/raid1/www/Hosts/bankrupt/TCR_Public/201116.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Monday, November 16, 2020, Vol. 24, No. 320
Headlines
2MORROWS SOLUTIONS: Taps Jensen Bagnato as Legal Counsel
ACCO BRANDS: Fitch Affirms 'BB' LongTerm IDR, Outlook Stable
ADMI CORP: Moody's Affirms B2 CFR & Alters Outlook to Stable
ADVANCED POWER: Wins December 7 Plan Exclusivity Extension
AEMETIS INC: Posts $12.2 Million Net Loss in Third Quarter
AGILE THERAPEUTICS: Incurs $15.5 Million Net Loss in Third Quarter
ALPHA ENTERTAINMENT: Wins Feb. 8 Plan Exclusivity Extension
AQA ACQUISITION: Moody's Assigns B3 CFR, Outlook Stable
AVIANCA HOLDINGS: Financing Not Dependent on Government Aid
AVIS BUDGET: S&P Affirms 'B+' ICR on Improved Liquidity
AYRO INC: Reports $2.68 Million Net Loss for Third Quarter
BASS PRO: Moody's Affirms Ba3 CFR; Alters Outlook to Stable
BETHUNE-COOKMAN UNIVERSITY: Fitch Hikes IDR to B-, Outlook Stable
BOUCHARD TRANSPORTATION: Hires Jackson Walker as Co-Counsel
BSVH LLC: Unsecureds Recovery Hiked to 59.98% in Plan
BSVH LLC: US Trustee Says Disclosure Statement is Inaccurate
CALLAWAY GOLF: S&P Retains 'B+' ICR on CreditWatch Negative
CAMBRIAN HOLDING: Wants Plan Hearing Shelved, Mediation Seen
CAPSTONE TURBINE: Incurs $4.2 Million Net Loss in Second Quarter
CBL & ASSOCIATES: Wells Fargo, Owed $1B, Won't Seize Rent Payments
CBL/REGENCY I: Case Summary & 30 Largest Unsecured Creditors
CEN BIOTECH: Incurs $1.93 Million Net Loss in Third Quarter
CENTURY 21: Puts Up Its Intellectual Property for Sale
CHARTER NEX: S&P Affirms 'B' ICR on Recapitalization Plan
CHEMOURS COMPANY: Moody's Assigns B1 to New $750MM Unsec. Notes
CHESAPEAKE ENERGY: Chunk of Assets Could be Purchased by Tapstone
CHESAPEAKE ENERGY: Weiner, Weiss Represents Caddo, 8 Others
CHESAPEAKE ENERGY: Wins Jan. 25 Plan Exclusivity Extension
CHI OVERHEAD: Moody's Rates $455.5 Million in Secured Loans 'B2'
CLEARWATER SEAFOODS: S&P Places 'B' ICR on CreditWatch Positive
CONSOL ENERGY: Moody's Assigns Caa2 Rating on New $100MM Bond
CONTAINER STORE: S&P Upgrades ICR to 'B' on Performance Gains
COVIA HOLDINGS: Court Approves Disclosure Statement
COVIA HOLDINGS: Lexon Insurance Objects to Disclosure Motion
COVIA HOLDINGS: Unsecureds to Get 'Equity Pool' in Plan
CRAZY CAT: Hires James & Haugland as Attorney
CRESTWOOD HOLDINGS: S&P Alters Outlook to Negative, Affirms B- ICR
CROSSPLEX VILLAGE: Hires Campbell Partners as Special Counsel
DBMP LLC: Asks Court to Extend Plan Exclusivity Thru Dec. 22
DEGROFF RX: Hires Healthgrowth Advisors as Consultant
DUNCAN MORGAN: Trustee Scraps Plan, Parties Agree on Dismissal
DURRANI M.D.: Case Summary & 20 Largest Unsecured Creditors
ECOARK HOLDINGS: Posts $8.9 Million Net Income in Second Quarter
ENCORE CAPITAL: Fitch Rates New GBP250MM Secured Notes 'BB+(EXP)'
ENSIGN DRILLING: Moody's Lowers CFR to Caa1, Outlook Negative
EYEPOINT PHARMACEUTICALS: Incurs $3.8-Mil. Net Loss in 3rd Quarter
FORD STEEL: Hires Muskat Mahony as Special Counsel
FORTRESS INVESTMENT: Fitch Affirms BB LongTerm IDR, Outlook Stable
FORUM ENERGY: Incurs $21.5 Million Net Loss in Third Quarter
FRE 355 INVESTMENT: Wins Dec. 1 Solicitation Exclusivity Extension
FROGNAL HOLDINGS: Dec. 11 Plan Confirmation Hearing Set
FROGNAL HOLDINGS: Plan to Pay Creditors in Full From Sale/Refinance
GARRETT MOTION: Entwistle Updates List of Fund Shareholders
GARRETT MOTION: Proskauer Rose Represents Equity Holders
GGI HOLDINGS: Kane Russell Represents GlassRatner, 2 Others
GUITAR CENTER: Preps for Chapter 11 Filing With Creditors' Support
GULFPORT ENERGY: Case Summary & 30 Largest Unsecured Creditors
HELIUS MEDICAL: Incurs $3.48 Million Net Loss in Third Quarter
HENRY FORD VILLAGE: Hires Dykema Gossett as Counsel
HENRY FORD VILLAGE: Hires Kurtzman as Claims and Noticing Agent
HOSTESS BRANDS: S&P Alters Outlook to Stable, Affirms 'B+' ICR
INVESTCORP HOLDINGS: Fitch Affirms BB LT IDR, Outlook Stable
IRB HOLDING: Moody's Upgrades CFR to B2; Alters Outlook to Stable
IRB HOLDING: S&P Affirms 'B' ICR on Dunkin' Brands Acquisition
ITT HOLDINGS: S&P Places 'BB' ICR on CreditWatch Negative
J.C. PENNEY: Business on Course to Emerge Ch. 11 by Thanksgiving
JJE INC: Disclosures and Plan Hearing Rescheduled to Dec. 16
JJE INC: Unsecured Creditors to Recover 20% Over 6 Years
KD BELLE TERRE: Hires NAI Latter as Property Manager
KLAUSNER LUMBER TWO: Court Extends Exclusivity Periods Thru Feb. 8
LIFETIME BRANDS: Moody's Affirms B2 CFR; Alters Outlook to Stable
LILIS ENERGY: Gets Court OK for $46.6M Sale to Ameredev
LONESTAR RESOURCES: Court Approves Plan that Cuts Debt by $390M
LONESTAR RESOURCES: Unsecured Claims Unimpaired in Prepackaged Plan
LOST D VENTURES: Plan of Reorganization Confirmed by Judge
LOST D VENTURES: U.S. Trustee Objects to Plan & Disclosures
LSB INDUSTRIES: Incurs $20.4 Million Net Loss in Third Quarter
LTI HOLDINGS: Moody's Affirms Caa1 CFR; Alters Outlook to Positive
MACQUARIE INFRASTRUCTURE: S&P Places 'BB' ICR on Watch Negative
MALLINCKRODT PLC: Ferry, Harris Represent Municipalities
MALLINCKRODT PLC: Kramer, et al. Update on Litigation Claimants
MALLINCKRODT PLC: Troutman, Gibson Update List of Term Lender Group
MARUTI REALSTATE: Seeks to Extend Plan Exclusivity Thru Dec. 14
MD AMERICA: Hires FTI Consulting as Financial Advisor
MD AMERICA: Hires Mr. Avila of Paladin Management as CRO
MIRION TECHNOLOGIES: S&P Alters Outlook to Neg., Affirms 'B' ICR
MONDORIVOLI LLC: Hires Kutner Brinen as Attorney
MORIAH POWDER: Court Extends Plan Exclusivity Thru April 30
MYOMO INC: Incurs $2.78 Million Net Loss in Third Quarter
NINE ENERGY: Incurs $18.5 Million Net Loss in Third Quarter
NINEPOINT MEDICAL: Hires Stretto as Claims and Noticing Agent
NORTHERN LIGHT: Moody's Affirms Ba1 Rating on $389MM Debt
NPC INT'L: Wendy's May Refuse Franchise Permission from Flynn
NPC INTERNATIONAL: Sets Lease Sale Procedures for De Minimis Assets
OAK LAWN, IL: Moody's Affirms Ba1 Rating on $60MM GOULT Debt
OMNIQ CORP: Reports $3.8 Million Net Loss for Third Quarter
ONCE A DOG: Creditors to Get Paid From Property Sale Proceeds
PACIFIC DRILLING: Akin Gump Represents Crossover Group
PEABODY ENERGY: Moody's Downgrades CFR to Caa1
PIMLICO RANCH: Creditors to be Paid in Full Over 5 Years
PIMLICO RANCH: Perris Trustee Says Plan Unconfirmable
PLASKOLITE PPC: S&P Alters Outlook to Positive, Affirms 'B-' ICR
PRIMO FOODS: Seeks to Hire Luke Lirot as Special Counsel
PRO-CRETE READY: Case Summary & 20 Largest Unsecured Creditors
QUARTER HOMES: Progress Residential Buying Spur House for $225K
QUINCY MEDIA: Moody's Affirms B2 CFR; Alters Outlook to Positive
RAINBOW LAND: Wants Plan Exclusivity Extended Until Dec. 15
RANDOLPH HOSPITAL: Seeks Plan Exclusivity Extension Thru Dec. 4
RENTPATH HOLDINGS: Plan Exclusivity Extended to February 22
REVLON INC: Inks Deal With Carl Icahn to Prevent Bankruptcy
REWALK ROBOTICS: Incurs $3.34 Million Net Loss in Third Quarter
RGN-PORTLAND VII: Case Summary & Unsecured Creditor
RTW RETAILWINDS: Plan Exclusivity Extended Thru January 2021
SCHOOL OF EXCELLENCE: S&P Lowers 2004A Revenue Bond Rating to 'B-'
SERVICE PROPERTIES: Moody's Downgrades CFR to Ba2, Outlook Neg.
SIWF HOLDINGS: S&P Upgrades ICR to 'B' on Healthy Demand
SKLAR EXPLORATION: Moye White, CMG Represent JF Howell, 2 Others
SMOKEY TOPCO: S&P Assigns 'B-' ICR on Proposed Debt Refinancing
SOUTHLAND ROYALTY: Wants Plan Exclusivity Extended Thru Dec. 21
SOUTHLAND ROYALTY: Wins OK to Reject Gathering Pact With Williams
SUMMIT MIDSTREAM: Posts $25.6 Million Net Income in Third Quarter
TAILORED BRANDS: Bankruptcy Court Confirms Reorganization Plan
TAILORED BRANDS: Creditors Committe's Objection to Plan
TAILORED BRANDS: Porter, Gibson 3rd Updated List of Term Lenders
TAILORED BRANDS: Reaches Plan Settlement With Unsecureds
TEEWINOT LIFE: Mintz, Levin Represent Michael Luther, Tribute
TEMPUR SEALY: S&P Raises ICR to BB on Strong Operating Performance
TENNECO INC: Fitch Assigns BB Rating on Proposed $500MM Sec. Notes
TENNECO INC: Moody's Assigns Ba3 Rating on New $500MM Sec. Notes
TRANS-LUX CORP: Incurs $758K Net Loss in Third Quarter
TRAXIUM LLC: Taps Gertz & Rosen at Bankruptcy Counsel
VALARIS PLC: Govt. Watchdog Questions Executive Bonus Plan
VERTEX ENERGY: Incurs $1.95 Million Net Loss in Third Quarter
VISTAGEN THERAPEUTICS: Incurs $3.64 Million Net Loss in 2nd Quarter
VIVUS INC: Rolls New Plan, Offers Stockholders Drug Royalties
WASHINGTON PRIME: Incurs $40.2 Million Net Loss in Third Quarter
Z-LINE DESIGNS: Files for Chapter 7 Bankruptcy
[*] Bankruptcies Spiraling for Companies Large and Small
[*] Q3 Has Highest Chapter 11 Filings Since Great Recession
[^] BOND PRICING: For the Week from November 9 to 13, 2020
*********
2MORROWS SOLUTIONS: Taps Jensen Bagnato as Legal Counsel
--------------------------------------------------------
2morrows Solutions 2day LLC received approval from the U.S.
Bankruptcy Court for the Eastern District of Pennsylvania to hire
Jensen Bagnato, P.C. as its attorneys.
The Debtor requires Jensen Bagnato to:
a. advise the Debtor with respect to its rights, powers and
duties;
b. prepare legal papers and review all financial and other
reports to be filed in the Chapter 11 cases;
c. review the nature and validity of any liens asserted
against the Debtor's properties and advise the Debtor concerning
the enforceability of such of liens;
d. counsel the Debtor in connection with the negotiation and
promulgation of a plan of reorganization or liquidation and related
documents;
e. advise and assist the Debtor in connection with the sale of
the Debtor's principal assets, real property located at 2452
Kimball Street, Philadelphia, Pennsylvania 19146;
f. advise the Debtor concerning executory contract and
unexpired lease assumptions, assignments, rejections ad lease
restructurings and recharacterizations; and
g. perform all other necessary legal services in connection
with this Chapter 11 case.
The firm's hourly rates are:
Jeffrey M. Carbino, Esq. $450
Jordan Winkyer (Law Clerk) $135
Jensen Bagnato neither holds nor represents any interest adverse to
the Debtor or its estate and creditors.
The firm can be reached through:
Jeffrey M. Carbino, Esq.
Jensen Bagnato, P.C.
1500 Walnut Street, Suite 1920
Philadelphia, PA 19102
Phone: (215) 546-4700
Fax: (215) 546-7440
About 2morrows Solutions 2day, LLC
2morrows Solutions 2day, LLC, a Philadelphia, Pa.-based company,
sought protection under Chapter 11 of the Bankruptcy Code (Bankr.
