/raid1/www/Hosts/bankrupt/TCR_Public/201112.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Thursday, November 12, 2020, Vol. 24, No. 316
Headlines
10827 STUDEBAKER: Seeks to Hire Ten-X as Auctioneer
511 GROUP: Seeks to Hire Joel M. Aresty as Legal Counsel
A.D.A.P.T. BASKETBALL: Seeks to Hire Cooper Law as Legal Counsel
ADVANCED READY: Seeks to Hire Rachel S. Blumenfeld as Legal Counsel
ALBERTSONS COMPANIES: Moody's Ups CFR to Ba3, Outlook Stable
ALERT 360: Moody's Assigns B3 Corp. Family Rating, Outlook Stable
AMERICAN AXLE: S&P Affirms 'B+' ICR; Ratings Off Watch Negative
APPROACH RESOURCES: Unsecureds to Recover 1.84% to 1.95% in Plan
APPROACH RESOURCES: Wins Court Nod to Solicit Liquidation Plan Vote
AREU STUDIOS: Seeks to Hire Jones & Walden as Legal Counsel
ARTERRA WINES: Moody's Affirms B2 CFR, Outlook Stable
ARTERRA WINES: S&P Affirms 'B' ICR, Rates 1st-Lien Term Loan 'B'
ASTRIA HEALTH: Presses Ahead to Emerge From Chapter 11 by December
ASTRIA HEALTH: Unsecureds Get At Least $7.3M in UCC-Backed Plan
AUTHENTIKI LLC: Taps Rehmann as Financial Advisor
AUTHENTIKI LLC: Taps Schafer and Weiner as Bankruptcy Counsel
AVANOS MEDICAL: S&P Alters Outlook to Stable, Affirms 'BB-' ICR
BEACH ON DUVAL: U.S. Trustee Unable to Appoint Committee
BGF SERVICES: Seeks to Hire Chung & Press as Legal Counsel
BRETON L. MORGAN: Court Approves Disclosures and Confirms Plan
BRINTON APARTMENTS: S&P Cuts 2015A Revenue Bond Rating to 'CCC-'
BSI LLC: U.S. Trustee Unable to Appoint Committee
BULLDOG DUMPSTERS: Taps Caddell Reynolds as Legal Counsel
CAMBRIAN HOLDING: Amends Committee-Backed Liquidating Plan
CAPE QUARRY: $794K for Unsecureds in Claim Holders' Plan
CAPE QUARRY: Plan Proponents Say QA Plan Not Workable
CAPE QUARRY: Unsecureds Will Recover At Least 75% in QA Plan
CDRH PARENT: S&P Lowers ICR to 'SD' on Credit Amendment Agreement
CENTERFIELD MEDIA: Moody's Assigns B2 CFR, Outlook Stable
CHARGING BEAR: Case Summary & 5 Unsecured Creditors
COCRYSTAL PHARMA: Falls Short of Nasdaq Bid Price Requirement
COMCAR INDUSTRIES: C&D Logistics Buying 2 Cement Tankers for $8K
COMCAR INDUSTRIES: Land Buying Low Value Assets for $600
COMCAR INDUSTRIES: PC Liquidation Buying Low Value Assets for $5K
CP ATLAS: S&P Assigns 'B' ICR on Acquisition by Centerbridge
CRGR LLC: Hearing on Disclosures and Plan Continued to Nov. 17
CVR ENERGY: S&P Downgrades ICR to 'B+'; Outlook Negative
DANNYLAND LLC: Plan Confirmation Hearing Continued to December 15
DANNYLAND LLC: SL Capital Objects to Chapter 11 Plan
DANNYLAND LLC: Unsecureds to be Paid 1% in 6 Months
DELAWARE VALLEY: Voluntary Chapter 11 Case Summary
EAGLE MANUFACTURING: Files for Chapter 11 Bankruptcy Protection
ED'S BEANS: Seeks to Hire Leech Tishman as Legal Counsel
EMERGENT CAPITAL: U.S. Trustee Unable to Appoint Committee
FURNITURE FACTORY: Court Gives Approval to Tap $2.5M DIP Financing
GENESIS HEALTHCARE: Warns of Bankruptcy Filing as Pandemic Rages On
GENESIS PLACE: U.S. Trustee Unable to Appoint Committee
GI DYNAMICS: COO Joseph Virgilio Named CEO, President & Director
GI DYNAMICS: Incurs $3.63 Million Net Loss in Third Quarter
GOGO INC: Incurs $80.1 Million Net Loss in Third Quarter
GOODYEAR TIRE: S&P Affirms 'B+' ICR, Ratings Off Watch Negative
GULFPORT ENERGY: Incurs $380.9 Million Net Loss in Third Quarter
ICAHN ENTERPRISES: S&P Downgrades ICR to 'BB' on Higher Leverage
INTERFACE INC: Moody's Assigns Ba3 CFR, Outlook Stable
INTERFACE INC: S&P Assigns 'BB-' ICR; Outlook Stable
JACKSON CITY: Moody's Affirms Ba2 Rating on $198MM Revenue Bonds
LAS VEGAS MONORAIL: Bankruptcy Sale Stalled After DOJ Objects
LIFE UNIVERSITY: Moody's Affirms Ba3 Rating on Series 2017A/B Bonds
LOUISIANA LOCAL: Moody's Lowers $27MM Revenue Bonds to Ba3
MERITAGE HOMES: Fitch Ups LT IDR to BB+; Alters Outlook to Stable
NETFLIX INC: S&P Alters Outlook to Positive, Affirms 'BB' ICR
NEXTERA ENERGY: S&P Affirms 'BB' ICR on Asset Acquisition Plan
NORTHERN OIL: Incurs $233 Million Net Loss in Third Quarter
NOVA CLASSICAL ACADEMY: S&P Lowers Revenue Bond Rating to 'BB+'
NPC INT'L: To Sell Itself Out of Bankruptcy to Panera Operator
OASIS PETROLEUM: Court OKs $1.8-Bil. Debt-for-Equity Plan
OASIS PETROLEUM: Unsecureds to Recover 100% in Prepackaged Plan
OMEROS CORP: Incurs $38.5 Million Net Loss in Third Quarter
ORIGINCLEAR INC: Holders Convert $26K Notes Into Equity
PENNSYLVANIA REAL: Taps Prime Clerk as Claims Agent
PETSMART INC: Moody's Affirms B2 CFR; Alters Outlook to Stable
PETSMART INC: S&P Lowers ICR to 'B-' on Unsuccessful Refinancing
POTTERS BORROWER: S&P Assigns 'B' ICR on Carve-Out, Acquisition
QUOTIENT LIMITED: Incurs $15 Million Net Loss in Second Quarter
REVLON INC: Has Ch. 11 Advisor, Awaits Lifeline from Bondholders
RTI HOLDING: Gets OK to Hire Baker Donelson as Special Counsel
RUBIO'S RESTAURANTS: U.S. Trustee Appoints Creditors' Committee
RUBY TUESDAY: Says It Needs the $28M Retiree Trust Cash in Ch. 11
SHILOH INDUSTRIES: Court Approves $128M Sale to MiddleGround
SHOPPINGTOWN MALL: Benderson Says Disclosures Are Misleading
SHOPPINGTOWN MALL: Onondaga & WEP Say Plan Feasibility Speculative
SPRING EDUCATION: Moody's Cuts CFR to Caa1, Outlook Stable
SRH SOUTHAVEN: U.S. Trustee Unable to Appoint Committee
STERICYCLE INC: S&P Rates New $400MM Senior Unsecured Notes 'BB-'
STUDIO MOVIE GRILL: Expects to File Reorganization Plan in December
SUNOCO LP: Moody's Rates Proposed Unsec. Notes Due 2029 'B1'
SUNOCO LP: S&P Rates New $500MM Senior Unsecured Notes 'BB-'
TACALA LLC: S&P Affirms 'B-' ICR, Alters Outlook to Stable
TALEN ENERGY: Fitch Affirms B LongTerm IDR, Outlook Stable
TERVITA CORP: Moody's Ups CFR to B2 & Alters Outlook to Stable
TERVITA CORP: S&P Affirms 'CCC+' Long-Term Issuer Credit Rating
THG HOLDINGS: Feds Take Company's Ch. 11 Plan Appeal to 3rd Circuit
TORNANTE-MDP JOE: S&P Affirms 'B-' ICR; Outlook Negative
TRANSFORMATION TECH: Case Summary & 7 Unsecured Creditors
UNITI GROUP: Swings to $7.4 Million Net Income in Third Quarter
UPSTREAM NEWCO: Moody's Affirms B3 CFR; Alters Outlook to Positive
VERITAS HOLDINGS: S&P Affirms 'B-' ICR, Alters Outlook to Stable
VIZIV TECHNOLOGIES: Taps Allred & Wilcox as Special Counsel
VT TOPCO: Moody's Upgrades CFR to B3 & Alters Outlook to Stable
WISLON SALON: U.S. Trustee Unable to Appoint Committee
WP CPP: S&P Assigns 'CCC+' Rating to $100MM Incremental Term Loan
YOUFIT HEALTH: Court Approves Fast Pace Chapter 11
[*] Bankruptcy Filings Down 41%, Ch. 11 Filings 4% Up in October
[*] Iconic Retailers Fight to Survive as COVID-19 Rages On
[^] Recent Small-Dollar & Individual Chapter 11 Filings
*********
10827 STUDEBAKER: Seeks to Hire Ten-X as Auctioneer
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10827 Studebaker LLC seeks authority from the U.S. Bankruptcy Court
for the Central District of California to hire Ten-X, Inc. to act
as its auctioneer.
Ten-X will market and conduct an auction of the Debtor's real
property located at 30012 Ivy Glenn Drive, Laguna Niguel, Calif.
The firm proposes to auction the property over a multi-day period
beginning on Nov. 18.
Ten-X's commission for auctioning the property will be as follows:
1. 5 percent of the buyer's offer price paid at closing, which
fee will be added to the buyer's offer price to establish the total
purchase price payable by the buyer.
2. If the Debtor withdraws the property from auction other
than due to a material adverse change to the property outside of
its control that renders the property unmarketable, the Debtor will
pay to Ten-X either $145,000, if the withdrawal occurs more than 30
days before the start of the first schedule auction date, or
$290,000 if the withdrawal occurs any time thereafter.
3. A buyer's broker commission of 1.5 percent of the buyer's
offer price (exclusive of any transaction fee), will be paid to the
buyer's broker (if any) at closing by Economos DeWolf, Inc., the
Debtor's existing real estate broker.
Jim Palmer, an agent at Ten-X, disclosed in court filings that the
firm is a "disinterested person" as that term is defined in Section
101(14) of the Bankruptcy Code.
The firm can be reached through:
Jim Palmer
Ten-X, Inc.
15295 Alton Parkway
Irvine, CA 92618
Telephone: (888) 770-7332
About 10827 Studebaker
10827 Studebaker LLC, which is primarily engaged in renting and
leasing real estate properties, sought Chapter 11 protection
(Bankr. C.D. Cal. Case No. 19-13242) on Aug. 21, 2019. Robert
Clippinger, authorized representative, signed the petition.
The Debtor was estimated to have assets and liabilities of $1
million to $10 million as of the bankruptcy filing.
Judge Erithe A. Smith oversees the case. SulmeyerKupetz is the
Debtor's legal counsel.
511 GROUP: Seeks to Hire Joel M. Aresty as Legal Counsel
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511 Group LLC seeks approval from the U.S. Bankruptcy Court for the
Southern District of Florida to hire Joel M. Aresty, P.A. as their
legal counsel.
The firm will provide the following services:
(a) give advice to the Debtor with respect to its powers and
duties as a Debtor in possession and the continued management of
its business operations;
(b) advise the Debtor with respect to its responsibilities in
complying with the U.S. Trustee's Operating Guidelines and
Reporting Requirements and with the rules of the court;
(c) prepare legal documents necessary in the administration of
the case;
(d) protect the interest of the Debtor in all matters pending
before the court; and
(e) represent the Debtor in negotiation with its creditors in
the preparation of a plan.
The firm will be paid at $440 per hour. The firm also requested a
maximum of $11,000 for retainer plus $2,000 for costs.
Joel Aresty, Esq., disclosed in court filings that his firm is a
"disinterested person" as that term is defined in Section 101(14)
of the Bankruptcy Code.
The firm can be reached through:
Joel M. Aresty, Esq.
JOEL M. ARESTY, P.A.
309 1st Ave S
Tierra Verde FL 33715
Telephone: (305) 904-1903
Facsimile: (800) 559-1870
Email: Aresty@Mac.com
About 511 Group LLC
511 Group LLC, a Miami Beach, Fla.-based limited liability company,
sought protection under Chapter 11 of the Bankruptcy Code (Bankr.
S.D. Fla. Case No. 20-21098) on October 12, 2020.
At the time of the filing, Debtor had estimated assets of between
$100,001 and $500,000 and liabilities of the same range.
Joel M. Aresty P.A. is Debtor's legal counsel.
A.D.A.P.T. BASKETBALL: Seeks to Hire Cooper Law as Legal Counsel
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A.D.A.P.T. Basketball, LLC seeks approval from the U.S. Bankruptcy
Court for the District of South Carolina to hire The Cooper Law
Firm as legal counsel.
The firm will provide the following legal services:
a. provide the Debtor with legal advice with respect to its
powers and duties;
b. provide legal advice to the Debtor regarding its
responsibility to provide insurance and bank account information to
file monthly operating reports with the court, to pay quarterly
fees to the U.S. Trustee's Office, to seek and receive through its
attorney consent of the court to incur debt or sell property, to
file a plan of reorganization and disclosure statement, and to file
a final report, accounting and request for final decree as soon
after confirmation of the plan as is feasible; and
c. prepare legal papers.
Robert H. Cooper, Esq., who will be primarily responsible for the
case will be billed at his customary rate of $295 per hour. He will
charge between $150 and $195 per hour for the services provided by
his associate lawyers and $95 per hour for paralegals.
Mr. Cooper disclosed in court filings that he and his firm are
"disinterested persons" as that term is defined in Section 101(14)
of the Bankruptcy Code.
The firm can be reached through:
Robert H. Cooper, Esq.
The Cooper Law Firm
150 Milestone Way, Suite B
Greenville, SC 29615
Telephone: (864) 271-9911
Facsimile: (864) 232-5236
Email: thecooperlawfirm@thecooperlawfirm.com
About A.D.A.P.T. Basketball Enrichment LLC
A.D.A.P.T. Basketball Enrichment LLC is an Indian Land, S.C.-based
company that engages in the basketball instruction school
business.
A.D.A.P.T. Basketball Enrichment sought protection under Chapter 11
of the Bankruptcy Code (Bankr. D.S.C. Case No. 20-03745) on October
2, 2020. Julian Wright, the company's managing member and sole
owner, signed the petition.
At the time of the filing, Debtor had estimated assets of between
$100,001 and $500,000 and liabilities of the same range.
The Cooper Law Firm is Debtor's legal counsel.
ADVANCED READY: Seeks to Hire Rachel S. Blumenfeld as Legal Counsel
-------------------------------------------------------------------
Advanced Ready Mix Corp. and its affiliates seek approval from the
U.S. Bankruptcy Court for the Eastern District of New York to hire
The Law Office of Rachel S. Blumenfeld PLLC as their legal
counsel.
The firm will provide the following services:
a. give advice to the Debtors with respect to their powers and
duties;
b. negotiate with creditors of the Debtors and work out a plan
of reorganization and take the necessary legal steps in order to
effectuate such a plan;
c. prepare legal papers;
d. appear before the court;
e. represent the Debtor in connection with obtaining
post-petition financing;
f. take any necessary action to obtain approval of a
disclosure statement and confirmation of a plan of reorganization;
and
g. perform all other legal services for the Debtor.
The firm's hourly rates for matters relating to the Chapter 11
proceeding are as follows:
Rachel S. Blumenfeld, Esq. $450
Of counsel $450
Paraprofessional $150
On or about Oct. 13, the firm received a retainer payment in the
sum of $20,000.
The firm is a "disinterested person" as that term is defined in
Section 101(14) of the Bankruptcy Code, according to a court
filing.
The firm can be reached through:
Rachel S. Blumenfeld, Esq.
The Law Office of Rachel S. Blumenfeld PLLC
26 Court Street, Suite 2220
Brooklyn, NY 11242
Telephone: (718) 858-9600
About Advanced Ready Mix Corp.
Advanced Ready Mix Corp. a supplier of ready-mixed concrete in
Bayside, N.Y., and its affiliates sought protection under Chapter
11 of the Bankruptcy Code (Bankr. E.D.N.Y. Lead Case No. 19 46274)
on Oct. 17, 2019. At the time of the filing, the Debtor had
estimated assets of less than $50,000 and liabilities of between
$500,000 and $1 million.
Judge Carla E. Craig oversees the cases.
Platzer, Swergold, Levine, Goldberg, Katz & Jaslow, LLP is the
Debtor's legal counsel.
The U.S. Trustee for Region 2 appointed a committee of unsecured
creditors on Jan. 23, 2020. The committee has tapped Cullen and
Dykman, LLP as its legal counsel, and CBIZ Accounting, Tax and
Advisory of New York, LLC as its financial advisor.
ALBERTSONS COMPANIES: Moody's Ups CFR to Ba3, Outlook Stable
------------------------------------------------------------
Moody's Investors Service upgraded Albertsons Companies, Inc.'s
corporate family rating and probability of default rating to Ba3
and Ba3-PD from B1 and B1-PD respectively. In addition, Moody's
upgraded the rating of Albertsons' and Safeway Inc.'s existing
senior unsecured notes to B1 from B2. The company's speculative
grade liquidity rating is unchanged at SGL-1. The outlook is
changed to stable from positive.
"Albertsons has benefitted from the increased demand for food at
home and pantry loading during the coronavirus pandemic with record
sales and EBITDA for the first half of 2020", Moody's Vice
President Mickey Chadha stated. "The company has also reduced debt
though free cash flow thereby improving credit metrics meaningfully
and we expect metrics to remain strong even after buying patterns
normalize", Chadha further stated.
Upgrades:
Issuer: Albertsons Companies, Inc.
Probability of Default Rating, Upgraded to Ba3-PD from B1-PD
Corporate Family Rating, Upgraded to Ba3 from B1
Senior Unsecured Regular Bond/Debenture, Upgraded to B1 (LGD4) from
B2 (LGD4)
Issuer: Safeway Inc.
Senior Unsecured Regular Bond/Debenture, Upgraded to B1 (LGD4) from
B2 (LGD4)
Outlook Actions:
Issuer: Albertsons Companies, Inc.
Outlook, Changed to Stable from Positive
Issuer: Safeway Inc.
Outlook, Changed to Stable from Positive
RATINGS RATIONALE
Albertsons' Ba3 corporate family rating reflects the company's very
good liquidity, its sizable scale, good store base, its
well-established regional brands and its significant store
ownership. The company has had a robust sales growth for the first
half of the year with identical store sales growing 26.5% and 13.8%
in the first and second quarter respectively. Consumers have been
increasing basket size as they consolidate trips to store and the
demand for food at home has significantly increased due to work at
home mandates and restrictions on restaurant indoor dining
capacity. Digital sales have also grown over 200% in each of the
first two quarters of fiscal 2020 as consumers increasingly got
comfortable ordering online and avoided going into the stores. As
demand increased across the grocery business promotions have been
lower than usual resulting in lower pricing pressure. This,
combined with the high operating leverage of food retailers due to
the high fixed cost nature of the business has resulted in
significant increase in profitability. The company has also reduced
debt and therefore Moody's expects Debt/EBITDA to be around 4.5x in
the next 12-18 months. Moody's expects growth to moderate in 2021
and revenues and EBITDA to decline as buying patterns normalize and
restaurant openings ramp up. The ratings are supported by the
company's track record of operational improvements especially with
regard to underperforming assets and synergy realization.
Competitive risks, coupled with a high debt burden and significant
ownership by financial sponsor, remain risks for the company. The
company is majority owned by a consortium led by Cerberus Capital
Management and although financial policies have been balanced there
exists a potential for them being skewed toward shareholder
returns. The company did an IPO in June 2020 with all proceeds of
the IPO going to the sponsors. In addition, in 2020 Albertsons
raised convertible preferred equity the majority of which is held
by affiliates of Apollo Global Management.
The stable outlook reflects its expectation that the company's
operating performance will not deteriorate and it will continue to
lower its debt burden.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Ratings could be upgraded if debt/EBITDA is sustained below 4.0
times, EBITA/interest approaches 2.5 times, financial policies
remain benign and liquidity remains very good.
Ratings could be downgraded if recent positive operating trends are
significantly reversed, debt/EBITDA is sustained above 5.0 times or
EBITA/interest is sustained below 1.75 times. Ratings could also be
downgraded if financial policies become aggressive or if liquidity
deteriorates.
With about $68 billion in annual sales Albertsons Companies, Inc.
is one of the largest foods and drug retailers in the United
States. As of Sept. 12, 2020, the Company operated 2,252 retail
food and drug stores with 1,725 pharmacies, 398 associated fuel
centers, 22 dedicated distribution centers and 20 manufacturing
facilities. The Company operates stores across 34 states and the
District of Columbia under 20 banners including Albertsons,
Safeway, Vons, Jewel-Osco, Shaw's, Acme, Tom Thumb, Randalls,
United Supermarkets, Pavilions, Star Market, Haggen and Carrs. The
company is majority-owned by a consortium led by Cerberus Capital
Management.
The principal methodology used in these ratings was Retail Industry
published in May 2018.
ALERT 360: Moody's Assigns B3 Corp. Family Rating, Outlook Stable
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Moody's Investors Service assigned ratings to Alert 360 Opco, Inc.,
including a B3 corporate family rating, a B3-PD probability of
default rating, and a B3 facility rating to the alarm monitoring
services company's new $200 million first-lien term loan. A
restructuring support agreement, confirmed in October by all
existing CSG lenders as part of an out-of-court exchange, mandates
the new term loan as well as a $25 million super-priority revolving
credit facility (unrated, and anticipated to be undrawn at closing)
will replace CSG's existing debt. Existing debt includes a fully
drawn $50 million revolving credit facility, a $346 million
first-lien term loan, and a $50 million second-lien term loan.
Existing revolver and first-lien lenders will give up all claims on
their respective debt in exchange for the new $200 million loan
plus most of the equity in the reorganized entity. First-lien
lenders will receive approximately 88% of the reorganized entity's
equity, while second-lien lenders will receive 2%. The new credit
program will replace all $446 million of CSG's pre-RSA debt. The
outlook is stable.
Shortly after this ratings assignment, Moody's will withdraw
existing ratings of Central Security Group, Inc. (Caa2 CFR,
negative outlook).
Assignments:
Issuer: Alert 360 Opco, Inc. (formerly known as Central Security
Group, Inc.)
Corporate family rating, assigned B3
Probability of default rating, assigned B3-PD
Senior secured first-lien term loan, maturing October 2025,
assigned B3 (LGD4)
The new entity's outlook is stable.
RATINGS RATIONALE
After unanimous confirmation of the RSA, Alert360 is a
significantly less leveraged entity than its predecessor company,
with pre-RSA debt being cut by more than half. As a result,
Alert360's main alarm-monitoring-industry credit statistics not
only improve in line with the reduction in debt, but they also
compare very favorably with similarly- or higher-rated competitors'
metrics. With the restructuring, Alert360 has eliminated the severe
risks of its fully-drawn $50 million revolver expiring and the $346
million first-lien term loan becoming current, both in October
2020. High leverage and refinancing risk, more than operational
challenges, had been the primary reasons for the predecessor
company's Caa2 CFR.
Post-RSA debt-to-RMR ("recurring monthly revenue") leverage (as of
December 31, 2020), has been cut to the low-20 times, as compared
with close to 50 times before the restructuring. Alert360's
post-restructuring debt-RMR leverage is easily the lowest among
Moody's rated universe of alarm monitors. The debt reduction saves
the company more than $20 million in annual interest costs. More
importantly, it pushes steady-state free cash flow as a percentage
of debt up into the low-double digits, stronger than the same
metric for B1-rated ADT, the alarm industry's leader (Prime
Security Services Borrower, LLC, B1 stable). These metrics are
attained even under its relatively conservative attrition and
creation-multiple assumptions.
Unlike certain of its competitors, Alert360 has not had to redesign
its business model over the years. It continues to employ a hybrid
subscriber model using hundreds of third-party dealers, an internal
sales-branch network, and its own practice of purchasing
subscribers in bulk from local operators. In response to
increasingly expensive dealer sales multiples in recent years,
Alert360 has been able to redirect its sales efforts away from
dealers and towards its 17-unit internal branch network, which has
expanded in markets where it has account density and profitable
growth opportunities.
While the lower debt burden affords more operational flexibility
and reduces execution risk, Alert360 is constrained by very small
scale, especially relative to its rated peers. Moody's expects
effectively flat revenue in 2020 and 2021, between $110 million and
$115 million, as the company pulls back on subscriber growth
spending (particularly through third-party dealers), as compared
with nearly 7% annual growth from 2015 to 2019. The RSA, moreover,
sets a limit to capital expenditures, allowing one new branch
opening per year, for example. The agreement also limits subscriber
acquisition costs ("SAC") plus capex to a specific dollar amount.
Alert360's very small scale with, now, minimal expected growth will
continue to weigh on the ratings, despite its relatively strong
industry metrics.
As with alarm monitors in general, Alert360's ratings are supported
by steady and predictable revenue streams, but also
industry-leading (low) attrition rates that have held between 10%
and 11.5%. Revenues are highly predictable due to the annuity-like
characteristics of contracts that provide for a steady stream of
RMR. More than 85% of Alert360's revenues are delivered though
subscriber contracts. As of September 2020, Alert360 has roughly
205,000 subscribers, mainly in the Sunbelt region of the US,
providing total RMR of about $8.9 million, up from $6.5 million
when Moody's originally rated the credit (as CSG) in 2014. However,
these most recent subscriber and RMR numbers represent a decline,
and a reversal in their improving trends, relative to recent
periods, as the company scaled back its growth plans in response to
its 2020 liquidity crisis.
Moody's views Alert360's liquidity as adequate. The new $25 million
revolving credit facility is undrawn and there is about $15 million
of balance sheet cash. One factor involved in evaluating an alarm
monitor's liquidity is assuming that it can curtail the active
subscriber acquisition programs in order to free up liquidity.
Without that "steady state" option, most alarm monitoring
companies' liquidity would be viewed less favorably. Moody's
projects that Alert360 could generate at least $20 million of free
cash flow if it went into a steady state, and spent not for revenue
growth but only to maintain a level count of subscribers (who would
attrit at a conservatively assumed 13% per year). Relative to about
$200 million of funded debt, this is a strong level of steady state
free cash flow for the ratings category. Secured lenders have the
benefit of the covenant restricting subscriber growth spending and
a covenant requiring minimum liquidity of $15 million at all times.
Moody's expects near-breakeven free cash flow over the next 12 to
18 months. Cash on hand plus the $25 million revolver should enable
the Issuer to stay comfortably within the minimum liquidity
covenant.
Moody's stable outlook reflects its expectations for flat revenue
growth in 2020, with a slight improvement by 2021. Key credit
metrics such as steady-state-free-cash-flow-to-debt and debt-to-RMR
leverage Moody's expects will show modest improvement through 2022,
and at levels at all times that are quite strong for the B3 CFR.
The ratings for Alert360's debt reflect both the overall
probability of default of the company, which Moody's designates as
B3-PD, and a loss-given-default ("LGD") assessment of the
individual debt instruments. The B3 instrument rating on the
first-lien term loan reflects directly the risk inherent to the
company's overall B3 CFR since the loan is by far the largest
component of Alert360's debt capital structure. There is no
subordinated debt in the post-RSA capital structure that would
provide instrument ratings "lift" to the first-lien debt. The
super-priority revolver, on the other hand, is too small relative
to the first-lien debt to produce downward ratings pressure on the
term loan.
FACTORS THAT WOULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
A ratings upgrade could be prompted if Alert360 grows its revenue
and subscriber base while maintaining strong steady state free cash
flows, with an improvement in its liquidity profile.
The ratings could be downgraded if revenue weakens substantially,
Moody's anticipates that steady state free cash flow will approach
breakeven, or if liquidity weakens to less than adequate.
Formerly known as Central Security Group ("CSG"), Alert360 provides
alarm monitoring services to roughly 205,000 primarily residential
customers in most sections of the Sunbelt US. The company had been
owned by private equity sponsors from late 2010 to its
restructuring in late 2020, after which it is owned primarily by
CSG's first-lien lenders and by management. Moody's expects the
company to generate 2020 revenues of about $110 million, down from
2019 full-year revenue of $114 million.
The principal methodology used in these ratings was Business and
Consumer Service Industry published in October 2016.
AMERICAN AXLE: S&P Affirms 'B+' ICR; Ratings Off Watch Negative
---------------------------------------------------------------
S&P Global Ratings removed the ratings on American Axle &
Manufacturing Holdings Inc. from CreditWatch, where it placed them
with negative implications on April 6, 2020 and affirmed its 'B+'
issuer credit rating and all issue-level ratings.
S&P said, "We believe that American Axle's profitability and cash
flow will improve as the recovery in global light-vehicle demand
proceeds. The company showed strong profitability and cash flow
generation in the third quarter 2020 due to the ongoing recovery in
light-vehicle demand. Excluding the sale of the casting business in
2019, third quarter revenue fell about 7% year over year, much
better than the 66% year-over-year drop in the second quarter. U.S.
light-vehicle demand also recovered as the quarter progressed with
sales falling year over year about 14% in July, 11% in August, and
about 5% in September. In October, the decline slowed to about 3%,
suggesting demand continues to normalize."
"Our positive outlook on American Axle reflects our view that there
is at least a one-third chance that we could raise the rating if,
for instance, its FOCF-to-debt ratio moves above 5% over the next
12 months."
"We could raise our rating on American Axle if demand in the U.S.
full-size pickup and large sport-utility vehicle (SUV) markets
continues to stay strong and the company maintains its good
operational execution, with EBITDA margins exceeding 16%, while
undertaking significant product launches across its business
segments. Specifically, we would expect the company's debt to
EBITDA to stay well below 5x and its free cash flow-to-adjusted
debt ratio to remain comfortably above 5% on a sustained basis."
"We could revise our outlook on American Axle to stable if we come
to believe that that its debt-to-EBITDA ratio stayed near 5x and
its FOCF-to-debt ratio remained close to 5% on a sustained basis.
This could occur because of weaker-than-expected cost synergies,
lower-than-expected margins on the company's new and replacement
programs, or an unexpected decline in large truck sales due, for
instance, from new government lockdowns put in place to slow the
spread of COVID-19."
APPROACH RESOURCES: Unsecureds to Recover 1.84% to 1.95% in Plan
----------------------------------------------------------------
Approach Resources Inc. and its debtor affiliates filed with the
U.S. Bankruptcy Court for the Southern District of Texas, Houston
Division, a Joint Plan of Liquidation and a Disclosure Statement on
Oct. 30, 2020.
During the course of these Cases, the Debtors have engaged in
extensive negotiations with the Lender Parties. In particular, the
Debtors consulted with agent JPMorgan Chase Bank, N.A., regarding
the terms and provisions of the Plan. The Agent has indicated that
the Lender Parties support confirmation of the Plan.
On September 30, 2020, the Debtors closed the sale of substantially
all of their assets to purchaser Zarvona III-A, L.P., pursuant to
the Sale Order. The Plan, among other things, appoints a Plan
Administrator to, among other things, wind down the Debtors'
limited remaining operations and distribute the remaining proceeds
of the Debtors' assets in the manner specified in the Plan. Under
the Plan, a Plan Administrator will be appointed to oversee the
Wind Down and to resolve and compromise Claims. The Plan provides
that the Plan Administrator shall, subject to the Agent's consent,
complete the winding up of the Debtors as expeditiously as
practicable under applicable law, and empowers and directs the Plan
Administrator to take such actions as may be necessary to effect
the dissolution of the Debtors.
Class 4 consists of the General Unsecured Claims (GUC) with
$92,471,000 estimated allowed amount of claims and 1.84% to 1.95%
recovery. Each Holder of an Allowed Class 4 GUC Claim shall
receive, as soon as reasonably practicable after the Effective
Date, in full and final satisfaction, settlement and release of and
in exchange for such Allowed Class 4 GUC Claim, its Pro Rata share
of the Gift Reserve, following payment of all other Claims and
other amounts entitled to receive payment from the Gift Reserve
under the Plan, and following the indefeasible payment in full of
all Prepetition Secured Claims, all remaining Available Cash.
All of the Class 6 Interests outstanding as of the Effective Date
shall be eliminated, extinguished, and cancelled.
Except as otherwise provided in the Plan or in the Confirmation
Order, all Cash required for the payments to be made pursuant to
the Plan shall be obtained from the Available Cash.
A full-text copy of the Disclosure Statement dated October 30,
2020, is available at https://tinyurl.com/y3nf4me7 from
PacerMonitor at no charge.
Counsel for Debtors:
THOMPSON & KNIGHT LLP
David M. Bennett
Email: david.bennett@tklaw.com
1722 Routh St., Suite 1500
Dallas, TX 75201
Telephone: (214) 969-1700
Facsimile: (214) 969-1751
- and -
THOMPSON & KNIGHT LLP
Demetra Liggins
Email: demetra.liggins@tklaw.com
Anthony F. Pirraglia
Email: anthony.pirraglia@tklaw.com
811 Main Street, Suite 2500
Houston, TX 77002
Telephone: (713) 654-8111
Facsimile: (713) 654-1871
About Approach Resources
Forth Worth, Texas-based Approach Resources Inc.
--https://www.approachresources.com/ -- is a publicly owned
Delaware corporation. The company and its subsidiaries comprise an
independent energy company focused on the exploration, development,
production and acquisition of unconventional oil and gas reserves.
Their principal operations are conducted in the Midland Basin of
the greater Permian Basin in West Texas.
Approach Resources Inc. and its affiliates filed for Chapter 11
bankruptcy protection (Bankr. S.D. Tex. Lead Case No. 19-36444) on
Nov. 18, 2019, listing $100 million to $500 million in assets and
liabilities. The petitions were signed by Sergei Krylov, chief
executive officer. The Hon. Marvin Isgur is the presiding judge.
The Debtors tapped Thompson & Knight LLP as legal counsel; Perella
Weinberg Partners LP as investment banker; Alvarez & Marsal North
America, LLC as financial advisor; KPMG US LLP as tax advisor; and
Epiq Corporate Restructuring LLC as claims, noticing and
solicitation agent.
APPROACH RESOURCES: Wins Court Nod to Solicit Liquidation Plan Vote
-------------------------------------------------------------------
Alex Wolf of Bloomberg Law reports that Approach Resources Inc. won
approval to solicit creditor votes on a bankruptcy liquidation plan
following the oil and gas company's $115.5 million sale to an
affiliate of Zarvona Energy LLC.
Under the Chapter 11 plan, company lenders are projected to recover
27.5% of their $307 million in estimated claims. General unsecured
creditors, owed more than $92 million, will split a "gift reserve"
of $1.8 million.
Judge Marvin Isgur of the U.S. Bankruptcy Court for the Southern
District of Texas authorized the vote solicitation process during a
telephonic hearing Tuesday after discussing final revisions to plan
disclosures.
About Approach Resources
Forth Worth, Texas-based Approach Resources Inc. --
https://www.approachresources.com/ -- is a publicly owned Delaware
corporation. The company and its subsidiaries comprise an
independent energy company focused on the exploration, development,
production and acquisition of unconventional oil and gas reserves.
Their principal operations are conducted in the Midland Basin of
the greater Permian Basin in West Texas.
Approach Resources Inc. and its affiliates filed for Chapter 11
bankruptcy protection (Bankr. S.D. Tex. Lead Case No. 19-36444) on
Nov. 18, 2019, listing $100 million to $500 million in assets and
liabilities. The petitions were signed by Sergei Krylov, chief
executive officer. The Hon. Marvin Isgur is the presiding judge.
The Debtors tapped Thompson & Knight LLP as legal counsel; Perella
Weinberg Partners LP as investment banker; Alvarez & Marsal North
America, LLC as financial advisor; KPMG US LLP as tax advisor; and
Epiq Corporate Restructuring LLC as claims, noticing and
solicitation agent.
AREU STUDIOS: Seeks to Hire Jones & Walden as Legal Counsel
-----------------------------------------------------------
Areu Studios, LLC seeks approval from the U.S. Bankruptcy Court for
the Northern District of Georgia to hire Jones & Walden, LLC as its
legal counsel.
The firm will provide the following services:
(a) prepare pleadings and applications;
(b) conduct examination;
(c) advise the Debtor of its rights, duties and obligations;
(d) consult with and represent the Debtor with respect to a
Chapter 11 plan;
(e) perform those legal services incidental and necessary to
the day-to-day operations of the Debtor's business; and
(f) take any and all other action incident to the proper
preservation and administration of the Debtor's estate and
business.
The hourly rates for the firm's attorneys range from $200 to $375.
Legal assistants charge an hourly fee of $100.
Jones & Walden neither holds nor represents any interest adverse to
the Debtor and its estate, according to a court filing.
The firm can be reached through:
Cameron M. McCord, Esq.
Jones & Walden, LLC
699 Piedmont Ave, NE
Atlanta, GA 30308
Telephone: (404) 564-9300
Email: cmccord@joneswalden.com
About Areu Studios LLC
Areu Studios, LLC, which owns and operates a movie studio in
Atlanta, Ga., sought protection under Chapter 11 of the Bankruptcy
Code (Bankr. N.D. Ga. Case No. 20-71228) on October 29, 2020. The
petition was signed by Ozzie Areu, the company's manager.
At the time of the filing, Debtor had estimated assets of less than
$50,000 and liabilities of between $1 million and $10 million.
Jones & Walden, LLC is Debtor's legal counsel.
ARTERRA WINES: Moody's Affirms B2 CFR, Outlook Stable
-----------------------------------------------------
Moody's Investors Service affirmed Arterra Wines Canada Inc.'s B2
corporate family rating (CFR) and its B2-PD probability of default
rating. At the same time, Moody's has assigned a B1 rating to
Arterra's new US$495 million first lien term loan tranche and
assigned a B1 to its new C$50 million term loan tranche, both due
in November 2027. The outlook remains unchanged at stable. Proceeds
from the company's new term loan will be used to refinance its
existing credit facilities and to finance the payment of a dividend
to Arterra's private equity owner, Ontario Teacher's Pension Plan
(OTPP).
"Arterra's rating and outlook has been affirmed despite the
leveraging dividend because leverage will remain acceptable for the
rating over the next 12-18 months at less than 7x" said Moody's
analyst Jonathan Reid.
Affirmations:
Issuer: Arterra Wines Canada, Inc.
Corporate Family Rating, Affirmed B2
Probability of Default Rating, Affirmed B2-PD
Assignments:
Issuer: Arterra Wines Canada, Inc.
Senior Secured 1st Lien Term Loan, Assigned B1 (LGD3)
Outlook Actions:
Issuer: Arterra Wines Canada, Inc.
Outlook, Remains Stable
RATINGS RATIONALE
Arterra is constrained by: (1) leverage in the 6-6.5x range over
the next 12-18 months; (2) small scale relative to rated alcoholic
beverage peers and exposure to foreign currency fluctuations as a
result of its international supply chain; and (3) financial policy
risks of private equity ownership. The company benefits from: (1)
its strong market position in the Canadian wine industry, supported
by a large retail presence and a portfolio of well-known brands
across various price points; (2) good demand for wine, ciders, and
wine-based coolers which will support modest revenue growth; and
(3) highly regulated Canadian wine industry which creates
substantial barriers to entry.
The stable outlook reflects its expectation that Arterra will
maintain its strong market position in the Canadian wine industry
and that it will maintain good liquidity and acceptable leverage
over the next 12-18 months.
Arterra has good liquidity. Sources are around C$130 million
compared to uses in the form of mandatory term loan amortization of
about C$7 million over the next four quarters. Sources are
comprised of accessible cash of around C$10 million (C$20 million
on balance sheet expected at close of the refinancing transaction
less around C$10 required to run the business), annual free cash
flow of around C$40 million and full availability on the company's
C$80 revolving credit facility due in November 2025. The revolving
credit facility is subject to a springing maximum first lien net
leverage covenant when drawings exceed 35%, which Moody's does not
expect to occur over the next four quarters. If the covenant were
to be active, Moody's expects the company would be in compliance.
Arterra has limited ability to generate liquidity from asset sales
as its assets are encumbered.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
A ratings upgrade would require Arterra to sustain adjusted
Debt/EBITDA below 5x (currently around 6.5x, proforma for the
refinancing) and adjusted EBIT/Interest above 2.5x (currently
around 2x, proforma for the refinancing).
A ratings downgrade could occur if adjusted Debt/EBITDA is
sustained above 7x (currently around 6.5x, proforma for the
refinancing) or adjusted EBIT/Interest below 1x (currently around
2x, proforma for the refinancing), or a weakening of liquidity.
In accordance with Moody's Loss Given Default for Speculative-Grade
Companies (LGD) methodology, Arterra's US$495 million first lien
term loan and C$50 million term loan, both due in November 2027,
are rated B1, one notch above the B2 CFR. This reflects the term
loan's pari-passu ranking with the company's C$80million secured
revolving credit facility, its first-out access to collateral and
loss absorption cushion provided by the C$87 million shareholder
loan, which is considered junior debt in the application of its LGD
methodology.
Environmental, Social and Governance Risk
The company is exposed to governance risk through its private
equity ownership, which can lead to more aggressive financial
policies than publicly owned companies.
The principal methodology used in these ratings was Alcoholic
Beverages Methodology published in February 2020.
ARTERRA WINES: S&P Affirms 'B' ICR, Rates 1st-Lien Term Loan 'B'
----------------------------------------------------------------
S&P Global Ratings affirmed its 'B' issuer credit rating on
Mississauga, Ont.-based Arterra Wines Canada Inc. At the same time,
S&P assigned its 'B' rating to the company's proposed first-lien
term loan facility.
Additional debt to fund dividend recapitalization could increase
debt to EBITDA to about 6.5x.
S&P said, "We forecast the proposed transaction will increase
Arterra Wines Canada Inc.'s total debt by more than C$150 million
compared with debt as of Aug. 31, 2020. Pro forma the transaction,
the debt-to-EBITDA ratio is about 6.2x (on S&P Global Ratings'
adjusted basis) based on last 12 months August 2020 EBITDA, which
is significantly higher than our current debt-to-EBITDA ratio of
about 5.0x. Given the company's growing EBITDA and financial
sponsor policy, we believe future shareholder returns are likely to
continue, which will keep the company from materially deleveraging
on a sustained basis. In our view, despite the additional debt,
Arterra will maintain credit measures that are commensurate with
the rating. These include debt to EBITDA in the mid-6x area through
fiscal 2022 and EBITDA interest coverage of about 3x. At this
leverage level, we believe Arterra has some room to withstand
unexpected EBITDA underperformance either due to cost headwinds or
revenue pressure while maintaining the current rating. Furthermore,
given the low capital intensity of its operations, Arterra should
be able generate positive FOCF in the C$35 million-C$45 million
range (on an S&P Global Ratings' adjusted basis) for each of fiscal
years 2021 and 2022, which we expect could be used to pursue
tuck-in acquisitions. Therefore, we anticipate deleveraging, if
any, could stem from EBITDA growth as opposed to material debt
reduction over the near term, and would be temporary in nature."
Fiscal 2021 EBITDA should increase growth in low-double-digit
percentage area even when assuming a slowdown of pandemic-led
demand. Arterra's year-to-date performance has been better than the
same period in the previous year due to a surge in demand and
consumption for the company's products, particularly during the
pandemic-related shutdown. Specifically, the company's revenues
increased by 9% for the six months ended Aug. 31, 2020, largely
spurred by solid volume growth in retail channels. This growth was
sufficient to offset declines in sales at estate properties and
sales to restaurants. Similarly, EBITDA on an S&P Global Ratings'
adjusted basis meaningfully improved because of higher sales,
operating efficiencies, and lower marketing spend.
S&P said, "We expect the company's sales volumes to normalize in
the second half of fiscal 2021 as benefits from initial stockpiling
gradually ease. Furthermore, government-mandated restrictions on
restaurants and social gatherings remain in place in several
regions, which should have a modest effect on Arterra's operating
performance. Considering these factors, we expect low-single-digit
year-over-year revenue growth for fiscal 2021 (ending Feb. 28,
2021)."
"At the same time, we expect a meaningful year-over-year
improvement in EBITDA and EBITDA margins as the company primarily
benefits from higher volumes, better overhead cost absorption, and
meaningfully lower one-time costs related to IT projects and
carve-out. Specifically, we expect fiscal 2021 EBITDA margins (on
an S&P Global Ratings' adjusted basis) to improve to 18.5%-19.0%
from about 17.0% in fiscal 2020. Furthermore, we believe, an
interplay of volume and price mix should support organic revenue
growth in the low-single-digit area in fiscal 2022, which assumes
the pandemic-led surge in demand subsides. That said, we anticipate
that EBITDA growth could be flat-to-modestly positive year over
year in fiscal 2022 as higher marketing costs limit margin gains."
Strong market position, solid brand recognition, broad product
portfolio, and a highly regulated Canadian wine industry underpin
the company's competitive position. Arterra has a leading position
in the Canadian wine market and it owns and distributes eight of
the top 20 wine brands in Canada including Jackson-Triggs and
Inniskillin.
S&P said, "Our ratings incorporate the company's attractive market
position in Ontario, British Columbia, and Quebec, with a combined
overall Canadian wine market share of about 17%. We recognize the
strength of the company's product offerings across different price
points in a fragmented and highly regulated Canadian wine industry.
That said, we note that Arterra has small scale, and narrow product
and geographic diversity when compared with that of global peers in
the alcohol and wine industry." Arterra also has modest product
concentration, with the top eight brands accounting for almost half
of revenues."
The regulated nature of the industry provides manufacturers such as
Arterra with some cash flow stability from price floors and uniform
pricing, along with modest barriers to entry.
S&P said, "We believe Arterra is well-positioned in this
competitive environment due to its strong brand recognition and
longstanding relationship with provincial government liquor
retailers such as the LCBO and B.C. liquor stores. Along with
selling to government liquor retail stores and large grocery chains
(approximately 70%-75% of sales), the company sells its products
through its own retail channel of 164 Wine Rack locations in
Ontario. These stores provide broader distribution of Arterra's
products compared with that of peers, and greater reach in Ontario.
