affecting Intelsat Jackson. Quinn Emanuel's work in connection with any and all Conflict Matters and in connection with reviewing Transactions remains open and will continue during the pendency of these chapter 11 cases. Spotts Fain's standard hourly rates are: Shareholders $395 Directors/Associates $235-$340 Legal Assistants $130 Robert H. Chappell, III, Shareholder $395 Neil E. McCullagh, Director $340 Karl A. Moses, Jr., Associate $235 Emily E. G. Anderson, Legal Assistant $130 Quinn Emanuel received a retainer payment in the amount of $300,000 from Intelsat Jackson to provide compensation for professional services to be performed relating to the Independent Analysis and for the reimbursement of reasonable and necessary expenses. Robert H. Chappell, III, Esq., a partner at Spotts Fain, disclosed in court filings that her firm is "disinterested" within the meaning of Section 101(14) of the Bankruptcy Code. In accordance with Appendix B-Guidelines for reviewing fee applications filed by attorneys in larger Chapter 11 cases, Mr. Chappell made the following disclosures: 1. Spotts Fain and Intelsat Jackson have not agreed to any variations from, or alternatives to, Spotts Fain's standard billing arrangements for this engagement. 2. The hourly rates used by Spotts Fain in representing Intelsat Jackson are consistent with the rates that Spotts Fain charges other comparable chapter 11 clients, regardless of the location of the chapter 11 case. 3. Spotts Fain has not represented the Debtors in the 12 months prepetition. 4. Quinn Emanuel has provided to Intelsat Jackson its budget and staffing plan for the period from May 14, 2020 through June 30, 2020, and Intelsat Jackson has and approved the same. Spotts Fain's services will be in accordance with that budget and plan taking into consideration its role as local counsel. Spotts Fain can be reached through: Robert H. Chappell III, Esq. Neil E. McCullagh, Esq. SPOTTS FAIN PC 411 East Franklin Street, Suite 600 Richmond, VA 23219 Tel: (804) 697-2000 Fax: (804) 697-2100 Email: rchappell@spottsfain.com nmccullagh@spottsfain.com About Intelsat S.A. Intelsat S.A. -- http://www.intelsat.com/-- is a publicly held operator of satellite services businesses, which provides a diverse array of communications services to a wide variety of clients, including media companies, telecommunication operators, internet service providers, and data networking service providers. The Company is also a provider of commercial satellite communication services to the U.S. government and other select military organizations and their contractors. The Company's administrative headquarters are in McLean, Virginia, and the Company has extensive operations spanning across the United States, Europe, South America, Africa, the Middle East, and Asia. Intelsat S.A., based in L-1246 Luxembourg, and its debtor-affiliates, filed a Chapter 11 petition (Bankr. E.D. Va. Lead Case No. 20-32299) on May 14, 2020. The petition was signed by David Tolley, executive vice president, chief financial officer, and co-chief restructuring officer. In its petition, the Debtor disclosed $11,651,558,000 in assets and $16,805,844,000 in liabilities. KIRKLAND & ELLIS LLP, and KUTAK ROCK LLP, as counsels; ALVAREZ & MARSAL NORTH AMERICA, LLC as restructuring advisor; PJT PARTNERS LP as investment banker; STRETTO as claims and noticing agent. INTELSAT LUXEMBOURG: Hires Berkeley Research as Financial Advisor ----------------------------------------------------------------- Intelsat (Luxembourg) S.A. seeks authority from the U.S. Bankruptcy Court for the Eastern District of Virginia to employ Berkeley Research Group, LLC as its financial advisor. Intelsat Luxembourg requests authority to retain BRG to provide such independent financial advisory services as are necessary and requested by the Special Committee during the pendency of these chapter 11 cases, including with respect to any and all Conflict Matters and analysis and investigation of any Transactions. The current standard hourly rates for the BRG are: Managing Director $825 - $1,095 Director $625 - $835 Professional Staff $295 - $740 Support Staff $125 - $260 Stephen Coulombe, a managing director of Berkeley Research Group, LLC, 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: Stephen Coulombe BERKELEY RESEARCH GROUP, LLC 2200 Powell St., Suite 1200 Emeryville, CA 94608 Telephone: (510) 285-3300 About Intelsat S.A. Intelsat S.A. -- http://www.intelsat.com/-- is a publicly held operator of satellite services businesses, which provides a diverse array of communications services to a wide variety of clients, including media companies, telecommunication operators, internet service providers, and data networking service providers. The Company is also a provider of commercial satellite communication services to the U.S. government and other select military organizations and their contractors. The Company's administrative headquarters are in McLean, Virginia, and the Company has extensive operations spanning across the United States, Europe, South America, Africa, the Middle East, and Asia. Intelsat S.A., based in L-1246 Luxembourg, and its debtor-affiliates, filed a Chapter 11 petition (Bankr. E.D. Va. Lead Case No. 20-32299) on May 14, 2020. The petition was signed by David Tolley, executive vice president, chief financial officer, and co-chief restructuring officer. In its petition, the Debtor disclosed $11,651,558,000 in assets and $16,805,844,000 in liabilities. KIRKLAND & ELLIS LLP, and KUTAK ROCK LLP, as counsels; ALVAREZ & MARSAL NORTH AMERICA, LLC as restructuring advisor; PJT PARTNERS LP as investment banker; STRETTO as claims and noticing agent. INTELSAT LUXEMBOURG: Hires Jenner & Block as Counsel ---------------------------------------------------- Intelsat (Luxembourg) S.A. seeks authority from the U.S. Bankruptcy Court for the Eastern District of Virginia to employ Jenner & Block LLP as its counsel to render independent services at the sole direction of the special committee of the board of directors of Intelsat Luxembourg, effective as of May 13, 2020. Pursuant to the resolution of the board of directors of Intelsat Luxembourg dated March 27, 2020, two disinterested directors were appointed to the Board of Directors and the Special Committee was established. The Disinterested Directors were appointed to the Special Committee effective April 1, 2020, and constitute the sole members of the Special Committee. Intelsat Luxembourg requests authority to retain Jenner to continue to provide such independent legal services as are necessary and requested by the Special Committee and to act with respect to Conflict Matters. Prepetition, Jenner provided various legal services relating to the Conflict Matters, including, without limitation: (a) reviewing and analyzing historical transactions; (b) reviewing documents in the Debtor's possession; (c) analyzing potential claims held by Intelsat Luxembourg; (d) advising on board matters; and (e) reviewing and advising on actions of the Debtors affecting Intelsat Luxembourg. Jenner's work in connection with any and all Conflict Matters and in connection with reviewing Transactions remains open and will continue during the pendency of these chapter 11 cases. Jenner's standard hourly rates are: Partners and counsel $865 to $1,400 Associates $510 to $880 Paralegals $230 to $400 Robert Gordon, Esq., a partner at Jenner, disclosed in court filings that her firm is "disinterested" within the meaning of Section 101(14) of the Bankruptcy Code. In accordance with Appendix B-Guidelines for reviewing fee applications filed by attorneys in larger Chapter 11 cases, Mr. Gordon made the following disclosures: a. Jenner and Intelsat Luxembourg have not agreed to any variations from, or alternatives to, Jenner’s standard billing arrangements for this engagement. b. The hourly rates used by Jenner in representing Intelsat Luxembourg are consistent with the rates that Jenner charges other comparable chapter 11 clients, regardless of the location of the chapter 11 case. c. Jenner represented the Special Committee from May 6, 2020 to the Petition Date using its standard hourly rates. d. Intelsat Luxembourg approved Jenner's budget and staffing plan for the period from and including May 14, 2020 through June 30, 2020. The firm can be reached through: Robert Gordon, Esq. JENNER & BLOCK LLP 919 Third Avenue New York, NY 10022 Tel: (212) 891-1600 Fax: (212) 891-1699 About Intelsat S.A. Intelsat S.A. -- http://www.intelsat.com/-- is a publicly held operator of satellite services businesses, which provides a diverse array of communications services to a wide variety of clients, including media companies, telecommunication operators, internet service providers, and data networking service providers. The Company is also a provider of commercial satellite communication services to the U.S. government and other select military organizations and their contractors. The Company's administrative headquarters are in McLean, Virginia, and the Company has extensive operations spanning across the United States, Europe, South America, Africa, the Middle East, and Asia. Intelsat S.A., based in L-1246 Luxembourg, and its debtor-affiliates, filed a Chapter 11 petition (Bankr. E.D. Va. Lead Case No. 20-32299) on May 14, 2020. The petition was signed by David Tolley, executive vice president, chief financial officer, and co-chief restructuring officer. In its petition, the Debtor disclosed $11,651,558,000 in assets and $16,805,844,000 in liabilities. KIRKLAND & ELLIS LLP, and KUTAK ROCK LLP, as counsels; ALVAREZ & MARSAL NORTH AMERICA, LLC as restructuring advisor; PJT PARTNERS LP as investment banker; STRETTO as claims and noticing agent. INTELSAT LUXEMBOURG: Hires Ronald Page as Virginia Counsel ---------------------------------------------------------- Intelsat (Luxembourg) S.A. seeks authority from the U.S. Bankruptcy Court for the Eastern District of Virginia to employ Ronald Page, PLC as its Virginia counsel to render independent services at the sole direction of the special committee of the board of directors of Intelsat Luxembourg, effective as of June 5, 2020. Pursuant to the resolution of the board of directors of Intelsat Luxembourg dated March 27, 2020, two disinterested directors were appointed to the Board of Directors and the Special Committee was established. The Disinterested Directors were appointed to the Special Committee effective April 1, 2020, and constitute the sole members of the Special Committee. Intelsat Luxembourg requests authority to retain Page to provide such independent legal services as are necessary and requested by the Special Committee and to act with respect to Conflict Matters. Page will work in connection with any and all Conflict Matters and in connection with reviewing Transactions during the pendency of these chapter 11 cases. Page's standard hourly rates are: Ronald A. Page, Jr. $350 Paralegals $160 Ronald A. Page, Jr., Esq., a partner at Jenner, disclosed in court filings that her firm is "disinterested" within the meaning of Section 101(14) of the Bankruptcy Code. In accordance with Appendix B-Guidelines for reviewing fee applications filed by attorneys in larger Chapter 11 cases, Mr. Page made the following disclosures: a. Page and Intelsat Luxembourg have not agreed to any variations from, or alternatives to, Jenner’s standard billing arrangements for this engagement. b. The hourly rates used by Page in representing Intelsat Luxembourg are consistent with the rates that Jenner charges other comparable chapter 11 clients, regardless of the location of the chapter 11 case. c. Page did not represent Intelsat Luxembourg in the 12 months prepetition. The firm can be reached through: Ronald A. Page, Jr., Esq. RONALD PAGE, PLC P.O Box 73087 N. Chesterfield, VA 23235 Tel: (804) 562-8704 Fax: (804) 482-2427 Email: rpage@rpagelaw.com About Intelsat S.A. Intelsat S.A. -- http://www.intelsat.com/-- is a publicly held operator of satellite services businesses, which provides a diverse array of communications services to a wide variety of clients, including media companies, telecommunication operators, internet service providers, and data networking service providers. The Company is also a provider of commercial satellite communication services to the U.S. government and other select military organizations and their contractors. The Company's administrative headquarters are in McLean, Virginia, and the Company has extensive operations spanning across the United States, Europe, South America, Africa, the Middle East, and Asia. Intelsat S.A., based in L-1246 Luxembourg, and its debtor-affiliates, filed a Chapter 11 petition (Bankr. E.D. Va. Lead Case No. 20-32299) on May 14, 2020. The petition was signed by David Tolley, executive vice president, chief financial officer, and co-chief restructuring officer. In its petition, the Debtor disclosed $11,651,558,000 in assets and $16,805,844,000 in liabilities. KIRKLAND & ELLIS LLP, and KUTAK ROCK LLP, as counsels; ALVAREZ & MARSAL NORTH AMERICA, LLC as restructuring advisor; PJT PARTNERS LP as investment banker; STRETTO as claims and noticing agent. INTELSAT S.A.: Hires Alvarez & Marsal as Restructuring Advisor -------------------------------------------------------------- Intelsat S.A., and its-debtor affiliates seek authority from the U.S. Bankruptcy Court for the Eastern District of Virginia to employ Alvarez & Marsal North America, LLC, as its restructuring advisor. Intelsat requires Alvarez & Marsal to: a. assist in the management of a 13-week cash flow forecast and implementation of short-term cash management procedures; b. assist to the Debtors in the preparation of financial-related disclosures required by the Court, including the Debtors' Schedules of Assets and Liabilities, Statements of Financial Affairs, and Monthly Operating Reports; c. assist with the identification of executory contracts and leases and performance of evaluations to support the Debtors' analysis and decision to assume or reject each contract and lease; d. assist the Debtors' management team and the Debtors' other professionals and advisors focused on the coordination of resources related to the ongoing reorganization effort; e. assist in the preparation of financial information for distribution to creditors and other parties in interest, including, but not limited to, business plan, cash flow projections and budgets, cash receipts and disbursement analysis, analysis of various asset and liability accounts, and analysis of proposed transactions for which Court approval is sought; f. analyse of creditor claims by type, entity, and individual claim, including assistance with development of databases, as necessary, to track such claims; g. assist in the evaluation and analysis of avoidance actions, including fraudulent conveyances and preferential transfers; h. provide expert witness testimony on issues directly related to the services provided by Alvarez & Marsal, as requested by the Debtors and agreed to by Alvarez & Marsal; i. assist the Debtors with information and analyses required pursuant to the Debtors' debtor-in-possession financing; j. provide advisory assistance in connection with the development and implementation of key employee compensation and other critical employee benefit programs; k. assist in the preparation of information and analysis necessary for the confirmation of a chapter 11 plan in these chapter 11 cases, including information contained in the disclosure statement related thereto; l. attend meetings and assistance in discussions with potential investors, banks, and other secured lenders, any official committee(s) appointed in these chapter 11 cases, the United States Trustee, other parties in interest and professionals hired by same, as requested; and m. render such other general business consulting or such other assistance as the Debtors' management or counsel may deem necessary consistent with the role of a restructuring advisor to the extent that it would not be duplicative of services provided by other professionals in this proceeding. Alvarez & Marsal customary hourly billing rates are: Restructuring: Managing Directors $900 – 1,150 Directors $700 – 875 Analysts / Associates $400 – 675 Case Management Services: Managing Directors $850 – 1,000 Directors $675 – 825 Analysts / Associates $400 – 625 Non-working travel time will be billed at 50% of the applicable hourly rate. Justin Schmaltz, managing director at Alvarez & Marsal, assures the court that the firm is "disinterested" as such term is defined in section 101(14) of the Bankruptcy Code. The firm can be reached through: Justin Schmaltz Alvarez & Marsal North America, LLC 540 West Madison Street, Suite 1800 Chicago, IL 60661 Tel: +1 312 601 4220 Fax: +1 312 332 4599 About Intelsat S.A. Intelsat S.A. -- http://www.intelsat.com/-- is a publicly held operator of satellite services businesses, which provides a diverse array of communications services to a wide variety of clients, including media companies, telecommunication operators, internet service providers, and data networking service providers. The Company is also a provider of commercial satellite communication services to the U.S. government and other select military organizations and their contractors. The Company's administrative headquarters are in McLean, Virginia, and the Company has extensive operations spanning across the United States, Europe, South America, Africa, the Middle East, and Asia. Intelsat S.A., based in L-1246 Luxembourg, and its debtor-affiliates, filed a Chapter 11 petition (Bankr. E.D. Va. Lead Case No. 20-32299) on May 14, 2020. The petition was signed by David Tolley, executive vice president, chief financial officer, and co-chief restructuring officer. In its petition, the Debtor disclosed $11,651,558,000 in assets and $16,805,844,000 in liabilities. KIRKLAND & ELLIS LLP, and KUTAK ROCK LLP, as counsels; ALVAREZ & MARSAL NORTH AMERICA, LLC as restructuring advisor; PJT PARTNERS LP as investment banker; STRETTO as claims and noticing agent. INTELSAT S.A.: Hires Evercore Group as Investment Banker -------------------------------------------------------- Intelsat S.A., and its-debtor affiliates seek authority from the U.S. Bankruptcy Court for the Eastern District of Virginia to employ Evercore Group L.L.C. as their investment banker. Evercore has provided and has agreed to provide services in connection with the possible sale, or new arrangement that results in the receipt of proceeds or compensation (including on account of clearing activities), directly or indirectly, related to all or a portion of the Debtors' Canadian C-Band spectrum rights. The Debtors have agreed to pay Evercore in cash fee in an amount equal to the greater of: (a) $1.5 million and (b) the sum of 1.0 percent of that portion of the Net Proceeds to the Debtors up to and including $250 million, plus 1.75 percent of that portion of the Net Proceeds to the Debtors in excess of $250 million up to and including $500 million, plus 2.0 percent of that portion of the Net Proceeds to the Company in excess of $500 million, which will be paid promptly upon consummation of a Transaction. Evercore is a "disinterested person" within the meaning of section 101(14) of the Bankruptcy Code, as required by section 327(a) of the Bankruptcy Code, and does not hold or represent an interest materially adverse to the Debtors' estates; and has no connection to the Debtors, their creditors or other parties in interest in these chapter 11 cases, according to court filings. The firm can be reached through: Justin Singh Evercore Group L.L.C. 666 Fifth Avenue New York, NY 10103 Tel: +1 212-446-5600 About Intelsat S.A. Intelsat S.A. -- http://www.intelsat.com/-- is a publicly held operator of satellite services businesses, which provides a diverse array of communications services to a wide variety of clients, including media companies, telecommunication operators, internet service providers, and data networking service providers. The Company is also a provider of commercial satellite communication services to the U.S. government and other select military organizations and their contractors. The Company's administrative headquarters are in McLean, Virginia, and the Company has extensive operations spanning across the United States, Europe, South America, Africa, the Middle East, and Asia. Intelsat S.A., based in L-1246 Luxembourg, and its debtor-affiliates, filed a Chapter 11 petition (Bankr. E.D. Va. Lead Case No. 20-32299) on May 14, 2020. The petition was signed by David Tolley, executive vice president, chief financial officer, and co-chief restructuring officer. In its petition, the Debtor disclosed $11,651,558,000 in assets and $16,805,844,000 in liabilities. KIRKLAND & ELLIS LLP, and KUTAK ROCK LLP, as counsels; ALVAREZ & MARSAL NORTH AMERICA, LLC as restructuring advisor; PJT PARTNERS LP as investment banker; STRETTO as claims and noticing agent. INTELSAT S.A.: Hires KPMG LLP to Provide Audit Services ------------------------------------------------------- Intelsat S.A., and its-debtor affiliates seek authority from the U.S. Bankruptcy Court for the Eastern District of Virginia to employ KPMG LLP to provide audit services to the Debtors effective as of May 13, 2020. Intelsat requires KPMG to: A. Audit Services. i. Audit of consolidated balance sheets of the Debtors as of Dec. 31, 2019 and 2020, the related consolidated statements of operations, comprehensive loss, changes in shareholders' deficit, and cash flows for each of the years in the three-year period ended Dec. 31, 2020 the related notes and financial statement Schedule II – Valuation and Qualifying Accounts; ii. Audit of internal control over financial reporting as of December 31, 2020; iii. Quarterly review procedures for the quarter ended March 31 2020; quarter ended June 30, 2020; and quarter ended September 30, 2020; iv. Issuance of Debt covenant compliance report (collectively i. through v., (Integrated Audit Services); v. Perform additional services (Out of Scope Audit Services), such as: a. Transactional activity to include Adoption of ASC 326, Financial Instruments – Credit Losses; developments and accounting impacts as it relates to the C-Band Spectrum proceedings, new investments, new debt transactions, accounting for any impairments, significant new agreements with complex lease or revenue accounting implications, tax restructuring activities, or similar items; b. Perform services in connection with registration statements and offering documents, including comfort letters and consents as well as procedures in connection with the Debtors' restructuring activities or emergence from bankruptcy including but not limited to: i. Fresh-start accounting; ii. Valuation of assets and liabilities on emergence from bankruptcy; iii. Income tax matters arising as a result of bankruptcy; iv. Other debt restructuring activities as a result of the bankruptcy; and c. Perform other significant transactions or audit efforts related to the audit. In addition to the foregoing, KPMG will provide such other consulting, advice, research, planning, and analysis regarding audit services as may be necessary, desirable, or requested from time to time. KPMG and the Debtors have agreed to a fixed fee of $1,950,000 for the Audit Services. Approximately $150,000 of the Integrated Audit Services Fee was paid prepetition. KPMG's hourly hourly rates for additional professional services and Out-of-Scope Audit Services are: Audit Partners $530 - $1,050 Specialty Partners $660 - $1,315 Audit Senior Managers $445 - $880 Specialty Senior Managers $540 - $1,080 Audit Managers $385 - $765 Specialty Managers $460 - $910 Audit Senior Associates $330 - $655 Specialty Senior Associates $315 - $625 Audit Staff $230 - $455 Specialty Staff $260 - $510 Michael L. Peduzzi, a partner at KPMG, assured the court that the firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. KPMG LLP can be reached at: Michael L. Peduzzi KPMG LLP 560 Lexington Ave. Tel: +1 212 937 3836 Fax: +1 212 954 5171 About Intelsat S.A. Intelsat S.A. -- http://www.intelsat.com/-- is a publicly held operator of satellite services businesses, which provides a diverse array of communications services to a wide variety of clients, including media companies, telecommunication operators, internet service providers, and data networking service providers. The Company is also a provider of commercial satellite communication services to the U.S. government and other select military organizations and their contractors. The Company's administrative headquarters are in McLean, Virginia, and the Company has extensive operations spanning across the United States, Europe, South America, Africa, the Middle East, and Asia. Intelsat S.A., based in L-1246 Luxembourg, and its debtor-affiliates, filed a Chapter 11 petition (Bankr. E.D. Va. Lead Case No. 20-32299) on May 14, 2020. The petition was signed by David Tolley, executive vice president, chief financial officer, and co-chief restructuring officer. In its petition, the Debtor disclosed $11,651,558,000 in assets and $16,805,844,000 in liabilities. KIRKLAND & ELLIS LLP, and KUTAK ROCK LLP, as counsels; ALVAREZ & MARSAL NORTH AMERICA, LLC as restructuring advisor; PJT PARTNERS LP as investment banker; STRETTO as claims and noticing agent. INTELSAT S.A.: Hires Kutak Rock as Co-Counsel --------------------------------------------- Intelsat S.A., and its-debtor affiliates seek authority from the U.S. Bankruptcy Court for the Eastern District of Virginia to employ Kutak Rock LLP as their co-counsel. Intelsat requires Kutak Rock to: a) provide legal advice and services regarding local rules, practices, and procedures and providing substantive and strategic advice on how to accomplish the Debtors' goals in connection with the prosecution of these chapter 11 cases, bearing in mind that the Court relies on co-counsel such as Kutak Rock to be involved in all aspects of these bankruptcy cases; b) review, revise, and/or prepare drafts of documents to be filed with the Court as co-counsel to the Debtors; c) appear in Court and at any meeting with the U.S. Trustee and any meeting of creditors at any given time on behalf of the Debtors as their co-counsel; d) perform various services in connection with the administration of these chapter 11 cases, including, without limitation, (i) preparing agendas, certificates of no objection, certifications of counsel, notices of fee applications, motions and hearings, and hearing binders of documents and pleadings, (ii) monitoring the docket for filings and coordinating with Kirkland on pending matters, (iii) preparing and maintaining critical dates memoranda to monitor pending applications, motions, hearing dates, and other matters and the deadlines associated therewith, and (iv) handling inquiries from creditors, contract counterparties and counsel to parties-in-interest regarding pending matters and the general status of these chapter 11 cases and coordinating with Kirkland on any necessary responses; e) interact and communicate with the Court's chambers and the Court's Clerk's Office; f) assist the Debtors and Kirkland in preparing, reviewing, revising, filing and prosecuting pleadings related to contested matters, executory contracts and unexpired leases, asset sales, plan and disclosure statement issues and claims administration and resolving objections and other matters relating thereto, to the extent requested by the Debtors or Kirkland and not duplicative of services being provided by Kirkland; and g) perform all other services assigned by the Debtors, in consultation with Kirkland to Kutak Rock as co-counsel to the Debtors, and to the extent Kutak Rock determines that such services fall outside of the scope of services historically or generally performed by the firm as co-counsel in a bankruptcy proceeding, Kutak Rock will file a supplemental declaration pursuant to Bankruptcy Rule 2014 and give parties in interest opportunity to object. Hourly rates of Kutak Rock are: Michael A. Condyles, Partner $590 Peter J. Barrett, Partner $540 Jeremy S. Williams, Partner $450 Brian H. Richardson, Associate $330 Paralegal Lynda Wood $190 Amanda Nugent $150 Kutak Rock is a "disinterested person," as that phrase is defined in section 101(14) of the Bankruptcy Code, as required by section 327(a) of the Bankruptcy Code, and does not hold or represent any interest adverse to the Debtors' estates, according to court filings. The firm can be reached through: Michael A. Condyles, Esq. Peter J. Barrett, Esq. Jeremy S. Williams, Esq. Brian H. Richardson, Esq. KUTAK ROCK LLP 901 East Byrd Street, Suite 1000 Richmond, VA 23219-4071 Tel: (804) 644-1700 Fax: (804) 783-6192 About Intelsat S.A. Intelsat S.A. -- http://www.intelsat.com/-- is a publicly held operator of satellite services businesses, which provides a diverse array of communications services to a wide variety of clients, including media companies, telecommunication operators, internet service providers, and data networking service providers. The Company is also a provider of commercial satellite communication services to the U.S. government and other select military organizations and their contractors. The Company's administrative headquarters are in McLean, Virginia, and the Company has extensive operations spanning across the United States, Europe, South America, Africa, the Middle East, and Asia. Intelsat S.A., based in L-1246 Luxembourg, and its debtor-affiliates, filed a Chapter 11 petition (Bankr. E.D. Va. Lead Case No. 20-32299) on May 14, 2020. The petition was signed by David Tolley, executive vice president, chief financial officer, and co-chief restructuring officer. In its petition, the Debtor disclosed $11,651,558,000 in assets and $16,805,844,000 in liabilities. KIRKLAND & ELLIS LLP, and KUTAK ROCK LLP, as counsels; ALVAREZ & MARSAL NORTH AMERICA, LLC as restructuring advisor; PJT PARTNERS LP as investment banker; STRETTO as claims and noticing agent. INTELSAT S.A.: Hires PJT Partners as Investment Banker ------------------------------------------------------ Intelsat S.A., and its-debtor affiliates seek authority from the U.S. Bankruptcy Court for the Eastern District of Virginia to employ PJT Partners LP as their investment banker. Intelsat requires PJT Partners to: a. assist in the evaluation of the Debtors' businesses and prospects; b. assist in the development of the Debtors' long-term business plan and related financial projections; c. assist in the development of financial data and presentations to the Debtors' Board of Directors, various creditors and other third parties; d. analyze the Debtors' financial liquidity and evaluate alternatives to improve such liquidity; e. analyze various Transaction scenarios and the potential impact of these scenarios on the recoveries of those stakeholders impacted by the Transaction; f. provide strategic advice with regard to any proposed Transaction; g. evaluate the Debtors' debt capacity and alternative capital structures; h. participate in negotiations among the Debtors and its creditors, suppliers, lessors and other interested parties; i. advise the Debtors in connection with its interactions with the Federal Communications Commission and other governmental entities; j. value securities offered or purchased by the Debtors in connection with a Transaction; k. advise the Debtors and negotiate with lenders with respect to potential waivers or amendments of various Obligations; l. assist in arranging financing for the Debtors, as requested; m. provide expert witness testimony concerning any of the subjects encompassed by the other investment banking services; n. assist the Debtors in preparing or reviewing marketing materials in conjunction with a possible Sale Transaction; o. assist the Debtors in identifying potential buyers, targets or parties in interest to a Sale Transaction and assist in the due diligence process; p. assist and advise the Debtors concerning the terms, conditions and impact of any proposed Sale Transaction; q. analyze and evaluate the business, operations and financial position of targets; and r. provide such other advisory services as are customarily provided in connection with the analysis, structuring and negotiation of a transaction similar to a potential Transaction, as requested and mutually agreed. PJT Partners will be paid as follows: a. The Debtors shall pay PJT a monthly advisory fee (Monthly Fee) of $225,000 per month. Fifty percent of all Monthly Fees paid to PJT after October 1, 2020 (i.e., the date that is six months after the date the PJT became entitled to receive Monthly Fees under the Engagement Letter) shall be credited, only once and without duplication, against the Restructuring Fee or the Sale Transaction Fee. b. The Debtors shall pay an amendment fee (Amendment Fee) equal to 0.025 percent of the principal face amount of the Obligations affected by any Amendment, earned and payable upon the closing of such Amendment; provided that, if PJT takes a leading role in the solicitation, structuring and/or negotiation of such Amendment, the Amendment Fee shall be equal to 0.075 percent of the principal face amount of the Obligations affected by such Amendment. c. The Debtors shall pay a capital raising fee (Capital Raising Fee) for any Capital Raise, earned and payable upon closing of any Capital Raise; provided that, if the Capital Raise consists of debtor-in-possession financing, the Capital Raising Fee with respect thereto shall be earned and payable upon signing of a commitment letter in respect thereof. If access to the financing is limited by orders of the bankruptcy court, a proportionate fee shall be payable with respect to each available commitment (irrespective of availability blocks, borrowing base, or other similar restrictions). The Capital Raising Fee for a Capital Raise in connection with an in-court proceeding shall be calculated as (a) 0.5 percent of any "debtor-in-possession" financing (whether senior or junior debt), (b) 0.5 percent of any senior secured debt financing (other than debtor-in-possession financing), (c) 1.0 percent of any unsecured, junior lien debt or equity linked financing (including any junior debt chapter 11 exit financing) and (d) 1.5 percent of any equity financing; provided that, any Capital Raising Fee related to debtor-in-possession financing shall be subject to cap of $10,000,000, and 50 percent of any Capital Raising Fee in excess of $5,000,000 in respect of a debtor-in-possession financing shall be credited against the Restructuring Fee; provided further that if PJT does not take a leading role in the solicitation, structuring and/or negotiation of any Capital Raise (other than debtor-in-possession financing), the Capital Raising Fee with respect to such Capital Raise shall be .15 percent of the financing. d. The Debtors shall pay an exchange/tender fee (an Exchange/Tender Fee) equal to 0.50 percent of the principal face amount of any Obligations, exchanged, tendered, consenting to, or otherwise affected in connection with an Exchange/Tender; provided that, if the Company consummates an Exchange/Tender in a private transaction with just Pacific Investment Management Company LLC or its affiliates (collectively, PIMCO), other than following a broader solicitation to other parties, any Obligations held by PIMCO that are exchanged pursuant thereto shall not be used to calculated the Exchange/Tender Fee payable to PJT Partners in connection therewith; provided further that, when calculating the Exchange/Tender Fee payable in respect of any single transaction or a series of concurrent, related transactions, each Obligation exchanged, tendered, consenting to, or otherwise affected in connection therewith shall be counted only once. The Exchange/Tender Fee shall be payable upon the closing of the applicable Exchange/Tender. e. The Debtors shall pay an additional fee for a Restructuring (Restructuring Fee) equal to $20,000,000. Notwithstanding anything set forth in the Engagement Letter, the Restructuring Fee will be earned and payable upon consummation of the Restructuring. f. The Debtors shall pay an additional fee (Sale Transaction Fee) upon the closing of any Sale Transaction calculated as (a) with respect to Sale Transactions having a Transaction Value up to $1.0 billion, 1.0 percent of the Transaction Value, (b) with respect to Sale Transactions having a Transaction Value of $10.0 billion or more, 0.50 percent of the Transaction Value, and (c) with respect to Sale Transactions having a Transaction Value greater than $1.0 billion and less than $10.0 billion, based on straight-line interpolation from 1.0 percent of the Transaction Value to 0.50 percent of the Transaction Value, respectively. Upon consummation of a Sale Transaction in which all or substantially all of the assets of the Company are sold, PJT Partners, in its sole discretion, shall be entitled to either a Sale Transaction Fee in respect of such Sale Transaction or the Restructuring Fee, but not both. Steve Zelin, a partner at PJT, assured the Court that the firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code and does not represent any interest adverse to the Debtors and their estates. PJT Partners can be reached at: Steve Zelin PJT Partners Inc. 280 Park Avenue New York, NY 10017 Phone: +1 212-364-7800 About Intelsat S.A. Intelsat S.A. -- http://www.intelsat.com/-- is a publicly held operator of satellite services businesses, which provides a diverse array of communications services to a wide variety of clients, including media companies, telecommunication operators, internet service providers, and data networking service providers. The Company is also a provider of commercial satellite communication services to the U.S. government and other select military organizations and their contractors. The Company's administrative headquarters are in McLean, Virginia, and the Company has extensive operations spanning across the United States, Europe, South America, Africa, the Middle East, and Asia. Intelsat S.A., based in L-1246 Luxembourg, and its debtor-affiliates, filed a Chapter 11 petition (Bankr. E.D. Va. Lead Case No. 20-32299) on May 14, 2020. The petition was signed by David Tolley, executive vice president, chief financial officer, and co-chief restructuring officer. In its petition, the Debtor disclosed $11,651,558,000 in assets and $16,805,844,000 in liabilities. KIRKLAND & ELLIS LLP, and KUTAK ROCK LLP, as counsels; ALVAREZ & MARSAL NORTH AMERICA, LLC as restructuring advisor; PJT PARTNERS LP as investment banker; STRETTO as claims and noticing agent. INTELSAT S.A.: Hires Stretto as Administrative Advisor ------------------------------------------------------ Intelsat S.A., and its-debtor affiliates seek authority from the U.S. Bankruptcy Court for the Eastern District of Virginia to employ Bankruptcy Management Solutions, Inc., d/b/a Stretto, as their administrative advisor. Intelsat requires Stretto to: a. assist with, among other things, claims management and reconciliation, plan solicitation, balloting, disbursements, and tabulation of votes, and prepare any related reports, as required in support of confirmation of a chapter 11 plan, and in connection with such services, process requests for documents from parties in interest, including, if applicable, brokerage firms, bank back-offices and institutional holders; b. prepare an official ballot certification and, if necessary, testify in support of the ballot tabulation results; c. assist with the preparation of the Debtors' schedules of assets and liabilities and statements of financial affairs and gather data in conjunction therewith; d. provide a confidential data room, if requested; e. manage and coordinate any distributions pursuant to a chapter 11 plan; and f. provide such other processing, solicitation, balloting and other administrative services described in the Engagement Agreement, but not included in the Section 156(c) Application, as may be requested from time to time by the Debtors, the Court or the Office of the Clerk of the United States Bankruptcy Court for the Eastern District of Virginia. Stretto will be paid based upon its normal and usual hourly billing rates. Stretto will also be reimbursed for reasonable out-of-pocket expenses incurred. Sheryl Betance, a managing director of Stretto, assured the Court that the firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code and does not represent any interest adverse to the Debtors and their estates. Stretto can be reached at: Sheryl Betance STRETTO 7 Times Square, 16th Floor New York, NY 10036 Tel: (714) 716-1872 E-mail: sheryl.betance@stretto.com About Intelsat S.A. Intelsat S.A. -- http://www.intelsat.com/-- is a publicly held operator of satellite services businesses, which provides a diverse array of communications services to a wide variety of clients, including media companies, telecommunication operators, internet service providers, and data networking service providers. The Company is also a provider of commercial satellite communication services to the U.S. government and other select military organizations and their contractors. The Company's administrative headquarters are in McLean, Virginia, and the Company has extensive operations spanning across the United States, Europe, South America, Africa, the Middle East, and Asia. Intelsat S.A., based in L-1246 Luxembourg, and its debtor-affiliates, filed a Chapter 11 petition (Bankr. E.D. Va. Lead Case No. 20-32299) on May 14, 2020. The petition was signed by David Tolley, executive vice president, chief financial officer, and co-chief restructuring officer. In its petition, the Debtor disclosed $11,651,558,000 in assets and $16,805,844,000 in liabilities. KIRKLAND & ELLIS LLP, and KUTAK ROCK LLP, as counsels; ALVAREZ & MARSAL NORTH AMERICA, LLC as restructuring advisor; PJT PARTNERS LP as investment banker; STRETTO as claims and noticing agent. INTERPACE BIOSCIENCES: Posts $9.3 Million Net Loss in 1st Quarter ----------------------------------------------------------------- Interpace Biosciences, Inc., reported a net loss attributable to common stockholders of $9.30 million on $9.20 million of net revenue for the three months ended March 31, 2020, compared to a net loss attributable to common stockholders of $3.42 million on $6.01 million of net revenue for the three months ended March 31, 2019. As of March 31, 2020, the Company had $78.51 million in total assets, $25.14 million in total liabilities, $46.54 million in preferred stock, and $6.84 million in total stockholders' equity. "First quarter revenue was $9.2 million and near the top end of our previously announced revenue range. During the first quarter we continued to grow our Clinical and Pharma services businesses, however, our Clinical services business was impacted by the pandemic beginning in the second half of March. We also took immediate action to protect our employees from exposure to the coronavirus, reduced discretionary and non-essential costs and accelerated operations integration," stated Jack Stover, CEO of Interpace Biosciences. "While we were generally pleased with first quarter progress, we did experience the business impact from the coronavirus pandemic and while recovering, we do anticipate the impact will continue through the remainder of 2020 and perhaps beyond. Our focus for the rest of the year will be continuing to respond to changing conditions while positioning ourselves for growth and expansion, improving business processes and integrating our service offerings. We believe that one of the important positive global impacts of the coronavirus pandemic is an increased awareness of the importance of the role diagnostics plays in all of our lives. We are confident that we are well positioned to take advantage of this opportunity with our diversification, focus on improving diagnosis and customized assays solutions for patients, physicians and pharma companies as well." "Our financial performance for the quarter was impacted by lower than expected Clinical service volume in March, which we believe has resulted from the required reduction in non-essential testing procedures in connection with the COVID-19 pandemic. As of mid-June, our business is down approximately 30% compared to our highs in February and early March and continues to improve," stated Fred Knechtel, CFO of Interpace Biosciences. "In response to customer interest we are developing serology antibody ELISA testing for COVID-19 at our CLIA lab in Pittsburgh, PA. We have completed validation, acquired acceptable kits and reference samples and are preparing to launch," stated Jack Stover. "We anticipate second quarter revenue between $5.6 million and $6.0 million, however, we cannot provide guidance for the remainder of the year at this time," added Stover. A full-text copy of the Quarterly Report is available for