E.D. Pa. Case No. 20-13870) on September 25, 2020. The petition was
signed by Jacky Veasly, member.
At the time of the filing, Debtor had estimated assets of between
$500,000 and $1 million and liabilities of between $1 million and
$10 million.
The Hon. Judge Eric L. Frank oversees the case.
Jensen Bagnato, P.C. is Debtor's legal counsel.
ACCO BRANDS: Fitch Affirms 'BB' LongTerm IDR, Outlook Stable
------------------------------------------------------------
Fitch Ratings has affirmed the Long-Term Issuer Default Rating
(IDR) of ACCO Brands Corporation at 'BB' following its proposed
acquisition of PowerA for approximately $340 million plus
transaction expenses, or around 7x projected EBITDA. Fitch
estimates gross leverage (gross debt/EBITDA), pro forma for the
transaction, could be approximately 4.3x, modestly above Fitch's
downgrade sensitivity of 4.0x. However, assuming a partial rebound
in the base business in 2021 and FCF deployment toward debt
reduction, gross leverage could trend toward the mid-3x in 2021.
The Rating Outlook is Stable.
ACCO's ratings reflect the company's historically consistent FCF
and reasonable gross leverage, which trended around 3x prior to
operating challenges in 2020 related to the coronavirus pandemic.
The ratings are constrained by secular challenges in the office
products industry and channel shifts within the company's customer
mix, as well as the risk of further debt-financed acquisitions into
faster-growing geographies and product categories. The company has
taken actions over the last few years to manage costs given
pressures on U.S. organic growth and has executed well on
diversifying its customer base toward higher-growth channels, as
well as international markets. The acquisition of PowerA, which
sells accessories for the fast-growing video gaming market, is an
example of ACCO's good diversification strategy.
The impact of the pandemic, including more remote work and remote
education activity as well as reduced corporate spending on ACCO's
product assortment, is expected to drive 2020 EBITDA to around $200
million from $290 million in 2019. Fitch expects a modest rebound
toward around $230 million in 2021, with total EBITDA projected
around $280 million assuming the PowerA transaction closes at the
end of 2020 and contributes approximately $50 million of EBITDA.
Despite near-term pressures, Fitch expects FCF after dividends of
at least $100 million annually, with FCF expected to be deployed
toward debt reduction.
KEY RATING DRIVERS
PowerA Acquisition: ACCO has announced its intent to acquire
PowerA, a manufacturer of video game accessories, including
controllers, audio peripherals and storage accessories, from
Bensussen, Deutsche & Associates. The company has licensee
arrangements with well-known gaming brands like Nintendo, Xbox and
Playstation. The approximately $340 million purchase price plus
transaction expenses and working capital investments represents a
7x multiple on projected 2020 EBITDA of $50 million; revenue in
2020 is estimated in the $200 million range. Assuming some recovery
in ACCO's existing business in 2021, PowerA would represent around
10% and close to 20% of pro forma revenue and EBITDA, respectively.
ACCO has not projected operating synergies as PowerA is expected to
operate mostly independently from the incumbent business.
Fitch views the acquisition positively as it provides ACCO some
business diversification into a category that is expected to
provide good growth. Per ACCO, PowerA's revenue has grown at a 40%
CAGR since 2015 and is expected to grow around 23% in 2020.
Assuming around 10% growth annually, PowerA could support ACCO's
top-line expansion by approximately 1% annually. Around 75% of
PowerA's revenue is generated in the U.S., compared with around 43%
for ACCO's existing business in North America, and could therefore
modestly increase ACCO's North America presence. The multiple of 7x
projected 2020 EBITDA appears reasonable given the company's
historical growth trajectory.
Fitch expects ACCO to finance most or all of the transaction,
expected to close at the end of 2020, with debt. Pro forma gross
leverage at the end of 2020 would be approximately 4.3x, assuming
$200 million of EBITDA in the base business and projected paydown
of $80 million of existing debt with FCF in 4Q20. In 2021, leverage
could improve toward the mid-3x range as base business EBITDA
recovers from pandemic-related challenges and FCF is deployed
toward debt reduction. ACCO has suspended share buybacks and Fitch
believes the company could generate around $100 million in annual
FCF beginning 2020, after dividends of approximately $25 million or
$0.26 per share.
Coronavirus Pandemic: ACCO has seen a significant decline in demand
for its products in 2020 due to remote work and education
arrangements and potential corporate spending pullbacks as
companies reduce operating expenses. Revenue in 2020 is expected to
decline approximately 15% to $1.64 billion from $1.96 billion in
2019. The company has shown good cost control, with operating
expenses projected down approximately 12% in 2020. However, gross
margins are expected to decline close to 200bps for the full year
on unfavorable product mix, yielding a potential 30% EBITDA decline
to approximately $200 million from $291 million in 2019. FCF in
2020 is projected at around $100 million, around $50 million lower
than 2019 due to EBITDA declines, somewhat mitigated by lower cash
taxes and capex.
Fitch expects ACCO's base business to rebound somewhat in 2021, as
remote work and education arrangements subside. However, ongoing
economic challenges could still cause ACCO's commercial customers
to limit spending on categories like office and business products.
In addition, acceptance of remote work arrangements longer term
could limit ACCO's ability to fully rebound to pre-2020 revenue
levels. Fitch projects ACCO's standalone sales could improve around
6% to $1.74 billion, with EBITDA rebounding toward $230 million.
Revenue and EBITDA growth could be flattish to modestly positive in
2022. FCF could remain around $100 million annually as EBITDA
growth is mitigated by higher taxes and capex.
Early in 2020 the company suspended share buybacks and indicated
its intent to use FCF toward debt reduction. On a standalone basis,
Fitch projects ACCO's leverage to be around 3.6x in 2020 from the
3x average over the past four years, as EBITDA decline is somewhat
offset by a projected $80 million in debt reduction. Should the
PowerA acquisition not close as contemplated and ACCO continues to
deploy FCF toward debt reduction, gross leverage could return to
around 3x in 2021.
Limited Organic Industry Growth: The office products industry is
experiencing a slow secular decline in mature markets due to a
shift toward digital technologies, partially offset by growth in
emerging markets. ACCO is also managing a continued shift in
channel revenue away from traditional office product superstores
such as Staples and Office Depot, and traditional office supply
wholesalers towards discounters, e-commerce retailers and the
independent channel. These customers have also increased their
direct sourcing efforts to grow private label penetration, creating
more competition for ACCO's largely branded product portfolio.
While ACCO benefits from its market-leading position, the company
has been impacted by industry pressures. ACCO's U.S. revenue (43.0%
of net revenue in 2019) declined 1.5% on a four-year CAGR basis in
2015-2019; operating income declines were modestly higher at 3.6%.
Fitch expects flattish to modestly negative growth will continue
over the medium term, after the near-term impacts of the
coronavirus pandemic.
ACCO's international revenue penetration increased to 57% in 2019
compared with 40% in 2015, largely due to acquisitions. Fitch
expects modest organic growth in ACCO's international portfolio,
given a more favorable secular backdrop coupled with ACCO's ability
to expand its geographic and product reach from its current revenue
base.
ACCO's customer concentration has somewhat eased in recent years,
with ACCO's top 10 customers accounting for 42% of revenue in 2019
compared with 56% in 2016. The decline is due to both retail market
share shifts and ACCO's proactive efforts to diversify its
portfolio through M&A activity. Fitch expects ACCO to continue to
seek opportunities to reduce its reliance on traditional office
products markets and channels. The proposed PowerA acquisition is
an example of these efforts.
Acquisitions Drive Growth and Diversification: Given secular
challenges in some of ACCO's primary categories and markets, the
company has acquired several businesses over the last few years to
capitalize on growth in new markets and faster-growing adjacent
categories. The acquisitions have contributed to ACCO's revenue
growth, margin expansion due to greater scale and improved
geographic and customer diversity. The proposed purchase of PowerA
is an example of ACCO adding a higher-growth category - video
gaming - to its business portfolio.
In August 2019, ACCO acquired Foroni, a Brazilian manufacturer and
marketer of notebooks and other paper products for schools and
offices, for $50 million including the assumption of debt. In July
2018, ACCO purchased GOBA, a producer of school and craft products
sold under the Barrilito brand in Mexico, for $37 million. These
transactions were financed with cash on hand. In February 2017,
ACCO acquired Esselte, a predominantly European-focused seller of
office machines and organizational products, for $333 million.
Annual cost savings from this acquisition exceeded $30 million and
this business line contributed $50 million of incremental FCF (of
the consolidated total of $147 million) in 2019. In May 2016, ACCO
closed the acquisition of the remaining 50% of Pelikan Artline Pty
Limited, its joint venture company serving the Australian and New
Zealand markets, as well as a buyout of a minority interest in a
subsidiary of the joint venture.
Strong Expense and Balance Sheet Management: ACCO maintains a tight
focus on its cost structure, which has enabled the company to
improve profitability in a difficult operating environment. In the
U.S., the company continues to reallocate sales efforts to
higher-margin independent retailers (who tend to sell
higher-price-point, higher-margin products but have a higher cost
to serve as well) and away from the declining, lower-margin office
superstore channel. Meanwhile, the company's selling, general &
administrative expense margin has remained relatively steady in the
low-19% range in recent years despite sluggish organic growth and
fixed cost inflation. The company's ongoing focus on cost
reductions has protected EBITDA in the face of its top-line
challenges.
ACCO's good balance sheet management is a positive factor in its
credit profile. While the company occasionally makes debt-financed
acquisitions to optimize its portfolio, the company has
demonstrated a willingness to manage its leverage through debt
reduction following a transaction, in line with its public
commitment to maintain net debt to EBITDA around 2.5x (similar on a
gross leverage basis given minimal cash balances). Over the four
years, gross leverage has trended at 3x, with approximately $100
million of debt reduction in 2018/2019 following the debt-financed
Esselte acquisition in 2017.
DERIVATION SUMMARY
ACCO's 'BB'/Stable rating reflects the company's good position in
the global office and business products industry. The ratings are
constrained by secular challenges in the office products industry
in North America, Europe and Australia. The company has taken steps
over the last few years to manage costs given pressures on U.S.
organic growth and has executed well on diversifying its customer
base toward higher-growth, higher-margin channels in North America
as well as acquisitions in better-performing categories and
international markets. The rating also reflects ACCO's good balance
sheet management, which has led to gross leverage trending around
3.0x over time. Assuming ACCO closes the PowerA acquisition as
contemplated, Fitch projects 2021 gross leverage could trend in the
mid-3x, below Fitch's downgrade sensitivity of 4.0x.
Spectrum Brands, Inc.'s 'BB' rating reflects the company's
diversified portfolio across products and categories with
well-known brands, and commitment to maintain leverage (net
debt/EBITDA) at or below 3.5x, which equates to a similar gross
debt/EBITDA target assuming around $150 million in cash. The rating
also reflects expectations for modest organic revenue growth over
the long term, reasonable profitability with an EBITDA margin near
15% and positive FCF.
These positive factors are offset by recent profit margin pressures
across segments and the company's acquisitive posture, which could
cause temporary leverage spikes following a transaction. Finally,
the rating considers expected near-term business challenges
relating to the impact of the coronavirus on Spectrum's
manufacturing capabilities, and the impact of a consumer recession
on Spectrum's operating segments like hardware and home
improvement.
Tempur Sealy International, Inc.'s 'BB'/Stable ratings reflect its
leading market position as a vertically integrated global bedding
company with well-known, established brands across a wide variety
of price points offered through broad distribution channels. The
ratings are tempered by the single-product focus in a highly
competitive, fragmented market exposed to potential pullbacks in
discretionary consumer spending amid macroeconomic weakness. In
addition, the mattress industry has been susceptible to irrational
pricing, secular shifts in consumer preferences and bankruptcies in
the supplier and distribution side.
Fitch expects 2020 EBITDA in the upper $600 million range and FCF
in excess of $400 million. Fitch projects EBITDA to moderate to the
mid-to-upper $500 million range beginning 2021 on potential revenue
pullback against tough comparisons with FCF sustained above $200
million. Fitch's forecast in 2020 projects gross leverage around 2x
driven by EBITDA growth and debt repayment. Gross leverage is
expected to trend toward the mid- to upper-2x range over the
longer-term given the company's focus on shareholder returns and
opportunistic acquisitions.
Central Garden & Pet Company's 'BB'/Stable rating reflects the
company's strong market positions within the pet and lawn and
garden segments, ample liquidity supported by robust FCF and
moderate leverage offset by limited scale with EBITDA below $300
million. Fitch expects modest organic revenue growth over the
medium term supplemented by acquisitions, with EBITDA margins in
the 10% range and annual FCF of $150 million to $200 million. Gross
leverage (total debt/EBITDA) is expected to trend around 2.5x in
fiscal 2020 (ending September 2020) and around 2.8x in fiscal 2021,
down from 3.2x in fiscal 2019, given the top-line and EBITDA
benefit from the coronavirus. Over time, Fitch expects the company
to manage gross debt/EBITDA within its targeted range of 3.0x to
3.5x, reflecting debt-financed acquisitions as it continues to
diversify its portfolio and increase scale within its segments.
Newell Brands Inc.'s 'BB' rating and Negative Outlook reflect
elevated leverage (total debt/EBITDA) of 4.4x following the
completion of its asset divestiture program and ongoing top-line
challenges in a number of its categories. The ratings also reflect
the significant business interruption from the coronavirus pandemic
and the potential for a downturn in discretionary spending.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Its Rating Case for the Issuer
-- Fitch projects 2020 revenue to decline around 15%, similar to
results through the first nine months, reaching around $1.64
billion for the full year from $1.96 billion in 2019. Organic
revenue could expand around 6% to $1.74 billion in 2021 as remote
work and education arrangements ease. Assuming the PowerA
acquisition closes at the end of 2020, total 2021 revenue could be
around $1.94 billion. Organic revenue growth could be in the low
single digits in 2022 as ACCO is expected to continue to benefit
from improving macroeconomic conditions.