We view positively the company's diversity in sourcing grapes from
various regions globally that provides for raw material cost
control and allows the company to operate during regional scarcity.
These favorable business characteristics and increasing consumer
preferences for wine should support Arterra's low-single-digit
revenue growth and EBITDA margins in the 18.5%-19.0% area on an S&P
Global Ratings' adjusted basis over the near term."
"The stable outlook reflects our expectation that Arterra's strong
market position in Canada, revenue growth through the pandemic, and
strength of branded product offerings should enable the company to
sustain low-single-digit revenue growth in fiscal 2022. In
addition, the stable outlook reflects the company's attractive FOCF
conversion characteristics given an asset-lite model that should
allow it to sustain its increased debt load and maintain debt to
EBITDA in the mid-6x area in fiscal 2022."
"We could lower the rating if operating performance deteriorates
and the debt-to-EBITDA ratio approaches 7.5x. An environment of
increased competition, unexpected key input cost headwinds, or
operational missteps could lead to lower EBITDA and leverage
approaching 7.5x, as well as free cash flow dropping meaningfully
below fiscal 2020 levels. We could also lower the rating if the
company's financial policy becomes more aggressive, with
significant debt-financed shareholder distribution that materially
weakens credit measures such that debt to EBITDA approaches 7.5x."
"We are unlikely to raise the rating in the next year, given our
expectation of leverage in the mid-6x area. However, we could
consider an upgrade if the company's operating performance
substantially improves and leverage is sustained below 5x. In
addition we would also expect the controlling shareholder to commit
to not pursuing debt-financed dividends or acquisitions that would
lead to a meaningful deterioration of credit ratios."
ASTRIA HEALTH: Presses Ahead to Emerge From Chapter 11 by December
------------------------------------------------------------------
Mai Hoang of Yakima Herald-Republic reports that Astria Health is
pressing ahead to emerge from Chapter 11 bankruptcy protection by
the end of 2020 end after receiving court approval for a proposed
disclosure statement.
Once several requested edits to the document are completed, Judge
Whitman L. Holt will sign an order approving the statement. The
disclosure statement provides extensive information about the
nonprofit health care system's finances, including its assets,
liabilities and events leading up to and following the
organization's bankruptcy.
The proposed order, which was filed Friday after a court hearing,
also approves procedures for a creditor vote on Astria Health's
reorganization plan and a confirmation hearing.
The court's approval of the disclosure statement comes after Astria
Health and its main creditor, Lapis Advisers, resolved issues
regarding the reorganization plan it had jointly filed this
summer.
During the hearing, Holt said he would sign the order soon, so
Astria Health can start soliciting creditors about the voting
process. According to the order, creditors would have until 4 p.m.
Pacific Time on Dec. 4, 2020 to get their vote to Kurtzman Carson
Consultants LLC, the California company serving as solicitation
agent for the voting process.
A confirmation hearing for the reorganization plan is scheduled for
Dec. 18, according to the proposed order.
Astria Health filed for Chapter 11 bankruptcy protection in May
2019. The organization cited cash flow issues after its former
billing vendor failed to collect tens of millions of dollars in
revenue. Over the last 18 months, the organization has scaled back
its operations considerably, closing several primary and specialty
care clinics. In January, the organization closed Astria Regional
Medical Center, leaving Yakima with just one hospital.
Since then, the organization has continued to run Astria Toppenish
and Astria Sunnyside hospitals and a smaller network of clinics
throughout the Yakima Valley.
Earlier in November 2020, John Gallagher announced his departure as
CEO of the organization. Gallagher has remained with the
organization as a consultant while it works to complete the
bankruptcy reorganization process.
A revised version of the disclosure statement lists Brian Gibbons
as the interim CEO of Astria Health and president and CEO of Astria
Sunnyside Hospital. The disclosure statement also notes that Astria
Health will soon reject a service agreement with AHM, which had
employed Gallagher and several other executives.
The disclosure statement said executives who are AHM employees
would be offered employment with Astria Health.
About Astria Health
Astria Health and its subsidiaries -- https://www.astria.health --
are a nonprofit health care system providing medical services to
patients who generally reside in Yakima County and Benton County,
Wash., through the operation of Sunnyside, Yakima, and Toppenish
hospitals, as well as several health clinics, home health services,
and other healthcare services. Collectively, they have 315 licensed
beds, three active emergency rooms, and a host of medical
specialties. The Debtors have 1,547 regular employees.
Astria Health and 12 of its subsidiaries filed for bankruptcy
protection (Bankr. E.D.Wash. Lead Case No. 19-01189) on May 6,
2019. In the petitions signed by John Gallagher, president and
CEO, the Debtors estimated assets and liabilities of $100 million
to $500 million.
The Hon. Frank L. Kurtz oversees the cases.
Bush Kornfeld LLP and Dentons US LLP serve as the Debtors' counsel.
Kurtzman Carson Consultants, LLC is the claims and noticing agent.
Gregory Garvin, acting U.S. trustee for Region 18, on May 24, 2019,
appointed seven creditors to serve on an official committee of
unsecured creditors. The Committee retained Sills Cummis & Gross
P.C. as its legal counsel; Polsinelli PC, as co-counsel; and
Berkeley Research Group, LLC as financial advisor.
ASTRIA HEALTH: Unsecureds Get At Least $7.3M in UCC-Backed Plan
---------------------------------------------------------------
Astria Health, et al., have proposed a Plan built around the
following key elements:
* The Debtors will be deemed consolidated for the sole purpose
of treatment of Claims and liabilities under a single Plan, but
will otherwise retain the separate corporate structure of
individual Debtors (and any other Debtor not included therein shall
be treated under a separate Plan).
* AH NP 2, a Washington nonprofit corporation and currently a
wholly owned nondebtor subsidiary of Astria, will become the sole
member of Astria; and Astria will change from a no-member nonprofit
corporation to a single member nonprofit corporation.
* A newly created nondebtor entity, AH System, a freestanding
Washington nonprofit corporation, will assume the non-discharged
debt of the Debtors in exchange for AH NP 2's transfer of its sole
membership interest in Astria to AH System.
* The Lapis Parties have agreed to reinstatement of the Senior
Secured Bond Debt Claims which will be paid by the Reorganized
Debtors over time.
* AH System will issue debt instruments described in the
scheduled attached as Exhibit A to the Plan to satisfy the DIP
Claims and Senior Secured Credit Agreement Claims in full.
* A GUC Distribution Trust will be created to pursue all
Avoidance Actions (other than any Avoidance Actions against the
Debtors' vendor that provided revenue cycle, billing and collection
services to the Debtors pre-petition and as of the Petition Date
(collectively with such vendor's affiliates, the "Vendor")),
reconcile General Unsecured Claims, receive certain assets from the
Debtors and/or Reorganized Debtors (including the Initial GUC
Distribution Amount of $5 million and additional funds totaling not
less than $2.3 million), and make pro rata distributions to Holders
of Allowed General Unsecured Claims consistent with the terms of
the Plan.
* A Liquidation Trust (together with the GUC Distribution Trust,
the "Plan Trusts," and each individually, a "Plan Trust") will be
created from assets of the Debtors not necessary for the operation
of their core health care businesses or constituting GUC
Distribution Trust Assets under the Plan. In the event any assets
in the Liquidation Trust are liquidated, the proceeds of such
liquidation shall be used to fund AH System's operating cash
account up to an amount equal to the lesser of $10 million or 30
days cash on hand and then to pay debt issued by AH System.
* Holders of Allowed Claims will receive a distribution of Cash
or proceeds from the applicable Plan Trust, consistent with the
priority provisions of the Bankruptcy Code.
* All Intercompany Claims will be expunged and eliminated through
the limited consolidation of the Debtors for purposes of treatment
of Claims and distributions under the Plan.
* The Debtors will proceed with the Closure Plan of SHC Medical
Center - Yakima, doing business as Astria Regional Medical Center
("ARMC" or the "Medical Center") in Yakima, Washington, and
dissolve the non-operating Debtors relating thereto.
The Plan embodies the settlement of the Committee's objections to
the prior version of the Debtors' plan of reorganization as set
forth in the Term Sheet. The treatment of General Unsecured Claims
provided for in the Plan consistent with the Term Sheet reflects a
compromise and settlement of numerous complex issues.
Class 4 General Unsecured Claims (Not Otherwise Classified)
totaling $101,950,400 are impaired. Holders of Allowed General
Unsecured Claims shall receive, on one or more GUC Distribution
Dates, a Pro Rata share of the Net GUC Distribution Trust Assets.
GUC Distribution Trust Assets means (i) the Initial GUC
Distribution Amount, (ii) the Second GUC Distribution Amount, (iii)
GUC Avoidance Actions, and (iv) the GUC Vendor Recovery.
As defined in Section 1.96 of the Plan, "Initial GUC Distribution
Amount" means cash of $5,000,000, which will be funded by the
Debtors to the GUC Distribution Trust on or before the Effective
Date." As defined in Section 1.137 of the Plan, "Second GUC
Distribution Amount" means cash of $2,300,000 minus the amount of
any GUC Vendor Recovery, which shall be paid by the Debtors (or
Reorganized Debtors, as applicable) to the GUC Distribution Trust
within 30 days after the determination of the total value of the
GUC Vendor Recovery. For the avoidance of doubt, the Second GUC
Distribution Amount will be an unconditional obligation of the
Debtors (or Reorganized Debtors, as applicable) to the GUC
Distribution Trust.
A full-text copy of the Disclosure Statement dated November 2,
2020, is available at https://tinyurl.com/y4ohrc9r from
PacerMonitor.com at no charge.
Attorneys for the Chapter 11 Debtors:
JAMES L. DAY
BUSH KORNFELD LLP
601 Union Street, Suite 5000
Seattle, WA 98101
Tel: (206) 521-3858
Email: jday@bskd.com
SAMUEL R. MAIZEL
DENTONS US LLP
601 South Figueroa Street, Suite 2500
Los Angeles, California 90017-5704
Tel: (213) 623-9300
Fax: (213) 623-9924
E-mail: samuel.maizel@dentons.com
SAM J. ALBERTS (WSBA #22255)
DENTONS US LLP
1900 K. Street, NW
Washington, DC 20006
Tel: (202) 496-7500
Fax: (202) 496-7756
E-mail: sam.alberts@dentons.com
Attorneys for the Lapis Parties:
MARK D. NORTHRUP (WSBA #16947)
MILLER NASH GRAHAM & DUNN LLP
2801 Alaskan Way, Suite 300
Seattle, Washington 98121-1128
Tel: (206) 624-8300
Email: mark.northrup@millernash.com
WILLIAM KANNEL
IAN A. HAMMEL
MINTZ, LEVIN, COHN, FERRIS, GLOVSKY AND POPEO, P.C.
One Financial Center
Boston, Massachusetts 02111
Tel: (617) 542-6000p
E-mail: wkannel@mintz.com
E-mail: iahammel@mintz.com
E-mail: tmckeon@mintz.com
About Astria Health
Astria Health and its subsidiaries -- https://www.astria.health --
are a nonprofit health care system providing medical services to
patients who generally reside in Yakima County and Benton County,
Wash., through the operation of Sunnyside, Yakima, and Toppenish
hospitals, as well as several health clinics, home health services,
and other healthcare services. Collectively, they have 315 licensed
beds, three active emergency rooms, and a host of medical
specialties. The Debtors have 1,547 regular employees.
Astria Health and 12 of its subsidiaries filed for bankruptcy
protection (Bankr. E.D.Wash. Lead Case No. 19-01189) on May 6,
2019. In the petitions signed by John Gallagher, president and
CEO, the Debtors estimated assets and liabilities of $100 million
to $500 million.
The Hon. Frank L. Kurtz oversees the cases.
Bush Kornfeld LLP and Dentons US LLP serve as the Debtors' counsel.
Kurtzman Carson Consultants, LLC is the claims and noticing agent.
Gregory Garvin, acting U.S. trustee for Region 18, on May 24, 2019,
appointed seven creditors to serve on an official committee of
unsecured creditors. The Committee retained Sills Cummis & Gross
P.C. as its legal counsel; Polsinelli PC, as co-counsel; and
Berkeley Research Group, LLC as financial advisor.
AUTHENTIKI LLC: Taps Rehmann as Financial Advisor
-------------------------------------------------
Authentiki LLC and MSSH, LLC seek approval from the U.S. Bankruptcy
Court for the Western District of Michigan to hire Rehmann as their
accountant and financial advisor.
The firm will render the following services:
a. prepare all required monthly operating reports;
b. prepare and file Debtors' federal and state corporate
income tax returns when necessary;
c. provide financial consulting, advice, research, planning
and analysis services;
d. prepare all other necessary reports required during the
course of the Chapter 11 cases.
The hourly rates charged by Rehmann for professionals are as
follows:
Principal $350
Manager $275
Staff $175
The firm received a retainer of $60,000.
Charles Hoebeke, CPA, a principal at Rehmann, disclosed in court
filings that the firm is a "disinterested person" as that term is
defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Charles Hoebeke, CPA
Rehmann
1500 W. Big Beaver Road
Troy, MI 48084
Telephone: (616) 975-4100
About Authentiki, LLC
Authentiki was established in July 2018 to own and operate
tiki-themed restaurants through wholly owned subsidiaries.
Authentiki owns 100% of the outstanding member units of MSSH, LLC
dba Max's South Seas Hideaway, which was formed in April 2019 and
has its principal place of business at 58 Ionia Avenue SW, Grand
Rapids, Mich.
Authentiki and its affiliate MSSH, LLC sought protection under
Chapter 11 of the Bankruptcy Code (Bankr. W.D. Lead Case No.
20-03322) on Oct. 29, 2020. The petitions were signed by Mark A.
Sellers, III, managing member.
At the time of the filing, Authentiki had total assets of $79,691
and total liabilities of $2,049,539 while MSSH had total assets of
$2,545,740 and total liabilities of $987,390.
Judge James W. Boyd oversees the cases.
Schafer and Weiner, PLLC is Debtors' legal counsel.
AUTHENTIKI LLC: Taps Schafer and Weiner as Bankruptcy Counsel
-------------------------------------------------------------
Authentiki LLC and MSSH, LLC seek approval from the U.S. Bankruptcy
Court for the Western District of Michigan to hire Schafer and
Weiner, PLLC to handle their Chapter 11 cases.
The firm's hourly rates for their attorneys are as follows:
Daniel J. Weiner $485
Michael E. Baum $485
Howard Borin $395
Joseph K. Grekin $385
Leon Mayer $310
Kim Hillary $335
John J. Stockdale, Jr. $350
Jeff Sattler $320
Legal Assistant $150
Joseph Grekin, Esq., disclosed in court filings that the firm is a
"disinterested person" as that term is defined in Section 101(14)
of the Bankruptcy Code.
The firm can be reached through:
Joseph K. Grekin, Esq.
Howard M. Borin, Esq.
John J. Stockdale, Jr., Esq.
Schafer and Weiner, PLLC
40950 Woodward Ave., Suite 100
Bloomfield Hills, MI 48304
Telephone: (248) 540-3340
Email: jerekin@schaferandweiner.com
About Authentiki, LLC
Authentiki was established in July 2018 to own and operate
tiki-themed restaurants through wholly owned subsidiaries.
Authentiki owns 100% of the outstanding member units of MSSH, LLC
dba Max's South Seas Hideaway, which was formed in April 2019 and
has its principal place of business at 58 Ionia Avenue SW, Grand
Rapids, Mich.
Authentiki and its affiliate MSSH, LLC sought protection under
Chapter 11 of the Bankruptcy Code (Bankr. W.D. Lead Case No.
20-03322) on October 29, 2020. The petitions were signed by Mark A.
Sellers, III, authorized and managing member.
At the time of the filing, Authentiki had total assets of $79,691
and total liabilities of $2,049,539 while MSSH had total assets of
$2,545,740 and total liabilities of $987,390.
Judge James W. Boyd oversees the cases.
Schafer and Weiner, PLLC is Debtors' legal counsel.
AVANOS MEDICAL: S&P Alters Outlook to Stable, Affirms 'BB-' ICR
---------------------------------------------------------------
S&P Global Ratings revised its outlook on Alpharetta, Ga.-based
medical devices manufacturer Avanos Medical Inc. to stable from
negative and affirmed its 'BB-' issuer credit rating on the
company.
S&P said, "The rating affirmation and outlook revision reflect our
expectation that the company's operating results will continue to
recover from the pandemic disruption over the coming quarters. It
also reflects the improvement in adjusted leverage after the early
repayment of the company's $250 million senior unsecured notes. We
now expect Avanos' adjusted leverage to remain comfortably below 4x
over the next few years. Following the bond repayment, we project
the leverage ratio will improve below 3x at the end of 2020,
compared with 3.5x at the end of 2019, but might return to the
3x-3.5x range in 2021-2022 if Avanos resumes its business
development activity after the pandemic uncertainty abates."
"We expect the company's operating results to continue improving in
the coming quarters. The company's third quarter operating results
showed significant improvement from the trough in March and April
2020, reflecting a rebound in elective procedures volumes. The
company indicated that the procedures related to the products in
its pain management segment (mostly ON-Q pumps and COOLIEF nerve
oblation systems) recovered to about 90% of pre-COVID-19 levels at
the end of third quarter, compared with 75% at the end of the
second quarter. We believe the volumes of elective procedures
volumes will continue to gradually improve, but at a slower pace
than the rebound in July to September period, amid further COVID-19
pandemic risks."
In addition, the company's respiratory products used for treating
COVID-19 patients are seeing an increased demand and, in
combination with contributions from the previous acquisition, the
company's Chronic Care segment revenue grew by 22% compared with
the third quarter of 2019. S&P believes the demand for the
company's products across its Chronic Care segment will persist
over the next few quarters, gradually slowing down over the course
of 2021.
S&P said, "We now estimate that the company's revenue growth will
be flat or in the low-single digits in 2020 and in the
mid-single-digits in 2021."
"We believe the company's cash flow generation will improve
significantly in 2021-2022. The impact of the COVID-19 pandemic
led to significant changes in the company's sales mix in the second
and third quarters of 2020. The uptick in demand for its lower
margin respiratory products, combined with a decrease in demand for
pain management procedures and inefficiencies in production related
to new safety protocols, reduced gross margins in the third quarter
of 2020 by more than 200 basis points (bps), compared with the
third quarter of 2019. We believe that as the volumes of elective
procedures recover and the sales mix changes back toward the
higher-margin pain management segment, the company's gross margins
should recover closer to pre-pandemic levels. In addition, we
project that the company's reduced sales, marketing, and
administration expenses will benefit from savings the company
implemented in the recent months. In addition, the company has
mostly completed the transition of its information technology (IT)
systems, and we no longer expect material restructuring charges
associated with the implementation. The company also received a
favorable judgment in MicroCOOL lawsuit, and we expect its legal
expenses to subside in 2021."
"We forecast that the combination of the abovementioned factors
will lead to a material improvement in the company's free cash flow
generation in 2021, to about $40 million-$50 million range."
In addition, the company expects to benefit from a tax refund of
about $65 million-$70 million, which it expects to receive in
2021.
S&P said, "We believe improved cash generation in 2021 will enable
the company to maintain leverage below 3.5x while increasing its
capacity for future acquisitions. We expect the company's positive
free cash flow generation, aided by expected inflow from tax
refunds, to enable the company to partially repay the current
revolver draw of about $180 million and maintain the leverage in
the 3x-3.5x range even if the company resumes its business
development activity." Given the track record of its previous
financial policy, we believe the company will maintain its leverage
below 4x."
Environmental, social, and governance (ESG) credit factors for this
credit rating change:
-- Health and safety
S&P said, "The stable outlook incorporates our expectation that
Avanos will maintain its debt-to-EBITDA ratio below 4x and FOCF to
debt above 10% in 2021 and 2022, as margins improve on more
favorable product mix and continued cost-containment measures and
debt levels decrease after unsecured notes repayment."
"We would consider a downgrade if the company experienced headwinds
in its operations that affected its revenue growth prospects and
its margins, limiting its ability to maintain leverage below 4x. We
estimate that a margin contraction of 400 bps in 2021 could result
in the company exceeding the above-mentioned leverage threshold.
Alternatively, we could also consider a negative action if the
company pursued a debt-financed acquisition that would increase the
leverage over 4x on a sustained basis."
"Although we consider an upgrade unlikely over the next few years,
we could raise the rating if the company significantly outperformed
our base case, expanding its business and reaching a substantial
market share in the areas of its operation while maintaining
leverage below 3x on a sustained basis. This scenario would also be
predicated on the company's financial policy remaining in line with
the lower leverage levels."
BEACH ON DUVAL: U.S. Trustee Unable to Appoint Committee
--------------------------------------------------------
The U.S. Trustee, until further notice, will not appoint an
official committee of unsecured creditors in the Chapter 11 case of
Beach on Duval, LLC, according to court dockets.
About Beach on Duval
Beach on Duval, LLC sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. S.D. Fla. Case No. 20-20904) on Oct. 6,
2020. At the time of the filing, the Debtor had estimated assets
of less than $50,000 and liabilities of between $1 million and $10
million. Judge Jay A. Cristol oversees the case. Kevin C.
Gleason, Esq., at Florida Bankruptcy Group, LLC, serves as the
Debtor's legal counsel.
BGF SERVICES: Seeks to Hire Chung & Press as Legal Counsel
----------------------------------------------------------
BGF Services, LLC seeks approval from the U.S. Bankruptcy Court for
the Eastern District of Virginia to hire Chung & Press, P.C. as its
legal counsel.
The firm will provide the following legal services:
a) assist and advise the Debtor relative to the administration
of its Chapter 11 case;
b) represent the Debtor before the court;
c) review and analyze all applications, orders and motions
filed with the bankruptcy court;
d) attend all meetings conducted pursuant to the Bankruptcy
Code and represent the Debtor at all examinations;
e) communicate with creditors and all other parties in
interest;
f) assist the Debtor in preparing all necessary documents;
g) confer with all other professionals;
h) assist the Debtor in negotiations with creditors or third
parties concerning the terms of any proposed plan of
reorganization;
i) prepare, draft and prosecute the plan of reorganization and
disclosure statement; and
j) assist the Debtor in performing such other legal services.
Chung & Press will charge fees and expenses incurred in
representing the Debtor in the proceedings based on the normal
rates, currently $495 per hour for Daniel Press, Esq., a partner at
Chung & Press.
Mr. Press disclosed in court filings that the firm is a
"disinterested person" as that term is defined in Section 101(14)
of the Bankruptcy Code.
The firm can be reached through:
Daniel M. Press, Esq.
Chung & Press, P.C.
6718 Whittier Ave., Suite 200
McLean, VA 22101
Telephone: (703) 734-3800
Facsimile: (703) 734-0590
Email: dpress@chung-press.com
About BGF Services, LLC
Based in Manassas, Va., BGF Services, LLC is engaged in activities
related to real estate.
BGF Services sought protection under Chapter 11 of the Bankruptcy
Code (Bankr. E.D. Va. Case No. 20-12393) on Oct. 29, 2020. The
petition was signed by Bernard G. Farrell III, managing member.
At the time of the filing, Debtor had estimated assets of between
$1 million and $10 million and liabilities of between $500,000 and
$1 million.
Judge Brian F. Kenney oversees the case. Chung & Press, P.C. is
Debtor's legal counsel.
BRETON L. MORGAN: Court Approves Disclosures and Confirms Plan
--------------------------------------------------------------
Judge Paul M. Black has entered an order approving Breton L.
Morgan, M.D., Inc.'s Amended Disclosure Statement and confirming
the Debtor's Plan.
The Court finds that the Debtor has complied with the provisions of
Chapter 11 of the Bankruptcy Code.
The Debtor has disclosed in the Plan that Breton Lee Morgan is the
sole shareholder and Director of the Debtor and that Breton Lee
Morgan shall be retained and have full management control of the
Debtor.
Each holder of an impaired claim or interest shall receive or
retain under the Plan property of a value, as of the effective date
of the Plan, that is not less than the amount that such holder
would receive or retain if the Debtor's estate was liquidated under
Chapter 7 of the Bankruptcy Code on such date in accordance with 11
U.S.C. Sec. 1129(a)(7).
All impaired classes of claims have voted to accept the Plan. The
Plan therefore satisfies the requirements of 11 U.S.C. Sec.
1129(a)(8).
The Debtor's assumption of the lease of the medical office located
at 2907 Jackson Avenue Point Pleasant, West Virginia with Pleasant
Valley Hospital is approved pursuant to 11 U.S.C. Sec. 365.
The impaired class (U-1) has voted to accept the Plan, and
therefore the Plan complies with 11 U.S.C. Sec. 1129(a)(10).-9
Counsel for the Debtor:
Joe M. Supple (WV Bar No. 8013)
Supple Law Office, PLLC
801 Viand Street
Point Pleasant, WV 25550
Tel: (304) 675-6249
About Breton L Morgan Md
Breton L Morgan Md Inc is a Medical Group that has only one
practice medical office located in Point Pleasant WV. There is only
one health care provider, specializing in General Practice,
Internal Medicine, being reported as a member of the medical group.
Medical taxonomies which are covered by Breton L Morgan Md Inc.
include Family Medicine.
Breton L Morgan Md Inc. filed a Chapter 11 petition (Bankr.
S.D.W.V. Case No. 18-30195) on April 27, 2018, estimating under $1
million in both assets and liabilities. The case is assigned to
Judge Frank W. Volk.
Joe M. Supple, Esq., at Supple Law Office, PLLC, is the Debtor's
counsel.
BRINTON APARTMENTS: S&P Cuts 2015A Revenue Bond Rating to 'CCC-'
----------------------------------------------------------------
S&P Global Ratings lowered its rating on Pennsylvania Housing
Finance Agency's series 2015A multifamily housing revenue bonds,
issued on behalf of Brinton Apartments Penn LLC as borrower, for
the Brinton Manor Apartments and Brinton Towers Apartments Project,
six notches to 'CCC-' from 'BB-'. The outlook is negative.
At the same time, S&P removed the rating from CreditWatch, where it
was placed on Aug. 31, 2020, with negative implications.
"The rating action reflects our opinion of Brinton Apartments
Penn's default on various covenants, announced in a disclosure
report filed by the trustee, Wilmington Trust, on Electronic
Municipal Market Access, dated Nov. 5, 2020," said S&P Global
Ratings credit analyst Daniel Pulter. These included covenant
defaults under the loan agreement pertaining to basic loan
payments, the rate covenant, failure to retain a management
consultant, taxes and impositions, needs assessment analysis, and
recording and filing. The downgrade also reflects S&P's view of an
inevitable payment default, distressed exchange, or redemption
within six months, absent unanticipated significantly favorable
changes in the borrower's circumstances.
BSI LLC: U.S. Trustee Unable to Appoint Committee
-------------------------------------------------
The Office of the U.S. Trustee on Nov. 9 disclosed in a court
filing that no official committee of unsecured creditors has been
appointed in the Chapter 11 case of BSI LLC - 33 Smiley Ingram.
About BSI, LLC - 33 Smiley Ingram
BSI, LLC - 33 Smiley Ingram, a single asset real estate (as defined
in 11 U.S.C. Section 101(51B)), sought protection under Chapter 11
of the Bankruptcy Code (Bankr. N.D. Ga. Case No. 20-40882) on May
4, 2020. Brian Alan Stewar, Debtor's manager, signed the petition.
At the time of the filing, the Debtor disclosed assets of between
$1 million and $10 million and liabilities of the same range.
Judge Paul W. Bonapfel oversees the case. The Debtor has tapped
Paul Reece Marr, P.C. as its legal counsel.
BULLDOG DUMPSTERS: Taps Caddell Reynolds as Legal Counsel
---------------------------------------------------------
Bulldog Dumpsters, LLC received approval from the U.S. Bankruptcy
Counsel for the Eastern District of Arkansas to hire Caddell
Reynolds Law Firm as its legal counsel.
The professional services to be rendered by the firm are as
follows:
a) give Debtor legal advice with respect to its powers and
duties;
b) prepare legal documents and appear before the court;
c) perform all other legal services for the Debtor.
O.C. Sparks, Esq., an attorney at Caddell Reynolds, disclosed in
court filings that the firm is a "disinterested person" as that
term is defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
O.C. Sparks, Esq.
Caddell Reynolds Law Firm
5515 JFK Blvd. N.
Little Rock, AR 72116
Telephone: (501) 214-0814
Facsimile: (501) 222-8824
Email: rsparks@justicetoday.com
About Bulldog Dumpsters, LLC
Bulldog Dumpsters, LLC is a Little Rock, Ark.-based company that
offers waste collection services.
Bulldog Dumpsters sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. E.D. Ark. Case No. 20-14072) on October 29,
2020. The petition was signed by Joseph Todd Raines, sole member of
LLC.
At the time of the filing, Debtor had estimated assets of less than
$50,000 and liabilities of between $1 million and $10 million.
Judge Richard D Taylor oversees the case.
Caddell Reynolds Law Firm is Debtor's legal counsel.
CAMBRIAN HOLDING: Amends Committee-Backed Liquidating Plan
----------------------------------------------------------
Cambrian Holding Company, Inc., et al., have submitted an Amended
Joint Disclosure Statement. The Official Committee of Unsecured
Creditors is a co-proponent of the Plan.
The Plan is a plan of liquidation and will be funded by the
"Liquidating Trust Assets"consisting of, (a) the Cash held by the
Estates after taking into account Distributions made on the
Effective Date; (b) all Causes of Action; (c) all Privileged
Documents and communications of the Debtors; (d) all other assets
of the Debtors or of the Estates existing on the Effective Date
after giving effect to all Distributions required to be made as of
or prior to the Effective Date, including but not limited to all
books, records and files of the Debtors and of the Estates, in all
forms, including electronic and hard copy.. The Plan also creates a
Liquidating Trust, which will be the mechanism through which Claims
will be adjudicated and distributions will be made as set forth in
the Plan
The Liquidating Trustee will be Ellen Arvin Kennedy.
Under the Plan, Class 6 general unsecured creditors owed $50
million to $100 million will recover 0% to 30%, subject to outcome
of litigation brought by the Liquidating Trustee.
Each holder of an Allowed General Unsecured Claim shall receive its
pro rata share of any remaining Liquidating Trust Assets after
providing for the payment in full of all Allowed Secured Claims,
Allowed Administrative Claims, Allowed Priority Tax Claims and
Allowed Other Priority Claims.
Sale of All Assets
The Debtors in September 2019 conducted an auction for
substantially all assets. On September 25, 2019, the Bankruptcy
Court approved the following three sales of the Debtors' assets:
* Clintwood Elkhorn Sale. The sale of the Clintwood Elkhorn
Operations to the joint venture of Richmond Hill, Essex and
Alliance , which ultimately organized Clintwood JOD, LLC (the
"JOD") to take title to such assets, in exchange for, among other
things,(a) the assumption of numerous liabilities including,
without limitation, (i) obligations under the mining permits used
in the Clintwood Elkhorn Operations to be transferred to the JOD;
(ii) the unpaid post-petition trade payables related to such
operations; (iii) accrued payroll and all other employee
liabilities related to such operations; and (iv) all cure costs;
(b) the payment of $2 million in cash into an "Administrative
Priority Claims Escrow Account"; and (c) the payment of $6,583,082
and $475,000 into a ‘Professional Fees Escrow Account" and
"Wind-Down Escrow Account," respectively.
* Premier Elkhorn Sale. The sale of the Premier Elkhorn
Operations to Pristine Clean Energy, LLC in exchange for the
assumption of numerous liabilities including, without limitation,
(a) obligations under the mining permits used in the Premier
Elkhorn Operations to be transferred to Pristine; (b) the unpaid
post-petition trade payables related to such operations; (c)
accrued payroll and all other employee liabilities related to such
operations; and (d) all cure costs.
* Perry County Sale. The sale of the Perry County Operations to
PCC in exchange for the assumption of numerous liabilities
including, without limitation, (a) obligations under the mining
permits used in the Perry County Operations to be transferred to
PCC; (b) the unpaid post-petition trade payables related to such
operations; (c) accrued payroll and all other employee liabilities
related to such operations; and (d) all cure costs.
The JOD, Pristine and PCC each has not completed the transfer of
all mining permits that it has acquired from the Debtors. To the
extent that one or more of these purchasers is unable to effectuate
the transfer of any permit (including, without limitation, due to
PCC and Pristine being "permit blocked"), such permit may remain
with the Liquidating Trust after the Effective Date, subject to the
rights of, among others, the Cabinet and Continental to be heard on
the issue of if and how the Liquidating Trust may hold any
permits.
Since the entry of the Sale Order and the conclusion of the TSA
period, the Debtors and the Committee have worked with the JV and
the JOD to ensure their compliance with their obligations under the
Sale Order. To date, the JV/JOD have paid a substantial portion of
their assumed liabilities under the Sale Order. To the best of the
knowledge of the Debtors and the Committee, the material unpaid
assumed liabilities of the JV/JOD under the Sale Order consist of
(i) between $600,000 and $800,000 in Meritain claims that are owed
by the JOD pending receipt of final claims and a review of
eligibility", and (ii) the funding of the final $836,833.33 owed by
the JV/JOD into the Administrative Priority Claims Escrow Account,
which must occur by September 30, 2020 under the Richmond
Hill-Essex Settlement.
The JV and JOD have made material progress in obtaining the
transfer of permits from the Debtors' estates. As of the filing of
the Disclosure Statement, Clintwood JOD has advised the Plan
Proponents that it has completed the transfer of two Kentucky
mining permits, all permits from the Kentucky Division for Air
Quality, and all radiation licenses. In addition, it has twenty six
applications for the transfer of mining of permits which are
pending with either the Commonwealth of Kentucky or Commonwealth of
Virginia, and it has started transfer of the Section 404 permits
issued by the U.S. Army Corps of Engineers.
On April 9, 2020, Continental separately filed a motion to compel
Pristine to comply with its Permit Operating Agreement with
Pristine (the "Continental Motion").The Continental Motion sought,
among other things, an order compelling Pristine to (a) file
applications to obtain transfers of the mining permits associated
with the Premier Elkhorn Operations (the "Premier Mining Permits"),
and (b) pay $1,059,346 in post-closing bond premiums owed to
Continental. Continental, Pristine, the Debtors and the Committee
resolved both the matters covered by the Continental Motion and
Pristine's payment of various assumed liabilities under the Sale
Order by an agreed order entered by the Bankruptcy Court on May 5,
2020 (the "Pristine Agreed Order"). As of September 14, 2020,
Pristine has not yet made all payments due to Continental under the
Pristine Agreed Order.
PCC failed to comply with the Assumed Liabilities Agreed Order
under the extended April 30, 2020 deadline. On May 22, 2020, the
Bankruptcy Court entered a sanctions order requiring PCC and ARC to
pay $1,067,736 to satisfy assumed liabilities (including amounts
owed to KEMI) by June 1, 2020, (b) imposed sanctions of $2,500 per
day on PCC and ARC if they did not make that payment by June 1,
2020, and (c) set a hearing date of June 11, 2020 to consider the
imposition of additional sanctions. PCC-ARC, the Debtors, the
Committee and KEMI reached an agreement on PCC-ARC's payment of
various assumed liabilities, as reflected in the agreed order
entered June 10, 2020. PCC has complied with its monthly payments
under the PCC Agreed Order through September 15, 2020.
Best Interests of Holders of Claims
The Plan is a liquidating plan. Thus, whether by the Liquidating
Trust, or a Chapter 7 trustee, the Debtors' Estates' assets will be
liquidated. Accordingly, there is no reorganization value to be
calculated, or distribution scenarios related thereto. In addition,
the activities of the Liquidating Trust and the Liquidating Trustee
after the Effective Date are the same ones that would be pursued by
a Chapter 7 trustee. However, a Chapter 7 trustee may seek to
charge statutory fees of up to 3% of disbursements above $1 million
(and higher amounts for disbursements below $1 million). The
Debtors already expect to have in excess of $3 million on hand as
of the Effective Date -- and may have several million more after
the conclusion of all litigation -- resulting in a fee to the
chapter 7 trustee that could be several hundred thousand dollars.
Additionally, it is likely that a Chapter 7 trustee will retain
counsel who would likely be required to spend a significant amount
of time and expense becoming familiar with the case -- time and
expense that would not be required if the Plan is confirmed. This
case has many players and intricacies that can be effectively and
efficiently managed by those -- including the proposed Liquidating
Trustee, Ms. Kennedy -- who already have knowledge of these
matters.
A full-text copy of the Amended Joint Disclosure Statement dated
September 16, 2020, is available at https://tinyurl.com/y6h6t2ue
from PacerMonitor.com at no charge.
Counsel to the Debtors:
Patricia Burgess
FROST BROWN TODD LLC
250 West Main Street
Suite 2800
Lexington, Kentucky 40507
Telephone: (859) 231-0000
Facsimile: (859) 231-0011
pburgess@fbtlaw.com
A.J. Webb
FROST BROWN TODD LLC
3300 Great American Tower
301 East Fourth Street
Cincinnati, Ohio 45202
Telephone: (513) 651-6800
Facsimile: (513) 651-6981
awebb@fbtlaw.com
Counsel for the Official Committee of
Unsecured Creditors of Cambrian
Holding Company, Inc. et al.:
Geoffrey S. Goodman
FOLEY & LARDNER LLP
321 North Clark Street, Suite 2800
Chicago, Illinois 60654
Telephone: (312) 832-4500
ggoodman@foley.com
T. Kent Barber, Esq.
BARBER LAW PLLC
2200 Burrus Drive
Lexington, KY 40513
Telephone: (859) 296-4372
E-mail: kbarber@barberlawky.com
About Cambrian Holding
Belcher, Kentucky-based Cambrian Holding Company, Inc., and its
subsidiaries produce and process metallurgical coal and thermal
coal for use by utility providers and industrial companies located
primarily in the eastern United States and Canada. The company
began operations in 1991 and, over time, acquired various mines and
mining-related assets from major coal corporations.
Cambrian Holding Company and 18 of its affiliates each filed a
petition seeking relief under Chapter 11 of the Bankruptcy Code
(Bankr. E.D. Ky. Lead Case No. 19-51200) on June 16, 2019. At the
time of the filing, Cambrian Holding Company had estimated assets
and liabilities of less than $50,000. Judge Gregory R. Schaaf
oversees the cases.
The Debtors tapped Frost Brown Todd, LLC as bankruptcy counsel;
Whiteford, Taylor & Preston, LLP as litigation counsel; Jefferies,
LLC as investment banker; and FTI Consulting, Inc., as financial
advisor. Epiq Corporate Restructuring, LLC, is the notice, claims
and solicitation agent.
The Office of the U.S. Trustee appointed an official committee of
unsecured creditors on June 26, 2019. The committee tapped Foley &
Lardner, LLP as legal counsel; Barber Law PLLC as local counsel;
and B. Riley FBR, Inc. as financial advisor.
CAPE QUARRY: $794K for Unsecureds in Claim Holders' Plan
--------------------------------------------------------
The Holders of the DIP Loan Claim (Charles Edward Milner, Jr.), the
Celtic Claim (Celtic Capital Corporation) and the Milner
Prepetition Claim (Charles Edward Milner, Jr.) propose this First
Amended Chapter 11 Plan of Reorganization of Cape Quarry, LLC.
Each holder of an allowed unsecured claim in Class 3 will receive
its Class 3 Cash Payment and its Class 3 Acceptance Note, but only
if Class 3 elects to accept the Plan and does not vote to accept a
competing or any other plan; and if Class 3 elects to reject the
Plan or votes to accept a competing or any other plan, the Holders
of Allowed Claims in Class 3 shall receive the Class 3 Distribution
Notes. Class 3 is Impaired by the Plan. Each Holder of
an Allowed Class 3 Claim is entitled to vote to accept or reject
the Plan.
"Class 3 Acceptance Notes" means promissory notes to be issued as
provided in Article 4.3.1 of this Plan, to the Holders of Allowed
Class 3 Claims in a principal amount equal to each such Holder's
pro rata Share of the lesser of $394,889 and the aggregate amount
of Allowed Unsecured Class 3 Claims over the amount of the Class 3
Cash Payment, which notes shall bear simple interest at the rate of
4% per annum and be payable in equal quarterly payments of
principal and interest over 36 months, with the first payment being
due on the first Business Day of the first full month after the
Effective Date.
"Class 3 Cash Payment" means the payment to each Holder of an
Allowed Class 3 Claim, such Holder's Pro Rate share of $400,000.
Class 6 Existing Equity Interests will be extinguished as of and on
the Effective Date.
The Reorganized Cape Quarry shall fund the Cash Plan Distributions
with Cash on hand, including Cash from the Milner Reserve and the
Administrative Expense Claims Reserve, as well as additional
funding provided by NEWCO Holdings to Reorganized Cape Quarry as
necessary.
A full-text copy of the First Amended Chapter 11 Plan of
Reorganization, as immaterially modified September 21, 2020, is
available at https://tinyurl.com/y42j37kh from PacerMonitor.com at
no charge.
Counsel for the Milner Prepetition Claims and the DIP Loan Claims:
Alan K. Breaud
Breaud & Meyers, APLC
600 Jefferson Street, Suite 1101
Lafayette, LA 70501
Telephone: (337) 266-2205
Email: alan@breaudlaw.com
Counsel for the Holder of the Celtic Claim:
H. Kent Aguillard
Attorney at Law
141 S. 6th Street
Eunice, LA 70535
Telephone: (337) 457-9331
Facsimile: (337) 457-2917
Email: kent@aguillardlaw.com
About Cape Quarry
Cape Quarry, LLC, filed a Chapter 11 bankruptcy petition (Bankr.
E.D. La. Case No. 19-12367). The Debtor hired Pepper & Associates,
PC, as attorney.
Pepper & Associates can be reached at:
Matthew L. Pepper, Esq.
PEPPER & ASSOCIATES, PC
10200 Grogans Mill Rd., Suite 235
The Woodlands, TX 77380
Tel: (281) 367-2266
Fax: (281) 292-6072
CAPE QUARRY: Plan Proponents Say QA Plan Not Workable
-----------------------------------------------------
The Holders of the DIP Loan Claim, the Celtic Claim and the Milner
Prepetition Claim ("Plan Proponents") have proposed a Plan of
Reorganization for the estate of Cape Quarry, LLC.
Quarry Aggregates has also proposed a Chapter 11 Plan ("QA Plan"),
but the Plan Proponents point to the inability of the QA Plan to be
a serious Plan.
"The initial and most basic comment is that the QA Plan is not
workable because the proposals about funding sources and possible
operations are not borne out by past negotiations nor operations
history. This comment is borne out, completely, by the Term Sheet
promoted by the QA Plan as the source of $6 million in funding from
loans from Amerisource Funding, Inc. As well, we believe that the
allegations with respect to available financing will not be
verified by an evidentiary hearing. Also, the proposal for payment
of certain claims, including the DIP Loan and the Milner
Prepetition Claim are insufficient, despite the promoters of this
QA Plan knowing full well that the proposed payment is
insufficient. As regards operations, current management of Cape
Quarry has been an abysmal failure, and the QA Plan in all
practical respects keeps current management in a prominent
position, adding one person who might could help, but otherwise the
added management and ownership persons have no experience in the
quarry business, whatsoever."
The Plan Proponents note of the clearly established inability of
the QA Plan to be a serious plan:
* In fact, Quarry operations had been shut down for some 18
months prior to bankruptcy, due to the inability of Cape Quarry
current management to conduct basic operations. Milner has had to
assist in providing financial and accounting information, as
current management is incapable of performing even rudimentary
accounting functions to account for operations, money spent, etc.
* The Plan Proponents believe that the alternative QA Plan
contains numerous inconsistencies (such as assuming Dominion
executory contracts, providing for a contribution of rights of Mr.
Trey Cline under some contractual redemption agreement and
litigation involving a third party entity (Five S), when in fact
Trey Cline has previously settled and compromised and such claims
and given full releases.
* The alternative QA Plan provides a full release for Mr. Trey
Cline with no consideration being given, despite Mr. Cline having
receive erroneously booked cashier's check payments for "home
office" expense (unauthorized by the Bankruptcy Court), while at
the same time leaving post-petition employee obligations unpaid,
perhaps having committed breach of duty to Cape Quarry, taking
other unauthorized distributions, etc.
* It is known that under Mr. Cline's direction Cape Quarry used
collateral improperly under the DIP Loan and Milner Prepetition
Lien to make payments to a prepetition creditor, without notice or
approval. It is known that Cape Quarry under current management of
Mr. Cline experienced extensive demurrage charges while trying to
restart operations to the extent that notwithstanding the DIP Loan
and the factoring of receivables, operations ground to a halt
quickly under the weight of postpetition debt that could not be
paid. Pure failure.
A full-text copy of the Amended Exhibit 1 to the Joint Disclosure
Statement dated September 16, 2020, is available at
https://tinyurl.com/y3r6hf8s from PacerMonitor.com at no charge.
About Cape Quarry
Cape Quarry, LLC, filed a Chapter 11 bankruptcy petition (Bankr.
E.D. La. Case No. 19-12367). The Debtor hired Pepper & Associates,
PC, as attorney.
Pepper & Associates can be reached at:
Matthew L. Pepper, Esq.
PEPPER & ASSOCIATES, PC
10200 Grogans Mill Rd., Suite 235
The Woodlands, TX 77380
Tel: (281) 367-2266
Fax: (281) 292-6072
CAPE QUARRY: Unsecureds Will Recover At Least 75% in QA Plan
------------------------------------------------------------
Quarry Aggregates, LLC, filed a Plan and a Disclosure Statement for
Cape Quarry LLC.
The Debtor has a series of approved loans from Amerisource and
alternatively the USDA who are willing to lend to the Debtors up to
$4,650,000.00 ("Exit Fund") to fund the Plan. An additional
[$2,900,000] in cash will be infused by Quarry Aggregates. Quarry
aggregates is involved in talks which may net another 1 million in
additional equity in the next 30-60 days. The Exit Fund will
provide the Debtors with cash to pay administrative claims as set
out in the First Amended Plan, pay down the allowed secured claim
of Ed Milner ("Milner"), the Milner DIP loan, 75% of the unsecured
claims and provide working capital for the Debtors.
Class 3 Milner Claim in the amount of $4,500,000 is impaired. The
Milner Claim note shall be purchased based on the following:
a) a principal amount equal to the Milner Allowed Secured Claim
and DIP loan;
b) Paid on closing of the Amerisource credit facilities or
alternatively upon closing of the USDA term loan or on the
Effective Date whichever is sooner.