free at the Securities and Exchange Commission's website at: https://is.gd/bjPwsN About Interpace Biosciences Headquartered in Parsippany, NJ, Interpace Biosciences f/k/a Interpace Diagnostics Group, Inc. -- http://www.interpace.com/-- offers specialized services along the therapeutic value chain from early diagnosis and prognostic planning to targeted therapeutic applications. Clinical services, through Interpace Diagnostics, provides clinically useful molecular diagnostic tests, bioinformatics and pathology services for evaluating risk of cancer by leveraging the latest technology in personalized medicine for improved patient diagnosis and management. Pharma services, through Interpace Pharma Solutions, provides pharmacogenomics testing, genotyping, biorepository and other customized services to the pharmaceutical and biotech industries. Interpace reported a net loss attributable to common stockholders of $27.16 million for the year ended Dec. 31, 2019, compared to a net loss attributable to common stockholders of $12.19 million for the year ended Dec. 31, 2018. As of Dec. 31, 2019, the Company had $69.05 million in total assets, $29.85 million in total liabilities, $26.17 million in preferred stock, and $13.03 million in total stockholders' equity. J.C. PENNEY: $450 Million DIP Financing Has Court Approval ---------------------------------------------------------- J. C. Penney Company, Inc., announced on June 4, 2020 that it has received authorization from the U.S. Bankruptcy Court for the Southern District of Texas, in Corpus Christi, Texas (the "Court") to access its debtor-in-possession ("DIP") financing, which includes $450 million of new money from its existing First Lien lenders. The Company had previously received approval to access and use its approximately $500 million in cash collateral. Under the terms of the DIP agreement, JCPenney has access to up to $225 million immediately, and will have access to an additional $225 million as needed after July 15, 2020, subject to certain conditions. In addition, the Company's Ad Hoc Crossholder Group of lenders has agreed to participate in the rollup portion of the DIP in the amount of $53 million. Jill Soltau, chief executive officer of JCPenney, said, "We are pleased to have received Court approval to access $450 million in new money, $225 million of which will be drawn immediately. This is a positive step forward that will help us execute our Plan for Renewal and store optimization strategy, continue working seamlessly with our vendor partners, fund our ongoing business operations, and continue our focus on further developing the Company’s go-forward business plan to successfully restructure JCPenney. In recent weeks, we have safely welcomed back valued customers to nearly 500 JCPenney stores, and we look forward to opening additional stores while following guidance from local and state orders. This progress would not be possible without the hard work and dedication of our associates, and we remain confident we will emerge from both Chapter 11 and this pandemic as a stronger retailer." As previously announced, JCPenney entered into a restructuring support agreement with lenders holding approximately 70 percent of JCPenney's first lien debt to reduce the Company's outstanding indebtedness and strengthen its financial position. To implement the financial restructuring plan, the Company filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code. Kirkland & Ellis LLP is serving as legal advisor, Lazard is serving as financial advisor, and AlixPartners LLP is serving as restructuring advisor to the Company. About J.C. Penney J. C. Penny Company, Inc. -- http://www.jcpenney.com/-- is an apparel and home retailer, offering merchandise from an extensive portfolio of private, exclusive, and national brands at over 850 stores and online. It sells clothing for women, men, juniors, kids, and babies. On May 15, 2020, J.C. Penney announced that it has entered into a restructuring support agreement with lenders holding 70% of its first lien debt. The RSA contemplates agreed-upon terms for a pre-arranged financial restructuring plan that is expected to reduce several billion dollars of indebtedness. To implement the plan, J.C. Penney and its affiliates on May 15, 2020, filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D. Tex. Lead Case No. 20-20182). At the time of the filing, J.C. Penney disclosed assets of between $1 billion and $10 billion and liabilities of the same range. Judge David R. Jones oversees the cases. The Debtors have tapped Kirkland & Ellis and Jackson Walker, LLP as legal counsel; Katten Muchin Rosenman, LLP as special counsel; Lazard Freres & Co. LLC as investment banker; AlixPartners, LLP as restructuring advisor; and KPMG, LLP as tax consultant. Prime Clerk is the claims agent, maintaining the page http://cases.primeclerk.com/JCPenney A committee of unsecured creditors has been appointed in Debtors' Chapter 11 cases. The committee is represented by Cole Schotz, P.C., and Cooley, LLP. J.C. PENNEY: Four Alabama Sites Included in 154-Store Closures -------------------------------------------------------------- J.C. Penney has released a list of 154 stores it plans to close as part of its Chapter 11 bankruptcy protection. The J.C. Penney in Andalusia is one of four stores in Alabama on the list. A court hearing was slated for June 11 in bankruptcy court in Texas. If a judge approves the plan, the closings could start immediately. According to the J.C. Penney website, the Andalusia store remains closed because of concerns over coronavirus. The other Alabama stores slated for closure are in Florence, Scottsboro and Spanish Fort. Stores in Montgomery and Prattville aren't on the list of closures. However, J.C. Penney calls this the first phase of store closures and had said in May that it planned to eventually close about 240 stores, leaving it with more than 600 stores. About J.C. Penney J. C. Penny Company, Inc. -- http://www.jcpenney.com/-- is an apparel and home retailer, offering merchandise from an extensive portfolio of private, exclusive, and national brands at over 850 stores and online. It sells clothing for women, men, juniors, kids, and babies. On May 15, 2020, J.C. Penney announced that it has entered into a restructuring support agreement with lenders holding 70% of its first lien debt. The RSA contemplates agreed-upon terms for a pre-arranged financial restructuring plan that is expected to reduce several billion dollars of indebtedness. To implement the plan, J.C. Penney and its affiliates on May 15, 2020, filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D. Tex. Lead Case No. 20-20182). At the time of the filing, J.C. Penney disclosed assets of between $1 billion and $10 billion and liabilities of the same range. Judge David R. Jones oversees the cases. Debtors have tapped Kirkland & Ellis and Jackson Walker, LLP as legal counsel; Katten Muchin Rosenman, LLP as special counsel; Lazard Freres & Co. LLC as investment banker; AlixPartners, LLP as restructuring advisor; and KPMG, LLP as tax consultant. Prime Clerk is the claims agent, maintaining the page http://cases.primeclerk.com/JCPenney A committee of unsecured creditors has been appointed in Debtors' Chapter 11 cases. The committee is represented by Cole Schotz, P.C. and Cooley, LLP. J.C. PENNEY: Reopens Niles, Ohio Location ----------------------------------------- Lauren Stebelton, writing for 21WFMJ, reports that J.C. Penney has reopened officially at the Eastwood Mall at Niles, Ohio. It will be open from 12 p.m. to 7 p.m. Monday through Saturday, and 11 a.m. to 6 p.m. on Sunday. The reopening comes as J.C. Penney deals with a recent Chapter 11 bankruptcy filing that will close more than 200 of the company's stores across the country. The company also reopened its Austintown location. 21 News reached out to J.C. Penney on its future at the Southern Park Mall in Boardman and has not heard back. About J.C. Penney J.C. Penny Company, Inc. -- http://www.jcpenney.com/-- is an apparel and home retailer, offering merchandise from an extensive portfolio of private, exclusive, and national brands at over 850 stores and online. It sells clothing for women, men, juniors, kids, and babies. On May 15, 2020, J.C. Penney announced that it has entered into a restructuring support agreement with lenders holding 70% of its first lien debt. The RSA contemplates agreed-upon terms for a pre-arranged financial restructuring plan that is expected to reduce several billion dollars of indebtedness. To implement the plan, J.C. Penney and its affiliates on May 15, 2020, filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D. Tex. Lead Case No. 20-20182). At the time of the filing, J.C. Penney was estimated to have assets of between $1 billion and $10 billion and liabilities of the same range. Judge David R. Jones oversees the cases. Debtors have tapped Kirkland & Ellis and Jackson Walker, LLP as legal counsel; Katten Muchin Rosenman, LLP as special counsel; Lazard Freres & Co. LLC as investment banker; AlixPartners, LLP as restructuring advisor; and KPMG, LLP as tax consultant. Prime Clerk is the claims agent, maintaining the page http://cases.primeclerk.com/JCPenney A committee of unsecured creditors has been appointed in Debtors' Chapter 11 cases. The committee is represented by Cole Schotz, P.C. and Cooley, LLP. JASON INC: Moody's Cuts PDR to D-PD on Chapter 11 Filing -------------------------------------------------------- Moody's Investors Service downgraded Jason Incorporated's probability of default rating to D-PD from Ca-PD following the company's June 24, 2020 announcement that it has it has filed for voluntary protection under Chapter 11 of the U.S. Bankruptcy Code [1]. Moody's also downgraded the company's senior secured first lien bank credit facilities to Ca from Caa3. Concurrently, Moody's affirmed the company's Ca corporate family rating and C senior secured second lien term loan rating. The Speculative Grade Liquidity Rating remains SGL-4. The ratings outlook is changed to stable from negative. Downgrades: Issuer: Jason Incorporated Probability of Default Rating, Downgraded to D-PD from Ca-PD Senior Secured 1st Lien Bank Credit Facility, Downgraded to Ca (LGD3) from Caa3 (LGD3) Affirmations: Issuer: Jason Incorporated Corporate Family Rating, Affirmed Ca Senior Secured 2nd Lien Bank Credit Facility, Affirmed C (LGD5) Outlook Actions: Issuer: Jason Incorporated Outlook, Changed to Stable from Negative RATINGS RATIONALE The downgrade of the PDR to D-PD reflects the company's bankruptcy filing. The downgrade of the first lien credit facilities to Ca and affirmation of the second lien term loan at C and corporate family rating at Ca, along with the stable ratings outlook, reflect Moody's assessments of relative expected loss rates for various creditor classes and the corporate enterprise overall upon ultimate resolution of the default event. Subsequent to its actions, Moody's will withdraw the ratings due to Jason's bankruptcy filing. The rapid spread of the coronavirus outbreak, deteriorating global economic outlook, low oil prices and high asset price volatility have created an unprecedented credit shock across a range of sectors and regions. 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 Jason of the deterioration in credit quality it has triggered given its exposure to the industrial sector, which has left it vulnerable to shifts in market demand and sentiment in these unprecedented operating conditions. The principal methodology used in these ratings was Manufacturing Methodology published in March 2020. Headquartered in Milwaukee, Wisconsin, Jason Incorporated is a publicly-traded diversified manufacturing company serving industrial, auto and other industries. Its products generally fall into the finishing (industrial brushes, buffing wheels and compounds) and seating (static and suspension seating for motorcycle, construction, agricultural, lawn and turf-care equipment) categories. Revenue for the twelve months ended March 2020 was $329 million. JASON INDUSTRIES: Enters Chapter 11 With Plan to Cut Debt by $250M ------------------------------------------------------------------ Jason Industries, Inc., announced on June 5, 2020 that it has entered into a restructuring support agreement (the "Agreement") with certain of its senior secured lenders. The Agreement outlines a comprehensive restructuring plan that will ultimately deleverage the Company's balance sheet by $250 million and anticipates that the Company's vendors, suppliers, and customers will remain unaffected by the transaction. Upon implementation of certain of the transactions contemplated by the Agreement, the Company will have the financial foundation necessary to continue to operate in the ordinary course of business, provide its customers innovative seating solutions and industry-leading surface polishing and finishing products, and realize the full benefit of its cost-savings initiatives and strategic investments. To facilitate these important changes to the Company's capital structure, the Company and its U.S. subsidiaries will be pursuing protection under Chapter 11 of the U.S. Bankruptcy Code. We do not anticipate that the Company's operations outside of the U.S., including Europe and Mexico, will be affected by this process, although they will benefit long-term from the actions Jason is taking to recapitalize and strengthen its financial position. The Company is anticipated to emerge as a private enterprise, and equity holders are not anticipated to receive a recovery. The plan is supported by a majority of Jason's first lien lenders, who have agreed to provide the Company with the consensual use of cash collateral to enable Jason to operate its business in the ordinary course and to position Jason for future success. Importantly, the plan will provide for no impairment of general unsecured trade creditors. "We have worked hard over the past three years to simplify our business, improve operational performance, enhance customer relationships and transform our portfolio. Unfortunately, we were not able to realize the full benefits of these actions, the newly secured platforms and cost-reduction initiatives prior to the impact of the COVID-19 global pandemic which weakened demand, disrupted our supply chain and forced us to temporarily close many of our plants," said Brian Kobylinski, Chief Executive Officer. "We remain confident in the underlying strength and direction of our two businesses and are taking this step to directly address our balance sheet so that we are positioned to better serve our customers and realize Jason's full potential," Mr. Kobylinski continued. "We thank our lenders, employees, customers and suppliers for their support and look forward to being an even stronger partner moving forward." About Jason Industries Jason Industries, Inc., headquartered in Milwaukee, Wisconsin, is a diversified manufacturing company serving the finishing, seating, acoustics and components end markets. Jason Industries, Inc., and 7 affiliates sought Chapter 11 protection (S.D.N.Y. Lead Case No. 20-22766) after reaching a deal with lenders on terms of a plan that will cut debt by $250 million. As of June 24, 2020, the Company reported total assets of $204,886,939 and total debt of $428,374,343. The Hon. Robert D. Drain is the case judge. Moelis & Company LLC, is acting as financial advisor, Kirkland & Ellis LLP is acting as legal counsel, and AlixPartners, LLP is acting as restructuring advisor to the Company in connection with the Restructuring. Houlihan Lokey Capital, Inc., is acting as financial and restructuring advisor and Weil, Gotshal & Manges LLP is acting as legal counsel to the Consenting Creditors. Epiq Corporate Restructuring, LLC, is the claims agent. JETBLUE AIRWAYS: Pulls Together Efforts to Prevent Furloughs ------------------------------------------------------------ Emily Derrick, writing for Simple Flying, reports that airline company JetBlue Airways is taking steps to prevent furlough of employees. Over 60% of JetBlue crew have taken voluntary leave from the airline to prevent furloughs in October. According to the conditions of the CARES Act loans, airlines cannot furlough staff until October 1st at the earliest. If enough staff take voluntary leave or early retirement, JetBlue is hoping it will not have to furlough any staff at all. JetBlue CEO Robin Hayes has said staff at the airline have been more than willing to take unpaid holidays as well as make use of voluntary leave programs. In an interview with the Washington Post last week, Hayes said, "We have a number of voluntary programs that crew members have taken. We do have a lot of crew members who wanted to take the summer off." Without the funds from the US government's CARES Act, "the sensible thing to do would have been just to ground the fleet and furlough the vast majority of our people. We've never furloughed anyone before, so that would be hard." However, the $935m federal bailout has been used to fund wages while voluntary leave programs and early retirement offers has driven down the fixed costs at the airline. Several airlines have also stressed that, thanks to federal funding, they are able to keep staff on the payroll until the fall. However, many have said that unless voluntary leave programs are successful, October 1st may see vast numbers of staff cuts. Staff have agreed to take unpaid holidays over the summer. However, some have said this violates the terms of the CARES act. For many airlines, offering early retirement packages was crucial for minimizing payroll costs. The CARES Act means staff cannot be furloughed, nor can airlines reduce pay. Several airlines have gotten around this by furloughing temporary staff and claiming they are not full-contact employees, and by reducing the number of hours employees can work. This workaround means employees aren't having their pay cut or being furloughed, and therefore this is in compliance with the CARES Act conditions. Despite the strict conditions of the CARES Act, some airlines have been accused of pressuring employees to take unpaid leave. While this is in breach of the CARES Act conditions, it's not always as clear cut as it might seem. JetBlue has claimed that its employees are willingly taking the time off. This could be a reflection of the desire to stay home and stay safe, or it could be a measure of the team spirit at JetBlue. Either way, it’s certainly better than facing up to mass layoffs come October. The airline previously stated it was using $10 million of its savings every day to try to stay afloat. JetBlue is not expecting the industry to return to normal soon. CEO Robin Hayes has said that some furloughs may be necessary in the fall. Despite hoping to avoid furloughing staff, Hayes confirmed that he does not expect the industry to recover quickly. Therefore, JetBlue will "be a smaller airline then than we would want to be". Hayes also confirmed that furloughs are still an option but implied they are the last resort. As well as operating a smaller network and fewer planes, JetBlue is preparing to operate flights without maximin capacity. Hayes said he expects flights to include social distancing for some time. The effect of this means flights operating half empty, which cuts into profits. In these circumstances, it's difficult to think that JetBlue, and other airlines, will be able to avoid furloughing staff. Even with staff pulling together and taking time off, we may still see some cuts come the fall. About JetBlue Airways JetBlue Airways Corp., based in Long Island City, New York, operates a low-cost, point-to-point airline from its primary focus cities -- New York from John F. Kennedy International airport, Boston, Fort Lauderdale and Los Angeles. In 2019, JetBlue served 103 cities with an average of 1,000 daily flights. The company reported revenue of $7.8 billion for the 12 months ended March 31, 2020. JetBlue carries a B+ issuer credit rating with negative outlook from Standard and Poor's and and a Ba2 corporate family rating with negative outlook from Moody's Investors Service. Moody's said at the end of May 2020 that the spread of the coronavirus pandemic, the weakened global economic outlook, low oil prices, and asset price declines are sustaining a severe and extensive credit shock across many sectors, regions and markets. JRV GROUP: RV World Objects to Disclosure & Plan ------------------------------------------------ RV World Inc., of Nokomis d/b/a Gerzeny’s RV World objects to debtor JRV Group USA L.P. and the Official Committee of Unsecured Creditors' Amended Combined Disclosure Statement and Joint Chapter 11 Plan of Liquidation. RV World points out that there is no dispute that the Debtor is a "manufacturer" and Gerzeny's is a "dealer" subject to the Safety Act, such that the provisions of the Safety Act apply to impose repurchase obligations and other recall-related obligations on the Debtor. Furthermore, there is no dispute that the Debtor has failed to comply with its obligations to Gerzeny's under the Safety Act. RV World asserts that Gerzeny's is entitled to a claim under the Safety Act. That claim is entitled to be paid first in the Debtor's chapter 11 case under the Safety Act and the Priority Act. The Debtor's Plan violates these requirements of federal law by failing to provide for and pay Gerzeny's claim ahead of other claims. Therefore, the Plan cannot be confirmed, unless and until it is amended to provide for payment of Gerzeny's claim ahead of other claims in accordance with the Safety Act and the Priority Act. A copy of RV World's objection to disclosure and plan dated June 4, 2020, is available at https://tinyurl.com/y7arnq5u from PacerMonitor.com at no charge. RV World is represented by: MORRIS, NICHOLS, ARSHT & TUNNELL LLP Robert J. Dehney Matthew B. Harvey 1201 North Market Street, 16th Floor P.O. Box 1347 Wilmington, DE 19899-1347 Telephone: (302) 658-9200 Facsimile: (302) 658-3989 E-mail: rdehney@mnat.com mharvey@mnat.com - and - Steven D. Hutton Yuliya V. Swaim HUTTON & DOMINKO, PLLC 2639 Fruitville Road, Suite 302 Sarasota, Florida 34237 Telephone: (941) 364-9292 Facsimile: (941) 364-9777 E-mail: sdh@huttondominko.com yvs@huttondominko.com About JRV Group USA L.P. JRV Group USA L.P. -- https://www.erwinhymergroup.com/ -- is based at 1945 Burgundy Place, Ontario, Calif. It was established on Jan. 30, 2015, to carry out the United States business of Erwin Hymer Group, a Germany-based recreational vehicle company. However, in 2016, all business activities of JRV Group were stopped, and it became a shelf company while EHG Global built out its Canadian operations through EHG NA. JRV Group resumed operating activities in November 2017 and continued to be owned indirectly by HG Global until Jan. 31, 2019, comprising a portion of its North American operations. Between November 2017 and March 2018, JRV Group acquired various assets in four asset acquisition transactions. Beginning in March 2018, JRV Group operated as a second-tier original equipment manufacturer and alterer of Jeep Wranglers made by FCA US LLC, an affiliate of Fiat Chrysler Automobiles N.V. Its business typically focused on adding features to the vehicles, such as a tent for camping, that would make them more desirable for recreational vehicle dealers to sell to end users and consumers. JRV Group sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D. Del. Case No. 19-11095) on May 13, 2019. At the time of the filing, the Debtor had estimated assets of between $1 million and $10 million and liabilities of between $10 million and $50 million. The Debtor tapped Pachulski Stang Ziehl & Jones LLP as legal counsel; Barnes & Thornburg LLP special counsel; Sherwood Partners Inc. as restructuring advisor; and BMC Group, Inc. as claims and noticing agent. On June 4, 2019, the Office of the United States Trustee appointed the Creditors' Committee. The Committee filed an application to employ and retain the law firm of Womble Bond Dickinson (US) LLP as counsel; and Rock Creek Advisors, LLC, as its financial advisor. KEYSTONE FILLER: July 24 Plan Confirmation Hearing Set ------------------------------------------------------ On May 28, 2020, debtor Keystone Filler and Mfg. Co. filed with the U.S. Bankruptcy Court for the Middle District of Pennsylvania an amended disclosure statement referring to an amended plan. On May 29, 2020, Judge Robert N. Opel, II approved the disclosure statement and established the following dates and deadlines: * July 3, 2020, is fixed as the last day for submitting written acceptances or rejections of the amended plan to Keystone Filler and Mfg. Co. * July 3, 2020, is fixed as the last day for filing and serving pursuant to Federal Rules of Bankruptcy Procedure 3020(b)(1) written objections to confirmation of the amended plan. * July 17, 2020, is fixed as the last day for filing with the Court a tabulation of ballots accepting or rejecting the amended plan. LBR 3018-1 sets the deadline as at least seven days before the confirmation hearing. * July 24, 2020, at 10:00 a.m., U.S. Courthouse, 240 West Third Street, Williamsport, Pennsylvania, is fixed for the hearing on confirmation of the amended plan. A copy of the order dated May 29, 2020, is available at https://tinyurl.com/ybtccggx from PacerMonitor at no charge. About Keystone Filler & Mfg. Co. Keystone Filler and Mfg. Co. is a manufacturer of carbon-based products made from finely-ground coal. Keystone Filler and Mfg. Co. sought protection under Chapter 11 of the Bankruptcy Code(Bankr. M.D. Pa. Case No. 19-02014) on May 9, 2019. At the time of the filing, the Debtor was estimated to have assets of $1 million to $10 million and liabilities of $1 million to $10 million. The case is assigned to Judge Robert N. Opel II. Cunningham, Chernicoff & Warshawsky, P.C., is the Debtor's counsel. KNOWLTON DEVELOPMENT: S&P Alters Outlook to Stable, Affirms B- ICR ------------------------------------------------------------------ S&P Global Ratings revised its outlook on Longueil Que.-based Knowlton Development Holdco Inc.'s (KDC) to stable from negative, and affirmed its 'B-' issuer credit rating on the company. At the same time, S&P assigned its 'B-' issue-level rating and '3' recovery rating to the company's EUR441 million senior secured term loan. Growth in nondiscretionary products categories could offset revenue pressures from COVID-19-related closures. "The outlook revision reflects our view of KDC's strategic shift during the pandemic toward essential consumables and cleaning products including diversified personal care, home care, health and hygiene-related products, which generate about 75% of total revenues--including the Zobele acquisition," S&P said. KDC's total value-added revenues (VAR) showed some improvement in May and continue to exhibit stability in June (month to date). The revenue trend reflects both the increased consumption while consumers stay at home and added awareness about health and sanitization, and S&P expects this positive momentum to continue in the near term. In addition, demand from legacy KDC's key retail customers remained robust, particularly for sanitizers, largely via online channels through the lockdown phase. S&P positively views KDC's ability to shift manufacturing capacity toward essential products in this time frame, which not only enabled the company to address elevated demand from existing customers but also win new customers in the home and personal care segment. S&P also recognizes that the Zobele acquisition enhances the company's product and geographic diversity, as well as providing a buffer and stability to operating performance in these uncertain circumstances. Therefore, S&P has revised its forecasts and expect flat-to-modest growth in revenues for fiscal 2021 (compared with fiscal 2020 pro forma revenues). "In our opinion, a flexible manufacturing footprint as well as other variable cost-saving measures should support EBITDA and margins in fiscal 2021. We also forecast fiscal 2021 debt-to-EBITDA at 7.0x-7.5x, a revision from our previous expectation of about 8.0x-8.5x," S&P said. The stable outlook also reflects fixed charge coverage (interest and minimum capital expenditures with internal cash flows) of about 1.4x-1.5x and positive free cash flow generation in fiscal 2021. S&P notes that fiscal 2020 pro forma debt-to-EBITDA on an S&P's adjusted basis is about 7x. S&P anticipates continued pressure on cosmetics segment revenues because of retail closures and a decline in travel. The company generates about 25% of its revenues from the cosmetics and personal fragrance category, which are largely discretionary in nature. S&P expects this segment to be meaningfully affected (up to 30% in revenue decline) for the next few months because countries are still in the very early stages of easing shelter-in-place restrictions. It anticipates a lower need for cosmetics in the next few months as COVID-19 continues to disrupt travel, tourist spending, and social occasions. Furthermore, consumers could continue to adopt social distancing practices that will likely keep retail mall traffic and operating capacity very low until the pandemic is contained. S&P also believes consumers could curtail their spending on discretionary products given depressed consumer confidence and high sustained unemployment. The rating agency believes the growth from personal care, and cleaning and sanitization-related products should sufficiently offset the revenue declines in cosmetics and fragrances. KDC's highly acquisitive strategy introduces execution and balance-sheet risks. S&P expects KDC to have about US$1.5 billion of balance-sheet debt post the addition of a proposed EUR441 million term loan, a sizable increase from about US$525 million in fiscal 2018. It believes that KDC will continue to pursue an acquisitive strategy to increase its customer base and diversify its revenues. "In our opinion, a growth strategy led by large debt-funded acquisitions introduces execution and integration risks, which could lead to an unsustainable capital structure should operations underperform compared to our base case. In our opinion, given the high debt balance and potential integration risks, KDC has limited capacity to make leveraging acquisitions at the current rating level," S&P said. Environmental, social, and governance credit factors for this credit rating change: -- Health and safety "The stable outlook reflects our expectation that the company will maintain leverage close to 7.0x-7.5x and adequate liquidity through 2021, reflecting the company's ability to diversify into product categories that are essential in nature. We expect the revenue increase from these essential categories should mitigate the significant declines in the cosmetics segments due to COVID-19-related challenges," S&P said. S&P could lower the ratings if KDC's debt-to-EBITDA increases toward 8x because of weaker operating performance, integration challenges, or if the financial sponsor follows policies that pressure the company's balance sheet. It could also take a negative action if KDC's liquidity position deteriorated reflecting weakening free cash flow and if fixed charge coverage (interest and minimum capital expenditures with internal cash flows) continues to decline from current levels. "Although unlikely until the coronavirus risk abates, we could raise the ratings on KDC if the company's revenues and EBITDA improved such that debt-to-EBITDA strengthens sustainably below 6x," the rating agency said. LATAM AIRLINES: Hires Claro & Cia as Special Counsel ---------------------------------------------------- LATAM Airlines Group S.A. and its debtor-affiliates seek authority from the United States Bankruptcy Court for the Southern District of New York to employ Claro & Cia as special Chilean counsel. Claro's representation of the Debtors in connection with certain aspects connected to these Chapter 11 Cases began in March 2020. Such representation included Claro assisting the Debtors in evaluating the available alternatives to protect their assets in the different jurisdictions where they operate, coordinating with local counsel where necessary, assisting the Debtors in their efforts to file these Chapter 11 Cases and seeking recognition of these Chapter 11 Cases in Chile. Claro's advice included a review of the possible effects of the applicable Chilean antitrust regulations and rulings, which may affect the Debtors operations in various jurisdictions, on these Chapter 11 Cases, as well as any alternatives available to the Debtors pursuant to the relevant Chilean antitrust regulations and rulings. Claro's compensation and expense reimbursement are: (a) Over the last three months, the Debtors have paid Claro $21,000 in fees in relation to the aforementioned antitrust matter concerning a terminated agreement entered into by LATAM Parent. On November 2020, Claro will receive an additional fee of $21,000 in connection with this matter. Finally, in the event that the matter is successfully terminated, Claro will be paid an additional fee that ranges from $10,000 to $30,000 depending on the date of its termination. (b) Over the last three months, the Debtors have paid Claro $150,807 in fees in relation to aforementioned antitrust matter concerning the prepetition acquisition of shares in LATAM Parent. In the event that the matter is successfully terminated, Claro will receive an additional fee of $150,000. (c) Over the last three months, the Debtors have paid Claro $25,500 in fees in relation to the aforementioned antitrust matter concerning LATAM Parent's frequent flyer program. In addition, on November 2020, Claro will receive an additional fee of $25,500 for this matter. Finally, in the event that the matter is successfully terminated, Claro will be paid an additional fee that ranges from $10,000 to $75,000 depending on the date of its termination. (d) Over the last three months, the Debtors have paid Claro $166,600 in fees in relation to the implementation of a business agreement with Delta. The Debtors agreed to pay Claro an additional monthly fee of $16,600 starting in June 2020 through June 2021, plus one final payment of $17,600 to be paid on July 2021. The Debtors will pay Claro $120,000 upon the successful approval of the matter in Chile. (e) The Debtors will pay Claro fees on an hourly basis for Claro's representation in the pending litigations in which it is representing the Debtors. The hourly rates of the attorneys involved range from $150 to $500 depending on seniority. Up to this date, Claro has not received any payments in relation to this matter. (f) Over the last three months, the Debtors have paid Claro $138,108 in fees in relation to the aforementioned securities civil action. The Debtors shall pay Claro a monthly fee of $24.437 (the equivalent amount in Chilean Pesos per the agreement) during the pendency of the case. The Debtors shall also pay Claro $555,388 (the equivalent amount in Chilean Pesos per the agreement) upon the successful termination of the case. (g) Over the last three months, the Debtors have paid Claro $1,000,000 in fees in relation to work advising on the local law implications of these Chapter 11 Cases. In addition, starting on June 30, 2020, Claro will receive a monthly fee in the amount of $250,000 during the pendency of the Chapter 11 proceedings and until the consummation and closing of a restructuring. During the ninety day period prior to the Petition Date, Claro was paid $3,184,835.54 for services performed and expenses incurred. These payments included $1,000,000 of fees associated with Claro's assistance in advising on local law considerations relating to these Chapter 11 Cases and $1,817,407 of fees in relation to the agreements recently entered with Delta. Jose Maria Eyzaguirre Baeza of Claro attests that his firm does not hold or represent any interest adverse to the Debtors or their estates, and is a "disinterested person" as that phrase is defined in section 101(14) of the Bankruptcy Code. Consistent with the United States Trustee's Appendix B-Guidelines for Reviewing Applications for Compensation and Reimbursement of Expenses Filed Under 11 U.S.C. Sect. 330 by Attorneys in Larger Chapter 11 Cases, Mr. Eyzaguirre Baeza states that: a. Claro has not agreed to a variation of its standard or customary billing arrangements for this engagement; b. None of the Claro's professionals included in this engagement have varied their rate based on the geographic location of these Chapter 11 Cases; c. Claro has not adjusted or changed its billing rates and material financial terms, neither in the 12 months prepetition nor postpetition. In some other matters, Claro and the Debtors agreed to be paid a flat fee or on a contingency fee depending on the result of the transaction, as is the case of Project Disney which was executed in February 2020 and involved the business alliance between LATAM Parent and Delta, whereby Delta acquired 19,99 percent of LATAM Parent and entered into a number of mutually beneficial agreements. In that case, Claro was paid a contingency fee of $1,500,000. For the antitrust aspect of that case, Claro agreed to be paid a flat fee of $150,000; and d. Claro has been working with the Debtors on a prospective budget and staffing plan for the two-month period from the Petition Date and will continue to work with the Debtors on these plans. The firm can be reached through: Jose Maria Eyzaguirre Baeza CLARO & CIA. Av. Apoquindo 3721, piso 14 Cod. Postal 755 0177 Santiago, Chile Tel: 562 2367 3000 Fax: 562 2367 3003 About LATAM Airlines LATAM Airlines Group S.A. -- http://www.latam.com/-- is a pan-Latin American airline holding company involved in the transportation of passengers and cargo and operates as one unified business enterprise. LATAM Airlines Group S.A. is the largest passenger airline in South America. Before the onset of the COVID-19 pandemic, LATAM offered passenger transport services to 145 different destinations in 26 countries, including domestic flights in Argentina, Brazil, Chile, Colombia, Ecuador and Peru, and international services within Latin America as well as to Europe, the United States, the Caribbean, Oceania, Asia and Africa. LATAM Airlines Group S.A. and its 28 affiliates sought Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 20-11254) on May 25, 2020. Affiliates in Chile, Peru, Colombia, Ecuador and the United States are part of the Chapter 11 filing. The Debtors disclosed $21,087,806,000 in total assets and $17,958,629,000 in total liabilities as of Dec. 31, 2019. The Hon. James L. Garrity, Jr., is the case judge. Debtors tapped Cleary Gottlieb Steen & Hamilton LLP as general bankruptcy counsel; FTI Consulting as restructuring advisor; and Togut, Segal & Segal LLP and Claro & Cia in Chile as special counsel. Prime Clerk LLC is the claims agent. LATAM AIRLINES: Hires Ordinary Course Professionals --------------------------------------------------- LATAM Airlines Group S.A. and its debtor-affiliates seek authority from the United States Bankruptcy Court for the Southern District of New York to employ certain professionals they employ in the ordinary course of business. The Debtors desire to employ and retain these ordinary course professionals to perform the services that will continue to be necessary during the Chapter 11 Cases. The Ordinary Course Professionals have extensive background knowledge, expertise, and familiarity with the Debtors and their business operations, and the Debtors believe that the continued postpetition employment and compensation of the OCPs is in the best interests of the Debtors' estates, their creditors, and other parties in interest. The compensation paid by the Debtors to the ordinary course professionals is comparable to the compensation paid to comparably skilled professionals in their respective fields. About LATAM Airlines LATAM Airlines Group S.A. -- http://www.latam.com/-- is a pan-Latin American airline holding company involved in the transportation of passengers and cargo and operates as one unified business enterprise. LATAM Airlines Group S.A. is the largest passenger airline in South America. Before the onset of the COVID-19 pandemic, LATAM offered passenger transport services to 145 different destinations in 26 countries, including domestic flights in Argentina, Brazil, Chile, Colombia, Ecuador and Peru, and international services within Latin America as well as to Europe, the United States, the Caribbean, Oceania, Asia and Africa. LATAM Airlines Group S.A. and its 28 affiliates sought Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 20-11254) on May 25, 2020. Affiliates in Chile, Peru, Colombia, Ecuador and the United States are part of the Chapter 11 filing. The Debtors disclosed $21,087,806,000 in total assets and $17,958,629,000 in total liabilities as of Dec. 31, 2019. The Hon. James L. Garrity, Jr., is the case judge. Debtors tapped Cleary Gottlieb Steen & Hamilton LLP as general bankruptcy counsel; FTI Consulting as restructuring advisor; and Togut, Segal & Segal LLP and Claro & Cia in Chile as special counsel. Prime Clerk LLC is the claims agent. LATAM AIRLINES: Hires PJT Partners as Investment Banker ------------------------------------------------------- LATAM Airlines Group S.A. and its debtor-affiliates seek authority from the United States Bankruptcy Court for the Southern District of New York to employ PJT Partners LP as their investment banker. LATAM Airlines requires PJT Partners to: (a) assist in arranging financing for the Debtors, including structuring, placement and negotiation of debtor-in-possession financing as requested; (b) assist in the evaluation of the Debtors' businesses and prospects; (c) assist in the development of the Debtors' long-term business plan and related financial projections; (d) assist in the development of financial data and presentations to LATAM Parent's Board of Directors, various creditors and other third parties; (e) analyze the Debtors' financial liquidity and evaluate alternatives to improve such liquidity; (f) analyze various restructuring scenarios and the potential impact of these scenarios on the recoveries of those stakeholders impacted by the Restructuring; (g) provide strategic advice with regard to restructuring or refinancing the Debtors' Obligations; (h) evaluate the Debtors' debt capacity and alternative capital structures; (i) participate in negotiations among the Debtors and their creditors, suppliers, lessors and other interested parties; (j) value any securities that may be offered by the Debtors in connection with a Restructuring; (k) advise the Debtors and negotiate with lenders and/or contractual parties with respect to potential amendments; (l) provide expert witness testimony concerning any of the subjects encompassed by the other investment banking services; and (m) provide such other advisory services as are customarily provided in connection with the analysis and negotiation of a transaction similar to a potential Restructuring, as requested and mutually agreed. PJT Partners will be paid as follows: (a) Monthly Advisory Fee: The Debtors shall pay PJT a monthly financial advisory fee of $300,000. Fifty percent of all Monthly Advisory Fees paid to PJT after the 6th Monthly Fee has been paid (i.e., after $1,800,000 in Monthly Fees have been paid) under the Engagement Letter shall be credited (without duplication) against the Restructuring Fee payable to PJT. (b) Capital Raising Fee: The Debtors shall pay PJT a capital raising fee for any financing arranged by PJT, earned and payable upon consummation of the financing. The Capital Raising Fee will be calculated as: (i) Senior Debt. 0.70 percent of the total issuance size for senior debt financing; (ii) Junior Debt. 1.75 percent of the total issuance size for junior debt financing; and (iii) Equity Financing. 