-- EBITDA in 2020 is expected to decline 30% to around $200
million from $291 million in 2019, on revenue declines and
merchandise mix shifts toward lower-margin products. EBITDA margins
could decline from approximately 15% in 2019 to the mid-12% range.
In 2021, legacy ACCO EBITDA could expand to around $225 million as
sales rebound, with PowerA adding approximately $50 million in
EBITDA assuming a full year of inclusion. EBITDA in 2022 could grow
modestly alongside top-line expansion.
-- FCF after dividends, which was $147 million in 2019, is
expected to be around $100 million in 2020 as EBITDA declines are
somewhat mitigated by lower cash taxes and capex. FCF is projected
to remain in the $100 million range beginning 2021, as EBITDA
growth is mitigated by higher taxes and capex.
-- The acquisition of PowerA is expected to have a modestly
positive impact on ACCO's FCF in 2021 and 2022, in the range of $10
million to $15 million annually. Fitch expects ACCO will deploy FCF
toward debt reduction but could resume its share buyback program at
some point in 2021. Dividends are projected at around $25 million,
or approximately $0.26 per share, in line with ACCO's history.
-- Gross debt/EBITDA, which averaged around 3x over the past four
years, could increase to the mid-3x range in 2020. Pro forma for
the acquisition, leverage is approximately 4.2x, assuming the
purchase is mostly debt funded and generates $50 million in EBITDA.
Gross leverage could return to the mid-3x by 2021. If the
acquisition does not close as contemplated, gross leverage in 2021
could decline to below 3x on EBITDA growth and debt amortization
payments.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- An upgrade beyond 'BB' is possible if the company makes
favorable acquisitions that change its business mix towards less
cyclical or higher growth prospects while maintaining total
debt/EBITDA below 3x. However, an upgrade is not anticipated in the
near term given existing business model and industry issues.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Sustained gross leverage at or above 4x, generating annual FCF
of less than $25 million, or a large debt-financed acquisition
without a concrete plan to reduce gross leverage to 4x in a
24-month time frame could lead to a negative rating action.
-- A sustained acceleration of revenue declines in North America
relative to the modestly negative trend prior to 2020.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of non-financial corporate
issuers have a best-case rating upgrade scenario (defined as the
99th percentile of rating transitions, measured in a positive
direction) of three notches over a three-year rating horizon; and a
worst-case rating downgrade scenario (defined as the 99th
percentile of rating transitions, measured in a negative direction)
of four notches over three years. The complete span of best- and
worst-case scenario credit ratings for all rating categories ranges
from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are
based on historical performance.
LIQUIDITY AND DEBT STRUCTURE
Adequate Liquidity: Liquidity is ample, and is supported by the
company's consistent FCF generation, albeit seasonally skewed to
the second half of the year. As of Sept. 30, 2020, ACCO had $85.8
million of cash on hand and $465.5 million of revolver
availability, net of $10.8 million outstanding LCs and $123.7
million of borrowings under its $600 million revolver.
ACCO had $917.3 million of debt outstanding as of Sept. 30, 2020,
consisting primarily of a $278.2-million euro senior secured term
loan A, $93.8 million outstanding on the U.S. dollar senior secured
term loan A, $40.8 million under the Australian dollar denior
decured term loan A and $123.7 million of revolver borrowings (all
of which mature in May 2024), and $375.0 million of unsecured notes
due December 2024. Annual amortization across ACCO's capital
structure is approximately $30 million annually through 2023.
Financial covenants include maintenance of funded indebtedness (net
of cash) to EBITDA less than 3.75x (increasing to 4.25x for up to
three quarters following an acquisition) and interest coverage
(EBITDA divided by interest expense) greater than 3.0x.
ACCO plans to finance the PowerA acquisition with debt. Initially,
the company would fund the acquisition through approximately $340
million in revolver borrowings and would term out around $200
million with a term loan or unsecured notes. Fitch expects ACCO
would then direct FCF toward paying down the remaining revolver
balance.
In conjunction with the proposed acquisition, ACCO has amended its
credit facility to increase permitted acquisition pro forma
leverage to 4.5x from 3.5x; the company also increased its maximum
net leverage covenant by 0.5x through the second quarter of 2022.
Consequently, maximum net leverage would be 4.75x at the end of
2020, 5.25x at the end of the first and second quarters of 2021,
4.75x at the end of the third quarter of 2021 and 4.25 at the end
of 2021. The maximum net leverage would step down to 3.75x at the
end of the third quarter of 2022.
Recovery Considerations
Fitch has assigned Recovery Ratings (RRs) to the various debt
tranches in accordance with Fitch criteria, which allows for the
assignment of RRs for issuers with IDRs in the 'BB' category. Given
the distance to default, RRs in the 'BB' category are not computed
by bespoke analysis. Instead, they serve as a label to reflect an
estimate of the risk of these instruments relative to other
instruments in the entity's capital structure. Fitch rates ACCO's
first-lien secured debt one notch above the IDR, reflecting
outstanding recovery prospects (91%-100%) given default (RR1).
Unsecured debt will typically achieve average recovery, and thus
was assigned an 'RR4', or 31%-50% recovery.
SUMMARY OF FINANCIAL ADJUSTMENTS
Summary of Financial Adjustments:
-- Stock-based compensation, transaction expenses and integration
expenses.
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.
ADMI CORP: Moody's Affirms B2 CFR & Alters Outlook to Stable
------------------------------------------------------------
Moody's Investors Service changed ADMI Corp.'s outlook to stable
from negative and affirmed its B2 Corporate Family Rating, the
B2-PD Probability of Default Rating, and the B2 first lien senior
secured debt rating.
The stabilization of the outlook reflects Aspen's return of patient
volumes to near pre-coronavirus levels. At the same time, strong
cost management has enabled the company to maintain strong
profitability and cash flow through the coronavirus pandemic. The
stable outlook also reflects Moody's view that another nationwide
mandate to defer dental services is unlikely. Aspen's geographic
diversity should limit the impact from coronavirus outbreaks in any
particular region.
The affirmation of the B2 CFR reflects the company's good liquidity
and moderately high financial leverage. Aspen's adjusted
debt/EBITDA approximated 5.0x for the twelve months ended September
30, 2020. This level of leverage, along with the company's ability
to reduce variable costs and growth capital expenditures if
necessary, positions the company well to withstand the potential
for further stress from the coronavirus pandemic and/or a weakening
of the economy.
Moody's took the following rating actions:
ADMI Corp.
Corporate Family Rating affirmed at B2
Probability of Default Rating affirmed at B2-PD
Senior Secured Bank Credit Facilities affirmed at B2 (LGD3)
Outlook action:
Outlook, changed to stable from negative
RATINGS RATIONALE
Aspen Dental's B2 Corporate Family Rating reflects its moderately
high financial leverage and aggressive growth strategy, with 70 to
80 new office openings per year. Moody's expects that these factors
will constrain profitability margins and free cash flow over the
next several years. The rating is also constrained by the high
proportion of self-pay revenues, as patients typically are
responsible for a large portion of their bill and rely on third
party financing arrangements. The rating also reflects the
lingering operating uncertainty due to the coronavirus pandemic.
Despite these challenges, the rating reflects the company's strong
market position as one of the largest dental service organizations
(DSO) in the US. The rating also takes into account Aspen's good
geographic diversity and solid track record of business execution
and growth.
Moody's expects Aspen Dental will maintain good liquidity with
about $60 million of cash and a $75 million undrawn revolving
credit facility, expiring in 2023. Aspen has been able to conserve
liquidity by reducing new office openings and growth capital
expenditures, but Moody's believes these activities will resume to
prior levels as the risk from the coronavirus pandemic ebbs. As a
result, Moody's expects free cash flow to be modestly positive over
the next 12-18 months.
Moody's considers coronavirus to be a social risk given the risk to
human health and safety. Aside from coronavirus, Aspen Dental faces
other social risks such as the rising concerns around the access
and affordability of healthcare services. However, Moody's does not
consider the DSOs to face the same level of social risk as many
other healthcare providers. From a governance perspective, Moody's
expects Aspen Dental's financial policies to remain aggressive due
to its private equity ownership.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be downgraded if the company's liquidity weakens
or if debt/EBITDA is sustained above 6 times. A material reduction
in free cash flow or additional debt funded transactions could also
result in a ratings downgrade.
An upgrade is possible if Aspen Dental adopts more conservative
financial policies and maintains debt/EBITDA below 4.5 times.
Additionally, a less aggressive new office opening strategy that
resulted in improved profitability and cash flow could support an
upgrade.
Aspen Dental provides business support services to its 843
affiliated dental offices across 42 states. The company is
privately-held and majority-owned by Ares Management, LP and
Leonard Green & Partners, L.P., with the remaining 20% owned by
American Securities, management and dentists. The company's audited
financials do not consolidate the practice ownership program
("POP") practices. As of September 30, 2020, excluding POP offices,
the company generated net revenues of approximately $863 million,
while the consolidated net revenues for all dental offices,
including POP offices, was approximately $1.4 billion for the same
period.
The principal methodology used in these ratings was Business and
Consumer Service Industry published in October 2016.
ADVANCED POWER: Wins December 7 Plan Exclusivity Extension
----------------------------------------------------------
Judge Peter D. Russin of the U.S. Bankruptcy Court for the Southern
District of Florida, Fort Lauderdale Division, extended the periods
within which Advanced Power Technologies, LLC has the exclusive
right to file a Chapter 11 plan through and including December 7,
2020, and to solicit acceptances of the plan through and including
February 4, 2021.
The Debtor says negotiations are going on with its largest general
unsecured creditor regarding payment of its claim, including the
terms of exit financing with its primary secured creditor.
"We believe that these negotiations will dictate the substance of
what will be a consensual chapter 11 plan," the Debtor says. The
Debtor also adds that the granted extension is not a delay tactic
or to pressure creditors.
A copy of the Court's Extension Order is available from
PacerMonitor.com at https://bit.ly/32agdJQ at no extra charge.
About Advanced Power Technologies
Advanced Power Technologies, LLC --
http://www.advancedpowertech.com/-- offers interior and exterior
lighting, signage, and electrical service needs throughout the
United States and Canada. It works with commercial, hospitality,
industrial, institutional, restaurant, and retail clients to save
energy and reduce operating costs.
Advanced Power Technologies, LLC, based in Pompano Beach, Fla.,
filed a Chapter 11 petition (Bankr. S.D. Fla. Case No. 20-13304) on
March 11, 2020. In the petition signed by Devin Grandis,
president, the Debtor was estimated to have $1 million to $10
million in both assets and liabilities.
Judge Peter D. Russin Bradley replaced Judge Paul G Hyman Jr., who
previously oversees the case. Bradley S. Shraiberg, Esq., at
Shraiberg Landau & Page PA, serves as Debtor's bankruptcy counsel.
The U.S. Trustee was not able to appoint an Official Committee of
Unsecured Creditors for the Debtor.
AEMETIS INC: Posts $12.2 Million Net Loss in Third Quarter
----------------------------------------------------------
Aemetis, Inc. filed with the Securities and Exchange Commission its
Quarterly Report on Form 10-Q disclosing a net loss of $12.22
million on $40.92 million of revenues for the three months ended
Sept. 30, 2020, compared to a net loss of $7.23 million on $57.39
million of revenues for the three months ended Sept. 30, 2019.
For the nine months ended Sept. 30, 2020, the Company reported a
net loss of $22.08 million on $128.23 million of revenues compared
to a net loss of $31.82 million on $149.89 million of revenues for
the same period during the prior year.
As of Sept. 30, 2020, the Company had $122.17 million in total
assets, $95.82 million in total current liabilities, $201.91
million in total long-term liabilities, and a total stockholders'
deficit of $175.56 million.
Adjusted EBITDA was negative $2.5 million for the three months
ended Sept. 30, 2020.
Cash at the end of the third quarter of 2020 was $79,000, compared
to $656,000 at the end of 2019.
The Company has a working capital deficit, which includes
approximately $59.3 million of debt maturing within the next 12
months, and the Company has been required to remit substantially
all excess cash from operations to its senior lender and is
therefore reliant on its senior lender to provide additional
funding when required. In order to meet its obligations during the
next 12 months, the Company will need to either refinance the
Company's debt or receive the continued cooperation from its senior
lender. According to the Company, this dependence on the senior
lender raises substantial doubt about its ability to continue as a
going concern.
"In the third quarter, the Aemetis Biogas team achieved several
significant milestones by completing the first phase of our dairy
digester cluster project, including the commissioning of a four
mile Aemetis-owned pipeline and two dairy digesters that are now
producing below zero carbon intensity biogas," said Eric McAfee,
Chairman & CEO of Aemetis, Inc. "The biogas team is working to
rapidly build 16 additional dairy digesters under 25 year
contracts, a centralized gas clean up unit, and about 26 more miles
of pipeline in the Aemetis dairy digester cluster, which is
expected to be fully completed within about 18 months. In 2021,
Aemetis will be able to inject dairy renewable natural gas into the
common carrier pipeline and utilize an onsite renewable compressed
natural gas fueling station," McAfee added.
Demand for high grade alcohol for sanitizer production and
shipments of bulk alcohol to sanitizer alcohol customers launched
strongly in the second quarter of 2020 at the onset of the COVID-19
pandemic, but then softened during the third quarter of 2020 due to
inferior product from overseas and customer resulting demand for
United States Pharmacopeia grade alcohol. Responding to this
continued market demand for high-quality sanitizer and health
products, Aemetis expanded its sustainable advantage as the largest
West Coast producer of high grade alcohol for sanitizer and health
products by launching Aemetis Health Products. This new subsidiary
extended the business into the production and distribution of
branded and private label blended liquid and gel sanitizer and
other health safety products.