Class 4 Celtic Allowed Secured Claim in the amount of $1,000,000
(est face value) is impaired. The Celtic Allowed Secured Claim
shall be paid in full based upon the following:
-- a principal amount equal to the Celtic Allowed Secured Claim;
-- an initial payment of $25,000 on the Effective Date;
-- the Plan Rate;
-- a monthly payment of interest and principal based upon the
Plan Rate and an amortization of 60 months;
Class 5 Cape Quarry Unsecured Claim in the amount of $700,000 (est)
is impaired. The Holders of Cape Quarry Unsecured Claims shall
receive 75% of the approved claims on the Effective date. The
remainder of the payments shall be made over a 36 month payout in
equal installments or sooner as operational funds allow.
Class 7 Equity Holders of Cape Quarry, LLC, and Class 8 Equity
Holders of Dominion Group, LLC, are impaired.
There are five principal sources of payments by which the Plan will
be funded. The sources are: (1) the Exit Loan; (2) Operations of
the Debtors; (3) the Cline Settlement; (4) funds in the DIP
Account; and (5) Cash infusion from the Equity Interests, as well
as recoveries from any retained causes of action.
The Debtors and the Exit Lender(s) have reached an agreement
wherein Exit Lender will lend to the Debtors the sum of up to
$4,650,000 with 2.9 million of new equity on the Effective Date
of a Plan contingent upon all necessary factors as set out in the
loan term sheets for each credit facility.
A full-text copy of the Disclosure Statement dated September 23,
2020, is available at https://tinyurl.com/y6h9g7e3 from
PacerMonitor.com at no charge.
Attorneys for Quarry Aggregates, LLC:
Matthew L. Pepper
Pepper & Associates, PC
10200 Grogans Mill Rd., Ste 235
The Woodlands, TX 77380
Tel: (281) 367-2266
Fax: (281) 292-6072
Email: pepperlaw@msn.com
About Cape Quarry
Cape Quarry, LLC, filed a Chapter 11 bankruptcy petition (Bankr.
E.D. La. Case No. 19-12367). The Debtor hired Pepper & Associates,
PC, as attorney.
Pepper & Associates can be reached at:
Matthew L. Pepper, Esq.
PEPPER & ASSOCIATES, PC
10200 Grogans Mill Rd., Suite 235
The Woodlands, TX 77380
Tel: (281) 367-2266
Fax: (281) 292-6072
CDRH PARENT: S&P Lowers ICR to 'SD' on Credit Amendment Agreement
-----------------------------------------------------------------
S&P Global Ratings lowered the issue-level rating on CDRH Parent
Inc.'s second-lien term loan due in 2022 to 'D' from 'C'. The
recovery rating remains '6', reflecting S&P's expectation of
negligible (0%-10%; rounded estimate: 0%) recovery in the event of
a payment default.
S&P lowered the issuer credit rating on CDRH to 'SD' from 'CCC-' to
reflect the default on a portion of the capital structure. The
rating on the first lien debt is unaffected. The recovery rating is
'4', reflecting S&P's expectation of meaningful (50%-70%; rounded
estimate: 40%) recovery.
The rating agency will reassess the capital structure shortly and
expect to raise the issuer credit rating to 'CCC-' with a negative
outlook.
S&P said, "We lowered the issuer credit rating and the second-lien
debt rating on CDRH to reflect our view of the distressed nature of
the recently completed credit agreement amendment. In addition to
relief against very tight financial covenants, second-lien term
loan lenders agreed to exchange annual cash interest payments for
cash interest payments plus PIK for three periods (from the third
quarter of 2020 to the first quarter of 2021). For the
floating-rate second-lien term loan ($200 million), the new
interest rate (PIK) will be LIBOR plus 1,060 basis points (bps) for
the third quarter of 2020 and then drop back to LIBOR plus 800 bps
for the fourth quarter of 2020 and first quarter of 2021. For the
fixed-rate second-lien term loan ($50 million), the new interest
rate (PIK) will be 12.85% for the third quarter of 2020 and 10.25%
for the next two quarters. Both loans will have PIK interest for
three quarterly payments."
"We view this transaction as distressed because we believe the
compensation of small additional overall interest expense is
insufficient for breaching the original promise of cash interest
payments. This view incorporates our belief CDRH may be unable to
refinance its debt, which matures shortly. The amendment has no
impact on the first-lien debt, which matures in April (revolver)
and July (term loan) 2021."
CENTERFIELD MEDIA: Moody's Assigns B2 CFR, Outlook Stable
---------------------------------------------------------
Moody's Investors Service assigned to Centerfield Media Parent,
Inc. a B2 Corporate Family Rating (CFR) and B2-PD Probability of
Default Rating (PDR). In connection with this rating action,
Moody's assigned a B2 rating to Centerfield's proposed senior
secured bank credit facilities, consisting of a $50 million
revolving credit facility (RCF), $400 million term loan B and $100
million delayed draw term loan B. The rating outlook is stable.
Net proceeds from the debt raise will be used to fully refinance
the existing unrated bank credit facilities, consisting of $340
million in outstanding term loans and a $25 million RCF, as well as
add cash to the balance sheet to fund future acquisitions.
Following is a summary of the rating actions:
Assignments:
Issuer: Centerfield Media Parent, Inc.
Corporate Family Rating, Assigned B2
Probability of Default Rating, Assigned B2-PD
$50 Million Senior Secured First-Lien Revolving Credit Facility due
2025, Assigned B2 (LGD3)
$400 Million Senior Secured First-Lien Term Loan B due 2027,
Assigned B2 (LGD3)
$100 Million Senior Secured First-Lien Delayed Draw Term Loan B due
2027, Assigned B2 (LGD3)
Outlook Actions:
Issuer: Centerfield Media Parent, Inc.
Outlook, Assigned Stable
The assigned ratings are subject to review of final documentation
and no material change to the size, terms and conditions of the
transaction as advised to Moody's
RATINGS RATIONALE
Centerfield's B2 CFR reflects the company's small size and Moody's
expectation that Centerfield will remain acquisitive over the
rating horizon and maintain financial leverage at high levels to
help fund its strategic growth initiatives. While average annual
revenue growth has been in the 30%-35% range since 2018, LTM 30
September 2020 revenue remains small at approximately $266 million,
representing a de minimis market share in the digital marketing
services industry. Much of this growth has been fueled through M&A
that enhanced Centerfield's digital properties portfolio, providing
editorial content and facilitating its end-to-end customer
acquisition solutions and sales conversion business. Moody's
expects continued acquisition activity as Centerfield seeks to add
new digital properties to scale its core Home Services segment
(comprising TV/internet/streaming and home security), expand its
smaller verticals that include the B2B small-to-medium sized
enterprise space (which tend to have 3-year contracts) and Other
(comprising products/services verticals) and extend into adjacent
and new verticals such as insurance and a variety of online product
and service industries. Further expansion of the company's customer
sales center operations is also expected.
Centerfield has opportunistically tapped the debt capital markets
to help fund its acquisitive growth. Since 2018, pro forma gross
debt has increased by approximately 2.5x, while pro forma adjusted
as-reported EBITDA expanded 2x (inclusive of recent acquisitions'
LTM EBITDA). The B2 rating considers the company's high pro forma
financial leverage of 4.6x total debt to EBITDA or 5.8x inclusive
of the $100 million proposed delayed draw term loan (both metrics
are Moody's adjusted at LTM 30 September 2020 inclusive of recent
acquisitions' LTM EBITDA). While leverage has the propensity to
decline, primarily via profit growth, given the large number of
independent digital marketing companies currently available for
purchase and the company's expected takedown of the delayed draw
term loan within six months after transaction closing, Moody's
expects Centerfield to engage in future debt-funded acquisitions.
This will likely result in volatile credit metrics and leverage
remaining in the 5.5x-6.25x range (as calculated by Moody's) over
the rating horizon. Given Centerfield's small size, even minor
disproportionate changes in debt relative to EBITDA can result in
meaningful shifts in leverage metrics.
Centerfield's B2 CFR is supported by the company's online customer
acquisition platform designed around a performance-based revenue
model (i.e., clients pay Centerfield only when a user converts to a
paying customer) and proprietary data-driven analytics that collect
and evaluate significant amounts of first-party user data in
real-time. These solutions enable algorithms to deliver high
customer traffic, greater sales conversions and meaningful ROI for
clients than traditional marketing channels. The application of
acquired first-party data to build a customer profile and adoption
of an omni-channel approach to engage and better target consumers
has helped Centerfield to improve sales conversion rates and, in
turn, sustain a high growth profile, which Moody's expects to
continue longer-term.
Owing to new revenue models and optimization initiatives,
Centerfield has expanded EBITDA margins to the 25%-30% range this
year compared to roughly 15% in 2018 and 20% in 2019 (all margins
are Moody's adjusted), a credit positive. Moody's believes
Centerfield will continue to benefit from the secular shift of
digital media spend and consumer purchase activity from traditional
channels to online platforms, and is poised to exploit these
pronounced trends as consumers increasingly view episodic TV and
theatrical content via video-on-demand streaming platforms and
continue to scale back in-store shopping and rely more on
e-commerce and online retail sites during the COVID-19 outbreak.
The "asset-lite" operating model facilitates good conversion of
EBITDA to positive free cash flow, supporting good liquidity and
the ability to de-lever, though the willingness to de-lever over
the rating horizon may be delayed as the company pursues
debt-funded M&A.
Factors that weigh on the rating include Centerfield's sizable
exposure to a handful of clients and high revenue concentration in
the Home Services business segment. Presently, the top five clients
account for over half of gross profit. These clients are chiefly in
the Home Services segment, which accounts for roughly 67% of
Centerfield's pro forma LTM revenue. Offsetting this is the
company's long-term client relationships, which range from 7 to 11
years, with the largest client having a 10+year relationship with
Centerfield. Additionally, since most of these big clients provide
internet connectivity or wireless data services, the risk of client
disengagement or advertising revenue cyclicality remains low given
that these sectors are experiencing strong demand growth,
especially during the coronavirus pandemic. Strong end market
growth is one of the reasons for the high client concentration.
Planned expansion into other verticals will help diversify the
client base.
The rating also considers the impact of a protracted economic
recession and high levels of unemployment that affect consumers'
purchasing behavior and advertisers' willingness to maintain
marketing spending levels. However, Moody's believes consumers'
increasing reliance on TV/internet/streaming and wireless data
services, which currently comprise the bulk of Centerfield's
clients, reflects non-discretionary consumer spend. Consequently,
marketing spend from clients in these end markets are less likely
to be cut. Additionally, Moody's believes that advertisers will
typically shift spend from brand awareness marketing to
quantifiable performance-based advertising during a recession to
reduce ROI risk, which benefits Centerfield's business model.
The company is highly reliant on Alphabet's Google, which Moody's
estimates accounts for around 80% of Centerfield's media purchases
primarily through paid search. Roughly 70% of Centerfield's traffic
is sourced through paid search (i.e., ads placed at the top of the
search engine results page, which typically get the vast majority
of traffic from search queries but have lower gross margins) while
30% is derived from the company's organic channels (higher gross
margins). Notably, the company derives around 50% of gross profit
from its owned and operated sites with the remaining 50% from
client branded sites. Given Google's search engine ubiquity and
popularity with searchers, bidding on Google's ad exchange can be
very competitive and certain industry keywords can be expensive.
Centerfield buys ad impressions in real-time (i.e., when the ad is
to be simultaneously rendered on-screen to the consumer) via
auctions facilitated by real-time bidding technology. Automated bid
optimization automatically bids to an optimal position to maximize
volume and profit based on estimated conversion rates for the ad
copy and clients' expected ROI. Google is the largest ad network
with the largest internet user reach in the world enabling
advertisers to target practically every demographic, a mitigating
factor to Centerfield's dependency on Google. Management believes
Centerfield's high click through rates, high conversions and
quality ads have enabled it to buy media at attractive prices and
remain a long-standing partner with Google, helping the ad giant to
maximize profits, despite the company's small size.
As Centerfield expands its sales centers, the labor intensity
associated with a larger sales operation could pressure margins if
sales agents' productivity falls below historical levels. The
company has mitigated margin pressure by offshoring and outsourcing
sales agents to low-cost regions and incorporating artificial
intelligence chat bots to minimize the need for human labor.
The B2 rating is also influenced by the absence of meaningful
international diversification and governance concerns related to
private equity ownership that include a heightened risk of
debt-funded acquisitions and shareholder distributions.
The stable outlook reflects Moody's view that Centerfield's
integrated end-to-end digital marketing platform, online customer
acquisition and sales center operating model will remain fairly
resilient during the economic recession and generate solid free
cash flow. Though Moody's projects US advertising spend to contract
in the mid-to-high single digit percentage range in 2020, digital
ad spend is expected to grow, albeit at a low-single digit
percentage pace with social media and mobile expanding at high
single-digits. Moody's expects that Centerfield will continue to
experience favorable digital ad market trends and achieve share
gains as clients adopt its data-driven approach to marketing,
especially in end markets less affected by the virus such as
TV/internet/streaming and wireless data services.
Over the next 12-18 months, Moody's expects good liquidity
supported by positive free cash flow generation (i.e., CFO less
capex less dividends) in the range of $40-$50 million, sufficient
cash levels to fund M&A (cash balances totaled $30 million at 30
September 2020, $80 million pro forma for the pending debt raise)
and access to the new $50 million revolving credit facility.
As proposed in the most recent summary term sheet (at the time of
this writing), the first-lien credit facilities are expected to
contain covenant flexibility for transactions that could adversely
affect creditors including incremental facility capacity equal to:
(i) the greater of $95 million and (ii) 100% of Consolidated
Adjusted EBITDA (as defined), plus additional pari passu credit
facilities so long as the First-Lien Net Leverage Ratio (as
defined) does not exceed 4.75x (or pro forma leverage is not
increased, if used to finance a permitted acquisition). Additional
incremental debt is permitted for incremental facilities that are
secured on a junior lien basis or are unsecured so long as the
Total Net Leverage Ratio (as defined) does not exceed 6x.
Collateral leakage through transfers to unrestricted subsidiaries
are permitted through investment covenant carve-outs; no
asset-transfer "blockers" are contemplated. Under the proposed
terms, guaranteeing subsidiaries must be material wholly-owned
domestic restricted subsidiaries; partial dividends of ownership
interests could jeopardize guarantees. The summary term sheet
indicates a 100% net asset sale prepayment requirement stepping
down to 25% when the First-Lien Net Leverage Ratio (as defined) is
less than or equal to 4.25x, and then 0% when the ratio is less
than or equal to 3.75x.
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. As a result of
Centerfield's exposure to the US economy, the company remains
vulnerable to shifts in market demand and business and consumer
sentiment in these unprecedented operating conditions.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
A ratings upgrade is unlikely over the near-term, however over time
an upgrade could occur if the company demonstrates continued strong
revenue growth and EBITDA margin expansion leading to consistent
and increasing positive free cash flow generation and sustained
reduction in total debt to GAAP EBITDA leverage below 4.25x (as
calculated by Moody's) and free cash flow to debt of at least 5%
(as calculated by Moody's). Centerfield would also need to increase
scale, maintain at least a good liquidity profile and exhibit
prudent financial policies.
Ratings could be downgraded if financial leverage is sustained
above 6.25x total debt to GAAP EBITDA (as calculated by Moody's) or
EBITDA growth is insufficient to maintain free cash flow to debt of
at least 2% (as calculated by Moody's). Market share erosion,
significant client losses, sub-par organic revenue growth, weakened
liquidity or if the company engages in leveraging acquisitions or
sizable shareholder distributions could also result in ratings
pressure.
Headquartered in Los Angeles, CA, Centerfield Media Parent, Inc.
owns a portfolio of digital media properties that provide
authoritative editorial content and drive traffic from millions of
targeted prospective customers across the home services, B2B and
products/services verticals. Platinum Equity recently acquired
Centerfield together with Digital Ventures for an aggregate
purchase price of approximately $700 million. Centerfield's revenue
totaled roughly $266 million for the twelve months ended September
30, 2020.
The principal methodology used in these ratings was Business and
Consumer Service Industry published in October 2016.
CHARGING BEAR: Case Summary & 5 Unsecured Creditors
---------------------------------------------------
Debtor: Charging Bear LLC
5800 NW 135th Street
Oklahoma City, OK 73142
Business Description: Charging Bear LLC is a Single Asset Real
Estate debtor (as defined in 11 U.S.C.
Section 101(51B)). The Company is the owner
of fee simple title to certain parcels
located in Oklahoma City, Oklahoma having
an appraised value of $3.4 million.
Chapter 11 Petition Date: November 11, 2020
Court: United States Bankruptcy Court
Western District of Oklahoma
Case No.: 20-13610
Debtor's Counsel: Douglas N. Gould, Esq.
DOUGLAS N. GOULD, PLC
5500 N. Western
Suite 150
Oklahoma City, OK 73118
Tel: (405) 286-3338
Fax: (405) 841-1001
Email: dg@dgouldlaw.net
Total Assets: $3,400,544
Total Liabilities: $4,081,531
The petition was signed by Charles V. Long, Jr., managing member.
A copy of the petition containing, among other items, a list of the
Debtor's five unsecured creditors is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/2OM2USY/Charging_Bear_LLC__okwbke-20-13610__0001.0.pdf?mcid=tGE4TAMA
COCRYSTAL PHARMA: Falls Short of Nasdaq Bid Price Requirement
-------------------------------------------------------------
Cocrystal Pharma, Inc. received a letter from the Nasdaq Stock
Market LLC on Nov. 4, 2020, notifying the Company of its
noncompliance with Nasdaq Listing Rule 5550(a)(2) by failing to
maintain a minimum bid price for its common stock of at least $1.00
per share for 30 consecutive business days.
According to the letter, the Company has a 180 calendar day grace
period to regain compliance with the Rule, subject to a potential
180 calendar day extension. To regain compliance, the Company's
common stock must have a minimum closing bid price of at least
$1.00 per share for at least 10 consecutive business days within
the Grace Period. In the event the Company does not regain
compliance by
May 3, 2021, the end of the Grace Period, the Company may be
eligible for an additional 180 calendar day grace period to regain
compliance. To qualify for the additional grace period, the
Company will be required to meet the continued listing requirement
for the market value of its publicly held shares and all other
initial listing standards for The Nasdaq Capital Market, with the
exception of the bid price requirement, and will need to provide
written notice of its intention to cure the deficiency during the
second grace period, by effecting a reverse stock split if
necessary. However, if it appears to Nasdaq at the end of the Grace
Period that the Company will be unable to cure the deficiency, or
if the Company is not otherwise eligible for the additional cure
period, Nasdaq will provide notice that the Company's common stock
will be subject to delisting.
The letter has no immediate impact on the listing of the Company's
common stock, which will continue to be listed and traded on The
Nasdaq Capital Market, subject to the Company's compliance with the
other continued listing requirements of The Nasdaq Capital Market.
The Company intends to monitor the bid price of its common stock
and assess its options for maintaining the listing of its common
stock on The Nasdaq Capital Market.
About Cocrystal Pharma
Headquartered in Creek Parkway Bothell, WA, Cocrystal Pharma, Inc.
-- http://www.cocrystalpharma.com/-- is a clinical stage
biotechnology company discovering and developing novel antiviral
therapeutics that target the replication machinery of influenza
viruses, hepatitis C viruses, noroviruses, and coronaviruses.
Cocrystal Pharma recorded a net loss of $48.17 million for the year
ended Dec. 31, 2019, compared to a net loss of $49.05 million for
the year ended Dec. 31, 2018. As of June 30, 2020, the Company had
$40.48 million in total assets, $3.42 million in total liabilities,
and $37.05 million in total stockholders' equity.
COMCAR INDUSTRIES: C&D Logistics Buying 2 Cement Tankers for $8K
----------------------------------------------------------------
Comcar Industries, Inc. and its affiliated debtors filed with the
U.S. Bankruptcy Court for the District of Delaware a notice of
their proposed sale of the two 1,000 cu. ft. dry cement tankers
described in the Bill of Sale (Exhibit A) to C&D Logistics for
$8,000, free and clear of all Liens.
On Sept. 2, 2020, the Court entered the Order, which, among other
things, established the De Minimis Asset Sale Procedures.
Pursuant to the De Minimis Asset Sale Procedures, the Debtors
submit the De Minimis Sale Notice in connection with their sale of
the Assets to the Purchaser.
The total selling price for the Sale to the Purchaser is $8,000,
which is under the limit set forth in the De Minimis Asset Sale
Procedures. The Sale does not include payments to be made by the
Debtors on account of commission fees to agents, brokers or
auctioneers. The Debtors intend to use the proceeds from the Sale
to fund the administration of these chapter 11 cases and, if
applicable, to distribute funds in accordance with the priority
scheme set forth in orders of the Court, their financing documents
and/or the Bankruptcy Code. The Purchaser is not an insider of the
Debtors.
The Objection Deadline is Nov. 3, 2020 at 4:00 p.m. (ET). If no
objection to the De Minimis Sale Notice is timely filed and served
in accordance with it and the De Minimis Asset Sale procedures, the
Debtors may consummate the sale without further notice.
Copies of all filings in the Debtors' chapter 11 cases are
available for free on the website of the Court-appointed claims and
noticing agent in these chapter 11 cases, Donlin Recano & Co.,
Inc., at https://www.donlinrecano.com/Comcar.
A copy of the Exhibit A is available at
https://tinyurl.com/y2fzx9yr from PacerMonitor.com free of charge.
About Comcar Industries
Comcar Industries is a transportation and logistics company
headquartered in Auburndale, Fla., with over 40
strategically-located terminal and satellite locations across the
United States. For more information, visit https://comcar.com/
On May 17, 2020, Comcar Industries and related entities sought
Chapter 11 protection (Bankr. D. Del. Lead Case No. 20-11120). In
the petitions signed by CRO Andrew Hinkelman, Comcar Industries was
estimated to have $50 million to $100 million in assets and
liabilities as of the bankruptcy filing.
The Hon. Laurie Selber Silverstein is the presiding judge.
The Debtors tapped DLA Piper LLP (US) as counsel; FTI Consulting,
Inc. as financial advisor; and Bluejay Advisors, LLC as investment
banker. Donlin Recano & Company, Inc. is the claims agent.
COMCAR INDUSTRIES: Land Buying Low Value Assets for $600
--------------------------------------------------------
Comcar Industries, Inc. and its affiliated debtors filed with the
U.S. Bankruptcy Court for the District of Delaware a notice of
their proposed sale of the low value assets described in the Bill
of Sale (Exhibit A) to Steve Land for $600, free and clear of all
Liens.
On Sept. 2, 2020, the Court entered the Order, which, among other
things, established the De Minimis Asset Sale Procedures.
Pursuant to the De Minimis Asset Sale Procedures, the Debtors
submit the De Minimis Sale Notice in connection with their sale of
the Assets to the Purchaser.
The total selling price for the Sale to the Purchaser is $600,
which is under the limit set forth in the De Minimis Asset Sale
Procedures. The Sale does not include payments to be made by the
Debtors on account of commission fees to agents, brokers or
auctioneers. The Debtors intend to use the proceeds from the Sale
to fund the administration of these chapter 11 cases and, if
applicable, to distribute funds in accordance with the priority
scheme set forth in orders of the Court, their financing documents
and/or the Bankruptcy Code. The Purchaser is not an insider of the
Debtors.
The Objection Deadline is Nov. 3, 2020 at 4:00 p.m. (ET). If no
objection to the De Minimis Sale Notice is timely filed and served
in accordance with it and the De Minimis Asset Sale procedures, the
Debtors may consummate the sale without further notice.
Copies of all filings in the Debtors' chapter 11 cases are
available for free on the website of the Court-appointed claims and
noticing agent in these chapter 11 cases, Donlin Recano & Co.,
Inc., at https://www.donlinrecano.com/Comcar.
A copy of the Exhibit A is available at
https://tinyurl.com/yxbe2wsh from PacerMonitor.com free of charge.
About Comcar Industries
Comcar Industries is a transportation and logistics company
headquartered in Auburndale, Fla., with over 40
strategically-located terminal and satellite locations across the
United States. For more information, visit https://comcar.com/
On May 17, 2020, Comcar Industries and related entities sought
Chapter 11 protection (Bankr. D. Del. Lead Case No. 20-11120). In
the petitions signed by CRO Andrew Hinkelman, Comcar Industries was
estimated to have $50 million to $100 million in assets and
liabilities as of the bankruptcy filing.
The Hon. Laurie Selber Silverstein is the presiding judge.
The Debtors tapped DLA Piper LLP (US) as counsel; FTI Consulting,
Inc. as financial advisor; and Bluejay Advisors, LLC as investment
banker. Donlin Recano & Company, Inc. is the claims agent.
COMCAR INDUSTRIES: PC Liquidation Buying Low Value Assets for $5K
-----------------------------------------------------------------
Comcar Industries, Inc. and its affiliated debtors filed with the
U.S. Bankruptcy Court for the District of Delaware a notice of
their proposed sale of the low value assets, consisting of multiple
computers, monitors, printers and scanners from their Jacksonville
and Auburndale sites, described in the Bill of Sale (Exhibit A) to
PC Liquidation for $5,035, free and clear of all Liens.
On Sept. 2, 2020, the Court entered the Order, which, among other
things, established the De Minimis Asset Sale Procedures.
Pursuant to the De Minimis Asset Sale Procedures, the Debtors
submit the De Minimis Sale Notice in connection with their sale of
the Assets to the Purchaser.
The total selling price for the Sale to the Purchaser is $5,035,
which is under the limit set forth in the De Minimis Asset Sale
Procedures. The Sale does not include payments to be made by the
Debtors on account of commission fees to agents, brokers or
auctioneers. The Debtors intend to use the proceeds from the Sale
to fund the administration of these chapter 11 cases and, if
applicable, to distribute funds in accordance with the priority
scheme set forth in orders of the Court, their financing documents
and/or the Bankruptcy Code. The Purchaser is not an insider of the
Debtors.
The Objection Deadline is Nov. 3, 2020 at 4:00 p.m. (ET). If no
objection to the De Minimis Sale Notice is timely filed and served
in accordance with it and the De Minimis Asset Sale procedures, the
Debtors may consummate the sale without further notice.
Copies of all filings in the Debtors' chapter 11 cases are
available for free on the website of the Court-appointed claims and
noticing agent in these chapter 11 cases, Donlin Recano & Co.,
Inc., at https://www.donlinrecano.com/Comcar.
A copy of the Exhibit A is available at
https://tinyurl.com/yxbvxxuw from PacerMonitor.com free of charge.
About Comcar Industries
Comcar Industries is a transportation and logistics company
headquartered in Auburndale, Fla., with over 40
strategically-located terminal and satellite locations across the
United States. For more information, visit https://comcar.com/
On May 17, 2020, Comcar Industries and related entities sought
Chapter 11 protection (Bankr. D. Del. Lead Case No. 20-11120). In
the petitions signed by CRO Andrew Hinkelman, Comcar Industries was
estimated to have $50 million to $100 million in assets and
liabilities as of the bankruptcy filing.
The Hon. Laurie Selber Silverstein is the presiding judge.
The Debtors tapped DLA Piper LLP (US) as counsel; FTI Consulting,
Inc. as financial advisor; and Bluejay Advisors, LLC as investment
banker. Donlin Recano & Company, Inc. is the claims agent.
CP ATLAS: S&P Assigns 'B' ICR on Acquisition by Centerbridge
------------------------------------------------------------
S&P Global Ratings assigned its 'B' issuer credit rating to U.S.
bath fixture manufacturer, CP Atlas Buyer Inc., ahead of financial
sponsor Centerbridge Partners' acquisition of American Bath Group
LLC (ABG).
At the same time, S&P is assigning its 'B' issue level rating to
the company's proposed $125 million revolver, $900 million
first-lien term loan, $300 million delayed draw term loan and its
'CCC+' rating to the company's proposed $335 million unsecured
notes. S&P is affirming its 'B' issuer credit rating on ABG.
Centerbridge Partners is acquiring ABG with funds coming from a
combination of debt and equity, resulting in adjusted leverage of
7x. As part of the transaction, CP Atlas Buyer will obtain a $125
million revolving credit facility due 2025 (undrawn at close) and a
$900 million senior secured first-lien term loan due 2027. CP Atlas
will also have a delayed draw term loan of $300 million (undrawn at
close) to fund future acquisitions and for general corporate
purposes. Finally, the capital structure will include $335 million
of senior unsecured notes due 2028 and $617 million of equity
contributed by Centerbridge Partners.
Strong demand from remodeling activity and new home construction
will result in mid-single-digit revenue growth for ABG in
2020-2021. Despite being closely tied to discretionary consumer
spending, demand for CP Atlas Buyer's (doing business as ABG)
products has remained resilient and even improved since the
recession in early 2020. Increased time spent at home, diversion of
consumer spending toward home improvements, and increased home
equity have resulted in a higher number of bath remodel projects.
Some of ABG's higher end products, such as spas have seen an
increase in demand because of social distancing practices and the
continued trend of investing in outdoor living. Further, low
mortgage rates coupled with the rise in demand for suburban homes
and low housing inventory have supported continued growth in
homebuilding activity.
S&P said, "Despite better earnings, we expect adjusted leverage to
be within the 6.5x-7x range over the next 12 months, which we
believe is very high. We expect 2020 earnings and margins to be
strong and substantially higher on a year-over-year basis, driven
by higher volumes, temporary variable cost cuts in the second
quarter, and deflated input costs. While some of these temporary
cost savings will reverse and input costs inflation will pick up,
we think these will be offset by the company's pricing actions and
overall earnings will remain flat in 2021. Based on this, we expect
ABG to end 2020 with adjusted leverage close to 7x, improving
toward 6.5x in 2021. However, we view these levels to be at the
weaker end for the current rating. Also, any incremental borrowing
on the delayed draw facility to fund acquisitions at higher
earnings' multiples may cause further deterioration in credit
measures. However, we expect the company will continue generating
positive free cash flow, despite increased working capital
investments and normalized capital spending over the next 12
months."
"The negative outlook on CP Atlas Buyer reflects our belief that
adjusted leverage will stay elevated, at around 6.5x-7x over the
next 12 months, leaving very little cushion if currently favorable
demand deteriorates."
S&P could lower the ratings on CP Atlas Buyer over the next 12
months if:
-- Economic recovery in the U.S. slows, perhaps because of a
resurgence in COVID-19 cases, and EBITDA declines by more than 10%,
causing adjusted leverage to rise above 7x or EBITDA interest
coverage to fall below 2x.
-- The company pursues large debt funded acquisitions and/or
shareholder dividends, such that adjusted leverage climbs higher
than 7x, with little prospect of a rapid recovery.
-- S&P could revise its outlook on CP Atlas Buyer to stable, over
the next 12 months if sustained earnings improvement results in
adjusted leverage below 6x and EBITDA interest coverage above 2x.
-- This could occur if remodeling activity remains robust and
housing starts climb substantially above S&P's forecast for 1.3
million units in 2021.
CRGR LLC: Hearing on Disclosures and Plan Continued to Nov. 17
--------------------------------------------------------------
Judge Randal S. Mashburn in September 2020 has entered an order
scheduling a hearing to consider approval of the Disclosure
Statement and the Chapter 11 Plan of CRGR, LLC, for Oct. 20, 2020.
Objections were due Oct. 13, 2020.
According to the case docket, the Court on Oct. 20, 2020, entered
an order continuing the hearing on the Disclosure Statement for
Nov. 17, 2020, at 9:30 a.m. The hearing will be held
telephonically. The call-in number is 1-888-363-4749; Access Code
is 8979228# for Judge Mashburn. (las)
In its objection, the U.S. Trustee said it does not object to the
premise of the Debtor's Plan, namely, the sale of its primary (and
allegedly sole asset) for the benefit of its secured and priority
tax claim holders. The U.S. Trustee believes, based upon the
information in its possession, that the sale proposed by the Debtor
is an arm's length transaction for fair market value and proposed
in good faith. Notwithstanding the foregoing, the U.S Trustee is
aware of the claims raised and litigation filed by the chapter 7
bankruptcy estate of Scott Lumley (Case No. 3:20-bk-00836)in this
matter ("Lumley Claims"), and based on such claims, believes the
chapter 11 Plan as proposed by the Debtor should not be confirmed
in its present form, to wit:
a) Any excess proceeds arising from thesale of real property
proposed in the Plan should be segregated and retained by a
disinterested third party pending resolution of the Lumley Claims;
b) The Debtor, or the present equity security holder of the
Debtor, should not be named the Disbursing Agent under the Plan
given the actual and future conflicts that arise based on the
pending Lumley Claims;
c) Given that the net effect of confirmation of the Plan would
result in the de facto liquidation of the Debtor, a mechanism for
the escrow and payment of pre-and post-confirmation quarterly fees
arising under 28 U.S.C. Sec. 1930 should be provided in the Plan;
d) The Plan proposes that all administrative expenses of the
chapter 11 case will be paid by the current equity security holder
of the Debtor (Thomas Cole Lumley). Notwithstanding the foregoing,
the Plan should expressly provide that counsel for the Debtor, as
well as any other potential administrative claimant, needs to file
an application for approval of final fees and expenses pursuant to
11 U.S.C. Sec. 330 and 331; and
e) The Plan provides for the assumption of a commercial lease
with the Stanton Group, which the U.S. Trustee believes to be
mistakenly included in the Plan given the previous representations
of the Debtor in its Schedules. The U.S. Trustee believes the
Debtor should correct this error, or otherwise explain how it
applies to the Debtor in this case.
Accordingly, the U.S. Trustee asked the Court deny confirmation of
the Debtor's Plan as presently presented.
Attorney for the Debtor:
Steven L. Lefkovitz, No. 5953
618 Church Street, Suite 410
Nashville, Tennessee 37219
Phone: (615)256-8300
Fax: (615) 255-4516
Email: slefkovitz@lefkovitz.com
CVR ENERGY: S&P Downgrades ICR to 'B+'; Outlook Negative
--------------------------------------------------------
S&P Global Ratings downgraded CVR Energy Inc. and CVR Refining L.P.
to 'B+' from 'BB-', and CVR Partners L.P. to 'B' from 'B+'. Given
S&P's view of CVR Partners' relevance to CVR Energy, it does not
equalize the rating on CVR Partners with that on CVR Energy.
S&P said, "The refining industry did not recover in the second
half, and we now expect a slow path to pre-COVID-19 demand and
refining margins. CVR Refining, the refining business of CVR
Energy, generated more than $700 million EBITDA in 2018 and 2019,
and is likely to post negative EBITDA in 2020 (through Sept. 30, it
was negative $8 million). Given it is the largest cash flow
contributor to the group (CVR Partners' EBITDA was $84 million in
2018 and $107 million in 2019), we expect the group's credit
metrics to remain depressed at least through the second half of
2021."
"We note the path to recovery is very uncertain, and both refined
products demand and margins will depend on the availability of a
COVID-19 vaccine, driving behaviors in a work-from-home environment
(gasoline demand), and recovery of international air travel (jet
fuel demand)."
While refining margins per total throughput barrel were about $15
in 2018 and 2019, S&P now models a 2020 price of about $4,
gradually recovering to about $7 in 2021 and $12 in 2022. Figures
though Sept. 30 show a refining margin per barrel of $5.77. This
should result in EBITDA improving to about $120 million in 2021 and
$430 million-$450 million by 2022, although still below 2018 and
2019 figures. It is worth mentioning that 2018 and 2019 were very
good years for CVR's refining business compared to 2017, when
EBITDA was about $400 million, driven by lower refining margins per
barrel. Under S&P's base case, consolidated leverage (including CVR
Partners' $645 million notes due in 2023) would improve from above
7x in 2021 to about 3x by 2022. Pre-COVID-19, the group's
consolidated leverage was about 2x.
S&P said, "Our ratings on CVR Energy assume consolidated credit
metrics (both CVR Refining and CVR Partners cash flows and debt).
We then equalize the rating on CVR Refining with that on CVR
Energy, as we consider it core to the group's strategy and its main
cash flow contributor in a mid-cycle environment. The 'B' rating on
CVR Partners reflects its stand-alone credit profile."
"We consider CVR Energy would provide some financial support to CVR
Partners if needed, although this subsidiary is not strategic
enough for the group to provide full support. Given that we lowered
the rating on CVR Energy, we no longer provide a one-notch uplift
to the rating on CVR Partners because of group support. This could
occur if there is at least a two-notch difference between the
rating on CVR Energy and the CVR Partners stand-alone credit
profile."
There has been backwardation in nitrogen fertilizer products that
CVR Partners sells, and S&P expects it to remain with leverage
about 7x in the next few years. While ammonia and urea ammonium
nitrate (UAN) prices improved in 2018 and 2019, some market
oversupply reduced 2020 prices. In particular, ammonia product
pricing at gate for CVR Partners declined to $293 per ton from $416
in the last nine months ended September 2020 compared to the same
period in 2019, while the UAN price at gate declined to $156 per
ton from $206 in the same period. This was partially offset by
higher volumes sold and lower feedstock costs, particularly natural
gas used in CVR Partners' East Dubuque, Ill., facility.
S&P said, "We now expect EBITDA generation of about $80 million in
2020 through 2022 (excluding a one-time impairment of about $40
million in 2020), compared to about $84 million in 2018 and $107
million in 2019. We expect such EBITDA sufficient to cover annual
interest expenses of about $60 million and maintenance capital
expenditure (capex) of $10 million-$15 million." Additionally, CVR
Partners had cash and cash equivalents of about $48 million as of
Sept. 30 and $25 million availability on its asset-based lending
(ABL) credit facility, with maturity recently extended to Sept. 30,
2022."
On a stand-alone basis, considering CVR Partners' $645 million
notes due in 2023, S&P expects its leverage to remain about 7x.
Liquidity at the group and subsidiaries remains adequate to cover
fixed expenses, which S&P believes is key in this weak cash flow
generation environment. CVR Energy as a group had consolidated cash
and cash equivalents of $672 million as of Sept. 30. Additionally,
the group had $393 million borrowing capacity on its CVR Refining
subsidiary ABL due in November 2022 and $25 million borrowing
capacity on the CVR Partners ABL.
Although the refining industry environment remains weak, and the
path and pace of recovery is uncertain, S&P believes the company
has enough liquidity to cover fixed expenses over the upcoming 12
months. It has about $60 million of interest expenses from CVR
Partners notes due in 2023, $55 million of interest expenses from
CVR Energy notes due in 2025 and 2028, and maintenance capex of
about $80 million for the refining business and $10 million-$15
million for the fertilizer business. Additionally, the refining
business might conduct (subject to full board approval) a renewable
diesel unit project at the Wynnewood, Okla., refinery that is
expected to reduce the amount of renewable identification number
(RIN) expenses. The cost of phase 1 of this project is about $100
million. It is worth noting the group has no debt maturities until
2023, when the CVR Partners notes mature. In 2022, the group would
need to extend its credit facilities, currently undrawn.
S&P said, "Additionally, we view CVR Energy's decision to not make
any dividend distributions in the second and third quarters as
credit positive. While there are aspects the company cannot control
such as demand or refining margins, we view the risk management
decision of preserving liquidity as positive from a credit
standpoint."
The negative outlook on CVR Energy reflects a still high
uncertainty on the path to recovery of the refining business. This
could result in a further downgrade in case EBITDA does not
materially recover and liquidity becomes a concern. S&P's ratings
on CVR Refining mirror those on the consolidated group, CVR Energy,
as it considers CVR Refining to be the most important cash flow
contributor to the group in a mid-cycle environment.
S&P could lower its ratings on CVR Energy if:
-- There is a prolonged period of muted cash flows from its
refining business and liquidity deteriorates; or
-- S&P expects consolidated leverage to remain above 5x in 2022.
S&P would lower the rating on CVR Partners if:
-- The group is further downgraded; or
-- Stand-alone leverage increases substantially due to cash flow
deterioration and S&P views the capital structure as
unsustainable.
S&P could revise its outlook on CVR Energy and CVR Refining to
stable if:
-- The current down cycle ends and the company returns to
generating sustained positive cash flow from its refining segment;
and
-- Consolidated leverage goes below 3x.
S&P would revise the outlook on CVR Partners to stable if it
revises the outlook on the group rating to stable.
The COVID-19 pandemic, which S&P views as a social event, has
severely affected the refining business. Lockdowns and
work-from-home activity reduced demand for refined products as
driving and air travel diminished. This resulted in very weak
refining margins, affecting the whole industry's cash flows.
From an environmental standpoint, CVR Energy's refining business is
required by the U.S. Environmental Protection Agency to blend
renewable fuels with transportation fuels or to purchase RINs in
lieu of blending. Based on recent prices, the estimated cost to
comply with this requirement will be $110 million-$115 million in
2020.
DANNYLAND LLC: Plan Confirmation Hearing Continued to December 15
-----------------------------------------------------------------
Judge Alan C. Stout of the U.S. Bankruptcy Court for the Western
District of Kentucky has entered an order within which the hearing
regarding confirmation of the Chapter 11 Plan of debtor Dannyland,
LLC shall be continued to December 15, 2020 at 10:00 AM by
telephone.
A full-text copy of the order dated October 22, 2020, is available
at https://tinyurl.com/y35yggn8 from PacerMonitor.com at no
charge.
About Dannyland LLC
Based in Paducah, Kentucky, Dannyland, LLC, sought protection under
Chapter 11 of the Bankruptcy Code (Bankr. W.D. Ky. Case No.
20-50336) on June 26, 2020, listing under $1 million in both assets
and liabilities. Samuel J. Wright, Esq. at Farmer & Wright, PLLC,
represents the Debtor as counsel. Judge Alan C. Stout oversees the
case.
DANNYLAND LLC: SL Capital Objects to Chapter 11 Plan
----------------------------------------------------
SL Capital Fund, LLC objects to the Chapter 11 Plan filed by debtor
Dannyland, LLC:
* Dannyland has proposed to list Units 140 and 142 for sale with
a realtor at a list price of One Hundred Five Thousand Dollars
($105,000.00) each no later than November 30, 2020 with all sales
proceeds from the sale of these units to be paid to SL Capital. It
is unclear as to how Units 140 and 142 can be listed at a list
price of $105,000.00 each because it is physically and legally
impossible to sever Units 140 and 142.
* Although SL Capital does not have a general objection to
efforts by Dannyland to list and sell some of its properties to pay
SL Capital's claim in this case, the parameters of Dannyland's sale
efforts need to be better defined.
* Dannyland has failed to demonstrate where it would even obtain
the funding for the balloon payment that it has proposed in its
Chapter 11 Plan. Dannyland has little to no cash in its operating
accounts, and Dannyland has been unable to comply with the Agreed
Order Regarding Cash Collateral.
* Dannyland's current Chapter 11 Plan (at least as it pertains to
SL Capital) is vague, unfair, and impractical.
A full-text copy of SL Capital's objection to plan dated October
15, 2020, is available at https://tinyurl.com/y48dt3gv from
PacerMonitor at no charge.
Attorneys for SL Capital:
DENTON LAW FIRM, PLLC
P. O. Box 969
Paducah, KY 42002-0969
Tel. No.: (270) 450-8253
Fax No.: (270) 450-8259
E-mail: jmatheny@dentonfirm.com
About Dannyland LLC
Based in Paducah, Kentucky, Dannyland, LLC, sought protection under
Chapter 11 of the Bankruptcy Code (Bankr. W.D. Ky. Case No.
20-50336) on June 26, 2020, listing under $1 million in both assets
and liabilities. Samuel J. Wright, Esq. at Farmer & Wright, PLLC,
represents the Debtor as counsel. Judge Alan C. Stout oversees the
case.
DANNYLAND LLC: Unsecureds to be Paid 1% in 6 Months
---------------------------------------------------
Dannyland, LLC submitted a Combined Disclosure Statement and
Chapter 11 Plan.
Under normal circumstances, the Debtor's average annual income is
$42,500 with an average annual expense of $16,900, excluding debt
service. The Debtor's regular annual debt service to secured
creditor, SL Capital Fund, LLC is $24,600.
The Plan proposes to treat claims as follows:
* CLASS A-3. Class A-3 shall consist of all Administrative
Expenses resulting from the purchase by the Debtor in Possession of
goods and services on open account and in the ordinary course and
conduct of the Debtor business during the case. The claims of the
Class A-3 Claimants shall be assumed by the reorganized Debtor and
shall be paid in the ordinary course of its business in accordance
with the terms and the conditions agreed upon between the claimant
and the Debtor.
* CLASS A-4. Class A-4 shall consist of all unsecured priority
taxes claims. The claims of the Chall A-4 claimants shall be paid
in regular monthly installments not to exceed Thirty-Six (36)
months.
* Class C Claims shall consist of the claims of SL Capital Fund,
LLC. The Debtor will make a balloon payment to SL Capital Fund, LLC
no later than June 26, 2021 equal to the then outstanding balance
owed.
* Class D Claims – Unsecured Claims. Any timely filed and
allowed unsecured claims will be paid at a percentage rate of 1
percent of the entire value of the claim and shall be paid within 6
months of confirmation.
The Debtor proposes to pay creditors with the collection of rents
from tenants as well as through a refinance of its secured debt.
A full-text copy of the Combined Disclosure Statement and Chapter
11 Plan dated September 16, 2020, is available at
https://tinyurl.com/yxb657vc from PacerMonitor.com at no charge.
Attorneys for the Debtor:
Samuel J. Wright
Farmer & Wright
4975 Alben Barkley Drive, Suite 1
P.O. Box 7766
Paducah, KY 42002-7766
Tel: (270) 443-4431
Fax: (270) 443-4631
About Dannyland LLC
Based in Paducah, Kentucky, Dannyland, LLC, sought protection under
Chapter 11 of the Bankruptcy Code (Bankr. W.D. Ky. Case No.
20-50336) on June 26, 2020, listing under $1 million in both
assets
and liabilities. Judge Alan C. Stout oversees the case. Samuel J.
Wright, Esq. at Farmer & Wright, PLLC, is the Debtor's counsel.
DELAWARE VALLEY: Voluntary Chapter 11 Case Summary
--------------------------------------------------
Debtor: Delaware Valley Lift Truck, Inc.
1311 Ford Road
Bensalem, PA 19020
Business Description: Delaware Valley Lift Truck, Inc.
sells, rents, and services forklifts
and material handling equipment.
Chapter 11 Petition Date: November 10, 2020
Court: United States Bankruptcy Court
Eastern District of Pennsylvania
Case No.: 20-14408
Judge: Hon. Ashely M. Chan
Debtor's Counsel: Paul J. Winterhalter, Esq.
OFFIT KURMAN, P.A.
Ten Penn Center
1801 Market Street, Suite 2300
Philadelphia, PA 19103
Tel: 267-338-1370
Email: pwinterhalter@offitkurman.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by John W. Meyer, president.