3.0 percent of the issuance amount for equity financing. (iv) Notwithstanding the foregoing, the Capital Raising Fee in respect of any debtor-in-possession financing (i.e., financing in respect of a chapter 11 case) shall be calculated as 1.0 percent of the total issuance size of such financing (including any committed but undrawn amounts); provided, that, no Capital Raising Fees shall be payable for any financing or capital raising arrangements with the Cueto Group, the Amaro family, Delta Airlines, Qatar Airlines, the Eblen Group, the Heller Group and/or any government or governmental entity. If financing arranged by PJT (and use of proceeds generated from such financing) is the only Restructuring undertaken, PJT, in its sole discretion, may choose to be paid either the Capital Raising Fee or the Restructuring Fee, but not both. (c) Restructuring Fee: The Debtors shall pay PJT a restructuring fee equal to $17,500,000 upon the consummation of a Restructuring, in accordance with the Engagement Letter (d) Expense Reimbursements: The Debtors agree to reimburse PJT for all (i) pre-approved (which approval shall not be unreasonably withheld) travel and lodging expenses and (ii) fees and expenses of PJT Partners' counsel. Timothy R. Coleman, partner of PJT Partners, assured the Court that the firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code and does not represent any interest adverse to the Debtors and their estates. PJT Partners can be reached at: Timothy R. Coleman PJT Partners LP 280 Park Avenue New York, NY 10017 Phone: +1 212-364-7800 About LATAM Airlines LATAM Airlines Group S.A. -- http://www.latam.com/-- is a pan-Latin American airline holding company involved in the transportation of passengers and cargo and operates as one unified business enterprise. LATAM Airlines Group S.A. is the largest passenger airline in South America. Before the onset of the COVID-19 pandemic, LATAM offered passenger transport services to 145 different destinations in 26 countries, including domestic flights in Argentina, Brazil, Chile, Colombia, Ecuador and Peru, and international services within Latin America as well as to Europe, the United States, the Caribbean, Oceania, Asia and Africa. LATAM Airlines Group S.A. and its 28 affiliates sought Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 20-11254) on May 25, 2020. Affiliates in Chile, Peru, Colombia, Ecuador and the United States are part of the Chapter 11 filing. The Debtors disclosed $21,087,806,000 in total assets and $17,958,629,000 in total liabilities as of Dec. 31, 2019. The Hon. James L. Garrity, Jr., is the case judge. Debtors tapped Cleary Gottlieb Steen & Hamilton LLP as general bankruptcy counsel; FTI Consulting as restructuring advisor; and Togut, Segal & Segal LLP and Claro & Cia in Chile as special counsel. Prime Clerk LLC is the claims agent. LATAM AIRLINES: Hires Prime Clerk LLC as Administrative Advisor --------------------------------------------------------------- LATAM Airlines Group S.A. and its debtor-affiliates seek authority from the United States Bankruptcy Court for the Southern District of New York to employ Prime Clerk LLC as their administrative advisor. LATAM Airlines requires Prime Clerk to: (a) assist with, among other things, solicitation, balloting and tabulation of votes, and prepare any related reports, as required in support of confirmation of a chapter 11 plan, and in connection with such services, process requests for documents from parties-in-interest, including, if applicable, brokerage firms, bank back-offices and institutional holders; (b) prepare an official ballot certification and, if necessary, testify in support of the ballot tabulation results; (c) assist with the preparation of the Debtors' schedules of assets and liabilities and statements of financial affairs and gather data in conjunction therewith; (d) provide a confidential data room, if requested; (e) manage and coordinate any distributions pursuant to a chapter 11 plan; and (f) provide such other administrative services described in the Engagement Agreement as may be requested from time to time by the Debtors or the Court. The firm will be paid at these rates: Claim/Noticing Rates: Analyst $35 - $55 Technology Consultant $35 - $95 Consultant/Senior Consultant $70 - $170 Director $175 - $195 COO/Executive VP No charge Solicitation Consultant $195 Director of Solicitation $215 Prime Clerk is a "disinterested person" within the meaning of section 101(14) of the Bankruptcy Code, as required by section 327(a) of the Bankruptcy Code, and does not hold or represent any interest materially adverse to the Debtors' estates in connection with any matter on which it would be employed, as disclosed in the court filings. The firm can be reached through: Benjamin J. Steele Prime Clerk LLC One Grand Central Place 60 East 42nd Street, Suite 1440 New York, New York 10165 About LATAM Airlines LATAM Airlines Group S.A. -- http://www.latam.com/-- is a pan-Latin American airline holding company involved in the transportation of passengers and cargo and operates as one unified business enterprise. LATAM Airlines Group S.A. is the largest passenger airline in South America. Before the onset of the COVID-19 pandemic, LATAM offered passenger transport services to 145 different destinations in 26 countries, including domestic flights in Argentina, Brazil, Chile, Colombia, Ecuador and Peru, and international services within Latin America as well as to Europe, the United States, the Caribbean, Oceania, Asia and Africa. LATAM Airlines Group S.A. and its 28 affiliates sought Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 20-11254) on May 25, 2020. Affiliates in Chile, Peru, Colombia, Ecuador and the United States are part of the Chapter 11 filing. The Debtors disclosed $21,087,806,000 in total assets and $17,958,629,000 in total liabilities as of Dec. 31, 2019. The Hon. James L. Garrity, Jr., is the case judge. Debtors tapped Cleary Gottlieb Steen & Hamilton LLP as general bankruptcy counsel; FTI Consulting as restructuring advisor; and Togut, Segal & Segal LLP and Claro & Cia in Chile as special counsel. Prime Clerk LLC is the claims agent. LATAM AIRLINES: Seeks to Hire Cleary Gottlieb as Counsel -------------------------------------------------------- LATAM Airlines Group S.A. and its debtor-affiliates seek authority from the United States Bankruptcy Court for the Southern District of New York to employ Cleary Gottlieb Steen & Hamilton LLP as their counsel. LATAM Airlines requires Cleary Gottlieb to: a. provide advice to the Debtors with respect to their powers and duties as debtors-in-possession in the continued operation of their businesses and the management of their properties; b. take all necessary actions to protect and preserve the Debtors' estates, including the prosecution of actions on the Debtors' behalf, the defense of any actions commenced against the Debtors, the negotiation of disputes in which the Debtors are involved and the preparation of objections to claims filed against the Debtors' estates; c. prepare, on behalf of the Debtors, applications, motions, answers, orders, reports, memoranda of law and other papers in connection with the Chapter 11 Cases; d. represent the Debtors in negotiations with creditors, equity holders, and parties in interest, including governmental agencies and authorities; and e. perform all other necessary or appropriate legal services in connection with the Chapter 11 Cases. Cleary Gottlieb's hourly rates are: Partners $1,065 – 1,5258 Counsel $995 – 1,215 Senior Attorneys $970 – 1,130 Associates $565 – 955 Staff Attorneys $305 – 575 International Lawyers $505 Law Clerks $460 Summer Associates $455 Paralegals $310 – 415 The Debtors provided Cleary Gottlieb with an initial retainer in the amount of $1,250,000, of which approximately $750,000 was applied before the Petition Date to outstanding balances on account of prepetition fees and expenses. Luke A. Barefoot, partner at Cleary Gottlieb, attests that his firm does not hold or represent any interest adverse to the Debtors or their estates, and is a "disinterested person" as that phrase is defined in section 101(14) of the Bankruptcy Code, as modified by section 1007(b) of the Bankruptcy Code. Consistent with the United States Trustee's Appendix B-Guidelines for Reviewing Applications for Compensation and Reimbursement of Expenses Filed Under 11 U.S.C. Sect. 330 by Attorneys in Larger Chapter 11 Cases, which became effective on Nov. 1, 2013, Mr. Barefoot states that: a. Cleary Gottlieb has not agreed to a variation of its standard or customary billing arrangements for this engagement; b. None of the Firm's professionals included in this engagement have varied their rate based on the geographic location of these Chapter 11 Cases; c. The billing rates and material terms of the prepetition engagement are the same as the rates and terms described in the Application; and d. The Debtors have approved a prospective budget and staffing plan for Cleary Gottlieb's engagement for the period from the Petition Date through sixty days after the Petition Date. The firm can be reached through: Luke A. Barefoot, Esq. Cleary Gottlieb Steen & Hamilton LLP One Liberty Plaza New York, NY 10006 Tel: +1 212 225 2829 Email: lbarefoot@cgsh.com About LATAM Airlines LATAM Airlines Group S.A. -- http://www.latam.com/-- is a pan-Latin American airline holding company involved in the transportation of passengers and cargo and operates as one unified business enterprise. LATAM Airlines Group S.A. is the largest passenger airline in South America. Before the onset of the COVID-19 pandemic, LATAM offered passenger transport services to 145 different destinations in 26 countries, including domestic flights in Argentina, Brazil, Chile, Colombia, Ecuador and Peru, and international services within Latin America as well as to Europe, the United States, the Caribbean, Oceania, Asia and Africa. LATAM Airlines Group S.A. and its 28 affiliates sought Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 20-11254) on May 25, 2020. Affiliates in Chile, Peru, Colombia, Ecuador and the United States are part of the Chapter 11 filing. The Debtors disclosed $21,087,806,000 in total assets and $17,958,629,000 in total liabilities as of Dec. 31, 2019. The Hon. James L. Garrity, Jr., is the case judge. Debtors tapped Cleary Gottlieb Steen & Hamilton LLP as general bankruptcy counsel; FTI Consulting as restructuring advisor; and Togut, Segal & Segal LLP and Claro & Cia in Chile as special counsel. Prime Clerk LLC is the claims agent. LATAM AIRLINES: Seeks to Hire FTI Consulting as Financial Advisor ----------------------------------------------------------------- LATAM Airlines Group S.A. and its debtor-affiliates seek authority from the United States Bankruptcy Court for the Southern District of New York to employ FTI Consulting Canada ULC (together with its parent FTI Consulting, Inc.) as their financial advisor. Services FTI will render are: (a) support the preparation of first day motions and petitions, as needed, for a potential chapter 11 filing; (b) assist management in generating the "Top Creditor List" and master mailing matrix; extract data necessary to develop critical trade analysis, foreign vendor analysis, shippers and warehousemen, as well as various exhibits for first day pleadings; (c) assist with developing accounting and operating procedures to segregate prepetition and postpetition business transactions; (d) assist in the identification, organization and classification of executory contracts and unexpired leases and assisting with cost/benefit evaluations with respect to the assumption or rejection of each, as needed; (e) prepare the Debtors with respect to financial disclosures that will be required by the Court; (f) assist with the review, classification, reconciliation, and quantification of claims against the estate under the plan of reorganization; (g) assist with bankruptcy reporting requirements (e.g., Statements of Financial Affairs and Schedules of Assets and Liabilities, Monthly Operating Reports, etc.); (h) engage and coordinate with the U.S. Trustee to minimize the burden on the Debtors while fulfilling all statutory obligations; (i) assist with the development or review of the Debtors' business plan; (j) review or assist with the development of the Debtors' 13-week cash flow forecast and regular variance reporting; (k) assist with evaluating the Debtors' cash flows under a variety of scenarios; (l) as required, assist the Debtors and their proposed counsel in support of restructuring proceedings in jurisdictions outside the U.S.; (m) assist in the preparation of financial information for distribution to creditors and others, including, but not limited to, cash flow projections and budgets, cash receipts and disbursement analysis, analysis of various asset and liability accounts, and analysis of proposed transactions for which Court approval is sought; (n) to the extent that an unsecured creditors committee or any other group is formed, engage with and manage the committee/group to minimize the distraction to management; (o) assist the Debtors and proposed counsel in preparation of plan and disclosure statement documents and supporting materials; (p) provide testimony and other litigation support as the circumstances warrant; (q) attending meetings, presentations and negotiations as may be requested by the Debtors and their proposed counsel; (r) develop overarching messaging and communications planning; (s) develop materials for identified stakeholder audiences (including but not limited to employees, media, customers, loyalty members, suppliers, regulators and elevated officials, financial audiences and the general public); as well as global media relations; and (t) render such other general business consulting or such other assistance as Debtors' management or counsel may deem necessary that are consistent with the role of a financial advisor and not duplicative of services provided by other professionals in this proceeding. FTI's hourly rates for its professionals are as follows: Senior Managing Directors $925 - $1,295 Directors/Senior Directors/Managing Directors $550 - $905 Consultants/Senior Consultants $350 - $660 Administrative/Paraprofessionals $125 - $280 Over the last twelve months, the Debtors have paid FTI approximately $3,138,832 in fees and expenses excluding the $225,565 that was applied to the retainer. In addition, on May 18, 2020, FTI received a retainer in the amount of $1,000,000, of which approximately $225,565 was applied to prepetition fees and expenses outstanding balances existing as of the Petition Date leaving a retainer balance of $777,435. Brock Edgar, 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: Brock Edgar FTI Consulting Canada ULC TD South Tower, 79 Wellington Street West Toronto Dominion Centre, Suite 2010, P.O. Box 104 Toronto, ON, M5K 1G8 CANADA Tel: +1 416 649 8100 Fax: +1 416 649 8101 Email: brock.edgar@fticonsulting.com About LATAM Airlines LATAM Airlines Group S.A. -- http://www.latam.com/-- is a pan-Latin American airline holding company involved in the transportation of passengers and cargo and operates as one unified business enterprise. LATAM Airlines Group S.A. is the largest passenger airline in South America. Before the onset of the COVID-19 pandemic, LATAM offered passenger transport services to 145 different destinations in 26 countries, including domestic flights in Argentina, Brazil, Chile, Colombia, Ecuador and Peru, and international services within Latin America as well as to Europe, the United States, the Caribbean, Oceania, Asia and Africa. LATAM Airlines Group S.A. and its 28 affiliates sought Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 20-11254) on May 25, 2020. Affiliates in Chile, Peru, Colombia, Ecuador and the United States are part of the Chapter 11 filing. The Debtors disclosed $21,087,806,000 in total assets and $17,958,629,000 in total liabilities as of Dec. 31, 2019. The Hon. James L. Garrity, Jr., is the case judge. Debtors tapped Cleary Gottlieb Steen & Hamilton LLP as general bankruptcy counsel; FTI Consulting as restructuring advisor; and Togut, Segal & Segal LLP and Claro & Cia in Chile as special counsel. Prime Clerk LLC is the claims agent. LATAM AIRLINES: Seeks to Hire Ocean Tomo as IP Valuation Consultant ------------------------------------------------------------------- LATAM Airlines Group S.A. and its debtor-affiliates seek authority from the United States Bankruptcy Court for the Southern District of New York to employ Ocean Tomo LLC as intellectual property valuation consultants. Service Ocean Tomo will render are: Phase 1 a. review of relevant information provided by the Debtors with supplemental research, including publicly available information and comparisons of similar brand names; b. create a preliminary financial valuation model based on data produced by the Debtors and other related parties with exhibits showing a preliminary range of value conclusions based solely on the Debtors information provided. Phase 2 a. interviews with available, relevant personnel having knowledge of the Subject Assets; b. conduct independent market research to develop estimates of undocumented data, including market size, industry trends, and relevant market transactions and other licensing activities; c. create financial valuation models based on data produced by the Debtors, other related parties and Ocean Tomo research with exhibits showing a range of value conclusions; d. review initial indications of value with relevant personnel having knowledge of the Subject Assets; e. update valuation models based on new data obtained from the Debtors, other related parties and additional Ocean Tomo research, as appropriate. Phase 3 a. present a valuation report that clearly outlines our assumptions, methodologies, and its opinion of the current FMV of the Subject Assets. Ocean Tomo's hourly rates are: Administrative $85 - $195 Analyst $195 - $235 Associate $245 - $345 Director $355 - $485 Managing Director $550 and up Ocean Tomo is a "disinterested person" as defined in section 101(14) of the Bankruptcy Code, according to court filings. The firm can be reached through: Gregory Campanella Ocean Tomo LLC 101 Montgomery St., Suite 2100 San Francisco, CA 94104 Phone: +1 415 946 2605 Email: gcampanella@oceantomo.com About LATAM Airlines LATAM Airlines Group S.A. -- http://www.latam.com/-- is a pan-Latin American airline holding company involved in the transportation of passengers and cargo and operates as one unified business enterprise. LATAM Airlines Group S.A. is the largest passenger airline in South America. Before the onset of the COVID-19 pandemic, LATAM offered passenger transport services to 145 different destinations in 26 countries, including domestic flights in Argentina, Brazil, Chile, Colombia, Ecuador and Peru, and international services within Latin America as well as to Europe, the United States, the Caribbean, Oceania, Asia and Africa. LATAM Airlines Group S.A. and its 28 affiliates sought Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 20-11254) on May 25, 2020. Affiliates in Chile, Peru, Colombia, Ecuador and the United States are part of the Chapter 11 filing. The Debtors disclosed $21,087,806,000 in total assets and $17,958,629,000 in total liabilities as of Dec. 31, 2019. The Hon. James L. Garrity, Jr., is the case judge. Debtors tapped Cleary Gottlieb Steen & Hamilton LLP as general bankruptcy counsel; FTI Consulting as restructuring advisor; and Togut, Segal & Segal LLP and Claro & Cia in Chile as special counsel. Prime Clerk LLC is the claims agent. LATAM AIRLINES: Seeks to Hire Togut Segal as Co-Counsel ------------------------------------------------------- LATAM Airlines Group S.A. and its debtor-affiliates seek authority from the United States Bankruptcy Court for the Southern District of New York to employ Togut, Segal & Segal LLP as their co-counsel. LATAM Airlines requires Togut Segal to: -- assist the Debtors with filing ordinary course professional verified statements and preparing OCP statements of fees and disbursements; -- assist certain of the Debtors' professionals with preparing monthly fee statements and interim fee applications; -- assist the Debtors with preparing their monthly operating reports; -- assist the Debtors with preparing their Schedules and Statements; -- assist the Debtors in connection with utility matters, including, but not limited to, demands by utility providers pursuant to section 366 of the Bankruptcy Code; -- analyze transfers made by the Debtors in the ninety-day period prior to the commencement of these Chapter 11 Cases for an assessment of potential avoidance claims under chapter 5 of the Bankruptcy Code; -- advise the Debtors regarding their powers and duties as debtors in possession for the tasks assigned; -- prepare and filing on the Debtors' behalf motions, applications, answers, proposed orders, reports, and papers necessary for the assigned matters; -- attend meetings and negotiations with representatives of creditors and other parties in interest that affect the Assigned Matters; -- appear before this Court and any appellate courts to protect the interests of the Debtors' estates in connection with the assigned matters; -- respond to inquiries and calls from creditors and counsel to interested parties regarding pending assigned matters; and -- perform other necessary legal services for assigned matters, or any other discrete matters assigned to the Togut Firm, and provide other necessary legal advice to the Debtors in connection with these Chapter 11 Cases. Togut Segal will be paid at these hourly rates: Partners $840 to $1,050 Counsels $750 to $945 Associates $385 to $780 Paralegals $195 to $390 Albert Togut, Esq., a senior member of Togut, disclosed in a court filing that his firm is "disinterested" as defined in Section 101(14) of the Bankruptcy Code. In accordance with Appendix B-Guidelines for reviewing fee applications filed by attorneys in larger Chapter 11 cases, Mr. Togut disclosed that the firm has not agreed to a variation of its standard or customary billing arrangements in connection with its employment with the Debtors, and that no professional in his firm has varied his rate based on the geographic location of the Debtors' bankruptcy cases. The Togut Firm did not represent the Debtors prior to their engagement of the Togut Firm in connection with the commencement of these Chapter 11 Cases, according to Mr. Togut. "As these Chapter 11 cases continue to develop, the Togut firm will formulate a budget and staffing plan for this proposed retention, which it will review with the Debtors," Mr. Togut said in a court filing. The firm can be reached through: Albert Togut, Esq. Togut, Segal & Segal LLP One Penn Plaza New York, NY 10119 Phone: 212-594-5000 Fax: 212-967-4258 Email: altogut@TeamTogut.com About LATAM Airlines LATAM Airlines Group S.A. -- http://www.latam.com/-- is a pan-Latin American airline holding company involved in the transportation of passengers and cargo and operates as one unified business enterprise. LATAM Airlines Group S.A. is the largest passenger airline in South America. Before the onset of the COVID-19 pandemic, LATAM offered passenger transport services to 145 different destinations in 26 countries, including domestic flights in Argentina, Brazil, Chile, Colombia, Ecuador and Peru, and international services within Latin America as well as to Europe, the United States, the Caribbean, Oceania, Asia and Africa. LATAM Airlines Group S.A. and its 28 affiliates sought Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 20-11254) on May 25, 2020. Affiliates in Chile, Peru, Colombia, Ecuador and the United States are part of the Chapter 11 filing. The Debtors disclosed $21,087,806,000 in total assets and $17,958,629,000 in total liabilities as of Dec. 31, 2019. The Hon. James L. Garrity, Jr., is the case judge. Debtors tapped Cleary Gottlieb Steen & Hamilton LLP as general bankruptcy counsel; FTI Consulting as restructuring advisor; and Togut, Segal & Segal LLP and Claro & Cia in Chile as special counsel. Prime Clerk LLC is the claims agent. LEVEL SOLAR: June 30 Plan Confirmation Hearing Set -------------------------------------------------- Ronald J. Friedman, Esq., the chapter 11 operating trustee of the bankruptcy estate of Debtor Level Solar Inc., and Lisa V. Pell and QED, LLC (the “Pell-QED Proponents”, and together with the Trustee, the “Proponents”) filed with the U.S. Bankruptcy Court for the Southern District of New York a motion seeking entry of an order approving the adequacy of the Fourth Amended Disclosure Statement for the Joint Chapter 11 Plan of Reorganization of the Chapter 11 Trustee and Pell-QED Proponents. On May 29, 2020, Judge Robert E. Grossman approved the Disclosure Statement and ordered that: * June 23, 2020, is fixed as the last day to deliver all ballots to be counted as votes to accept or reject the Plan. * June 30, 2020 at 11:00 a.m. is the confirmation hearing. * June 23, 2020 at 4:00 p.m. is fixed as the last day to file objections, if any, to confirmation of the Plan. * June 23, 2020 at 4:00 p.m. is fixed as the last day to file responses, if any, to a timely filed objection to confirmation of the Plan. A copy of the order dated May 29, 2020, is available at https://tinyurl.com/ybu3nj82 from PacerMonitor at no charge. About Level Solar Based in New York, Level Solar Inc. operates under the solar-energy installation industry. Incorporated in 2013, the company has operations in Long Island, New York City and Massachusetts. Level Solar filed for bankruptcy protection (Bankr. S.D.N.Y. Case No. 17-13469) on Dec. 4, 2017. At the time of the filing, the Debtor was estimated to have assets of between $50 million and $100 million and debt of between $1 million and $10 million. Michael Conway, Esq., at Shipman & Goodwin LLP, is the Debtor's bankruptcy counsel. Akin Gump Strauss Hauer & Feld LLP serves as corporate counsel. Ronald J. Friedman, Esq., was appointed Chapter 11 trustee for the Debtor. The Trustee tapped SilvermanAcampora LLP as his legal counsel. M9 DEFENSE: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------- Debtor: M9 Defense Inc. 13110 NE 177th PI #236 Woodinville, WA 98072 Chapter 11 Petition Date: June 24, 2020 Court: United States Bankruptcy Court Western District of Washington Case No.: 20-11733 Judge: Hon. Timothy W. Dore Debtor's Counsel: Darrel B. Carter, Esq. CBG LAW GROUP 11400 SE 8th St. Suite 235 Bellevue, WA 98004 Tel: (425) 283-0432 Email: darrel@cbglaw.com Estimated Assets: $0 to $50,000 Estimated Liabilities: $10 million to $50 million The petition was signed by Jamin Micarelli, 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/hS2mam MAXAR TECHNOLOGIES: Moody's Rates New $150MM Sec. Notes 'B2' ------------------------------------------------------------ Moody's Investors Service assigned a B2 rating to Maxar Technologies Inc.'s (Maxar) proposed $150 million senior secured notes due in 2027. The company's B2 corporate family rating (CFR), B2-PD probability of default rating, B2 ratings on its senior secured debt (term loan B, revolving credit facility and notes), SGL-3 speculative grade liquidity rating, and negative outlook remain unchanged. Maxar plans to use the net proceeds for general corporate purposes, including purchasing the remaining 50% it does not own of Vricon Inc., a joint venture with Saab AB, that specializes in the production of 3D data using high resolution imagery. The purchase price is about $140 million. "Moody's views the transaction as credit positive as the acquisition will enhance Maxar's business profile while pro forma leverage remains unchanged at 6.5x," said Peter Adu, Moody's Vice President and Senior Analyst. Ratings Assigned: Issuer: Maxar Technologies Inc. $150 million Senior Secured Notes due 2027, Assigned B2 (LGD3). RATINGS RATIONALE Maxar's B2 CFR is constrained by: (1) Moody's expectation that leverage (adjusted Debt/EBITDA) will remain above 6x through the next 12 to 18 months (pro forma 6.5x for LTM Q1/2020); (2) ongoing weak free cash flow, driven by capital spending on its next generation WorldView Legion satellite constellation; (3) rising business risk flowing from technological change and softness in the geostationary communications satellite sector; and (4) limited top line growth in 2020 due to the coronavirus pandemic. The company's rating benefits from: (1) a leading market position in satellite-based imaging services as well as being an important supplier to the US Government; and (2) potential for free cash flow generation starting in 2022 after the WorldView Legion constellation becomes operational as capital expenditures will decline and EBITDA will increase, which will improve deleveraging prospects. Maxar sold its former MacDonald Dettwiler and Associates business for C$1 billion ($729 million) in April 2020 and used $472 million of the proceeds to pay down its term loan. The company will also be using a portion of the proceeds to repurchase $150 million of its secured notes due in 2023. Pro forma for the debt reductions, leverage declines to 6.5x from 8.1x for LTM Q1/2020. Incorporating the Vricon transaction and related financing, leverage remains at 6.5x. Vricon's technology will enable Maxar to move to a fully integrated 3D solution that will allow for precision and co-registration of multiple data sources, which its customers require. Maxar will also be able to use Vricon's European base as a platform to expand in the region. Maxar has adequate liquidity (SGL-3). Sources approximate $520 million while it has uses of about $170 million in the next twelve months. Sources include $50 million of cash when the proposed financing closes and about $470 million of availability under its $500 million revolving credit facility due in October 2023. Cash uses are comprised of about $150 million of expected negative free cash flow mainly due to capital spending on its WorldView Legion constellation and $20 million of term loan amortization through the next four quarters. The company's revolver has leverage and coverage covenants and cushion are expected to exceed 25% through the next four quarters. Maxar has limited flexibility to generate liquidity from asset sales. The company has no refinancing risk until October 2023 when the revolver comes due. The negative outlook reflects expected revenue and EBITDA growth pressures in 2020, negative free cash flow generation, and execution risks in reducing leverage below 6x in the next 12 to 18 months. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The rating could be upgraded if Maxar demonstrates material organic growth in revenue and EBITDA while sustaining leverage below 5x (pro forma 6.5x for LTM Q1/2020). The rating could be downgraded if leverage is sustained above 6x (pro forma 6.5x for LTM Q1/2020) or if liquidity becomes weak. Maxar's environmental risk is evolving. Satellite companies own operational ones as well as ones that have lived out their useful lives and have become space debris. Given the planned launch of numerous future satellites, debris from nonoperational satellites or damaged because of collisions will be costly for operators. Maxar has high social risk. Technological advancement is impacting the way commercial and government customers consume information. Maxar's product offerings are integrated into the US and international defense and intelligence customers' activities. As a result of the classified or sensitive nature of information it handles, data security breaches would be costly for the company. Maxar also has high governance risk. The company's operational challenges have caused executive management turnover, which has led to a reset of strategy. As well, year-over-year comparability of performance is challenging given frequent business profile and accounting presentation changes. The principal methodology used in these ratings was Aerospace and Defense Industry published in March 2018. Headquartered in Westminster, Colorado, Maxar provides earth imagery, geospatial data and analytics, satellites, and satellite systems to government and commercial customers globally. Revenue for the twelve months ended March 31, 2020 was $1.6 billion. MCGINLEY FUNERAL: Seeks to Hire Morrison Tenenbaum as Counsel ------------------------------------------------------------- McGinley Funeral Home and Cremation Service LLC seeks authority from the US Bankruptcy Court for the Eastern District of New York to hire Morrison Tenenbaum PLLC as its counsel. McGinley Funeral requires Morrison Tenenbaum to: a. advise the Debtor with respect to its powers and duties as debtor-in-possession in the management of its estate; b. assist in any amendments of Schedules and other financial disclosures and in the reparation/review/amendment of a disclosure statement and plan of reorganization; c. negotiate with the Debtor's creditors and taking the necessary legal steps to confirm and consummate a plan of reorganization; d. prepare on behalf of the Debtor all necessary motions, applications, answers, proposed orders, reports and other papers to be filed by the Debtor in this case; e. appear before the Bankruptcy Court to represent and protect the interests of the Debtor and its estate; and f. perform all other legal services for the Debtor that may be necessary and proper for an effective reorganization. Morrison Tenenbaum will be paid at these hourly rates: Lawrence F. Morrison $525 Brian J. Hufnagel $425 Associates $380 Paraprofessionals $200 On or about April 5, 2020, MT Law received a retainer fee in the amount of $10,000. Morrison Tenenbaum will also be reimbursed for reasonable out-of-pocket expenses incurred. Lawrence F. Morrison, a partner at Morrison Tenenbaum, PLLC, assured the Court that the firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code and does not represent any interest adverse to the Debtor and its estates. Morrison Tenenbaum can be reached at: Lawrence F. Morrison, Esq. Brian J. Hufnagel, Esq. MORRISON TENENBAUM PLLC 87 Walker Street, Floor 2 New York, NY 10013 Tel: (212) 620-0938 E-mail: lmorrison@m-t-law.com bjhufnagel@m-t-law.com About McGinley Funeral Home McGinley Funeral Home and Cremation Service LLC sought protection under Chapter 11 of the Bankruptcy Code (Bankr. E.D.N.Y. Case No. 20-41815) on April 5, 2020, listing under $1 million in both assets and liabilities. Lawrence F. Morrison, Esq. at Morrison Tenenbaum PLLC represents the Debtor as counsel. MEREDITH CORP: Moody's Assigns Ba3 Rating on New Secured Notes -------------------------------------------------------------- Moody's Investors Service assigned Ba3 rating to new senior secured notes issued by Meredith Corp. The company will use proceeds from the senior secured notes together with recently launched incremental term loan and cash from the balance sheet to redeem all of its outstanding Series A preferred stock ("Series A Preferred Stock") and pay fees and expenses incurred in connection with the financing and redemption transactions. Financial strategy is a consideration under its ESG Framework. Issuer: Meredith Corp. New senior secured notes, assigned Ba3 (LGD2) RATINGS RATIONALE The Ba3 rating on the new senior secured notes reflects their pari-passu priority and equivalent security interest with the company's senior secured term loan. The senior secured term loan, revolving credit facility and senior secured notes will contribute over 50% of the company's total debt and are rated two notches above Meredith' B2 CFR, reflecting their senior position in the capital structure. The CFR reflects reduced operating margins and operating cash flow, and increased financial leverage of nearly 6x Debt-to-EBITDA (incorporating Moody's standard adjustments and pro-forma for incremental debt raise). Meredith's CFR also reflects a material decline in advertising spending across all media platforms. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Ratings could be upgraded if Meredith demonstrates consistent organic revenue and EBITDA growth, with debt-to-EBITDA leverage being sustained comfortably below 4.5x (including Moody's standard adjustments). Strong positive free cash flow and good liquidity would also be needed, with good revolver availability. Management would also need to maintain a commitment to financial policies consistent with the higher rating. Ratings could be downgraded if sustained macro-economic weakness continues to pressure the company's advertising reliant revenue stream without offsetting reductions in operating expenses or discretionary dividend payments, or if debt-to-EBITDA is sustained above 6x (including Moody's standard adjustments). Deterioration in liquidity or increased likelihood of a financial covenant breach could also result in a downgrade. Meredith Corp. is a diversified media company with magazine publishing, brand licensing, and television broadcasting operations. In January 2018, Meredith acquired all outstanding shares of Time Inc. for total enterprise value of $2.8bn. The company operates two business segments, National Media, and Local Media. The National Media segment includes national consumer media brands delivered via multiple media platforms including print magazines and digital and mobile media, brand licensing activities, database-related activities, and business-to-business marketing products and services. The Local Media segment consists of 17 television stations located across the United States (U.S.) concentrated in fast growing markets with related digital and mobile media assets. The principal methodology used in this rating was Media Industry published in June 2017. MEREDITH CORP: S&P Rates New $300MM Senior Secured Notes 'BB-' -------------------------------------------------------------- S&P Global Ratings assigned its 'BB-' rating and '1' recovery rating to Meredith Corp.'s proposed $300 million senior secured notes due 2025. The '1' recovery rating indicates S&P's expectation for very high (90%-100%; rounded estimate: 90%) recovery for lenders in the event of a payment default. Meredith will use the proceeds from the notes, its previously announced $410 million term loan, and cash from its balance sheet to redeem $650 million of outstanding preferred equity and cover its call premium, accrued dividends, and transaction-related expenses. The transaction does not affect S&P's 'B' issuer credit rating or negative outlook on the company because it had previously included the $650 million of preferred equity in its adjusted debt calculation and the new $710 million of secured debt does not materially increase leverage. S&P expects Meredith's adjusted debt to EBITDA to temporarily increase above 6x during the next 12 months due to the coronavirus pandemic and the related economic downturn. S&P's negative outlook reflects the risk the company's EBITDA and cash flows may remain pressured through calendar year 2021 from a prolonged recession that causes its net leverage to increase above 6.5x and its free operating cash flow -to-debt ratio to decrease below 5%. MEREDITH CORP: S&P Rates New $410MM Term Loan 'BB-' --------------------------------------------------- S&P Global Ratings assigned its 'BB-' issue-level rating and '1' recovery rating to Meredith Corp.'s proposed $410 million term loan due 2025. The '1' recovery rating indicates S&P's expectation for very high (90%-100%; rounded estimate: 90%) recovery for lenders in the event of a payment default. At the same time, S&P lowered its issue-level rating on Meredith's existing senior unsecured notes to 'CCC+' from 'B' and revised the recovery rating to '6' from '4'. The '6' recovery rating indicates S&P's expectation for negligible (0%-10%; rounded estimate: 0%) recovery for unsecured lenders in the event of a payment default. S&P lowered its issue-level rating and revised its recovery rating to reflect the reduction in funds available for the unsecured lenders in its default scenario due to the increased amount of secured debt in the company's capital structure following the proposed transaction. Meredith will use the proceeds from the term loan, $300 million of additional secured debt, and cash from its balance sheet to redeem $650 million of outstanding preferred equity and cover its call premium, accrued dividends, and transaction-related expenses. The transaction does not affect S&P's 'B' issuer credit rating or negative outlook on the company because it had previously included the $650 million of preferred equity in the rating agency's adjusted debt calculation and the new $710 million of secured debt does not materially affect the rating agency's forecast credit metrics. S&P expects Meredith's adjusted debt to EBITDA to temporarily increase above 6x during the next 12 months due to the coronavirus pandemic and the related economic downturn. S&P's negative outlook reflects the risk the company's EBITDA and cash flows may remain pressured through calendar year 2021 due to a prolonged recession that causes its net leverage to increase above 6.5x and its free operating cash flow (FOCF)-to-debt ratio to decrease below 5%. Additionally, Meredith announced an amendment to the credit agreement for its revolving credit facility, conditional upon redeeming its preferred stock, that resets its leverage covenant to a higher level and removes the springing feature. The amendment increases the company's available liquidity and allows it to borrow the full $350 million under the revolving credit facility. Specifically, the revised covenant permits maximum net leverage of up to 6.00x before stepping down to 5.00x and, subsequently, to 4.25x starting in March 2022. Currently, the revolver has a springing 4.25x total net leverage ratio covenant that only becomes effective if Meredith draws on more than 30% of the revolving credit facility's commitment. Prior to the amendment, S&P had expected the company's net leverage to exceed 4.25x over the next 12 months, which would have limited its availability to less than 30% of the revolver's capacity (or $105 million). ISSUE RATINGS--RECOVERY ANALYSIS Key analytical factors -- Meredith is the borrower of the debt. Its secured credit facilities are guaranteed by its material domestic subsidiaries and secured by substantially all of its assets of those of the guarantors. The unsecured debt is guaranteed by the same subsidiaries that guarantee the secured debt although it does not benefit from collateral, which effectively makes it subordinated to the secured debt. -- S&P's simulated default scenario contemplates a default occurring in 2024 stemming from the combination of a cyclical downturn that reduces the company's advertising, accelerating print subscriber losses, and underperforming acquisitions. -- In the event of a default, S&P believes that its lenders would seek to maximize its value through a reorganization given its ownership of well-known print brands and medium-size and large market TV stations. -- S&P uses a 6x EBITDA multiple to value the company in a default scenario, which reflects its mix of TV broadcasting and magazine businesses. S&P typically uses an EBITDA multiple in the 4.5x-5.0x range to value its peers in the magazine business but apply a higher multiple in the 6.5x-7.0x range for its TV broadcasting peers, such as Gray Television Inc. and E.W. Scripps Co. Simulated default assumptions -- EBITDA at emergence: About $340 million -- EBITDA multiple: 6x -- Gross recovery value: About $2.05 billion -- Net recovery value for waterfall after 5% administrative expenses: About $1.94 billion -- Jurisdiction: U.S. Simplified waterfall -- Value available for senior secured first-lien debt: $1.94 billion -- Estimated senior secured first-lien debt: $2.14 billion -- Recovery expectations: 90%-100% (rounded estimate: 90%) -- Value available for senior unsecured debt: Negligible -- Estimated senior unsecured debt and secured debt deficiency claims: $1.51 billion -- Recovery expectations: 0%-10% (rounded estimate: 0%) MURRAY METALLURGICAL: July 8 Plan Confirmation Hearing Set ---------------------------------------------------------- Murray Metallurgical Coal Holdings, LLC and its debtor affiliates filed with the U.S. Bankruptcy Court for the Southern District of Ohio, Western Division, a motion for entry of an order approving the Disclosure Statement for Joint Chapter 11 Plan. On May 29, 2020, Judge John E. Hoffman, Jr. granted the motion and ordered that: * The Amended Disclosure Statement is approved as providing holders of Claims entitled to vote on the Plan with adequate information to make an informed decision as to whether to vote to accept or reject the Plan in accordance with Section 1125(a)(1) of the Bankruptcy Code. * June 30, 2020, at 4:00 p.m. as the Voting Deadline unless otherwise extended by the Debtors, with the consent of the Requisite Parties, and reflected in the Voting Report. * June 30, 2020, at 4:00 p.m. as the date by which any objection to the Plan must be filed. * July 3, 2020, at 4:00 p.m. is established as the date by which the Voting Report must be filed. * July 8, 2020, at 10:00 a.m. as the start of the hearing for the confirmation of the Plan. * The Solicitation Packages provide the holders of Claims entitled to vote on the Plan with adequate information to make informed decisions with respect to voting on the Plan in accordance with Bankruptcy Rules 2002(b) and 3017(d), the Bankruptcy Code, and the Local Rules. A copy of the order dated May 29, 2020, is available at https://tinyurl.com/ybm5bemb from PacerMonitor at no charge. Co-Counsel to the Debtors: Thomas R. Allen Richard K. Stovall James A. Coutinho Matthew M. Zofchak Allen Stovall Neuman Fisher & Ashton 17 South High Street, Suite 1220 Columbus, Ohio 43215 Telephone: (614) 221-8500 Facsimile: (614) 221-5988 E-mail: allen@asnfa.com stovall@asnfa.com coutinho@asnfa.com zofchak@asnfa.com - and - David M. Hillman Timothy Q. Karcher Chris Theodoridis PROSKAUER ROSE LLP Eleven Times Square New York, New York 10036 Telephone: (212) 969-3000 Facsimile: (212) 969-2900 E-mail: dhillman@proskauer.com tkarcher@proskauer.com ctheodoridis@proskauer.com - and - Charles A. Dale PROSKAUER ROSE LLP One International Place Boston, Massachusetts 02110 Telephone: (617) 526-9600 Facsimile: (617) 526-9899 E-mail: cdale@proskauer.com About Murray Metallurgical Coal Murray Metallurgical Coal Holdings and its subsidiaries are engaged in the mining and production of metallurgical coal. Unlike thermal coal, which is primarily used by the electric utility industry to generate electricity, metallurgical coal is used to produce cok, which is an integral component of steel production. Murray Met primarily owns and operates two active coal mining complexes and other assets in Alabama and West Virginia. On Feb. 11, 2020, Murray Metallurgical Coal Holdings, LLC and five affiliates each filed a voluntary Chapter 11 petition (Bankr. S.D. Ohio Lead Case No. 20-10390). Murray Metallurgical was estimated to have $100 million to $500 million in assets and liabilities as of the bankruptcy filing. Judge John E. Hoffman, Jr., oversees the cases. The Debtors tapped Proskauer Rose LLP as legal counsel; Evercore Group LLC as investment banker; and Alvarez & Marsal LLC as financial advisor. Prime Clerk LLC, is the claims agent. NA RAIL: Moody's Confirms CFR & Senior Secured Ratings at B2 ------------------------------------------------------------ Moody's Investors Service confirmed the ratings of rail and port terminal operator NA Rail Hold Co. (aka Patriot Rail & Ports). The ratings include the B2 corporate family rating, the B2-PD probability of default rating and the B2 ratings of the $40 million revolving credit facility and the $285 million term loan due 2026. The ratings outlook is negative. This completes the review for downgrade that was initiated on March 27, 2020. RATINGS RATIONALE The negative outlook reflects the adverse impact on NA Rail Hold Co. of the economic contraction ensuing from efforts to contain the coronavirus outbreak, which Moody's considers a social risk. In particular the more severely affected port terminal operations will pressure NA Rail Hold Co.'s earnings and cause financial leverage to be elevated. Moody's estimates operating margins to weaken in 2020 to the mid-to-high teens (calculated excluding amortization), before reverting to around 20% in 2021. In addition, Moody's expects debt/EBITDA to be elevated in the near-term, approximately 6.5 times at year-end 2020. The confirmation of the ratings considers NA Rail Hold Co.'s position as an operator of 12 short line railroads that connect with the national rail infrastructure of the Class 1 railroads in the US, the company's relatively modest scale and some revenue concentration in pulp and paper and aggregates. NA Rail Hold Co. has a good record of attaining price increases in excess of rail inflation, aided by its limited exposure to more competitive intermodal freight. Operating margins are attractive, notwithstanding the much less profitable port terminal activities of NA Port Hold Co. (held with NA Rail Hold Co. under common control). Moody's considers NA Rail Hold Co.'s liquidity to be adequate. Moody's anticipates that annual free cash flow will remain positive in 2020, before increasing to likely around $15 million in 2021. The company's cash balance is boosted by the drawdown of virtually all of the availability under the $40 million revolving credit facility, although Moody's expects the funds drawn to be repaid when business conditions stabilize later in 2020. Moody's also anticipates that the financial covenant of the revolver will not be breached in the next 12 months. Although Moody's considers the environmental risks of the surface transportation sector to be 'emerging', NA Rail Hold Co. is much less exposed to environmental risks because it does not ship any coal. The $40 million revolving credit facility due 2024 and the $285 million term loan due 2026 are rated B2, the same level as the corporate family rating. This reflects the very high proportion of senior secured debt in the company's capital structure. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Given the negative outlook, an upgrade is unlikely in the near term. The ratings could be upgraded if the company demonstrates a prudent execution of its acquisition strategy and significantly increases its scale, if operating margins are consistently in excess of 20% (calculated excluding amortization), debt/EBITDA remains below 4.5 times and if free cash flow increases solidly. The ratings could be downgraded if Moody's expects that operating margins decrease towards the mid-teens (calculated excluding amortization), debt/EBITDA does not revert to less than 6 times, or that liquidity weakens, including if free cash flow drops below $10 million per annum. The following rating actions were taken: Confirmations: Issuer: NA Rail Hold Co. Corporate Family Rating, Confirmed at B2 Probability of Default Rating, Confirmed at B2-PD Senior Secured Bank Credit Facility, Confirmed at B2 (LGD3) Outlook Actions: Issuer: NA Rail Hold Co. Outlook, Changed to Negative from Rating Under Review The principal methodology used in these ratings was Surface Transportation and Logistics published in May 2019. NA Rail Hold Co. jointly owns Patriot Rail & Ports with NA Ports Hold Co. Patriot Rail & Ports operates 12 short line railroads in North America and provides rail services, including railcar cleaning, track cleaning and maintenance in 14 states. In addition, Patriot Rail & Ports operates eight port terminals and two cold storage facilities in five states in the southeastern US. NA Rail Hold Co. and NA Ports Hold Co. are owned by an infrastructure fund managed by First State Investments. NAI CAPITAL: Non-Insider Unsecureds to Get Paid from Estate Funds ----------------------------------------------------------------- Debtor NAI Capital, Inc. filed with the U.S. Bankruptcy Court for the Central District of California, San Fernando Valley Division, a Plan of Reorganization dated June 2, 2020. The Plan provides for a sale of certain of its assets and the creation of a liquidating trust for the benefit of creditors. The Liquidating Trust shall be a creditors' liquidating trust for all purposes. After the Liquidating Trust has been created and has taken ownership/assignment of all Trust Property, the Liquidating Trustee shall cause the Debtor to dissolve or otherwise wind down pursuant to applicable law. Class 2 under this Plan consists of all non-insiders that hold allowed general unsecured claims. The Debtor estimates that there are a total of approximately $1,481,476 of class 2 allowed claims. Each holder of a class 2 allowed claim will, along with any class 3 allowed claim and class 4 allowed claims, receive a pro rata share of the Estate Funds and any other Estate Recoveries obtained by the Liquidating Trust, along with any other Trust Property, after the payment of all allowed administrative claims and all allowed priority claims. After holding back a reserve of $50,000 to pay for the costs of the Liquidating Trust, the Liquidating Trustee will make an initial distribution to holders of class 2, 3 and 4 allowed claims within 90 days following the Effective Date, and then will make distributions no less frequently then every approximately ninety days thereafter provided there are sufficient funds (i.e., in excess of $10,000) available for distribution. Class 3 under the Plan consists of the general unsecured claim of insider Robert Scullin. If Scullin votes to accept the Plan, the Debtor will stipulate as part of Plan confirmation that Scullin will be deemed to have an allowed class 3 claim in the amount of $1,888,661 plus costs and reasonable attorneys' fees, and the Debtor's estate will provide Scullin with a full and complete release. If this occurs, Scullin will share pro rata in the Estate Funds and any Estate Recoveries on account of this class 3 allowed claim, and any other Trust Property, and the Debtor will dismiss its pending appeal of the Scullin Judgment. Class 4 under this Plan consists of the general unsecured claims of insiders Michael Zugsmith and Rachel Howitt. Zugsmith and Howitt have voluntarily agreed to waive their class 4 claims in their entirety and not receive any portion of the Estate Funds and Estate Recoveries, or any other Trust Property, if the Liquidating Trustee provides them with a full and complete release within three months following the Effective Date and provided that no party has filed or files an objection to their class 4 claims during the interim and the Liquidating Trustee has not filed any lawsuit against them. Class 5 under this Plan consists of all equity interests in the Debtor. Class 5 interest holders will not receive any distribution under this Plan. The Plan will be funded by the following: (1) all of the Debtor’s cash remaining on the Effective Date + (2) the $750,000 Initial Cash Component to be paid by the Merger Partner to the Debtor’s bankruptcy estate on the Effective Date + (3) all revenue received from all of the Debtor’s Pending Transactions existing on the Effective Date after all related commissions owing to the Brokers are paid + (4) all revenue received from the Merger Partner Promissory Note. In addition to the Estate Funds, creditors will receive the net benefit, if any, from the Trust’s pursuit of any causes of action that currently belong to the Debtor’s bankruptcy estate and will be transferred and assigned to the Trust on the Effective Date. A full-text copy of the Plan of Reorganization dated June 2, 2020, is available at https://tinyurl.com/y737tqny from PacerMonitor at no charge. The Debtor is represented by: RON BENDER TODD M. ARNOLD LINDSEY L. SMITH LEVENE, NEALE, BENDER, YOO & BRILL L.L.P. 10250 Constellation Blvd., Suite 1700 Los Angeles, CA 90067 Tel: (310) 229-1234 Fax: (310) 229-1244 E-mail: rb@lnbyb.com tma@lnbyb.com lls@lnbyb.com About NAI Capital NAI Capital, Inc. is a commercial real estate and property management company based in Encino, California. It specializes in the leasing and sale of office, the sale of investments, land and residential income, tenant representation, and corporate services. The Company was founded in 1979. NAI Capital, Inc., based in Encino, CA, filed a Chapter 11 petition (Bankr. C.D. Cal. Case No. 20-10256) on Jan. 31, 2020. In the petition signed by Chris Jackson, executive managing director and authorized agent, the Debtor was estimated to have up to $1 million to $10 million in both assets and liabilities. Judge Deborah J. Saltzman oversees the case. Debtor employed Levene Neale Bender, Yoo & Brill LLP as bankruptcy counsel; McGarrigle Kenney & Zampiello, APC as special litigation and corporate counsel; and Leitner, Zander & Co., LLP as accountant. The Office of the U.S. Trustee appointed a committee to represent unsecured creditors on March 12, 2020. The committee is represented by David B. Shemano, Esq., at Shemanolaw. NEOVIA LOGISTICS: Moody's Cuts CFR to Caa2 & Term Loan to Caa1 -------------------------------------------------------------- Moody's Investors Service downgraded the ratings of Neovia Logistics, LP, including Corporate Family Rating and Probability of Default Rating to Caa2 and Caa2-PD, from Caa1 and Caa1-PD, respectively; and first lien senior secured term loan to Caa1 from B3. The outlook is stable. This action concludes the review for downgrade initiated on March 26, 2020. Ratings Downgraded: Issuer: Neovia Logistics, LP Corporate Family Rating, at Caa2, from Caa1 Probability of Default Rating, at Caa2-PD, from Caa1-PD Senior Secured Bank Credit Facility, at Caa1 (LGD3), from B3 (LGD3) Outlook Actions: Issuer: Neovia Logistics, LP Outlook, Changed to Stable from Rating Under Review RATINGS RATIONALE Neovia's ratings incorporate Moody's expectation of negative free cash flow generation through 2020 balanced with a good competitive position supported by long-term customer relationships, multi-year customer contracts, and fixed/variable or cost-plus customer contract arrangements. About 45% of revenues are driven from the automotive aftermarkets with the remainder of the business in broader consumer and industrial markets. Yet, Moody's expects the negative macroeconomic impact from coronavirus pandemic will result in reduced volumes in all of Neovia's end markets. Neovia's debt/EBITDA of 6.3x at March 31, 2020, while modest for the rating, is expected to deteriorate over the coming quarters. With Moody's expectation of negative free cash flow through 2020, debt/EBITDA is expected remain elevated into to 2021. The stable outlook reflects Neovia's adequate liquidity profile which expected to support operating flexibility as the company's debt/EBITDA leverage will be elevated into 2021 along with the modest negative free cash flow for into 2021. Neovia has adequate liquidity profile into 2021 supported by cash and availability under the $75 million super-senior secured revolving credit facility that matures in February 2024. Cash at March 31, 2020 was about $47 million. Availability under the revolving credit facility was about $55 million after approximately $20 million of borrowings. Moody's believes Neovia will generate negative free cash flow in the $20 million range in 2020, before the potential of addition management actions to preserve cash. As such, Moody's expects Neovia to be moderately reliant on the revolving credit facility through 2020. The financial maintenance covenant under the revolving credit facility is a springing first lien net leverage ratio test under which the covenant cushion should be sufficient through 2020. External liquidity is also supplemented by a $65 million accounts receivable facility which matures in October 2022. There is also a €45 million revolving facility in an unrestricted subsidiary to support working capital needs for the Schaeffler contract. Environmental risks to Neovia are moderate, as its modest asset base limits direct exposure to risks related to carbon and air pollution. However, revenue generation depends in part on trucking or transportation companies, which are exposed to more stringent emission regulations and therefore may have an indirect but negative impact on Neovia. Neovia's corporate governance policies are developing following the company's capital restructuring in 2019. Moody's believes that private equity ownership has a high tolerance for leverage. Debt/EBITDA leverage remains high and any further reduction will be challenged by the impact of the coronavirus pandemic. The company's debt reduction in 2019 and recapitalization was favorably supported by a meaningful preferred equity contribution of about $168 million. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The rating could be downgraded if Debt-to-EBITDA is expected to be sustained above 7.0x through the second half of 2021 or expectation of a weakening liquidity profile. The inability to win meaningful levels of new business or a deterioration in liquidity could also lead to the ratings being downgraded. The rating could be upgraded predicated on improved liquidity involving expectations of consistently positive free cash generation along with an adequate liquidity. Expectations of a prudent financial policy with debt-to-EBITDA expected to be maintained below 6.0x, along with improved quality of earnings and strong operating performance with EBITDA margins consistently in the high teens would be important factors for an upgrade. The principal methodology used in these ratings was Surface Transportation and Logistics published in May 2019. Neovia Logistics, LP, is a global provider of logistics services. The company offers integrated supply chain solutions to its clients, primarily in the automotive, industrial and aerospace service parts, as well as retail, fulfillment and inbound to manufacturing logistics. The company is owned by affiliates of Goldman Sachs & Co. and Rhone Capital L.L.C. Revenues for the LTM period ending March 31, 2020 were $796 million. NEW WAY TRANSPORT: Unsec. Creditors to Receive $25,000 over 5 Years ------------------------------------------------------------------- Debtor New Way Transport, Inc., filed the second amended disclosure statement describing its plan of reorganization dated June 4, 2020. Class 8 consists of the Allowed Unsecured Claims against the Debtor. The total amount of Allowed Unsecured Claims against the Debtor is $77,006. In full satisfaction of the Class 8 Allowed Unsecured Claims, the total sum of $25,000 will be paid to the Holders of Class 8 Allowed Unsecured Claims on a Pro Rata basis. Payments shall be made in 20 equal quarterly installments over a period of 60 months. The first payment will be due on the 60th day following the Effective Date and will continue every three months thereafter. Class 8 is Impaired. Class 9 consists of Equity Interests. On the Effective Date, the Debtor will cancel all existing stock held by any and all shareholders, and issue 50% of the new stock to Gilberto Cardona Homs and the remaining 50% of the new stock to Ivonne Muñoz. The holders of any equity interests will receive no distribution under the Plan on account of such equity interests. Class 9 is Impaired. A full-text copy of the Second Amended Disclosure Statement dated June 4, 2020, is available at https://tinyurl.com/yctnrv24 from PacerMonitor.com at no charge. The Debtor is represented by: ALDO G. BARTOLONE, JR. BARTOLONE LAW, PLLC 1030 N. Orange Ave., Suite 300 Orlando, Florida 32801 Telephone: 407-294-4440 Facsimile: 407-287-5544 E-mail: aldo@bartolonelaw.com About New Way Transport New Way Transport, Inc., sought protection under Chapter 11 of the Bankruptcy Code (Bankr. M.D. Fla. Case No. 19-03707) on June 5, 2019. At the time of the filing, the Debtor was estimated to have assets of less than $50,000 and liabilities of less than $1 million. The case is assigned to Judge Cynthia C. Jackson. Bartolone Law, PLLC, is the Debtor's bankruptcy counsel. O'LOUGHLIN LTD: June 30 Plan Confirmation Hearing Set ----------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Ohio, Western Division, held a hearing to consider entry of an order approving the adequacy of the Disclosure Statement of Debtor O'Loughlin, Ltd. On May 29, 2020, Judge John P. Gustafson ordered that: * The Disclosure Statement, and as revised, is approved as providing Holders of Claims and Interests entitled to vote on the Plan with adequate information to make an informed decision as to whether to vote to accept or reject the Plan in accordance with the Bankruptcy Code. * June 22, 2020 at 4:00 p.m. is the deadline for Voting and Receipt of Ballots. * June 22, 2020 at 4:00 p.m. is the deadline for filing objections to Plan. * June 26, 2020 at 4:00 p.m. is the deadline for Debtor to reply to any objections to Plan Confirmation. * June 30, 2020 at 2:00 p.m., Courtroom No. 1, Room 119, United States Courthouse, 1716 Spielbusch Avenue, Toledo, Ohio is the hearing for the confirmation of the Plan. A copy of the order dated May 29, 2020, is available at https://tinyurl.com/ydaxexed from PacerMonitor at no charge. About O'Loughlin Ltd. O'Loughlin Ltd. is a privately held company whose principal assets are located at 2130 Collinway Ottawa Hills, Ohio. O'Loughlin sought protection under Chapter 11 of the Bankruptcy Code (Bankr. N.D. Ohio Case No. 19-31036) on April 8, 2019. At the time of the filing, the Debtor was estimated to have assets of less than $1 million and liabilities of $1 million to $10 million. The case is assigned to Judge John P. Gustafson. Diller and Rice, LLC, is the Debtor's legal counsel. OCCIDENTAL PETROLEUM: Fitch Hikes LT IDR to BB, Outlook Stable -------------------------------------------------------------- Fitch Ratings has upgraded the Long-Term Issuer Default Rating of Occidental Petroleum Corp. to 'BB' from 'BB-', upgraded its senior unsecured notes and revolver to 'BB'/'RR4' from 'BB-'/'RR4' and assigned a 'BB'/'RR4' rating to OXY's new senior unsecured notes. Proceeds from the notes are expected to be earmarked for repayment of near-term maturities, as well as general corporate purposes. Fitch has also withdrawn OXY's short-term IDR and CP ratings at 'B', removed the Rating Watch Negative and assigned a Stable Outlook. The main driver for the upgrade and revised Outlook is the company's unsecured notes issuance, which Fitch anticipates will help bridge OXY's large maturity wall in the absence of material near-term asset sales. Demonstrated capital market access also reduces future event risk around possible liability management exercises, and may also create uplift in the company's de-leveraging program. The ratings were withdrawn with the following reason Bonds Were Prefunded/Called/Redeemed/Exchanged/Cancelled/Repaid Early KEY RATING DRIVERS Issuance Helps Bridge Maturity Wall: The senior unsecured notes issuance helps bridge OXY's large maturity wall in the absence of near-term asset sales. While OXY's maturity wall remains a source of differentiated risk among peers, the current issuance lowers event risk around possible liability management exercises in the future. Fitch expects the combination of bond proceeds, FCF and revolver availability should be sufficient to get the company past its near-term maturities. Demonstrated market access may also create flexibility around the timing of asset sales, and could benefit the perceived value of the company's publicly traded WES units, which have more than tripled from lows earlier this year. Should the unsecured bond market close to OXY in the future due to another sustained oil price crash (after a second wave of coronavirus infections), the company maintains the flexibility to issue secured or guaranteed debt under existing indentures. Limited Traction on Asset Sales: OXY continues to see limited traction on asset sales. To date, the company sold $5.5 billion in assets to pay down debt. OXY's original target of over $15 billion in asset sales 12-24 months after closing is unlikely, although the modest rebound in oil pricing and fundamentals seen since the spring could still accelerate a portion of sales. Several of the company's assets are less correlated to oil, including the Anadarko Petroleum Corporation legacy land grant position, comprising 5 million acres across Wyoming, Utah and Colorado and consisting of 1 million surface acres and rights to 4 million subsurface acres, and other assets. High Maturity Wall: OXY's near-term maturity wall is high, with $7.4 billion due in 2021, $4.6 billion in 2022 and another $1.2 billion in 2023. A significant portion of 2021 maturities, totaling $2.43 billion, are due in 1Q21, less than one year away. The $7.4 billion includes $992 million in 2036 zero-coupon notes (legacy Anadarko notes), as it has recently been economic for noteholders to put those notes back to the company. The put feature in the notes is annual, with the next put date October 2020. Low Prices Increase Near-Term Leverage: In response to demand reductions associated with coronavirus-related shutdowns, Fitch lowered its base case WTI oil price deck to $32/barrel in 2020 and $42/barrel in 2021, before flipping back to $50/barrel in 2022 and $52/barrel in 2023. Lower oil prices, in conjunction with lower expected asset sales, resulted in elevated near-term leverage for OXY. For purposes of calculating leverage, Fitch assigns 50% equity credit for the $10 billion in Berkshire Hathaway 8% cumulative perpetual preferred stock based on the structural features of the notes as analyzed under Fitch's "Corporate Hybrids Treatment and Notching Criteria." Organic Measures to Defend Credit: In response to the collapse in oil prices, OXY announced the following credit defensive measures: the near-elimination of its dividend (cut to $0.01/share), which will reduce dividend payments by $2.7 billion on a run rate basis; multiple reductions in 2020 capex, including the most recent cuts to the $2.4 billion-$2.6 billion level; relief on cash payments for the company's $10 billion Berkshire preferred notes; and early achievement of increased overhead and opex synergy targets. In the near term, FCF is also helped by OXY's 2020 hedge position of approximately 350,000bpd of oil with a three-way collar, with realized prices equal to Brent plus $10 at $45 or lower. Fitch believes the company could shrink capex to enhance FCF further should it choose this route. Deal Should Strengthen Long-Term Profile: To the degree the company overcomes its financing issues, Fitch believes the Anadarko acquisition will ultimately strengthen OXY's business and operational profile over the longer term, assuming a recovery in oil prices. OXY's post-acquisition size has more than doubled to just under 1.4 million boepd and, on a pro forma basis, par with ConocoPhillips (A/Stable). Oxy is the largest producer in the Permian and DJ basins, and a top producer in the Gulf of Mexico. The ability to deploy OXY's technological, subsurface and operational expertise to Anadarko's holdings (particularly in the Permian) is expected to create significant value in a more normalized oil price environment by lowering unit costs. Integrated Producer: OXY enjoys modest but meaningful integration benefits through its chemicals segment, which has a top-three position in most basic chemicals it produces in North America, including chlorine, vinyl, PVC and caustic soda, and through its midstream segment, including gas processing plants, pipelines, CO2 infrastructure, storage, power generation and gas marketing businesses. Chemicals in particular historically contribute strong FCF given their limited reinvestment needs, which the company has been able to redeploy elsewhere. Diversification from non-E&P businesses has dropped on a percentage basis following the Anadarko acquisition but remains a source of differentiation from other credits. DERIVATION SUMMARY Rating Derivation versus Peers: OXY's credit profile is mixed. OXY's rating is currently dominated by refinancing concerns given the looming maturity wall and difficulty in meeting its maturity schedule with organic cash flows even as the market for energy assets remains hobbled by high volatility. At the same time, the company has several long-term characteristics of a high-grade credit. In terms of size and scale, at just under 1.4 million boepd, it is among the largest independents, in line with ConocoPhillips, and is significantly larger than E&Ps such as Devon Energy Corporation (BBB/Stable), Apache Corporation (BB+/Stable) and Marathon Oil Corporation (BBB/Negative). Upstream diversification is also above-average, given OXY's number-one position in the Permian and the DJ, number-four position in the GOM, and upstream diversification in Middle Eastern countries, which remains a differentiating factor versus peers. Integration with chemicals and midstream also sets OXY apart from peers. No Country Ceiling, operating environment or parent-subsidiary-linkages affect the rating. KEY ASSUMPTIONS -- Base Case WTI oil price of $32/barrel in 2020, $42/barrel in 2021, $50/barrel in 2022 and $52/barrel in 2023 and the long term; -- Henry Hub natural gas prices of $1.85/mcf in 2020 and $2.45/mcf across the forecast; -- Capex of $2.6 billion in 2020, $5.1 billion in 2021, $5.9 billion in 2022 and $6.7 billion in 2023; -- 90% of 2036 zero-coupon bonds assumed put to the company in October 2020; -- $300 million in asset sales in 2020 and $2.2 billion in 2021, with proceeds applied to debt paydown; -- Dividends of $1.6 billion in 2020, falling to de minimis levels in 2021, before rising in line with a rising price deck. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade: -- Sustained recovery in oil prices; -- Additional progress in redeeming or refinancing the company's near-term maturity wall; -- Mid-cycle debt/EBITDA leverage at or below 3.5x; -- Mid-cycle FFO lease-adjusted leverage at or below 3.7x; Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade: -- Further sustained leg down in oil prices; -- Excess reliance on revolver for refinancing of maturity wall, especially if done without announced asset sales; -- Impairments to liquidity; -- Mid-cycle debt/EBITDA leverage above 3.7x; -- Mid-cycle FFO lease-adjusted leverage above 4.0x. 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 Tight Liquidity: Liquidity is limited in the context of low oil prices, limited asset sales and a large maturity wall. Cash on hand at March 31, 2020 was $2.01 billion (excluding $242 million in restricted cash), and there was no draw on the company's committed $5.0 billion senior unsecured revolver (maturing January 2023) for total liquidity of $7.01 billion. The company has maturities of up to $992 million in October 2020, $6.4 billion in 2021, $4.7 billion in 2022 and an additional $1.2 billion due 2023. 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). Occidental Petroleum Corp. - LT IDR BB; Upgrade - ST IDR WD; Withdrawn - Senior unsecured; LT BB; New Rating - Senior unsecured; LT BB; Upgrade - Senior unsecured; ST WD; Withdrawn OCCIDENTAL PETROLEUM: Moody's Cuts CFR & Sr. Unsec. Rating to Ba2 ----------------------------------------------------------------- Moody's Investors Service downgraded Occidental Petroleum Corporation's Corporate Family Rating to Ba2 from Ba1, its Probability of Default Rating to Ba2-PD from Ba1-PD, its senior unsecured notes rating to Ba2 from Ba1 and its senior unsecured shelf rating to (P)Ba2 from (P)Ba1. Moody's has also assigned a Ba2 rating to OXY's proposed new issuance of senior unsecured notes. Its commercial paper program rating was confirmed at Not Prime. The Speculative Grade Liquidity rating is unchanged at SGL-3. The outlook is negative. This rating action concludes the review initiated on March 18, 2020 following OXY's downgrade to Ba1 The Ba2 rating assigned to OXY's proposed unsecured notes issue is the same as OXY's Ba2 CFR, reflecting the company's unsecured capital structure. "Occidental Petroleum's August 2019 acquisition of Anadarko Petroleum Corporation continues to burden the company's balance sheet with over $35 billion of debt and $10 billion of preferred stock, compromising its financial flexibility to confront the collapse in oil prices," commented Andrew Brooks, Moody's Vice President. "While OXY has made substantial progress capturing acquisition synergies, and is itself a low-cost operator with attractive Permian Basin acreage, asset sales initially projected to raise cash for debt reduction have been insufficient to meaningfully address sizable upcoming debt maturities, leaving OXY with a significantly weakened credit profile whose prospects for near-term improvement remain uncertain." Downgrades: Issuer: Maryland Industrial Development Financ. Auth. Senior Unsecured Revenue Bonds, Downgraded to Ba2 from Ba1 Issuer: Occidental Petroleum Corporation Probability of Default Rating, Downgraded to Ba2-PD from Ba1-PD Corporate Family Rating, Downgraded to Ba2 from Ba1 Senior Unsecured Shelf, Downgraded to (P)Ba2 from (P)Ba1 Senior Unsecured Medium-Term Note Program, Downgraded to (P)Ba2 from (P)Ba1 Senior Unsecured Notes, Downgraded to Ba2 (LGD4) from Ba1 Assignments: Issuer: Occidental Petroleum Corporation Senior Unsecured Notes, Assigned Ba2 (LGD4) Confirmations: Issuer: Maryland Industrial Development Financ. Auth. Senior Unsecured Revenue Bonds, Confirmed at S.G. Issuer: Occidental Petroleum Corporation Commercial Paper (Local Currency), Confirmed at NP Outlook Actions: Issuer: Occidental Petroleum Corporation Outlook, Changed to Negative from Rating Under Review RATINGS RATIONALE While OXY's acquisition of Anadarko afforded it strategic and cost benefits, it came at an excessive price which was largely debt-financed, and at the very high cost of a significantly eroded credit profile. The addition of Anadarko's sizable position in the Delaware Basin added meaningful production and proved reserves to OXY's core Permian Basin asset, with further development opportunities across an enlarged asset footprint. However, the full value of this significant acquisition has been compromised by 2020's collapse in crude oil prices. The value accorded OXY's $100 billion asset base, its operating footprint that extends beyond North America and considerable EBITDA generated from non-E&P assets has been compromised by the drop in commodity prices and global demand stress. The stress imposed on OXY's credit metrics by approximately $40 billion of acquisition-related debt (OXY's September new issue notes and term loan, Anadarko's legacy debt which was exchanged into new OXY debt, proportionately consolidated Western Midstream debt and $10 billion preferred) has materially weakened OXY's leverage metrics. The challenges posed by its over-levered balance sheet have been further exacerbated by the sharp drop in crude oil prices and commensurate reduction in cash flow. OXY has reacted to the currently challenged oil price environment with several recent defensive measures including the virtual elimination of its cash dividend, a reduction in 2020's capital spending of over 50%, operating cost reductions and the payment of its preferred stock dividend in OXY common shares, which together will reduce its annual cash outflow by almost $8 billion. However, without significant and immediate debt reduction beyond the $7 billion achieved in the latter half of 2019, on a run-rate basis Moody's estimates that OXY's retained cash flow to debt metric will remain well under 15% and E&P debt on production over $30,000 per barrel of oil equivalent, both measures weak for the company's rating. The rapid and widening spread of the coronavirus outbreak, deteriorating global economic outlook, weak energy 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 oil and gas 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 OXY's credit profile has left it exposed to shifts in market sentiment in these unprecedented operating conditions and OXY 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 OXY of the breadth and severity of the shock, and the broad deterioration in credit quality it has triggered. From a governance perspective, the composition of OXY's 11-member Board of Directors was materially reconstituted in 2020 with the addition of six new Board members including a new Chairman. Moody's understands that the Board is highly focused on restoring OXY's financial strength through debt reduction. The Board has also adopted certain corporate governance-enhancing amendments to its by-laws, and has created a new Oversight Committee that will work closely with company management to provide regular Board input. Moody's regards OXY's near-term liquidity as adequate, comprised of $1 billion of balance sheet cash as of April 30 and an undrawn $5 billion revolving credit facility having a January 2023 scheduled maturity date. The company should retain full access to its revolver, which does not have a MAC clause, nor stringent covenant limitations. Moreover, the dividend and capital spending cuts will relieve stress on cash flow, enabling OXY to operate in a modestly free cash flow mode. While Moody's expects that OXY will continue to prioritize debt reduction, that effort faces difficult headwinds. With the market for commodity-exposed and related asset sales compromised by weak commodity prices, OXY's weakened financial condition leaves the company with limited options for further debt reduction as it confronts sizable near-term debt maturities, which in the aggregate total $12.1 billion through 2022, including its zero coupon notes which are puttable for $992 million in October 2020. OXY intends to use proceeds from its proposed notes issue, limited asset sale proceeds and free cash flow to address near-term debt maturities of up to $7.4 billion into 2021. The outlook is negative reflecting the challenges OXY confronts as it addresses its over-levered balance sheet in a weak oil and gas market. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Prospects for a ratings upgrade over the near-term are limited by OXY's weak balance sheet. Debt reduction exceeding $10 billion, debt on production approaching $20,000 per Boe and RCF/debt over 25% could support a rating upgrade. An inability to maintain RCF/debt above 15% or a failure to achieve further debt reduction could lead to a rating downgrade, as would the resumption of a meaningful cash dividend or share buybacks. The principal methodology used in these ratings was Independent Exploration and Production Industry published in May 2017. Occidental Petroleum Corporation is a large, publicly traded independent exploration and production with operations focused in the Permian Basin, Colorado's DJ Basin, the Middle East in Oman, Qatar and the UAE, Algeria and Ghana, and Colombia. It also has significant Midstream and Chemicals businesses. The company is headquartered in Houston, Texas. ODYSSEY LOGISTICS: Moody's Cuts CFR to B3, Outlook Negative ----------------------------------------------------------- Moody's Investors Service downgraded the ratings of Odyssey Logistics & Technology Corporation, including Corporate Family Rating and Probability of Default Rating to B3 and B3-PD, from B2 and B2-PD, respectively; first lien senior secured to B2 from B1; and second lien senior secured to Caa2 from Caa1. The outlook is negative. This action concludes the review for downgrade initiated on March 26, 2020. Ratings Downgraded: Issuer: Odyssey Logistics & Technology Corporation Corporate Family Rating, to B3 from B2 Probability of Default Rating, to B3-PD from B2-PD Senior Secured 1st Lien Bank Credit Facility, to B2 (LGD3) from B1 (LGD3) Senior Secured 2nd Lien Bank Credit Facility, to Caa2 (LGD5) from Caa1 (LGD5) Outlook Actions: Issuer: Odyssey Logistics & Technology Corporation Outlook, Changed to Negative from Rating Under Review RATINGS RATIONALE Odyssey's ratings reflect weaker than expected operating performance in 2019 along with the expected recessionary impact from the coronavirus pandemic. Following the acquisition AFF Global Logistics in late 2018, Debt/EBITDA (after Moody's standard adjustments) was expected to reduce from a pro forma level of about 6x. However, Debt/EBITDA at December 31, 2019 was 6.6x, and further deteriorated to 7.6x as of March 31, 2020, due to the recessionary conditions. While profit should benefit from a cash funded acquisition in early 2020, leverage is expected to remain elevated into 2021. Moody's expects weak revenue growth and free cash flow generation in 2021 will remain below previous expectations. Odyssey's competitive position as a niche provider of intermodal and trucking services with technical and regulatory expertise is expected to continue balanced by a comparatively modest footprint, and cyclical end-markets. The company's management services business is expected to remain relatively stable (albeit with low margins) over the intermediate-term. Management has initiated cost saving actions including lay-offs, furloughs, salary cuts, capital expenditure reductions, and travel and marketing reductions have been initiated to enhance cash preservation. The negative outlook reflects Moody's expectation that Odyssey's weak free cash flow generation will continue into 2021 as a result of the recessionary impact from the coronavirus pandemic. As industry conditions gradually recover into 2021, Moody's expects free cash flow to remain weak as cost savings gradually reverse and working capital uses cash to support growth. As a result, the opportunity for meaningful debt reduction will be limited. Moody's expects Odyssey to maintain adequate liquidity into 2021 supported by cash of about $60 million as of March 31, 2020. The $60 million revolver had nominal availability after drawdowns to build cash. Moody's expects expect negative free cash flow in 2020 in the low double digit range before the impact of additional management actions. The facility contains a springing first lien net leverage ratio of 6.25x, that comes into effect if usage exceeds 35%, which is expected to be operational. As such, the covenant cushions are expected to come under pressure in the coming quarters. Odyssey has no significant near-term principal obligations and amortization on term debt is modest at $5 million per annum beginning in March 2021. Other alternative sources of liquidity are limited given the all-asset pledge to the company's various creditors. The environment and social risks are moderate for Odyssey, although Moody's notes the company's reliance on the transportation of chemicals for a portion of its business and the resultant risks of spillage and/or other incidents that could have a negative impact on the company. Odyssey is required to comply with a wide variety of regulations and environmental considerations as it relates to licenses, safety and security, and insurance requirements. Moody's also notes the risk that changes to future laws and regulations for the transportation of certain materials (e.g. chemicals) could adversely impact the company. With respect to governance, Moody's anticipates a developing financial policy in light of private-equity ownership (The Jordan Company) which may balance a high tolerance for leverage with the need for financial flexibility given current industry conditions. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The ratings could be upgraded if Debt-to-EBITDA (after Moody's standard adjustments) is expected to remain consistently below 4x. Any upgrade would be predicated on the maintenance of a good liquidity profile and strong operating performance across all segments. Given the company's modest scale, Moody's anticipates credit metrics that are stronger than levels typically associated with companies at the same rating level. The ratings could be downgraded if EBITA margins remain materially below 6% or if Moody's adjusted Debt-to-EBITDA is expected to remain above 7x through the back half of 2021. The ratings could be downgraded if the company pursues additional debt-financed acquisitions or shareholder distributions. The principal methodology used in these ratings was Surface Transportation and Logistics published in May 2019. Odyssey Logistics & Technology Corporation, headquartered in Danbury, Connecticut, is a global logistics solutions provider offering intermodal services, trucking services, managed services, domestic and international ocean freight forwarding, as well as international transportation management and consulting. Odyssey operates in multiple modes of transport with TL/LTL trucking, containership, freight forwarding, rail, air and bulk transport including bulk truck, ISO Tank, railcar and tanker, as well as food-grade product lines. Revenue for LTM period ending March 31, 2020 was approximately $916 million. OMNI BAY COLONY: Unsecureds to Get Full Payment With 3% Interest ---------------------------------------------------------------- Debtor Omni Bay Colony L.P., a Texas limited partnership, filed with the U.S. Bankruptcy Court for the Western District of Texas, Austin Division, a Plan of Reorganization and a Disclosure Statement on June 2, 2020. The Debtor plans to satisfy all creditors from the sale or disposition of the Property. The Debtor plans to sell the Property at a price sufficient to pay all allowed claims in full. If the Debtor is unable pay the allowed claims of the secured creditor in full within 12 months of the effective date of the Plan to, the secured creditor can elect to take title to so much of the property to pay their allowed claims in full, at a value to be determined by the Bankruptcy Court, if the parties cannot agree. The Debtor will continue its current active marketing approach to sell the Property. The Debtor will be flexible in considering options to sell the Property, in whole or in separate tracts. Prior to engaging the Real Estate Broker, the Debtor received a broker's Price Opinion (BPO) based upon currently marketed properties in the area surrounding the Flying Dollar Ranch. The BPO came back with a valuation of the ranch at approximately $6,138,000, for a per acre price of $5,995. Promptly after the Court approved the retention of the Real Estate Broker, a professional photographer went on site to capture the breadth, diversity, and attractive landscape of the Property. Class 4 Allowed Unsecured Claims will be paid in full with interest at 3% per annum upon the sale of the Property after payment of Allowed Claims in Classes 1 through 5. Class 5 Allowed Equity Interests in the Debtor. The equity interest holder, Gregory Hall, will retain his interest. The Plan requires Debtor to sell the Property or convey property to the Secured Creditor having a value equal to their Allowed Claim. Based upon the fair market valuations of the property and Debtor's substantial equity in the Property, Debtor is confident that it will be able to close a sale for the property, or a portion of the property, sufficient to pay all creditors in full; but if it is unable to do so, the Secured Creditor will be paid their Allowed Claim in full by a conveyance of property to them equal to their Allowed Claim. There is a risk to creditors that the value of the property will decline. However, the loan to value ratio of the Secured Claim ranges from 30% to 55%, based upon the BPO or Agrow's 2019 appraisal. The Debtor does not believe that there is any material risk that the property value will decline by 45% to 70%. A full-text copy of the Disclosure Statement dated June 2, 2020, is available at https://tinyurl.com/y864trca from PacerMonitor at no charge. The Debtor is represented by: Todd Headden HAJJAR PETERS LLP 3144 Bee Caves Rd Austin, Texas 78746 Tel: (512) 637-4956 Fax: (512) 637-4958 E-mail: theadden@legalstrategy.com About Omni Bay Colony Omni Bay Colony, L.P., is a single asset real estate debtor (as defined in 11 U.S.C. Section 101(51B)). Omni Bay Colony sought protection under Chapter 11 of the Bankruptcy Code (Bankr. W.D. Tex. Case No. 20-10178) on Feb. 3, 2020. At the time of the filing, the Debtor was estimated to have assets of between $1 million and $10 million and liabilities of the same range. Judge Christopher H. Mott oversees the case. Ron Satija, Esq., at Hajjar Peters, LLP, is the Debtor's legal counsel. OMNIQ CORP: Gets $5.5M Orders for Mobile Data Collection Equipment ------------------------------------------------------------------ OMNIQ Corp. has received purchase orders during the month of June with a total value of approximately $5.5 million from one of the largest U.S. supermarket chains. The orders are for the supply of mobile data collection, computing and communications equipment. OMNIQ is providing a suite of solutions that enable a more "contactless" approach to the customer's retail and logistics operations. The hardware OMNIQ is providing, which includes rugged handheld mobile computers and barcode printers, is designed to enhance the productivity of the retail workforce by providing the ability to collect and track data using integrated features through handheld devices, with the fastest and most dependable wireless connection inside and outside four walls. The industrial-designed device improves efficiencies by enabling quick and accurate control of data collection, processing, shipping/receiving and inventory management. Shai Lustgarten, president and CEO of OMNIQ, stated, "We have consistently demonstrated our value as a source of new technologies and hardware that enable our customers to operate at the highest levels of safety and efficiency. We're pleased to continue to build upon our partnership with this valued customer, one of the largest retail corporations in the U.S., as they significantly upgrade and improve the efficiency of their operations. Our solutions embody next generation enterprise technology that's as easy to use as a smartphone, with the durability to perform well in warehouses and other industrial settings, while driving employee productivity and keeping data secure. "If we've learned anything from the COVID-19 virus, it's the importance of hands-free, automated solutions to protect employees as well as end customers. Particularly in the retail grocery industry, the less hand-to-hand transfer of items such as produce from warehouse to point of sale, the safer everyone in the supply chain will be, and our products and solutions heighten the capability of 'touch free' supply chain management. We look forward to working with existing and new customers as they rethink their logistics and supply chain operations with an eye to more 'contactless' interactions. We believe our proprietary AI-based solutions are well positioned to contribute significant value to the Supply Chain as well as to the Smart City, Public Safety and Traffic Control verticals as logistics and supply chain operations continue to evolve to a more touchless approach." About OMNIQ Corp. Headquartered in Salt Lake City, Utah, OMNIQ Corp. (OTCQB: OMQS) -- http://www.omniq.com/-- provides computerized and machine vision image processing solutions that use patented and proprietary AI technology to deliver data collection, real time surveillance and monitoring for supply chain management, homeland security, public safety, traffic & parking management and access control applications. The technology and services provided by the Company help clients move people, assets and data safely and securely through airports, warehouses, schools, national borders, and many other applications and environments. Omniq reported a net loss attributable to common stockholders of $5.31 million for the year ended Dec. 31, 2019, compared to a net loss attributable to common stockholders of $5.41 million for the year ended Dec. 31, 2018. As of March 31, 2020, the Company had $42.60 million in total assets, $42.76 million in total liabilities, and a total stockholders' deficit of $156,000. Haynie & Company, in Salt Lake City, Utah, the Company's auditor since 2019, issued a "going concern" qualification in its report dated March 30, 2020, citing that the Company has a deficit in stockholders' equity, and has sustained recurring losses from operations. This raises substantial doubt about the Company's ability to continue as a going concern. OUTLOOK THERAPEUTICS: Adds New Member to Board of Directors ----------------------------------------------------------- Upon the recommendation of its Nominating and Corporate Governance Committee, the Board of Directors of Outlook Therapeutics, Inc. increased the size of the Board from seven to eight members, and effective June 19, 2020, appointed Andong Huang to fill the newly created vacancy, with Mr. Huang to serve on the Board as a Class II director until the Company's 2021 annual meeting of stockholders, until his successor has been duly elected and qualified, or until his earlier death, resignation or removal. Mr. Huang was designated by Syntone Ventures LLC pursuant to the Stock Purchase Agreement by and between the Company and Syntone Ventures LLC, dated May 22, 2020, the terms of which are described in the Company's Current Report on Form 8-K filed on May 28, 2020. Mr. Huang is the vice president, Business Development of Syntone Technologies Co. Ltd., an affiliate of Syntone Ventures LLC. Mr. Huang will receive compensation as a non-employee director in accordance with the Company's non-employee director compensation policy that took effect on Oct. 1, 2019, as described in the Company's definitive proxy statement for the 2020 Annual Meeting of Stockholders, filed with the Securities and Exchange Commission on Feb. 14, 2020. Pursuant to the automatic grant program under such policy, Mr. Huang was granted an option to purchase 25,000 shares of the Company's common stock under the Company's 2015 Equity Incentive Plan, which vests annually over three-years, subject to Mr. Huang's continuous service through the applicable vesting dates, and acceleration in the event of a change of control as defined in the plan. Such option grants have an exercise price of $1.35 per share (the closing sales price of the Company's common stock on June 19, 2020 as reported on The Nasdaq Capital Market) and a term of 10 years, subject to earlier termination for cessation of continuous service. In connection with the aforementioned appointments to the Board, the Company entered into its standard indemnification agreement with Mr. Huang, which requires the Company, under the circumstances and to the extent provided for therein, to indemnify the indemnitee to the fullest extent permitted by applicable law against certain expenses and other amounts incurred by him as a result of either of him being made a party to certain actions, suits, investigations and other proceedings. About Outlook Therapeutics Outlook Therapeutics, Inc., formerly known as Oncobiologics, Inc. -- http://www.outlooktherapeutics.com/-- is a late clinical-stage biopharmaceutical company working to develop the first FDA-approved ophthalmic formulation of bevacizumab for use in retinal indications, including wet AMD, DME and BRVO. If ONS-5010, its investigational ophthalmic formulation of bevacizumab, is approved, Outlook Therapeutics expects to commercialize it as the first and only on-label approved ophthalmic formulation of bevacizumab for use in treating retinal diseases in the United States, Europe, Japan and other markets. Outlook Therapeutics reported a net loss attributable to common stockholders of $36.04 million for the year ended Sept. 30, 2019, compared to a net loss attributable to common stockholders of $48.02 million for the year ended Sept. 30, 2018. As of March 31, 2020, the Company had $13.17 million in total assets, $33.69 million in total liabilities, and a total stockholders' deficit of $20.52 million. KPMG LLP, in Philadelphia, Pennsylvania, the Company's auditor since 2015, issued a "going concern" qualification in its report dated Dec. 19, 2019, on the consolidated financial statements for the year ended Sept. 30, 2019, citing that the Company has incurred recurring losses and negative cash flows from operations and has a stockholders' deficit of $16.1 million, $6.7 million of convertible senior secured notes that become due on Dec. 22, 2019, $3.6 million of unsecured indebtedness due on demand and $1.0 million of unsecured indebtedness also due on demand, but subject to a forbearance agreement through March 2020, that raise substantial doubt about its ability to continue as a going concern. OUTLOOK THERAPEUTICS: Expects to Raise $11.2M from Stock Sale ------------------------------------------------------------- Outlook Therapeutics, Inc., has entered into definitive agreements with several healthcare-focused institutional investors for the purchase and sale, in a registered direct offering priced at-the-market under Nasdaq rules, of 8,407,411 shares of its common stock, at a purchase price of $1.215 per share, for aggregate gross proceeds of approximately $10.2 million. H.C. Wainwright & Co. is acting as the exclusive placement agent. In addition, the Company has entered into a definitive agreement with Syntone Ventures, LLC for the purchase and sale, in a private placement priced at-the-market under Nasdaq rules, of 823,045 shares of its common stock at a purchase price of $1.215 per share, for aggregate gross proceeds of approximately $1.0 million. The closing of the sale of the shares of common stock in the registered direct offering is expected to occur on or about June 24, 2020, subject to the satisfaction of customary closing conditions. The closing of the sale of the shares of common stock in the private placement to Syntone is expected to occur on or about July 21, 2020, subject to the satisfaction of customary closing conditions. Outlook Therapeutics intends to use the net proceeds from the financings for working capital and general corporate purposes, including in support of its ONS-5010 development program. About Outlook Therapeutics Outlook Therapeutics, Inc., formerly known as Oncobiologics, Inc. -- http://www.outlooktherapeutics.com-- is a late clinical-stage biopharmaceutical company working to develop the first FDA-approved ophthalmic formulation of bevacizumab for use in retinal indications, including wet AMD, DME and BRVO. If ONS-5010, its investigational ophthalmic formulation of bevacizumab, is approved, Outlook Therapeutics expects to commercialize it as the first and only on-label approved ophthalmic formulation of bevacizumab for use in treating retinal diseases in the United States, Europe, Japan and other markets. Outlook Therapeutics reported a net loss attributable to common stockholders of $36.04 million for the year ended Sept. 30, 2019, compared to a net loss attributable to common stockholders of $48.02 million for the year ended Sept. 30, 2018. As of March 31, 2020, the Company had $13.17 million in total assets, $33.69 million in total liabilities, and a total stockholders' deficit of $20.52 million. KPMG LLP, in Philadelphia, Pennsylvania, the Company's auditor since 2015, issued a "going concern" qualification in its report dated Dec. 19, 2019, on the consolidated financial statements for the year ended Sept. 30, 2019, citing that the Company has incurred recurring losses and negative cash flows from operations and has a stockholders' deficit of $16.1 million, $6.7 million of convertible senior secured notes that become due on Dec. 22, 2019, $3.6 million of unsecured indebtedness due on demand and $1.0 million of unsecured indebtedness also due on demand, but subject to a forbearance agreement through March 2020, that raise substantial doubt about its ability to continue as a going concern. PACE INDUSTRIES: Joint Prepackaged Plan Confirmed by Judge ---------------------------------------------------------- Judge Mary F. Walrath has entered findings of fact, conclusions of law and order approving Disclosure Statement and confirming First Amended Joint Prepackaged Chapter 11 Plan for Pace Industries, LLC, and its Affiliated Debtors. The Plan has been proposed in good faith and not by any means forbidden by law. In so finding, the Court has considered the totality of the circumstances in the Chapter 11 cases. The Plan is the result of extensive, good faith, arm's-length negotiations among the Debtors and their principal creditor constituencies, reflects substantial input from such constituencies, and achieves the goal of reorganization embodied by the Bankruptcy Code. All documents necessary to implement the Plan and all other relevant and necessary documents have been negotiated in good faith and at arm's length and will, upon completion of documentation and execution, be valid, binding, and enforceable agreements and not in conflict with any federal or state law. Accordingly, the Plan satisfies the requirements of Section 1129(d) of the Bankruptcy Code. A copy of the order dated May 29, 2020, is available at https://tinyurl.com/ydfq7jqm from PacerMonitor at no charge. About Pace Industries Pace Industries, LLC -- http://www.paceind.com/-- is a full-service aluminum, zinc and magnesium die casting company. Headquartered in Fayetteville, Ark., Pace Industries offers end-to-end, nonferrous, die cast supply chain solutions, and a wide array of capabilities and services, including advanced engineering, tool and die fabrication, prototyping, precision machining, assembly, finishing and painting. Pace Industries and 10 affiliates sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D. Del. Lead Case No. 20-10927) on April 12, 2020. At the time of the filing, Debtors disclosed assets of between $100 million and $500 million and liabilities of the same range. Judge Mary F. Walrath oversees the cases. Debtors tapped Young Conaway Stargatt & Taylor, LLP and Willkie Farr & Gallagher, LLP as bankruptcy counsel; FTI Consulting, Inc., as financial advisor; Hughes Hubbard & Reed, LLP as special counsel; and Kurtzman Carson Consultants, LLC as claims, noticing and balloting agent. PRAYER TABERNACLE: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Prayer Tabernacle Church of Love, Inc. 729 Union Avenue Bridgeport, CT 06607 Business Description: Prayer Tabernacle Church of Love, Inc. is a not-for-profit religious institution organized and existing under the laws of the State of Connecticut. Chapter 11 Petition Date: June 26, 2020 Court: United States Bankruptcy Court District of Connecticut Case No.: 20-50605 Debtor's Counsel: Carl T. Gulliver, Esq. COAN, LEWENDON, GULLIVER & MILTENBERGER, LLC 495 Orange Street New Haven, CT 06511-3809 Tel: 203-624-4756 Email: cgulliver@coanlewendon.com Estimated Assets: $10 million to $50 million Estimated Liabilities: $0 to $50,000 The petition was signed by Kenneth H. Moales, Jr., pastor. A copy of the petition is available for free at PacerMonitor.com at: https://is.gd/mjQbiL List of Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ 1. All American Waste LLC $5,000 Attn: Managing Member 15 Mullen Road Enfield, CT 06082 2. Andrew Cayo, Esq. Possible $1 84 Park Place West Attorney Fees 3rd Flr Stamford, CT 06901 3. Aquarion Water Company $5,134 Att: Pres. or Other Officer 200 Monroe Turnpike Monroe, CT 06468 4. Cream Enterprises LLC $83,517 Att: Managing Member 851 Central Avenue Bridgeport, CT 0660 5. Dennis A. Bradley, Esq. Possible $1 Bradley Law Group, LLC Attorney Fees 853 Fairfield Avenue Bridgeport, CT 06605 6. Greater Mount Cavalry $39,850 Holy Church Attn: Pastor 610 Rhode Island Ave NE Washington, DC 20002 7. Green and Gross, P.C. $64,734 Att: Managing Partner 1087 Broad Street Ste 401 Bridgeport, CT 06604-4231 8. Hartford Sprinkler Company $23,590 Attn: Pres. or Other Officer 4 Britton Drive Bloomfield, CT 06002 9. iWire $8,150 Attn: Pres. or Other Officer Bridgeport, CT 06605 10. John R. Williams, Esq. Possible $1 51 Elm Street Ste 409 Attorney Fees New Haven, CT 06510 11. Kenya Moales-Byrd $18,490 49 Elmwood Place Bridgeport, CT 06607 12. Kindom's Little One $10,580 Attn: Pres. or Other Officer 1277 Stratford Avenue Bridgeport, CT 06607 13. Love Fellowship Church $608,000 Attn: Pastor 464 Liberty Avenue Brooklyn, NY 11207-3102 14. Moales Estates $813,000 Attn: Pres. or Other Officer 49 Elmwood Place Bridgeport, CT 06607 15. Moales Estates $101,213 Attn: Pres. or Other Officer 49 Elmwood Place Bridgeport, CT 0660 16. People's United Bank Business Line $7,645 Attn: Pres. or Other Officer of Credit 850 Main Street Bridgeport, CT 06604 17. Southern Connecticut Gas Co. $11,436 Attn: Pres. or Other Officer 60 Marsh Hill Road Orange, CT 06477 18. Theresa Arrington $31,590 69 Butler Avenue Bridgeport, CT 06607 19. Ultiplay Parks and Playgrounds Breach of $65,683 Attn: Pres. or Other Officer Contract 51 Carney Street Uxbridge, MA 01569-1808 20. United Illuminating $19,437 Attn: Pres. or Other Officer 180 Marsh Hill Road Orange, CT 06477 PREMIER DENTAL: Moody's Lowers CFR to Caa1, Outlook Stable ---------------------------------------------------------- Moody's Investors Service downgraded Premier Dental Services, Inc.'s Corporate Family Rating to Caa1 from B3, the Probability of Default Rating to Caa1-PD from B3-PD, and the senior secured bank credit facilities to Caa1 from B3. The outlook was revised to stable from rating under review. This concludes the review for downgrade that was initiated on March 27, 2020. The downgrade reflects Moody's view that Western Dental's liquidity has weakened due in a large part to volume declines related to the coronavirus pandemic despite reducing variable costs. The downgrade also reflects concerns regarding Western Dental's ability to fully recover patient volumes in the context of rising levels of unemployment. As such, Moody's expects that leverage will rise and remain elevated. The stable outlook reflects Moody's expectation that the company's volumes will begin to improve such that credit metrics will recover from current elevated levels. Downgrades: Premier Dental Services, Inc. Corporate Family Rating, Caa1, from B3, Previously on review for Downgrade Probability of Default Rating, Caa1-PD, from B3-PD, Previously on review for Downgrade Senior Secured Bank Credit Facilities, Caa1 (LGD 3), from B3 (LGD 3), Previously on review for Downgrade Outlook action: Outlook changed to stable from Rating Under Review RATINGS RATIONALE Premier Dental Services, Inc.'s (dba Western Dental) Caa1 Corporate Family Rating reflects the company's very high geographic concentration in California, with about 82% of revenue. The rating also reflects risks that bad debt expense related to Western Dental's captive financing program will rise as a result of rising unemployment levels. A significant portion of Western Dental's clients use financing to pay for dental services. Leverage is expected to remain high, at above 6.5 times for the next 12 months as a result of weaker operational performance resulting from volume declines experienced amidst the coronavirus pandemic. Despite these risks, the rating is supported by the company's established market position in California and its adequate liquidity. Western Dental has an adequate liquidity profile based on its moderate cash balances. Moody's expects free cash flow to be negative due to profitability declines resulting from the coronavirus partly offset by collections on outstanding receivables. However, rising unemployment may meaningfully impact the ability of many of Western Dental's customers to keep current on their payments. There are no near-term maturities with the term loan due in 2023. Moody's considers coronavirus to be a social risk given the risk to human health and safety. Aside from coronavirus, Western Dental faces other social risks such as the rising concerns around the access and affordability of healthcare services. However, Moody's does not consider the DSOs to face the same level of social risk as many other healthcare providers. Further, Moody's understands that many of Western Dental's patients are financed at very high interest rates, also raising longer-term social risk, given the growing focus on the affordability of healthcare. Moody's views aggressive collection of patient healthcare bills as a growing social risk to the healthcare industry. From a governance perspective, Moody's expects Western Dental's financial policies to remain aggressive due to its private equity ownership. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The ratings could be downgraded if Western Dental's liquidity weakens further or the probability of a default, including by way of a transaction that Moody's considered to be a distressed exchange, increases. The ratings could be upgraded if Western Dental operations recover such that debt to EBITDA falls below 6.5 times, while maintaining a good liquidity profile. Western Dental provides full service general, specialty and orthodontic dentistry services and is the largest provider of dentistry services in the State of California. The company directly employs the majority of its dentists. The company is owned by New Mountain Capital and generated revenues of around $845 million LTM March 31, 2020. The principal methodology used in these ratings was Business and Consumer Service Industry published in October 2016. PROFESSIONAL DIVERSITY: Removes Interim Tag from CEO He ------------------------------------------------------- The Board of Directors of Professional Diversity Network, Inc. appointed Mr. Xin (Adam) He, the interim chief executive officer and chief financial officer of the Company, to be the chief executive officer (and cease to be the chief financial officer) of the Company effective June 25, 2020. On June 25, 2020, the Board of Directors also appointed Charles O’Brien, the Company's Director of Finance, to be the chief financial officer of the Company on an interim basis effective immediately, subject to the finalization of an employment agreement mutually agreeable by the parties. About Professional Diversity Headquartered in Chicago, Illinois, Professional Diversity Network, Inc. -- https://www.prodivnet.com/ -- is a dynamic operator of professional networks with a focus on diversity. The Company uses the term "diversity" to describe communities, or "affinities," that are distinctly based on a wide array of criteria which may change from time to time, including ethnic, national, cultural, racial, religious or gender classification. It serves a variety of such communities, including Women, Hispanic-Americans, African-Americans, Asian-Americans, Disabled, Military Professionals, and Lesbian, Gay, Bisexual and Transgender. Its goal is (i) to assist its registered users and members in their efforts to connect with like-minded individuals, identify career opportunities within the network and (ii) connect members with prospective employers while helping the employers address their workforce diversity needs. Professional Diversity recorded a net loss of $3.84 million for the year ended Dec. 31, 2019, compared to a net loss of $15.08 million for the year ended Dec. 31, 2018. As of March 31, 2020, the Company had $6.78 million in total assets, $4.16 million in total liabilities, and $2.62 million in total stockholders' equity. Ciro E. Adams, CPA, LLC, in Wilmington, DE, the Company's auditor since 2018, issued a "going concern" qualification in its report dated May 1, 2020, citing that the Company has a significant working capital deficiency, has incurred significant losses, and needs to raise additional funds to meet its obligations and sustain its operations. These conditions raise substantial doubt about the Company's ability to continue as a going concern. PROFESSIONAL DIVERSITY: Stockholders Pass All Proposals at Meeting ------------------------------------------------------------------ Professional Diversity Network, Inc., held its annual meeting of stockholders on June 25, 2020, at which the stockholders: (a) elected Courtney Shea, Michael Belsky, Haibin Gong, Hao (Howard) Zhang, and Grace Reyes as directors, to serve until the next Annual Meeting of Stockholders and until their respective successors are duly elected and qualified; (b) voted to ratify the appointment of Ciro E. Adams, CPA, LLC as the Company's independent registered public accounting firm for the fiscal year ending Dec. 31, 2020; and (c) voted to ratify the compensation of the Company's named executive officers. On Jan. 2, 2020 the Company received a letter from The Nasdaq Stock Market LLC stating that since the Company has not yet held an annual meeting of shareholders within twelve months of the end of the Company's fiscal year end, it no longer complies with Nasdaq's Listing Rules for continued listing. By successfully holding the Annual Meeting the Company has regained compliance under the Listing Rules, and the staff of Nasdaq has orally confirmed such compliance status with the Company. About Professional Diversity Headquartered in Chicago, Illinois, Professional Diversity Network, Inc. -- https://www.prodivnet.com -- is a dynamic operator of professional networks with a focus on diversity. The Company uses the term "diversity" to describe communities, or "affinities," that are distinctly based on a wide array of criteria which may change from time to time, including ethnic, national, cultural, racial, religious or gender classification. It serves a variety of such communities, including Women, Hispanic-Americans, African-Americans, Asian-Americans, Disabled, Military Professionals, and Lesbian, Gay, Bisexual and Transgender. Its goal is (i) to assist its registered users and members in their efforts to connect with like-minded individuals, identify career opportunities within the network and (ii) connect members with prospective employers while helping the employers address their workforce diversity needs. Professional Diversity recorded a net loss of $3.84 million for the year ended Dec. 31, 2019, compared to a net loss of $15.08 million for the year ended Dec. 31, 2018. As of March 31, 2020, the Company had $6.78 million in total assets, $4.16 million in total liabilities, and $2.62 million in total stockholders' equity. Ciro E. Adams, CPA, LLC, in Wilmington, DE, the Company's auditor since 2018, issued a "going concern" qualification in its report dated May 1, 2020, citing that the Company has a significant working capital deficiency, has incurred significant losses, and needs to raise additional funds to meet its obligations and sustain its operations. These conditions raise substantial doubt about the Company's ability to continue as a going concern. PROVECTUS BIOPHARMACEUTICALS: All Proposals Passed at Meeting ------------------------------------------------------------- Provectus Biopharmaceuticals, Inc. held its annual meeting of stockholders on June 24, 2020, at which the Company's stockholders: (a) elected Bruce Horowitz, Jan Koe, John Lacey, III, M.D., Ed Pershing, CPA, and Dominic Rodrigues as directors for a term of one year; (b) approved the advisory vote on the compensation of the Company's named executive officers, consistent with the Board's recommendation; and (c) ratified the selection of Marcum LLP as the Company's independent registered public accounting firm for 2020, consistent with the Board's recommendation. About Provectus Provectus Biopharmaceuticals, Inc. is a clinical-stage biotechnology company developing a new class of drugs for oncology, hematology, and dermatology based on an entire, wholly-owned, family of chemical small molecules called halogenated xanthenes. Provectus reported a net loss of $6.92 million for the year ended Dec. 31, 2019, compared to a net loss of $8.15 million for the year ended Dec. 31, 2018. As of Dec. 31, 2019, the Company had $1.48 million in total assets, $25.55 million in total liabilities, and a total stockholders' deficiency of $24.07 million. Marcum LLP, in New York, NY, the Company's auditor since 2016, issued a "going concern" qualification in its report dated March 5, 2020, citing that the Company has a significant working capital deficiency, has incurred significant losses, and needs to raise additional funds to meet its obligations and sustain its operations. These conditions raise substantial doubt about the Company's ability to continue as a going concern. PURPLE LINE: Fitch Cuts Rating on $313MM 2016A-D Bonds to B ----------------------------------------------------------- Fitch Ratings has downgraded the rating to 'B' from 'BB' on approximately $313 million of Maryland Economic Development Corporation senior private activity bonds, series 2016A-D issued on behalf of Purple Line Transit Partners LLC (PLTP; limited liability company) for the Purple Line light rail transit project (the project). Fitch has also downgraded the rating to 'B' from 'BB' on the approximately $875 million subordinated Transportation Infrastructure Finance and Innovation Act loan to PLTP for the project. All instruments remain on Rating Watch Negative. The Downgrade to 'B' reflects the heightened risk of project work stoppage and potential court action arising from the continued inability of the owner (the Maryland Department of Transportation and the Maryland Transit Administration) and PLTP to reach successful resolution to on-going disputes over delays and cost increases. The situation has resulted in a notice of project termination by PLTP and a notice of concessionaire default to PLTP by the owner. The Rating Watch Negative reflects Fitch's concern over the project implications from a pending termination of the project at the current stage of construction, including the inability to draw on the existing performance bond and DB contract parent company guarantees. The Negative Watch also reflects further uncertainty with the notice of default issued by the owner to PLTP. Execution of a global settlement agreement prior to the early termination date that addresses a new, achievable long-stop date and ensures timely payments on all upcoming debt service obligations, in conjunction with successful resolution of the DB and PLTP termination notices would likely resolve the Rating Watch Negative. RATING RATIONALE The ratings reflect heightened completion risk, which constrains the project to below investment grade. Settlement discussions by the owner and PLTP appear far apart in terms of both relief (nearly 1,000 days by PLTP compared to less than 365 by the owner) and compensation (more than $600 million by PLTP compared to much less by the owner) with less than 60 days until the early termination date. Disputes have lasted for several years and prolonged litigation is becoming a real possibility. The rating further reflects a capitalized interest period that now falls inside of the projected project completion date. KEY RATING DRIVERS CONSTRUCTION DELAYS; UNRESOLVED ISSUES - Completion Risk: Weaker The weaker assessment reflects the uncertainty resulting from the termination notification provided by PLTP for a project that is currently roughly 50% complete. Notwithstanding, the project is being constructed by a highly experienced DB contractor, a LLC comprised of Fluor Enterprises, Inc., The Lane Construction Corporation (acquired by Salini Impreglio S.p.a.; 'BB'/Negative), and Traylor Bros., Inc. DB requirements of PLTP are fully passed down to the DB contractor on a back-to-back basis. PLTC sub-contracted the rolling stock and specialized aspects of systems integration to skilled technical experts. Per analysis by the technical advisor at financial close, a LOC sized to 50% (with step-up provisions to 100%) of liquidated damages to the DB long-stop date, in addition to a 55% payment bond and a 55% performance bond, together with cash flow headroom, provide sufficient protection to weather even the worst construction cash flow stress scenario due to contractor replacement at that point in time. Although there is the potential for delays in the delivery of rolling stock due to coronavirus, these delays are of less concern in comparison to the risks posed by the potential termination of the project. Existing DB contract parent company guarantees (up to a 35% aggregate liability cap) on a joint-and-several basis, add strong support to the current contracting unit but would be at risk should the project be terminated. CONTRACTED OPERATIONS; ADEQUATE LIFECYCLE PLAN - Cost Risk: Midrange Project operations and light rail vehicle maintenance are contracted through an O&M contractor, a LLC comprised of Fluor Enterprises, Inc., Alternate Concepts, Inc., and CAF USA, Inc., which has extensive experience fulfilling O&M obligations on comparable light rail projects worldwide. In addition, CAF USA is the LRV supplier, with the obligations wrapped through the DB contract by Fluor, providing continuity and strong parent support. The TA believes that the project company's approach and budget is adequately detailed for annual maintenance and lifecycle costs. The O&M contractor will perform regular condition and performance monitoring inspections, allowing them to better assess the remaining life of the asset. In addition, in the event of a rehabilitation cash flow deficit, the O&M contractor will be required to fund a renewal reserve account. Additional support within the O&M contract includes parent company guarantees (75% annual liability cap, 150% rolling three-year aggregate liability cap) and liquid security in the form of a 50% annual payment letter of credit. This security helps cushion some cost and lifecycle forecast uncertainty over the 30-year operations period. PAYMENTS FROM STRONG COUNTERPARTY - Revenue Risk: Stronger Progress payments during construction, a revenue service availability payment at service commencement, a final completion payment, and availability payments, including special lifecycle payments during operation of the project are made by The Maryland Department of Transportation and Maryland Transit Administration, with a PPP grantor payment obligation rating of 'AA-'/Outlook Stable. The AP is divided between a fixed capital payment, which covers debt service and equity distributions, and escalating payments, which cover O&M and rehabilitation obligations, based on a basket of available indices. The tailored payment mechanism is considered moderately better than peers and includes flexible standards or cure periods to ensure minimal deductions are incurred. CONSERVATIVE STRUCTURE; FLAT COVERAGE - Debt Structure: Midrange The debt structure is fixed rate and fully amortizing and is further supported by a six-month debt service reserve fund (DSRF) and 1.20x equity lockup trigger. Funds trapped in the distribution lock-up account for more than 30 months will be applied to prepay TIFIA obligations, which Fitch views favorably in terms of deleveraging. The DSCR profile is relatively flat, following a few initial years of slightly higher coverage. The subordinate TIFIA loan has the ability to spring to parity with the senior debt in a bankruptcy related event. FINANCIAL SUMMARY The Fitch cases reflect timely completion, which based on the original plan of finance and long-stop date, is now not likely. Further, the capitalized interest period now falls inside of the projected project completion date and will need to be addressed. Fitch will continue to monitor the situation and will update the cases once the issues are resolved. The sponsor case, adopted as the Fitch base case, demonstrates average DSCR of 1.31x and minimum DSCR of 1.26x. The Fitch rating case applies a realistic outside cost (ROC) of 6%, as identified by the TA, which results in an average DSCR of 1.28x, with minimum coverage of 1.20x. Absent completion risk issues, Fitch views the all cost break-even of 24.6% producing a 4.1x break-even expressed as a multiple of the ROC as consistent with a 'BBB' category rating. PEER GROUP The most comparable Fitch-rated availability-based project is Denver Transit Partners (DTP; 'BBB-'/Stable). Both projects include the construction of rail projects in major metropolitan areas and benefit from similar DB and O&M parent guarantees that include the LRV-related obligations. PLTP's underlying financial metrics (average DSCR of 1.3x and ROC multiple of 4.1x) are slightly stronger than DTP's (1.2x average DSCR and ROC multiple of under 3.0x). However, PLTP's lower rating reflects its increased completion risk, while DTP is a completed and operating asset. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- Successful resolution of the PLTP notice to terminate that allows project construction to continue moving forward; -- Execution of a global settlement agreement that provides clarity on a new long-stop date and resolves key outstanding disputes. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- Failure to favorably resolve the notice to terminate provided by PLTP; -- Failure to execute a global settlement agreement to resolve the long-stop date and key outstanding disputes. BEST/WORST CASE RATING SCENARIO International scale credit ratings of Public Finance issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of three notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. CREDIT UPDATE The 50-day window for PLTP to take action on PLTC's notice of termination, followed by the two-day notification period to the owner, has lapsed and PLTP filed a notice of unconditional election to terminate the public-private partnership (P3) agreement for extended delay with the owner. This now starts the clock on a new 60-day window leading up to the early termination date. Discussions and negotiations will continue during this time and an ultimate resolution could be reached prior to termination. However, the two parties will also develop a transition plan over the first 15 days to be ready to turn the project back over to the owner following the early termination date (should no settlement be reached). The owner has in turn filed a notice of concessionaire default to PLTP, disputing PLTP's right to terminate. The owner believes that PLTP has not established that an Extended Delay occurred permitting PLTP to terminate for Extended Delay, and by providing such notice, PLTP is therefore in breach of the P3 Agreement. Further, the owner has stated that they remain committed to getting the project done with or without PLTP and is exploring all available options to continue construction activities, which includes the possibility of a remarketing event under the P3 agreement, while continuing to negotiate. The cure period for concessionaire default lasts 30 days until July 24, 2020. Design and construction works have continued and will continue to advance during this time and the owner continues to make timely payments for completed works. Still, to the extent a settlement is not reached, it is possible that the claims could have to be taken to a dispute resolution board and ultimately subject to prolonged litigation. Fitch views potential implications of a project termination as negative to the credit and will continue to monitor the situation. FINANCIAL ANALYSIS Fitch Cases Fitch has adopted the sponsor's case as its base case due to its view as to the reasonableness of the project's construction and OM&R cost assumptions following conversations with the LTA. The sponsor-provided financial model contemplated DSCRs no less than 1.26x and that average 1.31x. The project life coverage ratio in the first operational year is 1.34x. Fitch's rating case incorporated the ROC (expressed as a percentage) identified by the LTA for O&M, LC, SPV, deductions and insurance expenses exceeding initial projections in a conservative cost overrun scenario. The ROC was applied to the base case to measure the project's financial flexibility to absorb reasonable cost increases. Accordingly, a ROC stress of 6% was applied to O&M costs, 7% to LC and 3% to SPV costs, based on analysis provided by the TA, to assess the impact that stresses would have on the profile. Fitch did not stress deductions in its rating case given its review of the deduction scheme in the project documents as well as the TA's p90 montecarlo simulation of possible deduction outcomes and the likelihood that the O&M contractor would operate at a very good or good level of performance. The results of this scenario resulted in average DSCR of 1.28x and a minimum of 1.20x. Fitch analyzed a number of coverage ratio break-even scenarios related to the financial structure. When run on the adopted Fitch base case using only the debt service reserve as available liquidity, the model indicates the financial structure can withstand a 24.6% increase in total costs. Based on an overall ROC of 6%, the break-even expressed as a multiple of the ROC is 4.1x. Based on Fitch's criteria, the break-even and coverage levels are on the lower end for a 'BBB'-category rating for a project deemed midrange but are constrained by the project's completion risk profile. REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING The principal sources of information used in the analysis are described in the Applicable Criteria. ESG CONSIDERATIONS The highest level of ESG credit relevance, if present, is a score of 3. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity(ies), either due to their nature or to the way in which they are being managed by the entity(ies). Purple Line Transit Partners (NY) - Purple Line Transit Partners (NY) /Availability Payment - Subordinate/1 LT; LT B; Downgrade - Purple Line Transit Partners (NY) /Availability Payments/1 LT LT B; Downgrade QUALITY DISTRIBUTION: S&P Affirms 'B-' ICR, Alters Outlook to Neg. ------------------------------------------------------------------ S&P Global Ratings affirmed its 'B-' issuer credit rating on Quality Distribution Inc. and revised the outlook to negative from stable. At the same time, S&P affirmed its 'B-' issue-level rating on the company's first-lien term loan and its 'CCC' issue-level rating on its second-lien term loan. Quality Distribution has seen modest revenue declines as a result of COVID-19, primarily within its chemical segment. Volumes within the company's chemical segment have decreased and, although the company has experienced an improvement in recent weeks as auto plants have reopened, S&P expects 2020 volumes to be below 2019 levels. The intermodal segment has been more stable, and the company is benefiting from asset efficiency initiatives and resilient loaded storage volumes. Additionally, the company has taken cost actions across its segments that are expected to somewhat offset the revenue impact of lower volumes in its chemical segment. Environmental, social, and governance (ESG) credit factors for this credit rating change: -- Health and safety The negative outlook on Quality Distribution reflects S&P's expectation for continued elevated debt leverage in 2020, in part due to the impact of COVID-19 particularly within the company's chemical segment. S&P believes there is downside risk to credit measures if economic conditions remain weak for a sustained period. "We could lower our ratings on Quality Distribution over the next 12 months if its liquidity becomes constrained, if earnings deterioration causes us to conclude the company's capital structure is unsustainable, or if its EBITDA interest coverage ratio declines below 1x for a sustained period," S&P said. "We could revise the outlook to stable on Quality Distribution over the next 12 months if its liquidity remains adequate and the company's operating performance improves, potentially due to recovering economic activity, causing adjusted debt to EBITDA to fall below 9x and FFO to debt to increase above 5% for a sustained period," the rating agency said. RAVN AIR GROUP: Gets U.S. Treasury Approval for the CARES Act Sale ------------------------------------------------------------------ Ravn Air Group obtained conditional approval from the U.S. Treasury to move forward and seek payroll grants under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) Payroll Support Program (PSP). This assistance will help pave the way for buyers who are seeking to purchase the entire Air Group, maximize creditor recoveries, and enable a successful exit from Chapter 11 that will preserve Alaska's largest and most vital regional air carrier and the many jobs and essential air service it provides. In addition, Ravn has worked with its Debtor in Possession (DIP) lenders to develop a process for the airline to sell all, substantially all, or a substantial part of its assets on Wednesday, June 17th, and next week Ravn will be asking the federal bankruptcy judge handling the company’s Chapter 11 case to approve that process.