"After obtaining the Food and Drug Administration National Drug
Code for sanitizer products, Aemetis Health Products began
production during the third quarter to expand product offerings
into key markets for hand sanitizers, personal care and cleaning
products. Sales of the new sanitizer products are planned to be
supported by production of United States Pharmacopeia medical grade
alcohol beginning in the first half of 2021," said McAfee.
To reduce the carbon intensity of its products, Aemetis commenced
project development for two significant ethanol plant energy
upgrade projects, including a large solar microgrid that is
expected to produce approximately 1.5MW of renewable energy at the
Keyes plant, and a mechanical vapor recompression (MVR) upgrade
that, when combined with the solar project, is engineered to reduce
the plant's natural gas steam usage by approximately 85%. The
combined solar and MVR projects were awarded $14 million of grants
from the California Energy Commission in 2020, with construction
expected to commence in the second half of 2021.
This month, Aemetis participated in a $900 million India government
oil marketing company request to purchase biodiesel, and acceptance
of its bid is expected to grow revenue at its India business during
2021.
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/Archives/edgar/data/738214/000165495420012181/amtx_10q.htm
About Aemetis
Headquartered in Cupertino, California, Aemetis --
http://www.aemetis.com/-- is an advanced renewable fuels and
biochemicals company focused on the acquisition, development and
commercialization of innovative technologies that replace
traditional petroleum-based products by the conversion of ethanol
and biodiesel plants into advanced biorefineries. Founded in
2006,
Aemetis owns and operates a 60 million gallon-per-year ethanol
production facility in the California Central Valley near Modesto.
Aemetis also owns and operates a 50 million gallon per year
renewable chemical and advanced fuel production facility on the
East Coast of India producing high quality distilled biodiesel and
refined glycerin for customers in India and Europe. Aemetis is
building a biogas digester, pipeline and gas cleanup project to
convert dairy waste gas into renewable natural gas, and is
developing a plant to convert waste orchard wood into cellulosic
ethanol. Aemetis holds a portfolio of patents and related
technology licenses for the production of renewable fuels and
biochemicals.
Aemetis recorded a net loss of $39.48 million for the year ended
Dec. 31, 2019, compared to a net loss of $36.29 million for the
year ended Dec. 31, 2018. As of March 31, 2020, the Company had
$103.81 million in total assets, $60.95 million in total current
liabilities, $209.55 million in total long term liabilities, and a
total stockholders' deficit of $166.69 million.
AGILE THERAPEUTICS: Incurs $15.5 Million Net Loss in Third Quarter
------------------------------------------------------------------
Agile Therapeutics, Inc., filed with the Securities and Exchange
Commission its Quarterly Report on Form 10-Q disclosing a net loss
of $15.52 million for the three months ended Sept. 30, 2020,
compared to a net loss of $4.43 million for the three months ended
Sept. 30, 2019.
For the nine months ended Sept. 30, 2020, the Company reported a
net loss of $34.23 million compared to a net loss of $12.58 million
for the same period during the prior year.
As of Sept. 30, 2020, the Company had $89.41 million in total
assets, $23.28 million in total liabilities, and $66.13 million in
total stockholders' equity.
As of Sept. 30, 2020, Agile had $71.9 million of cash, cash
equivalents and marketable securities compared to $34.5 million of
cash and cash equivalents as of Dec. 31, 2019.
Research and development expenses were $3.7 million for the quarter
ended Sept. 30, 2020, compared to $2.4 million for the comparable
period in 2019. The increase in R&D expenses was primarily due to
costs to conduct validation work for commercial manufacturing of
Twirla by Corium, the Company’s contract manufacturer.
General and administrative expenses were $11.0 million for the
quarter ended Sept. 30, 2020, compared to $2.1 million for the
comparable period in 2019. The increase in G&A expenses was
primarily due to higher costs associated with the Company's
pre-commercialization activities for Twirla, such as brand
building, advocacy, market research and consulting. The increase
in G&A expenses was also attributable to activities related to
building out the commercial organization and included higher
salaries and higher professional fees related to recruiting fees
and consultants, and an increase in stock compensation expense.
"With our commercial launch of Twirla expected by the end of the
year, we remain on track to deliver on our plan. The final
validation of our commercial manufacturing process continues to
progress as all three of our batches are expected to be released
for commercial use in December 2020. By taking steps to build out
an experienced sales force, secure major wholesaler agreements and
increase market access for Twirla, we believe we are well-prepared
to hit the ground running. Having our first FDA-approved product
nearing launch marks an exciting time for Agile and we look forward
to bringing to the market another choice for women to help fulfill
their contraceptive needs," said Al Altomari, chairman and chief
executive officer of Agile.
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/Archives/edgar/data/1261249/000155837020013706/agrx-20200930x10q.htm
About Agile Therapeutics
Agile Therapeutics, headquartered in Princeton, New Jersey --
http://www.agiletherapeutics.com-- is a forward-thinking women's
healthcare company dedicated to fulfilling the unmet health needs
of today's women. The Company's product candidates are designed to
provide women with contraceptive options that offer freedom from
taking a daily pill, without committing to a longer-acting method.
Its lead product candidate, Twirla, (ethinyl estradiol and
levonorgestrel transdermal system), also known as AG200-15, is a
once-weekly prescription contraceptive patch that has completed
Phase 3 trials.
Agile recorded a net loss of $18.61 million in 2019, a net loss of
$19.78 million in 2018, and a net loss of $28.30 million in 2017.
As of June 30, 2020, the Company had $103.06 million in total
assets, $22.27 million in total liabilities, and $80.79 million in
total stockholders' equity.
Ernst & Young LLP, in Iselin, New Jersey, the Company's auditor
since 2010, issued a "going concern" qualification in its report
dated Feb. 20, 2020 citing that the Company has suffered recurring
losses from operations, requires additional capital to fund its
commercialization activities and has stated that substantial doubt
exists about the Company's ability to continue as a going concern.
ALPHA ENTERTAINMENT: Wins Feb. 8 Plan Exclusivity Extension
-----------------------------------------------------------
At the behest of Alpha Entertainment LLC, Judge Laurie Selber
Silverstein extended the period within which the Debtor has the
exclusive right to file a plan of reorganization to February 8,
2021, and to solicit acceptances through and including April 7,
2021.
Prior to the Petition Date, the XFL "Xtreme Football League"
provided high-energy professional football. The league debuted on
February 8, 2020, to immediate acclaim; unfortunately, just weeks
later the worldwide COVID-19 pandemic forced every major American
sports league to suspend, if not cancel, their seasons.
So on March 20, 2020, the XFL canceled the remainder of its
inaugural season, costing the nascent league tens of millions of
dollars in revenue. It only worsened the problems posed by the
Debtor's abrupt loss of revenue and continuing operating expenses.
After considering all available strategic options, the Debtor and
its professional advisors determined that the best course to
preserve and maximize the value of the Debtor's estate was through
a chapter 11 sale process. On August 7, 2020, the Court held a sale
hearing, and consistent with the record at the Sale Hearing,
entered an order approving the sale of substantially all of the
Debtor's assets to Alpha Opco, LLC and the Sale closed on August
21, 2020.
The Debtor and its advisors have devoted a significant amount of
time and effort to ensure a smooth transition into chapter 11, and
to preserving and maximizing the value of the Debtor’s estate for
the benefit of all stakeholders through the sale process.
The Debtor has already filed a chapter 11 plan that provides for
the orderly wind-down of its estate and distributions to creditors.
The granted extension will give the Debtor sufficient time to
solicit acceptances of the Plan and undertake the countless tasks
attendant to confirmation while working with interested parties to
resolve any issues or comments.
A copy of the Debtor's Motion to Extend is available from
donlinrecano.com at https://bit.ly/32vGouQ at no extra charge.
A copy of the Court's Extension Order is available from
donlinrecano.com at https://bit.ly/32w6M7Y at no extra charge.
About Alpha Entertainment
Alpha Entertainment LLC, which does business as the "Xtreme
Football League" -- https://www.alphaentllc.com/ -- is a
professional American football league. The XFL kicked off with
games beginning in February 2020. The XFL offered fast-paced,
three-hour games with fewer play stoppages and simpler rules. The
XFL featured eight teams, 46-man active rosters, and a 10-week
regular-season schedule, with a postseason consisting of two
semifinal playoff games and a championship game. The eight XFL
teams were the DC Defenders, the Dallas Renegades, the Houston
Roughnecks, the Los Angeles Wildcats, the New York Guardians, the
St. Louis BattleHawks, the Seattle Dragons, and the Tampa Bay
Vipers.
Alpha Entertainment LLC, based in Stamford, CT, filed a Chapter 11
petition (Bankr. D. Del. Case No. 20-10940) on April 13, 2020. In
its petition, the Debtor was estimated to have $10 million to $50
million in both assets and liabilities. The petition was signed by
John Brecker, an independent manager.
The Honorable Laurie Selber Silverstein presides over the case.
The Debtor hired Young Conaway Stargatt & Taylor, LLP, as counsel;
and Donlin Recano & Company, Inc., as claims agent and
administrative advisor.
AQA ACQUISITION: Moody's Assigns B3 CFR, Outlook Stable
-------------------------------------------------------
Moody's Investors Service assigned a B3 Corporate Family Rating
(CFR) and B3-PD Probability of Default Rating (PDR) to AQA
Acquisition Holdings, Inc. (1st time rating) ("SmartBear").
Concurrently, Moody's assigned a B2 rating to SmartBear's proposed
senior secured first lien bank credit facilities which will consist
of a $50 million revolving credit facility and a $385 million term
loan. Proceeds from the first lien term loan, a $130 million second
lien term loan (unrated), approximately $30 million of balance
sheet cash, and new cash equity from Vista Equity Partners will be
used to refinance the company's existing debt and fund Vista's
purchase of SmartBear equity. The business will be owned jointly by
existing financial sponsors Francisco Partners and Vista Equity
Partners. The outlook is stable.
Assignments:
Issuer: AQA Acquisition Holding, Inc
Corporate Family Rating, Assigned B3
Probability of Default Rating, Assigned B3-PD
Senior Secured Bank Credit Facility, Assigned B2 (LGD3)
Outlook Actions:
Issuer: AQA Acquisition Holding, Inc
Outlook, Assigned Stable
RATINGS RATIONALE
SmartBear's B3 CFR reflects the credit risks associated with
SmartBear's small revenue base, narrow market focus and high
leverage levels. Pro forma for the proposed transaction Moody's
adjusted leverage is in excess of 10x however, when adjusting for
certain one-time expenses and including change in deferred revenue,
Moody's cash adjusted leverage was approximately 7.8x as of the LTM
period ended September 30, 2020. The rating also considers the
company's recent acquisitions of BitBar and Cucumber and Moody's
expectation that tuck-in M&A activity will continue and is likely
to be funded with additional debt which could result in leverage
levels remaining elevated over time.
The B3 CFR also reflects SmartBear's largely recurring revenue
base, very high adjusted EBITDA margins and Moody's expectation for
high-single to low-double-digit percent organic revenue and EBITDA
growth. SmartBear's base of recurring maintenance, subscription and
SaaS contracts make up about 90% of total revenues and the company
maintains Moody's adjusted cash EBITDA margins in the mid to high
40% range. As a result of its high profitability levels and limited
capital expenditure requirements SmartBear is expected to generate
healthy free cash flow over the next 12-18 months which should
approximate about 5% of gross debt. Moody's expects the company to
remain acquisitive however, and continued transaction and
integration fees associated with M&A activities have the potential
to depress cash flow generation.
SmartBear is subject to governance risk as the business is owned by
financial sponsors Francisco Partners and Vista Equity Partners and
is expected to maintain an aggressive financial strategy as
evidenced by the high leverage levels contemplated to affect the
proposed transaction.
The Stable outlook reflects Moody's expectations that SmartBear
will continue to grow revenue and EBITDA organically in the
high-single to low-double-digit percent range over the next 12-18
months which will drive Moody's cash adjusted leverage below 7x.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
SmartBear's ratings could be downgraded if Moody's cash adjusted
leverage is expected to be above 8x on other than a temporary basis
as a result of deteriorating performance, debt-funded dividend or
M&A activity. Ratings could also be downgraded if free cash flow
generation declined such that free cash flow to debt is expected to
be negative.
SmartBear's ratings could be upgraded if the company were to
continue to grow revenue and EBITDA organically such that scale is
meaningfully increased, and Moody's cash adjusted leverage were to
be maintained below 6x.
SmartBear's liquidity is considered good as it is supported by a
$50 million revolving credit facility and expectations for free
cash flow generation in excess of $20 million over the next 12-18
months. The company's fixed charges will consist of approximately
$28 million of interest expense and term loan amortization, about
$5 million of capex and about $10 million of cash taxes. There are
no financial covenants on the first lien term loan however, the
company will be required to comply with a springing maximum first
lien net leverage ratio of 9.10x when utilization of the revolving
credit facility exceeds 40%. SmartBear is expected to have
substantial cushion under the springing covenant at the close of
the transaction.
The B2 ratings on the first lien bank credit facilities reflect the
B3-PD PDR and the debt's senior-most position within the capital
structure.