The Debtor failed to include in the petition a list of its 20
largest unsecured creditors.
A copy of the petition is available for free at PacerMonitor.com
at:
https://www.pacermonitor.com/view/O6VH42Q/Delaware_Valley_Lift_Truck_Inc__paebke-20-14408__0001.0.pdf?mcid=tGE4TAMA
EAGLE MANUFACTURING: Files for Chapter 11 Bankruptcy Protection
---------------------------------------------------------------
CDL Life reports that a Minnesota-based manufacturing company,
Eagle Manufacturing, has filed for bankruptcy protection, leaving
several trucking companies on the hook for thousands of dollars.
On November 7, 2020, Red Lake Falls-based Eagle Manufacturing filed
for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court
for the District of Minnesota.
The company had previously received a U.S. Small Business
Administration's Paycheck Protection Program (PPP) loan in the
amount of $133,100. PPP loans were meant to help businesses keep
their doors open during the economic hardship caused by the
COVID-19 crisis.
In bankruptcy filings, Eagle Manufacturing listed a number of
trucking companies as unsecured creditors, including Hartz Truck
Line Inc., which is owed $15,500, FedEx Freight East, which is owed
$11,600, and Becker Aggregate Trucking Inc., which is owed almost
$4,000.
Eagle Manufacturing, formerly Northwest Manufacturing, Inc.,
produced outdoor furnaces.
About Eagle Manufacturing
Eagle Manufacturing, Inc., manufactures outdoor furnaces offering a
range of furnaces to heat homes, garages, pools and spas; radiant
floor heating systems; and replacement parts for all outdoor
furnaces brands.
Eagle Manufacturing filed a Chapter 11 petition (Bankr. D. Minn.
Case No. 20-60555) on Nov. 6, 2020. In the petition signed by CFO
Ronald Gagner, the Debtor disclosed total assets of $5,496,035 and
total liabilities of $3,117,376. Kenneth C. Edstrom of SAPIENTIA
LAW GROUP is serving as the Debtor's counsel.
ED'S BEANS: Seeks to Hire Leech Tishman as Legal Counsel
--------------------------------------------------------
Ed's Beans, Inc. seeks approval from the U.S. Bankruptcy Court for
the Western District of Pennsylvania to hire Leech Tishman Fuscaldo
& Lampl, LLC as its legal counsel.
The firm will provide the following legal services:
a. advise the Debtor with respect to its powers and duties;
b. prepare and file necessary pleadings;
c. attend hearings on behalf of the Debtor;
d. pursue any causes of action on behalf of the Debtor or
which may be filed against the Debtor; and
e. perform all other legal services that are or may become
necessary.
Leech Tishman's current hourly rates are as follows:
Partner Time $275 to $690
Associate Time $205 to $300
Counsel/Of Counsel $325 to $690
Paralegals and Law Clerks $95 to $230
The firm received a retainer in the amount of $25,000.
Leech Tishman is a "disinterested person" as that term is defined
in Section 101(14) of the Bankruptcy Code, according to court
filings.
The firm can be reached through:
John M. Steiner, Esq.
Crystal H. Thornton-Illar, Esq.
Leech Tishman Fuscaldo & Lampl, LLC
525 William Penn Place, 28th Floor
Pittsburgh, PA 15219
Telephone: (412) 261-1600
Email: jsteiner@leechtishman.com
cthornton-illar@leechtishman.com
About Ed's Beans Inc.
Ed's Beans, Inc., owner of Kiva Han Coffee and Crazy Mocha
restaurants, sought Chapter 11 protection (Bankr. W.D. Pa. Case No.
20-22974) on Oct. 19, 2020. The Debtor was estimated to have
$100,000 to $500,000 in assets and $1 million to $10 million in
liabilities.
Crystal H. Thornton-Illar of Leech Tishman Fuscaldo & Lampl, LLC,
is the Debtor's legal counsel.
EMERGENT CAPITAL: U.S. Trustee Unable to Appoint Committee
----------------------------------------------------------
The Office of the U.S. Trustee on Nov. 9, 2020, disclosed in a
court filing that no official committee of unsecured creditors has
been appointed in the Chapter 11 case of Emergent Capital, Inc.
About Emergent Capital
Emergent Capital Inc. (OTCQX: EMGC) is a specialty finance company
that invests in life settlements. Emergent Capital, through its
subsidiaries, owns a 27.5% equity interest in White Eagle Asset
Portfolio, LP, which holds a valuable portfolio of life settlement
assets. Visit http://www.emergentcapital.comfor more information.
On Oct. 15, 2020, Emergent Capital and its wholly-owned subsidiary
Red Reef Alternative Investment, LLC filed voluntary petitions for
relief under Chapter 11 of Bankruptcy Code (Bankr. D. Del. Lead
Case No. 20-12602). Miriam Martinez, chief financial officer of
Emergent Capital, signed the petitions.
Emergent Capital disclosed $175.1 million in assets and $115.9
million in liabilities as of May 31, 2020, while Red Reef
Alternative Investment estimated to have less than $50,000 in both
assets and liabilities.
Judge Brendan Linehan Shannon oversees the cases.
The Debtors have tapped Pachulski Stang Ziehl & Jones LLP as their
bankruptcy counsel; Curtis, Mallet-Prevost, Colt & Mosle LLP as
special litigation counsel; Kelley Drye & Warren LLP as general
non-bankruptcy counsel; Winston & Strawn LLP as tax counsel; and
RSM US, LLP as valuation advisor. Kurtzman Carson Consultants LLC
is the administrative advisor.
FURNITURE FACTORY: Court Gives Approval to Tap $2.5M DIP Financing
------------------------------------------------------------------
Law360 reports that the bankrupt owner of the Furniture Factory
Outlet retail chain received a Delaware bankruptcy court's
permission Friday, November 6, 2020, to borrow up to $2.5 million
in postpetition financing as it seeks to complete a sale through
its Chapter 11 case.
During a first-day hearing, debtor attorney Domenic E. Pacitti of
Klehr Harrison Harvey Branzburg LLP said the financing was needed
as the company continues to navigate the tumultuous environment
that exists for retailers in the midst of the COVID-19 pandemic and
tries to complete a sale of its assets. "We commenced these cases
to preserve the value," Mr. Pacitti said.
About Furniture Factory Outlet
Furniture Factory Outlet, LLC retails furniture and accessories
products. The Company retails reclining and sectional sofas,
chairs, tables, ottomans, recliners, bedroom sets, beds, dressers,
mirrors, chests, dining sets, and accessories. Furniture Factory
Outlet serves customers in the United States. Furniture Factory was
founded in 1984 in Muldrow, Oklahoma around an original concept of
providing quality furniture at highly competitive prices with the
Company's"lowest price every day" guarantee, a differentiator from
the competition.
As of November 2020, FFO had 31 stores in Arkansas, Indiana,
Kentucky, Missouri and Oklahoma.
Furniture Factory Ultimate Holding, LP, including Furniture Factory
Outlet, LLC, sought Chapter 11 protection (Bankr. D. Del. Lead Case
No. 20-12816) on Nov. 5, 2020.
Furniture Factory was estimated to have $10 million to $50 million
in assets and liabilities.
The Hon. John T. Dorsey is the case judge.
The Debtors tapped KLEHR HARRISON HARVEY BRANZBURG LLP as general
counsel; FOCALPOINT SECURITIES, LLC as investment banker; and RAS
MANAGEMENT ADVISORS, LLC, as restructuring advisor. STRETTO is the
claims agent.
GENESIS HEALTHCARE: Warns of Bankruptcy Filing as Pandemic Rages On
-------------------------------------------------------------------
John George of Philadelphia Business Journal reports that Genesis
Healthcare officials said Monday the Chester County-based nursing
home operator is continuing to struggle financially with the impact
of Covid-19 on its operations, and the company may need to consider
a bankruptcy filing in the future.
"The virus continues to have a significant adverse impact on the
company's revenues and expenses, particularly in hard-hit
Mid-Atlantic and Northeastern markets," said Genesis CEO George V.
Hager Jr., in a statement. "While we are grateful for federal and
state financial support received and committed to date, the
stimulus funds recognized in the third quarter of 2020 fell nearly
$60 million short of the company's Covid-19-related costs and the
estimated impact of lost revenue."
"Given the persistence of the virus, its intensification as we
approach the winter months and the slow pace of recovery in
occupancy, the company remains reliant on adequate and timely
government-sponsored financial support to meet its obligations to
patients, residents, caregivers and stakeholders," he said.
During the first three quarters of this year, Genesis (NYSE: GEN)
has posted revenue of just under $3 billion and a net loss of $86.6
million. For the same period in 2019, the company's revenue was
$3.4 billion and its net income was $24.8 million.
The company's skilled nursing facility operating occupancy
decreased from 88.2% for the first three months of this year to
75.4% for the three months that ended Sept. 30, 2020. Its operating
occupancy of 76.5% in October 2020 was up from an operating
occupancy low point of 74.2% in June 2020.
In its third-quarter financial report, Genesis said it recognized
$34 million in grants under the CARES Act and $30 million of
additional funding provided by certain states. The company said
that funding partially offset the estimated $124 million impact of
pandemic-related lost revenue and incremental expenses incurred in
the quarter.
Genesis said the impact of Covid-19 on the company's occupancy and
net revenue for the remainder of the year will depend on future
developments, which are "highly uncertain and cannot be
predicted."
The company said in response to Covid-19 "and other conditions that
raise substantial doubt about [its] ability to continue as a going
concern," Genesis has taken a variety of measures that include:
* Applying for, and receiving, government-sponsored financial
relief related to the pandemic and taking advantage of other
existing government-sponsored funding programs implemented to
support businesses impacted by Covid-19;
* Utilizing the CARES Act payroll tax deferral program to delay
payment of a portion of its
payroll taxes incurred through December (under which it will repay
50% of the taxes owed in 2021 and the other 50% in 2022);
* Advocating, for itself and the skilled nursing industry,
regarding the need for additional
government-sponsored funding;
* Pursuing creative and accretive opportunities to sell assets and
enter into joint venture
structures;
* Exploring and evaluating "a number of strategic and other
alternatives" to manage and to improve the company's liquidity
position.
Genesis, however, said even if the company receives additional
funding support from government sources and/or is able to
successfully execute all of its plans and initiatives, if may not
be enough to fund operations for the next 12-month period given the
"unpredictable nature of, and the operating challenges presented
by," the Covid-19 virus. "Such events or circumstances could force
the company to seek reorganization under the U.S. Bankruptcy Code,"
Genesis stated.
Genesis operates more than 350 skilled nursing facilities and
assisted/senior living communities in 25 states nationwide. The
company's subsidiaries also supply rehabilitation therapy to about
1,100 health care providers in 44 states, Washington, D.C., and
China.
About 70% of patient and resident positive Covid-19 cases have
occurred in its facilities located in Pennsylvania, New Jersey,
Connecticut, Massachusetts, and Maryland — which correspond to
many of the largest initial community outbreak areas across the
country. Genesis facilities in the five states represent 45% of its
total operating beds.
Hager praised the level of commitment shown by the company's
employees during the pandemic.
“Our admiration and respect for all of our employees, who have
been true heroes for the last eight months, only increases as they
have come to work each and every day despite challenging conditions
to care for our patients and residents," he said.
About Genesis Healthcare Inc.
Genesis is a provider of short-term post-acute, rehabilitation,
skilled nursing and long-term care services. As of January 2017,
Genesis operates approximately 500 skilled nursing centers and
assisted/senior living residences in 34 states across the United
States.
GENESIS PLACE: U.S. Trustee Unable to Appoint Committee
-------------------------------------------------------
The Office of the U.S. Trustee on Nov. 9, 2020 disclosed in a court
filing that no official committee of unsecured creditors has been
appointed in the Chapter 11 case of Genesis Place, LLC.
About Genesis Place
Genesis Place, LLC classifies its business as single asset real
estate (as defined in 11 U.S.C. Section 101(51B)).
Genesis Place sought protection under Chapter 11 of the Bankruptcy
Code (Bankr. W.D. Tenn. Case No. 20-24485) on Sept. 15, 2020. At
the time of the filing, the Debtor disclosed assets of between $1
million and $10 million and liabilities of the same range.
Judge David S. Kennedy oversees the case. Glanker Brown, PLLC is
Debtor's legal counsel.
GI DYNAMICS: COO Joseph Virgilio Named CEO, President & Director
----------------------------------------------------------------
Scott Schorer departed as chief executive officer and president of
GI Dynamics, Inc., effective as of Nov. 2, 2020. Joseph Virgilio,
the Company's chief operating officer, was appointed as chief
executive officer and president, effective as of Nov. 2, 2020. At
this time, the Company has not made any changes to Mr. Virgilio's
compensation in connection with his appointment to serve as the
Company's chief executive officer. Mr. Virgilio's current
executive employment agreement which provides for, among other
things, an annual base salary of $350,000 , as well as his
severance agreement, remain in effect.
In addition, effective as of Nov. 2, 2020, the Board of Directors
of the Company increased the size of the Board to four members and
elected Mr. Virgilio to fill that newly-created vacancy and serve
as a member of the Board and all committees thereof. Mr. Virgilio
will hold office until the next annual meeting of stockholder and
thereafter until his successor is duly elected and qualified in
accordance with the Company's bylaws or his earlier resignation,
removal or death. Mr. Virgilio will not receive any compensation
in connection with his services as a director.
Mr. Virgilio, age 46, has served as the Company's chief operating
officer since October 2020. Prior to his time with the Company, he
served as the president and general manager of Amann Girrbach, AG,
an innovator and preferred full-service provider in digital dental
prosthetics, from September 2018 until April 2020. From April 2016
until February 2018, Mr. Virgilio served as the vice president of
Sales, The Americas at Surgical Specialties Corp, a manufacturer
and distributer of medical products. Prior to Surgical Specialties
Corp, Mr. Virgilio served as the vice president of Sales and Global
Marketing of Aptus Endosystems, a medical device company focused on
developing advanced technology for endovascular aneurysm repair
(EVAR) and thoracic endovascular aneurysm repair, from October 2013
until September 2015 when it was acquired by Medtronic plc. Mr.
Virgilio has also held positions with Medtronic, Boston Scientific
and Constellation Brands. Mr. Virgilio received a Bachelor of Arts
in History from Colgate University.
About GI Dynamics
Founded in 2003 and headquartered in Boston, Massachusetts, GI
Dynamics, Inc. (ASX:GID) is a developer of EndoBarrier, an
endoscopically-delivered medical device for the treatment of type 2
diabetes and the reduction of obesity. EndoBarrier is not approved
for sale and is limited by federal law to investigational use only.
EndoBarrier is subject to an Investigational Device Exemption by
the FDA in the United States and is entering concurrent pivotal
trials in the United States and India.
GI Dynamics reported a net loss of $17.33 million for the year
ended Dec. 31, 2019, compared to a net loss of $8.04 million for
the year ended Dec. 31, 2018. As of Sept. 30, 2020, the Company
had $6.45 million in total assets, $4.88 million in total
liabilities, $5.32 million in redeemable preferred stock, and a
total stockholders' deficit of $3.76 million.
Wolf and Company, P.C., in Boston, Massachusetts, the Company's
auditor since 2019, issued a "going concern" qualification in its
report dated March 26, 2020 citing that the Company has suffered
losses from operations since inception and has an accumulated
deficit and working capital deficiency that raise substantial doubt
about the Company's ability to continue as a going concern.
GI DYNAMICS: Incurs $3.63 Million Net Loss in Third Quarter
-----------------------------------------------------------
GI Dynamics, Inc., filed with the Securities and Exchange
Commission its Quarterly Report on Form 10-Q disclosing a net loss
of $3.63 million for the three months ended Sept. 30, 2020,
compared to a net loss of $2.76 million for the three months ended
Sept. 30, 2019.
For the nine months ended Sept. 30, 2020, the Company reported a
net loss of $9.31 million compared to a net loss of $14.85 million
for the nine months ended Sept. 30, 2019.
As of Sept. 30, 2020, the Company had $6.45 million in total
assets, $4.88 million in total liabilities, $5.32 million in
redeemable preferred stock, and a total stockholders' deficit of
$3.76 million.
As of Sept. 30, 2020, the Company's primary source of liquidity is
its cash and restricted cash balances. GI Dynamics is currently
focused primarily on obtaining CE mark approval to allow
commercialization in select markets and on conducting its clinical
trials which will support future regulatory submissions and
potential commercialization activities. Until the Company is
successful in gaining regulatory approvals, including CE mark, it
is unable to sell the Company's product in any market at this time.
Without revenues, GI Dynamics is reliant on funding obtained from
investment in the Company to maintain business operations until the
Company can generate positive cash flows from operations. The
Company cannot predict the extent of future operating losses and
accumulated deficit, and it may never generate sufficient revenues
to achieve or sustain profitability.
GI Dynamics has incurred operating losses since inception and at
Sept. 30, 2020, had an accumulated deficit of approximately $295
million and a working capital surplus of approximately $4.6
million. The Company expects to incur significant operating losses
for the next several years. At Sept. 30, 2020, the Company had
approximately $2.7 million in cash and restricted cash.
GI Dynamics stated, "The Company expects that the cash received in
the September 2020 Financing will be sufficient to fund the
Company's operations through the later of obtaining of CE mark
approval or May 31, 2021, after which additional financing will be
required to continue the Company's operations. Further additional
financing will be required to fund operations until the Company
achieves sustainably positive cash flow. There can be no assurance
that any potential financing opportunities will be available on
acceptable terms, if at all. If the Company is unable to raise
sufficient capital on the Company's required timelines and on
acceptable terms to stockholders and the Board of Directors, it
could be forced to reduce or cease operations that may include
activities essential to support regulatory applications to
commercialize EndoBarrier, file for bankruptcy, or undertake a
combination of the foregoing.
"These factors raise substantial doubt about its ability to
continue as a going concern within one year after the date that
these consolidated financial statements are issued."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/Archives/edgar/data/1245791/000121390020036139/f10q0920_gidynamics.htm
About GI Dynamics
Founded in 2003 and headquartered in Boston, Massachusetts, GI
Dynamics, Inc. (ASX:GID) is a developer of EndoBarrier, an
endoscopically-delivered medical device for the treatment of type 2
diabetes and the reduction of obesity. EndoBarrier is not approved
for sale and is limited by federal law to investigational use only.
EndoBarrier is subject to an Investigational Device Exemption by
the FDA in the United States and is entering concurrent pivotal
trials in the United States and India.
GI Dynamics reported a net loss of $17.33 million for the year
ended Dec. 31, 2019, compared to a net loss of $8.04 million for
the year ended Dec. 31, 2018. As of June 30, 2020, the Company had
$4.80 million in total assets, $10.51 million in total liabilities,
and a total stockholders' deficit of $5.71 million.
Wolf and Company, P.C., in Boston, Massachusetts, the Company's
auditor since 2019, issued a "going concern" qualification in its
report dated March 26, 2020 citing that the Company has suffered
losses from operations since inception and has an accumulated
deficit and working capital deficiency that raise substantial doubt
about the Company's ability to continue as a going concern.
GOGO INC: Incurs $80.1 Million Net Loss in Third Quarter
--------------------------------------------------------
Gogo Inc. filed with the Securities and Exchange Commission its
Quarterly Report on Form 10-Q disclosing a net loss of $80.12
million on $66.52 million of total revenue for the three months
ended Sept. 30, 2020, compared to a net loss of $22.89 million on
$81.34 million of total revenue for the three months ended Sept.
30, 2019.
For the nine months ended Sept. 30, 2020, the Company reported a
net loss of $250.88 million on $192.08 million of total revenue
compared to a net loss of $123.65 million on $223.13 million of
total revenue for the same period during the prior year.
As of Sept. 30, 2020, the Company had $984.45 million in total
assets, $1.63 billion in total liabilities, and a total
stockholders' deficit of $647.19 million.
Third Quarter 2020 Business Aviation Financial Results: Continuing
Operations
* Total revenue decreased to $66.5 million, down 18% from Q3
2019, driven by declines in both service and equipment revenue
caused by the negative impact of COVID-19. However, total
revenue grew 22% sequentially from Q2 2020, driven by a 21%
increase in service revenue and a 25% increase in equipment
revenue.
* Service revenue decreased to $53.3 million, down 4% from Q3
2019, resulting primarily from a 3% decrease in average
monthly
service revenue per ATG unit online. Service revenue
increased
21% sequentially as ATG aircraft online (AOL) and average
monthly service revenue increased 3% and 17%, respectively.
* Equipment revenue decreased to $13.2 million, down 49% from Q3
2019, primarily due to lower unit shipments. Equipment
revenue
increased 25% sequentially from Q2 2020 as ATG shipments
increased substantially.
* Combined engineering, design and development, sales and
marketing and general and administrative expenses decreased to
$20.8 million, down 18% from Q3 2019, primarily due to cost
management actions.
* Adjusted EBITDA decreased to $30.2 million, down 9% from Q3
2019, with Adjusted EBITDA margin of 45.4%.
Q3 2020 Commercial Aviation Financial Summary: Discontinued
Operations
* Total revenue of $44 million.
* Total CA service revenue of $40.5 million declined 61% from Q3
2019 but increased 34% from Q2 2020.
* Net loss of $71.2 million, which includes $27 million of
accelerated depreciation offset by $18 million of accelerated
amortization of deferred lease proceeds, both related to the
Delta contract amendment signed in Q2 2020, and approximately
$20 million of stock-based compensation expense, inventory
reserves and Transaction expenses.
"The sale of our Commercial Aviation division to Intelsat is
transformational for Gogo and remains on track for closing. The
Transaction will give us the ability to de-lever, generate positive
free cash flow, take advantage of our substantial NOL
carryforwards, and invest in strengthening our Business Aviation
franchise," said Oakleigh Thorne, Gogo's president and CEO. "The
rapid recovery in BA is a testament to the strength of our
business."
"Our priorities are to close the Intelsat transaction, focus on
BA's long-term growth opportunities and rebuild our balance sheet,"
said Barry Rowan, Gogo's executive vice president and CFO.
"Looking ahead, we expect to de-lever and meaningfully lower our
cost of capital through a comprehensive refinancing."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1537054/000156459020052605/gogo-10q_20200930.htm
About Gogo Inc.
Gogo Inc. -- http://www.gogoair.com/-- is an inflight internet
company that provides broadband connectivity products and services
for aviation. It designs and sources innovative network solutions
that connect aircraft to the Internet, and develop software and
platforms that enable customizable solutions for and by its
aviation partners. Gogo's products and services are installed on
thousands of aircraft operated by the leading global commercial
airlines and thousands of private aircraft, including those of the
largest fractional ownership operators. Gogo is headquartered in
Chicago, IL, with additional facilities in Broomfield, CO, and
locations across the globe.
Gogo Inc. reported a net loss of $146 million for the year ended
Dec. 31, 2019, compared to a net loss of $162.03 million for the
year ended Dec. 31, 2018. As of June 30, 2020, the Company had
$1.06 billion in total assets, $1.63 billion in total liabilities,
and a total stockholders' deficit of $569.02 million.
* * *
As reported by the TCR on Sept. 4, 2020, Moody's Investors Service
changed Gogo Inc.'s outlook to positive from stable following the
company's announcement that it had agreed to sell its commercial
aviation (CA) business to Intelsat Jackson Holdings S.A.
Concurrently, Moody's affirmed Gogo's Caa1 corporate family
rating.
As reported by the TCR on March 20, 2020, S&P Global Ratings placed
all of its ratings on Gogo Inc., including its 'CCC+' issuer credit
rating, on CreditWatch with negative implications. S&P placed its
ratings on Gogo on CreditWatch with negative implications because
the company does not have sufficient liquidity cushion to absorb a
significant and prolonged cut to global air travel.
GOODYEAR TIRE: S&P Affirms 'B+' ICR, Ratings Off Watch Negative
---------------------------------------------------------------
S&P Global Ratings removed its ratings on The Goodyear Tire &
Rubber Co. from CreditWatch, where they were placed on May 13,
2020, with negative implications. The rating agency affirmed its
'B+' issuer credit rating and all issue-level ratings.
S&P said, "We expect Goodyear to continue to benefit from a
recovery in global tire demand. Despite the company's steep drop
in tire volumes in the second quarter due to the closure of many
businesses to halt the spread of COVID-19, third-quarter sales
declined only 9% versus the third-quarter 2019. As the quarter
progressed, global tire volumes improved. July unit sales were down
12% year over year, but in September they were down 5%. As
government lockdowns were lifted, economic activity rose and miles
driven improved around the world."
"In the U.S., consumer original equipment volumes rose 7% in the
third quarter due to Goodyear's strong participation in the SUV and
light truck market. We expect continued strength in this market as
dealer inventories remain significantly below average.
Nevertheless, replacement volume in the Americas were down 12%,
partly because of the temporary closing of Walmart's auto service
centers. Still, while roughly 15% of these centers remain shut, we
believe most will open by the end of the year."
"Goodyear's consumer original equipment business in Europe, the
Middle East, and Africa (EMEA) began returning to pre-COVID-19
levels by the end of the third quarter. The consumer replacement
market has been impacted in the near term by the company's more
selective distribution strategy. However, we believe this strategy
could help support the brand's value proposition with consumers and
support prices."
"The negative outlook reflects our view that there is at least a
one-third chance we will lower the ratings if Goodyear's liquidity
weakens significantly over the next 12 months due, for instance, to
another round of plant shutdowns in response to the pandemic."
"We could lower our rating on the company if declining global tire
demand, due for instance to a new wave of lockdowns to combat the
spread of COVID-19, makes higher-than-expected free operating cash
flow (FOCF) deficits likely, significantly weakening its liquidity
position on a sustained basis. Alternatively, we could lower the
rating if its debt-to-EBITDA ratio exceeded 6.5x on a normalized
basis."
"We could consider revising the outlook to stable if we come to
believe the company can sustain an FOCF-to-debt ratio of at least
3%. This could occur if Goodyear continues to streamline its cost
structure, increase its share of the high-value added markets, or
raise prices for its branded tires, expanding EBITDA margins."
GULFPORT ENERGY: Incurs $380.9 Million Net Loss in Third Quarter
----------------------------------------------------------------
Gulfport Energy Corporation filed with the Securities and Exchange
Commission its Quarterly Report on Form 10-Q disclosing a net loss
of $380.96 million on $136.17 million of total revenues for the
three months ended Sept. 30, 2020, compared to a net loss of
$484.80 million on $341.75 million of total revenues for the three
months ended Sept. 30, 2019.
For the nine months ended Sept. 30, 2020, the Company reported a
net loss of $1.46 billion on $621.81 million of total revenues
compared to a net loss of $187.60 million on $1.22 billion of total
revenues for the nine months ended Sept. 30, 2019.
As of Sept. 30, 2020, the Company had $2.37 billion in total
assets, $2.52 billion in total liabilities, and a total
stockholders' deficit of $144.78 million.
Decreased demand for oil and natural gas as a result of the
COVID-19 pandemic has put further downward pressure on commodity
pricing. In the current depressed commodity price environment and
period of economic uncertainty, the Company has taken the following
operational and financial measures in 2020 to improve its balance
sheet and preserve liquidity:
* Reduced 2020 capital spending by more than 50% as compared to
2019
* Focused on operational efficiencies to reduce operating costs;
including significant improvements in development and
completion costs per lateral foot
* Repurchased $73.3 million of unsecured notes at a discount
* Evaluated economics across our portfolio and shut-in certain
non-economical production in the second quarter of 2020
* Reduced corporate general and administrative costs
significantly through pay reductions, furloughs and reductions
in force.
Gulfport said, "Although management's actions listed above have
helped to improve the Company's liquidity and leverage profile,
continued macro headwinds including the depressed state of energy
capital markets and the extraordinarily low commodity price
environments present significant risks to the Company's ability to
fund its operations going forward. Additionally, subsequent to
September 30, 2020, on October 8, 2020, the Company's borrowing
base under its revolving credit facility was reduced for the second
time during 2020. The October redetermination reduced the
Company's borrowing base from $700 million to $580 million, thereby
significantly reducing available liquidity.
"Considering the factors above, there is substantial doubt about
the Company's ability to maintain, repay, refinance or restructure
its $2.1 billion of long-term debt. The Company elected not to
make an interest payment of $17.4 million due October 15, 2020 on
its 6.000% senior unsecured notes maturing 2024 (the "2024 Notes").
The Company elected not to make an interest payment of $10.8
million due November 2, 2020 on its 6.625% senior unsecured notes
maturing 2023 (the "2023 Notes"). The elections to defer the
interest payments do not constitute an "Event of Default" as
defined under the indentures governing the 2024 Notes and 2023
Notes (the "Indentures") if the interest payments are made within
30 days of the due date. If the Company does not make such
interest payments within such 30-day period, there will be an event
of default under the Indentures upon expiration of the grace period
and there can be no assurance that it will have sufficient funds to
pay such interest payments prior to such time."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/874499/000162828020016083/gpor-20200930.htm
About Gulfport
Gulfport Energy Corporation (NASDAQ: GPOR) --
http://www.gulfportenergy.com-- is an independent natural gas and
oil company focused on the exploration and development of natural
gas and oil properties in North America and a producer of natural
gas in the contiguous United States. Headquartered in Oklahoma
City, Gulfport holds significant acreage positions in the Utica
Shale of Eastern Ohio and the SCOOP Woodford and SCOOP Springer
plays in Oklahoma. In addition, Gulfport holds non-core assets
that include an approximately 22% equity interest in Mammoth Energy
Services, Inc. (NASDAQ: TUSK) and has a position in the Alberta Oil
Sands in Canada through its 25% interest in Grizzly Oil Sands ULC.
Gulfport Energy reported net loss of $2.0 billion for the year
ended Dec. 31, 2019 as compared to net income of $430.6 million for
the year ended Dec. 31, 2018. As of June 30, 2020, Gulfport had
$2.58 billion in total assets, $2.35 billion in total liabilities,
and $231.34 million in total stockholders' equity.
* * *
As reported by the TCR on Oct. 21, 2020, S&P Global Ratings lowered
its issuer credit rating on U.S.-based exploration and production
company Gulfport Energy Corp. to 'D' from 'CCC-'. The downgrade
reflects Gulfport's decision to not make the Oct. 15, 2020,
interest payment on its 6% senior unsecured notes due Oct. 15,
2024.
As reported by the TCR on March 4, 2020, Moody's Investors Service
downgraded Gulfport Energy Corporation's Corporate Family Rating to
Caa1 from B2. "The downgrade reflects rising financial risks amid
low natural gas prices and limited hedging protection in place for
Gulfport in 2020. This required the company to significantly
reduce investment and allow production to fall significantly in
2020 in order to avoid new borrowings," commented Elena Nadtotchi,
Moody's vice president - senior credit officer.
ICAHN ENTERPRISES: S&P Downgrades ICR to 'BB' on Higher Leverage
----------------------------------------------------------------
S&P Global Ratings said it lowered its ratings on Icahn Enterprises
L.P. (IEP), including its long-term issuer credit rating and senior
unsecured debt ratings, to 'BB' from 'BB+'. The outlook is
negative. The recovery rating on the senior unsecured notes remains
at '3', indicating its expectation for meaningful (65%) recovery in
the event of default.
IEP has sustained an LTV ratio above 45%, S&P's downside trigger,
in each of the first three quarters of 2020, and it anticipates
that the ratio will remain above that threshold during the next 12
months.
S&P said, "The increase in the LTV ratio (from close to 30% at the
end of 2019) was driven by volatility in oil and equity markets,
combined with the company's lower cash balance, which we net
against debt in our calculation of leverage. CVR Energy, one of the
company' largest investments, declined approximately 70% in value
during the first nine months of 2020 while the portfolio value of
the company's investment unit modestly declined despite the
investment of an additional $750 million, net of redemptions,
during the first nine months of 2020 (a major driver for a decline
in the company's cash balance year-to-date). Because of the
declining portfolio value and cash balance, the LTV ratio doubled
during the first nine months of 2020, leading to an LTV ratio of
approximately 60% at the end of September."
"The performance of the investment segment was negative 18.8% for
the first nine months of 2020, from negative returns of
approximately 15% during full-year 2019. In our view, further
losses in the investment segment could add pressure to the
company's LTV ratio while reducing IEP's liquidity because we view
it as a secondary source of liquidity and an offset to the
company's relatively low cash flow adequacy ratio. CVR Energy, on
the other hand, has been hurt by lower demand for refined products
as a result of the COVID-19 pandemic."
"Because the portfolio has a lower weight of listed assets
(primarily as a result of the decline in value of CVR Energy), the
company's mixed investment performance in the investment segment,
and concentration in few investments, we have revised our
assessment of the company's business risk to fair from
satisfactory. That said, we continue to view favorably the
meaningful asset liquidity derived from the investment segment, the
stability of some of the non-listed assets, and that there are no
maturities until 2022. Because of these factors, as well as our
view of IEP at the higher end of the business risk assessment
range, we include a positive comparable ratings adjustment in our
rating on IEP."
"The negative outlook reflects our expectation that IEP could have
an LTV ratio close to or above 60% during the next 12 months absent
sustained improvement in oil and equity markets."
"We could lower the ratings on IEP if the company's LTV ratio
remains above 60% during the next 12 months or if the company's
portfolio becomes more concentrated, asset quality deteriorates, or
if portfolio liquidity diminishes."
"We do not anticipate raising the ratings during the next 12 months
as LTV would need to be sustained comfortably below 45% for ratings
improvement. That said, we could revise the outlook to stable if
the LTV ratio drops comfortably below 60% and we deem that decline
as sustained while the portfolio liquidity, diversity, and asset
quality do not deteriorate."
INTERFACE INC: Moody's Assigns Ba3 CFR, Outlook Stable
------------------------------------------------------
Moody's Investors Service assigned a Ba3 Corporate Family Rating
and a Ba3-PD Probability of Default Rating to Interface, Inc.
Moody's also assigned a B1 rating to the company's new 8-year
senior unsecured notes and an SGL-2 speculative-grade liquidity
rating. The outlook is stable.
Proceeds from the new unsecured notes will be used to refinance
existing debt including the repayment of several secured bank term
loans as well as borrowings under the company's existing revolving
credit facility. The transaction improves liquidity by extending
the company's maturities and reducing required term loan
amortization at a manageable increase in cash interest costs.
Moody's assigned the following ratings:
Interface, Inc:
Corporate Family Rating at Ba3;
Probability of Default at Ba3-PD;
New senior unsecured notes due 2028 at B1 (LGD5);
Speculative Grade Liquidity Rating at SGL-2.
The outlook is stable.
RATINGS RATIONALE
The Ba3 (stable) Corporate Family Rating reflects Interface's
exposure to the cyclical corporate office and hospitality
end-markets, product concentration in carpet tile and moderate
leverage. The company benefits from its large scale, good
geographic and customer diversification, and leading market
position in modular carpet tile. The company's 2018 expansion into
luxury vinyl tile and rubber flooring through the acquisition of
Nora helps diversify its product offerings. Further, Interface's
focus on carbon neutral product offerings positions the company
well to benefit from consumers' focus on using environmentally
friendly material. Interface also benefits from solid operating
profit margins of 10%, good free cash flow that Moody's expects
will average around $40 million annually over the next 12-18
months, and good liquidity with approximately $104 million of cash
on hand and $275 million availability under its $300 million
revolving credit facility expiring in 2025.
Moody's expects that Interface will experience a significant
contraction in demand in 2020 with revenue and EBITDA declining by
20% for the full year as some customers pause on renovation
projects due to the weak economic environment. However, this
weakness will partially reverse in 2021 with EBITDA growing by
approximately 10% as customers return to renovation and
reconfiguration of office space with more workers returning to
offices because of an easing of the coronavirus pandemic. The
company will likely reach 2019 operating profit levels past 2022. A
recovery of the office market will likely take multiple years
because companies are expected to adopt more permanent and flexible
at-home and hybrid work arrangements, but Interface is likely to
benefit from office reconfigurations. Moody's expects that debt to
EBITDA will increase to approximately 4.5x by the end of 2020 and
decline to below 4.0x by the end of 2021 as the company's operating
performance improves. Moody's also expects that the company will
continue to curtail dividends during the economic downturn and
utilize free cash flow to reduce debt. Moody's expects the
publicly-traded company to maintain a reasonably conservative
financial policy including a target net-debt-to-EBITDA leverage
ratio of 2.0x (company's calculation; 2.9x as of LTM ending October
4, 2020).
The SGL-2 speculative-grade liquidity rating reflects the company's
good liquidity. Cash sources provide good coverage of the $31
million of required annual term loan amortization payable
quarterly. The remaining term loans mature in August 2023. At
times, Moody's expects the company to use its revolving credit
facility to fund working capital investments. Moody's expects
Interface will maintain good cushion within the credit facility
financial maintenance covenants that consist of a maximum 5.75x net
debt-to-EBITDA leverage ratio that steps down beginning in June
2021 and a minimum 2.25x EBITDA-to-interest ratio. Alternative
liquidity is limited as the majority of material assets are pledged
to Interface's credit facilities.
The coronavirus outbreak, the government measures put in place to
contain it, and the weak global economic outlook continue to
disrupt economies and credit markets across sectors and regions.
Moody's analysis has considered the effect on the performance of
corporate and consumer assets from the current weak global economic
activity and a gradual recovery for the coming months. Although an
economic recovery is underway, it is tenuous and its continuation
will be closely tied to containment of the virus. As a result, the
degree of uncertainty around Moody's forecasts is unusually high.
Moody's regards the coronavirus outbreak as a social risk under its
ESG framework, given the substantial implications for public health
and safety.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The stable outlook reflects Moody's expectation that the company's
earnings will improve in 2021 following a weak 2020 that will
restore credit metrics consistent with Moody's expectations for the
Ba3 rating. Specifically, the outlook reflects that debt to EBITDA
will decline to just below 4.0x by 2021 as revenue growth returns
during the second half of 2021 and operating performance at
Interface improves. The company will continue to generate positive
free cash flow and maintain good liquidity throughout this period.
Ratings could be downgraded if operating performance declines
materially due to a prolonged recession or adverse corporate office
trends, liquidity deteriorates, or if management adopts a more
aggressive financial policy. Debt/EBITDA sustained above 4.0x could
also lead to a downgrade.
Ratings could be upgraded if Interface demonstrates sustained
revenue growth and operating margin expansion that leads to
improved free cash flow. The company would also need to have a
disciplined approach to leverage reduction with Debt to EBITDA
sustained below 3.0x.
The principal methodology used in these ratings was the
Manufacturing Methodology published in March 2020.
Interface, Inc., based in Atlanta Georgia, is a global flooring
designer and manufacturer that specializes in carbon neutral carpet
tile and resilient flooring, including luxury vinyl tile (LVT) and
nora rubber flooring. The company's products are used in offices,
schools, hospitals, medical office buildings, life sciences, retail
locations, hospitality, public buildings, airports, transportation
vessels, and multi-residential facilities. The company is publicly
traded and generates annual revenue of $1.2 billion for the
last-twelve-month period ending October 4, 2020.
INTERFACE INC: S&P Assigns 'BB-' ICR; Outlook Stable
----------------------------------------------------
S&P Global Ratings assigned its 'BB-' issuer credit rating to
Atlanta-based carpet tile and flooring products maker Interface
Inc., and its 'B+' issue-level and '5' recovery ratings to the $300
million senior unsecured notes due in 2028 proposed by the company
to refinance existing debt.
High exposure to corporate office refurbishment, which has been
adversely affected by the coronavirus pandemic, could limit
Interface's growth prospects in the future. Interface faces
uncertainty over how strong a demand rebound for commercial real
estate in the U.S. will be, particularly if corporations and
educational institutions pivot to a more remote operating model.
S&P said, "We believe there is a risk of a gradual and longer term
decline of the demand for office space even after the coronavirus
pandemic is under control. We applied a negative adjustment to
reflect this risk that results in a rating one notch below the
implied anchor for Interface."
"We anticipate about 25% drop in adjusted EBITDA and 18%-19%
decline in revenues in 2020 due to reduced end-market demand amid
the coronavirus pandemic. The company generates about 46% of its
revenue from the corporate office segment and another 24% from the
education, hospitality, and retail sectors, which have also been
negatively affected by reduced demand. We assume modest
mid-single-digit sales growth in 2021 based on the expectation that
some offices will reopen and possibly reconfigure, as well as the
company's significant penetration (about 80% of sales) into the
remodel and refurbishing end markets that are typically more stable
than new construction sales."
The company has limited product diversity but higher profitability
compared to peers. Interface offers primarily carpet tile flooring
products (about 64% of sales) to commercial end markets, commanding
approximately 20% of the global carpet tile market. The company has
expanded its product mix in recent years by entering resilient
flooring with the introduction of luxury vinyl tile (LVT; about 9%
of sales) in 2017 and the acquisition of Nora rubber flooring
(about 20% of sales) in 2018. However, it still has limited product
offerings compared to bigger and more diversified peers like Mohawk
Industries Inc. and unrated Shaw Industries. Mannington Mills is
slightly smaller in size than Interface but holds a leading market
share in resilient flooring like LVT. Interface somewhat offsets
its lack of product breadth by generating relatively higher
adjusted EBITDA margin of 15.6% compared with 14.3% for Mohawk in
2020 on a rolling 12-month basis. The company's profit margins tend
to be stable due to its strong presence in the Architects and
Designer community, which is less price sensitive.
Interface's flooring products are carbon neutral, which increases
its competitiveness among environmentally conscious customers and
investors. Interface is a market leader in environmental
sustainability by offering carbon-neutral flooring products.
Interface sources recycled yarn and post-consumer fibers in the
production of carpet tiles and LVT. In addition, its Nora rubber
flooring products are certified with environmentally friendly
aspects. While sourcing recycled materials could mitigate exposure
to the price volatility of crude oil, Interface has high
concentration with suppliers of raw materials (including a single
supplier of LVT), which could cause increased operational
disruptions and increase manufacturing costs.
S&P said, "The stable outlook on Interface reflects our expectation
of mid-single-digit percent revenue growth and increasing EBITDA
margins, improving adjusted debt to EBITDA from over 4x in 2020 to
mid 3x range by the end of 2021. Our expectation of improved
adjusted leverage is also driven by sizable debt repayments and
conservative dividend distributions in the next 12 months. We
believe that Interface's strong penetration in the repair and
remodeling end markets, as well as exposure to growing segments in
LVT, can mitigate some of the headwinds of the slowdown in
commercial investments and economic recovery."
S&P could downgrade the company over the next 12 months if EBITDA
margins deteriorate by 200 basis points (bps) or annualized revenue
growth slows down below 2.5% while keeping its debt repayment
schedule constant. This could happen if the global economic
recovery stalls amid a resurgence in coronavirus cases, affecting
commercial office space demand. This will result in:
-- Leverage approaching 5x; or
-- Near break-even discretionary cash flow (free operating cash
flow after debt amortization payments).
An upgrade is unlikely over the next year. However, this could
happen if the demand for commercial office space rebounds faster
than S&P expects. This could also happen if the company
successfully integrates the recent Nora acquisition and increases
its penetration into noncorporate office segments such as health
care, life sciences, education, and infrastructure. Additionally,
together with end-market diversification S&P would expect Interface
to increase its share of LVT sales. Under this scenario S&P expects
Interface to sustain:
-- Adjusted leverage trending toward 3x;
-- EBITDA margins above 14%;
-- Positive discretionary cash flow for debt repayment.
JACKSON CITY: Moody's Affirms Ba2 Rating on $198MM Revenue Bonds
----------------------------------------------------------------
Moody's Investors Service has affirmed the Ba2 rating on Jackson
(City of) MS Water & Sewer Enterprise's $198 million of outstanding
water and sewer revenue bonds. The outlook has been revised to
stable from negative.
RATINGS RATIONALE
The Ba2 rating affirmation reflects the water and sewer system's
stable service area with low incomes and high poverty. The rating
is also driven by the receipt of nearly $60 million in one-time
settlement money, which materially improve the system's liquidity
position and will allow it more solid footing to address other
significant operating challenges. These challenges include the
implementation of an effective billing and collection system and
the management of a very large consent decree in addition to
substantial capital needs that will continue to create narrow
operating margins.
RATING OUTLOOK
The stable outlook reflects its expectation that the systems newly
improved cash position will eliminate the need for further
operating loans from the general fund and stem the recent pattern
of operating declines. Moody's also anticipates that the city will
increase its revenue base to enable it to improve debt service
coverage and produce net revenues sufficient to provide 1 times
debt service.
FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGS
- Effective implementation of billing and collection system that
efficiently captures revenues
- Finalization and material reduction of the consent decree
- Improved financial operations resulting in substantively
strengthened debt service coverage by current net revenues
FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGS
- Downgrade of the city's GO rating as a result of material
weakness of liquidity or reserves
- Loss of major customers without offsetting reduction of costs
- Inability to generate current net revenues sufficient to pay
debt service
LEGAL SECURITY
The city's water and sewer system revenue bonds are secured by the
net revenues of the Jackson water and sewer system.
USE OF PROCEEDS
Not applicable
PROFILE
Jackson is the state capital of the State of Mississippi (Aa2
stable). The water and sewer system serves an area of approximately
150 square miles, including the City of Jackson (Baa3 stable) and
portions of Hinds, Rankin, and Madison counties.
METHODOLOGY
The principal methodology used in these ratings was US Municipal
Utility Revenue Debt published in October 2017.
LAS VEGAS MONORAIL: Bankruptcy Sale Stalled After DOJ Objects
-------------------------------------------------------------
Daniel Gill pf Bloomberg Law reports that a bankruptcy judge
delayed approving bankrupt Las Vegas Monorail Co.'s $24 million
deal to sell its assets to the city's convention authority, seeking
more evidence that all priority claims would be paid in full.
Judge Natalie M. Cox's decision to postpone the approval, made
Tuesday, November 10, 2020, during a hearing at the U.S. Bankruptcy
Court for the District of Nevada, comes after the U.S. Trustee
raised objections to the deal.
The judge agreed with the Justice Department bankruptcy watchdog's
contention that the sale terms appear to pay some of the Monorail's
creditors.
About Las Vegas Monorail Company
Las Vegas, Nevada-based Las Vegas Monorail Company, organized by
the State of Nevada in 2000 as a nonprofit corporation, owns and
manages the Las Vegas Monorail. The monorail is a seven-stop,
elevated train system that travels along a 3.9-mile route near the
Las Vegas Strip. LVMC has contracted with Bombardier Transit
Corporation to operate the Monorail. Though it benefits from its
tax-exempt status due to being a nonprofit entity, LVMC claims to
be the first privately-owned public transportation system in the
nation to be funded solely by fares and advertising. LVMC says it
receives no governmental financial support or subsidies.