* "This is great news for our creditors, our employees, our customers, and for the 115 different communities we were serving before the COVID-19 Pandemic hit Alaska and forced our company to seek Chapter 11 protection. We would like to thank Treasury Secretary Mnuchin and Alaska's congressional delegation, Senators Dan Sullivan and Lisa Murkowski, and Congressman Don Young for their tireless work in connection with this conditional approval," said Dave Pflieger, Ravn's President & CEO. "The opportunity to receive CARES Act Grants and work with our DIP lenders on a sale process means there is a new path forward by which Ravn could resume operations later this summer," said Pflieger. "Now, instead of only one path, a planned liquidation, qualified parties who meet strict bidding criteria and guidelines will be able to buy the entire Air Group with all three of its airlines. This is a game-changer for our creditors, our employees, our customers, and the many communities we have served for decades." "Saint Paul fully supports everything Ravn is doing to get the airline up and flying again. Ravn provides vital air service to our remote island community, and they have been a fantastic partner over the last year and a half," said Phillip Zavadil, City Manager for the City of Saint Paul. REMARK HOLDINGS: Delays Filing of Quarterly Report -------------------------------------------------- Remark Holdings, Inc., was unable to file its Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 without unreasonable effort or expense due to delays in obtaining and compiling information for inclusion in the Report. The Company expects to be able to file the Report on or before the fifth calendar day following its original prescribed due date. In May 2019, the Company completed the sale of Vegas.com, LLC, which comprised its previously-reported Travel and Entertainment segment. The Company anticipates that the sale of Vegas.com, LLC will cause a significant change in its results of operations; however, the Company is not able to quantify the change at this time as the review of its consolidated financial statements for the quarter ended March 31, 2020 is not complete. About Remark Holdings Remark Holdings, Inc. (NASDAQ: MARK) -- http://www.remarkholdings.com-- delivers an integrated suite of AI solutions that enable businesses and organizations to solve problems, reduce risk and deliver positive outcomes. The company's easy-to-install AI products are being rolled out in a wide range of applications within the retail, financial, public safety and workplace arenas. The company also owns and operates digital media properties that deliver relevant, dynamic content and ecommerce solutions. The company is headquartered in Las Vegas, Nevada, with additional operations in Los Angeles, California and in Beijing, Shanghai, Chengdu and Hangzhou, China. As of Dec. 31, 2019, the Company had $14.83 million in total assets, $42.56 million in total liabilities, and a total stockholders' deficit of $27.73 million. Cherry Bekaert LLP, in Atlanta, Georgia, the Company's auditor since 2011, issued a "going concern" qualification in its report dated May 29, 2020, citing that the Company has suffered recurring losses from operations and negative cash flows from operating activities and has a negative working capital and a stockholders' deficit that raise substantial doubt about its ability to continue as a going concern. RENAISSANCE INNOVATIONS: Unsecured Creditors to Get 13.5% in Plan ----------------------------------------------------------------- Debtor Renaissance Innovations, LLC, filed with the U.S. Bankruptcy Court for the Eastern District of North Carolina, Raleigh Division, a Disclosure Statement describing its Plan of Reorganization dated June 4, 2020. The Debtor's obligations total just under $1,000,000 and its petition date assets are valued at $203,968.80. Any and all priority taxes due and owing to the Internal Revenue Service, North Carolina Department of Revenue, or any county or city taxing authority shall be paid in full. In accordance with the liquidation analysis included in the Debtor's Disclosure Statement which accompanies this Plan, the Debtor will pay allowed unsecured claims 13.5% of their claim amounts. By earlier motions in this case, the Debtor already rejected its lease with Hipex Properties and assumed its other contracts and leases. To the extent that any such agreement was delinquent on the petition date, the Debtor proposes to cure that agreement on the effective date. The Debtor shall make payments under the Plan by the continued operations and profit of business. A full-text copy of the Disclosure Statement dated June 4, 2020, is available at https://tinyurl.com/ydf343h9 from PacerMonitor at no charge. The Debtor is represented by: Travis Sasser 2000 Regency Parkway, Suite 230 Cary, North Carolina 27518 Tel: 919.319.7400 Fax: 919.657.7400 About Renaissance Innovations Renaissance Innovations, LLC, sought protection under Chapter 11 of the Bankruptcy Code (Bankr. E.D.N.C. Case No. 20-01005) on March 6, 2020. At the time of the filing, the Debtor had estimated assets of between $100,001 and $500,000 and liabilities of between $500,001 and $1 million. Judge Stephani W. Humrickhouse oversees the case. Travis Sasser, Esq., at Sasser Law Firm, is the Debtor's legal counsel. RIGHT ON BRANDS: Delays Filing of Form 10-Q Due to COVID-19 ----------------------------------------------------------- As result of the global outbreak of the COVID-19 virus, Right On Brands, Inc. evaluated its ongoing effort to prepare and file its Annual report on Form 10-K for the year ended March 31, 2020. Certain Company officers and management as well as professional staff and consultants are unable to conduct work required to prepare the Company's financial report for the year ended March 31, 2020. As a result, the Company expects to be unable to compile and review certain information required in order to permit the Company to file a timely and accurate annual report on Form 10-K for the year ended March 31, 2020, by the prescribed date without unreasonable effort or expense due to circumstances related to COVID-19. On March 4, 2020, the Securities and Exchange Commission issued an Order under Section 36 (Release No. 34-88318) of the Securities Exchange Act of 1934 granting exemptions from specified provisions of the Exchange Act and certain rules thereunder. The March 4th Order provides that a registrant (as defined in Exchange Act Rule 12b-2) subject to the reporting requirements of Exchange Act Section 13(a) or 15(d), and any person required to make any flings with respect to such a registrant, is exempt from any requirement to file or furnish materials with the Commission under Exchange Act Sections 13(a), 13(f), 13(g), 14(a), 14(c), 14(f), 15(d) and Regulations 13A, Regulation 13D-G (except for those provisions mandating the fling of Schedule 13D or amendments to Schedule 13D), 14A, 14C and 15D, and Exchange Act Rules 13f-1, and 14f-1, as applicable, where certain conditions are satisfied. On March 25, 2020, the SEC issued an Order under Section 36 (Release No. 34-88465) of the Exchange Act which modified the exemptions of the March 4th Order to cover filings due on or before July 1, 2020. The Company is relying on the March 4th Order and the March 25th Order for filing of its Form 8-K the later of June 29, 2020, or original filing deadline of the report and expects to file its Annual report for the year ended March 31, 2020, on Form 10-K approximately 45 days after June 29, 2020. The Company is providing the following risk factor for its ongoing business operations: "War, terrorism, other acts of violence or natural or manmade disasters such as a global pandemic may affect the markets in which the Company operates, the Company's customers, the Company's delivery of products and customer service, and could have a material adverse impact on our business, results of operations, or financial condition. "The Company's business may be adversely affected by instability, disruption or destruction in a geographic region in which it operates, regardless of cause, including war, terrorism, riot, civil insurrection or social unrest, and natural or manmade disasters, including famine, food, fire, earthquake, storm or pandemic events and spread of disease (including the recent outbreak of the coronavirus commonly referred to as "COVID-19"). Such events may cause customers to suspend their decisions on using the Company's products and services, make it impossible to attend or sponsor trade shows or other conferences in which our products and services are presented to distributors, customers and potential customers, for our customers to visit our facilities, manufacturing locations or other physical locations, cause restrictions, postponements and cancellations of events that attract large crowds and public gatherings such as trade shows at which we have historically presented our products, and give rise to sudden significant changes in regional and global economic conditions and cycles that could interfere with purchases of goods or services, commitments to develop new brands and white label products. "Any significant disruption to communications and travel, including travel restrictions and other potential protective quarantine measures against COVID-19 by governmental agencies, may increase the difficulty and could make it impossible for the Company to deliver goods services to its customers. Travel restrictions and protective measures against COVID-19 could cause the Company to incur additional unexpected labor costs and expenses or could restrain the Company's ability to retain the highly skilled personnel the Company needs for its operations. The extent to which COVID-19 impacts the Company's business, sales and results of operations will depend on future developments, which are highly uncertain and cannot be predicted. "We believe the novel coronavirus (COVID-19) has negatively affected our corporate operations necessary to prepare and maintain accurate accounting and reporting and could continue to do so in the foreseeable future. The coronavirus has resulted in restrictions, postponements and cancelations and the impact, extent and duration of the government mposed restrictions on travel and public gatherings as well as the overall effect of the COVID-19 virus is currently unknown. "The ongoing circumstances resulting from the COVID-19 virus outbreak magnify the challenges faced from our continuing efforts to introduce and sell our products in a challenging environment and could have an impact on our business and financial results." About Right on Brands, Inc. Right on Brands, Inc.'s business is conducted through its wholly-owned subsidiaries, Humbly Hemp, Endo Brands, and Humble Water Company. Humbly Hemp sells and markets a line of hemp enhanced snack foods. Humble Water Company is in a partnership with Springhill Water Co. to develop a line of High Alkaline, Natural Mineral Water, and a bottling and packaging facility. Endo Brands creates and markets a line of CBD consumer products and through ENDO Labs, a joint venture with Centre Manufacturing, creates white label products and formulations for CBD brands. Right On Brands is at the focus of health and wellness. Right on Brands reported a net loss attributable to stockholders of the company of $6.08 million for the year ended March 31, 2019, compared to a net loss attributable shareholders of the company of $804,146 for the year ended March 31, 2018. Turner, Stone & Company, L.L.P., in Dallas, Texas, the Company's auditor since 2019, issued a "going concern" qualification in its report dated July 24, 2019, citing that the Company has suffered recurring losses since inception and has a significant working capital deficiency both of which raise substantial doubt about its ability to continue as a going concern. RIVERDALE FINANCE: Fitch Affirms BB on $7.5MM Income Tax Bond ------------------------------------------------------------- Fitch Ratings has affirmed the 'BB' rating on the following Riverdale Finance Corporation, IL income tax securitized bonds: -- $7.5 million income tax securitized bonds, series 2018A. Fitch also affirmed the 'CCC' Issuer Default Rating (IDR) on the village of Riverdale, IL. The Rating Outlook on the corporation's bonds is Stable. SECURITY The income tax securitized bonds have a first lien on the village's local share of the statewide income tax. The pledged revenue includes all distributions under Section 2 of the State Revenue Sharing Act from the Local Government Distributive Fund (LGDF) of income tax amounts payable by the state of Illinois to the village. The lien is closed to additional bonds. Final maturity is on Oct. 1, 2047. IDR ANALYTICAL CONCLUSION The 'CCC' IDR reflects the village's very poor credit fundamentals, including its distressed financial position and a limited tax base. Fitch expects that revenues may decline through an economic cycle and that the village may continue to be unable to balance financial operations. DEDICATED TAX ANALYTICAL CONCLUSION The 'BB' income tax securitized bond rating is based on the very strong legal structure which supports a true sale of the revenues and, in Fitch's opinion, significantly insulates bondholders from operating risk of the village of Riverdale. As the structure is a securitization specifically authorized by state law, the rating can be up to six notches above the village's 'CCC' IDR, pursuant to Fitch criteria. ECONOMIC SUMMARY Riverdale is located approximately 22 miles south of downtown Chicago with a population of approximately 13,200. Residential properties make up approximately 60% of the tax base, while commercial, industrial and railroad properties comprise the majority of the remainder. The village became a home rule municipality in 2006. IDR KEY RATING DRIVERS Revenue Framework: 'bbb' Fitch expects general fund revenue without rate adjustments will decline through an economic cycle. The village has unlimited independent legal ability to increase revenues as a home rule municipality, although its practical ability to do so is constrained. Expenditure Framework: '< bb' Expenditures seem likely to grow at an extremely high rate as compared to expectations for revenue declines, creating budget gaps that will be difficult to address. The village has a constrained ability to adjust expenditures. Long-Term Liability Burden: 'a' The village's long-term liability burden, including the net pension liability and overall debt, is elevated but moderate at around 24% of personal income. Operating Performance: '< bb' Fitch believes that the village has extremely limited gap-closing capacity and that the already distressed operations will worsen further in the current economic downturn. The village has accumulated a reserve deficit through the recent recovery. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade: For the IDR: -- Sustained improvement in the accumulated deficit reserve position; -- Declining fixed costs or improved ability to make expenditure reductions in response to revenue declines. For the dedicated tax bonds: -- Long term improvement in income tax revenue; -- Upgrade of the IDR. Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade: For the IDR: -- A slower and/or weaker recovery from the current economic contraction that materially pressures revenues and erodes the village's already weak financial flexibility. For the dedicated tax bonds: -- Large and sustained revenue declines, beyond the range of Fitch's expectations; -- A downgrade of the IDR. CURRENT DEVELOPMENTS The ongoing outbreak of coronavirus and related government containment measures worldwide creates an uncertain global environment for U.S. state and local governments and related entities in the near term. While the village's most recently available fiscal and economic data may not fully reflect impairment, material changes in revenues and expenditures are occurring across the country and likely to worsen in the coming weeks and months as economic activity suffers and public health spending increases. Fitch's ratings are forward-looking in nature, and Fitch will monitor developments in state and local governments as a result of the virus outbreak as it relates to severity and duration, and incorporate revised expectations for future performance and assessment of key risks. In its baseline scenario, Fitch assumes sharp economic contractions to hit major economies in 1H20 at a speed and depth that is unprecedented since World War II. Sequential recovery is projected to begin from 3Q20 onward as the health crisis subsides after a short but severe global recession. GDP is projected to remain below its 4Q19 level until mid-2022. Due to the coronavirus pandemic, Fitch expects there will be revenue decline during fiscal 2021, ended April 30. The village is expecting an 8% decline from the fiscal 2020 budget. This includes a 5% decline in property tax revenue, a 17% decline in sales tax, and a 10% decline in income tax revenue. These potential revenue shortfalls have created a $745,000 budget gap (5.7% of fiscal 2021 budgeted expenditures). The village has identified several spending adjustments that it will make in an effort to balance operations. Management hopes to make these adjustments as recurring expenditure reductions in order to achieve structural balance and restore positive reserves going forward. The 'CCC' rating reflects the potential that revenue declines may exceed management's expectations, continuing a trend of structural imbalance. The corporation's income tax bond structure remains moderately resilient, even assuming Fitch's modelled 22% decline in pledged revenues related to the pandemic. Interest is capitalized through April 1, 2023. ECONOMIC RESOURCE BASE The village's population has declined by about 3.5% since 2010, and assessed value (AV) is still well below its pre-recession levels. About 30% of the village's residents live under the poverty level, and income levels are well below the county, state, and national levels. IDR CREDIT PROFILE REVENUE FRAMEWORK The village relies on property taxes, which made up 32% of fiscal 2019 (April 30 fiscal YE) general fund revenue and intergovernmental revenue, including the village's share of the state income and utility taxes, which made up 34%. Beginning in fiscal 2019, the village's share of the state income tax is collected by the corporation, which will transfer a residual amount to the village after paying debt service, which begins in fiscal 2023. Fitch assesses the village's revenues as having negative growth prospects absent policy action. The village's population and AV have declined since 2010. Those declines have pressured both the local share of the state income tax and property tax revenue. The village's property tax collection rates have also been very low, declining to under 70% in fiscals 2018 and 2019. The village passed an ordinance instructing the county clerk to collect a loss factor of 20%, which essentially increases the levy by that amount to counteract the low collection rate. While management has been active in its attempts to stimulate the underlying tax base and generate new revenue, such as a new gas tax effective in fiscal 2019, substantial negative pressure on the revenue stream remains. Riverdale is a home rule municipality and not subject to the state's Limitation Law. The village has used this flexibility to adjust property tax rates on an annual basis and maintains the independent legal ability to adjust the sales tax or other tax rates, although the weak economic and tax base, demonstrated by the low collection rate, may limit the practical ability of the village to increase taxes. EXPENDITURE FRAMEWORK Public safety makes up the largest portion of the village's general fund expenditures, as approximately 50% of 2019 expenditures. The second largest is general government administration at 38%. The natural pace of expenditure growth is likely to be extremely high in relation to the prospects for declining revenue growth, creating challenging budget gaps that will require active management of both revenues and expenditures. The village will likely also have significant growing pension contribution costs, as it is required to increase the funding for its police and fire funds to 90% by 2040 pursuant to state law. The village has limited flexibility to adjust its main expenditure items. Fixed carrying costs for debt service and retiree benefits are elevated at approximately 35% of expenditures in 2019. Fitch expects these costs will increase over time since annual payments are made on a statutory basis which is far below the actuarial level. A 20-year amortization at a 5% interest rate for the village's pension liabilities more than doubles the pension contributions compared to the actuarially determined contribution (ADC) and around 2.5x the statutory contribution. LONG-TERM LIABILITY BURDEN Riverdale's long-term liability burden is elevated, but still in the moderate range, with direct and overlapping debt and the unfunded pension liability 24% of personal income. The village has no near-term debt plans, although management may consider restructuring some of its outstanding debt in the next several years. The village participates in four defined benefit pension plans: the agent multiple-employer Illinois Municipal Retirement Fund (IMRF), the agent multiple-employer Sheriff's Law Enforcement Personnel Fund (SLEP) the single-employer Police Pension Plan (PPP), and the single-employer Firefighters' Pension Plan (FPP). The IMRF and SLEP are statutorily funded at the actuarially determined contribution amount, and the PPP and FPP are funded annually at a rate significantly lower than the actuarially determined amount. Fitch calculates the village's share of the pension liability to equate to a low ratio of assets to liabilities of 29%, assuming a 6% discount rate for the IMRF and SLEP, and the lower discount rate assumptions that are required to be used by the PPP and FPP. Fitch expects net pension liabilities to put increasing pressure on expenditure flexibility, as the village is required to fund contributions to the PPP and FPP at a rate that will result in the funding of 90% of past service cost by 2040, pursuant to state law. OPERATING PERFORMANCE The village has distressed financial operations and been unable to close its structural budget gap during the recent national economic recovery. The village minimized the accumulated deficit in 2019 by using some proceeds of the recent income tax securitization to create a working capital fund. However, Fitch expects ongoing downward pressure on revenue and increasing expenditures will continue to strain operations. Despite the village's notable legal revenue-raising flexibility due to its home rule status, Fitch believes general fund financial operations are at risk of worsening due to its constrained expenditure flexibility and already vulnerable tax base. The village expects a revenue shortfall of around $750,000 in 2021 and has identified an equal amount of expenditure reductions to balance the budget. The village had operating deficits in five of the last six years. Fiscal 2019 operations would have been negative without the transfer of $2 million from the Riverdale Finance Corporation as part of its income tax securitization. This transfer enabled the village to bolster its cash position. The village anticipates finishing fiscal 2020 with a small surplus despite the trend of deficits, perhaps leading to slightly positive available reserves. Interest on the finance corporation income tax securitization bonds is capitalized through 2023, which will provide temporary breathing room but not address the structural issues. Management's plans post-2023 include reviewing the structure of some of its outstanding debt to restructure payments and to attempt to rebuild general fund balance through recurring expenditure reductions. DEDICATED TAX KEY RATING DRIVERS Strong Legal Framework: Fitch believes the bankruptcy-remote, statutorily defined nature of the issuer and a bond structure involving a perfected first-lien security interest in the income tax revenues are key credit strengths. Fitch considers the credit quality of the corporation's bonds as somewhat insulated from that of Riverdale. Therefore, the 'BB' corporation bond rating can be higher under Fitch criteria's dedicated tax bond analysis. Declining Pledged Revenue Prospects: Pledged income tax revenues declined over the past 10 years through fiscal 2018 by approximately 1.4% annually on average, but had a large increase in fiscal 2019. The decline through fiscal 2018 was due to several factors, including declines in overall state income tax collections through the last economic cycle, continued population declines in the village and recent reductions by the state in the local share of the revenue stream. The state lessened the reduction in the local share of the income tax distribution in fiscal 2019. However, Fitch expects declines may recur in the long term due to population declines in the village. Exposure to Changes in the Local Share: The state can alter the local share of income tax revenue through legislative changes, as it did in the state's fiscal 2018 budget when it reduced the local share by 10%, and again in fiscals 2019 and 2020 when it reduced the local share by a smaller 5% from the pre-fiscal 2018 formula. This introduces risk to the revenue stream that is incorporated in Fitch's assessment of resilience through economic cycles. Resilience Through Economic Cycles: The pledged revenue structure is expected to show a moderate level of resiliency to anticipated declines in an economic downturn scenario plus potential state action in reducing the local share of revenue. Based on 2019 results, income tax revenue is able to tolerate a 53% decline to 1.0x coverage, which is 2.7x the largest historical decline and 2.4x the potential impact of Fitch's baseline stress scenario due to the current economic downturn, as estimated by the Fitch Analytical Sensitivity Tool (FAST). Fitch expects fiscal 2020 debt service coverage will be in line with fiscal 2019, but coverage could weaken notably in fiscal 2021 given expected revenue declines. No additional debt is allowed under the bond resolution. DEDICATED TAX CREDIT PROFILE Riverdale sold all right, title and interest in the pledged revenues to Riverdale Finance Corporation, a limited purpose entity. The state will direct all pledged income tax revenues to the trustee for benefit of corporation bondholders, and the residual will flow to the village for any lawful purpose. Pledged revenues include the village's share of the state-collected statewide income tax. The pledged income tax revenue is collected by the Illinois Department of Revenue, which certifies the amount collected to the state comptroller on a monthly basis. The comptroller must deposit the local share of the income tax revenue to the LGDF no later than 60 days after the comptroller receives that certification. The statewide income tax rate has changed several times since it was first established in 1969 and three times since 2011. The rate is currently 4.95% on individuals and 7.00% on corporations. The local share is 6.06% of the individual income tax and 6.85% of the corporate tax. Allocations to individual municipalities are made on the basis of that municipality's proportionate share of the state's population. This introduces some downward pressure on revenue, as the village's population has declined at a rate faster than the state's population decline. Until 2018, the state kept the amount of the local share constant, adjusting the local share percentage of total collections in conjunction with rate changes. In the state fiscal year 2018, however, the state reduced the local share by 10%, although local municipalities received two extra months of revenue due to an accelerated payment schedule. The state reduced the local share again in fiscals 2019 and 2020 by a smaller 5% from the pre-fiscal 2018 formula. The ability of the state to reduce the local share percentage introduces additional risk to the revenue stream. The authorizing act assures that the state "will not limit or alter the basis on which transferred receipts are to be paid to the issuing entity as provided in this Article, or the use of such funds, so as to impair the terms of any such contract. Growth prospects for the pledged revenue stream are negative. Income tax receipts are allocated to the village based on its population as a proportion of the state population, meaning relative declines in population at a higher rate than the growth rate in state income tax revenue would lead to declines in the pledged revenue. The village's population declined from over 15,000 in 2000 to 13,549 in the 2010 Census, and further to an estimated 13,077 in 2019, a 3.5% decline since 2010. In the meantime, the state's population declined at a slower rate (1.2%) since 2010. To evaluate the sensitivity of the dedicated revenue stream to cyclical decline, Fitch considers both revenue sensitivity results, using a 5.6% decline in national GDP scenario, and the largest decline in revenues over the period covered by the revenue sensitivity analysis. Based on the historical performance of pledged income tax revenues since 2000, FAST generates a 22% scenario decline, higher than the village's assumed decline of 10%. The largest cumulative decline was an approximately 19% decline between 2008 and 2010. Fitch also considered what would happen if the state decreased the local share of income tax revenue by 10%, as it did in fiscal 2018, in the same year of the largest decline. This would result in a largest consecutive decline of around 26%. Based on current coverage, the revenue stream could withstand a 52% decline before it is insufficient to fully cover maximum annual debt service. This is 2x the stressed 26% decline. The corporation has a cash-funded debt service reserve fund, which provides some additional cushion. In addition to the sources of information identified in Fitch's applicable criteria specified, this action was informed by information from Lumesis. 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). ROCK POND: AMR Investment Objects to Disclosure Statemen1t ---------------------------------------------------------- AMR Investment Group, LLC, filed an objection to the Disclosure Statement filed by debtor Rock Pond Acres, LLC, on May 18, 2020. AMR Investment claims that the Disclosure Statement fails to identify the mortgage broker, if any, that the Debtor is working with, nor does it identify the lender, the costs of the loan the Debtor will incur and the source for payment of those costs. AMR Investment asserts that the Disclosure Statement fails to include any information regarding the terms of the loan including, without limitation, the amount of the loan, the expected interest rate, the expected amount of the periodic payments or the expected maturity date. AMR Investment further asserts that the Disclosure Statement fails to include any information regarding the risk factors regarding consummation of the loan. There is no information regarding the impact of the COVID-19 pandemic on the timing of loan processing, loan approval and funding of the loan. AMR Investment points out that the Disclosure Statement fails to provide an analysis of the feasibility of loan approval. Without such an analysis, a creditor has no information from which to evaluate the likelihood of loan approval. AMR Investment Group, LLC, contends that the Disclosure Statement contains no information on the mortgage broker, if any, the lender, essential terms of the loan, the cost of the loan and the source of payment of those costs, the underwriting requirements of the lender, the risk factors related to the loan, the feasibility of loan approval and information regarding the managing member of Debtor should be disclosed as more particularly detailed in Sections 5.1 through 5.7. A full-text copy of AMR Investment's objection to disclosure statement dated June 2, 2020, is available at https://tinyurl.com/ycz6avyz from PacerMonitor at no charge. Attorney for AMR Investment: Robert A. Smejkal 800 Willamette St., Suite 800 Eugene, Oregon 97401 Tel: (541) 345-3330 E-mail: bob@attomeysmejkal.com About Rock Pond Acres Rock Pond Acres, LLC, is a privately held company that is primarily engaged in renting and leasing real estate properties. Rock Pond Acres sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D. Ore. Case No. 20-30574) on Feb. 19, 2020. At the time of the filing, the Debtor was estimated to have assets of between $1 million and $10 million and liabilities of the same range. Judge Peter C. Mckittrick oversees the case. Sally Leisure, Esq., at SRL Legal, LLC, is the Debtor's legal counsel. RQW - REAL ESTATE: Aug. 13 Plan & Disclosure Hearing Set -------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Illinois, Eastern Division, held a hearing to consider the motion of Debtors RQW Real Estate Holdings, LLC and RQW Automotive LLC to Set Combined Hearing on Adequacy of Debtors' Second Amended Joint Disclosure Statement and Confirmation of Second Amended Joint Plan of Reorganization which was filed on June 3, 2020. On June 4, 2020, Judge Deborah L. Thorne ordered that: * Aug. 13, 2020, at 10:00 a.m. is the combined hearing as to the adequacy of the Disclosure Statement and Confirmation of the Plan. * Aug. 4, 2020, is the deadline to file objections to approval of the Disclosure Statement. * Aug. 4, 2020, is the deadline to file objections to confirmation of the Plan. * Aug. 4, 2020, is set as the last day for the filing of ballots accepting or rejecting the Plan. A copy of the order dated June 4, 2020, is available at https://tinyurl.com/yc39w8s4 from PacerMonitor.com at no charge. The Debtors are represented by: Scott R. Clar Crane, Simon, Clar & Goodman 135 South LaSalle St., Suite 3705 Chicago, IL 60603 Tel: (312) 641-6777 About RQW Real Estate Holdings and RQW Automotive Services RQW Real Estate Holdings LLC is a single asset real estate debtor (as defined in 11 U.S.C. Section 101(51B)). RQW Real Estate Holdings and its affiliate, RQW Automotive Services LLC, filed voluntary Chapter 11 petitions (Bankr. N.D. Ill. Lead Case No. 19-35576) on Dec. 18, 2019. At the time of the filing, RQW Real Estate Holdings was estimated to have assets of between $1 million and $10 million and liabilities of the same range. RQW Automotive had estimated assets of between $1 million and $10 million and liabilities of less than $50,000. Judge Deborah L. Thorne oversees the cases. Crane, Simon, Clar and Dan is the Debtors' legal counsel. SEA OAKS: Country Club, Golf Course File for Chapter 11 Protection ------------------------------------------------------------------ Jim Walsh, writing for Cherry Hill Courier-Post, reports that Jersey-based golf course Sea Oaks Country Club owner sought protection from creditors by filing bankruptcy protection in the federal bankruptcy court due to the financial rough it experienced. Sea Oaks Golf Club LLC, which includes an 18-hole course and a 31-room inn, reported assets of about $5.3 million in a Chapter 11 filing. It reported liabilities of about $10.3 million, with most of that owed to one lender. The creditor, Atlantic Homes Inc. of Toms River, sued Sea Oaks in state court in February, asserting it was owed about $10.3 million on a delinquent loan. Atlantic Homes holds a 49 percent stake in Sea Oaks Golf Club, according to the filing in U.S. Bankruptcy Court, Trenton. An affiliated firm, Sea Oaks Country Club LLC, also sought Chapter 11 protection. Its filing noted assets of about $345,000 and liabilities of almost $13 million. The country club leases the property from Sea Oaks Golf Club. its filing says. Unsecured creditors of the country club include people planning weddings, reunions, banquets and fundraisers at the site, as well as parties celebrating baptisms, first communions and baby showers. The 163-acre golf course includes a 35,000-square-foot clubhouse with a restaurant and pro shop. Sea Oaks Golf Club also has approvals to develop 29 condominiums or townhomes on vacant land, the filing says. The Ocean County country club closed earlier this year due to the COVID-19 state of emergency and has not reopened despite an easing of those restrictions. An attorney for both Sea Oaks entities, Timothy Neumann of Manasquan, could not be reached for comment Thursday. About Sea Oaks Country Club Sea Oaks Golf Club LLC is a golf resort that offers 18 Hole semi-private golf course that is open to the public, Golf Shop, Restaurant & Grill Room. Sea Oaks Country Club LLC manages the golf course and leases the property from Sea Oaks Golf Club. Sea Oaks Country Club and Sea Oaks Golf Club sought Chapter 11 bankruptcy protection (Bankr. D.N.J. Lead Case No. 20-17229) on June 3, 2020. Sea Oaks Country Club disclosed $344,900 in assets and $12.92 million in liabilities. Sea Oaks Golf Club reported assets of about $5.3 million in a Chapter 11 filing. Joseph Mezzina, managing member of J & J Partnership, signed the petitions. Timothy P. Neumann of Broege Neumann Fischer & Shaver, LLC, serves as counsel to the Debtor. SILVERLINER LLC: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Silverliner LLC 479 Industry Drive Pikeville, KY 41501 Business Description: Silverliner LLC -- https://silverliner.com -- is a tank manufacturer in Pikeville, Kentucky. Chapter 11 Petition Date: June 26, 2020 Court: United States Bankruptcy Court Eastern District of Kentucky Case No.: 20-70314 Judge: Hon. Gregory R. Schaaf Debtor's Counsel: Jamie L. Harris, Esq. DELCOTTO LAW GROUP PLLC 200 North Upper St. Lexington, KY 40507 Tel: (859) 231-5800 E-mail: jharris@dlgfirm.com Total Assets: $8,980,590 Total Liabilities: $6,683,199 The petition was signed by David C. Tomlinson, 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/14Qj21 SOULA INC: July 23 Plan Confirmation Hearing Set ------------------------------------------------ On April 23, 2020, debtor Soula, Inc., filed with the U.S. Bankruptcy Court for the District of New Jersey a Disclosure Statement referring to a Plan. On May 28, 2020, Judge Andrew B. Altenburg, Jr., approved the Disclosure Statement and ordered that: * Written acceptances, rejections or objections to the Plan will be filed with the attorney for the plan proponent not less than seven days before the hearing on confirmation of the Plan. * July 23, 2020, at 10:00 a.m. is fixed as the date and time for the hearing on confirmation of the plan. A copy of the order dated May 28, 2020, is available at https://tinyurl.com/ybnkroda from PacerMonitor at no charge. The Chapter 11 case is In re Soula, Inc. (Bankr. D.N.J. Case No. 19-14373). The Debtor is represented by: LEE M. PERLMAN, ESQUIRE 1926 Greentree Road, Suite 100 Cherry Hill, NJ 08003 Tel: (856) 751-4224 SUNOPTA INC: Stockholders Pass All Proposals at Annual Meeting -------------------------------------------------------------- SunOpta Inc. held an Annual Meeting of Shareholders on June 18, 2020, at which the stockholders: (1) elected Dr. Albert Bolles, Derek Briffett, Joseph Ennen, Rebecca Fisher, R. Dean Hollis, Katrina Houde, Leslie Starr Keating, and Ken Kempf as directors for the ensuing year; (2) ratified the appointment of Ernst & Young LLP as the independent registered public accounting firm and auditor of the Company for the ensuing year and authorized the Audit Committee of the Company to fix their remuneration; (3) approved, on a non-binding advisory basis, the compensation of the Company's named executive officers; (4) approved, on a non-binding advisory basis, a yearly frequency of future advisory vote regarding the compensation of the Company's named executive officers; and (5) approved the Company's Amended 2013 Stock Incentive Plan. About SunOpta Inc. Headquartered in Ontario, Canada, SunOpta Inc. is a global company focused on plant-based foods and beverages, fruit-based foods and beverages, and organic ingredient sourcing and production. SunOpta specializes in the sourcing, processing and packaging of organic, natural and non-GMO food products, integrated from seed through packaged products; with a focus on strategic vertically integrated business models. SunOpta reported a loss attributable to common shareholders of $8.78 million for the year ended Dec. 28, 2019, compared to a net loss attributable to common shareholders of $117.11 million for the year ended Dec. 29, 2018. As of March 28, 2020, the Company had $894.42 million in total assets, $676.39 million in total liabilities, $84.55 million in series A preferred stock, $and $133.47 million in total equity. * * * As reported by the TCR on June 2, 2020, S&P Global Ratings raised its issuer credit rating on Mississauga, Ont.