Preliminary terms of the first lien credit agreement contain
provisions for incremental debt capacity up to the greater of $69.1
million and 100% of consolidated EBITDA for the trailing four
fiscal quarters (reduced by incremental equivalent debt amounts
incurred in reliance on this basket, or any second lien amounts
incurred under the second lien incremental starter basket). The
company can also incur unlimited incremental first lien facilities
if (i) pro forma First Lien Net Leverage Ratio is less than 5.5x or
(ii) if incurred for permitted acquisitions or investments, first
lien net leverage does not increase on a pro forma basis. The
company can incur unlimited junior lien incremental equivalent debt
if (i) pro forma senior secured net leverage is 7.5x or less, or
(ii) if incurred for permitted acquisitions or investments the pro
forma senior secured leverage ratio does not increase. The company
can incur unsecured incremental equivalent debt if (i) pro forma
total net leverage is 7.75x or less (or does not increase, if used
to finance a permitted acquisition or investment), or (ii) pro
forma interest coverage ratio is at least 1.75 (or if incurred for
permitted acquisitions or investments, the pro forma interest
coverage does not decrease). There are no anticipated "blocker"
provisions providing additional restrictions on top of the covenant
carve-outs to limit collateral leakage through transfers of assets
to unrestricted subsidiaries. Only wholly owned subsidiaries must
provide guarantees, raising the risk of potential guarantee
release; dividends of partial ownership interests could jeopardize
guarantees. The company's obligation to prepay loans with net
proceeds of asset sales steps down to 50%, 25% and 0%, subject to
pro forma first lien net leverage at 4.50x, 4.25x and 4x,
respectively, weakening control over collateral.
SmartBear, headquartered in Somerville, MA is a provider of
software testing automation tools used by software developers
across a broad set of enterprise customers. The company generated
revenues of approximately $139 million in the LTM period ended
September 30, 2020. Smart Bear is owned by funds affiliated with
private equity sponsors Francisco Partners and Vista Equity
Partners.
The principal methodology used in these ratings was Software
Industry published in August 2018.
AVIANCA HOLDINGS: Financing Not Dependent on Government Aid
-----------------------------------------------------------
Ezra Fieser of Bloomberg News reports that Avianca Holdings SA's $2
billion debtor-in-possession financing plan does not depend on govt
participation, the airline said in a regulatory filing in Colombia.
The Plan, already approved by a U.S. bankruptcy court, is
structured to allow for "possible future participation" from one or
more governments. The airline has the support from "a large number
of outside institutional investors and existing lenders in its DIP
financing", giving it the support to continue advancing in its
reorganization plan without the participation of the govt of
Colombia.
About Avianca Holdings SA
Avianca -- https://aviancaholdings.com/ -- is the commercial brand
for the collection of passenger airlines and cargo airlines under
the umbrella company Avianca Holdings S.A. Avianca has been flying
uninterrupted for 100 years. With a fleet of 158 aircraft, Avianca
serves 76 destinations in 27 countries within the Americas and
Europe.
Avianca Holdings S.A. and its affiliates sought protection under
Chapter 11 of the Bankruptcy Code (Bankr. S.D. N.Y. Lead Case No.
20-11133) on May 10, 2020. At the time of the filing, Debtors
disclosed $7,273,900,000 in assets and $7,268,700,000 in
liabilities.
Judge Martin Glenn oversees the cases.
Debtors tapped Milbank LLP as general bankruptcy counsel; Urdaneta,
Velez, Pearl & Abdallah Abogados and Gomez-Pinzon Abogados S.A.S.
as restructuring counsel; Smith Gambrell and Russell, LLP as
aviation counsel; Seabury Securities LLC as financial restructuring
advisor and investment banker; FTI Consulting, Inc. as financial
restructuring advisor; and Kurtzman Carson Consultants LLC as
claims and noticing agent.
The U.S. Trustee for Region 2 appointed a committee of unsecured
creditors in Debtor's bankruptcy cases on May 22, 2020.
AVIS BUDGET: S&P Affirms 'B+' ICR on Improved Liquidity
-------------------------------------------------------
S&P Global Ratings affirmed all of its ratings, including the 'B+'
issuer credit ratings on Parsippany, N.J.-based car renter Avis
Budget Group Inc. and subsidiary Avis Budget Car Rental LLC and
removed all ratings from CreditWatch, where S&P placed them with
negative implications on March 16, 2020.
S&P said, "We expect Avis Budget's credit metrics to weaken sharply
in 2020, due to the impact of the coronavirus, and to recover
somewhat in 2021 based on a continuation of the company's improved
operating performance in third-quarter 2020. Avis Budget generates
the majority of its revenues at airports globally and thus relies
on airline passenger travel. To offset the steep decline in air
travel and demand for its vehicles, the company has reduced costs
($2 billion thus far in 2020 and another $500 million expected by
year end) and its fleet through the cancellation of orders for new
vehicles and the sale of vehicles (75,000 in the U.S. and 100,000
globally in the third quarter of 2020). In addition, the company
has benefited from strong used-car prices that have lowered its
vehicle costs (when used-car prices are strong, this is reflected
in lower depreciation expense). In the third quarter of 2020, the
company generated pretax income of $63 million and net income of
$45 million. We don't expect passenger travel to begin to recover
until 2021. We expect strong used-car prices to moderate somewhat
in 2021. As a result, we expect modestly negative EBIT interest
coverage in 2020, returning to modestly positive in 2021. We expect
FFO to debt in the mid-single-digit percent area in 2020, with a
modest improvement in 2021."
"We are revising our assessment of liquidity to adequate from less
than adequate. We revised our liquidity assessment to reflect the
liquidity-raising initiatives the company has undertaken since the
beginning of the pandemic. At Sept. 30, 2020, the company had $1.6
billion of unrestricted cash, and availability of $818 million
under its corporate revolving credit facility and $4.3 billion
under its vehicle-financing facilities. In May 2020, the company
issued $500 million of secured notes and issued $350 million of
unsecured notes (using $100 million of proceeds to redeem the
remaining unsecured notes due 2023) and $650 million of
asset-backed debt in August 2020. We expect that, given continued
relatively low levels of capital spending, the company's sources of
liquidity will cover uses by around 2.8x over the next 12 months."
Environmental, social, and governance (ESG) credit factors for this
credit rating change.
-- Health and safety
S&P said, "We expect the company's credit metrics to be weak in
2020 due to the sharp decline in airline travel related to the
impact of the COVID-19. However, the company has benefited from
substantial cost reductions and strong used-car prices that have
reduced its depreciation expense. We expect the company's credit
metrics to improve in 2021, but not to previous levels. We expect
modestly negative EBIT interest coverage in 2020, returning to
modestly positive in 2021. We expect FFO to debt in the
mid-single-digit percent area in 2020, with a modest improvement in
2021."
"We could lower our rating over the next year if FFO to debt does
not improve from the mid-single-digit percent area and liquidity
becomes constrained. This could be the result of continued weak air
travel or a decline in used-car prices for a prolonged period."
"We could revise the outlook to stable over the next year if
airline travel is stronger than expected or used-car prices remain
strong, resulting in EBIT interest coverage becoming positive and
continued adequate liquidity."
AYRO INC: Reports $2.68 Million Net Loss for Third Quarter
----------------------------------------------------------
Ayro, Inc. filed with the Securities and Exchange Commission its
Quarterly Report on Form 10-Q disclosing a net loss of $2.68
million on $388,654 of revenue for the three months ended Sept. 30,
2020, compared to a net loss of $2.14 million on $265,481 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 $6.01 million on $821,398 of revenue compared to a net
loss of $5.21 million on $745,530 of revenue for the same period
during the prior year.
As of Sept. 30, 2020, the Company had $33.85 million in total
assets, $3.09 million in total liabilities, $30.76 million in total
stockholders' equity.
"The third quarter positioned us well to execute our strategy of
becoming a dominant manufacturer of purpose-built, low-speed EVs
for the commercial fleet market," commented AYRO Chief Executive
Officer Rod Keller. "Despite the impact of COVID-19 and the
uncertainties it has created across global economies, we were able
to successfully improve our balance sheet materially through two
equity raises and had nearly $28 million in cash at the end of the
third quarter. We continued to deliver 411 cars to Club Car via
our exclusive relationship with them and even established another
partnership with Gallery Carts that is based on the 411 model and
targeted at point-of-demand hospitality markets. This initiative
permits food, beverage, and even merchandise operators to bring
goods directly to consumers. The COVID-19 pandemic has brought
into focus the need to be able to bring food and beverages to
students, faculty, fans, and/or employees on an as-needed basis to
avoid large gatherings like cafeterias. Together with Gallery
Carts, we have a few different vehicles available in a variety of
ready-made and configurable solutions to address varied customer
needs. Encouragingly, on the heels of establishing the partnership
with Gallery Carts, we received an initial order for such mobile
food trucks valued at nearly $600,000. This is a testament to our
team's ability to identify new and ancillary markets for our EV
solutions."
"Turning to manufacturing, we are especially excited about the
initiatives we achieved in the third quarter. In early July, we
announced that we tripled the production capacity of our Austin
facility from 200 cars per month to 600 cars per month. Austin is
certainly becoming a hotbed of EV manufacturing, and we are happy
to have the increased flexibility to satisfy future demand locally.
At the end of September, we announced a significant strategic
manufacturing, engineering, and design partnership with Karma
Automotive's Innovation and Customization Center. Under the
partnership, Karma will provide its expert contract manufacturing
services for the next-generation of AYRO light-duty vehicles as
well as engineering and development services for new EV solutions
in the delivery and microdistribution markets. Together, we aim to
deliver over 20,000 light-duty trucks and electric delivery
vehicles over the next three years. We estimate this production
goal to have a value in excess of $300 million," continued Mr.
Keller.
"Given our strategic partnerships with industry leaders like Club
Car, Gallery Carts, and now Karma Automotive, our strong balance
sheet, and our internal team who will continue to innovate and help
bring next-generation purpose-built EVs to the market, the outlook
remains quite bright for us, and we are truly excited about AYRO's
future. Furthermore, while COVID-19 may have led to some
disruptions in customer orders and the near-term pace of EV
adoption, the transition to EVs is a trend that will continue for
both consumers and businesses alike. AYRO is committed to be the
leader in purpose-built EVs," concluded Mr. Keller.
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/Archives/edgar/data/1086745/000149315220020639/form10-q.htm
About AYRO
Texas-based AYRO, Inc., f/k/a DropCar, Inc. -- http://www.ayro.com
-- designs and delivers compact, emissions-free electric fleet
solutions for use within urban and short-haul markets. Capable of
accommodating a broad range of commercial requirements, AYRO's
vehicles are the emerging leaders of safe, affordable, efficient
and sustainable logistical transportation. AYRO was founded in
2017
by entrepreneurs, investors, and executives with a passion to
create sustainable urban electric vehicle solutions for Campus
Management, Last Mile & Urban Delivery and Closed Campus
Transport.
Dropcar reported a net loss of $4.90 million for the year ended
Dec. 31, 2019, compared to a net loss of $18.75 million for the
year ended Dec. 31, 2018. As of June 30, 2020, the Company had
$11.51 million in total assets, $2.96 million in total liabilities,
and $8.54 million in total stockholders' equity.
Friedman LLP, in East Hanover, New Jersey, the Company's auditor
since 2019, issued a "going concern" qualification in its report
dated March 30, 2020, citing that the Company has recurring losses
and negative cash flows from operations. These conditions, among
others, raise substantial doubt about the Company's ability to
continue as a going concern.
BASS PRO: Moody's Affirms Ba3 CFR; Alters Outlook to Stable
-----------------------------------------------------------
Moody's Investors Service changed Bass Pro Group, L.L.C.'s ratings
outlook to stable from negative. Concurrently, Moody's affirmed the
company's Ba3 corporate family rating (CFR), Ba3-PD probability of
default rating (PDR), and B1 term loan rating.
The change in outlook to stable from negative reflects Bass Pro's
strong performance and Moody's expectation that despite a likely
normalization in demand in the outdoor, firearms and sports
categories in 2021 following the surge in 2020, credit metrics will
remain in line with the Ba3 rating.
The ratings affirmation reflects Bass Pro's good liquidity,
established market position in the sports and outdoors category and
the resiliency of its earnings, which are supported by the sizable
and stable credit card income.
Moody's took the following rating actions for Bass Pro Group,
L.L.C:
Corporate family rating, affirmed Ba3
Probability of default rating, affirmed Ba3-PD
Senior secured term loan B, affirmed B1 (LGD4)
Outlook, changed to stable from negative
RATINGS RATIONALE
Bass Pro's Ba3 CFR is supported by its well-recognized brand names
and good market position in the outdoor recreational products
retail sector. Bass Pro's margins benefit from its sizable and
stable credit card income stream and significant private label
penetration. The company's business model as a destination
experiential retailer sets it apart from mass market and big-box
competitors that do not provide the level of in-store customer
service that is the foundation underpinning its loyal customer
base. In addition, Bass Pro's diverse product assortment and value
price points mitigate earnings pressure in economic downturns. The
rating also benefits from the company's good liquidity over the
next 12-18 months, including a solid cash balance, ample revolver
availability, breakeven to modestly positive free cash flow after a
significant projected increase in capital expenditures and a lack
of near-term maturities.
Bass Pro's credit profile is constrained by its high leverage. As
of September 26, 2020, Moody's-adjusted debt/EBITDA was an
estimated 5.0 times and EBIT/interest expense was 2.1 times.
Moody's expects that credit metrics will weaken modestly in 2021,
to 5.3 times and 2 times respectively, as a result of a likely
pullback in the sports and outdoor categories following strong
demand in 2020. However, the company's recent omni-channel and
digital investments and new customers acquired during the pandemic
will mitigate the potential decline in demand. The rating also
reflects the company's aggressive financial strategies, including
its use of cash flow and incremental debt for member distributions
and redemption of preferred equity issued by Bass Pro's parent. In
addition, as a retailer, Bass Pro needs to make ongoing investments
in its brand and infrastructure, as well as in social and
environmental drivers including responsible sourcing, product and
supply sustainability, privacy and data protection. The company's
ongoing offering of firearms and ammunition at a time when several
other large retailers have reduced their offerings in the category
also represents a social consideration.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be downgraded if operating performance materially
deteriorates, financial policies become more aggressive, or
liquidity weakens. Quantitatively, the ratings could be downgraded
if Moody's-adjusted debt/EBITDA is sustained above 5.5 times or
EBITA/interest expense is below 1.75x.