LVMC filed for Chapter 11 bankruptcy protection (Bankr. D. Nev.
Case No. 10-10464) on Jan. 13, 2010. It disclosed $395,959,764 in
assets and $769,515,450 in liabilities as of the petition date.
LVMC has tapped Garman Turner Gordon LLP as its bankruptcy counsel,
Alvarez & Marsal North America, LLC as financial advisor, and
Stradling Yocca Carlson & Rauth and Jones Vargas as special
counsel. Gordon Silver assists LVMC in its restructuring effort.
In April 2010, bondholder Ambac Assurance Corp. lost in its bid to
halt the bankruptcy after U.S. Bankruptcy Judge Bruce A. Markell
ruled that monorail isn't a municipality and is therefore entitled
to reorganize in Chapter 11. U.S. District Judge James Mahan in
Reno upheld the ruling in October 2010.
LIFE UNIVERSITY: Moody's Affirms Ba3 Rating on Series 2017A/B Bonds
-------------------------------------------------------------------
Moody's Investors Service has affirmed the Ba3 ratings on Life
University's (GA) Series 2017A and Federally Taxable Series 2017B
revenue bonds. The bonds were issued through the Marietta
Development Authority (Georgia), currently with $95 million
outstanding. The outlook is revised to stable from negative.
RATINGS RATIONALE
The revision of Life University's (LU) outlook to stable from
negative reflects the combination of improved operating performance
and resolution of accreditation probation. Steady net tuition
revenue growth and heightened expense discipline should sustain the
recent improvement in operating cash flow margins. LU's operating
cash flow margin strengthened to 16.1% in fiscal 2020 and 15.0% in
fiscal 2019, despite impacts from the coronavirus pandemic,
providing debt service coverage of approximately 1.8x each year.
Favorably, The Council on Chiropractic Education (CCE) removed the
probation sanction relating to LU's accreditation status in April
2020 reflecting the resolution of CCE's questions regarding LU's
program completion rates. Over three-quarters of LU's student
charges are derived from its College of Chiropractic students.
The affirmation of LU's Ba3 rating incorporates its relatively
small scale as a niche provider of chiropractic education, with
aims to strategically grow and diversify its enrollment and revenue
mix to include more undergraduate programming while navigating in a
very competitive student market environment. LU has modest pricing
power in its core chiropractic programs, and faces weaker pricing
flexibility for undergraduate programs, evidenced by rising student
aid support. Life University is highly tuition dependent, with
student charges comprising 97% of operating revenue, and students
having a high reliance on federal financial aid programs. Modest
wealth and liquidity, with fiscal 2020 cash and investments at $23
million and 109 monthly days cash on hand, in addition to very
limited gift support, restrain LU's reserve growth and long-term
financial flexibility, contributing to poor strategic positioning.
Debt levels are high, with debt to revenue of over 1.2x and debt
service consuming 9% of operations. However, favorable operating
cash flow and a fixed rated debt structure currently support debt
affordability.
Moody's regards the coronavirus outbreak as a social risk under its
ESG framework given the substantial implications for public health
and safety. For fall 2020, management reports meeting enrollment
targets with classes delivered in multiple methods to meet social
distancing protocols. Housing occupancy was decreased to single
occupancy only. LU is currently planning to return to in-person
class for winter 2021. As LU is on a quarter system, the university
has greater ability to pivot operations from in-person to remote
learning. Favorably, fiscal 2021 operations are currently budgeted
to be on par with fiscal 2020.
RATING OUTLOOK
The stable outlook reflects its expectations that Life University
will maintain its improved level of operating performance, with
ongoing fiscal discipline to meet more than ample debt service
coverage, with minimal use of reserves and no borrowing plans.
FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGS
- Material improvement in strategic positioning, reflected by
continued enrollment diversification, growing net tuition revenue,
and overall improvement in wealth and financial flexibility
- Sustained improvement in operating performance and debt
affordability
FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGS
- Deterioration of student demand, given very high reliance on
student generated revenue; further accreditation problems that
could negatively impact student demand
- Inability to sustain sufficient operating performance to
generate debt service coverage above 1x (on a Moody's adjusted
basis)
- Material additional debt given already high leverage, or
reduction in headroom on debt covenants or covenant violations
LEGAL SECURITY
The Series 2017A and Series 2017B bonds are secured by a gross
revenue pledge, first mortgage pledge of university real property
and cash funded debt service reserve fund equal to maximum annual
debt service (currently funded at $7.0 million). A small portion of
the campus near the student housing funded by a portion of the
bonds is carved out of the mortgage pledge to allow the university
to support a future public-private partnership or alternative
finance mechanism for additional student housing facilities.
Covenants include: rates and charges sufficient to meet university
operations and payments under the Loan Agreement; debt service
coverage of 1.2x; liquidity covenant of at least 80 days cash on
hand; long-term indebtedness ratio of at least 0.15x; and trades
payable of at least 90% of payables at less than 60 days. As of
June 30, 2020, the university's exceeded all covenants, with 1.54x
coverage, 118.6 days cash on hand, indebtedness ratio of 0.24x, and
trade payables at 99.9%. Failure to meet the required covenants
would trigger the university's need to engage a consultant. Failure
to meet the required covenants in any two consecutive calendar
quarters would trigger the university's requirement to transfer all
Revenues to the Trustee on a daily basis.
PROFILE
Life University was founded in 1974 as a private university in the
Atlanta suburb of Marietta, Georgia. The majority of students are
enrolled in its doctoral degree program in chiropractic. The
university also offers undergraduate and graduate programs in
health and wellness-oriented fields. In fiscal 2020, Life generated
operating revenue of $74 million and enrolled 2,671 full-time
equivalent (FTE) students as of fall 2020.
METHODOLOGY
The principal methodology used in these ratings was Higher
Education published in May 2019.
LOUISIANA LOCAL: Moody's Lowers $27MM Revenue Bonds to Ba3
----------------------------------------------------------
Moody's Investors Service downgraded to Ba3 from Ba2 the ratings on
Louisiana Local Government Environment Facilities and Community
Development Authority's approximately $27,000,000 Louisiana Local
Government Environment Facilities and Community Development
Authority Student Housing Revenue Bonds (Provident Group - ULM
Properties LLC - University at Monroe Project), Series 2019A and
Taxable Student Housing Revenue Bonds (Provident Group - ULM
Properties LLC - University of Louisiana at Monroe Project) Series
2019B (collectively the "Bonds"). The outlook is negative. This
rating action concludes the review for possible downgrade initiated
on September 8, 2020.
RATINGS RATIONALE
The Ba3 rating is based on the limited availability of adequate
capital interest funds to mitigate the revenue shortfall that
results from the delayed construction completion of the project for
the inaugural Fall 2020 semester and the continued uncertainty
around when the project's second building will be completed and
leased up. To date only one of the two project buildings is online
and leased up.
Although the capital interest fund balance is sufficient to cover
the January 1, 2021 debt service payment, without increases in
occupancy and lease up of the second building, the project may
require a debt service reserve fund tap in order to cover a portion
of the July 1, 2021 debt service.
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 of the crisis on the
student housing project and consequently the bonds.
OUTLOOK
The negative outlook is based on the continued uncertainty around
building completion and lease up which may continue to adversely
affect the financial performance of the project. The outlook also
incorporates the potential adverse impact the COVID outbreak may
have on occupancy.
FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGS
- Upgrade would be unlikely in the near term due to construction
and initial lease up risk.
FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGS
- Prolonged construction delays or failure to lease up at the
expected occupancy and rent levels.
- Weak financial performance as measured by low and/or declining
debt service coverage levels.
- Withdrawals from the debt service reserve fund.
LEGAL SECURITY
Project revenues constitute the primary source of revenue for the
rated debt. The bond trustee will also have a security interest in
various funds, such as the Bond Fund, Debt Service Reserve Fund,
and the Repair and Replacement Fund, as provided by the Trust
Agreement.
USE OF PROCEEDS
Not Applicable
PROFILE
Provident Group - ULM Properties, LLC, is a single member LLC of
which Provident Resources Group Inc., a non-profit corporation is
the sole member. The Borrower was formed for the purpose of
developing, constructing, owning and operating student housing. The
Borrower will issue the tax-exempt bonds to construct the Project
and fund the required reserves under the Trust Indenture.
METHODOLOGY
The principal methodology used in these ratings was Global Housing
Projects published in June 2017.
MERITAGE HOMES: Fitch Ups LT IDR to BB+; Alters Outlook to Stable
-----------------------------------------------------------------
Fitch Ratings has upgraded the ratings of Meritage Homes
Corporation (Meritage, NYSE: MTH), including the company's
Long-Term Issuer Default Rating (IDR), to 'BB+' from 'BB'. The
Rating Outlook has been revised to Stable from Positive.
The upgrade to 'BB+' and Stable Outlook reflects Fitch's
expectation that the company's net debt to capitalization will
remain sustainably in the 20%-30% range, in line with management's
target, which is considerably below Fitch's positive rating
sensitivity at the 'BB' level of sustainably below 40%. Fitch's
view is supported by the company's efforts to reduce debt and
management's willingness to slow housing starts and land investment
during recent pauses in housing market growth. The company's strong
execution of its entry-level/first-time move-up buyer focused
strategy, leading to improving profitability and above-market
growth, also demonstrate credit strength.
Future positive rating action may be considered if Fitch believes
the company can generate consistently and meaningfully positive
CFFO through expansionary and recessionary housing environments,
similar to many investment-grade peers. Fitch currently expects the
company to generate limited CFFO in the near to intermediate term
as it expands community count. Strong execution of the company's
spec strategy in both strong and weak housing markets and
successful build-out of its new communities, leading to EBITDA
margins consistently in the mid-teens with limited land impairment
charges would also demonstrate further credit strength. Improved
geographic diversity through successful entry into new markets
would also improve the credit profile.
KEY RATING DRIVERS
Conservative Credit Metrics: Meritage intends to maintain a net
debt/capitalization ratio of 20%-30% and has managed this ratio in
that range since year-end 2019 (according to Fitch calculations
which considers $75 million of cash as not readily available for
seasonal working capital use). The company had managed its net
debt/capitalization in the 40%-45% range for much of the housing
upcycle prior to deleveraging by retiring debt and building equity
from 2018 to 2020. Fitch-measured net debt to capitalization was
18.2% and total debt to operating EBITDA was 1.8x as of Sept. 30,
2020, in line with or stronger than many 'BBB-' rated homebuilding
peers.
Fitch expects the company to be able to comfortably manage its
balance sheet in line with its stated targets and Fitch's rating
sensitivities during the rating horizon despite its intention to
aggressively rebuild and grow its community count, which will
require significant land and development investment. Fitch believes
that the company's capitalization ratios have sufficient cushion to
support expansionary activity and absorb modest impairment charges
without negative rating action.
Speculative Building Activity: Meritage has significantly increased
its spec building activity in order to facilitate delivery of
entry-level homes on an immediate need basis in recent years. Homes
closed from spec inventory accounted for 71% of closings in 3Q20.
Fitch generally views high spec activity as a credit negative, all
else equal, as rapidly deteriorating market conditions could result
in standing inventory and consequently sharply lower margins and/or
impairment charges, both of which could negatively impact credit
metrics. Fitch believes the company has managed its spec building
activity appropriately, as the company slowed housing starts in the
early stages of the pandemic, but the strategy remains untested
during a more prolonged housing downturn.
Aggressive Growth Strategy: Fitch expects Meritage to significantly
increase land and home inventory investment for the remainder of
2020 and into 2022 in order to facilitate the company's planned
community expansion to 300 by early- to mid-2022, up from 204
active communities at end-3Q20. The community count expansion plans
are supported by strong recent sale trends, which have led to
faster than anticipated community close-outs.
Fitch views the pace of growth as risky due to the uncertain
macroeconomic backdrop heading into 2021, which could lead to
impairment charges if the housing market were to slow meaningfully,
and the significant cash investment this build-out will require.
These risks are partially offset by the company's relatively low
owned land supply (2.5 years) and the fact that the company
currently controls all land necessary for its growth to 300 active
communities. In addition to the increase in community count,
management also indicated that it is looking to enter new markets
in the near term. Meritage's atypically high levels of cash and
Fitch's forecast for strong EBITDA generation in 2021 will enable
to the company to execute on its strategy without issuing new
debt.
Limited CFFO Generation Expected: Fitch expects the company will
generate roughly neutral CFFO despite its base case expectation for
strong delivery growth in 2021 with EBITDA margins in the 13%-14%
range due to the significant inventory investment required for
planned community count expansion. CFFO generation should trend
positively after 2021 after active communities approach the
company's target. The company generated more limited CFFO than most
investment-grade peers in the last few years mostly due to the
company's lower EBITDA margins. Meritage's expanding margins due to
strong execution on its entry-level spec strategy could enable the
company to generate similar CFFO to peers in the long-term.
Land Position: As of Sept. 30, 2020, Meritage controlled 47,875
lots, of which 58% were owned and the remaining lots controlled
through options or bulk purchases. Based on LTM closings, it
controlled 4.4 years of land and owned roughly 2.5 years of land.
The company's owned lot position is approximately in line with the
average homebuilder in Fitch's coverage and is within the company's
internal target of four to five years of supply.
Moderate Geographic and Product Diversity: Meritage operates in 18
markets across nine states as of YE19, with particularly heavy
exposure to Texas, Arizona, California and Florida. The company is
less geographically diversified than larger investment-grade peers
such as D.R. Horton (BBB/Stable) and Lennar (BBB-/Stable), which
have leading market shares in dozens of markets nationwide.
However, Meritage's multiregional exposure provides more diversity
than lower-rated or privately held peers. Fitch views geographic
diversity for homebuilders favorably since it may help insulate a
builder from a local or regional housing downturn.
The company historically focused on the trade-up market, the
strongest segment during the earlier part of this upcycle. However,
Meritage's focus is now solely on the entry-level and first-time
move-up segments as it winds down remaining noncore communities.
About 60% of active communities were targeted toward entry-level
buyers on average during 3Q20. The company plans on targeting a
65%/35% split between entry-level and first move-up product,
respectively.
Leadership Change Ratings Neutral: The company announced the
retirement of co-founder and current CEO Steven Hilton and the
appointment of Phillippe Lord as CEO, effective Jan. 1, 2021. Mr.
Lord has been the company's chief operating officer since 2015 and
has been with the company since 2008. Mr. Hilton served as CEO
since co-founding the company in 1985 and will transition to
executive chairman of Meritage's board of directors after
retirement. Fitch does not anticipate a change in the company's
operational strategy or capital allocation priorities due to the
leadership change and this, therefore, has no impact on current
ratings.
DERIVATION SUMMARY
Meritage's ratings reflect the company's strong credit metrics,
moderate geographic and product diversity, healthy liquidity
position and execution of its business model in the current housing
environment. The ratings also consider the company's aggressive
shift toward a more speculative homebuilding strategy in the past
two years driven by its emphasis on the entry-level/first-time
buyer, which Fitch views as a riskier approach to homebuilding.
Meritage's credit metrics are stronger compared to M/I Homes, Inc.
(BB-/Stable) and are in line with several 'BBB-' rated peers. Fitch
expects Meritage's net debt to capitalization ratio and total debt
to operating EBITDA to be roughly in line with investment grade
peers such as Pulte (BBB-/Stable) and Lennar (BBB-/Stable) during
the rating horizon. These peers' breadth of leading positions in
local markets, strong profitability and Fitch's expectation for
consistently positive CFFO are credit positives relative to
Meritage. M.D.C. Holdings (BBB-/Stable) has similar credit metrics,
scale, profitability and cash flow characteristics as Meritage, but
MDC's historically short land position, build-to-order strategy and
very conservatively managed balance sheet through housing cycles
are strengths relative to Meritage.
KEY ASSUMPTIONS
-- Total U.S. single family housing starts increase 7% and new
home sales increase 15% in 2020.
-- Fitch expects Meritage's home deliveries to increase about 24%
and ASP to decline about 3%, leading to 21% revenue growth in 2020.
EBITDA margins increase by around 270 bps.
-- Fitch expects strong year over year delivery growth in 2021
due to strong order backlog, partially offset by Fitch's
expectation for absorption pace to moderate next year compared to
the pace in 2020.
-- Fitch's rating case assumes some impairment charges to land
holdings in 2021 due to the forecasted moderation in sales pace.
-- Meritage generates positive CFFO in 2020 and slightly positive
to slightly negative CFFO in 2021 as the company resumes more
aggressive land acquisition, development and housing start
activity.
-- Net debt to capitalization remains below 30% and total
debt/operating EBITDA situates in the 1.5x to 2.0x range during the
rating horizon.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- The company consistently maintains conservative credit
metrics, such as net debt to capitalization below 35% or total debt
to operating EBITDA below 2.0x;
-- Fitch's expectation that Meritage can generate consistently
and meaningfully positive CFFO through expansionary and
recessionary housing environments, consistent with many investment
grade homebuilding peers, which could result from more consistent
land and development spending as the company grows into a mature
homebuilder;
-- The company further demonstrates strong execution of its spec
build strategy and community count expansion, as demonstrated by
limited land impairment charges and low volatility in operating
margins, with EBITDA margin percentages maintaining in the low- to
mid-teens;
-- Meritage improves geographic diversity through successful
entry into new markets;
-- Management commits to an investment grade rating.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- There is a sustained erosion of profits due to poor execution
of the company's strategy, leading to consistently lower EBITDA
margins and meaningful and continued loss of market share,
resulting in weakened credit metrics, such as net/debt to
capitalization sustaining above 40%.
-- The company maintains an aggressive land and development
spending program that leads to consistently negative CFFO, higher
debt levels and a diminished liquidity position.
LIQUIDITY AND DEBT STRUCTURE
Solid Liquidity: On Sept. 30, 2020, Meritage had $610 million of
cash and $705 million of borrowing availability under its $780
million revolver that will mature in July 2023. The credit facility
also includes an accordion feature that allows the company to
increase the facility to $880 million, subject to additional lender
commitments. The company drew $500 million under its revolver in
1Q20 as a precautionary measure during the coronavirus pandemic
uncertainty, which was primarily held as cash on the balance sheet
and has since been repaid. Fitch believes the company has ample
liquidity to manage fixed charges and land acquisition activity.
The company's nearest maturity is in April 2022, when a $300
million note comes due. The company redeemed its 2020 $300 million
7.15% senior notes ahead of the maturity date.
SUMMARY OF FINANCIAL ADJUSTMENTS
Historical and projected EBITDA is adjusted to add back non-cash
stock-based compensation and interest expense included in cost of
sales and also excludes impairment charges and land option
abandonment costs.
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF
RATING
The principal sources of information used in the analysis are
described in the Applicable Criteria.
ESG CONSIDERATIONS
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of '3'. This means 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.
NETFLIX INC: S&P Alters Outlook to Positive, Affirms 'BB' ICR
-------------------------------------------------------------
S&P Global Ratings revised its outlook to positive from stable and
affirmed all its ratings on Netflix Inc., including its 'BB' issuer
credit rating.
S&P said, "We are revising our outlook on Netflix to positive from
stable because the company's free operating cash flow (FOCF)
trajectory is better than we had forecast. We now expect FOCF
deficits to be smaller in 2021 even as content production returns
to more normal levels (below $1 billion in 2021 compared to our
prior forecast of $1 billion-$2 billion of deficits). The revision
is due to our assumptions that while content spending will grow
rapidly, it will do so from a lower base set in 2020. The better
FOCF trajectory is also based on our expectations that despite
increasing competition in streaming video on demand (SVOD)
services, Netflix will generate higher revenues than we had
forecast, fueled by periodic price increases and international
subscriber growth, enabling it to continue improving margins."
The improving FOCF trajectory is driving better credit metrics.
S&P said, "Our FOCF expectations over the next two years are much
improved due to strong revenue growth and margin expansion, coupled
with lower cash content costs due to production delays caused by
COVID-19. The pandemic resulted in industrywide production delays
over the past several months and while production has resumed, we
expect it will take time return to pre-pandemic levels. As a
result, we are reducing our forecast for cash content spending by
an additional $1 billion in 2020 compared to our previous forecast
in July. Additionally, while we expect significant growth in
content spend in 2021, we now expect it to be between $18
billion-$18.5 billion compared to our previous $19 billion
forecast. Based on these revisions, we now expect FOCF deficits in
2021 to be less than $1 billion. Improved FOCF will reduce
Netflix's funding needs resulting in less debt, lower leverage, and
a faster-than-expected path toward remaining FOCF break-even."
Financial discipline will determine the path of Netflix's credit
metric improvement.
Netflix's path toward sustained credit metric improvements, and
specifically toward sustained positive free cash flow, depends more
on its level of financial discipline, especially with respect to
content investments, than the pace of overall growth. If Netflix
manages the streaming video ecosystem without materially increasing
its current pace of programming spending, S&P would expect it to
reach positive free cash flow even if its subscriber growth slows.
However, if cash programming spending grows substantially to
maintain higher growth rates, it could reverse its recent credit
metric and FOCF improvement.
Over-the-top adoption is accelerating, driving stronger operating
performance.
Consumers are spending more time at home due to the COVID-19
pandemic, resulting in increased engagement with video content.
This trend benefits the overall streaming video industry, including
Netflix, the industry leader. In the first nine months of 2020,
Netflix added 28 million subscribers compared with 19 million in
the same period last year. S&P now forecasts over 34 million net
subscriber additions for 2020, compared to 28 million in 2019.
The accelerated subscriber growth is driving stronger-than-expected
operating performance because Netflix is driving significant
operating leverage.
S&P said, "We now expect adjusted EBITDA margins to expand by about
450 basis points in 2020, largely due to improved marketing
efficiency and no expectation for incremental content spending
despite higher revenue expectations for 2020. While we don't expect
the same level of operating improvement in 2021 as subscriber
growth slows and content investments ramp back up, the company's
financial metrics will be materially better than we had previously
forecast."
Revenue growth of about 18%-20% in 2021, with 70%-75% from
additional subscribers and the rest from price increases.
Cash content spending of $18 billion-$18.5 billion in 2021.
Adjusted EBITDA margin increasing to 22%-22.5% in 2021 from
21%-21.5% in 2020. Margin expansion will slow in 2021 as content
spend normalizes, but still better than previously forecasted due
to strong margin growth in 2020.
S&P now expects FOCF deficits of about $500 million-$750 million in
2021 as production ramps back up.
S&P said, "The positive outlook reflects our expectations that
Netflix's FOCF trajectory toward break-even is significantly
improved due to rapidly improving margins and slower-than-expected
growth in content spending. It is also based on our expectation
that, despite a return to normal production levels and increased
competition from emerging SVOD services, FOCF deficits will be
below $1 billion in 2021 and will improve toward break-even in the
next few years."
S&P could raise the rating if:
-- Netflix maintains a strong leadership position in the OTT
marketplace.
-- It generates robust EBITDA growth.
It has FOCF deficits of less than $1 billion with the expectation
that FOCF will continue to improve toward break-even. This would
demonstrate the company's operating leveraging from its expanding
subscriber base and its financial discipline on programming spend,
despite the increasing number of SVOD competitors.
S&P could revise the outlook to stable if EBITDA margin expansion
slows and FOCF deficits remain above $1 billion. This would likely
occur if:
-- Increased competition from new and existing OTT platforms
dampens subscriber growth.
-- Content and marketing investments are less effective at
retaining subscribers.
-- The company reverses its disciplined approach to programming
spending and accelerates content spending beyond subscriber cash
flow.
NEXTERA ENERGY: S&P Affirms 'BB' ICR on Asset Acquisition Plan
--------------------------------------------------------------
S&P Global Ratings affirmed its 'BB' issuer credit rating on
NextEra Energy Partners L.P. (NEP) and its 'BB' issue-level rating
on NEP's senior unsecured debt following the company's announcement
of its plans to acquire a 40% interest in a 1 GW portfolio of
renewable assets (Pine Brooke) and 100% interest in a solar plus
storage project in Arizona.
NEP also announced a $2 billion convertible equity portfolio
financing (CEPF) with certain infrastructure funds, part of which
it will use to fund these acquisitions.
S&P expects the acquisitions of the Pine Brooke portfolio and
Wilmot solar plus storage project will enhance NEP's contractual
profile and geographic diversity. In keeping with its 2020 growth
plan, NEP plans to acquire the following assets from NextEra Energy
Resources LLC's (NEER) portfolio:
40% interest in a 1 GW portfolio of seven renewable assets (Pine
Brooke portfolio). NEER has offered a 50% stake in this portfolio
to KKR and a 40% stake to NEP; KKR and NEP would pay the same
purchase price for their interests. The portfolio includes three
wind farms and four solar projects.
Upon completion, S&P expects these acquisitions to add $50 million
to $55 million to NEP's EBITDA (contributing 6% of total EBITDA on
a consolidated basis). The proposed portfolio enhances NEP's
current contractual profile. With a remaining life of 19 years, the
contract structure is favorable compared to NEP's current remaining
contract life of 15 years. This portfolio also improves the
company's geographic footprint.
S&P said, "We now assess our ratings on NEP ratings under our
corporate methodology. We previously rated NEP under our project
developer methodology, which incorporated the weighted average
quality of distributions from its subsidiaries. Central to the
project developer analysis is our view that a developer holds
itself separate from its subsidiaries, viewing them only as
economic investments. Embedded in our deconsolidation
treatment--where we incorporate only parent-level recourse debt in
our financial analysis--was our assessment that the developer will
extend limited support to a subsidiary, mostly through capital
allocation decisions in the subsidiary's growth investments."
"Importantly, if a developer extends sustained support to a
subsidiary, we consider it no different from a corporate credit and
assess its financial risk profile on a consolidated basis. NEP's
increased reliance on CEPFs as a preferred mode of financing
growth, in our view, extends absolute support to these investments.
We view these instruments as parent level quasi-equity because upon
conversion, this would materially dilute NEP's market float. As a
result, NEP is now rated under our corporate methodology. Our
business risk profile of satisfactory and financial risk profile of
aggressive is unchanged."
Even on a consolidated basis, S&P views convertible equity
portfolio financing (CEPF) joint ventures (JVs) as potentially cash
flow interruptible in the longer run. NEP expects to fund the
acquisitions with proceeds from a new CEPF plus additional tax
equity proceeds from its existing Baldwin and Northern Colorado
repowering projects
NEP would place Wilmot into a tax equity with the Baldwin and
Northern Colorado repowering wind assets.
NEP would combine these eight assets with four existing assets,
including Genesis, to create a portfolio to support the CEPF
investment.
S&P said, "We view CEPF with 100% buyout provision in common units
as potentially interruptible to NEP's cash flows in the long run.
If NEP is unable to or elects not to buy out the funds' interests,
cash distributions flip to the investor (85%-99% to the funds).
Currently, we view these financings as favorable when compared to
traditional intermediate hybrid financings. In the longer run,
however, we will continue to monitor NEP's progress on the buyouts
as any delay would flip cash flows to the counterparties and would
cause significant deterioration in NEP's credit quality. We also
think these structures expose NEP to market risks if its unit price
is depressed due to conditions unrelated to the company's
performance over an extended period of time. While no conversions
have yet occurred, we expect the first likely in December 2021. We
discuss the proposed terms of the current CEPF below."
2020 CEPF overview.
NEP is entering into a $1.1 billion, 10-year CEPF with certain
infrastructure funds at a 6.75% unlevered return that it can draw
over the next two years. Of the $1.1 billion, NEP expects to draw
$750 million in 2020, $350 million in 2021, and an additional $900
million commitment to fund future growth as it expands its
portfolio. Along with $125 million of cash available from
operations, NEP plans to use these funds for:
-- $325 million for the 2020 acquisitions; and
-- $550 million to pay off the outstanding revolver balance by
year-end.
For the first $1.1 billion draw, NEP expects to sell interest in
Genesis, Northern Colorado, Baldwin, Elk City and the proposed
acquisitions (Pine Brooke and Wilmot). For the remaining $900
million, it proposes to pledge future assets. The four existing
assets contribute about 15% to total EBITDA. These assets were
unlevered previously.
S&P said, "We don't anticipate these acquisitions will materially
improve the financial risk assessment considering the annual cost
of additional CEPFs (around $13 million annually). We anticipate
the transactions will add about $26 million to NEP's FFO on
completion. We expect additional CEPF costs of $30 million annually
related to CEPF distributions and funds borrowed repay the
revolver."
"The stable outlook reflects our expectation that NEP's portfolio
will continue to operate under long-term contracts with mostly
investment-grade counterparties and generate predictable cash flows
to support its holding-company debt obligations. We expect the
company to continue to make acquisitions in line with the existing
portfolio and support the current business risk profile. We also
expect adjusted debt to EBITDA of around 4x over the next three
years and adjusted funds from operations (FFO) to debt at around
20%."
"We would consider lowering the rating if adjusted debt to EBITDA
increases above 5x consistently and if the ratio of FFO to debt
consistently falls below 14% over our outlook period. This could
result from significantly lower cash flows from the company's
projects as a result of worse operating performance and asset
reliability, higher-than-expected operating costs, unfavorable
weather events, or increased leverage at the corporate level. Given
its roughly 40-45% reliance on wind-generation-based cash flows,
resource risk could be yet another reason for underperformance that
could result in a downgrade."
"Although unlikely at this time, we would consider upgrading NEP if
we expect adjusted debt to EBITDA to remain below 4x and if
adjusted FFO to debt improves and remains above 22% on a consistent
basis. We could also raise ratings over time if the company's
portfolio becomes highly diversified, resulting in a better
business risk profile. Among other requirements, this would need
reduced reliance on distributions from NET Holdings, the largest
asset in the portfolio, and a degree of certainty around future
convertible equity portfolio financings."
NORTHERN OIL: Incurs $233 Million Net Loss in Third Quarter
-----------------------------------------------------------
Northern Oil and Gas, Inc., filed with the Securities and Exchange
Commission its Quarterly Report on Form 10-Q disclosing a net loss
of $233 million on $47.32 million of total revenues for the three
months ended Sept. 30, 2020, compared to net income of $94.38
million on $233.88 million of total revenues for the three months
ended Sept. 30, 2019.
For the nine months ended Sept. 30, 2020, the Company reported a
net loss of $763.92 million on $502.13 million of total revenues
compared to net income of $31.62 million on $413.39 million of
total revenues for the nine months ended Sept. 30, 2019.
As of Sept. 30, 2020, the Company had $1.02 billion in total
assets, $1.11 billion in total liabilities, and a total
stockholders' deficit of $83.73 million.
"Northern's business model continues to deliver on its 2020 plan,"
commented Nick O'Grady, Northern's chief executive officer. "Costs
were down, production was up and we generated meaningful free cash
flow while continuing to strategically bolt on high return assets.
As of November 6, 2020, our debt is already down $160 million
year-to-date, and our 2021 outlook continues to be focused on
delivering more free cash flow, debt reduction and taking advantage
of market distress. Despite the industry challenges, we continue
to work through a great pipeline of deal flow at some of the most
compelling valuations seen in energy in decades."
Lease operating costs were $24.2 million in the third quarter of
2020, or $9.04 per boe, down 9% on a total basis and down 27% on a
per unit basis compared to the second quarter. Third quarter
general and administrative costs totaled $4.6 million, which
includes non-cash stock-based compensation. Cash G&A expense
totaled $3.7 million or $1.39 per Boe in the third quarter, down
14% on a per unit basis compared to the second quarter.
Capital spending for the third quarter was $43.8 million, made up
of $27.7 million of organic drilling and completion capital and
$16.1 million of total acquisition spending and other items,
inclusive of ground game D&C spending. Northern added 3.4 net
wells to production in the third quarter, and wells in process
increased to 28.3 net wells, up 1.6 net wells from the prior
quarter. On the ground game acquisition front, Northern closed on
10 transactions during the third quarter totaling 4.6 net wells,
653 net mineral acres and 141 net royalty acres (standardized to a
1/8 royalty interest).
On Nov. 2, 2020, Northern's borrowing base under its revolving
credit facility was reaffirmed at $660 million. As of Nov. 6,
2020, Northern has $550.0 million of borrowings outstanding on its
revolving credit facility, with $110.0 million of current borrowing
capacity. Northern expects an additional $15 - 30 million
reduction in borrowings under the revolving credit facility by the
end of 2020, but will continue to defer payment of any dividends on
its Perpetual Preferred Stock due to the current environment.
As of Sept. 30, 2020, Northern had $1.8 million in cash and $571.0
million of borrowings outstanding on its revolving credit facility.
Northern had total liquidity of $90.8 million as of Sept. 30, 2020,
consisting of cash and borrowing availability under the revolving
credit facility.
As of Sept. 30, 2020, Northern had additional debt outstanding
consisting of a $130.0 million 6% Senior Unsecured Note and $287.8
million of 8.5% Senior Secured Notes. During the third quarter,
Northern strengthened its balance sheet through two negotiated
agreements with noteholders, which resulted in $9.5 million in
principal amount of the 8.5% Senior Secured Notes being retired,
capturing $0.8 million in discounts to par value. In addition,
Northern executed an agreement to retire approximately $7.6 million
in liquidation value of its Perpetual Preferred Stock, capturing a
discount to liquidation value of approximately $3.6 million.
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1104485/000110448520000206/nog-20200930.htm
About Northern Oil
Northern Oil and Gas, Inc. -- http://www.northernoil.com/-- is an
independent energy company engaged in the acquisition, exploration,
development and production of oil and natural gas properties,
primarily in the Bakken and Three Forks formations within the
Williston Basin in North Dakota and Montana.
Northern Oil recorded a net loss of $76.32 million for the year
ended Dec. 31, 2019. As of June 30, 2020, the Company had $1.26
billion in total assets, $1.12 billion in total liabilities, and
$140.73 million in total stockholders' equity.
* * *
As reported by the TCR on April 14, 2020, S&P Global Ratings
lowered its issuer credit rating on Northern Oil and Gas Resources
to 'CCC+' from 'B-'. The outlook is negative. "Our downgrade
reflects the company's tight liquidity and history of distressed
exchanges. The recent collapse in oil prices increases the risk
that the company's reserve-based lending (RBL) facility size could
be reduced at its next bank redetermination, which could further
strain its limited capacity," S&P said.
NOVA CLASSICAL ACADEMY: S&P Lowers Revenue Bond Rating to 'BB+'
---------------------------------------------------------------
S&P Global Ratings lowered its rating to 'BB+' from 'BBB-' on St.
Paul Housing and Redevelopment Authority, Minn.'s series 2016A,
2016B, 2011A, and 2011B charter school lease revenue bonds, issued
for Nova Classical Academy (NCA). The outlook is stable.
"The downgrade reflects our view of NCA's weakened financial
profile, due to the school posting a large operational deficit in
fiscal 2019 that led to a drop in liquidity and lease-adjusted
maximum annual debt service coverage of less than 1.0x, which we
consider weak," said S&P Global Ratings credit analyst Robert Tu.
"Additionally, we believe the school could face liquidity
challenges if state holdbacks were to increase," Mr. Tu added.
S&P views the risks posed by COVID-19 pandemic to public health and
safety as an elevated social risk for all charter schools under the
rating agency's environmental, social, and governance factors. It
believes this is a social risk for LTS due to potential per-pupil
funding reductions or an increase in state holdbacks that might
occur as a result of recessionary pressures. Despite the elevated
social risk, S&P believes the school's environmental and governance
risk are in line with its view of the sector as a whole.
Nova Classical is a kindergarten through 12th grade (K-12) charter
school located in St. Paul in Ramsey County, Minn.
NPC INT'L: To Sell Itself Out of Bankruptcy to Panera Operator
--------------------------------------------------------------
Ann Schmidt of Yahoo Finance reports that the largest franchisee of
Pizza Hut and Wendy's is planning to sell itself out of bankruptcy
to another huge franchise operator.
NPC International, which operates 1,225 Pizza Huts and 385 Wendy's
locations, announced on Friday that Flynn Restaurant Group has
agreed to acquire the restaurants for $816 million.
Flynn Restaurant Group is the largest franchisee in the United
States and it operates 451 Applebee's restaurants, 282 Taco Bells,
137 Paneras and 369 Arby's locations, according to the website.
NPC filed for Chapter 11 bankruptcy protection in July 2020 and has
said it would close 300 underperforming Pizza Huts and even put
another 163 Pizza Hut locations up for sale as part of its
bankruptcy restructuring.
"This is a significant step in our restructuring process, and we
are very pleased to have reached this agreement with Flynn, which
validates the strong value and long-term potential of NPC's
business," Jon Weber, the CEO and president of NPC’s Pizza Hut
division, said in a statement.
"As we continue to work through the sale process and solicit bids
for our assets from other interested parties in accordance with the
Court-approved bidding procedures, our restaurants across the
country will remain open," Weber added.
The deal still has to be approved by the U.S. Bankruptcy Court for
the Southern District of Texas, according to the announcement.
The Wall Street Journal reported that other companies could make
competitive offers, including the Wendy's Company, which has
reportedly expressed opposition to the deal because of competition
between Wendy's and two of Flynn's franchises, Panera and Arby's.
PANERA TESTS WINE, BEER, HARD SELTZER AT SELECT LOCATIONS
"We are very excited about the possibility of acquiring NPC's
portfolio of Pizza Hut and Wendy's restaurants, as well as its
Shared Services division," Greg Flynn, Flynn Restaurant Group's
founder, chairman and CEO said in a statement. "These are great
assets and iconic restaurant brands, and we are confident we can
maximize the long-term value of the business as we continue to
pursue our goal of being the premier franchise group in the
restaurant industry."
About NPC International
NPC International, Inc. -- https://www.npcinternational.com/ -- is
a franchisee company with over 1,600 franchised restaurants across
two iconic brands -- Wendy's and Pizza Hut -- spanning 30 states
and the District of Columbia.
NPC International and its affiliates sought protection under
Chapter 11 of the Bankruptcy Code (Bankr. S.D. Tex. Lead Case No.
20-33353) on July 1, 2020. At the time of the filing, the Debtors
disclosed assets of between $1 billion and $10 billion and
liabilities of the same range.
Judge David R. Jones oversees the cases.
The Debtors tapped Weil, Gotshal & Manges, LLP, as bankruptcy
counsel; Alixpartners, LLP as financial advisor; Greenhill & Co.,
LLC as investment banker; and Epiq Corporate Restructuring, LLC as
claims, noticing and solicitation agent and administrative advisor.
OASIS PETROLEUM: Court OKs $1.8-Bil. Debt-for-Equity Plan
---------------------------------------------------------
Law360 reports that oil and gas driller Oasis Petroleum on Tuesday
got approval from a Texas bankruptcy judge for its prepackaged $1.8
billion equity swap Chapter 11 plan, achieving the quick turnaround
it had hoped for when it filed for bankruptcy a little over a month
ago.
Following a brief telephone hearing, U.S. Bankruptcy Judge Marvin
Isgur approved what Oasis' counsel said was now a fully consensual
plan that had received the votes of nearly all of its creditors.
Texas-headquartered Oasis is an exploration and production company
focused on crude oil and natural gas. Its development and
production activities are concentrated in North Dakota.
About Oasis Petroleum Inc.
Headquartered in Houston, Texas, Oasis --
http://www.oasispetroleum.com/-- is an independent exploration and
production company focused on the acquisition and development of
onshore, unconventional crude oil and natural gas resources in the
United States. Its primary production and development activities
are located in the Williston Basin in North Dakota and Montana,
with additional oil and gas properties located in the Delaware
Basin in Texas.
Oasis reported a net loss attributable to the company of $128.24
million for the year ended Dec. 31, 2019, compared to a net loss
attributable to the company of $35.29 million for the year ended
Dec. 31, 2018.
For the six months ended June 30, 2020, the Company reported a net
loss attributable to the company of $4.40 billion on $554.15
million of total revenues compared to a net loss attributable to
the company of $72.12 million on $1.10 billion of total revenues
for the same period in 2019.
As of June 30, 2020, the Company had $2.62 billion in total assets,
$3.21 billion in total liabilities, and a total stockholders'
deficit of $589.91 million.
On Sept. 30, 2020, Oasis Petroleum Inc. and its affiliates sought
Chapter 11 protection (Bankr. S.D. Tex. Lead Case No. 20-34771).
The Hon. Marvin Isgur is the case judge.
The Debtors tapped KIRKLAND & ELLIS LLP as counsel; JACKSON WALKER
L.L.P. as co-bankruptcy counsel; TUDOR, PICKERING, HOLT & CO. and
PERELLA WEINBERG PARTNERS LP as investment banker; and ALIXPARTNERS
LLP as financial advisor. KURTZMAN CARSON CONSULTANTS LLC is the
claims agent. PRICEWATERHOUSECOOPERS is the external auditor and
DELOITTE TOUCHE TOHMATSU LIMITED is the tax advisor.
Evercore is acting as financial advisor and Paul, Weiss, Rikind,
Wharton & Garrison LLP and Porter Hedges LLP are acting as legal
advisors to the Ad Hoc Committee of Senior Noteholders.
OASIS PETROLEUM: Unsecureds to Recover 100% in Prepackaged Plan
---------------------------------------------------------------
Oasis Petroleum Inc., et al. submitted a Prepackaged Plan and a
Disclosure Statement.
The Debtors engaged discussions with its key secured and unsecured
stakeholder groups regarding a long-term balance sheet solution,
including the RBL Lenders and an ad hoc group of holders of the
Notes (the "Ad Hoc Group"). These discussions were ultimately
successful. The Debtors, with broad support across their capital
structure, ultimately determined that pursuing an in-court
deleveraging transaction represents the value-maximizing path
forward. After extensive, arm's-length negotiations, the Consenting
Stakeholders and the Debtors arrived at the transactions embodied
in the Restructuring Support Agreement, agreeing to support a
Cprepackaged plan that provides:
* Certain of the Consenting RBL Lenders will provide a
superpriority debtor-in-possession revolving debtor-in-possession
financing facility in an aggregate amount of $450 million (the "DIP
Facility"), including $150 million of new money loans and $300
million of "rolled up" prepetition RBL Claims;
* Certain of the Consenting RBL Lenders will also provide a
senior secured reserved-based lending exit facility in an aggregate
amount up to $1.5 billion (the "Exit Facility") and an initial
borrowing base totaling up to $575 million, the proceeds of which
will be used to refinance amounts outstanding under the DIP
Facility and any remaining prepetition RBL Claims outstanding on
the Effective Date, and otherwise fund the Debtors' emergence from
chapter 11;
* Holders of Notes Claims will receive 100% of the new common
equity in Reorganized Oasis, subject to dilution on account of the
Management Incentive Plan and New Warrants (as defined below);
* Certain long-running litigation claims asserted by Mirada
will be settled on terms set forth in the Plan and a separate
settlement agreement to be included in the Plan Supplement;
* Payment in full in cash of all administrative and priority
claims;
* Payment in full or reinstatement of General Unsecured Claims;
and
* Holders of existing equity interests will receive certain
4-year warrants (the "New Warrants") convertible into up to 7.5% of
the new common equity in Reorganized Oasis.
The Restructuring Support Agreement is a significant achievement
for the Debtors. A right-sized capital structure will ultimately
allow the Debtors to maximize value for the benefit of all
stakeholders. In addition, the compromises and settlements embodied
in the Restructuring Support Agreement, and to be implemented
pursuant to the Plan, preserve value by enabling the Debtors to
avoid protracted, value-destructive litigation over potential
recoveries and other causes of action that could delay the Debtors'
emergence from chapter 11. As of the date of this Disclosure
Statement, holders of approximately 97% in principal of the RBL
Claims and approximately 52% in principal of the Notes Claims have
signed onto the Restructuring Support Agreement and support the
transactions contemplated by the Restructuring Support Agreement
and the Plan. The core terms of the Restructuring Support
Agreement will be implemented through a chapter 11 plan of
reorganization-- namely, the Plan.
A full-text copy of the Disclosure Statement dated September 30,
2020, is available at https://tinyurl.com/y4t3k2xe from
PacerMonitor.com at no charge.
Proposed Co-Counsel for the Debtors:
Bruce J. Ruzinsky
Matthew D. Cavenaugh
Jennifer F. Wertz
Vienna F. Anaya
JACKSON WALKER L.L.P.
1401 McKinney Street, Suite 1900
Houston, Texas 77010
Telephone: (713) 752-4200
Facsimile: (713) 752-4221
Email: bruzinsky@jw.com
Email: mcavenaugh@jw.com
Email: jwertz@jw.com
Email: vanaya@jw.com
Proposed Co-Counsel for the Debtors:
Brian Schartz, P.C.
KIRKLAND & ELLIS LLP
KIRKLAND & ELLIS INTERNATIONAL LLP
609 Main Street
Houston, Texas 77002
Telephone: (713) 836-3600
Facsimile: (713) 836-3601
Email: brian.schartz@kirkland.com
- and -
Chad J. Husnick, P.C.
David L. Eaton
John Luze
300 North LaSalle Street
Chicago, Illinois 60654
Telephone: (312) 862-2000
Facsimile: (312) 862-2200
Email: chad.husnick@kirkland.com
david.eaton@kirkland.com
john.luze@kirkland.com
- and -
AnnElyse Scarlett Gains
1301 N. Pennsylvania Ave., N.W.
Washington, D.C. 20004
Telephone: (202) 389-5000
Facsimile: (202) 389-5200
Email: annelyse.gains@kirkland.com
About Oasis Petroleum
Headquartered in Houston, Texas, Oasis --
http://www.oasispetroleum.com/-- is an independent exploration and
production company focused on the acquisition and development of
onshore, unconventional crude oil and natural gas resources in the
United States. Its primary production and development activities
are located in the Williston Basin in North Dakota and Montana,
with additional oil and gas properties located in the Delaware
Basin in Texas.
Oasis reported a net loss attributable to the company of $128.24
million for the year ended Dec. 31, 2019, compared to a net loss
attributable to the company of $35.29 million for the year ended
Dec. 31, 2018.
For the six months ended June 30, 2020, the Company reported a net
loss attributable to the company of $4.40 billion on $554.15
million of total revenues compared to a net loss attributable to
the company of $72.12 million on $1.10 billion of total revenues
for the same period in 2019.
As of June 30, 2020, the Company had $2.62 billion in total assets,
$3.21 billion in total liabilities, and a total stockholders'
deficit of $589.91 million.
On Sept. 30, 2020, Oasis Petroleum Inc. and its affiliates sought
Chapter 11 protection (Bankr. S.D. Tex. Lead Case No. 20-34771).
The Hon. Marvin Isgur is the case judge.