-based food and beverage manufacturer SunOpta Inc. to 'CCC+' from 'CCC'. "We forecast SunOpta's operating performance to improve meaningfully in fiscal 2020. The upgrade reflects our favorable view of the company's execution on its turnaround initiatives across its business divisions, particularly the growth in its plant-based foods and beverages segments," S&P said. SYCAMORE PARTNERS: Talks With J.C. Penny for Possible Buyout ------------------------------------------------------------ Private equity company Sycamore Partners has held preliminary talks with J.C. Penney to discuss the acquisition of the latter out of bankruptcy should its negotiations with its creditors fail, Reuters reported, citing three people familiar with the matter on June 5, 2020. J.C. Penney, which employs roughly 85,000 people, filed for bankruptcy protection in May after the coronavirus pandemic forced it to temporarily close its more than 800 stores across the United States, compounding financial woes that stemmed from years of dwindling sales. Sycamore is weighing acquiring J.C. Penney outright or making an investment in the troubled retailer, the sources said. There is no certainty that the talks between Sycamore and J.C. Penney will result in a deal, which would require a bankruptcy judge's approval, the sources said. J.C. Penney is also in touch with some of its landlords, including Brookfield Asset Management Inc and Simon Property Group, about possible transactions, the sources said. Under one scenario being explored, Sycamore, Brookfield and Simon would join forces on a bid for J.C. Penney, two of the sources said. Wells Fargo & Co is also involved in the discussions, one of the sources said. The sources requested anonymity because the discussions are confidential. Sycamore and J.C. Penney declined to comment. Brookfield had no immediate comment while Simon and Wells Fargo did not immediately respond to requests for comment. J.C. Penney is in discussions about handing over control to its lenders in exchange for reducing its nearly $5 billion of debt. This hinges on a slew of investment firms that hold the company's senior debt and have provided the company's bankruptcy financing agreeing to J.C. Penney's business plan by July 14, 2020. If the Plano, Texas-based company does not persuade enough lenders to approve its plan by the following day, July 15, the terms of its bankruptcy loan require J.C. Penney to abandon its reorganization efforts and pursue a sale. It is unclear how much Sycamore is willing to pay for J.C. Penney, which is in the process of permanently closing stores and cutting jobs. Sycamore, a New York private equity firm that specializes in retail and consumer investments, has in the past taken control of high-profile businesses such as office supplies chain Staples, women's clothing retailer Talbots and department-store operator Belk. Last month, Sycamore walked away from a $525 million deal to buy a majority stake in L Brands Inc's Victoria's Secret, as the pandemic hammered sales at the lingerie chain. Brookfield and Simon operate malls across the United States. Brookfield in May said it would devote $5 billion to non-controlling investments designed to revitalize retailers struggling in the wake of the coronavirus outbreak. During a court hearing on Thursday, U.S. Bankruptcy Judge David Jones approved fresh financing from senior lenders to aid J.C. Penney's operations while it navigates Chapter 11 protection, and expressed concern the 118-year old chain needed to restructure quickly to survive. In July 2020, the lenders will "decide whether the dream lives or the dream dies," said Cathy Hershcopf, a creditors' lawyer, during the hearing. David Kurtz, a Lazard Ltd banker representing J.C. Penney, said during the hearing that "four major institutions" had signed confidentiality agreements to discuss working with the company and its lenders on the retailer's restructuring. He did not name them. Sycamore, Brookfield, Simon and Wells Fargo are the four unnamed parties, one of the sources said. Under a plan being discussed with its creditors, J.C. Penney would be split into two companies. One would be a real estate investment trust that would hold some of the company's property and lease it back to J.C. Penney. The other would operate J.C. Penney's retail business. Joshua Sussberg, a Kirkland & Ellis LLP lawyer representing J.C. Penney, said during Thursday's court hearing that the company needed to persuade lenders negotiating to take control of the restructured business to keep it alive and that he planned to hold them accountable for how the case ended. Even in less-fraught times, many retailers, including Barneys New York Inc and Toys 'R' Us, have failed to reorganize under bankruptcy protection and gone out of business for good. J.C. Penney on Thursday said it plans to permanently close 154 stores, and may shut more. It has so far reopened nearly 500 stores that were closed due to the pandemic, and plans to bring additional locations online in coming weeks. Still, concerns remain that customers might be slow to return amid health concerns and job losses not seen since the Great Depression. J.C. Penney is also seeking permission from landlords to skip rent payments for June, July and August, Sussberg said last week. About Sycamore Partners Sycamore Partners is a New York-based private equity company that specialized in investments through a varied private equity strategies, most notably debt investments, complex corporate carveouts, distressed buyouts, and leveraged buyouts. About J.C. Penney J.C. Penney Company, Inc. -- http://www.jcpenney.com/-- is an apparel and home retailer, offering merchandise from an extensive portfolio of private, exclusive, and national brands at over 850 stores and online. It sells clothing for women, men, juniors, kids, and babies. On May 15, 2020, J.C. Penney announced that it has entered into a restructuring support agreement with lenders holding 70% of its first lien debt. The RSA contemplates agreed-upon terms for a pre-arranged financial restructuring plan that is expected to reduce several billion dollars of indebtedness. To implement the plan, J.C. Penney and its affiliates on May 15, 2020, filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D. Tex. Lead Case No. 20-20182). At the time of the filing, J.C. Penney disclosed assets of between $1 billion and $10 billion and liabilities of the same range. Judge David R. Jones oversees the cases. The Debtors have tapped Kirkland & Ellis and Jackson Walker, LLP as legal counsel; Katten Muchin Rosenman, LLP as special counsel; Lazard Freres & Co. LLC as investment banker; AlixPartners, LLP as restructuring advisor; and KPMG, LLP as tax consultant. Prime Clerk is the claims agent, maintaining the page http://cases.primeclerk.com/JCPenney A committee of unsecured creditors has been appointed in Debtors' Chapter 11 cases. The committee is represented by Cole Schotz, P.C., and Cooley, LLP. TRINITY INDUSTRIES: Fitch Affirms 'BB' LT IDR, Outlook Stable ------------------------------------------------------------- Fitch Ratings has affirmed the Long-Term Issuer Default Rating (IDR) of Trinity Industries Inc. (Trinity) at 'BB'. Trinity's senior unsecured notes and revolving credit facility have also been affirmed at 'BB'/'RR4'. The Rating Outlook is Stable. KEY RATING DRIVERS Focused Railcar Business: The affirmation reflects Trinity's strong position in North American railcar leasing and manufacturing and currently moderate financial leverage within the leasing business, offsetting cyclical weakness in the leasing and manufacturing operations. The ratings incorporate a high level of cyclicality in the railcar manufacturing business, which saw sales declines of more than 30% in each of 2016 and 2017, and Fitch projects another sizable decline in 2020 as a result of the coronavirus pandemic. This cyclicality is balanced by the more stable leasing business, which will account for the majority of Trinity's pretax earnings through the cycle. Increased Leasing Leverage: Financial leverage (debt/tangible equity) within the leasing business increased to 1.9x at the end of 2019 from 1.5x at the end of 2018 due to growth in the level of secured railcar equipment notes to finance growth in the leasing portfolio as well as higher levels of manufacturing capex, working capital growth and elevated share repurchases. The rating also reflects management's intention to further increase financial leverage within the leasing segment through faster growth of its leased railcar portfolio, with a goal of driving loan to value on the wholly owned lease portfolio to 60%-65% from 53% as of end-2019. Fitch does not expect leverage to move materially higher during 2020 given challenging market conditions. High Manufacturing Leverage: Leverage for the manufacturing operations (Trinity's recourse debt net of advances to TILC/manufacturing EBITDA) was 2.3x at the end of 2019, but is expected to move up to as high as 10x during 2020 due to a sharp drop in railcar deliveries. This assumes that half of unallocated selling, general and administrative expenses are allocated to the manufacturing operations. Leverage is expected to improve to below 4.0x by 2022. Weak Manufacturing FCF: FCF at the manufacturing operations is limited due to low manufacturing margins and higher capex in 2019-2020. FCF before dividends is expected to be negative in 2020 but to turn positive in 2021. Overall cash flow for Trinity will benefit from sizable tax refunds related to the CARES Act in 2020 and 2021. Total company cash flow will be used to finance growth in the leasing portfolio and for an ongoing level of share repurchases. Substantial Leasing Business: Trinity has a substantial railcar leasing business that broadens the company's industry presence and scale, helping to mitigate the effects of cyclicality at the railcar manufacturing operations. Fitch views Trinity Industries Leasing Company, Inc. (TILC) as a core part of Trinity's railcar business, reflecting strong operational and financial linkages between the two companies. TILC generates railcar orders for Trinity as it obtains lease commitments from customers and provides a relatively stable source of earnings. In addition, TILC increases Trinity's presence in the railcar market by providing customers with a single source for purchasing and financing railcars. No Formal Support: TILC does not benefit from a formal support agreement from Trinity, although Fitch believes Trinity would support TILC due to its important role in the parent's railcar business. An important rating consideration is Trinity's ability to withstand potential disruptions to TILC's funding sources or an unexpected decline in the credit quality of TILC's lease portfolio. Good Leasing Asset Quality: TILC's credit profile is characterized by good asset quality, sufficient liquidity and financial leverage that is currently low but expected to increase over the next few years. The leasing company's operating performance is driven by core leasing and management services plus gains from asset sales. Fitch expects TILC's asset quality metrics will weaken during the current downturn, but that, over time, the company will maintain low write-offs and the ability to remarket railcars within the fleet. The rating takes into account the potential asset quality risk associated with an expected faster pace of growth within the leasing segment. DERIVATION SUMMARY Trinity's key competitors in its core rail business include The Greenbrier Companies, which is a railcar manufacturer and lessor, and TTX Co. (A/Stable) and GATX, which are large railcar lessors. Relative to these companies, Trinity is the largest railcar manufacturer and a meaningful lessor. The credit metrics for Trinity's manufacturing operations vary widely through cycles, while the leasing business is more stable and currently has below-average leverage. No country ceiling, parent/subsidiary or operating environment aspects affect the rating. KEY ASSUMPTIONS Fitch's Key Assumptions Within the Rating Case for the Issuer Include: -- The base case reflects Trinity's manufacturing operations, excluding the leasing business. Fitch assumes corporate expenses are split evenly between the manufacturing and leasing operations; -- Revenues drop by 38% in 2020, are flat in 2021 and grow by 20% in 2022; -- The EBITDA margin narrows to 2.6% in 2020 from 6.9% in 2019, and recovers beginning in 2021; -- Annual FCF is negative due to narrow margins and inclusion of the company dividend. Pre-dividend FCF is positive beginning in 2021. Negative FCF plus share repurchases are covered by inflows from the leasing company; -- Debt/EBITDA (including recourse debt at Trinity net of advances to TILC) increases to over 10x in 2020 from 2.3x in 2019 before recovering to below 4x in 2022. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- An improvement in profitability metrics at the leasing segment while maintaining strong asset quality; -- A more diversified funding profile at the leasing business; -- Slower growth in the leased railcar fleet leading to a smaller than expected increase in financial leverage at TILC, and a sustained improvement in leverage at the manufacturing businesses. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- Mid-cycle manufacturing debt net of advances to TILC/EBITDA is sustained above 3.5x; -- A material increase in leverage (tangible debt/equity) at TILC above 4.0x or significant asset quality deterioration; -- Large debt-funded acquisitions and/or share repurchases; -- The need for significant financial support for TILC. LIQUIDITY AND DEBT STRUCTURE Adequate Liquidity: Trinity had liquidity totaling $760 million as of March 31, 2020. This included $213 million in cash and marketable securities plus $285 million available on a $450 million unsecured revolver, which matures in November 2023, and $262 million available on a $750 million warehouse facility at TILC, which matures in March 2021. TILC uses the facility and to fund railcar purchases on an interim basis until permanent funding is obtained from securitizations or sales to investment vehicles. Trinity had $1.5 billion net book value of unpledged equipment as of March 31, 2020. This equipment could be used as collateral for the warehouse facility or it could be sold. In addition, leasing cash flow will benefit from sizable tax refunds related to the CARES Act in 2020 and 2021. Debt Structure: Trinity had $4.9 billion of debt as of March 31, 2020, composed of $130 million drawn on the revolver, $400 million of senior notes at the parent company and $4.4 billion of nonrecourse debt at TILC. Trinity does not have a legal obligation to repay TILC's nonrecourse debt, but Fitch expects the parent would support TILC if necessary. Both the senior notes and the revolver are guaranteed by the following 100%-owned subsidiaries: Trinity Highway Products, LLC; Trinity Industries Leasing Company; Trinity Rail Group, LLC; Trinity Tank Car, Inc.; Trinity North American Freight Car, Inc.; and Trinity Rail Maintenance Services, Inc. TILC Leverage: Under Fitch's criteria for rating non-financial corporates, Fitch calculates an appropriate target debt/equity ratio for a finance subsidiary based on asset quality and funding, liquidity and coverage metrics. In TILC's case, Fitch calculates a target leverage ratio of 3.0x, compared with debt/equity of 1.9x at the end of 2019. Trinity does not maintain a formal support agreement with TILC, but it has an undertaking agreement to ensure leasing contracts are serviced in the event TILC were to default. The bank revolver includes a cross default to Trinity's performance under the agreement. SUMMARY OF FINANCIAL ADJUSTMENTS Fitch's analysis takes into account Trinity's results on a consolidated basis and the results for its manufacturing and leasing operations on a stand-alone basis. Fitch has made no material adjustments that are not disclosed within the company's public filings. 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). TRUCK HERO: Moody's Confirms B3 CFR, Outlook Stable --------------------------------------------------- Moody's Investors Service confirmed the ratings of Truck Hero, Inc. - Corporate Family Rating ("CFR") and Probability of Default Rating at B3, and B3-PD, respectively; and first lien senior secured facilities at B2; and second lien senior secured term loan at Caa2. The outlook is stable. This action concludes the review for downgrade initiated on March 26, 2020. Confirmations: Issuer: Truck Hero, Inc. Corporate Family Rating, at B3 Probability of Default Rating, at B3-PD Senior Secured 1st Lien Bank Credit Facility, at B2 (LGD3) Senior Secured Regular Bond/Debenture, at B2 (LGD3) Senior Secured 2nd Lien Bank Credit Facility, at Caa2 (LGD6) Outlook Action: Issuer: Truck Hero, Inc. Outlook, Changed To Stable from Rating Under Review RATINGS RATIONALE Truck Hero's ratings reflect Moody's expectation that management's cost reduction and working capital remediation actions will largely mitigate the negative impact of the coronavirus pandemic's on demand over the coming quarters. Nonetheless, as sales grow with more states opening up over the coming months, Truck Hero is anticipated to gradually reverse cost savings action to support sales growth. Still the company should generate free cash flow. Moody's expects Truck Hero's 2020 free cash flow to be as much as $70 million, with further debt reduction by year-end 2020. This view is supported by the company's strong free cash flow generation in the second half of 2019 with the successful integration of previous acquisitions completed earlier in 2019. The company used this cash flow for $50 million of debt reduction under the bank credit facilities in late 2019. This debt reduction and the company's ongoing operating performance in the first fiscal quarter of 2020, resulted in Debt/EBITDA reduction to 6.8x at March 31, 2020 (after Moody's standard adjustments). The stable rating outlook reflects Moody's expectation that Truck Hero's cost actions and working capital wind down will support strong free cash flow generation in 2020 available for debt paydown in 2020 as state economies open up. The risk of a second wave of reinfection rates is somewhat mitigated by Moody's belief that management can repeat previous cost and working capital reduction actions executed in early 2020. Truck Hero has good liquidity into 2020, with cash of about $28 million (as of March 31, 2020) and about $93 million available under its $100 million revolving credit facility. Moody's estimates free cash flow generation in 2020 could be as much as $70 million, similar to 2019, driven by working capital wind down and cost containment actions initiated by the company in March 2020. As such, the revolving credit facility should be largely available through 2020. The financial maintenance covenant for the senior secured credit facilities is a springing maximum first lien net leverage ratio test which is not expected to trigger over the next 12-15 months. As such, Truck Hero can draw under its revolving credit facility to support cash on hand without triggering the springing covenant test threshold. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Truck Hero's ratings could be upgraded if the company sustains EBITA/interest expense above 2x and Debt/ EBITDA sustained below 5.5x. Truck Hero's ratings could be downgraded if EBITA/interest expense is expected to be sustained below 1x, if Debt/ EBITDA is expected to be sustained above 6.5x, or if liquidity deteriorates. A financial policy focused on further debt funded acquisitions, or shareholder distributions rather than debt reduction could also lower the company's rating. Truck Hero's products and services are not directly exposed to material environmental risks arising from increasing regulations on carbon emissions. While automotive manufacturers continue to announce the introduction of electrified products to meet increasingly stringent regulatory requirements, demand for the company's products are not dependent on a vehicle's powertrain. Yet, Moody's believes that with ongoing improvements in fuel efficiency, pick-up truck demand will remain robust for the foreseeable future. The principal methodology used in these ratings was Automotive Supplier Methodology published in January 2020. Truck Hero, Inc. is a wholly-owned subsidiary of Truck Holdings Inc. (a non-operating holding company). The company manufactures truck bed covers, bed liners, truck caps, and sells truck accessory products through its online retail business throughout the United States and Canada. Revenues for 2019 were $1.2 billion. The company is owned by affiliates of CCMP Capital Advisors, LP. TUNNEL HILL: S&P Lowers ICR to 'B-' on Expected Operating Weakness ------------------------------------------------------------------ S&P Global Ratings lowered its issuer credit rating on Tunnel Hill Partners (THP) to 'B-' from 'B'. At the same time, S&P lowered its rating on the company's first-lien debt to 'B-' from 'B'. The downgrade reflects S&P's expectation for S&P Global Ratings-adjusted leverage to near 9x in 2020 on a stand-alone basis. THP derives a signification portion of its revenue from the construction and demolition (C&D) markets, which S&P considers to be volatile and expects to perform poorly this year as a result of the impact from COVID-19. The company provides use of its landfills and transfer stations to construction-related customers, primarily within the Northeast U.S. S&P expects construction activity within this region to be materially worse than previously expected given government shutdowns and muted economic activity. Specifically, S&P's economists forecast an 11.8% decline in nonresidential construction activity. As such, S&P has incorporated double-digit decline within its base case for 2020, resulting in S&P-adjusted leverage in the 9x area for the year along with negative free operating cash flow (FOCF) generation. The company's financial consolidation with Granite Acquisition, however, could provide upside to the rating. Macquarie Infrastructure Partners, owner of THP, announced in late 2019 its intention to combine THP along with another portfolio company, Wheelabrator (WTI) (parent company of Granite Acquisition Inc.). S&P believes there is a high likelihood that the consolidation is completed, given that both companies are owned by Macquarie Infrastructure Partners and they are run by the same management team. The companies, however, currently have separate legal and capital structures. WTI is a waste company that primarily converts waste into energy, which tends to be a relatively stable revenue stream given the majority of its revenues are long-term contracted with highly rated municipalities. While the financial consolidation has been delayed due to the COVID-19 outbreak, S&P expects Macquarie to complete the integration by sometime in 2021, pending the sale of WTI's U.K. assets. S&P views the company's liquidity position as less than adequate given deteriorating revolver headroom. The company has no near-term maturities and is currently able to meet its fixed charges somewhat comfortably. Given its forecast, however, S&P expects the headroom under the company's covenant to diminish rapidly. Under its base-case forecast, S&P expects the company to likely breach its leverage covenant for its June 30, 2020, period. However, S&P believes the company will address the deficit through an equity cure in the short term. S&P could lower the ratings further if it believes the deficit becomes more pronounced, requiring additional equity infusions. "The developing outlook reflects our view that in the next 12 months the company's credit quality could improve if Macquarie completes the integration of THP and Granite Acquisition and completes its sale of Granite's U.K. assets. In this scenario, we believe the company would refinance its existing debt, with a more conservative financial profile at the combined company," S&P said. "We could lower the rating if the integration with WTI is further delayed or terminated and we expect liquidity to remain constrained. We could also lower the rating if the company underperforms our expectations on a stand-alone basis, resulting in meaningfully negative FOCF," the rating agency said. S&P could raise its ratings on the company if it merges with WTI and the combined entity maintained a more manageable capital structure. UNIT CORP: Fitch Withdraws 'D' LongTerm IDR on Bankruptcy --------------------------------------------------------- Fitch Ratings has withdrawn the following Unit Corporation Ratings: -- 'D' Long-Term Issuer Default Rating; -- 'CCC+'/'RR1' senior secured credit facility rating; and -- 'C'/'RR6' senior subordinated notes rating. The ratings were withdrawn due to Bankruptcy of the Rated Entity, Debt restructuring and Issue/Tranche Default. KEY RATING DRIVERS Fitch Ratings has withdrawn the ratings as Unit Corporation has entered into bankruptcy. Accordingly, Fitch will no longer provide ratings or analytical coverage. RATING SENSITIVITIES Rating sensitivities do not apply; the ratings are being withdrawn. 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). Unit Corporation - LT IDR WD; Withdrawn - Subordinated; LT WD; Withdrawn - Senior secured; LT WD; Withdrawn UNITED METHODIST: Unsecureds to Get $17K Per Month for 180 Months ----------------------------------------------------------------- Debtors The United Methodist Village, Inc. and Village Health Care Management, LLC, filed an Amended Plan of Reorganization and an Amended Disclosure Statement on May 29, 2020. The Debtors will be conducting a public auction of several parcels of real estate including: (1) 12 single-family brick homes; (2) a 32-unit apartment building called the McKiou Center; (3) single-family home at 1701 16th Street; (4) single-family home at 1516 17th Street; (5) 25 apartments; (6) the Holden Center located at 1616 Cedar Street; (7) a maintenance building at 1701 Ash Street; (8) a maintenance building at 1158 Pine Street; and (9) approximately 10 acres of scrub ground. The Debtors conservatively estimate that the sale will yield approximately $3,000,000, which will allow the Debtors to satisfy the loan with Citizens National Bank of Albion, priority tax claims owed to the Illinois Department of Employment Security, Illinois Department of Revenue, and Internal Revenue Service. The remaining balance will be distributed to the general, unsecured creditors on a pro rata basis. Class 5 Priority, Unsecured Claims of the Department of the Treasury Internal Revenue Service, Illinois Department of Revenue, Illinois Department of Employment Security, and Illinois Healthcare & Family Services will be paid 100% of the allowed claims totaling approximately $855,349 from the net proceeds of the real estate. Holders of Class 6 general unsecured claims will receive 100% of their respective allowed claims. The Debtors will the liquidating real estate at public auction. The Debtors will first pay the transaction costs associated with the sale. Then, the Debtors will pay the secured claims in Classes3. Then, the Debtors will pay the claims in Class 6. The remaining balance of $1,710,102 will be distributed to the creditors in Class 6 on a pro rata basis. That will leave a balance of approximately $2,473,678.42. The Debtors will also fund a pool in the amount of $17,083 each month for a period of 180 months beginning upon the effective date of the Plan. The Debtors will disburse the money each month to the creditors of Class 6 on a pro rata basis. A full-text copy of the Amended Disclosure Statement dated May 29, 2020, is available at https://tinyurl.com/y7a4t662 from PacerMonitor at no charge. The Debtors are represented by: Roy Jackson Dent, III DENT LAW OFFICES, LTD. P.O. Box 1633 415 W. Virginia Ave. Effingham, IL 62401 Telephone 217-330-5500 Facsimile 866-870-6855 E-mail: notices@dentlawoffices.com About The United Methodist Village The United Methodist Village, Inc., is a non-profit nursing home based in Lawrenceville, Illinois. The United Methodist Village filed for Chapter 11 bankruptcy protection (Bankr. S.D. Ill. Case No. 19-60046) on Feb. 22, 2019. In the petition signed by Ashli Wesley, administrator, the Debtor disclosed $13,779,571 in assets and $7,164,533 in liabilities. USA COMPRESSION: Fitch Affirms BB- LongTerm IDR, Outlook Negative ----------------------------------------------------------------- Fitch Ratings has affirmed the Long-term Issuer Default Rating of USA Compression Partners, LP at 'BB-' and the senior unsecured ratings of USAC and co-issuer USA Compression Finance Corp.'s senior unsecured notes at 'BB-'/'RR4'. Additionally, Fitch has affirmed USAC's senior secured rating on USAC's secured asset-based revolving credit facility at 'BB+'/'RR1.' The Rating Outlook is revised to 'Negative' from 'Stable'. The negative outlook reflects Fitch's expectation that near-term EBITDA will be pressured by the effects of the weak commodity price environment on the demand for compression services. Fitch forecasts the stress on EBITDA to cause the partnership's leverage to go above Fitch's negative sensitivity by YE20 and stay there for at least several more quarters. EBITDA weakness also prompts concerns about bank covenants. The Outlook further reflects the significant amount of uncertainty as to how quickly demand for compression returns as the economy and the commodity price environment improve, and when fleet utilization will return to pre-coronavirus levels. USAC's ratings are reflective of the partnership's size, scale, customer and geographic diversity. USAC's operations are supported by primarily fixed-fee, take-or-pay contracts with little direct volumetric and commodity price-based risks. A long-dated maturity profile positions USAC to execute through the trough created by the weak commodity price environment. The ratings recognize that the partnership has relatively high leverage, following the acquisition of CDM Resource Management LLC and CDM Environmental & Technical Services LLC and that leverage is expected to remain higher for longer due to the effects of the current commodity price environment on the demand for compression services. USAC's ratings also account for the partnership's exposure to relatively short average contract lengths, a high degree of competition in the compression services market and the threat of disintermediation of its services by upstream or other midstream operators. KEY RATING DRIVERS Leverage Trend Knocked Off Course: Leverage (defined as total debt with equity credit-to-adjusted EBITDA) has been high since the completion of the CDM transaction in April 2018 and was steadily improving through 1Q20. USAC ended 2018 with leverage of over 6.0x, but recovered somewhat by the end of 2019 when leverage was approximately 5.0x. Fitch expects the events of 2020 to push back the deleveraging timeline and cause USAC to go above Fitch's negative leverage sensitivity of 5.5x by the end of 2020. Fitch acknowledges that USAC may bump up against its bank agreement 5.0x leverage covenant in the near term but expects that the partnership would be able to negotiate relief with its bank group if it became necessary. Fitch expects leverage to fall over time as the effects of the weak commodity price environment on demand for compression services wears off and fleet utilization improves. Fitch's expectation of USAC's longer-term leverage range of 5.0x-5.5x is relatively high for a midstream master limited partnership, particularly in a fragmented market such as gas compression services with significant competition. Relatively Stable Cash Flows: USAC's contracts are 100% fixed-fee, take-or-pay contracts with no volumetric or commodity price-based revenues. USAC has a strong track record of average fleet horsepower utilization going back to 2007 of approximately 93%. During the most recent commodity price downturn in 2015-2016, the partnership saw its utilization average for the full year in 2016 fall to approximately 87%, its lowest point since 2007. For the year ended Dec. 31, 2019, utilization averaged 94% and decreased marginally in 1Q20 to 92.5%. Fitch expects utilization to fall in 2Q20 and bottom out in 3Q20 due to the effects of the commodity price downturn on oil and gas production levels. Utilization is expected to begin to recover in 4Q20 and continue to improve in 2021. Recently, Fitch raised its outlook for Henry Hub natural gas prices in 2021 and 2022 to $2.45/mcf in each year from $2.10/mcf in 2021 and $2.25/mcf in 2022. USAC's focus on larger horsepower, midstream focused compression applications like regional gathering, gas processing plant compression and central gathering with unit specific contracts provides it some competitive advantages and creates high barriers to exit for some customers, making USAC's services hard or costly to replace. Average contract length is relatively short, but USAC has a good history with customer renewal and long-term relationships with many of their customers. Fitch believes these factors should contribute to relatively stable earnings and cash flow for USAC as utilization rebounds toward historical levels. Highly Competitive Market: Fitch expects the already competitive compression services market to be increasingly competitive as producers measure costs more closely in the lower commodity price environment. High competition throughout the midstream value chain could pressure profitability at service providers like USAC. Fitch notes, however, that USAC does not focus on gas wellhead compression, which tends to be smaller compression and the most competitive area of the compression services subsector given its low barriers to entry. USAC's focus on large horsepower generally provides longer-term contracts and higher barriers to exit. Compression is generally a "must run"-type asset critical to the transportation of natural gas, and large, higher horsepower compression, once in place, is costly to replicate or replace. Larger compression units also require longer lead times to be acquired from engine manufacturers, creating a slightly higher barrier to entry. Increased Size, Scale and Geographic Diversity: USAC operates across the U.S. in various shale plays, including the Marcellus, Eagle Ford, Utica, Mississippi Lime, Granite Wash, Woodford, Barnett, Permian Basin, Haynesville and Fayetteville shales. The acquisition of CDM in 2018 effectively doubled the partnership's horsepower and provided complementary geographic and customer diversity with limited overlap. While USAC is not directly exposed to commodity prices, its performance is positively correlated with production growth. The partnership's geographic diversity provides a measure of insulation from downturns in the drilling economics and production levels of any one particular region and allows it to maintain more stable utilization rates across the fleet. Sponsor Relationship: USAC's ratings are largely reflective of its stand-alone credit profile with no express linkage to its ultimate sponsor and general partner Energy Transfer LP (ET; BBB-/Stable). USAC's ratings do consider its relationship with ET as being generally favorable. ET, through its subsidiary Energy Transfer Operating, L.P. (ETO; BBB-/Stable), owns a significant amount of USAC's outstanding limited partnership units and is expected at some point in the future to potentially exit some of its position in USAC. Fitch notes that ET/ETO has generally been a supportive sponsor and general partner to both USAC and its other operating partnerships. ESG Considerations: USAC has a relevance Score of 4 for Group Structure and Financial Transparency as it possesses complex group structure, with significant related party transactions and ownership concentration. This has a negative impact on the credit profile and is relevant to the rating in conjunction with other factors. DERIVATION SUMMARY USAC's ratings are reflective of its size, scale, customer and geographic diversity, as well as its high expected leverage relative to other 'BB' category rated midstream-focused service providers. The ratings also consider that USAC's cash flow is supported by fixed-fee based contracts with a fairly diverse set of counterparties. USAC's contract tenor is relatively short compared with other midstream peers, with between 25%-35% of revenue tied to compression services provided on a month-to-month basis to customers continuing to utilize USAC's services following expiration of the primary term of their contracts. Fitch notes that USAC has a good history of customer retention and has long-term relationships with all its largest customers. Nevertheless, the shorter tenor contracts compare less favorably with more highly rated natural gas pipeline and other midstream services names. Within the 'BB' category, USAC is at the low end at 'BB-'. It is one notch below its affiliate partnership Sunoco, LP, which is expected to maintain longer-term leverage in the 4.5x to 5.0x range. USAC's leverage is also relatively high compared to 'BB' rated AmeriGas Partners, LP for which Fitch expects to have leverage of 4.3x to 4.6x once the near-term effects of the coronavirus pandemic have diminished. KEY ASSUMPTIONS -- Utilization declines in 2Q20 and bottoms in 3Q20 before rebounding slightly in 4Q and into 2021; -- Fitch base case price deck, e.g. Henry Hub natural gas prices in 2021, 2022 and long term at $2.45/mcf; -- Growth spending moderating in the near term and maintenance capital spending of between $25 million and $35 million annually; -- No distribution growth through the forecast; -- No equity issuances for balance of forecast, any cash needs funded by revolver borrowings; -- Should it be necessary, management is able to negotiate covenant relief with its bank group. RATING SENSITIVITIES Developments That May, Individually or Collectively, Lead to a Positive Rating Action -- Fitch would look to stabilize the outlook if leverage (Total Debt with Equity Credit/Adjusted EBITDA) is expected to be at or below 5.5x on a sustained basis; -- Leverage at or below 5.0x on a sustained basis could lead to an upgrade; -- An increase in size, scale and average contract term while maintaining leverage below 5.5x; Developments That May, Individually or Collectively, Lead to a Negative Rating Action -- Leverage (Total Debt with Equity Credit/Adjusted EBITDA), above 5.5x on a sustained basis, inclusive of preferred equity receiving 50% debt treatment; -- Distribution coverage below 1.0x on a sustained basis; -- Failure to maintain leverage below the bank agreements financial covenants or to obtain covenant relief if needed would lead to a negative rating action. 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 Liquidity Adequate: Fitch considers USAC's liquidity to be adequate and remain so over the near to intermediate term. USAC currently has a $1.6 billion revolving credit facility that matures in April 2023. USAC has the option to increase the amount of total commitments under the revolving credit facility by $400 million, subject to receipt of lender commitments and satisfaction of other conditions. As of March 31, 2020, USAC had outstanding borrowings of $459.3 million with borrowing base availability (based on USAC's borrowing base) of $1.1 billion and available borrowing capacity of $185.9 million under its covenants. Financial covenants permit a maximum funded debt-to-EBITDA ratio of 5.0x and a minimum EBITDA to interest coverage ratio of 2.5x. USAC was in compliance with its covenants as of March 31, 2020. Maturities are limited with the nearest term maturity for USAC being the 2023 revolving credit facility. The largest component of the borrowing base (approximately 95%) consists of eligible compression units, and the rest consists of eligible inventory and accounts receivable. The security package underlying the borrowing base is robust relative to the $1.6 billion commitment on the asset backed credit facility. SUMMARY OF FINANCIAL ADJUSTMENTS Fitch has applied 50% debt credit to USAC's preferred equity units and applied an 8x multiple to operating leases. 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 USA Compression Partners, LP: Group Structure: 4 Except for the matters discussed, the highest level of ESG credit relevance, if present, is a score of 3 - ESG issues are credit neutral or have only a minimal credit impact on the entity(ies), either due to their nature or the way in which they are being managed by the entity(ies). USA Compression Partners, LP - LT IDR BB-; Affirmed - Senior unsecured; LT BB-; Affirmed - Senior secured; LT BB+; Affirmed USA Compression Finance Corp. - Senior unsecured; LT BB-; Affirmed VALERITAS HOLDINGS: Court to Confirm Chapter 11 Plan ---------------------------------------------------- Rick Archer, writing for Law360, reports that on June 4, 2020, a Delaware judge gave her approval to the Chapter 11 plan of drug technology company Valeritas Holdings Inc., one of the first insolvency cases countrywide that blamed the COVID-19 outbreak for the company's trip into bankruptcy. During a hearing held via telephone, U.S. Bankruptcy Judge Laurie Selber Silverstein said she will sign off on the confirmation order once some final revisions are made to clarify liability releases that will be given to certain parties under the plan. Judge Silverstein rejected provisions that would have expanded provisions protecting lenders from potential claims against them, but noted the lenders are already shielded by other terms in the plan. The judge asked the parties to shore up language dealing with liability releases before submitting a final order to the court. The U.S. Trustee's representative Richard L. Schepacarter had argued that exculpation provision in Valeritas' Chapter 11 plan were too broad and would protect prepetition lenders from too wide a swath of potential liability causes of actions. "This is about a very narrow subset of releases," said prepetition lender Jeffrey S. Sabin of Venable LLP. The releases were included in the plan because the lenders were deemed to have made a "significant contribution" in moving the bankruptcy along, including allowing the use of their cash collateral and agreeing to certain concessions to resolve issues. But the judge questioned if expanded exculpation provisions were warranted or even needed given other liability releases included in the plan. Once the order is revised, the judge said she will finalize the plan's confirmation. In March, Judge Silverstein approved the $23 million sale of the New Jersey-based diabetes drug technology company to Zealand Pharma AS, a Denmark-based biotech company. Valeritas had cited the coronavirus outbreak's impact on its Chinese factories in its Chapter 11 filing. Valeritas and three affiliates hit bankruptcy in February, saying years of losses and a one-two punch of late-year manufacturing problems and coronavirus-related production disruptions sent it into default on its debt and left it no way to preserve the company other than a Chapter 11 sale with a $23 million stalking horse bid in hand from Zealand. Earlier in the case, Judge Silverstein also signed off on an agreement between Valeritas, the committee of unsecured creditors, and prepetition lender agent CRG Servicing LLC by which the lenders will share some estate proceeds with unsecured creditors. Under the deal, prepetition lenders agreed to subordinate their unsecured claim to clear the way for unsecured creditors to get a distribution from the bankruptcy estate. Prepetition lenders have a total claim of about $22 million, roughly $18 million of which is unsecured, according to comments at a previous hearing. On Thursday, Sabin said $2.5 million remains to be distributed to unsecured creditors and pay off remaining administrative claims. Valeritas is represented by Maris J. Kandestin and Rachel Ehrlich Albanese of DLA Piper. About Valeritas Holdings Valeritas Holdings, Inc. (OTCPK: VLRXQ) -- https://www.valeritas.com/ -- is a commercial-stage medical technology company focused on improving health and simplifying life for people with diabetes by developing and commercializing innovative technologies. Valeritas' flagship product, V-Go Wearable Insulin Delivery device, is a simple, affordable, all-in-one basal-bolus insulin delivery option for adult patients requiring insulin that is worn like a patch and can eliminate the need for taking multiple daily shots. V-Go administers a continuous preset basal rate of insulin over 24 hours, and it provides discreet on-demand bolus dosing at mealtimes. It is the only basal-bolus insulin delivery device on the market today specifically designed keeping in mind the needs of type 2 diabetes patients. Headquartered in Bridgewater, New Jersey, Valeritas operates its R&D functions in Marlborough, Massachusetts. Valeritas Holdings, Inc. and three affiliates sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 20-10290) on Feb. 9, 2020. Valeritas Holdings disclosed $49.2 million in total assets and $38.2 million in total debt as of Sept. 30, 2019. Judge Laurie Selber Silverstein oversees the cases. The Debtors tapped DLA Piper LLP (US) as legal counsel; Lincoln International as investment banker; PricewaterhouseCoopers LLP as financial advisor; and Kurtzman Carson Consultants LLC as claims agent. The prepetition lenders are represented by Daniel A. O'Brien, Jeffrey S. Sabin and Carol Weiner Levy of Venable LLP. VERTEX ENERGY: All Four Proposals Passed at Annual Meeting ---------------------------------------------------------- The 2020 Annual Meeting of Stockholders of Vertex Energy, Inc. was held on June 17, 2020, at which the stockholders: (a) elected Benjamin P. Cowart, Dan Borgen, David Phillips, Christopher Stratton, Timothy Harvey, and James P. Gregory as directors, each to serve a term of one year and until their respective successors have been elected and qualified, or until their earlier resignation or removal; (b) ratified the Company's 2019 Equity Incentive Plan; (c) approved the Company's 2020 Equity Incentive Plan; and (d) ratified the appointment of Ham, Longston & Brezina, L.L.P., as the Company's independent auditors for the fiscal year ending Dec. 31, 2020. About Vertex Energy Houston-based Vertex Energy, Inc. (NASDAQ: VTNR) is a specialty refiner of alternative feedstocks and marketer of petroleum products. Vertex is one of the largest processors of used motor oil in the U.S., with operations located in Houston and Port Arthur (TX), Marrero (LA) and Heartland (OH). Vertex also co-owns a facility, Myrtle Grove, located on a 41-acre industrial complex along the Gulf Coast in Belle Chasse, LA, with existing hydro-processing and plant infrastructure assets, that include nine million gallons of storage. The Company has built a reputation as a key supplier of Group II+ and Group III base oils to the lubricant manufacturing industry throughout North America. Vertex reported a net loss of $5.48 million for the year ended Dec. 31, 2019, compared to a net loss of $1.98 million for the year ended Dec. 31, 2018. As of March 31, 2020, the Company had $125.52 million in total assets, $50.68 million in total liabilities, and $48.52 million in total temporary equity, and $26.32 million in total equity. "Given the ongoing COVID-19 pandemic, challenging market conditions and recent market events resulting in industry-wide spending cuts, we continue to remain focused on maintaining a strong balance sheet and adequate liquidity. Over the near term, we plan to reduce, defer or cancel certain planned capital expenditures and reduce our overall cost structures commensurate with our expected level of activities. We believe that our cash on hand, internally generated cash flows and availability under the Revolving Credit Facility will be sufficient to fund our operations and service our debt in the near term. A prolonged period of weak, or a significant decrease in, industry activity and overall