The ratings could be upgraded if the company demonstrates the
ability and willingness to reduce debt/EBITDA (on a Moody's
adjusted basis) below 4 times and EBITA/interest expense above 2.5
times on a sustained basis, while maintaining good liquidity.
The principal methodology used in these ratings was Retail Industry
published in May 2018.
Headquartered in Springfield, Missouri, Bass Pro Group, L.L.C
operates Bass Pro Shops and Cabela's, retailers of outdoor
recreational products throughout the US and Canada. The company
also manufactures and sells recreational boats and related marine
products under the Tracker, Mako, Tahoe, Nitro, Ranger Boats,
Stratos and Triton brand names. The company also owns the Big Cedar
Lodge in Ridgedale, Missouri and Big Cypress Lodge in Memphis,
Tennessee. Bass Pro is majority-owned by its founder, John Morris.
Revenues for the LTM ended September 26, 2020 were approximately
$7.1 billion.
BETHUNE-COOKMAN UNIVERSITY: Fitch Hikes IDR to B-, Outlook Stable
-----------------------------------------------------------------
Fitch Ratings has upgraded Bethune-Cookman University's (BCU)
Issuer Default Rating (IDR) to 'B-' from 'CCC'. Fitch has also
upgraded to 'B-' from 'CCC' the ratings on $15.7 million of Florida
Higher Educational Facilities Financing Authority educational
facilities revenue bonds, series 2010, issued on behalf of BCU.
Fitch has removed the ratings from Rating Watch Negative and
revised the Rating Outlook to Stable.
SECURITY
The bonds are an unsecured general obligation of BCU and have a
cash-funded debt service reserve fund (DSRF) equal to maximum
annual debt service. U.S. Bank as the series 2010 trustee has
exercised its priority lien and withdrawn approximately $223,000
from the DSRF related to certain fees and expenses. BCU plans to
remit additional funds as required in FY2021 to replenish the
DSRF.
ANALYTICAL CONCLUSION
The upgrade of the IDR and bond ratings reflects several positive
developments since Fitch's May 2020 review, including:
-- Resolution of the accreditation threat. BCU was removed from
probation by its primary accreditor in September 2020;
-- Recurring state funding. BCU received $13 million in
additional operating appropriations - expected to be recurring -
from the State of Florida (AAA/Stable) beginning in fiscal 2021, in
addition to the approximately $4 million it already receives. The
legislature allocated additional funding for student aid and
instructional costs to each of the state's three private
historically black colleges and universities (HBCUs) in its FY 2021
budget.
-- Improved financial performance. Cash flow improved notably in
FY 2020 (year ended June 30), and BCU modestly improved its
liquidity position, halting a trend of cash deterioration.
Significant expense reductions were the largest driver of improved
cash flow, but strong unrestricted fundraising also contributed. In
addition, federal Coronavirus Aid, Relief, and Economic Security
(CARES) funds have generally offset auxiliary refunds and other
pandemic-related financial impacts in FY 2020.
Still, the 'B-' ratings reflect material default risk. Recent
positive developments provide a margin of safety, even though the
ongoing pandemic, but BCU remains vulnerable to acceleration of the
2010 bonds and to deterioration in its operating environment.
Key risks include:
-- Technical default and acceleration risk. BCU has made all
payments to date but remains in technical default on its series
2010 bonds related to a 2015 dormitory lease financing prohibited
by the series 2010 terms. Fitch now considers acceleration unlikely
given BCU's improving trajectory; however, the largest holder of
2010 bonds could nevertheless instruct the trustee to accelerate.
BCU may now also be able to pay the debt in the event of
acceleration, but likely not without impairing its ability to
operate normally. The bonds are now callable, though Fitch assumes
market access for refinancing may be limited at BCU's rating
level;
-- A weak financial profile characterized by very high leverage
and thin unrestricted liquidity;
-- Ongoing risk to net student revenue through the pandemic. Fall
2020 enrollment declines (nearly 3%) and weak housing occupancy
(approximately 61% of design capacity; BCU has also limited
capacity in each facility for health reasons) are manageable from a
budgetary perspective, especially in light of additional state
funding. However, further or prolonged pressure on demand and net
student fees could limit BCU's ability to rebuild its financial
position.
Coronavirus Impact and Scenario Analysis
The ongoing coronavirus pandemic and related government-led
containment measures create an uncertain environment for the U.S.
Public Finance higher education sector. Fitch's forward-looking
analysis is informed by management expectations and Fitch's
macroeconomic scenarios, which will evolve as needed during this
dynamic period. After the initial economic bounce experienced in
3Q20, Fitch's expectations include a slower recovery trajectory
from 4Q20.
The rating sensitivities address potential rating implications
under Fitch's baseline stress scenario. BCU's compressed fall term
ends on Nov. 11, 2020. The university recently moved remaining
classes for the term online but did not close the campus and will
not owe any auxiliary or other refunds. BCU plans to maintain its
mixed on-campus and online approach for the remainder of the
academic year and has already canceled spring 2021 athletic
competition. Fitch's baseline case incorporates the potential for
some further disruption in spring 2021, especially to auxiliary
revenues if BCU is forced to close the campus mid-spring, but
assumes that BCU's enrollment and housing occupancy will remain at
least stable in fall 2021 compared to fall 2020.
Fitch's downside stress scenario, which assumes a slower economic
recovery and prolonged or more significant pandemic-induced
disruptions lasting into fall 2021 or longer, is less relevant at
BCU's current rating level, which already reflects high
vulnerability to severe downside stress.
KEY RATING DRIVERS
Revenue Defensibility: 'bb'
Pandemic Pressures Auxiliaries; State Support Improves Revenue
Prospects
Net tuition and auxiliary revenues remain pressured due to a
weaker-than-expected fall 2019 cycle as well as due to mild fall
2020 enrollment losses and weaker auxiliary utilization related to
the pandemic. High student price sensitivity limits BCU's capacity
to increase net tuition and fees, which typically make up around
75% of operating revenues. However, the additional $13 million in
recurring state funding (subject to an across-the-board 6% state
funding reduction in FY 2021) will improve BCU's bottom line and
enhance revenue stability by offsetting institutionally funded
student aid and bad debt.
Operating Risk: 'bbb'
Budget Balancing Efforts Improve Cash Flow
The 'bbb' assessment, improved from 'bb', reflects Fitch's
expectation that BCU can maintain adequate and more stable cash
flow after several years of negative or very thin cash flow margins
below 5%. BCU made significant expense reductions in FY 2020 to
balance its budget and has budgeted conservatively in FY 2021.
Fitch estimates that BCU achieved a FY 2020 cash flow margin
approaching 10% (excluding an extraordinary release of net assets
from restrictions), and that cash flow margins will remain
healthier and more stable going forward as new state funding
offsets further potential pandemic costs. The university has no
major capital plans, but limited investment in capital maintenance
will increase already high deferred maintenance needs over time.
Financial Profile: 'bb'
Very High Leverage; Thin Unrestricted Liquidity
The university has very high leverage in the context of its
operating profile. Available funds-to-adjusted debt was only 25% at
FYE 2020, though this position could improve quickly as a result of
the additional state funding. Unrestricted liquidity is improved
but remains thin after recent reclassifications. The university
borrowed $8.5 million from its endowment for operating liquidity in
summer 2019 but satisfied the endowment note in FY 2020 after a
review of spending and gift terms found BCU had met purpose
restrictions and was able to release approximately $9 million. Of
BCU's $26 million of available funds (cash and investments not
permanently restricted), the majority (about $15 million) is
purpose-restricted. Fitch expects that some but not all of these
purpose-restricted funds could still be used for liquidity needs
related to student aid and instruction.
ESG - Governance: BCU has an ESG Relevance Score of '4' for
Management Strategy due to a period of ineffective strategic
planning and execution under prior management, which continues to
have a negative impact on the credit profile, and is relevant to
the ratings in conjunction with other factors. Specifically, the
university remains in technical default and subject to acceleration
of its series 2010 bonds related to the dormitory lease obligation
incurred in FY 2015.
This score has been revised to '4' from '5', as Fitch has no
current concerns about management strategy, and other material
credit developments have also affected the current ratings. In
addition, Fitch now considers acceleration relatively less likely
and expects BCU could likely avoid a payment default in the event
of acceleration.
ASYMMETRIC ADDITIONAL RISK CONSIDERATIONS
The technical default under the series 2010 bonds and related
acceleration risk, in addition to uncertainty around resolution
around dormitory project litigation (currently in court-ordered
mediation) are risk-additive factors that together weigh negatively
on the ratings until resolved.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to a
positive rating action/upgrade:
-- Resolution of technical default: Execution of a forbearance
agreement, refinancing of the 2010 bonds or other development that
removes the threat of acceleration;
-- Stronger cash flow margins consistently above 10% and
resulting improvement in leverage and liquidity metrics;
-- A stabilizing enrollment trend and improving demand indicators
starting fall 2021.
Factors that could, individually or collectively, lead to a
negative rating action/downgrade:
-- Debt acceleration. A decision by series 2010 bondholders (the
largest holder meets the required 25% threshold) to accelerate
could cause a payment default or, if BCU is able to make payments,
could require liquidation of resources to an extent that impairs
the university's ability to continue normal operations;
-- Loss of new state funding. The $13 million of additional
recurring state funding is a key support for the rating level,
providing flexibility to manage coronavirus-driven operating
pressures in FY 2021 and providing a clear path to improving the
university's financial position over time. Elimination or
significant reduction of those funds, especially while the pandemic
remains a threat to net tuition and auxiliary revenues, could
trigger a downgrade back to 'CCC' or potentially lower.
CREDIT PROFILE
Founded in 1904, BCU is a private co-educational university in
Daytona Beach, FL and is one of the federally designated HBCUs in
the United States. As of fall 2020, the university serves 2,845
students (2,783 FTE) at its main campus, satellite location and
online.
In addition to the sources of information identified in Fitch's
applicable criteria specified, this action was informed by
information from Lumesis.
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF
RATING
The principal sources of information used in the analysis are
described in the Applicable Criteria.
ESG CONSIDERATIONS
Bethune-Cookman University (FL): Management Strategy: 4
BCU has an ESG Relevance Score of '4' for Management Strategy due
to ineffective strategic planning and execution under prior
management related to the 2015 dormitory lease obligation which
continues to have a negative impact on the credit profile, and is
relevant to the ratings in conjunction with other factors. Fitch
has revised this score to '4' from '5'.
Fitch has also revised BCU's ESG Relevance Score to '3' from '5'
for Governance Structure. BCU has been removed from probation by
its primary accreditor as of September 2020. The accreditor had
placed BCU on probation in June 2018, which had a negative impact
on the ratings, and the sanction had in part reflected concerns
over BCU's board structure and practices at that time. Removal from
probation indicates that BCU has substantially addressed the
accreditor's governance-related and other concerns.
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.
BOUCHARD TRANSPORTATION: Hires Jackson Walker as Co-Counsel
-----------------------------------------------------------
Bouchard Transportation Co., Inc., and its debtor-affiliates seek
authority from the U.S. Bankruptcy Court for the Southern District
of Texas to employ Jackson Walker LLP, as co-counsel to the
Debtors.
Bouchard Transportation requires Jackson Walker to:
a. provide legal advice and services regarding local rules,
practices, and procedures, including Fifth Circuit law;
b. provide certain services in connection with administration
of the chapter 11 cases, including, without limitation,
preparing agendas, hearing notices, witness and exhibit
lists, and hearing binders of documents and pleadings;
c. review and comment on proposed drafts of pleadings to be
filed with the Court;
d. at the request of the Debtors, appear in Court and at any
meeting with the U.S. Trustee, and any meeting of creditors
at any given time on behalf of the Debtors as their local
and conflicts bankruptcy co-counsel;
e. perform all other services assigned by the Debtors to the
Firm as local and conflicts bankruptcy co-counsel; and
f. provide legal advice and services on any matter on which
Kirkland & Ellis LLP and Kirkland & Ellis International LLP
may have a conflict or as needed based on specialization.
Jackson Walker will be paid at these hourly rates:
Matthew D. Cavenaugh $825
Attorneys $445 to $935
Paraprofessional $175 to $185
Jackson Walker will also be reimbursed for reasonable out-of-pocket
expenses incurred.
In accordance with Appendix B-Guidelines for Reviewing Applications
for Compensation and Reimbursement of Expenses Filed under 11
U.S.C. Sec. 330 for Attorneys in Larger Chapter 11 Cases, the
following is provided in response to the request for additional
information:
Question: Did you agree to any variations from, or
alternatives to, your standard or customary billing
arrangements for this engagement?
Response: No.
Question: Do any of the professionals included in this
engagement vary their rate based on the geographic
location of the bankruptcy case?
Response: No.
Question: If you represented the client in the 12 months
prepetition, disclose your billing rates and
material financial terms for the prepetition
engagement, including any adjustments during the 12
months prepetition. If your billing rates and
material financial terms have changed postpetition,
explain the difference and the reasons for the
difference.
Response: The rates of other restructuring attorneys in the
Firm range from $445 to $935 an hour, and the
paraprofessional rates range from $175 to $185 per
hour. The Firm did not represent the Debtors prior
to the petition, nor did the Firm receive any
prepetition payments.
Question: Has your client approved your prospective budget
and staffing plan, and, if so for what budget
period?
Response: The Firm has not prepared a budget and staffing
plan.