The Debtors tapped KIRKLAND & ELLIS LLP as counsel; JACKSON WALKER
L.L.P. as co-bankruptcy counsel; TUDOR, PICKERING, HOLT & CO. and
PERELLA WEINBERG PARTNERS LP as investment banker; and ALIXPARTNERS
LLP as financial advisor. KURTZMAN CARSON CONSULTANTS LLC is the
claims agent. PRICEWATERHOUSECOOPERS is the external auditor and
DELOITTE TOUCHE TOHMATSU LIMITED is the tax advisor.
Evercore is acting as financial advisor and Paul, Weiss, Rikind,
Wharton & Garrison LLP and Porter Hedges LLP are acting as legal
advisors to the Ad Hoc Committee of Senior Noteholders.
OMEROS CORP: Incurs $38.5 Million Net Loss in Third Quarter
-----------------------------------------------------------
Omeros Corporation filed with the Securities and Exchange
Commission its Quarterly Report on Form 10-Q disclosing a net loss
of $38.46 million on $26.11 million of revenue for the three months
ended Sept. 30, 2020, compared to a net loss of $16.46 million on
$29.85 million of revenue for the three months ended Sept. 30,
2019.
For the nine months ended Sept. 30, 2020, the Company reported a
net loss of $100.79 million on $63.18 million of revenue compared
to a net loss of $55.26 million on $79.39 million of revenue for
the nine months ended Sept. 30, 2019.
As of Sept. 30, 2020, the Company had $227.07 million in total
assets, $47.72 million in total current liabilities, $29.72 million
in lease liabilities (non-current), $232.81 million in unsecured
convertible senior notes, $4.16 million in deferred tax liability,
and a total shareholders' deficit of $87.33 million.
As of Sept. 30, 2020, Omeros had $153.5 million of cash, cash
equivalents and short-term investments available for operations and
accounts receivable of $37.4 million.
The Company stated, "We plan to continue to fund our operations for
at least the next twelve months with our cash and investments on
hand, from sales of OMIDRIA and, if FDA approval is granted, from
sales of narsoplimab for HSCT-TMA. There is also that possibility
that narsoplimab will generate revenues in the treatment of
COVID-19. In addition, we may utilize funds available under our
accounts receivable-based line of credit, which allows us to borrow
up to 85% of our available accounts receivable borrowing base, less
certain reserves, or $50.0 million, whichever is less. Should it
be necessary or determined to be strategically advantageous, we
also could pursue debt financings, public and private offerings of
our equity securities similar to those we have completed
previously, or other strategic transactions, which may include
licensing a portion of our existing technology. Should it be
necessary to manage our operating expenses, we would reduce our
projected cash requirements through reduction of our expenses by
delaying clinical trials, reducing selected research and
development efforts, or implementing other restructuring
activities."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1285819/000155837020013359/omer-20200930x10q.htm
About Omeros Corporation
Headquartered in Seattle, Washington, Omeros Corporation --
http://www.omeros.com-- is an innovative biopharmaceutical company
committed to discovering, developing and commercializing
small-molecule and protein therapeutics for large-market as well as
orphan indications targeting complement-mediated diseases,
disorders of the central nervous system and immune-related
diseases, including cancers. In addition to its commercial product
OMIDRIA (phenylephrine and ketorolac intraocular solution) 1%/0.3%,
Omeros has multiple Phase 3 and Phase 2 clinical-stage development
programs focused on complement-mediated disorders and substance
abuse, as well as a diverse group of preclinical programs including
GPR174, a novel target in immuno-oncology that modulates a new
cancer immunity axis recently discovered by Omeros. Small-molecule
inhibitors of GPR174 are part of Omeros' proprietary G
protein-coupled receptor (GPCR) platform through which it controls
54 new GPCR drug targets and their corresponding compounds. The
company also exclusively possesses a novel antibody-generating
platform.
Omeros reported a net loss of $84.48 million for the year ended
Dec. 31, 2019, a net loss of $126.76 million in 2018, and a net
loss of $53.48 million in 2017. As of March 31, 2020, the Company
had $118.21 million in total assets, $57.94 million in total
current liabilities, $31.39 million in lease liabilities, $160.75
million in unsecured convertible senior notes, and a total
shareholders' deficit of $131.86 million.
Ernst & Young LLP, in Seattle, Washington, the Company's auditor
since 1998, issued a "going concern" qualification in its report
dated March 2, 2020, citing that the Company has suffered losses
from operations and has stated that substantial doubt exists about
the Company's ability to continue as a going concern.
ORIGINCLEAR INC: Holders Convert $26K Notes Into Equity
-------------------------------------------------------
As previously reported, OriginClear, Inc., issued notes to various
investors convertible into shares of the Company's common stock.
On Oct. 28, 2020, holders of convertible notes converted an
aggregate principal and interest amount of $26,472 into an
aggregate of 1,747,300 shares of the Company's common stock.
As previously reported, on Aug. 19, 2019, the Company filed a
certificate of designation of Series L Preferred Stock. Pursuant
to the Series L COD, the Company designated 100,000 shares of
preferred stock as Series L. The Series L has a stated value of
$1,000 per share, and is convertible into shares of the Company's
common stock, on the terms and conditions set forth in the Series L
COD.
On Nov. 5, 2020, a holder of Series L Preferred Stock converted an
aggregate of 4.4 Series L shares into an aggregate of 583,828
shares, including make-good shares, of the Company's common stock.
As previously reported, on May 1, 2020, the Company filed a
certificate of designation of Series P Preferred Stock. Pursuant
to the Series P COD, the Company designated 500 shares of preferred
stock as Series P. The Series P has a stated value of $1,000 per
share, and is convertible into shares of the Company's common
stock, on the terms and conditions set forth in the Series P COD.
On Nov. 2, 2020, a holder of Series P Preferred Stock converted an
aggregate of 25 Series P shares into an aggregate of 1,326,835
shares, including make-good shares, of the Company's common stock.
As previously reported, on Aug. 27, 2020, the Company filed a
certificate of designation of Series Q Preferred Stock. Pursuant
to the Series Q COD, the Company designated 2,000 shares of
preferred stock as Series Q. The Series Q has a stated value of
$1,000 per share, and is convertible into shares of the Company's
common stock, on the terms and conditions set forth in the Series Q
COD.
On Nov. 3, 2020, a holder of Series Q Preferred Stock converted an
aggregate of 7 Series Q shares into an aggregate of 472,654 shares
of the Company's common stock.
On Oct. 30, 2020, the Company issued to consultants and one
employee an aggregate of 308,572 shares of the Company's common
stock for services.
About OriginClear
Headquartered in Los Angeles, California, OriginClear --
http://www.originclear.com-- is a provider of water treatment
solutions and the developer of a breakthrough water cleanup
technology. Through its wholly owned subsidiaries, OriginClear
provides systems and services to treat water in a wide range of
industries, such as municipal, pharmaceutical, semiconductors,
industrial, and oil & gas.
OriginClear reported a net loss of $27.47 million for the year
ended Dec. 31, 2019, compared to a net loss of $11.35 million for
the year ended Dec. 31, 2018. As of June 30, 2020, the Company had
$1.64 million in total assets, $28.24 million in total liabilities,
and a total shareholders' deficit of $26.60 million.
M&K CPAS, PLLC, in Houston, TX, the Company's auditor since 2019,
issued a "going concern" qualification in its report dated May 29,
2020, citing that the Company suffered a net loss from operations
and has a net capital deficiency, which raises substantial doubt
about its ability to continue as a going concern.
PENNSYLVANIA REAL: Taps Prime Clerk as Claims Agent
---------------------------------------------------
Pennsylvania Real Estate Investment Trust and its affiliates
received approval from the U.S. Bankruptcy Court for the District
of Delaware to hire Prime Clerk LLC as their claims and noticing
agent.
The firm will oversee the distribution of notices and the
maintenance, processing and docketing of proofs of claim filed in
Debtors' Chapter 11 cases.
Prime Clerk will be paid at hourly rates as follows:
Claim and Noticing Rates
Analyst $30 - $50
Technology Consultant $35 - $95
Consultant/Senior Consultant $65 - $165
Director $175 - $195
Chief Operating Officer and No charge
Executive Vice President
Solicitation, Balloting and Tabulation Rates
Solicitation Consultant $190
Director of Solicitation $210
Prior to the petition date, the Debtors provided Prime Clerk an
advance in the amount of $50,000.
Benjamin Steele, vice president of Prime Clerk, disclosed in court
filings that the firm is a "disinterested person" as that term is
defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Benjamin J. Steele
Prime Clerk LLC
One Grand Central Place
60 East 42nd Street, Suite 1440
New York, NY 10165
About PREIT
Pennsylvania Real Estate Investment Trust (NYSE:PEI) is a publicly
traded real estate investment trust that owns and manages
innovative properties at the forefront of shaping consumer
experiences through the built environment. PREIT's robust portfolio
of carefully curated retail and lifestyle offerings mixed with
destination dining and entertainment experiences are located
primarily in densely-populated, high barrier-to-entry markets with
tremendous opportunity to create vibrant multi-use destinations. On
the Web: http://www.preit.com/
PREIT and certain of its affiliates filed a voluntary Chapter 11
petition in the United States Bankruptcy Court for the District of
Delaware (Bankr. D. Del. Case No. 20-12737) on Nov. 1, 2020, to
implement its prepackaged Chapter 11 plan.
The Debtors have tapped DLA Piper LLP (US) LLP and Wachtell,
Lipton, Rosen & Katz as their legal counsel, and PJT Partners LP as
their financial advisor. PREIT's claims agent is Prime Clerk,
maintaining the page https://cases.primeclerk.com/PREIT.
PETSMART INC: Moody's Affirms B2 CFR; Alters Outlook to Stable
--------------------------------------------------------------
Moody's Investors Service changed PetSmart, Inc.'s outlook to
stable from positive. At the same time, Moody's affirmed the
corporate family rating and probability of default rating at B2 and
B2-PD respectively. Additionally, Moody's upgraded the rating of
the company's existing senior secured term loan and senior secured
notes to B1 from B2 and upgraded the rating of its senior unsecured
notes to Caa1 from Caa2. As the company did not complete the
refinancing of its existing debt the ratings assigned to the
proposed new debt are withdrawn.
"The withdrawal of the company's refinancing transaction including
the new equity from its private equity owners that was going to be
used to repay debt will result in leverage being higher than
previously expected. As a result, we are revising the outlook to
stable", Moody's Vice President Mickey Chadha stated. "On the
positive side, PetSmart's continued ownership of Chewy enhances
liquidity and provides credit support to lenders", Chadha further
stated. The affirmation of the B2 CFR acknowledge that credit
metrics will remain in line with the rating despite the higher
leverage with debt/EBITDA expected to remain around 5.5x. The
upgrade of PetSmart's existing debt reflects the affirmation of the
B2 CFR as those debt instruments will no longer be repaid given the
withdrawal of the refinancing transaction.
Upgrades:
Issuer: PetSmart, Inc.
Senior Secured Bank Credit Facility, Upgraded to B1 (LGD3) from B2
(LGD3)
Senior Secured Regular Bond/Debenture, Upgraded to B1 (LGD3) from
B2 (LGD3)
Senior Unsecured Regular Bond/Debenture, Upgraded to Caa1 (LGD5)
from Caa2 (LGD5)
Affirmations:
Issuer: PetSmart, Inc.
Probability of Default Rating, Affirmed B2-PD
Corporate Family Rating, Affirmed B2
Withdrawals:
Issuer: PetSmart, Inc.
Senior Secured Bank Credit Facility, Withdrawn, previously rated B1
(LGD3)
Senior Secured Regular Bond/Debenture, Withdrawn, previously rated
B1 (LGD3)
Senior Unsecured Regular Bond/Debenture, Withdrawn, previously
rated Caa1 (LGD5)
Outlook Actions:
Issuer: PetSmart, Inc.
Outlook, Changed to Stable from Positive
RATINGS RATIONALE
PetSmart's B2 corporate family rating is supported by the company's
very good liquidity and its position as the largest specialty
retailer of pet products and services in the US. Although the
company's leverage is high with lease-adjusted debt/EBITDA expected
to be around about 5.5 in the next 12 months, it has improved
significantly as the company has reduced debt through the
monetization of Chewy stock and improved EBITDA. For the LTM period
ended August 2, 2020 leverage was at 5.9x compared to 7.1x at the
end of fiscal 2019. The pet products and services industry remain
highly competitive with increasing competition from the mass
retailers including large chains like Walmart, Target, and Kroger
and pure play e-commerce retailers like Amazon and Chewy. Despite
the close to 300% increase in omnichannel sales which include buy
online pickup in-store (BOPIS), ship to home and ship from store,
in the first two quarters, Moody's estimates the company's
e-commerce penetration remains low at less than 5%. However,
PetSmart has demonstrated the resilience of its business model as
it very successfully navigated the disruptions caused by the
coronavirus pandemic reporting comparable store sales growth of
5.8% for the first half of fiscal 2020.
Other positive rating factors include PetSmart's well-known brand
and broad national footprint. The company's sizeable services
offering is a positive as it provides a defensible market position
and is less vulnerable to e-commerce. The pet products industry in
general remains relatively recession resilient, driven by factors
such as the replenishment nature of consumables and services and
increased pet ownership. The company's credit profile is also
enhanced by its very good liquidity and the company's 59% ownership
of Chewy whose current implied valuation more than covers the
amount of total debt outstanding
The stable outlook reflects Moody's expectation that the current
positive operating trends will be sustained supporting some
improvement in credit metrics over the next 12 months, that
PetSmart's financial strategies will not result in
shareholder-friendly transactions and that liquidity will remain
very good.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Sustained growth in revenue and profitability and continued free
cash flow generation while demonstrating conservative financial
policies could lead to a ratings upgrade. Quantitatively, ratings
could be upgraded if debt/EBITDA is sustained below 4.5 times and
if EBIT/interest expense is sustained above 2.5 times while
maintaining very good overall liquidity.
PetSmart's ratings could be downgraded if same-store sales trends
demonstrate loss of market share or if operating margins erode,
indicating that the company's industry or competitive profile is
weakening. Ratings could also be downgraded if the company's
financial policies were to become aggressive particularly in terms
of dividends and acquisitions or if liquidity deteriorates.
Quantitatively, a ratings downgrade could occur if debt/EBITDA does
not improve and remains above 5.75 times or EBIT/interest is
sustained below 1.5 times.
PetSmart, Inc. is the largest specialty retailer of supplies, food,
and services for household pets in the U.S. The company currently
operates close to 1,647 stores in the U.S. and Canada. Revenues
totaled $13.4 billion (including Chewy) for LTM period ended Aug 1,
2020. The company is owned by a consortium of sponsors including BC
Partners, Inc., La Caisse de dépôt et placement du Quebec,
affiliates of GIC Special Investments Pte Ltd, affiliates of
StepStone Group LP, and Longview Asset Management, LLC. PetSmart
currently owns 59% of Chewy, a leading online retailer of pet food
and products in the United States.
The principal methodology used in these ratings was Retail Industry
published in May 2018.
PETSMART INC: S&P Lowers ICR to 'B-' on Unsuccessful Refinancing
----------------------------------------------------------------
S&P Global Ratings lowered its issuer credit rating on U.S.-based
PetSmart Inc. to 'B-' from 'B'. S&P's 'B' issue-level rating on the
company's existing secured debt and its 'CCC+' issue-level rating
on the company's existing senior unsecured debt remain unchanged.
The downgrade follows the company's unsuccessful attempt to
complete a holistic refinancing of its capital structure, which
would have substantially reduced its funded debt.
S&P said, "We upgraded PetSmart to 'B' on Oct. 20, 2020, on our
expectation that it would complete the refinancing transaction and
reduce its leverage comfortably below 6x, which are two of the
triggers for an upgrade we outlined in our Sept. 28, 2020, research
update. Due to the company's decision to pull the refinancing,
citing unfavorable market conditions, we expect its leverage to be
above 6x and note that its fast approaching debt maturities remain
unaddressed. However, PetSmart will maintain its majority ownership
of Chewy (the refinancing would have eliminated this), which is
positive for the company's competitive positioning."
"Still, we believe that PetSmart will complete a refinancing of its
term loan before it becomes current in March 2021. However, the
structure and timing of the future refinancing are uncertain and we
consider the financial markets to still be volatile given the
uncertainty around the global economy and the effects of the
coronavirus pandemic over the next 12 months. Because the company
was planning to reduce its debt by roughly $1.75 billion (via cash
on hand and an anticipated equity contribution from its financial
sponsor) through the attempted refinancing, we see the possibility
for some debt reduction in a future refinancing."
"Given our expectation that pandemic-related tailwinds will
continue to support PetSmart's performance, we forecast its
leverage will be in the mid-6x area in fiscal year 2020 before
declining toward 6x in fiscal year 2021."
"We believe that the coronavirus pandemic has led to an increase in
pet ownership as well as a reallocation of consumer discretionary
spending toward home-related purchases, including pet purchases,
and away from travel and dining. PetSmart's accelerated revenue
growth and roughly stable margins will increase its absolute
EBITDA, which lead us to forecast S&P-adjusted leverage will be in
the mid-6x area in 2020 (a full turn improvement from 7.4x in
2019). While the company's leverage remains elevated at more 6x,
the coronavirus-related tailwinds have accelerated deleveraging
such that we now expect leverage to be in the low 6x area in 2021
and see a potential path for it to sustain leverage of less than 6x
if the tailwinds from the pandemic continue to support its
performance."
PetSmart has several rapidly approaching debt maturities, including
a $750 million asset-based lending (ABL) facility maturing in
December 2021 (unrated) and a $2.7 billion outstanding term loan
maturing in March 2022. S&P believes that its current operating
trends and the value of its equity stake in Chewy will allow for a
successful refinancing at par, although the timing of this
transaction is uncertain.
S&P believes there is still some potential for volatility in the
company's performance given the uncertainty around the path of the
pandemic for the remainder of fiscal year 2020 and into fiscal year
2021.
The path of the pandemic remains uncertain and could lead to
changes in consumer discretionary spending that negatively affect
PetSmart's performance. In S&P's view, the company's second-quarter
results were partially supported by government stimulus actions,
which expired at the end of July with no clear replacement. In
addition, U.S. unemployment remains significantly elevated, which
could lead to a pullback in discretionary spending. While pet
purchases are somewhat non-discretionary (particularly
consumables), S&P would expect the company's sales of hard goods
and specialty merchandise, which are currently strong sales
categories, to moderate in a weaker consumer spending environment.
S&P said, "The positive outlook reflects our expectation that
PetSmart's leverage will decline toward 6x on positive same-store
sales and continued rapid growth at Chewy. We also expect the
company to complete an at-par refinancing before its term loan
becomes current in March 2021."
S&P could raise its rating on PetSmart if:
-- S&P is confident debt to EBITDA will decline to and be
sustained below 6x, which could occur through additional debt
paydowns;
-- PetSmart addresses the upcoming maturities of its ABL and term
loan in 2021 and 2022, respectively; and
-- S&P believes it will sustain positive same-store sales and
EBITDA growth.
S&P would consider a negative rating action on PetSmart if:
-- The company does not refinance its term loan before it becomes
current; and
-- S&P expects it to sustain debt to EBITDA of more than 6x, which
could occur if its same-store sales are flat to negative and its
EBITDA margins decline by roughly 50 basis points.
POTTERS BORROWER: S&P Assigns 'B' ICR on Carve-Out, Acquisition
---------------------------------------------------------------
S&P Global Ratings assigned its 'B' issuer credit rating to Potters
Borrower L.P. The outlook is stable.
S&P said, "We are also assigning a 'B' issue-level rating to
Potters' proposed senior secured debt, including its $390 million
term loan and $75 million (undrawn) credit facility. The recovery
rating is '3', indicating our expectation for meaningful (50%-70%;
rounded estimate: 50%) recovery of principal in the event of a
default."
On Oct. 19, 2020, U.S.–based PQ Corp. (PQ) agreed to sell its
Performance Materials segment (Potters) to The Jordan Co. L.P. in a
transaction valued at $670 million. The newly rated carve-out
entity, Potters Borrower L.P., is a glass microsphere producer that
operates in two segments: transportation safety and engineered
glass material.
The acquisition will be funded through a $280 million common equity
contribution from Jordan, $390 million senior secured term loan
maturing in seven years, and $75 million revolving credit facility
that will remain undrawn at close.
S&P's ratings on Potters reflect the company's market position as a
leading supplier in a niche business for solid glass microspheres
and engineered glass materials. Solid glass microspheres are used
to increase the reflectivity and visibility of road, airport, and
barrier markings. Engineered glass materials (including hollow and
solid glass microspheres) are used in processes such as metal
finishing, conductives, and polymer lightweighting.
S&P said, "The rating also benefits from the company's average but
relatively stable EBITDA margins. About 60% of the company's
revenue is derived from its transportation safety segment, where
Potters' products are used for road maintenance, an end market we
expect will be somewhat stable in the next 12 months at least, even
under weak economic conditions. Additionally, our assessment
considers the company's high leverage, financial sponsor ownership,
and small overall scale."
Potters benefits from its somewhat stable transportation safety
business, recurring customer base, and geographic end-market
diversity compared to smaller regional competitors. Its
transportation safety segment should demonstrate some resilience
even if economic recovery in 2021 is slow, patchy, and somewhat
below our base-case expectations.
S&P said, "We believe demand for products used in safety related
maintenance of roads will be somewhat stable because many of
Potter's customers view such applications as nondiscretionary. Road
markings are required to be replaced or maintained every few years;
therefore government funds allocated to highway safety,
particularly in developed markets, do not necessarily follow
typical business or economic cycles."
Potters has a track record of winning state and provincial
contracts in North America, competing against mostly smaller
regional players. It generally extends these bids yearly with high
customer retention and long-term relationships. Potters also has
the scale and expertise to meet the multiyear testing and
qualification procedures required for regulatory approval of
microsphere products. In transportation safety, the company
benefits from its logistical and manufacturing capacity within each
of its regional markets. Local facilities allow it to meet customer
needs and deliveries in a timely manner.
Potters' niche engineered glass material business provides some
end-market diversity with exposure to industrial, automotive,
plastics and polymers, consumer goods, construction, and oil and
gas. These industries diversify its transportation exposure,
provide potential growth opportunities, and are higher-margin.
However, volumes are much more cyclical, so earnings are
susceptible to economic and industrial downturns.
S&P said, "We also consider several credit risks. Potters'
government relationships, while historically beneficial, may be
tested over the next 12 months as the COVID-19 pandemic and lower
tax revenues put added stress on state and municipal budgets. While
road safety has been a government priority, in the unprecedented
current economic environment, we cannot be completely confident
those expenditures will not be cut." Governments are being forced
to make difficult decisions when allocating scarce resources. Such
cuts will lower demand for the company's key product. Additionally,
relative to the universe of chemical companies we rate, Potters is
a niche business, with somewhat limited scale and scope, and
earnings concentrated mainly in a narrow product category--glass
microspheres."
The company's high leverage of about 6x debt to EBITDA on a
weighted-average basis over the next two years, as well as its
financial sponsor ownership, present key financial risks.
Potters' volume declined through the first three quarters of the
year, mainly due to weakening demand for European highway safety
products and engineered glass materials. This was partially offset
by higher prices for highway safety products in North America.
S&P said, "Given our forecast for a continued economic recovery in
2021--with GDP growth of 3.9% in the U.S, 5.3% in Europe, and 6.2%
in Asia-Pacific--we expect revenue and earnings to increase in the
low-single-digit percentages. Additionally, we anticipate marginal
cash flow generation over the coming 12 months."
"However, we anticipate leverage will remain high (in the 5x-6x
range). Our rating also considers the company's ownership by
private equity and a potential, in our view, for aggressive
leveraging actions."
"The stable outlook reflects our view that the carve-out of Potters
from PQ and its acquisition by Jordan will proceed as planned under
the proposed capital structure. We anticipate a relatively smooth
transition to a stand-alone entity given senior management's
long-standing relationship with the company. We expect earnings to
deteriorate slightly in 2020, driven by COVID-19-related shutdowns
in North America and Europe, and lower industrial demand for
engineered glass materials. The earnings impact should be partially
offset by higher prices, particularly in North American
transportation safety, and various cost-saving initiatives. We
forecast the economic recovery will continue into 2021, which
underpins our assumption for moderate revenue and EBITDA growth in
both of Potters' segments. We anticipate transportation safety
revenue to expand in the low-single–digit percentages and
engineered glass materials in the mid- to low-single digits. Our
base case assumes funds from operations (FFO) to debt of about 10%
and debt to EBITDA of about 6x."
S&P could lower its ratings on Potters over the next few months
if:
-- The transaction is not finalized as expected;
-- The company's capital structure is not implemented as
envisioned;
-- EBITDA deteriorates in 2021 with no prospect for an immediate
recovery;
-- Liquidity declines significantly; or
-- Debt to EBITDA approaches 7x.
Although it is unlikely at this time given the company's transition
to a stand-alone entity and its financial sponsor ownership, S&P
could raise its ratings over the next 12 months if:
-- The company reduces leverage below 5x debt to EBITDA; and
-- S&P is certain ownership is committed to further deleveraging.
A key aspect of any upgrade would be an established track record as
an independent entity.
QUOTIENT LIMITED: Incurs $15 Million Net Loss in Second Quarter
---------------------------------------------------------------
Quotient Limited filed with the Securities and Exchange Commission
its Quarterly Report on Form 10-Q disclosing a net loss of $14.97
million on $16.07 million of total revenue for the quarter ended
Sept. 30, 2020, compared to a net loss of $26.99 million on $7.85
million of total revenue for the three months ended Sept. 30,
2019.
For the six months ended Sept. 30, 2020, the Company reported a net
loss of $40.40 million on $24.99 million of total revenue compared
to a net loss of $50.56 million on $16.01 million of total revenue
for the same period a year ago.
As of Sept. 30, 2020, the Company had $271.89 million in total
assets, $238.18 million in total liabilities, and $33.71 million in
total shareholders' equity.
The Company has incurred net losses and negative cash flows from
operations in each year since it commenced operations in 2007 and
had an accumulated deficit of $523.8 million as of Sept. 30, 2020.
At Sept. 30, 2020, the Company had available cash holdings and
short-term investments of $162.7 million. The Company said that
following the completion of a public offering which raised $80.7
million of net proceeds, and the resolution of the Ortho
arbitration, the Company's existing available cash and short-term
investment balances are adequate to meet its forecasted cash
requirements for the next twelve months and accordingly the
financial statements have been prepared on the going concern
basis.
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1596946/000156459020051980/qtnt-10q_20200930.htm
About Quotient Limited
Penicuik, United Kingdom-based Quotient Limited is a
commercial-stage diagnostics company committed to reducing
healthcare costs and improving patient care through the provision
of innovative tests within established markets. With an initial
focus on blood grouping and serological disease screening, Quotient
is developing its proprietary MosaiQTM technology platform to offer
a breadth of tests that is unmatched by existing commercially
available transfusion diagnostic instrument platforms. The
Company's operations are based in Edinburgh, Scotland; Eysins,
Switzerland and Newtown, Pennsylvania.
Quotient Limited reported a net loss of $102.77 million for the
year ended March 31, 2020, compared to a net loss of $105.4 million
for the year ended March 31, 2019. As of June 30, 2020, the
Company had $200.68 million in total assets, $230.87 million in
total liabilities, and a total shareholders' deficit of $30.18
million.
Ernst & Young LLP, in Belfast, United Kingdom, the Company's
auditor since 2007, issued a "going concern" qualification in its
report dated June 12, 2020, citing that the Company is currently
involved in an arbitration dispute with a customer and an adverse
outcome of this dispute in addition to the Company's expenditure
plans over the next 12 months could result in net cash outflows
over the next 12 months exceeding the Company's existing available
cash and short-term investment balances, and has stated that
substantial doubt exists about the Company's ability to continue as
a going concern.
REVLON INC: Has Ch. 11 Advisor, Awaits Lifeline from Bondholders
----------------------------------------------------------------
The wall Street Journal, citing people familiar with the matter,
reports that Revlon has been working with a financial advisor to
prepare for a potential bankruptcy filing in the event bondholders
don't take the company up on a restructuring offer.
Revlon, owned by billionaire Ron Perelman's MacAndrews & Forbes,
Inc., has tapped Alvarez & Marsal to prepare the company for
possible bankruptcy as it woos bondholders for a lifeline.
Meanwhile, Katherine Doherty of Bloomberg News reports that
Revlon's shares soared as the embattled cosmetics company wrangled
with creditors over terms of a debt overhaul just hours before a
deadline that could lead to a default and bankruptcy. The stock
rose as much as 124%, the most ever on an intraday basis, before
closing at $8.79 Tuesday for a 47% gain. Revlon's bonds due 2021
also jumped 17 cents on the dollar to 53.5 cents, according to
Trace bond trading data.
Billionaires Ronald Perelman and Carl Icahn are facing off over a
proposed debt exchange offer. Icahn owns enough of the company's
bonds to potentially derail efforts by Revlon to complete the bond
exchange.
Under the Company's proposal, bondholders would swap out their
holdings for roughly a third of their face value, in exchange for
getting cash or a mix of cash and new debt. The exchange, if
complete, would lighten Revlon's debt load and avoid the need for
an imminent chapter 11 filing.
About Revlon Inc.
Headquartered in New York, Revlon, Inc., is a leading global beauty
company with a portfolio of iconic brands that transform the lives
of women and men around the world. It manufactures and markets
color cosmetics, hair color and care, skincare, beauty care and
fragrances through a diverse portfolio of 15+ brands sold in more
than 150 countries.
Revlon Inc. conducts its business exclusively through its direct
wholly-owned operating subsidiary, Revlon Consumer Products
Corporation and its subsidiaries. Revlon is an indirect
majority-owned subsidiary of MacAndrews & Forbes Incorporated, a
corporation beneficially owned by Ronald O. Perelman. Mr. Perelman
is Chairman of Revlon's and Products Corporation's Board of
Directors.
* * *
In July 2020, S&P Global Ratings lowered issuer credit rating on
Revlon Inc. to 'CC' from 'CCC-'. Concurrently, S&P lowered its
issue-level rating on the company's $880 million Brandco first lien
term loan to 'CCC-' from 'CCC' and maintain '2' recovery rating. In
addition, S&P lowered its issue-level rating on the remaining
tranches of secured debt to 'C' from 'CC' and maintained '5'
recovery rating. Lastly, S&P affirmed its 'C' issue-level rating on
the company's two tranches of unsecured notes, the '6' recovery
ratings remain unchanged.
The negative outlook reflects S&P's expectation that it will lower
its issuer credit rating on Revlon to 'SD' (selective default) and
its issue-level rating on its February 2021 notes to 'D' after the
transaction closes.
The downgrade follows Revlon's announcement that it commenced an
offer to exchange any and all of its outstanding amounts of 5.75%
notes due February 2021 for a combination of new 5.75% notes due
February 2024 and an early tender/consent fee. The existing
noteholders will receive $750 principal amount of new notes for
every $1,000 of existing notes tender and $50 of cash as an early
tender/consent fee. Holders who tender their existing notes after
the early tender deadline (Aug. 7, 2020) will receive only $750
principal amount of new notes for every $1,000 principal amount of
existing notes tendered.
RTI HOLDING: Gets OK to Hire Baker Donelson as Special Counsel
--------------------------------------------------------------
RTI Holding Company, LLC and its affiliates received approval from
the U.S. Bankruptcy Court for the District of Delaware to employ
Baker, Donelson, Bearman, Caldwell & Berkowitz P.C. as their
special counsel.
The firm's services include legal advice on real estate lease,
ERISA, labor and employment matters. Baker Donelson may also
provide such other services as the Debtors may request.
The firm's attorneys who will primarily be responsible for this
matter will be paid at hourly rates as follows:
D. Keith Andress, Partner $556
Steven F. Griffith, Jr., Partner $555
Andrea Bailey Powers, Partner $539
Ross N. Cohen, Of Counsel $506
Eve A. Cann, Partner $460
Jackson Cates, Associate $308
Steven Griffith, Jr., Esq., a shareholder of Baker Donelson,
disclosed in court filings that the firm is a "disinterested
person" 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.
Griffith made the following disclosures:
1. Baker Donelson has not agreed to any variations from, or
alternatives
to, its standard or customary billing arrangements.
2. No professional at Baker Donelson has varied his rate based
on the
geographic location of the Debtors' bankruptcy cases.
3. Mr. Griffith's rate and that of other attorneys at Baker
Donelson are as follows:
D. Keith Andress Partner $556
Steven F. Griffith, Jr. Partner $555
Andrea Bailey Powers Partner $539
Ross N. Cohen Of Counsel $506
Eve A. Cann Partner $460
Jackson Cates Associate $308
There were no adjustments post-petition and the rates were last
adjusted in January
2020.
4. The Debtors have already approved the firm's budget and
staffing
plan.
Baker Donelson can be reached through:
Steven F. Griffith, Jr., Esq.
Baker, Donelson, Bearman, Caldwell & Berkowitz P.C.
201 St. Charles Avenue, Suite 3600
New Orleans, LA 70170
Tel: 504-566-5200
Fax: 504-636-4000
Email: sgriffith@bakerdonelson.com
About RTI Holding Company
RTI Holding Company, LLC and its affiliates develop, operate and
franchise casual dining restaurants in the United States, Guam and
five foreign countries under the Ruby Tuesday brand. The
company-owned and operated restaurants (i.e. non-franchise) are
concentrated primarily in the Southeast, Northeast, Mid-Atlantic
and Midwest regions of the United States.
On Oct. 7, 2020, RTI Holding Company and its affiliates sought
protection under Chapter 11 of the Bankruptcy Code (Bankr. D. Del.
Lead Case No. 20-12456). At the time of the filing, the Debtors
disclosed assets of between $100 million and $500 million and
liabilities of the same range.
Judge John T. Dorsey oversees the cases.
Pachulski Stang Ziehl & Jones LLP and CR3 Partners LLC serve as the
Debtors' legal counsel and financial advisor respectively. Epiq
Corporate Restructuring LLC is the claims, noticing and
solicitation agent and administrative advisor.
RUBIO'S RESTAURANTS: U.S. Trustee Appoints Creditors' Committee
---------------------------------------------------------------
The U.S. Trustee for Regions 3 and 9 on Nov. 9, 2020, appointed a
committee to represent unsecured creditors in the Chapter 11 cases
of Rubio's Restaurants, Inc. and its affiliates.
The committee members are:
1. CAPREF Paseo, LLC
Attn: Amy M. Williams
169 Ramapo Valley Rd., #106,
Oakland, NJ 07436
Phone: (973) 869-4072
awilliams@williamsadvisors.com
2. C21, LLC,
Attn: Joshua Berman
1528 Wazee Street
Denver, CO 80202
Phone: (303) 623-0200
jab@antonoff.com
3. Regency Centers, L.P.
Attn: Ernst Bell
One Independent Drive, Suite 114
Jackson, FL 32202
Phone: (904) 598-7685
ernstbell@regencycenters.com
Official creditors' committees serve as fiduciaries to the general
population of creditors they represent. They may investigate the
debtor's business and financial affairs. Committees have the right
to employ legal counsel, accountants and financial advisors at a
debtor's expense.
About Rubio's Restaurants
Rubio's Restaurants, Inc. and its affiliates are operators and
franchisors of approximately 170 limited service restaurants in
California, Arizona, and Nevada under the Rubio's Coastal Grill
concept. Visit www.rubios.com for more information.
On Oct. 26, 2020, Rubio's Restaurants and its affiliates
concurrently filed voluntary petitions for relief under Chapter 11
of the Bankruptcy Code (Bankr. D. Del. Lead Case No. 20-12688)
Melissa Kibler, chief restructuring officer, signed the petition.
At the time of the filing, the Debtors were estimated to have $50
million to $100 million in assets and $100 million to $500 million
in liabilities.
Judge Mary F. Walrath oversees the cases.
The Debtors have tapped Ropes & Gray LLP as counsel, Young Conaway
Stargatt & Taylor, LLP as Delaware counsel, Mackinac Partners LLC
as restructuring advisor, Gower Advisers as investment banker, and
B. Riley Financial, Inc. as real estate advisor. Stretto is the
claims, noticing, solicitation and balloting agent.
RUBY TUESDAY: Says It Needs the $28M Retiree Trust Cash in Ch. 11
-----------------------------------------------------------------
Law360 reports that the bankrupt parent company of casual dining
chain Ruby Tuesday told a Delaware judge late Monday, November 9,
2020, that its motions to liquidate $28 million in trusts created
to hold retirement and deferred compensation benefits for its
employees should be granted because the money is needed in its
Chapter 11 case.
In the filing, RTI Holding Co. LLC said its use of the so-called
rabbi trusts to hold the retirement and deferred compensation
assets for its employees has always been conditioned on the
possibility that the company could use the money to satisfy debts
to other creditors.
About Ruby Tuesday
Founded in 1972 in Knoxville, Tennessee, Ruby Tuesday, Inc. --
http://www.rubytuesday.com/-- is dedicated to delighting guests
with exceptional casual dining experiences that offer
uncompromising quality paired with passionate service every time
they visit. From signature handcrafted burgers to the farm-grown
goodness of the Endless Garden Bar, Ruby Tuesday is proud of its
long-standing history as an American classic and international
favorite for nearly 50 years. The Company currently owns, operates
and franchises casual dining restaurants in the United States,
Guam, and five foreign countries under the Ruby Tuesday® brand.
On Oct. 7, 2020, Ruby Tuesday, Inc., and 50 affiliates sought
Chapter 11 protection. The lead case is In re RTI Holding Company,
LLC (Bankr. D. Del. Lead Case No. 20-12456).
Ruby Tuesday was estimated to have $100 million to $500 million in
assets as of the bankruptcy filing.
The Hon. John T. Dorsey is the case judge.
Ruby Tuesday is advised by Pachulski Stang Ziehl & Jones LLP as
legal counsel, CR3 Partners, LLC, as financial advisor, FocalPoint
Securities, LLC, as investment banker, and Hilco Real Estate, LLC,
as lease restructuring advisor. Epiq is the claims agent,
maintaining the page https://dm.epiq11.com/RubyTuesday
SHILOH INDUSTRIES: Court Approves $128M Sale to MiddleGround
------------------------------------------------------------
Alex Wolf of Bloomberg Law reports that auto-parts supplier Shiloh
Industries Inc. won bankruptcy court approval to sell its business
to a subsidiary of MiddleGround Capital LLC for $218 million in
cash, paving the way for a consensual restructuring plan.
Shiloh's estate will receive up to $400 million in net value from
the inclusion of assumed contracts and liabilities in the deal, the
company said.
Unsecured creditors dropped an objection to the sale to Grouper
Holdings LLC following an agreement that sets aside $1 million for
their benefit. The creditors could see their recoveries climb up
to $3 million if certain savings are met.
About Shiloh Industries
Shiloh Industries, Inc., and its subsidiaries are global innovative
solutions providers focusing on lightweighting technologies that
provide environmental and safety benefits to the mobility markets.
On Aug. 30, 2020, Shiloh Industries and its subsidiaries sought
protection under Chapter 11 of the Bankruptcy Code (Bankr. D. Del.
Lead Case No. 20-12024). The petitions were signed by Lillian
Etzkorn, authorized person.
The Debtors reported total consolidated assets of $664,170,000 and
total consolidated debt of $563,360,000 as of April 30, 2020.
The Debtors have tapped Jones Day and Richards, Layton & Finger
P.A. as their legal counsel; Houlihan Lokey Capital Inc. as
financial advisor, Ernst & Young LLP as restructuring advisor, and
Prime Clerk LLC as claims and noticing agent.
On Sept. 15, 2020, the United States Trustee appointed the five
member official committee of unsecured creditors. The committee
selected Foley & Lardner LLP as its lead counsel, and Morris James
as Delaware counsel.
SHOPPINGTOWN MALL: Benderson Says Disclosures Are Misleading
------------------------------------------------------------
Benderson Development Company, LLC ("Benderson"), filed an
objection to the Amended Disclosure Statement filed by Shoppingtown
Mall NY, LLC.
Benderson submits that that Amended Plan and Amended Disclosure
Statement are
misleading in their characterization of potential claims against
Benderson.
Benderson asserts that there is no basis in fact or law for any
claims against it "as a result of any conspiracy or other actions
to deprive Debtor it is property through any means," or otherwise,
and Benderson would vigorously defend any such claims asserted
against it by the Debtor or its Estate.
Benderson points out that the Debtor should be required to revise
its Amended Disclosure Statement to add a sentence at the end of
Section VIII (2) as follows: "Benderson Development Company, LLC
denies that the Debtor or the Estate have or hold any viable claims
or rights which may be asserted against it. Any complaint filed
against Benderson Development Company, LLC asserting such purported
claims or rights would be vigorously defended."
Attorneys for Benderson Development Company:
George T. Snyder, Esquire
STONECIPHER LAW FIRM
125 1st Ave
Pittsburgh, PA 15222
Tel: (412) 391-8510
Fax: (412) 391-8522
E-mail: gsnyder@stonecipherlaw.com
About Shoppingtown Mall NY
Shoppingtown Mall NY LLC owns and operates the shopping center
known as "ShoppingTown Mall" located at 3649 Erie Boulevard East,
Dewitt, NY 13214
Shoppingtown Mall NY sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. W.D. Pa. Case No. 19-23178) on Aug. 13,
2019. At the time of the filing, the Debtor was estimated to have
assets of between $1 million and $10 million, and liabilities of
between $10 million and $50 million. The case is assigned to Judge
Carlota M. Bohm. Bernstein-Burkley, P.C., is the Debtor's counsel.
No official committee of unsecured creditors has been appointed in
the Debtor's case.
SHOPPINGTOWN MALL: Onondaga & WEP Say Plan Feasibility Speculative
------------------------------------------------------------------
The County of Onondaga, State of New York (Onondaga) and the
Onondaga County Department of Water Environment Protection (the
WEP, and together with Onondaga, the County) object to the
Disclosure Statement to Accompany Amended Chapter 11 Plan of
Reorganization of Debtor Shoppingtown Mall NY LLC.
The County claims that the Plan has not been proposed in good
faith. As evidenced by the actions of the Debtor and its officers
and affiliates both before the Petition Date and throughout this
case, good faith is completely lacking.
The County points out that the feasibility of the Debtor's plan
protections are truly visionary and speculative. Without more
information regarding specific tenants and a clear funding source,
the Debtor cannot legitimately claim its non-traditional tenant
revenues will double in the next three years.
The County states that the Disclosure Statement lacks sufficient
information and contains misleading data, failing to satisfy the
threshold 11 U.S.C. § 1125 disclosure requirements. Under the
Third Circuit’s standards outlined in Oneida Motor Freight, the
Court should deny the Disclosure Statement.
The County asserts that the Debtor has failed to provide a complete
description of available assets and their value, resulting in a
misleading and incomplete liquidation analysis. The glaring
omission in this analysis is the Debtor's failure to discuss the
chapter 5 preference and fraudulent-transfer causes of action
against insider entities that should be immediately investigated
and commenced.
The County further asserts that the Disclosure Statement fails to
provide any information regarding the County's credit-bid rights
under 11 U.S.C.§ 363(k) while the County welcomes a robust
marketing and sale process approved by the Court.
A full-text copy of the County's objection to disclosure statement
dated September 25, 2020, is available at
https://tinyurl.com/yyawfj9z from PacerMonitor at no charge.
Attorneys for the County:
HARRIS BEACH PLLC
David M. Capriotti, Esq.
Wendy A. Kinsella, Esq.
333 West Washington Street, Suite 200
Syracuse, New York 13202
Telephone: (315) 423-7100
Facsimile: (315) 422-9331
E-mail: dcapriotti@harrisbeach.com
- and -
MCGUIREWOODS LLP
George W. Fitting
Mark E. Freedlander
Tower 260
260 Forbes Ave., Ste. 1800
Pittsburgh, PA 15222
Telephone: (412) 667-6069
Facsimile: (412) 402-4179
E-mail: mfreedlander@mcguirewoods.com
gfitting@mcguirewoods.com
About Shoppingtown Mall NY
Shoppingtown Mall NY LLC owns and operates the shopping center
known as "ShoppingTown Mall" located at 3649 Erie Boulevard East,
Dewitt, NY 13214
Shoppingtown Mall NY sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. W.D. Pa. Case No. 19-23178) on Aug. 13,
2019. At the time of the filing, the Debtor was estimated to have
assets of between $1 million and $10 million, and liabilities of
between $10 million and $50 million. The case is assigned to Judge
Carlota M. Bohm. Bernstein-Burkley, P.C., is the Debtor's counsel.
No official committee of unsecured creditors has been appointed in
the Debtor's case.
SPRING EDUCATION: Moody's Cuts CFR to Caa1, Outlook Stable
----------------------------------------------------------
Moody's Investors Service downgraded Spring Education Group, Inc.'s
Corporate Family Rating to Caa1 from B3 and Probability of Default
Rating (PDR) to Caa1-PD from B3-PD. Moody's also downgraded the
rating for the company's first lien senior secured credit
facilities to B3 from B2 and second lien term loan to Caa3 from
Caa2. The outlook is stable.
The downgrade of the CFR to Caa1 reflects Moody's expectation that
leverage on Moody's lease adjusted basis will increase to about
10.0x over the next year due to an earnings decline stemming
primarily from weakness in Spring Education's early childhood
education segment. The early childhood segment has been more
severely impacted by the ongoing coronavirus pandemic than its K-12
segment. Attrition due to the difficulty of transitioning some
students to remote learning at a young age, parents working from
home as well as reluctance to put young children in a more social
setting until there is a vaccine have caused significant enrollment
declines and low utilization at re-opened schools. Moody's expects
earnings decline in FY2021 vs FY2020 and that the earnings weakness
will persist longer than the rating agency had originally expected
given the ongoing coronavirus pandemic. In addition, free cash flow
was negative $35 million for FY2020 ended June 30, 2020, and
despite cost cutting initiatives and lower capex, Moody's expects
free cash flow generation to continue to be in the range of
negative $30 million over the next year. Spring Education's K-12
segment has remained more resilient with enrollment for the 2020 to
2021 school year declining more modestly with the resulting revenue
decline partially offset by tuition increases.
Moody's took the following ratings actions:
Issuer: Spring Education Group, Inc.
Corporate Family Rating, downgraded to Caa1 from B3
Probability of Default Rating, downgraded to Caa1-PD from B3-PD
Senior Secured First Lien Bank Credit Facilities (revolver and
term loan), downgraded to B3 (LGD3) form B2 (LGD3)
Senior Secured Second Lien Term Loan, downgraded to Caa3 (LGD5)
from Caa2 (LGD5)
Outlook Actions:
Issuer: Spring Education Group, Inc.