markets, due to COVID-19 or otherwise, may make it difficult to comply with our covenants and the other restrictions in the agreements governing our debt. Current global and market conditions have increased the potential for that difficulty," the Company stated in its Quarterly Report for the period ended March 31, 2020. VPR BRANDS: Issues $100K Unsecured Promissory Note to CEO --------------------------------------------------------- VPR Brands, LP issued a promissory note in the principal amount of $100,001 to Kevin Frija, who is the Company's chief executive officer, president, principal financial officer, principal accounting officer and chairman of the Board, and a significant stockholder of the Company. The principal amount due under the Note bears interest at the rate of 24% per annum, and the Note permits Mr. Frija to deduct one ACH payment from the Company's bank account in the amount of $500 per business day until the principal amount due and accrued interest is repaid. Any unpaid principal amount and any accrued interest is due on June 22, 2021. The Note is unsecured. About VPR Brands Headquartered in Ft. Lauderdale, FL, VPR Brands -- http://www.VPRBrands.com-- is a technology company whose assets include issued U.S. and Chinese patents for atomization-related products, including technology for medical marijuana vaporizers and electronic cigarette products and components. The Company is also engaged in product development for the vapor or vaping market, including e-liquids, vaporizers and electronic cigarettes (also known as e-cigarettes) which are devices which deliver nicotine and or cannabis and cannabidiol (CBD) through atomization or vaping, and without smoke and other chemical constituents typically found in traditional products. As of Dec. 31, 2019, the Company had $1.27 million in total assets, $2.95 million in total liabilities, and a total partners' deficit of $1.68 million. Prager Metis CPA's LLC, in Hackensack, New Jersey, the Company's auditor since 2018, issued a "going concern" qualification in its report dated June 9, 2020, citing that the Company incurred a net loss of $1,179,010 for the year ended Dec. 31, 2019 and has an accumulated deficit of $9,778,394 and a working capital deficit of $1,704,753 at Dec. 31, 2019. These factors, among others, raise substantial doubt regarding the Company's ability to continue as a going concern. WALTER P SAUER: Plan of Reorganization Confirmed by Judge --------------------------------------------------------- Judge Nancy Hershey Lord has entered findings of fact, conclusions of law and order approving disclosure statement and confirming amended plan of reorganization for debtor Walter P Sauer LLC. As required by Section 1129(a)(3) of the Bankruptcy Code, the Plan has been proposed in good faith and not by any means forbidden by law. The Debtor has valid and legitimate business reasons for proposing the Plan. The requirements of Section 1129(a)(8) of the Bankruptcy Code are satisfied with respect to each class of claims or interests because such class has accepted the Plan or is not impaired under the Plan. A copy of the order dated May 29, 2020, is available at https://tinyurl.com/ybtccggx from PacerMonitor at no charge. About Walter P. Sauer LLC Walter P. Sauer LLC is a furniture manufacturer based in Brooklyn, New York. Walter P. Sauer LLC filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code on July 8, 2019. In the petition signed by Anthony Morris, managing member, the Debtor was estimated to have up to $50,000 in assets and $1 million to $10 million in liabilities. Lawrence Morrison, Esq. at Morrison Tenenbaum, PLLC, represents the Debtor. WHITE'S PLACE: Unsecureds to Receive 100% Via Quarterly Payments ---------------------------------------------------------------- Debtor White's Place, LLC filed with the U.S. Bankruptcy Court for the Middle District of Florida, Tampa Division, a Plan of Reorganization and a Disclosure Statement on June 4, 2020. Class 5 Holder(s) consist of Allowed Claims of general unsecured creditors not otherwise classified in the Plan. Unsecured creditors will be paid in full of their Allowed Claims in 12 equal pro rata quarterly installments beginning on the first full quarter following the Effective Date out of the Debtor’s projected free cash flow from operations and/or out of the Litigation Proceeds. Class 6 consists of the PPP Loan. The Debtor will file a separate motion to approve the PPP Loan. If the PPP Loan is determined to be forgivable the Debtor will incur no additional obligations under this Plan. If the PPP Loan is determined not to be forgivable, the Debtor will repay the PPP Loan pursuant to the terms of a standard PPP note. Class 7 consists of ownership interests currently issued or authorized in the Debtor. The Equity Holders will retain their interest(s) in the Debtor to the same extent held prior to the Petition Date. The Debtor will fund payments to be made under the Plan through the following: (A) Cash on hand on the Effective Date, (B) Cash generated in the ordinary course of business on and after the Effective Date, and (C) the Litigation Proceeds. The Reorganized Debtor’s operations will be funded by Cash generated from operations. On or after the Effective Date, the business and affairs of the Debtor including the conduct of the Airport Litigation shall continue to be managed by Michael Tomkovich, as manager. A full-text copy of the Disclosure Statement dated June 4, 2020, is available at https://tinyurl.com/y7mk8pkq from PacerMonitor.com at no charge. Counsel to the Debtor: David S. Jennis Daniel E. Etlinger Jennis Law Firm 606 E. Madison St. Tampa, FL 33602 Tel: (813) 229-2800 E-mail: dejennis@jennislaw.com ecf@jennislaw.com About White's Place White's Place, LLC, filed a Chapter 11 bankruptcy petition (Bankr. M.D. Fla. Case No. 19-07777) on Aug. 16, 2019, disclosing under $1 million in both assets and liabilities. The case is assigned to Judge Catherine Peek McEwen. The Debtor is represented by David S. Jennis, Esq., at Jennis Law Firm. YETI INVESTMENT: July 14 Disclosure Statement Hearing Set --------------------------------------------------------- On May 28, 2020, debtor Yeti Investment, LLC, filed with the U.S. Bankruptcy Court for the Eastern District of Texas, Sherman Division, a Disclosure Statement and a Plan. On May 29, 2020, Judge Brenda T. Rhoades ordered that: * July 14, 2020, at 9:30 am in Plano - U. S. Bankruptcy Court, 660 N. Central Expressway, Third Floor, Plano, Texas 75074 is the hearing to consider the approval of the Disclosure Statement. * July 7, 2020 is fixed as the last day for filing and serving in accordance with Federal Rules of Bankruptcy Procedure 3017(a) written objections to the Disclosure Statement. * Within 11 days after entry of this order, the Debtor shall distribute the Disclosure Statement and Plan only to the Debtor, Trustee, any appointed committee and it's counsel, the Securities and Exchange Commission, and to all parties who have filed a Notice of Appearance with the Court in accordance with Fed. R. Bankr. P. 3017(a). A copy of the order dated May 29, 2020, is available at https://tinyurl.com/y9y2faha from PacerMonitor at no charge. The Debtor is represented by: Eric A. Liepins 12770 Coit Road Suite 1100 Dallas TX 75251 About Yeti Investment Yeti Investment, LLC, owns a real property in 2452 Fm 3364, Princeton Texas having a current value of $3.9 million. Yeti Investment filed a Chapter 11 petition (Bankr. E.D. Tex. Case No. 20-40627) on March 2, 2020. At the time of filing, the Debtor had $3,900,000 in total assets and $2,156,000 in total liabilities. The Debtor's counsel is Eric A. Liepins, Esq. of ERIC A. LIEPINS. [*] Bankruptcy Sales During Pandemic Carry Hidden Risks ------------------------------------------------------- Phillip Ebsworth and John Yslas of Seyfarth Shaw LLP wrote on JDSupra an article titled "Is a Purchase in Bankruptcy Really Free and Clear of Liability During COVID-19?" Seyfarth Synopsis: In acquiring a company in bankruptcy, there is often a tendency to think this guarantees the purchaser will be “free and clear” of any liability (including so-called "successor liability"). This is not necessarily so with wage and hour liability, particularly if the purchaser merely continues to operate virtually the same business that was acquired. Ordinarily, a bankruptcy debtor's sale of property 'free and clear' of interests under Bankruptcy Code Section 363(f) excises from the sold assets any claims made on a theory of successor liability. The purchaser is shielded from successor liability claims in accord with public policy underlying the Bankruptcy Code, including the inequality of allowing one creditor to pursue a purchaser of assets for successor liability while other creditors' recourse is limited to the proceeds of the asset sale. However, although rarely applied, some bankruptcy courts have found exceptions to this 'free and clear' transfer where: (1) the successor expressly or impliedly assumes the liabilities; (2) there is an actual or de facto consolidation or merger of the two companies; (3) the purchaser is a mere continuation of the seller; or (4) the transaction was entered into fraudulently to escape liability. This not-often-discussed and rarely-applied exception is similar to that which has developed in connection with asset purchase sales (which was first recognized under the FLSA and has recently continued to develop in state statutes), as we previously wrote about here. Moreover, in a post-COVID-19 world, it is foreseeable that public policy concerns may continue to further shift away from protecting the purchaser or employer and in favor of protecting the creditor or employee—making the application of such exceptions more common. Although some of the COVID-19 legislation passed has benefited employers -- for example, California’s relaxation of Cal-WARN notification requirements -- much of the legislation and the public policy discussion has focused on protection of employees and even independent contractors. As one example, legislators have enacted additional paid sick leave requirements at the federal, state, and local level and job protection for employees who could not, or did not, work for COVID-19-related reasons. And uncertainty remains on significant issues such as California’s final pay requirements for employers in the context of furloughs. The COVID-19 pandemic will likely lead to more distressed businesses and bankruptcies in the near future. COVID-19 related legislative efforts may then pivot to focus on the bankruptcy arena. For example, the City of Los Angeles has implemented a citywide worker retention ordinance which requires any purchaser of a business to give priority in hiring to the seller's employees for the first six months and prohibits discharge of the seller's employees without cause for the first 90 days. It is unclear whether this ordinance would apply to a bankruptcy sale, but arguably, Bankruptcy Code Section 363(f) would preempt any such municipal or state legislation and relieve a purchaser in bankruptcy of these obligations. The pandemic has also greatly increased legal compliance risks to businesses. The seemingly constant modifications to federal, state, and local laws and executive orders regarding everything from requirements for businesses to remain open to sick leave for employees has created a dizzying maze of regulations complete with the bear traps and trip wires of steep monetary penalties and class action litigation exposure. With the primary focus seemingly on employee protection, it is foreseeable that courts may more frequently utilize the previously rare "exceptions" allowing successor liability in the bankruptcy context. Thus, inheriting successor liability should be kept in mind when considering distressed asset purchases. The risk that the purchased asset will not be 'free and clear' of such claims should be factored into the purchase price, making due diligence for labor and employment compliance (and considering putting aside monies for potential liability including potential litigation) all the more important. Further, representations and warranties insurance should be considered, as we previously explained at length here. That said, section 363 purchasers also should be aware that some insurers have implemented exclusions for COVID-19-related exposure. Conclusion Along with the increased number of bankruptcies and distressed asset sales on the horizon comes the possibility that asset sales may carry hidden risk. As such, it is now more important than ever that purchasers conduct thorough and competent labor and employment due diligence that contemplates COVID-19 related developments and previously remote possibilities, such as successor liability following a 'free and clear’ bankruptcy purchase. [*] Clothing Stores Tremendously Impacted by Coronavirus Pandemic ----------------------------------------------------------------- ResearchAndMarkets.com published a new article on the retail industry "Clothing Stores Face Falling Sales During COVID-19 Crisis": US retail sales in clothing stores fell by over 50% in March 2020 versus the previous year. Several retailers such as J C Penny, J. Crew, and Neiman Marcus have filed for chapter 11 bankruptcy while others are deferring commercial rent payments until they can reopen. This is putting increased pressure on mall operators who may not be able to safely reopen all of their properties. Simon Property Group has reopened 77 of its 209 US properties so far while Macerich has reopened 13 of 52 properties. Several retailers are stuck with last season's unsold merchandise and many are offering heavy discounts to encourage sales. Storing unsold stock until next year can be a risky move for clothing retailers operating in a trend-driven industry. As a result, it is likely that more clothing stores will turn to off price retailers like TJX, Ross Stores and B.J. Wholesale to offload unsold stock. Once clothing stores reopen, many customers will be wary of entering stores and may continue to prefer to shop online. Retailers could consider promoting click and collect orders as a way to encourage customers to return to their stores. [*] Hayse Gives Warning Signs of Troubled Law Firms --------------------------------------------------- Roger Hayse of Hayse LLC wrote on JDSupra an article titled "Law Firm Crisis – 3 Warning Signs" "If you throw a frog in a pot of boiling water, it will hop right out. But if you put that frog in a pot of tepid water and slowly warm it, the frog doesn't figure out what is going on until it's too late..." Stephenie Meyer Much like the boiling frog, if a law firm's partners don't recognize that the water is heating up -- and not in a good way -- they too may face a painful demise. For some law firms COVID-19 has resulted in an immediate and apparent crisis; for others (e.g., bankruptcy and employment law firms) business has rarely been better. Thousands of firms find themselves somewhere in between, considering what the damage associated with the virus will have on their firms. Here are three specific areas that should be examined and routinely monitored in order to accurately assess what the future holds. 1. Client satisfaction and stability- Any significant decrease in the depth of relationships with key clients, or the loss of any material number of clients is reason for heightened attention. The percentage of revenue associated with key clients, as well as the quantity of clients served should be closely monitored. Too many eggs in one or two baskets is a warning sign. 2. Personnel unrest or discontent- A negative shift in the way lawyers and staff feel about the firm is reason for further study and concern. 3. Economic stress- declining financial performance is an indication of a firm that must take steps to strengthen operations or face the prospects of serious challenges to its survival. As obvious as this may seem, it is puzzling how often firm leadership manages to ignore economic issues. Several indicators to watch include: * Falling revenue per attorney * Declining productivity * Failure to meet monthly budgets * Slower turnaround on payables and receivables * Decreased partner distributions * Increased reliance on debt All of the above are signs of a potentially unstable platform. In the end, the impact of financial decline is the decreasing ability to pay partners fairly for their contributions to the firm. As partners make less and less for the same work, dissatisfaction will be followed by departures. In summary, the sooner potential challenges to law firm stability are identified, the more probable damage can be limited and long-term fixes can be implemented. [*] Landlord Considerations with Troubled Healthcare Operators -------------------------------------------------------------- Andy Dow, Joe Wielebinski and Kevin Wood of Winstead PC wrote on JDSupra an article titled "Landlord Considerations in Lease Workouts with Troubled Healthcare Operators (Including Bankruptcy Considerations)": The past few years have seen an unprecedented number of bankruptcies in the healthcare space, primarily from hospitals and senior living operators. The pressure placed on healthcare operating companies will only increase as they deal with the effects of the COVID-19 pandemic and continued downward pressure on reimbursements. As the owner of the real estate leased to these operators, the landlord has a large stake in the success of the healthcare business being conducted on its premises, and needs to understand the drivers of the underlying business model in order to assess the risk profile of the tenant operator. This understanding should allow the landlord to detect the early warning signs of distress and take proactive steps toward nursing the operator back to health. While a failing tenant is not the landlord's fault or responsibility, it often does become the landlord's problem, and a landlord with healthcare tenants has many factors to consider that landlords of other asset classes do not. This article will address the unique nature of the healthcare tenant/operator, as well as some strategies and tactics for landlords to consider when working with a troubled healthcare tenant. For more information, see full article at https://www.jdsupra.com/legalnews/landlord-considerations-in-lease-89313/ [*] Travel Industry Hit by Layoffs Amid Pandemic ------------------------------------------------ Natalie Walters of The Dallas News reported in early June on 500 layoffs at Holiday Inn, Live! by Loews and Allied Aviation as travel industry struggles to turn corner. "As a business that caters to travelers and hosts events, this pandemic impacts us immensely," wrote Loews Hotels & Co. in a filing with the Texas Workforce Commission. Most people are currently avoiding flying as a precaution against catching or spreading the coronavirus. And when people don't fly, they don't need hotels. Businesses in Dallas and Tarrant counties laid off 866 workers in the last several weeks in COVID-19 related cuts, according to notices the Texas Workforce Commission made public. More than 500 of the layoffs were in the badly-hit travel industry at two hotels and an aviation fueling company. The data is from the Worker Adjustment and Retraining Notification Act list, which requires employers to provide a 60-day notice of a plant closing or mass layoffs affecting 50 or more employees at a single location. The three companies -- Live! by Loews, Holiday Inn Club Vacations and Allied Aviation -- said in letters to the state that they were unable to give two months' notice due to the sudden and unforeseeable impact of the global pandemic. The once-booming hotel industry has seen massive layoffs, with even the most enthusiastic travelers being stuck at home the past few months due to stay-at-home orders and travel restrictions. Across the U.S., job cuts in the entertainment and leisure industry — which includes bars, restaurants, hotels and amusement parks — totaled 163,680 in May, a stunning 15,900% increase from the same month a year ago, according to data released Thursday by recruiting firm Challenger, Gray & Christmas. Holiday Inn Club Vacations-Pantego, a call center focused on sales and marketing, laid off 307 people on May 21. The center is still in operation with 73 employees, said spokeswoman Ashley Fraboni. She said the company will reassess hiring as demand returns. Orlando-based Holiday Inn Club Vacations Inc. is a national vacation ownership company with 29 resorts, more than 7,900 U.S. villas, over 365,000 timeshare owners and its workforce had 5,300 employees at the beginning of this year. The multiconcept sports resort Live! by Loews in Arlington opened less than a year ago and laid off 153 people on May 27. The layoffs happened two days before it resumed operations last Friday, said spokeswoman Sarah Murov. The $150 million, 300-room luxury hotel was a joint venture between Loews Hotels & Co, a subsidiary of New York-based Loews Corp.; the Cordish Companies, a Maryland-based real estate development and entertainment operating company, and the Texas Rangers baseball team. The hotel is geared toward leisure and sports travelers with its infinity pool, 35,000 square feet of event space and close proximity to Texas Live!, AT&T Stadium and Globe Life Field. "As a business that caters to travelers and hosts events, this pandemic impacts us immensely," the company wrote in its letter to TWC. While many hotels received loans from the Small Business Administration's Paycheck Protection Program, a survey by the American Hotel & Lodging Association shows that half of 900 respondents said the loans weren’t enough to rehire its staff. The loans covered eight weeks of payroll, yet the hotel industry is expected to take much longer to recover. Another company cutting jobs was Allied Aviation, a leader in the aviation fueling industry. It laid off 50 people at its DFW International Airport location on April 20, bringing its total layoffs to 91. The company is part of New York-based Allied Aviation Services Inc. It handles nearly six billion gallons of jet fuel a year at airports in the U.S., Canada, South America, and the Caribbean -- including two locations in Texas -- the George Bush Intercontinental Airport in Houston and the San Antonio International Airport. Joe Correa, general manager for the DFW location of Allied Aviation, said 200 employees have still been coming into work despite the global slowdown in airline travel. He also said the company plans to hire back 15 employees next week. "It's been slow, but it's picking up," he said. "The fly schedule is increasing." Airlines are starting to feel a positive shift in travel patterns, too. Airports saw 313,000 daily passengers last week -- just 13% of what it reported a year ago -- yet significantly better than mid-April when fewer than 100,000 people were flying, according to the Transportation Security Administration. [] Jones Day: June Legislative Update on CARES Act -------------------------------------------------- Mark Douglas of Jones Day in early June 2020 wrote on JDSupra a Legislative Update on the Coronavirus Aid, Relief, and Economic Security (CARES) Act: On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief, and Economic Security Act, Pub. L. No. 116-136 (the "CARES Act"). The legislation, which earlier that day had quickly passed the House of Representatives, having passed 96-0 in the Senate on March 25, provides $2 trillion in economic stimulus to U.S. industries and citizens confronting the challenges of the COVID-19 pandemic. Section 1113 of the CARES Act includes several important bankruptcy provisions designed to assist financially distressed consumers and small businesses. Key provisions include: * Changes to the Small Business Reorganization Act of 2019 that increase the eligibility threshold for businesses filing under new subchapter V of chapter 11 of the Bankruptcy Code from $2,725,625 in debt to $7,500,000. The debt threshold will revert to $2,725,625 after one year. * A clarification that the calculation of "disposable income" in section 1325(b)(2) of the Bankruptcy Code for purposes of confirming a chapter 13 plan does not include coronavirus-related payments. * An amendment to the definition of "current monthly income" in section 101(10A) of the Bankruptcy Code to exclude coronavirus-related payments from the federal government for purposes of determining whether a debtor is eligible for relief under chapters 7 and 13. * A change to section 1329 of the Bankruptcy Code to permit the modification of a chapter 13 wage earner plan after confirmation "if the debtor is experiencing or has experienced a material financial hardship due, directly or indirectly, to the coronavirus disease 2019 (COVID-19) pandemic" and to permit a post-modification creditor repayment plan of up to seven years after the initial plan payment was due. These bankruptcy provisions sunset within one year. Section 1102 of the CARES Act provides that any business that employs not more than 500 employees shall be eligible to receive a forgivable loan under the Small Business Act of as much as $10 million to be used for employee payroll and related benefits, mortgage payments, rent, utilities, and certain other expenses. Although the CARES Act says nothing about excluding companies in bankruptcy from receiving Paycheck Protection Program loans, on April 15, 2020, the Small Business Administration released an interim rule stating that companies in bankruptcy are not eligible for loans under the program and that any company that files for bankruptcy before receiving funds under the program must withdraw its application. The rule almost immediately led to litigation seeking to preclude or enjoin its enforcement. See, e.g., Hidalgo County Emergency Serv. Foundation v. Carranza (In re Hidalgo County Emergency Serv. Foundation), No. 20-02006 (Bankr. S.D. Tex. Apr. 25, 2020); Calais Regional Hospital v. Carranza (In re Calais Regional Hospital), No. 20-1006 (Bankr. D. Maine May 1, 2020); Roman Catholic Church of the Archdiocese of Santa Fe v. U.S. (In re Roman Catholic Church of the Archdiocese of Santa Fe), No. 20-1026 (Bankr. D.N.M. May 1, 2020); Springfield Hospital, Inc. v. Carranza (In re Springfield Hospital, Inc.), No. 19-10283 (Bankr. D. Vt. May 4, 2020). Section 4003(D) of the CARES Act authorizes the Secretary of the Treasury to provide financing to banks that make direct, low-interest loans to eligible businesses with between 500 and 10,000 employees, provided that the borrower certifies, among other things, that: (i) the funds it receives will be used to retain at least 90 percent of the recipient's workforce, at full compensation and benefits, until September 30, 2020; (ii) the recipient will not pay common stock dividends or repurchase its stock while the loan is outstanding, except as contractually obligated to do so as of the enactment date; (iii) the recipient will not outsource or offshore jobs or abrogate collective bargaining during the term of the loan and for two years afterward; and (iv) "the recipient is not a debtor in a bankruptcy proceeding." A more detailed summary of the CARES Act is available at https://www.jonesday.com/en/insights/2020/03/congress-enacts-massive-coronavirus-relief-package Proposed Amendments to Commodity Futures Trading Commission Bankruptcy Rules On April 14, 2020, the Commodity Futures Trading Commission approved proposed amendments to Part 190 of its rules governing bankruptcy proceedings of commodity brokers, including futures commission merchants and derivatives clearing organizations. The proposed amendments, intended to update Part 190 comprehensively to reflect current market practices, include provisions: (i) establishing a policy preference for transferring (rather than liquidating) positions of public customers and their proportionate share of associated collateral; (ii) establishing a new subpart C to Part 190 to govern the bankruptcy of derivatives clearing organizations; and (iii) augmenting the discretion given to bankruptcy trustees to adapt to the unique characteristics of a particular commodity broker bankruptcy. The comment period on the proposed amendments expires July 13, 2020. [^] BOND PRICING: For the Week from June 22 to 26, 2020 ------------------------------------------------------- Company Ticker Coupon Bid Price Maturity ------- ------ ------ --------- -------- 24 Hour Fitness Worldwide HRFITW 8.000 2.000 6/1/2022 24 Hour Fitness Worldwide HRFITW 8.000 1.970 6/1/2022 AT&T Inc T 3.875 103.768 8/15/2021 Ahern Rentals Inc AHEREN 7.375 48.961 5/15/2023 Allscripts Healthcare Solutions Inc MDRX 1.250 99.750 7/1/2020 America West Airlines 2000-1 Pass Through Trust AAL 8.057 100.000 7/2/2020 America West Airlines 2001-1 Pass Through Trust AAL 7.100 79.953 4/2/2021 American Airlines 2011-1 Class A Pass Through Trust AAL 5.250 84.264 1/31/2021 American Airlines 2013-1 Class B Pass Through Trust AAL 5.625 87.374 1/15/2021 American Airlines 2013-2 Class B Pass Through Trust AAL 5.600 98.290 7/15/2020 American Airlines Group AAL 5.000 56.292 6/1/2022 American Airlines Group AAL 5.000 56.622 6/1/2022 American Energy- Permian Basin LLC AMEPER 12.000 11.515 10/1/2024 American Energy- Permian Basin LLC AMEPER 12.000 10.004 10/1/2024 American Energy- Permian Basin LLC AMEPER 12.000 10.004 10/1/2024 Applied Materials Inc AMAT 4.300 103.501 6/15/2021 Applied Materials Inc AMAT 2.625 100.599 10/1/2020 Archer-Daniels-Midland Co ADM 4.479 102.677 3/1/2021 BPZ Resources Inc BPZR 6.500 3.017 3/1/2049 Bank of America Corp BAC 4.635 99.592 6/29/2020 Basic Energy Services Inc BASX 10.750 40.655 10/15/2023 Basic Energy Services Inc BASX 10.750 40.655 10/15/2023 Bon-Ton Department Stores BONT 8.000 9.500 6/15/2021 Briggs & Stratton Corp BGG 6.875 32.171 12/15/2020 Bristow Group Inc/old BRS 6.250 5.948 10/15/2022 Bristow Group Inc/old BRS 4.500 6.000 6/1/2023 Bruin E&P Partners LLC BRUINE 8.875 1.963 8/1/2023 Bruin E&P Partners LLC BRUINE 8.875 2.047 8/1/2023 Buffalo Thunder Development Authority BUFLO 11.000 50.125 12/9/2022 CBL & Associates LP CBL 5.250 30.001 12/1/2023 CBL & Associates LP CBL 4.600 29.910 10/15/2024 CEC Entertainment Inc CEC 8.000 8.621 2/15/2022 CSI Compressco LP / CSI Compressco Finance Inc CCLP 7.250 51.372 8/15/2022 Calfrac Holdings LP CFWCN 8.500 6.454 6/15/2026 Calfrac Holdings LP CFWCN 8.500 6.546 6/15/2026 California Resources Corp CRC 8.000 3.370 12/15/2022 California Resources Corp CRC 6.000 1.510 11/15/2024 California Resources Corp CRC 8.000 3.382 12/15/2022 California Resources Corp CRC 5.500 2.321 9/15/2021 California Resources Corp CRC 6.000 2.151 11/15/2024 Callon Petroleum Co CPE 6.250 39.369 4/15/2023 Chaparral Energy Inc CHAP 8.750 10.284 7/15/2023 Chaparral Energy Inc CHAP 8.750 10.452 7/15/2023 Chesapeake Energy Corp CHK 11.500 13.814 1/1/2025 Chesapeake Energy Corp CHK 11.500 13.345 1/1/2025 Chesapeake Energy Corp CHK 5.500 5.310 9/15/2026 Chesapeake Energy Corp CHK 8.000 6.140 6/15/2027 Chesapeake Energy Corp CHK 5.375 5.294 6/15/2021 Chesapeake Energy Corp CHK 8.000 3.866 1/15/2025 Chesapeake Energy Corp CHK 4.875 4.138 4/15/2022 Chesapeake Energy Corp CHK 5.750 3.945 3/15/2023 Chesapeake Energy Corp CHK 7.000 3.955 10/1/2024 Chesapeake Energy Corp CHK 7.500 3.499 10/1/2026 Chesapeake Energy Corp CHK 8.000 2.000 3/15/2026 Chesapeake Energy Corp CHK 8.000 4.006 6/15/2027 Chesapeake Energy Corp CHK 8.000 3.475 3/15/2026 Chesapeake Energy Corp CHK 8.000 3.475 3/15/2026 Chesapeake Energy Corp CHK 8.000 4.006 6/15/2027 Chesapeake Energy Corp CHK 8.000 4.590 1/15/2025 Chesapeake Energy Corp CHK 8.000 4.590 1/15/2025 Citigroup Inc C 5.950 94.092 N/A DIRECTV Holdings LLC / DIRECTV Financing DTV 3.800 102.052 3/15/2022 Dean Foods Co DF 6.500 3.125 3/15/2023 Dean Foods Co DF 6.500 2.923 3/15/2023 Denbury Resources Inc DNR 9.000 40.341 5/15/2021 Denbury Resources Inc DNR 7.750 39.343 2/15/2024 Denbury Resources Inc DNR 4.625 2.889 7/15/2023 Denbury Resources Inc DNR 6.375 8.500 12/31/2024 Denbury Resources Inc DNR 5.500 6.663 5/1/2022 Denbury Resources Inc DNR 6.375 3.000 8/15/2021 Denbury Resources Inc DNR 9.250 40.089 3/31/2022 Denbury Resources Inc DNR 9.000 39.863 5/15/2021 Denbury Resources Inc DNR 9.250 40.035 3/31/2022 Denbury Resources Inc DNR 7.750 39.300 2/15/2024 Diamond Offshore Drilling DOFSQ 7.875 12.250 8/15/2025 Diamond Offshore Drilling DOFSQ 5.700 12.250 10/15/2039 Diamond Offshore Drilling DOFSQ 3.450 12.250 11/1/2023 ENSCO International Inc VAL 7.200 13.607 11/15/2027 EP Energy LLC / Everest Acquisition Finance Inc EPENEG 7.750 23.250 5/15/2026 EP Energy LLC / Everest Acquisition Finance Inc EPENEG 8.000 2.000 11/29/2024 EP Energy LLC / Everest Acquisition Finance Inc EPENEG 9.375 0.949 5/1/2024 EP Energy LLC / Everest Acquisition Finance Inc EPENEG 7.750 23.189 5/15/2026 EP Energy LLC / Everest Acquisition Finance Inc EPENEG 9.375 0.949 5/1/2024 EP Energy LLC / Everest Acquisition Finance Inc EPENEG 8.000 1.783 11/29/2024 EnLink Midstream Partners ENLK 6.000 39.938 N/A Encore Capital Group Inc ECPG 3.000 99.250 7/1/2020 Energy Conversion Devices ENER 3.000 7.875 6/15/2013 Energy Future Competitive Holdings Co LLC TXU 1.108 0.072 1/30/2037 Exela Intermediate LLC / Exela Finance Inc EXLINT 10.000 25.743 7/15/2023 Exela Intermediate LLC / Exela Finance Inc EXLINT 10.000 26.118 7/15/2023 Extraction Oil & Gas Inc XOG 7.375 14.837 5/15/2024 Extraction Oil & Gas Inc XOG 5.625 12.026 2/1/2026 Extraction Oil & Gas Inc XOG 5.625 8.700 2/1/2026 Extraction Oil & Gas Inc XOG 7.375 15.208 5/15/2024 FTS International Inc FTSINT 6.250 33.240 5/1/2022 Federal Farm Credit Banks Funding Corp FFCB 0.900 99.186 9/30/2021 Federal Home Loan Banks FHLB 2.790 99.693 2/28/2045 Federal Home Loan Banks FHLB 2.500 99.201 3/5/2035 Federal Home Loan Mortgage FHLMC 1.150 99.722 4/1/2022 Federal Home Loan Mortgage FHLMC 1.125 99.446 6/30/2023 Federal Home Loan Mortgage FHLMC 1.000 99.813 9/30/2021 Federal Home Loan Mortgage FHLMC 1.050 99.350 12/30/2022 Federal Home Loan Mortgage FHLMC 1.290 99.710 10/1/2024 Federal National Mortgage Association FNMA 1.300 99.441 6/30/2020 Federal National Mortgage Association FNMA 1.300 99.441 6/30/2020 Federal National Mortgage Association FNMA 1.250 99.437 6/29/2020 Federal National Mortgage Association FNMA 1.340 99.442 6/30/2020 Fleetwood Enterprises Inc FLTW 14.000 3.557 12/15/2011 Forum Energy Technologies FET 6.250 40.254 10/1/2021 Frontier Communications FTR 10.500 35.750 9/15/2022 Frontier Communications FTR 7.125 31.750 1/15/2023 Frontier Communications FTR 6.875 31.000 1/15/2025 Frontier Communications FTR 8.750 33.625 4/15/2022 Frontier Communications FTR 6.250 35.250 9/15/2021 Frontier Communications FTR 7.625 35.500 4/15/2024 Frontier Communications FTR 9.250 31.750 7/1/2021 Frontier Communications FTR 11.000 34.816 9/15/2025 Frontier Communications FTR 10.500 34.767 9/15/2022 Frontier Communications FTR 11.000 34.816 9/15/2025 Frontier Communications FTR 10.500 30.875 9/15/2022 Frontier Communications FTR 11.000 35.000 9/15/2025 GameStop GME 6.750 80.524 3/15/2021 GameStop GME 6.750 79.970 3/15/2021 General Electric Co GE 5.000 79.000 N/A Global Eagle Entertainment ENT 2.750 6.215 2/15/2035 Goodman Networks Inc GOODNT 8.000 46.993 5/11/2022 Great Western Bancorp Inc GWB 4.875 93.554 8/15/2025 Great Western Petroleum LLC / Great Western Finance Corp GRTWST 9.000 59.911 9/30/2021 Great Western Petroleum LLC / Great Western Finance Corp GRTWST 9.000 61.856 9/30/2021 Grizzly Energy LLC VNR 9.000 6.000 2/15/2024 Grizzly Energy LLC VNR 9.000 6.000 2/15/2024 Healthpeak Properties Inc PEAK 3.150 102.433 8/1/2022 Hertz Corp/The HTZ 5.500 42.500 10/15/2024 Hertz Corp/The HTZ 5.500 30.433 10/15/2024 Hertz Corp/The HTZ 7.000 20.721 1/15/2028 Hertz Corp/The HTZ 6.250 31.000 10/15/2022 Hi-Crush Inc HCR 9.500 6.747 8/1/2026 Hi-Crush Inc HCR 9.500 7.658 8/1/2026 High Ridge Brands Co HIRIDG 8.875 5.125 3/15/2025 High Ridge Brands Co HIRIDG 8.875 5.125 3/15/2025 HighPoint Operating HPR 7.000 25.819 10/15/2022 HighPoint Operating HPR 8.750 24.972 6/15/2025 International Wire Group ITWG 10.750 81.006 8/1/2021 International Wire Group ITWG 10.750 81.006 8/1/2021 J Crew Brand LLC / J Crew Brand Corp JCREWB 13.000 50.500 9/15/2021 JC Penney Corp Inc JCP 5.875 35.250 7/1/2023 JC Penney Corp Inc JCP 5.650 2.125 6/1/2020 JC Penney Corp Inc JCP 6.375 0.625 10/15/2036 JC Penney Corp Inc JCP 7.400 1.300 4/1/2037 JC Penney Corp Inc JCP 8.625 2.000 3/15/2025 JC Penney Corp Inc JCP 7.625 0.625 3/1/2097 JC Penney Corp Inc JCP 8.625 2.500 3/15/2025 JC Penney Corp Inc JCP 5.875 32.000 7/1/2023 JC Penney Corp Inc JCP 7.125 0.624 11/15/2023 JC Penney Corp Inc JCP 6.900 0.631 8/15/2026 Jonah Energy LLC / Jonah Energy Finance Corp JONAHE 7.250 12.221 10/15/2025 Jonah Energy LLC / Jonah Energy Finance Corp JONAHE 7.250 12.443 10/15/2025 K Hovnanian Enterprises HOV 5.000 10.899 2/1/2040 K Hovnanian Enterprises HOV 5.000 10.899 2/1/2040 KLX Energy Services Holdings Inc KLXE 11.500 39.567 11/1/2025 KLX Energy Services Holdings Inc KLXE 11.500 40.231 11/1/2025 KLX Energy Services Holdings Inc KLXE 11.500 40.262 11/1/2025 LSC Communications Inc LKSD 8.750 9.660 10/15/2023 LSC Communications Inc LKSD 8.750 2.875 10/15/2023 Lexicon Pharmaceuticals Inc LXRX 5.250 63.791 12/1/2021 Liberty Media LMCA 2.250 48.178 9/30/2046 Lonestar Resources America LONE 11.250 10.349 1/1/2023 Lonestar Resources America LONE 11.250 10.204 1/1/2023 MAI Holdings Inc MAIHLD 9.500 17.191 6/1/2023 MAI Holdings Inc MAIHLD 9.500 17.191 6/1/2023 MAI Holdings Inc MAIHLD 9.500 17.191 6/1/2023 MF Global Holdings Ltd MF 9.000 15.625 6/20/2038 MF Global Holdings Ltd MF 6.750 15.625 8/8/2016 Martin Midstream Partners LP / Martin Midstream Finance Corp MMLP 7.250 73.906 2/15/2021 Martin Midstream Partners LP / Martin Midstream Finance Corp MMLP 7.250 75.442 2/15/2021 Martin Midstream Partners LP / Martin Midstream Finance Corp MMLP 7.250 75.442 2/15/2021 Mashantucket Western Pequot Tribe MASHTU 7.350 15.640 7/1/2026 McClatchy Co/The MNIQQ 6.875 2.011 3/15/2029 McClatchy Co/The MNIQQ 6.875 1.987 7/15/2031 McClatchy Co/The MNIQQ 7.150 1.822 11/1/2027 McDermott Technology Americas Inc / McDermott Technology US Inc MDR 10.625 6.500 5/1/2024 McDermott Technology Americas Inc / McDermott Technology US Inc MDR 10.625 4.762 5/1/2024 Men's Wearhouse Inc/The TLRD 7.000 14.371 7/1/2022 Men's Wearhouse Inc/The TLRD 7.000 15.835 7/1/2022 Murray Energy MURREN 12.000 0.635 4/15/2024 Murray Energy MURREN 12.000 0.635 4/15/2024 NWH Escrow HARDWD 7.500 53.250 8/1/2021 NWH Escrow HARDWD 7.500 53.250 8/1/2021 Navajo Transitional Energy Co LLC NVJOTE 9.000 5.750 10/24/2024 Neiman Marcus Group LLC/The NMG 7.125 8.100 6/1/2028 Neiman Marcus Group LTD LLC / Neiman Marcus Group LLC / Mariposa Borrower / NMG NMG 14.000 21.875 4/25/2024 Neiman Marcus Group LTD LLC / Neiman Marcus Group LLC / Mariposa Borrower / NMG NMG 8.000 4.500 10/25/2024 Neiman Marcus Group LTD LLC / Neiman Marcus Group LLC / Mariposa Borrower / NMG NMG 8.750 3.312 10/25/2024 Neiman Marcus Group LTD LLC / Neiman Marcus Group LLC / Mariposa Borrower / NMG NMG 8.000 3.331 10/25/2024 Neiman Marcus Group LTD LLC / Neiman Marcus Group LLC / Mariposa Borrower / NMG NMG 14.000 24.123 4/25/2024 Neiman Marcus Group LTD LLC / Neiman Marcus Group LLC / Mariposa Borrower / NMG NMG 8.750 2.941 10/25/2024 Neiman Marcus Group Ltd NMG 8.000 54.000 10/15/2021 Neiman Marcus Group Ltd NMG 8.750 54.112 10/15/2021 Neiman Marcus Group Ltd NMG 8.000 55.347 10/15/2021 Neiman Marcus Group Ltd NMG 8.750 54.112 10/15/2021 Northwest Hardwoods Inc HARDWD 7.500 35.000 8/1/2021 Northwest Hardwoods Inc HARDWD 7.500 35.096 8/1/2021 OMX Timber Finance Investments II LLC OMX 5.540 1.660 1/29/2020 Oasis Petroleum Inc OAS 6.875 19.323 3/15/2022 Oasis Petroleum Inc OAS 6.875 18.815 1/15/2023 Oasis Petroleum Inc OAS 2.625 16.000 9/15/2023 Oasis Petroleum Inc OAS 6.250 18.128 5/1/2026 Oasis Petroleum Inc OAS 6.500 26.811 11/1/2021 Oasis Petroleum Inc OAS 6.250 17.109 5/1/2026 Omnimax International Inc EURAMX 12.000 81.803 8/15/2020 Omnimax International Inc EURAMX 12.000 78.185 8/15/2020 Optimas OE Solutions Holding LLC / Optimas OE Solutions Inc OPTOES 8.625 45.000 6/1/2021 Optimas OE Solutions Holding LLC / Optimas OE Solutions Inc OPTOES 8.625 44.555 6/1/2021 PDC Energy Inc PDCE 6.250 84.202 12/1/2025 PHH PHH 6.375 59.651 8/15/2021 PPG Industries Inc PPG 3.600 100.726 11/15/2020 Party City Holdings Inc PRTY 6.625 21.075 8/1/2026 Party City Holdings Inc PRTY 6.125 21.147 8/15/2023 Party City Holdings Inc PRTY 6.625 20.159 8/1/2026 Party City Holdings Inc PRTY 6.125 20.322 8/15/2023 Pride International LLC VAL 7.875 8.995 8/15/2040 Pyxus International Inc PYX 9.875 12.250 7/15/2021 Pyxus International Inc PYX 9.875 8.653 7/15/2021 Pyxus International Inc PYX 9.875 8.653 7/15/2021 Quorum Health QHC 11.625 15.496 4/15/2023 Renco Metals Inc RENCO 11.500 24.875 7/1/2003 Revlon Consumer Products REV 6.250 22.849 8/1/2024 Revlon Consumer Products REV 5.750 67.492 2/15/2021 Rolta LLC RLTAIN 10.750 7.113 5/16/2018 SESI LLC SPN 7.125 47.470 12/15/2021 SESI LLC SPN 7.125 30.828 12/15/2021 SESI LLC SPN 7.750 37.175 9/15/2024 SanDisk LLC SNDK 0.500 84.637 10/15/2020 Sanchez Energy SNEC 7.250 1.000 2/15/2023 Sanchez Energy SNEC 7.250 0.772 2/15/2023 SandRidge Energy Inc SD 7.500 0.500 2/15/2023 Sears Holdings SHLD 6.625 9.000 10/15/2018 Sears Holdings SHLD 8.000 1.175 12/15/2019 Sears Holdings SHLD 6.625 8.728 10/15/2018 Sears Roebuck Acceptance SHLD 6.750 1.179 1/15/2028 Sears Roebuck Acceptance SHLD 7.500 1.114 10/15/2027 Sears Roebuck Acceptance SHLD 6.500 0.659 12/1/2028 Sears Roebuck Acceptance SHLD 7.000 0.914 6/1/2032 Sempra Texas Holdings TXU 5.550 13.500 11/15/2014 Stearns Holdings LLC STELND 9.375 45.375 8/15/2020 Stearns Holdings LLC STELND 9.375 45.375 8/15/2020 Summit Midstream Partners SMLP 9.500 14.000 N/A Teligent Inc/NJ TLGT 4.750 38.741 5/1/2023 TerraVia Holdings Inc TVIA 5.000 4.644 10/1/2019 Tesla Energy Operations TSLAEN 3.600 94.908 8/6/2020 Transworld Systems Inc TSIACQ 9.500 26.283 8/15/2021 Tupperware Brands TUP 4.750 58.338 6/1/2021 Tupperware Brands TUP 4.750 59.077 6/1/2021 Tupperware Brands TUP 4.750 59.077 6/1/2021 UCI International LLC UCII 8.625 4.780 2/15/2019 Ultra Resources Inc/US UPL 11.000 5.500 7/12/2024 Ultra Resources Inc/US UPL 7.125 0.250 4/15/2025 Ultra Resources Inc/US UPL 7.125 0.439 4/15/2025 Unit UNTUS 6.625 13.250 5/15/2021 Voyager Aviation Holdings LLC / Voyager Finance Co VAHLLC 8.500 73.767 8/15/2021 Warner Media LLC TWX 4.000 103.651 1/15/2022 Whiting Petroleum WLL 5.750 15.500 3/15/2021 Whiting Petroleum WLL 6.625 16.280 1/15/2026 Whiting Petroleum WLL 6.250 15.500 4/1/2023 Whiting Petroleum WLL 6.625 6.750 1/15/2026 Whiting Petroleum WLL 6.625 15.047 1/15/2026 Windstream Services LLC / Windstream Finance Corp WIN 10.500 5.000 6/30/2024 Windstream Services LLC / Windstream Finance Corp WIN 7.500 5.000 6/1/2022 Windstream Services LLC / Windstream Finance Corp WIN 9.000 4.738 6/30/2025 Windstream Services LLC / Windstream Finance Corp WIN 6.375 5.000 8/1/2023 Windstream Services LLC / Windstream Finance Corp WIN 6.375 4.748 8/1/2023 Windstream Services LLC / Windstream Finance Corp WIN 9.000 4.717 6/30/2025 Windstream Services LLC / Windstream Finance Corp WIN 8.750 5.000 12/15/2024 Windstream Services LLC / Windstream Finance Corp WIN 8.750 4.065 12/15/2024 Windstream Services LLC / Windstream Finance Corp WIN 10.500 4.747 6/30/2024 Windstream Services LLC / Windstream Finance Corp WIN 7.750 4.349 10/1/2021 rue21 inc RUE 9.000 1.305 10/15/2021 ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. On Thursdays, the TCR delivers a list of recently filed Chapter 11 cases involving less than $1,000,000 in assets and liabilities delivered to nation's bankruptcy courts. The list includes links to freely downloadable images of these small-dollar petitions in Acrobat PDF format. Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. Monthly Operating Reports are summarized in every Saturday edition of the TCR. The Sunday TCR delivers securitization rating news from the week then-ending. TCR subscribers have free access to our on-line news archive. Point your Web browser to http://TCRresources.bankrupt.com/and use the e-mail address to which your TCR is delivered to login. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA. Jhonas Dampog, Marites Claro, Joy Agravante, Rousel Elaine Tumanda, Valerie Udtuhan, Howard C. Tolentino, Carmel Paderog, Meriam Fernandez, Joel Anthony G. Lopez, Cecil R. Villacampa, Sheryl Joy P. Olano, Psyche A. Castillon, Ivy B. Magdadaro, Carlo Fernandez, Christopher G. Patalinghug, and Peter A. Chapman, Editors. Copyright 2020. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $975 for 6 months delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Peter A. Chapman at 215-945-7000. *** End of Transmission ***