Matthew D. Cavenaugh, partner of Jackson Walker LLP, assured the
Court that the firm is a "disinterested person" as the term is
defined in Section 101(14) of the Bankruptcy Code and does not
represent any interest adverse to the Debtors and their estates.
Jackson Walker can be reached at:
Matthew D. Cavenaugh, Esq.
JACKSON WALKER LLP
1401 McKinney Street, Suite 1900
Houston, TX 77010
Tel: (713) 752-4284
E-mail: mcavenaugh@jw.com
About Bouchard Transportation
Founded in 1918, Bouchard Transportation's first cargo was a
shipment of coal. By 1931, Bouchard acquired its first oil barge.
Over the past 100 years and five generations later, Bouchard has
expanded its fleet, which now consists of 25 barges and 26 tugs of
various sizes, capacities and capabilities, with services operating
in the United States, Canada, and the Caribbean. Bouchard remains
dedicated to continuing the rich heritage of barging expertise and
family pride well into the future.
Bouchard Transportation Co., Inc., and certain of its affiliates
sought Chapter 11 protection (Bankr. S.D. Tex. Lead Case No.
20-34682) on Sept. 28, 2020.
Kirkland & Ellis LLP and Jackson Walker LLP are acting as the
Company's legal counsel, Portage Point Partners, LLC is serving as
restructuring advisor, and Jefferies LLC is acting as investment
banker. Stretto is the claims agent.
BSVH LLC: Unsecureds Recovery Hiked to 59.98% in Plan
-----------------------------------------------------
BSVH, LLC, submitted a First Amended Disclosure Statement
explaining its Reorganization Plan.
General unsecured creditors are classified in Class 3, and will
receive a distribution of 59.98% of their allowed claims, to be
paid upon confirmation.
The hearing at which the Court will determine whether to approve
the Plan will take place on Dec. 17, 2020, at 9:00 a.m.
Class 1 BSI Financial, with a claim totaling $1,425,382, is
impaired. The creditor will receive monthly payment of $6,352.56.
It is anticipated that the secured portion of the claim will be
paid in full at 5% interest over five years. The remaining
$259,476.38 shall be treated as unsecured through the treatment
outlined in Class 2.
Class 2 Unsecured portion of BSI's bifurcated claim is impaired.
The Creditor will receive monthly payment of $2,593.90 for 60
months. 59.98% payout on claim at 0% interest.
Class 3 General unsecured claims are impaired. Unsecured creditors
will each receive one payment of 59.98% of their claims. In the
prior iteration of the Disclosure Statement, general unsecured
creditors were projected to recover 10% of their allowed claims, to
be paid upon confirmation.
All payments required under this Plan will be provided by the net
monthly and/or annual cash flow from business operations of the
corporation.
A full-text copy of the First Amended Disclosure Statement dated
September 21, 2020, is available at https://tinyurl.com/y4tevkhl
from PacerMonitor.com at no charge.
Attorney for the Debtor:
Jennifer M. Lancaster
THE LANCASTER LAW FIRM, PPLC
P.O. Box 1295
Benton, AR 72018
Tel: (501) 776-2224
Fax: (501) 778-6186
E-mail: Jennifer@thelancasterlawfirm.com
About BSVH LLC
BSVH, LLC is a Hot Springs National, Ark.-based privately held
company primarily engaged in the operation of dwellings other than
apartment buildings.
BSVH filed a Chapter 11 petition (Bankr. W.D. Ark. Case No.
20-70365) on Feb. 7, 2020. The petition was signed by BSVH
President Matthew Valentine. At the time of the filing, Debtor had
estimated assets of between $1 million and $10 million and
liabilities of less than $50,000.
Judge Ben T. Barry oversees the case.
Jennifer M. Lancaster, Esq., at The Lancaster Law Firm, is the
Debtor's legal counsel.
BSVH LLC: US Trustee Says Disclosure Statement is Inaccurate
------------------------------------------------------------
The United States Trustee filed an objection to the BSVH, LLC's
Amended Disclosure Statement.
The United States Trustee points out that the Amended Disclosure
Statement does not contain sufficient information to enable a
hypothetical investor to make an informed judgment about the plan
in accordance with 11 U.S.C. S 1125:
* The liquidation analysis attached to the Amended Disclosure
Statement appears to be incomplete or inaccurate.
* The historical financial information provided in the Amended
Disclosure Statement does not appear to accurately reflect and
represent Debtor's past financial performance.
* No future pro forma financial projections are provided in the
amended
disclosure statement.
About BSVH LLC
BSVH, LLC is a Hot Springs National, Ark.-based privately held
company primarily engaged in the operation of dwellings other than
apartment buildings.
BSVH filed a Chapter 11 petition (Bankr. W.D. Ark. Case No.
20-70365) on Feb. 7, 2020. The petition was signed by BSVH
President Matthew Valentine. At the time of the filing, Debtor had
estimated assets of between $1 million and $10 million and
liabilities of less than $50,000.
Judge Ben T. Barry oversees the case.
Jennifer M. Lancaster, Esq., at The Lancaster Law Firm, is the
Debtor's legal counsel.
CALLAWAY GOLF: S&P Retains 'B+' ICR on CreditWatch Negative
-----------------------------------------------------------
S&P Global Ratings retained all ratings on U.S.-based golf
equipment and apparel manufacturer Callaway Golf Co. and driving
range entertainment company Topgolf International Inc. on
CreditWatch, where it placed them on Oct. 28, 2020, and Oct. 29,
2020, respectively.
Callaway Golf Co. recently entered into an agreement to acquire the
remaining 86% of driving range entertainment company Topgolf
International Inc. that it does not already own. The proposed
all-stock transaction values Topgolf at about $2 billion and is
expected to close in early 2021. Callaway shareholders will own
51.5% of the combined company and Topgolf shareholders the
remaining 48.5%.
Callaway will consolidate Topgolf's debt, which consists of a term
loan with $344 million outstanding, $175 million revolving credit
facility with $160 million outstanding, and roughly $200 million of
real estate-related debt, in addition to high lease obligations.
The debt will remain at Topgolf, and Callaway will not provide
guarantees.
S&P said, "The CreditWatch with negative implications for Callaway
reflects our expectation that incremental leverage over the next
few years as a result of consolidating Topgolf's debt and lease
obligations will offset the strategic benefits from combining the
two companies. We expect to lower all ratings on Callaway to 'B'
from 'B+' and revise the outlook to negative if the transaction is
approved as proposed."
"The CreditWatch with positive implications for Topgolf reflects
our expectation that we will raise the rating to 'B-' from 'CCC+',
because we view Topgolf as strategically important to Callaway and
that Callaway would likely support Topgolf in most foreseeable
circumstances."
"The anticipated downgrade of Callaway primarily reflects high
leverage and lower cash flow at the combined entity over the next
few years. Once Callaway's shareholders and lenders approve the
merger and we have high confidence it will close, we expect to
lower the rating on Callaway to 'B' from 'B+'. The downgrade will
primarily reflect our belief that incremental leverage at the
combined entity and Callaway's plan to fund growth capital
expenditures (capex) at Topgolf will increase financial risk more
than the strategic benefits of the acquisition improve the combined
entity's scale, breadth of products and services, and EBITDA growth
over the next few years."
"We view Callaway's decision to fund the transaction with equity
rather than new debt favorably. However, Callaway will consolidate
more than $500 million of funded debt from Topgolf, more than $200
million in real estate-related debt, and about $1 billion in lease
obligations. This will increase leverage significantly at the
combined entity for at least the next two years, well above our 5x
downgrade threshold for Callaway at the current rating, because we
do not expect Topgolf to generate meaningful EBITDA in 2020 or
2021. We forecast double-digit pro forma leverage at the combined
company at the close of the transaction, primarily due to negative
EBITDA at Topgolf as a result of its venues being closed during the
COVID-19 pandemic and a sustained drop in group business. Although
we believe the transaction creates an opportunity to accelerate
Topgolf's growth trajectory and eventually reach sustained
profitability, we believe leverage at the combined entity will
remain high in the 7x-8x area in 2021 and the mid-5x area in
2022."
"We will resolve the CreditWatch once we have high confidence that
the merger will be completed, likely after Callaway shareholders
approve it and its lenders agree to necessary amendments to the
credit agreement."
CAMBRIAN HOLDING: Wants Plan Hearing Shelved, Mediation Seen
------------------------------------------------------------
The hearing to consider confirmation of the Amended Joint Plan of
Orderly Liquidation of Cambrian Holding Company, Inc. and its
Affiliated Debtors under Chapter 11 of the Bankruptcy Code, is
scheduled for November 19, 2020.
However, the Debtors, the Official Committee of Unsecured
Creditors, Continental Heritage Insurance Company and the
Commonwealth of Kentucky Energy and Environment Cabinet are asking
the Bankruptcy Court to:
(a) adjourn the November 19 hearing on confirmation of the
Amended Liquidation Plan; and
(b) conduct a status hearing on the Plan on November 19, 2020
at 9:00 a.m.
At the Debtors' behest, Judge Gregory R. Schaaf extended the
Debtor's exclusivity period to solicit acceptances of a chapter 11
plan through and including November 13, 2020.
At the request of several parties in interest in the Debtors
Chapter 11 cases, including Continental Heritage Insurance Company
and the Commonwealth of Kentucky Energy and Environment Cabinet,
the Debtors and the Committee agreed to continue the hearing on the
Disclosure Statement to September 17, 2020, to allow parties to
continue to work through issues regarding the Disclosure Statement.
The Debtors requested the extension to give them more time to
solicit votes on the plan.
On September 22, 2020, the Court entered an order approving the
Second Amended Disclosure Statement and setting a hearing on
confirmation of the Plan for November 19, 2020 at 9 a.m. In
accordance with the Disclosure Statement Order, the Debtors and the
Committee solicited votes on the Plan, and reported that each of
the classes that cast votes on the Plan (Classes 1, 3, 4 and 6)
voted in favor of the Plan. Class 2, which consists of the claim
held by Alliance Prime Associates, Inc., the pre-petition term
lender and an affiliate of Continental, did not vote (but may do so
later in the event of an agreement). The Debtors and the Committee
will make the voting results of record by declaration in connection
with the Confirmation Hearing, as the same may be adjourned.
No party has filed an objection to the Plan. The Debtors and the
Committee, however, have agreed to extend the deadline for
objecting to the Plan for Continental, the Cabinet, the United
States and its agencies, and Appalachian Regional Healthcare, Inc.
and its affiliates.
The Debtors and the Committee have also resolved various informal
objections to the Plan that have been raised by other
parties-in-interest, including by the Office of the United States
Trustee, Deutsche Bank AG, New York and certain points raised by
agencies of the U.S. government. The Debtors and the Committee will
include the resolutions to such objections -- none of which are
material modifications -- in an updated Plan and/or proposed order
confirming the Plan.
The Debtors said the remaining unresolved issues related to the
Plan mainly revolve around the sales of the Debtors' assets and
permitting/bonding issues with respect to the Debtors' purchasers.
The Debtors and the Committee have made substantial progress in
addressing those issues, including by getting all of the Parties --
plus two of the Debtors' purchasers (Pristine Clean Energy and
American Resources Corporation) -- on a lengthy video conference to
address outstanding permitting and bonding issues.
The Parties, however, need a limited amount of additional time to
attempt to reach certain compromises that address permitting and
bonding issues and the impact of the Plan on those issues.
The Parties also ask the Court to extend the deadline for objecting
to the Plan for the Potential Objecting Parties to a date to be set
at the status conference.
While the Debtors and the Committee believe that they should be
able to resolve the outstanding issues related to the Plan promptly
through discussions among the Parties, they note that there is a
chance that they will request that this Court submit the matter to
mediation, depending on the progress the Parties make in the
interim.
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.
CAPSTONE TURBINE: Incurs $4.2 Million Net Loss in Second Quarter
----------------------------------------------------------------
Capstone Turbine Corporation filed with the Securities and Exchange
Commission its Quarterly Report on Form 10-Q disclosing a net loss
of $4.21 million on $14.91 million of total revenue for the three
months ended Sept. 30, 2020, compared to a net loss of $4.45
million on $20.74 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 $6.03 million on $29.10 million of total revenue compared
to a net loss of $10.04 millioin on $39.98 million of total revenue
for the nine months ended Sept. 30, 2019.
As of Sept. 30, 2020, the Company had $65.75 million in total
assets, $56.90 million in total liabilities, and $8.85 million in
total stockholders' equity.
Total cash and cash equivalents as of Sept. 30, 2020, were $16.8
million, an increase of $0.6 million, compared to $16.2 million as
of June 30, 2020, despite ongoing impacts from the COVID-19
pandemic, including no cash provided by financing activities.
Additionally, following the end of the quarter, on Oct. 1, 2020
Capstone entered into an agreement to upsize its current Goldman
Sachs $30.0 million note to $50.0 million, at a significantly
reduced interest rate and for a new 3-year term.
"I am pleased that we continue to make significant progress against
our stated goal of improving Adjusted EBITDA ten million dollars
year-over-year despite the ongoing adverse impacts caused by the
pandemic. In the first half of our fiscal year, we achieved a $4.2
million improvement in Adjusted EBITDA year-over-year," said Darren
Jamison, president and chief executive officer of Capstone Turbine.
"Not only are we making excellent strides in improving our Adjusted
EBITDA performance amid external headwinds, in the second quarter,
we also generated positive cash from operations for the first time
in eleven quarters without any dilutive financing during the
period," added Mr. Jamison.
"I'm extremely pleased that we delivered a positive adjusted EBITDA
quarter in the first quarter of fiscal 2021 despite COVID-19, and
continued momentum into the second quarter of fiscal 2021 by
generating positive cash from operations," stated Eric Hencken,
chief financial officer of Capstone Turbine. "This clearly
demonstrates the importance of our EaaS strategy and shows the
impact it can have on cash flow and profitability even during the
most challenging and unpredictable economic environments,"
concluded Mr. Hencken.