Outlook, revised to Stable from Negative
RATINGS RATIONALE
Spring Education's Caa1 CFR reflects its very high leverage with
Moody's lease adjusted debt-to-EBITDA expected to rise to about
10.0x in 2021 due to earnings decline primarily from its early
childhood segment as a result of contracting enrollment related to
the ongoing coronavirus pandemic. Moody's expects the K-12 segment,
including the company's Laurel Spring's on-line K to 12 school,
will be more resilient with a modest enrollment decline at the
Stratford and BASIS schools partially offset by tuition price
increases in 2021. Enrollments, revenue and earnings at Laurel
Springs is projected to increase in fiscal 2021 because of greater
demand for distance learning. Moody's also expects free cash flow
generation to continue to be negative over the next year. The
rating is constrained by the aggressive financial policies as
evidenced by three primarily debt funded acquisitions since the LBO
in 2018, modest scale, and operation in the competitive primary
school market. The rating further reflects enrollment exposure to
economic conditions due to the cyclical nature of the for-profit
education industry, especially in the early childhood education
segment. However, the rating is supported by Spring Education's
established base of schools with strong brand recognition and good
revenue visibility especially in the K-12 segment due to the
pre-paid nature of those tuition contracts.
The coronavirus outbreak, the government measures put in place to
contain it, and the weak global economic outlook continue to
disrupt economies and credit markets across sectors and regions.
Its analysis has considered the effect on the performance of Spring
Education from the current weak US economic activity and a gradual
recovery for the coming months. Although an economic recovery is
underway, it is tenuous and its continuation will be closely tied
to containment of the virus. As a result, the degree of uncertainty
around its forecasts is unusually high. Moody's regards the
coronavirus outbreak as a social risk under its ESG framework,
given the substantial implications for public health and safety.
Specifically, the weaknesses in Spring Education's credit profile,
including its exposure to continued coronavirus pandemic as a
result of social distancing measures have left it vulnerable to
shifts in market sentiment in these unprecedented operating
conditions. The action reflects the impact on Spring Education of
the breadth and severity of the shock, and the broad deterioration
in credit quality it has triggered.
The stable outlook reflects Moody's expectation that, although
leverage will remain very high over the next year due to the
earnings decline, the company will have adequate liquidity to fund
the free cash flow deficit in 2021 due to the recently upsized
undrawn $90 million revolver, proceeds from unsecured debt provided
by the sponsor after the year end, as well as covenant relief
through June 2021.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Ratings could be upgraded if Spring Education resumes enrollment
and earnings growth such that operating metrics improve and that
the company will be able to consistently generate modestly positive
free cash flow and maintain interest coverage (EBITA-to-interest)
above 1.0x.
The ratings could be downgraded if there is further deterioration
of operating performance including from enrollment declines,
pricing weakness or cost increases, or if liquidity weakens.
The principal methodology used in these ratings was Business and
Consumer Service Industry published in October 2016.
Spring Education, headquartered in the Silicon Valley region of CA,
is a for-profit provider of early childhood and K-12th grade
education. The company operates about 219 schools across 19 states
and the District of Columbia. Spring Education is privately owned
by Primavera Capital Group, an Asian-based private equity firm.
Revenue for FY2020 ended on June 30, 2020 was approximately $609
million.
SRH SOUTHAVEN: U.S. Trustee Unable to Appoint Committee
-------------------------------------------------------
The Office of the U.S. Trustee on Nov. 9, 2020 disclosed in a court
filing that no official committee of unsecured creditors has been
appointed in the Chapter 11 case of SRH Southaven, LLC.
About SRH Southaven
SRH Southaven, LLC filed a petition for relief under Chapter 11 of
Bankruptcy Code (Bankr. N.D. Ga. Case No. 20-40329) on Feb. 20,
2020, listing under $1 million in both assets and liabilities.
Judge Barbara Ellis-Monro oversees the case. Leslie Pineyro, Esq.,
at Jones & Walden, LLC, is the Debtor's legal counsel.
STERICYCLE INC: S&P Rates New $400MM Senior Unsecured Notes 'BB-'
-----------------------------------------------------------------
S&P Global Ratings assigned its 'BB-' issue-level rating and '5'
recovery rating to regulated waste and information destruction
services company Stericycle Inc.'s proposed $400 million senior
unsecured notes due 2029. S&P anticipates that the company will use
the proceeds from these notes to repay the $200 million outstanding
under its revolving facility due Nov. 17, 2022, and the $200
million outstanding under its term loan A due Nov. 17, 2022.
Stericycle's organic revenue is still contracting because the
effects of the COVID-19 pandemic have weakened the demand in its
Secure Information Destruction Services (SIDS) unit (29% of
quarterly sales), which reported a 16.8% decline in revenue in the
third quarter compared with the same period last year. At the same
time, the company's larger Regulated Waste and Compliance Services
unit (65% of quarterly sales) reported paltry organic growth of
0.6% because it was negatively affected by the anemic level of
maritime waste services activity.
S&P said, "However, Stericycle expanded its margin by almost 200
basis points, which we consider very good, and limited the decline
in its adjusted EBITDA (adjusted for the effects of divestitures
and foreign-exchange translation) to 16%. The company has also
continued to make progress on its divestitures and productivity
improvements. Specifically, Stericycle generated strong cash from
operations of $365 million through the first nine months of 2020,
which outpaces the $201 million it reported at the same point last
year. Debt repayment of over $135 million has reduced our
calculation of the company's adjusted debt to EBITDA to less than
5x, which we consider to be an appropriate level for the current
rating. That said, we recognize the risks stemming from the ongoing
choppy volumes in the company's medical waste and SIDS businesses
as it braces for the second wave of COVID-19 cases. However, if
Stericycle maintains its leverage comfortably below 5x, we could
revise our outlook on the company to stable."
ISSUE RATINGS--RECOVERY ANALYSIS
Key analytical factors
-- The major debt tranches in Stericycle's capital structure
include a $1.2 billion revolving credit facility (assumed 85% drawn
at default), a $1.315 billion term loan (partially repaid and
refinanced to $588 million at default), $600 million of senior
unsecured notes due 2024, and $400 million of senior unsecured
notes due 2029. S&P assumes the senior secured credit facility is
refinanced before maturity into a new $1.2 billion revolver and a
$600 million term loan B. S&P's simulated default scenario
contemplates a default occurring in 2025 precipitated by the
company's debt maturities and worsening operating results due to
regulatory suspensions, increased competition, and lower capacity
utilization.
-- S&P has valued the company on a going-concern basis because it
believes Stericycle would reorganize in the event of a default
given its strong customer relationships and the importance of its
products to its customers' supply chains. Furthermore, S&P believes
that the company's lenders would achieve greater recovery through a
reorganization rather than a liquidation.
-- S&P's '5' recovery rating on the company's senior unsecured
notes indicates its expectation for modest recovery (10%-30%;
rounded estimate: 25%) in the event of a payment default.
Simulated default assumptions
Simulated year of default: 2025
-- EBITDA multiple: 6.5x
-- Jurisdiction: U.S.
Simplified waterfall
-- Emergence EBITDA: $328 million
-- Net recovery value after admin. expenses (5%): $2.0 billion
-- Obligor/nonobligor valuation split: 85%/15%
-- Value distributed to claims to secured & foreign creditors:
$1.71 billion
-- Total value available to unsecured claims: $320 million
-- Estimated unsecured debt claims: $1.08 billion
-- Recovery expectations: 10%-30% (rounded estimate: 25%)
Note: Debt amounts include six months of accrued interest that S&P
assumes the company will owe at default. Collateral value includes
asset pledges from obligors (after priority claims) plus equity
pledges in nonobligors. S&P generally assumes usage of 85% for cash
flow revolvers at default. S&P assumes the company refinances any
debt maturing before S&P's simulated default on similar terms.
STUDIO MOVIE GRILL: Expects to File Reorganization Plan in December
-------------------------------------------------------------------
Fabiola Diaz of Monrovia Weekly reports that Studio Movie Grill
(SMG), the dine-in movie theater chain with a location in Monrovia,
filed for Chapter 11 bankruptcy protection at the end of October
2020.
The Dallas-based company filed in U.S. Bankruptcy Court for the
Northern District of Texas. According to the Houston Business
Journal, the main petition "lists assets between $50 million and
$100 million and liabilities between $100 million and $500
million."
Prior to its filing, the company reached an agreement with its
secured lenders to support its restructuring through financing and
an agreement regarding a sustainable path forward, according to a
press release. Theaters will remain open during this restructuring
process but the company plans to close certain locations.
"Our restructuring demonstrates our commitment to SMG's future and
to welcoming back our 7,000 plus treasured team members as we
strive to preserve our mission to open hearts and minds, one story
at a time," said Brian Schultz, founder/chairman of Studio Movie
Grill.
"Our guests can also be assured that we have always been, and will
continue to be, committed to your safety and have the resources to
do so. During the Chapter 11 process, SMG is fully committed to
continuing to offer great service, and a simple, safer way to enjoy
movies + meals in a welcoming environment in support of the future
of theatergoing. Film and all creative arts are an integral and
powerful part of the joy of the human experience, a way for us to
better understand the lives of those around us and to come
together, which we cannot afford to lose."
The company will file its reorganization plan in December. A market
test will also be conducted during this time to ensure SMG can exit
bankruptcy in early 2021. The market test is used primarily to
determine the value of SMG and part of this review is filing a Sale
and Bidding Process motion. This motion establishes a procedure to
canvas the market and determine potential values that exceed the
proposed reorganization plan value.
Studio Movie Grill's locations in Los Angeles County remain closed
as the area remains in the state's most restrictive tier on the
blueprint for reopening business sectors during the COVID-19
pandemic.
About Studio Movie Grill
Studio Movie Grill and its affiliates operate a chain of movie
theatres that include full-service dining during the show. Studio
Movie Grill is based in Dallas and runs 33 theater-restaurants.
Studio Movie Grill Holdings, LLC, and its affiliates sought Chapter
11 protection (Bankr. N.D. Tex., Case No. 20-32633) on Oct. 23,
2020. Studio Movie Grill was estimated to have $50 million to $100
million in assets and $100 million to $500 million in liabilities.
The Hon. Stacey G. Jernigan is the case judge. The Law Offices of
Frank J. Wright, PLLC is the Debtors' counsel.
SUNOCO LP: Moody's Rates Proposed Unsec. Notes Due 2029 'B1'
------------------------------------------------------------
Moody's Investors Service assigned a B1 rating to Sunoco LP's
proposed offering of senior unsecured notes due 2029. The Ba3
Corporate Family Rating, the Ba3-PD Probability of Default Rating
(PDR), SGL-3 Speculative Grade Liquidity (SGL) rating and stable
outlook are not affected by this action. The notes will be fully
and unconditionally guaranteed by all of SUN's material domestic
subsidiaries and are co-issued by Sunoco Finance Corp.
Proceeds of the proposed notes offering will be used to refinance a
portion of upcoming near-term debt maturities.
Assignments:
Issuer: Sunoco LP
Senior Unsecured Notes, Assigned B1 (LGD4)
RATINGS RATIONALE
The proposed senior notes issue is unsecured and guaranteed by
substantially all of SUN's domestic subsidiaries. The notes are
rated B1, or one notch below the Ba3 CFR, reflective of their
junior position relative to the priority claim of its $1.5 billion
secured revolving credit facility.
As one of the largest distributors of motor fuels in the US, SUN
benefits from the strength of the Sunoco retail brand and the
geographic reach and revenue stability accruing from the wholesale
distribution of motor fuel which has become its dominant business.
This followed the January 2018 sale of the majority of its
company-operated retail fuel outlets for $3.2 billion to 7-Eleven,
Inc. (Baa1 review down). Earnings and cash flow derived from
wholesale motor fuels distribution, while generating lower margins,
are less volatile than that derived from the retail sales of motor
fuels and merchandise. SUN generates a fixed margin, which it
expects to average 9.5-10.5 cents per gallon over the medium term
on a significant portion of its gallons distributed and is no
longer exposed to the volatility of retail fuel and merchandise
margins associated with its retail businesses. While third quarter
2020 motor fuels volumes sold were down 12% to 1.9 billion gallons
compared to 2019's third quarter due to the pandemic-related
downturn in transportation, they were up 22% sequentially on a
partial recovery in demand. The gross profit margin on third
quarter gallons sold averaged 12.1-cents compared to 11.6-cents in
the year-ago quarter, and 13.5-cents in 2020's second quarter.
Largely as a result of margin expansion and somewhat improved
second-half demand conditions, SUN expects full-year 2020 EBITDA to
be at or above $740 million, up at least 11% over 2019's $665
million.
SUN distributed 8.2 billion gallons of wholesale fuel volumes in
2019. Wholesale fuels distribution requires materially lower
capital expenditures than retail; prior to its sale of the retail
sites, capital spending on maintenance and facility upgrading had
consumed a disproportionate amount of cash from operations.
Reflecting the uncertainty of 2020's operating environment, SUN has
cut 2020's projected growth capital spending by 42% to $75
million.
Moody's believes that SUN will look to grow to gain additional size
through acquisitions and economies of scale. Acquisitions could
potentially extend upstream into logistics assets. Notwithstanding
growth aspirations, Moody's expects that SUN will adhere to its
recently updated publicly stated long term leverage target of
around 4x (about 4.5x including Moody's standard adjustments),
about where it operated in 2020's third quarter. Distribution
coverage at 2020's third quarter was 1.6x; comfortably in excess of
the company's 1.2x publicly stated targeted level.
The rapid spread of the coronavirus outbreak, a weak global
economic outlook, low oil and natural gas 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. SUN's
exposure to volumetric risk in the wholesale distribution of motor
fuels leaves it vulnerable to shifts in market demand and sentiment
in these unprecedented operating conditions. Environmental
considerations also have a growing impact on Moody's credit
analysis for midstream energy companies, indirectly related to
potential carbon dioxide regulations. A strong financial position
and low financial leverage are important characteristics for
managing these environmental and social risks.
Moody's regards SUN as having adequate liquidity as indicated by
its SGL-3 Speculative Grade Liquidity rating, principally a
function of its $1.5 billion secured revolving credit facility. At
September 30, $87 million was outstanding under SUN's revolver,
down from $158 million at June 30. The revolving credit facility
has a July 2023 scheduled maturity date. SUN's next upcoming debt
maturity is its $1.0 billion 4.875% notes issue due January 2023.
Proceeds from the proposed notes issue will be used to redeem a
portion of these notes.
SUN's outlook is stable reflecting Moody's expectation of the
stability in earnings and cash flow associated with the company's
wholesale motor fuels distribution operations.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Ratings could be upgraded if SUN's debt/EBITDA consistently remains
under 4.5x and interest coverage exceeds 4x. Ratings could be
downgraded should leverage increase above 5.5x or should
distribution coverage fall below 1x.
Sunoco LP is a master limited partnership (MLP) that distributes
motor fuels on a wholesale basis to convenience stores, independent
dealers, commercial customers and distributors situated in over 30
states. Its general partner is Energy Transfer Operating, L.P.
(Baa3 negative), who owns 100% of SUN's Incentive Distribution
Rights (IDRs) and 34.4% of SUN's common units. ETO is a
wholly-owned subsidiary of Energy Transfer LP (not rated). Sunoco
LP is headquartered in Dallas, Texas.
The principal methodology used in these ratings was Midstream
Energy published in December 2018.
SUNOCO LP: S&P Rates New $500MM Senior Unsecured Notes 'BB-'
------------------------------------------------------------
S&P Global Ratings assigned its 'BB-' issue-level rating and '3'
recovery rating to Sunoco LP and Sunoco Finance Corp.'s proposed
$500 million senior unsecured notes due 2029. The '3' recovery
rating indicated its expectation for meaningful (50%-70%; rounded
estimate: 55%) recovery in the event of a payment default.
The company intends to use the net proceeds from these notes to
repay a certain portion of its $1 billion senior unsecured notes
due 2023.
Sunoco L.P.'s general partner, Sunoco GP LLC, is 100% owned by
Energy Transfer Operating L.P., which is a wholly-owned subsidiary
of Energy Transfer L.P. (ET) that owns 100% of Sunoco's incentive
distribution rights, the noneconomic general partner interest, and
a significant portion of the partnership's limited partner units.
S&P said, "While ET controls Sunoco through this interest, we
assess Sunoco on a stand-alone basis because we believe that
several factors insulate its creditors from ET: namely, its
substantial third-party limited partnership ownership, the limited
business interactions between ET and Sunoco, and the partnership
agreement provisions that provide some protection to its creditors.
We view Sunoco L.P. as nonstrategic to ET."
TACALA LLC: S&P Affirms 'B-' ICR, Alters Outlook to Stable
----------------------------------------------------------
S&P Global Ratings affirmed its 'B-' issuer credit rating on Tacala
LLC and revised its outlook to stable from negative. At the same
time, S&P affirmed its 'B-' issue-level rating on the company's
upsized first-lien credit facility and 'CCC' rating on its upsized
second-lien term loan. The '3' and '6' recovery ratings,
respectively, are unchanged.
S&P said, "Tacala has demonstrated a resilient business model
during the pandemic, although we expect some profit moderation over
the next 12 months. The outlook revision follows Tacala's revenue
and profit growth in the third quarter, amid the ongoing
coronavirus pandemic. We believe quick service restaurants (QSR)
are relatively well positioned for the pandemic, owing to their
drive-thru channel, which is conducive to social distancing and
crowd avoidance practices. By shutting down its dining rooms and
running its business entirely through the drive-thru channel,
Tacala was able to reduce costs and expand profitability, with
third-quarter adjusted EBITDA margin of 29.9% improving over 300
basis points (bps) compared to the prior year. As the pandemic
wanes over the next 12 months and the company reopens its dining
rooms, we expect it to give back some of the recent cost savings.
This, along with intensifying competition should moderate adjusted
EBITDA margin to the mid-20% area in 2021."
"The releveraging transaction supports our view of the company's
aggressive financial policy and our expectation that it will
maintain a highly leveraged capital structure. Tacala is planning
to issue an incremental $65 million of first-lien and $20 million
of second-lien debt. It will use the new debt issuance, together
with about $35 million of cash to fund a one-time dividend of $120
million. The contemplated transaction is consistent with our view
of the company's aggressive financial policy and will increase
adjusted leverage to the low-7x area, from about 6.2x as of the end
of the third quarter. The additional interest burden should be
offset by Tacala's improved cash generation over the past year, as
the company continues to expand its store base. We anticipate
incremental improvement in its credit metrics over the next 12
months as the company continues to grow EBITDA at a modest pace
through new unit development. However, we believe the company will
maintain a very highly leveraged capital structure. The company has
regularly pursued releveraging transactions (this will be the
fourth over the past three years) and we expect it will continue
this strategy."
"Despite an efficient model, Tacala is subject to significant
operational risks, including commodity price fluctuations. We view
the Taco Bell brand as stronger than other QSR operators based on
its labor-efficient and low-cost operating model, which has allowed
for Tacala's good profitability metrics this year. We also believe
the business is somewhat insulated from economic downturns based on
its value-focused positioning. However, as a restaurant operator,
Tacala's operating performance is sensitive to commodity price
fluctuations which it cannot easily pass on to its price-conscious
customers. While other restaurant operators can shift their menu
focus to various protein options depending on commodity prices,
Tacala's menu is heavily beef focused. This leaves it particularly
vulnerable to commodity price volatility, in our view. Despite
this, we believe the company has some capacity for increasing input
costs owing to its good margin profile."
"The stable outlook reflects our expectations for relatively stable
credit metrics over the next 12 months, with adjusted debt to
EBITDA sustained above 6x in 2021. We expect modest EBITDA
expansion through net unit and same-store sales growth, partially
offset by moderating profitability as the company opens its dining
rooms over the next 12 months. We also anticipate consistent free
operating cash flow generation in the $40 million to $50 million
range, net of sale-leaseback transactions."
"We could lower the rating if we believe Tacala's capital structure
is unsustainable as a result of deteriorating performance. For
example, this could occur if the company generates consistently
negative FOCF as a result of elevated commodity and labor costs and
declining same-store sales."
"We could raise the rating if Tacala shifts to a less aggressive
financial policy, leading us to believe it will sustain leverage
below 6x. We could also raise our rating if the company broadens
its operating scale and meaningfully increases profitability
through continued successful new store development."
TALEN ENERGY: Fitch Affirms B LongTerm IDR, Outlook Stable
----------------------------------------------------------
Fitch Ratings has affirmed the Long-term Issuer Default Rating
(IDR) of Talen Energy Supply, LLC at 'B'. Fitch has affirmed its
'BB'/'RR1' rating for Talen's senior secured debt that consists of
$690 million revolving credit facility, $427 million senior secured
term loan due 2026, $750 million secured notes due 2027 and $870
million secured notes due 2028. Fitch has also affirmed its
'B'/'RR4' rating for Talen's senior unsecured notes including the
outstanding $100 million PEDFA bonds. Recovery Ratings (RR) 1
indicates outstanding recovery (in the range of 91%-100%) in the
event of default and 'RR4' indicates average recovery (in the range
of 31%-50%) in the event of default. The Rating Outlook is Stable.
Talen's IDR reflects its elevated leverage and high business risk
associated with owning a largely uncontracted power-generation
fleet. Talen's EBITDA is highly sensitive to the changes in the
energy and capacity prices in the PJM region, which accounts for
approximately 73% of its total realized energy margin. Given the
already announced PJM capacity auction results, existing hedges and
current forward curves, Fitch expects 2020 to be a through year for
EBITDA and FCF generation. Subsequently, Fitch expects Talen's
EBITDA and FCF to improve in 2021-2023; however, Fitch has tempered
its prior expectations given coronavirus-induced weak power demand
and lower forward energy prices.
Fitch expects Talen's recourse Debt to EBITDA to be between 6.2x
and 6.8x over 2021-2023, which while weaker than its prior
forecasts, remains below its negative sensitivity of 7.0x. Minimal
near-term maturities until 2024 further underpin its Stable Rating
Outlook. The ratings also reflect the private equity owners'
commitment to manage to a 4.5x total debt/EBITDA and not take any
distributions until the target is met.
KEY RATING DRIVERS
Limited Near-term Impact from Coronavirus: Prior executed hedges
and strict O&M cost control has helped Talen offset challenging
power markets driven by coronavirus- induced decline in power
demand and weak natural gas prices. The MWHs generated by Talen's
power generation fleet fell by more than 30% during second-quarter
2020 and power prices in its key markets of PJM and ERCOT slid
concurrent with a sharp decline in natural gas prices. However,
financial gain resulting from previously executed hedges helped to
offset the near-term stress in power markets. On the liquidity
front, a $400 million senior secured notes issuance in May
bolstered liquidity and Talen used the net proceeds to pay down
$245 million of revolver borrowings and $70 million of 2026 term
loan.
Fitch expects Talen to generate EBITDA within management's revised
guidance range of $495 million to $645 million in 2020, which was
lowered by $30 million during the second quarter earnings
conference call to reflect exit from Northeast Gas Generation. The
2020 FCF guidance range was unchanged at $40 million-$120 million.
Longer Term Outlook Uncertain: Similar to other merchant power
generation companies, Talen's generation fleet is exposed to
changes in energy and capacity prices, which creates volatility in
EBITDA and FCF. PJM is by far the largest market for Talen with 84%
of its MWs located in this region. Many of the states located in
PJM are seeing a slower recovery in commercial and industrial sales
after the spring lockdowns following the initial wave of
coronavirus and the strong growth in residential demand has only
provided a partial offset. A delayed recovery in power demand,
continued weak commercial and industrial sales and shifting
patterns in power consumption due to the work-from-home trend could
continue to pressure forward power prices and negatively affect
results of future capacity auctions. The timing of the next base
residual auction (BRA) for 2022/2023 and 2023/2024 planning years
remains uncertain compounding uncertainty for Talen's longer-term
EBITDA outlook. A constructive outcome of the delayed PJM capacity
market auctions is key for long-term stability of EBITDA and
improvement in credit metrics.
In its financial projections, Fitch has tempered expectations for
energy and capacity prices, specifically for years 2022 and 2023,
versus its prior assumptions. However, increased volatility in
commodity prices and recent strength in natural gas prices given
the sharp decline in associate gas output and curtailment of
natural gas production in the Marcellus and Utica regions provides
opportunities for management to layer in opportunistic hedges,
which offer upside to its estimates. A three-year ratable hedging
policy and capacity revenues, which comprise approximately 20%-25%
of gross margin, mitigate commodity exposure to some extent. As of
July 28, 2020, Talen was 88% hedged for balance of 2020, followed
by 65% hedged for 2021 and 30% for 2022. Fitch expects management
to continue to exercise tight O&M and capex control to be able to
remain FCF positive 2020 onwards.
Higher Leverage than Prior Forecast: Fitch's revised EBITDA
expectations are lower than prior forecast leading to higher
forecasted leverage. Fitch expects Talen's recourse Debt to EBITDA
to be between 6.2x and 6.8x over 2021-2023, improving from
approximately 7.4x in 2020. Fitch assumes that Talen will pay down
2021-2022 maturing debt using cash on hand. Fitch includes only
recourse debt in its leverage calculation and includes distribution
from Lower Mt. Bethel - Martins Creek non-recourse subsidiary in
its adjusted EBITDA calculation. Fitch does not expect Talen to
make a distribution to its owners over 2020-2023.
Limited Diversification and Scale: Talen has limited geographical
and fuel diversity with approximately 73% of its realized energy
margin coming from PJM. Its Susquehanna nuclear plant alone
contributes approximately 57% of total realized energy margin.
While the nuclear plant has been running at industry-leading
capacity factors, any unforeseen adverse event could be material to
Talen.
ERCOT is Talen's second largest market. Fitch has a favorable
near-term view of power prices in ERCOT given the strong and
resilient power demand. However, power prices remain leveraged to
summer scarcity premiums and a rapid addition of renewables,
especially solar, has the potential to dampen margins over the
longer term. Talen also lacks a meaningful presence in retail
markets, which could serve as a natural hedge to wholesale
generation making the business model more resilient to commodity
cycles. The partial ownership of Colstrip 3 and 4 coal units in
Montana provides additional regional diversity for Talen.
Growth Opportunities: Management has been contemplating the
conversion of Montour coal plant in Pennsylvania to natural gas.
The total estimated investment is approximately $140 million,
roughly 50% of which is related to a gas pipeline lateral to the
plant and the balance is for modifications to existing plant
equipment. The drop in energy prices in PJM in 2019 and a further
decline in 2020, caused by the coronavirus-related economic
slowdown and uncertainty regarding the capacity auction construct
has led management to pause on the conversion.
Separately, Talen is pursuing development of several solar projects
at its existing generation sites. By structuring these investments
through joint ventures with a 49% ownership and contribution land,
existing infrastructure including grid interconnection, Talen plans
to minimize its upfront cash investment. The projects include two
separate solar projects, with 101 MW and 140 MW capacity, being
developed with Pattern Renewables and additional two separate
projects of 20 MW each being developed with BQ Energy Development,
LLC. These projects are in various stages of evaluation phase in
the PJM interconnection application process. Additional significant
renewables development potential exists across Talen's asset
footprint, including solar, wind, storage and transmission. Current
capex projections do not reflect any significant growth
investment.
Recovery Analysis: The individual debt instrument ratings at Talen
are notched above or below the IDR as a result of the relative
recovery prospects in a hypothetical default scenario. The recovery
analysis assumes that Talen would be reorganized as a going concern
in bankruptcy rather than liquidated. Fitch values the
power-generation assets that guarantee the debt at Talen using a
net present value (NPV) analysis. A similar NPV analysis is used to
value the generation assets that reside in non-guarantor
subsidiary, and the excess equity value is added to the parent
recovery prospects. The generation asset NPVs vary significantly
based on future gas price assumptions and other variables, such as
the discount rate and heat rate forecasts in PJM, ERCOT and the
Northeast.
For the NPV of generation assets used in Fitch's recovery analysis,
Fitch uses the plant valuation provided by its third-party power
market consultant, Wood Mackenzie, as well as Fitch's own gas price
deck and other assumptions. The NPV analysis for Talen's generation
portfolio yields approximately $200/kW for PJM Coal, $650/kw for
Susquehanna nuclear and an average of $400/kW for the natural gas
generation assets in ERCOT and Lower Mt. Bethel and Martin Creek in
PJM. Other key assumptions in the recovery analysis include 10%
administrative claim and full draw down of the revolver.
The recovery analysis yields 'RR1' for the first lien senior
secured debt and 'RR4' rating for the senior unsecured notes.
DERIVATION SUMMARY
Talen is unfavorably positioned compared to Vistra Energy Corp.
(Vistra, BB+/Positive) and Calpine Corp. (B+/Stable) with respect
to size, asset composition and geographic exposure. Vistra is the
largest independent power producer in the country with
approximately 39 GW of generation capacity compared to Calpine's 26
GW and Talen's 14GW. Talen lacks geographical diversity, but Fitch
considers PJM as a constructive market for power generators given
the capacity auction construct.
Vistra benefits from its ownership of large and well-entrenched
retail electricity businesses in contrast to Calpine, whose retail
business is much smaller. Talen has a modest retail business
focused on C&I customers. Calpine's younger and predominant natural
gas-fired fleet bears less operational and environmental risk as
compared to nuclear and generation assets owned by Vistra and
Talen. In addition, Calpine's EBITDA is very resilient to changes
in natural gas prices and heat rates as compared to its peers.
Talen's forecasted leverage is the highest among its peers, which
positions its rating lower than its peers. Fitch forecasts Talen's
debt to EBITDA leverage ratio, excluding non-recourse subsidiaries,
above 6.0x, which is weaker than Calpine's 5.0x and significantly
weaker than Vistra's 3.0x.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Its Rating Case for Talen include:
-- Modest recovery in energy prices in PJM and ERCOT over current
levels;
-- PJM capacity auction results as announced and assuming a 20%
decline in auction results for the 2022/23 auction;
-- Maintenance capex averaging $225 million annually;
-- No dividend to the owners;
-- 2020-2023 maturities paid using cash on hand and FCF.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Execution of deleveraging as per management's stated goal such
that recourse debt to adjusted EBITDA is below 4.5x on a
sustainable basis.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Weaker power demand and/or higher than expected power supply
depressing wholesale power prices in its core regions.
-- Unfavorable changes in regulatory construct/rules in the
markets in which Talen operates.
-- Negative FCF generation on a sustained basis.
-- Recourse debt to adjusted EBITDA above 7.0x and FFO fixed
charge coverage below 2.0x on a sustained basis.
-- Any incremental secured leverage and/or deterioration in NPV
of the generation portfolio will lead to downward rating pressure
on the unsecured debt.
LIQUIDITY AND DEBT STRUCTURE
Adequate Liquidity: As of June 30, 2020, Talen had approximately
$934 million of liquidity available, including $374 million of
unrestricted cash and $560 million availability under the $690
billion revolving credit facility. The revolving credit facility
matures in March 2024. Talen has two unsecured LC facilities that
provide for issuance of LCs of up to $100 million each. The two LC
facilities expire in June 2021 and December 2021. There was $190
million of alternate LC facility available as of June 30, 2020.
Talen also has the ability to issue first-lien debt for collateral
support. The secured obligations under the first lien collateral
was $96 million as of June 30, 2020.
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF
RATING
The principal sources of information used in the analysis are
described in the Applicable Criteria.
ESG CONSIDERATIONS
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of '3'. This means 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.
TERVITA CORP: Moody's Ups CFR to B2 & Alters Outlook to Stable
--------------------------------------------------------------
Moody's Investors Service upgraded Tervita Corporation's corporate
family rating (CFR) to B2 from B3, probability of default rating to
B2-PD from B3-PD, and assigned a B3 rating to Tervita's proposed
$500 million senior secured notes offering due in 2025. At the same
time, Moody's changed the outlook to stable from negative. The
speculative grade liquidity rating remains at SGL-3.
Tervita will use the proceeds from its US$500 million senior
secured notes issuance, combined with room under its new C$350
million revolving credit facility due November 2022 and cash on
balance sheet to refinance all of its US$590 million senior secured
notes due December 2021. The rating actions taken are contingent on
Tervita's ability to successfully refinance its US$590 million of
senior secured notes due in December 2021.
"Tervita's refinancing removes upcoming maturity concerns" said
Jonathan Reid, Moody's analyst.
Upgrades:
Issuer: Tervita Corporation
Corporate Family Rating, Upgraded to B2 from B3
Probability of Default Rating, Upgraded to B2-PD from B3-PD
Assignments:
Issuer: Tervita Corporation
Senior Secured Regular Bond/Debenture, Assigned B3 (LGD3)
Outlook Actions:
Issuer: Tervita Corporation
Outlook, Changed to Stable from Negative
RATINGS RATIONALE
Tervita's B2 CFR is challenged by: (1) exposure to declining
drilling and completion activity, which has led to a decline in
EBITDA and increased financial leverage; (2) concentration in the
Transfer, Remediation & Disposal (TRD) and landfill business with
little EBITDA coming from other segments; and (3) its small size.
Tervita is supported by: (1) the high barriers-to-entry of its
landfill and TRD facilities through a combination of technical
know-how and stringent environmental regulations; (2) its extensive
network of fixed facility waste management sites across the Western
Canadian Sedimentary Basin (WCSB); (3) significant portion of
EBITDA that is tied to production and contracts which limits
earnings volatility and (4) adequate liquidity.
Tervita's liquidity is adequate (SGL-3). The company has sources of
around C$230 million with no mandatory uses. Sources consist of
available operating cash of C$32 million (C$52 million on hand as
of September 30, 2020 less around C$20 million operating cash),
expected free cash flow of $30 million, and around C$170 million of
availability on the company's C$350 million revolving credit
facility due November 2022. The company has three financial
covenants, and Moody's expects it will be in compliance over the
next four quarters. Alternative sources of liquidity are limited as
all assets are largely pledged to the secured lenders.
Governance issues taken into consideration include Tervita's
detailed financial reporting that enable good visibility of
business conditions, and its financial policies that adequately
balance shareholder priorities with those of debtholders.
The stable outlook reflects its expectation that Tervita will
maintain adequate liquidity and generate positive free cash flow
over the next 12-18 months.
In accordance with Moody's Loss Given Default for Speculative-Grade
Companies (LGD) Methodology, the rating for the US$500 million
(equivalent to around C$560 million) senior secured second lien
notes is B3, one notch below Tervita's B2 corporate family rating,
reflecting the amount of priority ranking secured debt in the form
of the C$350 million revolving credit facility.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be downgraded if Tervita sustains EBITDA/interest
below 1.5x (2.2x LTM Sep20), if it sustains debt/EBITDA above 5x
(4.7x LTM Sep20) or if liquidity worsens, likely as a result of
sequential negative free cash flow generation.
The ratings could be upgraded if the company sustains debt/EBITDA
below 3.5x (4.7x LTM Sep20) and if sustains EBITDA/interest above
3x (2.2x LTM Sep20) while maintaining adequate liquidity.
The principal methodology used in these ratings was Global Oilfield
Services Industry Rating Methodology published in May 2017.
Tervita, based in Calgary, Alberta, is a public oilfield services
company that focuses on waste management in the Canadian oil and
gas industry. Revenue were C$716 million (excluding Energy
Marketing in 2019).
TERVITA CORP: S&P Affirms 'CCC+' Long-Term Issuer Credit Rating
---------------------------------------------------------------
S&P Global Ratings affirmed its 'CCC+' long-term issuer credit
ratings on Tervita Corp. At the same time, S&P assigned its 'CCC+'
issue-level rating and '4' recovery rating to Tervita's proposed
senior secured notes due 2025.
The affirmation largely reflects uncertainty around successful
completion of the proposed transaction at reasonable terms and
continued weakness in cash flow and leverage metrics under S&P's
updated base-case scenario. On Nov. 9, Tervita announced issuance
of US$500 million of senior secured notes due 2025. The proposed
notes, along with draws on the credit facility, will be used to
repay existing US$590 million of secured notes due December 2021
and related fees and expenses. The company has also received a
commitment from its banking syndicate to upsize the credit facility
to C$350 million from C$275 million, subject to completion of the
refinancing.
S&P said, "We view the proposed refinancing and upsized credit
facility favorably. However, in our view, uncertain economic and
industry conditions could make it difficult for the company to
complete the transaction at favorable terms. The negative outlook
reflects the possibility that if the transaction is not completed
in a timely manner, it could result in the notes becoming current
obligations by the end of 2020."
"In addition, although the company's recent operating performance
has been better than expected and relatively less muted compared
with that of other oilfield service providers, we believe credit
measures could remain weak, with adjusted funds from operations
(FFO)-to-debt expected to average 10% over the next two years."
"The negative outlook reflects our expectation for forecast credit
measures to remain weak through 2021. The outlook also reflects
Tervita's sizable debt maturities in 2021 and the risk that
refinancing may be difficult under current conditions."
"We could lower the rating if Tervita cannot extend its debt
maturity beyond 2021. An inability to refinance its long-term debt
would increase the probability of a debt restructuring we might
characterize as distressed."
"We could take a positive rating action if Tervita is able to
extend its debt maturity beyond 2021, while maintaining a
FFO-to-debt ratio above 12%."
THG HOLDINGS: Feds Take Company's Ch. 11 Plan Appeal to 3rd Circuit
-------------------------------------------------------------------
Law360 reports that the U.S. Department of Health and Human
Services says it is going to the Third Circuit with its argument
that medical testing firm True Health Group LLC's Chapter 11 plan
should have set aside $5.2 million for disputed Medicare payments.
HHS and the Centers for Medicare and Medicaid Services filed a
notice of appeal Monday of U. S. District Judge Richard G. Andrews'
Sept. 9, 2020 decision to uphold the bankruptcy court's
confirmation of THG's Chapter 11 plan from last year. THG hit
Chapter 11 in late July 2019, after more than two years of reduced
reimbursement payments from CMS.
About THG Holdings LLC
THG Holdings LLC and its affiliates, including True Health LLC,
sought protection under Chapter 11 of the Bankruptcy Code (Bankr.
D. Del. Lead Case No. 19-11689) on July 30, 2019.
THG's business is conducted in large part through True Health --
https://truehealthdiag.com/ -- a laboratory provider of diagnostic
and disease-management solutions based in Frisco, Texas. It
utilizes proprietary and innovative diagnostic to detect disease
indicators that enable early stage and monitoring for a variety of
chronic diseases.
At the time of the filing, True Health Diagnostics was estimated to
have assets of between $10 million and $50 million and liabilities
of between $100 million and $500 million.
The cases have been assigned to Judge John T. Dorsey.
The Debtors tapped Morris, Nichols, Arsht & Tunnell LLP as counsel;
Perkins Coie LLP as special counsel; SSG Advisors LLC as investment
banker; and Epiq Corporate , LLC as claims, noticing and
solicitation agent.
Andrew Vara, acting U.S. trustee for Region 3, on Aug. 8, 2019,
three creditors to serve on the official committee of creditors in
the Chapter 11 cases. The Committee retained Elliott Greenleaf,
P.C., and Cooley LLP, as attorneys, and GlassRatner Advisory &
Capital Group, LLC as financial advisor.
TORNANTE-MDP JOE: S&P Affirms 'B-' ICR; Outlook Negative
--------------------------------------------------------
S&P Global Ratings affirmed all ratings, including its 'B-' issuer
credit rating, on Tornante-MDP Joe Holding LLC (Topps).
S&P's recovery rating on the company's senior secured $30 million
revolver due April 2022 and $200 million term loan due October 2022
remain '3' despite the increased size of the term loan, as the
rating agency has raised its recovery valuation.
S&P said, "Despite the leveraging dividend, strong revenue, EBITDA,
and cash flow performance in 2020 will likely mitigate greater
financial risk. We updated our base case to incorporate the
additional debt and the dividend payment, and our measure of total
debt to EBITDA could be around 3x in 2020 primarily because of
strong anticipated revenue and EBITDA in 2020. We preliminarily
assume that revenue and EBITDA could moderate in 2021 because 2020
is a tough comparison, and leverage could rise above 4x in 2021. It
is our understanding that retailer inventory levels for Topps'
trading cards and collectibles are currently low, and demand is
outpacing the company's ability to fulfill orders. We believe the
pandemic has caused a surge in product demand because consumers are
spending more time at home, where trading cards and collectibles
activities have become more attractive entertainment options. As a
result, we expect positive sales trends to continue through the
remainder of 2020, and potentially into early 2021. As a result of
these positive sales trends, we now expect the company to end 2020
with lease adjusted debt to EBITDA around 3x, which is good for the
current rating. Under our base case, we expect some continuation of
current sales trends into first-quarter 2021 as retailers replenish
depleted trading card and collectable inventory."
"However, while pandemic-related shutdowns and the launches of
successful products like the company's Project 2020 card series
have resulted in elevated revenue so far this year in Topps'
Ftrading card business, the demand may not continue through 2021 if
the availability of entertainment options widens and consumers feel
more comfortable traveling and visiting out-of-home entertainment
venues. As a result, we assume 2021 revenue will be lower than 2020
levels. We also expect EBITDA margin compression in 2021 if the
company's revenue declines and it experiences some negative
operating leverage compared to the atypically high margin in 2020.
Under our base-case forecast we expect that 2021 leverage will
increase to above 4x as a result of EBITDA declines relative to
2020."
"Our negative outlook reflects refinancing risk as the company's
revolver and term loan come due in April and October of 2022,
respectively. While we believe that Topps' current level of
EBITDA and Cash flow may be sufficient to successfully refinance
its capital structure in 2022, the company has historically had
highly volatile revenue, and we would consider lowering the rating
one notch or more if operating performance is weak in 2021 and we
lose confidence the company can extend the maturity of its senior
secured facilities by the second half of the year. If Topps does
not refinance with sufficient lead time ahead of maturities, the
company could subject itself to unanticipated unfavorable market
conditions and interest costs."
"The company's financial sponsor ownership and recent dividend
recapitalization suggest Topps is unlikely to use its cash flow for
substantial deleveraging. We believe the company's aggressive,
financial sponsor ownership is unlikely to use available cash flow
for substantial deleveraging, as evidenced by its historical
appetite for dividends and leveraging transactions. Topps has a
track record of debt-financed dividends due to its financial
sponsor ownership. Additionally, as part of the $75 million term
loan add-on, Topps amended its credit facility to remove its excess
cash flow payment that was to be determined based on its 2020
financial performance. As a result of its financial sponsor
ownership, we do not net the company's balance sheet cash in our
measure of lease-adjusted debt as we believe that excess cash could
be deployed for dividends or tuck-in acquisitions. Accordingly, we
assess the company's financial risk profile as highly leveraged
because the financial sponsor could extract cash or otherwise
increase leverage from time to time."
"We believe that Topps' demand is highly volatile, largely driven
by the discretionary nature of its products, fad risk inherent in
the trading cards and collectibles market, and the highly
competitive confectionary market. The company has a small cash
flow base and narrow focus on two competitive and highly volatile
consumer discretionary markets--confectionary products and sports
and entertainment. The company also faces price competition in its
North American confection business and is vulnerable to periodic
margin compression. The company's trading card and collectible
sales are also highly volatile, as sales are largely driven by the
success of sports, movies, and TV shows, and faces significant fad
risk. We also believe that the company's seasonally driven sales
and productions cycles represent substantial risk, as it could
overproduce inventory in the first half of the year that's heavily
mismatched with its sales pattern in the second half of the year.
Additionally, while the company has had high demand and
correspondingly high revenue in 2020, we expect a tapering in
demand in 2021 and 2022 as out-of-home consumer entertainment
becomes more widely available."
"We believe recovery prospects for lenders have not been materially
impaired by the $75 million term loan add-on. We have adjusted
the rounded estimate of recovery on the senior secured debt to 50%
from 55%. We view the company's term loan add-on to be a
recapitalization because of its size relative to the company's
existing facilities. The dividend recap suggests Topps could be at
a higher level of assumed emergence EBITDA generation, even in a
distressed scenario, than we previously assumed. Consequently, we
have raised our assumed EBITDA at emergence in a hypothetical
default scenario as we believe increased debt service costs would
result in a hypothetical default at a lower level of EBITDA decline
than our prior recovery assumptions."
"The negative outlook reflects the possibility we could lower the
rating over the next year if we lose confidence the company can
refinance its revolver due April 2022 and term loan due October
2022."
S&P could lower the rating if:
-- S&P believes that the capital structure could become
unsustainable; or
-- S&P believes the company will not generate sufficient cash flow
to refinance its term loan due in Oct. 2022.
S&P could stabilize the outlook or raise the rating one notch or
more if:
-- S&P believes that the company will generate sufficient EBITDA
to sustain leverage below 4x; and
-- S&P believes Topps will successfully address its senior secured
maturity profile.
TRANSFORMATION TECH: Case Summary & 7 Unsecured Creditors
---------------------------------------------------------
Debtor: Transformation Tech Investors, Inc.
aka Interface Preferred Holdings, Inc.
3773 Corporate Center Dr.
Earth City, MO 63045
Case No.: 20-12970
Business Description: Transformation Tech Investors, Inc. --
https://interfacesystems.com --
is a managed services provider
delivering business security systems,
managed network services, managed voice
over IP, and business intelligence
solutions to distributed enterprises.
Chapter 11 Petition Date: November 11, 2020
Court: United States Bankruptcy Court
District of Delaware
Debtor's Counsel: Paul N. Heath, Esq.
RICHARDS, LAYTON & FINGER, P.A.
One Rodney Square, 920 North King Street
Wilmington, Delaware 19801
Tel: (302) 651-7700
Email: heath@rlf.com
Debtor's
Financial
Advisor: IMPERIAL CAPITAL, LLC
10100 Santa Monica Boulevard
Suite 2400
Los Angeles, CA 90067
Debtor's
Claims &
Noticing Agent
and Administrative
Advisor: RELIABLE COMPANIES
D/B/A RELIABLE
Nemours Building
1007 Orange Street
Suite 110
Wilmington, DE 19801
Estimated Assets: $100,000 to $500,000
Estimated Liabilities: $100 million to $500 million
The petition was signed by Mark Pape, director.
A copy of the petition is available for free at PacerMonitor.com
at:
https://www.pacermonitor.com/view/HNMCJII/Transformation_Tech_Investors__debke-20-12970__0001.0.pdf?mcid=tGE4TAMA
List of Debtor's Seven Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
1. Terman Investment PTE Ltd. Note $19,444,444
c/o GIC Special Investments PTE Ltd.
280 Park Avenue, Floor 9
New York, NY 10017
Geraldine Lor
Tel: (212) 856-2567
Email: geraldinelor@gic.com.sg
and
c/o GIC Special Investments PTE Ltd.
York House
45 Seymour Street
London W1H 7LX UK
Liu Rui
Tel: (+44) 207-7253883
Email: liurui@gic.com.sg
2. Teachers Insurance and Note $12,500,000
Annuity Association of America
8500 Andrew Carnegie Boulevard
Charlotte, NC 28262
Jason Strife
Tel: (704) 988-6571
Email: jason.strife@tiaainvestments.com
- and -
Derek Fricke
Tel: (704) 988-3608
Email: Derek.fricke@tiaainvestments.com
3. PCP ISS Group Investors, LLC Note $4,441,594
c/o Ottawa Avenue Private Capital, LLC,
an affiliate of RDV Corporation
126 Ottawa Ave. NW, Suite 500
Grand Rapids, MI 49503
Randall Damstra
Tel: (616) 454-4114
Email: investmentgroup@rdvcorp.com
4. Doug and Maria Devos Foundation Note $2,960,230
c/o Ottawa Avenue Private Capital, LLC,
an affiliate of RDV Corporation
126 Ottawa Ave. NW, Suite 500
Grand Rapids, MI 49503
Randall Damstra
Tel: (616) 454-4114
Email: investmentgroup@rdvcorp.com
5. Dick and Betsy Devos Note $2,055,715
Family Foundation
c/o Ottawa Avenue Private
Capital, LLC, an affiliate
of RDV Corporation
126 Ottawa Ave. NW, Suite 500
Grand Rapids, MI 49503
Randall Damstra
Tel: (616) 454-4114
Email: investmentgroup@rdvcorp.com
6. CDV5 Foundation Note $2,055,715
c/o Ottawa Avenue Private Capital, LLC,
an affiliate of RDV Corporation
126 Ottawa Ave. NW, Suite 500
Grand Rapids, MI 49503
Randall Damstra
Tel: (616) 454-4114
Email: investmentgroup@rdvcorp.com
7. Jerry and Marcia Note $986,743
Tubergen Foundation
c/o Ottawa Avenue Private
Capital, LLC, an affiliate of
RDV Corporation
126 Ottawa Ave. NW, Suite 500
Grand Rapids, MI 49503
Randall Damstra
Tel: (616) 454-4114
Email: investmentgroup@rdvcorp.com
UNITI GROUP: Swings to $7.4 Million Net Income in Third Quarter
---------------------------------------------------------------
Uniti Group Inc. filed with the Securities and Exchange Commission
its Quarterly Report on Form 10-Q disclosing net income of $7.45
million on $258.76 million of total revenues for the three months
ended Sept. 30, 2020, compared to a net loss of $19.78 million on
$263.63 million of total revenues for the three months ended Sept.
30, 2019.
For the nine months ended Sept. 30, 2020, the Company reported a
net loss of $671.14 million on $791.74 million of total revenues
compared to net income of $22.26 million on $789.07 million of
total revenues for the same period during the prior year.
As of Sept. 30, 2020, the Company had $4.83 billion in total
assets, $6.83 billion in total liabilities, and a total
shareholders' deficit of $1.99 billion.
"Our fiber and leasing businesses continue to perform exceedingly
well. Install activity during the quarter at Uniti Fiber remained
robust reflecting the strong demand we continue to see for our
wireless and non-wireless service offerings. At Uniti Leasing, we
continue to drive additional lease up on our national fiber
network. This was reflected in the Everstream transaction we are
announcing today, reinforcing the substantial value of our national
network, including the fiber Uniti acquired the rights to in its
settlement with Windstream," commented Kenny Gunderman, president
and chief executive officer.
Mr. Gunderman continued, "The demand for our fiber networks has
never been higher as we continue to drive high margin, low churn,
recurring revenue to provide mission critical services."
Windstream Emerges From Bankruptcy;
Settlement of Litigation Effective
On Sept. 21, 2020, Uniti announced the effectiveness of the
previously announced settlement with Windstream Holdings Inc. and
certain of its subsidiaries. The settlement occurred in connection
with Windstream's emergence from bankruptcy. The effectiveness of
the settlement resolves any and all claims and causes of action
that have been or may be asserted in the future by Uniti and
Windstream regarding the 2015 spinoff of Uniti and related sale
leaseback transaction, including all litigation brought against
Uniti by Windstream and certain of its creditors during
Windstream's bankruptcy proceedings. The release from claims
applies to any Windstream successor and is binding going forward,
including in any future Windstream bankruptcy.
Investment Transaction
Uniti announced today a strategic OpCo-PropCo transaction with
Everstream Solutions LLC, which is majority owned by AMP Capital, a
global investment manager headquartered in Sydney, Australia. As
part of the transaction, Uniti will enter into two 20 year IRU
lease agreements with Everstream on Uniti owned fiber that spans 8
states and covers over 10,000 route miles and 220,000 fiber strand
miles. Concurrently, Uniti has agreed to sell to Everstream a
portion of Uniti Fiber's Northeast operations and certain dark
fiber IRU contracts acquired as part of the Windstream settlement,
that on a combined basis, currently generate approximately $24
million of annual revenue. Total cash consideration to Uniti,
including upfront IRU payments, is approximately $135 million. In
addition to the upfront proceeds, Uniti will receive fees of
approximately $3 million annually from Everstream over the initial
20 year term of the IRU lease agreements, subject to an annual
escalator of 2%. The transaction is subject to regulatory and
other customary closing conditions and is expected to close in the
second quarter of 2021.
On July 1, 2020, Uniti completed the sale of a controlling
ownership stake in the entity that holds certain former Uniti
Midwest fiber network assets to MIP for total cash consideration of
approximately $168 million. Uniti retained an investment interest
in the entity, and the fiber network will continue to be leased to
MIP at a fixed cash yield of 8.5%.
Liquidity and Financing Transactions
At quarter-end, the Company had approximately $484 million of
unrestricted cash and cash equivalents, and undrawn borrowing
availability under its revolving credit agreement. The Company's
leverage ratio at quarter end was 6.1x based on Net Debt to
Annualized Adjusted EBITDA.
On Nov. 5, 2020, the Company's Board of Directors declared a
quarterly cash dividend of $0.15 per common share, payable on
Jan. 4, 2021 to stockholders of record on Dec. 15, 2020.
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1620280/000156459020052508/unit-10q_20200930.htm
About Uniti
Headquartered in Little Rock, Arkansas, Uniti --
http://www.uniti.com/-- is an internally managed real estate
investment trust. It is engaged in the acquisition and
construction of mission critical communications infrastructure, and
is a provider of wireless infrastructure solutions for the
communications industry. As of Sept. 30, 2020, Uniti owns 6.7
million fiber strand miles and other communications real estate
throughout the United States.
As of June 30, 2020, the Company had $4.82 billion in total assets,
$7.03 billion in total liabilities, and a total shareholders'
deficit of $2.22 billion.
PricewaterhouseCoopers LLP, in Little Rock, Arkansas, the Company's
auditor since 2014, issued a "going concern" qualification in its
report dated March 12, 2020, citing that the Company's most
significant customer, Windstream Holdings, Inc., which accounts
for
approximately 65.0% of consolidated total revenues for the year
ended Dec. 31, 2019, filed a voluntary petition for relief under
Chapter 11 of the Bankruptcy Code, and uncertainties surrounding
potential impacts to the Company resulting from Windstream
Holdings, Inc.'s bankruptcy filing raise substantial doubt about
the Company's ability to continue as a going concern.
* * *
Also in March 2020, S&P Global Ratings placed all ratings on U.S.
telecom REIT Uniti Group Inc., including the 'CCC-' issuer credit
rating, on CreditWatch with positive implications. The CreditWatch
placement follows the company's announcement it reached an
agreement in principle with its largest tenant Windstream Holdings
Inc. to resolve all legal claims it asserted against Uniti in the
context of Windstream's bankruptcy proceedings.
UPSTREAM NEWCO: Moody's Affirms B3 CFR; Alters Outlook to Positive
------------------------------------------------------------------
Moody's Investors Service changed Upstream Newco, Inc.'s outlook to
positive from negative and affirmed its B3 Corporate Family Rating
(CFR), B3-PD Probability of Default Rating, B2 rating on the first
lien senior secured credit facility, and Caa2 rating on the second
lien term loan.
The affirmation of the B3 CFR reflects Moody's view that, in the
face of the pandemic, Upstream has successfully reduced variable
costs and constrained growth capital expenditures in order to
preserve cash flow and maintain liquidity. Despite lower physical
therapy volumes in the second quarter, volumes have mostly returned
to pre-pandemic levels and will continue to improve as demand for
physical therapy services continue to normalize. The rating also
reflects the lingering operating uncertainty due to the coronavirus
pandemic.
The change in outlook to positive reflects the return to volumes to
near pre-coronavirus pandemic levels. The positive outlook reflects
Moody's expectation that the company's leverage will decline
meaningfully over the next 12-18 months and that Upstream will
resume its positive same-store sales growth.
Moody's took the following rating actions:
Issuer: Upstream Newco, Inc.
Corporate Family Rating, affirmed at B3
Probability of Default Rating, affirmed at B3-PD
Senior secured first lien revolver expiring 2024, affirmed at B2
(LGD3)
Senior secured first lien term loan due 2026, affirmed at B2
(LGD3)
Senior secured second lien term loan due 2027, affirmed at Caa2
(LGD5)
Outlook Actions:
Issuer: Upstream Newco, Inc.
Outlook, Changed to Positive from Negative
RATINGS RATIONALE
Upstream's B3 Corporate Family Rating reflects its high financial
leverage at 6.9x and geographic concentration in the southeastern
region of the US. The rating also reflects the company's rapid
expansion strategy as it grows predominantly through new clinic
openings. The rating is also constrained by the low barriers to
entry in the physical therapy business and the risk of market
oversaturation given the rapid expansion plans of Upstream and many
of its competitors. The rating is supported by Upstream's strong
track record of same-store sales growth and management of new
clinic expansions and acquisitions. Moody's expects that the demand
for physical therapy will continue to grow given it is relatively
low-cost and can prevent the need for more expensive treatments or
opioid pain management.
Moody's considers Upstream to have good liquidity. The company has
historically had positive free cash flow, though limited by growth
and acquisition spending. Moody's expects free cash flow to be
modestly positive over the next two years, after significant growth
expenditures. That said, the company has a proven ability to
conserve cash if necessary, by reducing growth investments.
Liquidity is supported by the company's approximately $31 million
of cash as of June 30, 2020, and $50 million of availability on the
company's revolving credit facility. The company expects to repay
the remaining $7 million in Medicare Advance Payments in 2021, as
cash reserves will be more than sufficient.
Moody's considers coronavirus to be a social risk given the risk to
human health and safety. Aside from coronavirus, Upstream faces
other social risks such as the rising concerns around the access
and affordability of healthcare services. However, Moody's does not
consider the physical therapy providers to face the same level of
social risk as many other healthcare providers. Further, Upstream
benefits from positive social considerations, as physical therapy
can be a less expensive and a safer alternative to surgery or
opioid usage. From a governance perspective, Moody's views
Upstream's growth strategy to be aggressive given its history of
debt-funded new clinic openings and clinic acquisitions.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Ratings could be downgraded if the company's liquidity weakens or
if the company is not able to reduce variable costs and capital
expenditures in the coming weeks to mitigate the negative impact of
coronavirus on volumes. Beyond coronavirus, if the company fails to
effectively manage its rapid growth or the company pursues more
aggressive financial policies, the ratings could be downgraded.
Ratings could be upgraded if Upstream materially increases its size
and scale and demonstrates stable organic growth at the same time
that it effectively executes its expansion strategy. Additionally,
debt/EBITDA sustained below 6.0 times could support an upgrade.
Upstream Newco, Inc., headquartered in Birmingham, Alabama, is a
provider of outpatient rehabilitation services - primarily physical
therapy. Through its subsidiaries, it operates over 767 clinics in
27 states, with a strong presence in the southeast. Upstream is
owned by Revelstoke Capital Partners, LLC, a Denver-based private
equity firm. The company's revenue as of June 30, 2020 is
approximately $490 million.
The principal methodology used in these ratings was Business and
Consumer Service Industry published in October 2016.
VERITAS HOLDINGS: S&P Affirms 'B-' ICR, Alters Outlook to Stable
----------------------------------------------------------------
S&P Global Ratings affirmed all of its ratings on U.S.-based
enterprise information management software provider Veritas
Holdings Ltd. (Veritas) (including issuer subsidiaries Veritas US
Inc. and Veritas Bermuda Ltd.), including its 'B-' issuer credit
rating, and revised its outlook to stable from negative.
S&P said, "We expect Veritas' products that protect
mission-critical data and applications will help it manage macro
uncertainty in the near term. Though growth remains challenged, the
company's operating performance following the peak of the pandemic
was better than we expected. Preliminary results for the second
fiscal quarter ended Sept. 30, 2020 showed strong management
adjusted EBITDA margins above 40% (approximately 34% S&P Global
Ratings-adjusted) compared with about 35% one year ago (about 29%
S&P Global Ratings-adjusted) driven by moderating restructuring
costs and higher-margin software sales. Veritas' core offerings are
mature, though demand for data protection and solutions drove
stable revenues and margin expansion in the quarter. As a result,
we expect consistent profitability to support steady FOCF
generation over the next 12 months. Typically, the third and fourth
fiscal quarters are the company's seasonal high periods for license
sales."
"While revenue growth headwinds due to competition from cloud
offerings and a decrease in information technology (IT) spend in
2020 are likely to weaken customer demand and delay upgrades and
capacity expansion, we expect revenue declines over the next 1-2
years to be gradual because of the company's high recurring revenue
base (about 65% of total revenues) and a long-standing customer
base. We expect increased remote selling of software solutions,
higher renewal rates for its NetBackup offering and integrated
appliances should continue to offset some declines in non-core
offerings, and support EBITDA margin in the low-30% area (S&P
Global Ratings-adjusted). We also expect FOCF of about $90
million-$100 million in fiscal 2021 or 2%-3% FOCF to debt."
"Planned refinancing improves Veritas' debt maturity profile,
providing some flexibility to execute revenue growth initiatives.
Despite data growth stemming from new workloads and multi-cloud
environments and requirements to protect data amid IT
transformation and security threats, Veritas' revenue has
persistently declined over the past few years. Considering the
challenges, the company has implemented restructuring plans to
reduce costs and targeted investment in core product areas and
delivery to support future growth. While we do not expect revenues
to grow in fiscal 2021 and adjusted leverage to remain high at
around 8x, the proposed debt refinancing alleviates a looming
maturity and meaningful liquidity shortfall should business
fundamentals weaken considerably because of macro and competitive
pressures. The company's high pro forma cash balances of $551
million and improved maturity profile that provide some operational
flexibility to execute on growth initiatives partly support the
revision of our outlook on the rating."
Veritas is required to make amortization payments reducing the
secured term loan by about $20 million annually. Expected cash flow
generation and current cash balances will be more than sufficient
over the next 12-24 months. The company's nearest funded debt
maturity will include the remaining 2023 notes not refinanced. The
$785 million unsecured senior notes are due in 2024. If more than
$400 million of these notes is outstanding at Nov. 1, 2023, the
secured term loans due Sept. 2025 will be due. The company's $63
million revolver expires Jan. 29, 2021, and its $187 million
revolver expires Oct. 28, 2022. The facilities were undrawn as of
Oct. 2, 2020.
After significant cost cuts over the past few years further expense
reduction might be challenging. The company improved margins and
EBITDA in recent years despite revenue declines. Veritas
implemented a number of temporary expense-reduction measures that
should help defend margins in the near term.
S&P said, "We believe permanent further cuts may be difficult to
achieve quickly or disruptive to the business turnaround, and that
a sizable revenue decline will materially compress margins if sales
do not continue to recover. We also see risk that substantial
further reductions may impair the firm's ability to innovate and
return to growth longer-term."
"The stable outlook reflects our expectation for moderating revenue
declines, steady profitability, and positive FOCF in fiscal 2021,
and sizable cash balances to somewhat offset growth headwinds over
the next 12 months. The outlook also reflects our expectation for
an improved debt maturity profile that provides some flexibility to
execute plans to improve revenue over the same period."
S&P could lower the rating if:
-- Revenue erosion accelerates because of stronger competition in
data protection markets or worsening macro factors, and
profitability declines such that FOCF is break-even after debt
service; and
-- Its liquidity position is diminished with weak interest
coverage of 1x.
An upgrade is unlikely over the next 12 months because of the
company's high leverage and revenue growth challenges. S&P could
consider an upgrade over time if:
-- The company maintains a flattish revenue profile;
-- Expands EBITDA margins above 30% on a sustained basis; and
-- Adjusted leverage declines and remains in the low-7x area or
FOCF to debt above 5%.
VIZIV TECHNOLOGIES: Taps Allred & Wilcox as Special Counsel
-----------------------------------------------------------
Viziv Technologies, LLC seeks authority from the U.S. Bankruptcy
Court for the Northern District of Texas to hire Allred & Wilcox
PLLC as its special corporate counsel.
The services that Allred & Wilcox will provide are as follows:
a. advise and consult with the Debtor regarding corporate
transactions, including recapitalization through new equity
investment or through another transaction structure;
b. advise and consult with the Debtor concerning questions
about revisions and amendments to the governing documents,
including the limited liability company agreement; and
c. address other corporate law matters if requested by the
Debtor.
The normal rates for the firm's attorneys range from $450 to $550
per hour.
Allred & Wilcox is disinterested within the meaning of Section
101(14) of the Bankruptcy Code, according to court filings.
The firm can be reached through:
Aaron R. Allred, Esq.
Allred & Wilcox PLLC
1022 E 15th St.
Plano, TX 75074
Phone: +1 214-224-0885
About Viziv Technologies
Viziv Technologies, LLC is an electronics company that specialized
in the field of electromagnetic surface waves.
On Oct 7, 2020, creditors Surface Energy Partners LP, Kendol C.
Everroad and Jamison Partners, LP filed an involuntary petition for
relief under Chapter 11 of the Bankruptcy Code (Bankr. N.D. Texas
Case No. 20-32554) against Viziv Technologies. The creditors are
represented by Kenneth Stohner Jr., Esq., at Jackson Walker, LLP.
Judge Stacey G. Jernigan oversees the case.
Cavazos Hendricks Poirot, PC and Allred & Wilcox, PLLC serve as the
Debtor's bankruptcy counsel and special corporate counsel,
respectively.
VT TOPCO: Moody's Upgrades CFR to B3 & Alters Outlook to Stable
---------------------------------------------------------------
Moody's Investors Service upgraded VT Topco, Inc.'s corporate
family rating to B3 from Caa1 and probability of default (PDR) to
B3-PD from Caa1-PD. Concurrently, Moody's upgraded the company's
first lien senior secured credit facility to B2 from Caa1 and its
second lien senior secured term loan to Caa2 from Caa3. The outlook
was changed to stable from negative.
"The upgrade of Veritext's ratings reflects higher than anticipated
revenue and earnings in 2020 amid the COVID-19 pandemic and Moody's
view that the company's liquidity profile will remain good," said
Andrew MacDonald, Moody's analyst at the company. "The company has
managed to effectively adjust costs and shift to a remote working
environment that should lead to an improvement in debt leverage
towards 6x in 2021, aided by the resumption of revenue growth and
margin expansion."
Upgrades:
Issuer: VT Topco, Inc.
Corporate Family Rating, Upgraded to B3 from Caa1
Probability of Default Rating, Upgraded to B3-PD from Caa1-PD
Senior Secured 1st Lien Bank Credit Facility, Upgraded to B2 (LGD3)
from Caa1 (LGD3)
Senior Secured 2nd Lien Bank Credit Facility, Upgraded to Caa2
(LGD5) from Caa3 (LGD5)
Outlook Actions:
Issuer: VT Topco, Inc.
Outlook, Changed To Stable From Negative
RATINGS RATIONALE
Veritext's B3 CFR is constrained by high debt-to-EBITDA leverage,
currently estimated at 7.2x (Moody's adjusted and excluding
one-time COVID savings and capitalized software development costs)
for the twelve months ended 30 September 2020. The rating also
reflects the company's modest size and scale and a highly
acquisitive growth strategy. Positively, Moody's believes that the
impact of the pandemic on earnings and revenue will be largely
limited to the second quarter of 2020 and that revenue growth
should resume in 2021. Moreover, operations should be more
resilient to future health emergencies as the company has
demonstrated the ability to transition operations to a remote
model. Additionally, Moody's expects that actioned cost savings
combined with a shift towards greater adoption of Veritext's
virtual deposition services will lead to sustained margin
improvement. The company also has a leading competitive position in
a fragmented industry with a diverse base of major law firm clients
and a high customer retention rate. Liquidity is supported by
Moody's expectation for positive free cash flow of approximately
$40 to $45 million during the next 12 months, a cash balance of
approximately $16 million as of 30 September 2020, and access to an
undrawn $55 million revolving credit facility expiring in 2025.
The stable outlook reflects Moody's expectation that the company
will be able to sustain sequential revenue and earnings growth over
the next 12-18 months and that adjusted debt leverage will improve
towards 6x while maintaining adequate liquidity including
acquisitions.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be downgraded if operational performance
deteriorates, liquidity weakens or Veritext's acquisition strategy
results in operational disruptions. Moody's adjusted debt-to-EBITDA
sustained above 7.5x or EBITA-to-interest approaching 1.0x could
also result in a downgrade.
The ratings could be upgraded if the company delivers sustained
revenue and earnings growth while continuing to deliver on its
historically successful track record of integrating acquisitions.
Moody's adjusted debt-to-EBITDA sustained below 6.0x and free cash
flow as a percentage of debt maintained above 5% could also support
a prospective upgrade.
Veritext, headquartered in Livingston, NJ, is the largest
deposition and litigation support solutions provider to the legal
industry. Since the August 2018 leveraged buyout transaction, the
company has been owned by Leonard Green & Company.
The principal methodology used in these ratings was Business and
Consumer Service Industry published in October 2016.
WISLON SALON: U.S. Trustee Unable to Appoint Committee
------------------------------------------------------
The U.S. Trustee, until further notice, will not appoint an
official committee of unsecured creditors in the Chapter 11 case of
Wislon Salon and Spa, Inc., according to court dockets.
About Wislon Salon and Spa Inc.
Wislon Salon and Spa Inc. sought protection for relief under
Chapter 11 of the Bankruptcy Code (Bankr. S.D. Fla. Case No.
20-21138) on Oct. 13, 2020, listing under $1 million in both assets
and liabilities. Julianne R. Frank, Esq. serves as the Debtor's
legal counsel.
WP CPP: S&P Assigns 'CCC+' Rating to $100MM Incremental Term Loan
-----------------------------------------------------------------
S&P Global Ratings assigned its 'CCC+' rating to WP CPP Holdings
LLC's $100 million incremental first-lien term loan due in April
2025. The recovery rating is '4' indicating S&P's expectations of
average (30%-50%; rounded estimate: 45%) recovery in a default
scenario.
S&P's other ratings on the company are not affected.
WP CPP plans to use the proceeds to bolster liquidity. Pro forma
for the transaction, the company has about $173 million cash on
hand and about $90 million additional revolver and accounts
receivable (AR) securitization facility availability as of June 30,
2020. The transaction will slightly weaken credit metrics in 2020
from S&P's previous expectations, but it improves liquidity. This
is more of a concern with the weakness in the commercial aerospace
market caused by the coronavirus pandemic.
ISSUE RATINGS - RECOVERY ANALYSIS
Key analytical factors
-- The company's capital structure comprises a $125 million
revolver due in 2023, first-lien term loans (including the
delayed-draw and 2020 incremental facilities) with about $1.243
billion outstanding due in 2025, $356 million second-lien term loan
due in 2026, and $100 million AR factoring facility (not rated).
The AR facility has about $35 million drawn as of June 30, 2020,
and S&P considers it a priority claim.
-- Other default assumptions include LIBOR rising to 2.5%, the
revolver being 85% drawn, and the AR facility 55% drawn at
default.
Simulated default assumptions
-- Simulated year of default: 2022
-- EBITDA at emergence: $145 million
-- EBITDA multiple: 5x
Simplified waterfall
-- Net enterprise value (after 5% administrative costs): $687
million
-- Valuation split (obligors/nonobligors): 92%/8%
-- Priority claims (AR): $56 million
-- Collateral value available to secured creditors: $612 million
-- Secured first-lien debt claims: $1.369 billion
-- Recovery expectations: 30%-50% (rounded estimate: 45%)
-- Value available to second-lien debt claims: $0
-- Secured second-lien debt claims: $374 million
-- Recovery expectations: 0%-10% (rounded estimate: 0%)
Ratings List
WP CPP Holdings LLC
Issuer Credit Rating CCC+/Negative/--
New Rating
WP CPP Holdings LLC
Senior Secured
US$100 mil 1st lien term bank ln due 04/30/2025 CCC+
Recovery Rating 4(45%)
YOUFIT HEALTH: Court Approves Fast Pace Chapter 11
--------------------------------------------------
Law360 reports that bankrupt gym chain YouFit Health Clubs LLC
convinced a judge in Delaware to go along with a fast-paced Chapter
11 workout on Tuesday, setting a tentative Dec. 29, 2020 target for
closing on its planned multisite business sale and granting access
to $3.5 million of a larger loan from a creditor.
"I have accepted the debtor's premise that 'This needs to be done
before the end of the year' is a valid business reason," U.S.
Bankruptcy Judge Mary F. Walrath said during a teleconference
hearings on case-opening motions for the company and its 119
affiliates. YouFit sought bankruptcy protection on Monday, November
9, 2020.
About YouFit Health Clubs
YouFit Health Clubs, LLC, and its affiliates own and operate 85
fitness clubs in the states of Alabama, Arizona, Florida, Georgia,
Louisiana, Maryland, Pennsylvania, Rhode Island, Texas, and
Virginia. On the Web: https://www.youfit.com/
On Nov. 9, 2020, YouFit Health Clubs and its affiliates sought
Chapter 11 protection (Bankr. D. Del. Lead Case No. 20-12841).
YouFit was estimated to have $50 million to $100 million in assets
and $100 million to $500 million in liabilities as of the filing.
The Hon. Mary F. Walrath is the case judge.
The Debtors tapped GREENBERG TRAURIG, LLP, as general bankruptcy
counsel; and FOCALPOINT SECURITIES, LLC as investment banker. RED
BANYAN GROUP, LLC, is the communications consultant. DONLIN RECANO
& COMPANY, INC., is the claims agent. HILCO REAL ESTATE, LLC, is
the real estate advisor.
[*] Bankruptcy Filings Down 41%, Ch. 11 Filings 4% Up in October
----------------------------------------------------------------
Monitor Daily reports that the bankruptcy filings in the U.S.
declined by 41% overall while Chapter 11 filings rose by 4%.
Total U.S. bankruptcy filings in October 2020 decreased 41% from
2019, according to data provided by Epiq Systems. The 40,209 total
filings in October 2020 were down from the 67,858 filings
registered in October 2019. The 37,688 consumer filings in October
2020 also represented a 41% decrease from last year’s consumer
total of 64,279.
Overall commercial filings in October 2020 totaled 2,521 filings,
down 30% from the 3,579 filings in October 2019. Commercial Chapter
11 filings increased slightly, with the 550 filings in October 2020
up 4% over the 530 recorded in October 2019. Throughout 2020, more
than half of the commercial Chapter 11 filings have been related
filings by subsidiaries within a corporate group.
"Families and businesses are faced with increasing financial
challenges due to the COVID-19 pandemic and growing debt loads,"
Amy Quackenboss, executive director of the American Bankruptcy
Institute, said. "The expiration of government relief programs,
high unemployment and a difficult financial outlook for many
sectors will likely lead to filings increasing in early 2021."
Total bankruptcy filings in October 2020 represented a 1% increase
from the 39,713 total filings in September. The 37,688 consumer
filings in October represented a 2% increase from September's
consumer total of 37,030. October 2020 business filings decreased
6% to 2,521 from September's business total of 2,683. The 550
commercial Chapter 11 filings recorded in October 2020 represented
a 27% decrease from the 749 commercial Chapter 11 filings in
September.
The average nationwide per capita bankruptcy filing rate in October
was 1.78 (total filings per 1,000 per population), a slight
decrease from the filing rate of 1.81 during the first nine months
of 2020. Average total filings per day in October 2020 were 1,915,
a decrease of 38% from the 3,084 total daily filings in October
2019. States with the highest per capita filing rates (total
filings per 1,000 population) in October 2020 were Alabama (4.00),
Delaware (3.71), Tennessee (3.54), Mississippi (3.01) and Nevada
(2.99).
[*] Iconic Retailers Fight to Survive as COVID-19 Rages On
----------------------------------------------------------
Lauren Thomas of CNBC reports that numerous American iconic
retailers fight to survive as COVID-19 pandemic rages on.
Through mid-October 2020, there had been 46 retail bankruptcies in
2020, according to a tracking by S&P Global.
More retailers are expected to file for bankruptcy after the
holiday season. Bankruptcy doesn't always mean the end.
Retailers including J.Crew and Neiman Marcus have already emerged
from bankruptcy court, having filed for Chapter 11 in 2020.
For the dozens of American retailers that have filed for bankruptcy
in 2020, it doesn't always mean the end is near.
Bankruptcies have piled up in the retail industry this year, as
many of the consumer-facing companies that were already teetering
on the edge of survival prior to the coronavirus pandemic were
pushed into even bigger sales slumps, and could not manage through
the crisis. And analysts say another wave of filings likely lies
ahead, after the holiday season, with the size of that wave
dependent upon retailers’ performance through the winter months.
A common misconception among consumers — when they see their
favorite brands are headed to bankruptcy court — is that those
companies are going away for good. (Yes, sometimes tears are
shed.)
But a number of the retailers that have filed for Chapter 11
bankruptcy protection this year have already emerged, in some form
or fashion. Typically, that is with fewer bricks-and-mortar stores,
as many companies will use the restructuring process to break
leases without penalty to slim down their real-estate portfolios.
As those stores close up, mall and shopping center owners are then
under pressure to find new tenants. The retail real estate industry
has also been grappling with the effects of the pandemic: Fewer
rent checks coming in each month, and thousands of store closures
when less companies are looking to open new locations. Mall owners
CBL & Associates and Pennsylvania REIT both filed for bankruptcy
protection on Sunday, highlighting these stresses.
A Chapter 11 filing is, simply put, a way for troubled companies to
slash unprofitable assets and burdensome debt, while their
management team remains in control of the business. And a
bankruptcy court oversees the negotiating process with landlords,
creditors, vendors and other involved parties.
A Chapter 7 filing, in comparison, entails a total liquidation.
Simon Property Group continues its shopping spree, looks to do more
deals. Retailers file, then emerge.
The preppy apparel brand J.Crew marked the first major retailer to
file for Chapter 11 during the pandemic, in early May. Its problems
predated the Covid-19 crisis, as its debts mounted and sales were
in a slump. But pressures ballooned when its stores were forced to
shut in March, to try to help curb the spread of the virus, and
many consumers culled their spending on clothing.
In September 2020, though, J.Crew emerged from bankruptcy court —
this time with new owners. Its restructuring plan swapped $1.6
billion of old, secured debt for new ownership, under Anchorage
Capital Group, and also provided a fresh $400 million credit
facility.
"J.Crew and Madewell's ability to pair timeless classics with
modern, fresh designs will never go out of style, and we intend to
continue the legacies of these two iconic American brands with
deeply loyal customers and strong, creative leadership teams," the
Anchorage Capital CEO said in a statement.
The high-end department store chain Neiman Marcus emerged from
bankruptcy in late September 2020, too, after filing for Chapter 11
in May 2020, shortly after J.Crew. Its restructuring plan
eliminated more than $4 billion of debt, along with $200 million of
annual interest expense.
"While the unprecedented business disruption caused by Covid-19 has
presented many challenges, it has also given us the opportunity to
reimagine our platform and improve our business," Neiman Marcus
Group CEO Geoffroy van Raemdonck said in a statement. "We emerge
from Chapter 11 as a stronger, more innovative retailer, brand
partner, and employer."
The home-goods chain Pier 1 Imports has somewhat of a unique story:
It had filed for Chapter 11 in February, and at the time planned to
close roughly half of its locations, or about 450 shops. But when
it didn’t find a buyer for the remainder of its business during
the pandemic, it started liquidating in May.
This past July 2020, however, a company known as Retail Ecommerce
Ventures paid $31 million for Pier 1's trademark name, intellectual
property, data and various online-related assets. Pier 1's website
has since re-launched, just ahead of the holiday season.
REV is known for saving a number of other troubled companies: It
owns the brand assets and e-commerce businesses of Linens 'n
Things, Modell’s Sporting Goods and Ascena Retail Group's
Dressbarn banner, to name a few.
"Clearly, there is the appetite to save," said David Berliner,
chief of BDO's business restructuring and turnaround practice. "The
strategy is to get as much sales [from these brands] as you can."
Simon Property Group, the biggest mall owner in the U.S., has
teamed up with the apparel-licensing firm Authentic Brands Group to
buy the denim maker Lucky Brand and the men's suit maker Brooks
Brother out of bankruptcy - both earlier this year.
ABG CEO Jamie Salter had previously told CNBC: "My strategy is
simple. Buy low, sell high. ... We make sure, if we get into
retail, that [the company] has a purpose. If it doesn’t have a
purpose, we find a purpose."
The department store chain J.C. Penney is also in the process of
emerging from bankruptcy. It filed for Chapter 11 in May 2020.
Simon and Brookfield Asset Management have since entered into an
asset purchase agreement to buy almost all of Penney's stores and
assets, with a goal of operating the company outside of Chapter 11
before the holidays.
All told, through mid-October, there had been 46 retail
bankruptcies in 2020, according to a tracking by S&P Global,
exceeding the number of bankruptcy filings in the industry in any
year since 2010. They include some of America's iconic brands: Lord
& Taylor, Century 21, True Religion, Sur la Table and Men’s
Wearhouse owner Tailored Brands.
'The worst is yet to come.' Some industry analysts think more
filings are looming, especially after the holidays.
"The worst is yet to come. The dust has not settled on this," said
Scott Stuart, CEO of the Turnaround Management Association. "You
think Christmas is going to save retailers? Maybe it won't."
And analysts' forecasts for holiday sales are all over the place.
That's due in large part to the fact that there are still a whole
host of unknowns — tied to the pandemic and to politics — that
could influence consumer confidence one way or another.
Deloitte, for example, is calling for two scenarios to play out:
One where holiday sales are flat to up 1%, if consumers -- and
especially lower-wage earners -- remain nervous about their health
and finances. But, a bigger 2.5% to 3.5% increase could occur if
wealthier consumers gain even more confidence in the back half of
2020, Deloitte said. Factors that could bolster confidence within
this group include shrinking unemployment, additional government
stimulus and an effective Covid-19 vaccine, it said.
The leading trade organization for the retail industry, the
National Retail Federation, has yet to release its annual holiday
forecast — something it typically does in October.
"When the dust settles in January ... you'll see the stressed
retailers that didn't so well enough to get through the first of
the [New] year," BDO's Berliner said.
[^] Recent Small-Dollar & Individual Chapter 11 Filings
-------------------------------------------------------
In re Janet Lynnette Jones McCormick
Bankr. M.D. Tenn. Case No. 20-04909
Chapter 11 Petition filed November 3, 2020
represented by: Joseph Rusnak, Esq.
TUNE, ENTREKIN & WHITE
Email: thobbs@tewlawfirm.com
In re UMAC World, Inc.
Bankr. D.D.C. Case No. 20-00444
Chapter 11 Petition filed November 4, 2020
See
https://www.pacermonitor.com/view/ZUOSZGA/UMAC_World_Inc__dcbke-20-00444__0001.0.pdf?mcid=tGE4TAMA
represented by: Craig A. Butler, Esq.
THE BUTLER LAW GROUP, PLLC
E-mail: cbutler@blgnow.com
In re Charlie Brown's Hauling & Demolition, Inc.
Bankr. M.D. Fla. Case No. 20-08264
Chapter 11 Petition filed November 4, 2020
See
https://www.pacermonitor.com/view/6LCQHRI/Charlie_Browns_Hauling__Demolition__flmbke-20-08264__0001.0.pdf?mcid=tGE4TAMA
represented by: David W. Steen, Esq.
DAVID W. STEEN, P.A.
E-mail: dwsteen@dsteenpa.com
In re Kids Wonderland Academy, LLC
Bankr. D. Mass. Case No. 20-12182
Chapter 11 Petition filed November 4, 2020
See
https://www.pacermonitor.com/view/JMAISXY/Kids_Wonderland_Academy_LLC__mabke-20-12182__0001.0.pdf?mcid=tGE4TAMA
represented by: Vladimir von Timroth, Esq.
LAW OFFICE OF VLADIMIR VON TIMROTH
E-mail: vontimroth@gmail.com
In re Courtney E. Stewart
Bankr. E.D. Va. Case No. 20-72952
Chapter 11 Petition filed November 4, 2020
represented by: Flax Jeffrey, Esq.
Kelly M. Barnhart, Esq.
CHILDRESS FLAX LEVINE, P.C.
E-mail: info@cfllaw.com
In re David T. Chandler
Bankr. N.D. Fla. Case No. 20-30889
Chapter 11 Petition filed November 5, 2020
represented by: Charles Wynn, Esq.
In re Nelson Lowell Bobrowski and Teresa Rene Bobrowski
Bankr. E.D. Ky. Case No. 20-61157
Chapter 11 Petition filed November 5, 2020
represented by: Dean Langdon, Esq.
DELCOTTO LAW GROUP
Email: dlangdon@dlgfirm.com
In re Ira Lee Bates
Bankr. E.D. Mich. Case No. 20-51285
Chapter 11 Petition filed November 5, 2020
In re A-1 Auto Glass, Inc.
Bankr. M.D.N.C. Case No. 20-50809
Chapter 11 Petition filed November 5, 2020
See
https://www.pacermonitor.com/view/5IXQHEY/A-1_Auto_Glass_Inc__ncmbke-20-50809__0001.0.pdf?mcid=tGE4TAMA
represented by: Erik M. Harvey, Esq.
BENNETT GUTHRIE PLLC
E-mail: EHarvey@Bennett-Guthrie.com
In re RS Air, LLC
Bankr. N.D. Cal. Case No. 20-51604
Chapter 11 Petition filed November 6, 2020
See
https://www.pacermonitor.com/view/ZIAI2QA/RS_Air_LLC__canbke-20-51604__0001.0.pdf?mcid=tGE4TAMA
represented by: Jennifer C. Hayes, Esq.
FINESTONE HAYES LLP
E-mail: jhayes@fhlawllp.com
In re RS Air, LLC
Bankr. N.D. Cal. Case No. 20-51604
Chapter 11 Petition filed November 6, 2020
See
https://www.pacermonitor.com/view/ZIAI2QA/RS_Air_LLC__canbke-20-51604__0001.0.pdf?mcid=tGE4TAMA
represented by: Jennifer C. Hayes, Esq.
FINESTONE HAYES LLP
E-mail: jhayes@fhlawllp.com
In re Derek Baine
Bankr. N.D. Cal. Case No. 20-51607
Chapter 11 Petition filed November 6, 2020
represented by: Ralph Guenther, Esq.
In re Ramin Pourteymour
Bankr. S.D. Cal. Case No. 20-05522
Chapter 11 Petition filed November 6, 2020
represented by: David Speckman, Esq.
In re Whitney Harris Drugs, Inc.
Bankr. S.D. Miss. Case No. 20-02760
Chapter 11 Petition filed November 6, 2020
See
https://www.pacermonitor.com/view/JWZ5TNY/Whitney_Harris_Drugs_Inc__mssbke-20-02760__0001.0.pdf?mcid=tGE4TAMA
represented by: R. Michael Bolen, Esq.
HOOD & BOLEN, PLLC
E-mail: rmb@hoodbolen.com
In re Western Ship Management, LLC
Bankr. N.D. Tex. Case No. 20-32816
Chapter 11 Petition filed November 6, 2020
See
https://www.pacermonitor.com/view/7XLWBBA/Western_Ship_Management_LLC__txnbke-20-32816__0001.0.pdf?mcid=tGE4TAMA
represented by: Robert T. DeMarco, Esq.
DEMARCO MITCHELL, PLLC
E-mail: robert@demarcomitchell.com
In re Linda M Armellino
Bankr. E.D. Va. Case No. 20-12475
Chapter 11 Petition filed November 6, 2020
represented by: Richard Hall, Esq.
In re SNL Baldwin Realty, LLC
Bankr. E.D.N.Y. Case No. 20-73348
Chapter 11 Petition filed November 7, 2020
See
https://www.pacermonitor.com/view/WDJF6AY/SNL_Baldwin_Realty_LLC__nyebke-20-73348__0001.0.pdf?mcid=tGE4TAMA
represented by: Michael G. McAuliffe, Esq.
LAW OFFICE OF MICHAEL G. MCAULIFFE
E-mail: mgmlaw@optonline.com
In re Forest Leaf LLC
Bankr. E.D.N.Y. Case No. 20-43935
Chapter 11 Petition filed November 8, 2020
See
https://www.pacermonitor.com/view/TSPZBGA/Forest_Leaf_LLC__nyebke-20-43935__0001.0.pdf?mcid=tGE4TAMA
represented by: Rachel S. Blumenfeld, Esq.
LAW OFFICE OF RACHEL S. BLUMENFIELD PLLC
E-mail: rblmnf@aol.com
In re Forest Leaf LLC
Bankr. E.D.N.Y. Case No. 20-43935
Chapter 11 Petition filed November 8, 2020
See
https://www.pacermonitor.com/view/TSPZBGA/Forest_Leaf_LLC__nyebke-20-43935__0001.0.pdf?mcid=tGE4TAMA
represented by: Rachel S. Blumenfeld, Esq.
LAW OFFICE OF RACHEL S. BLUMENFELD PLLC
E-mail: rblmnf@aol.com
In re Omar Aref MD, PLC
Bankr. M.D. Fla. Case No. 20-08336
Chapter 11 Petition filed November 9, 2020
See
https://www.pacermonitor.com/view/NOHI7XI/Omar_Aref_MD_PLC__flmbke-20-08336__0001.0.pdf?mcid=tGE4TAMA
represented by: Edward J. Peterson, Esq.
STICHTER, RIEDEL, BLAIN & POSTLER, P.A.
E-mail: epeterson@srbp.com
In re Surge Christian Academy LLC
Bankr. M.D. Fla. Case No. 20-08348
Chapter 11 Petition filed November 9, 2020
See
https://www.pacermonitor.com/view/HXRX4AA/Surge_Christian_Academy_LLC__flmbke-20-08348__0001.0.pdf?mcid=tGE4TAMA
represented by: Eric A. Lanigan, Esq.
LANIGAN & LANIGAN PL
E-mail: eric.lanigan@lanianpl.com
In re Showkat Hossain
Bankr. N.D. Ga. Case No. 20-71519
Chapter 11 Petition filed November 8, 2020
represented by: William Rountree, Esq.
ROUNTREE LEITMAN & KLEIN, LLC
In re Nelson Ricks Cheese Company, Inc.
Bankr. D. Idaho Case No. 20-40866
Chapter 11 Petition filed November 9, 2020
See
https://www.pacermonitor.com/view/N34UZTI/Nelson_Ricks_Cheese_Company_Inc__idbke-20-40866__0001.0.pdf?mcid=tGE4TAMA
represented by: Aaron Tolson, Esq.
TOLSON & WAYMENT PLLC
E-mail: ajt@aaronjtolsonlaw.com
In re MKL Enterprise LLC
Bankr. D. Md. Case No. 20-19935
Chapter 11 Petition filed November 9, 2020
See
https://www.pacermonitor.com/view/2I5VIVI/MKL_Enterprise_LLC__mdbke-20-19935__0001.0.pdf?mcid=tGE4TAMA
represented by: Daniel A. Staeven, Esq.
FROST & ASSOCIATES, LLC
E-mail: daniel.staeven@frosttaxlaw.com
In re 7073 Sea Birds Place, LLC
Bankr. D. Nev. Case No. 20-15683
Chapter 11 Petition filed November 9, 2020
See
https://www.pacermonitor.com/view/JYCVNCQ/7073_SEA_BIRDS_PLACE_LLC__nvbke-20-15683__0001.0.pdf?mcid=tGE4TAMA
represented by: Roger P. Croteau, Esq.
ROGER P. CROTEAU & ASSOCIATES LTD.
E-mail: croteaulaw@croteaulaw.com
In re Gregory A. Johnson
Bankr. D.N.D. Case No. 20-30578
Chapter 11 Petition filed November 9, 2020
In re Dennis Raymond Haarsma
Bankr. D.S.D. Case No. 20-40428
Chapter 11 Petition filed November 9, 2020
represented by: Clair R. Gerry, Esq.
GERRY & KULM ASK, PROF. LLC
Email: gerry@sgsllc.com
In re Peter H. Marte
Bankr. N.D. Ga. Case No. 20-71576
Chapter 11 Petition filed November 10, 2020
represented by: Leslie Pineyro, Esq.
In re DIS Express, Inc.
Bankr. W.D. Mich. Case No. 20-03409
Chapter 11 Petition filed November 10, 2020
See
https://www.pacermonitor.com/view/MWMH2OQ/DIS_Express_Inc__miwbke-20-03409__0001.0.pdf?mcid=tGE4TAMA
represented by: Steven M. Bylenga, Esq.
CHASE BYLENGA HULST, PLLC
E-mail: nikki@chasebylenga.com
In re DIS Transportation, LLC
Bankr. W.D. Mich. Case No. 20-03408
Chapter 11 Petition filed November 10, 2020
See
https://www.pacermonitor.com/view/MOZXHJA/DIS_Transportation_LLC__miwbke-20-03408__0001.0.pdf?mcid=tGE4TAMA
represented by: Steven M. Bylenga, Esq.
CHASE BYLENGA HULST, PLLC
E-mail: nikki@chasebylenga.com
*********
Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par. Prices are
obtained by TCR editors from a variety of outside sources during
the prior week we think are reliable. Those sources may not,
however, be complete or accurate. The Monday Bond Pricing table
is compiled on the Friday prior to publication. Prices reported
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then-ending.
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S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published
by Bankruptcy Creditors Service, Inc., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA.
Jhonas Dampog, Marites Claro, Joy Agravante, Rousel Elaine
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Sheryl Joy P. Olano, Psyche A. Castillon, Ivy B. Magdadaro, Carlo
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