In connection with preparing the condensed consolidated financial
statements for the six months ended Sept. 30, 2020, management
evaluated whether there were conditions and events, considered in
the aggregate, that raised substantial doubt about the Company's
ability to meet its obligations as they became due for the next
twelve months from the date of issuance of its second quarter of
Fiscal 2021 interim condensed consolidated financial statements.
"Management assessed that there were such conditions and events,
including a history of recurring operating losses, negative cash
flows from operating activities, the continued impact of the
COVID-19 pandemic, volatility of the global oil and gas markets, a
strong U.S. dollar in certain markets making its products more
expensive in such markets and ongoing global geopolitical tensions.
The Company incurred a net loss of $6.0 million and used cash in
operating activities of approximately $20,000 for the six months
ended September 30, 2020. The Company's working capital
requirements during the six months ended September 30, 2020 were
in-line with management's expectations, which included reductions
in accounts receivable, inventory, and accounts payable primarily
due to the Company managing to lower revenue levels. The Company's
net loss improved during the six months ended September 30, 2020
compared to the same period the previous year primarily because of
lower overhead and operating expenses from our COVID-19 Business
Continuity Plan. As of September 30, 2020, we had cash and cash
equivalents of $16.8 million, and outstanding debt of $32.0 million
at fair value."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/Archives/edgar/data/1009759/000155837020013540/cpst-20200930x10q.htm
About Capstone Turbine Corporation
Capstone Turbine Corporation -- http://www.capstoneturbine.com/--
is a producer of microturbine energy systems. Capstone
microturbines serve multiple vertical markets worldwide, including
natural resources, energy efficiency, renewable energy, critical
power supply, transportation and microgrids. Capstone offers a
comprehensive product lineup via the Company's direct sales team,
as well as its global distribution network. Capstone provides
scalable solutions from 30 kWs to 10 MWs that operate on a variety
of fuels and are the ideal solution for today's multi-technology
distributed power generation projects.
Capstone reported a net loss of $21.90 million for the year ended
March 31, 2020, compared to a net loss of $16.66 million for the
year ended March 31, 2019.
CBL & ASSOCIATES: Wells Fargo, Owed $1B, Won't Seize Rent Payments
------------------------------------------------------------------
Steven Church of Bloomberg News reports that Wells Fargo & Co., the
agent representing senior lenders owed about $1 billion by CBL &
Associates Properties Inc., agreed not to try to seize rent
payments owed by retailers to the mall owner while the two
companies fight over the issue in bankruptcy court.
U.S. Bankruptcy Judge David R. Jones in Houston signed a standstill
order that also requires Wells to return any payments it may have
received after the bank told some tenants to send it rent instead
of CBL. Until Jones makes a final ruling on claims that CBL has
filed against Wells Fargo.
About CBL & Associates
CBL & Associates Properties, Inc. -- http://www.cblproperties.com/
-- is a self-managed, self-administered, fully integrated real
estate investment trust ("REIT") that is engaged in the ownership,
development, acquisition, leasing, management and operation of
regional shopping malls, open-air and mixed-use centers, outlet
centers, associated centers, community centers, and office
properties.
CBL's portfolio is comprised of 107 properties totaling 66.7
million square feet across 26 states, including 65 high-quality
enclosed, outlet and open-air retail centers and 8 properties
managed for third parties. CBL seeks to continuously strengthen
its company and portfolio through active management, aggressive
leasing and profitable reinvestment in its properties.
CBL & Associates Properties, Inc., CBL & Associates Limited
Partnership, and certain other related entities filed voluntary
petitions for reorganization under Chapter 11 of the U.S.
Bankruptcy Code in Houston, TX, on Nov. 1, 2020 (Bankr. S.D. Tex.
Lead Case No. 20-35226).
Weil, Gotshal & Manges LLP is serving as legal counsel to the
Company and Moelis & Company is serving as restructuring advisor.
Berkeley Research Group, LLC, is the Debtors' financial advisor.
Epiq Corporate Restructuring, LLC, is the claims agent.
CBL/REGENCY I: Case Summary & 30 Largest Unsecured Creditors
------------------------------------------------------------
Debtor: CBL/Regency I, LLC
2030 Hamilton Place Blvd.
CBL Center, Suite 500
Chattanooga, Tennessee 37421
Business Description: CBL/Regency I, LLC is engaged in activities
related to real estate.
Chapter 11 Petition Date: November 13, 2020
Court: United States Bankruptcy Court
Southern District of Texas
Case No.: 20-35560
Judge: Hon. David R. Jones
Debtor's Counsel: Alfredo R. Perez, Esq.
WEIL, GOTSHAL & MANGES LLP
700 Louisiana Street, Suite 1700
Houston, Texas 77002
Tel: (713) 546-5000
Fax: (713) 224-9511
Email: Alfredo.Perez@weil.com
- and -
Ray C. Schrock, P.C.
Garrett A. Fail, Esq.
Moshe A. Fink, Esq.
WEIL, GOTSHAL & MANGES LLP
767 Fifth Avenue
New York, New York 10153
Tel: (212) 310-8000
Fax: (212) 310-8007
Email: Ray.Schrock@weil.com
Garrett.Fail@weil.com
Moshe.Fink@weil.com
Debtor's
Investment
Banker: MOELIS & COMPANY
399 Park Avenue, 5th Floor
New York, NY 10022
Debtor's
Financial
Advisor: BERKELEY RESEARCH GROUP, LLC
99 High Street, 27th Floor
Boston, MA 02110
Debtor's
Claims Agent: EPIQ CORPORATE RESTRUCTURING, LLC
777 Third Avenue, 12th Floor
New York, New York 10017
https://dm.epiq11.com/case/cblproperties/info
Estimated Assets
(on a consolidated basis): $1 billion to $10 billion
Estimated Liabilities
(on a consolidated basis): $1 billion to $10 billion
The petitions was signed by Jeffery V. Curry, chief legal officer
and secretary.
A copy of the petition is available for free at PacerMonitor.com
at:
https://www.pacermonitor.com/view/7QKSCVQ/CBLRegency_I_LLC__txsbke-20-35560__0001.0.pdf?mcid=tGE4TAMA
Consolidated List of Debtors' 30 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- --------------
1. Delaware Trust Company as Unsecured Notes $1,381,900,000
Indenture Trustee
Attn.: Michelle Dreyer,
Corporate Trust Administration
251 Little Falls Drive
Wilmington, Delaware 19808
Tel: (866) 403-5272
Fax: (302) 636-5454
Email: michelle.dreyer@cscgfm.com
2. Husch Blackwell LLP Legal Services $126,807
Attn.: Ron Feldman
P.O. Box 790379
St. Louis, Missouri 63179
Tel: (423) 266-5500
Email: remit@huschblackwell.com
3. CCI Construction of SC Inc. Trade Payable $93,596
Attn.: Derick Owens
130 Venture Boulevard., Suite 1
Spartanburg, South Carolina 29306-3801
Tel: (864) 587-0852
Email: cciderek@yahoo.com
4. ERMC LLC Trade Payable $58,865
Attn.: Tamie Morgan
2226 Encompass Drive, Suite 116
Chattanooga, Tennessee 37421-1576
Tel: (423) 899-2753
Email: tamie.morgan@ermc2.com
5. Recycling & Waste Solutions LLC Trade Payable $50,789
Attn.: Nancy Settle
3 Dickinson Drive, Suite 103
Brandywine 4 Building
Chadds Ford, Pennsylvania 19317
Tel: (484) 849-7027
Email: nsettle@rwsfacilityservices.com
6. SecurAmerica LLC Trade Payable $37,158
Attn.: Tamie Morgan
3399 Peachtree Road, NE, Suite 1500
Atlanta, Georgia 30326-1151
Tel: (404) 926-4222
Email: tamie.morgan@ermc2.com
7. Charleston County Trade Payable $35,231
Attn.: Mary Tinkler
4045 Bridge View Drive
North Charleston, South Carolina 29405
Tel: (843) 202-6080
Email: stormwater@charlestoncounty.org
8. Subway Real Estate LLC Trade Payable $30,000
Attn.: Christopher Ferguson
325 Sub Way
Milford, Connecticut 06461 3081
Tel: (800) 888 4848
Email: Ferguson_c@subway.com
9. Miller-McCoy, Inc. Trade Payable $23,861
Attn.: R. Wayne McCoy
915 Creekside Road
Chattanooga, Tennessee 37406
Tel: (423) 698-2661
Email: rmccoy@millermccoy.com
10. Jones Lang LaSalle Trade Payable $23,848
Brokerage Inc.
Attn.: Marti Johnson
200 E. Randolph Street, Suite 4300
Chicago, Illinois 60601 6519
Tel: (251) 301-7248
Email: Marti.Johnson@am.jll.com
11. Boen Plumbing Inc. Trade Payable $19,173
Attn.: Stephanie Boen
P.O. Box 21803
Waco, Texas 76702
Tel: (254) 757-2500
Email: boenplumbing@sbcglobal.net
12. KONE Inc. Trade Payable $16,477
Attn.: Paula Royer
P.O. Box 3491
Carol Stream, Illinois 60132-3491
Tel: (877) 276-8691
Email: Paula.Royer@kone.com
13. Western Specialty Contractors Trade Payable $15,435
Attn.: Carter Pogue
7401 Alabama Avenue
St. Louis, Missouri 63111
Tel: (314) 773-8813
Email: daveec@westerngroup.com
14. Piedmont Property Services, Inc. Trade Payable $12,827
Attn.: P. Smaatt
404 Old Thomasville Road
High Point, North Carolina 27260
Tel: (336) 886-6393
Email: ppsmatt@northstate.net
15. Palmetto Door Controls Trade Payable $12,353
& Glass LLC
Attn.: Heather Latshaw
1284 Surfside Industrial Park
Surfside, South Carolina 29575
Tel: (843) 839-0923
Email: heather@palmettodoorcontrols.com
16. Brite Ideas Contracting, LLC Trade Payable $12,062
Attn.: John Gingow
2156 Fineview Drive
York, Pennsylvania 17406
Tel: (717) 575-9402
Email: johnsbriteideas@gmail.com
17. Trane U.S. Inc. Trade Payable $10,526
Attn.: Sam Shore
P.O. Box 406469
Tel: (423) 296-1506
Email: smshore@trane.com
18. Champions Real Estate Group LLC Trade Payable $10,466
Attn.: Lin Teng
6117 Richmond Avenue, Suite 120
Houston, Texas 77057-6267
Tel: (713) 847-6666
Email: lin@bellairefoodstreet.com
19. Trimmers Holiday Decor Trade Payable $9,643
Attn.: Dale Norwine
2650 59th Street
Sarasota, Florida 34243
Tel: (941) 355-6655
Email: dale@trimmershd.com
20. Foxhill Construction LLC Trade Payable $9,000
Attn.: Joe Jones
139 Dogwood Lane
Hampstead, North Carolina 28443
Tel: (919) 384-6535
Email: joe@foxhillconstruction.com
21. Florida Bulb & Ballast Inc. Trade Payable $8,109
Attn.: Karen Jones
1617 Cooling Street
Melbourne, Florida 32935â€5905
Tel: (321) 259-7882
Email: customerservice@flabulb.com
22. Schindler Elevator Corporation Trade Payable $7,855
Attn.: David O'Brien
P.O. Box 93050
Chicago, Illinois 60673-3050
Tel: (864) 627-5332
Fax: (412) 578-6600
23. A & H Mechanical Trade Payable $6,765
Contracting, Inc.
Attn.: Cindy
P.O. Box 38
Collinsville, Illinois 62234
Tel: (618) 874-5588
Email: cindy@ahmech.com
24. SoCo Services, LLC Trade Payable $6,363
Attn.: Chris
1001 Springwood Avenue, Unit #2
Gibsonville, North Carolina 27249
Tel: (336) 446-1334
Email: socoservices@yahoo.com
25. AFL Network Services Inc. Trade Payable $6,300
Attn.: Carolyn Price
P.O. Box 896112
Charlotte, North Carolina 28283
Tel: (800) 368-1034
Email: carolyn.price@aflglobal.com
26. DCO Construction LLC Trade Payable $5,500
Attn.: Eladio Cuellar
50 E. Elizabeth Street
Brownsville, Texas 78520
Tel: (956) 521-2578
Email: Ecuellardesigns@yahoo.com
27. The Wilbert Group Trade Payable $5,250
Attn.: M. Braykovich
1718 Peachtree Street, Suite 1048
Atlanta, Georgia 30309-2422
Tel: (404) 343-4080
Email: mbraykovich@thewilbertgroup.com
28. JennMack Group LLC Trade Payable $5,230
Attn.: Jennifer Irving
1327 Brewer Road
Winston Salem, North Carolina 27127
Tel: (412) 953-9827
Email: brisbanegroup99@yahoo.com
29. Gettle Incorporated Trade Payable $5,142
Attn.: Elizabeth Bair
325 Busser Road
P.O. Box 337
Emigsville, Pennsylvania 17318-0337
Tel: (717) 843-1231
Email: ebair@gettle.com
30. Nauman Mechanical Inc. Trade Payable $4,850
Attn.: Nicole Foleno
P.O. Box 407
Stroudsburg, Pennsylvania 18360
Tel: (570) 476-7606
Email: nicole@naumaninc.com
The Debtor seeks joint administration of its its Chapter 11 case
under the Lead Case of CBL & Associates Properties, Inc., et al.
(Bank. D. Del. Case No. 20-35226).
CEN BIOTECH: Incurs $1.93 Million Net Loss in Third Quarter
-----------------------------------------------------------
CEN Biotech, Inc., filed with the Securities and Exchange
Commission its Quarterly Report on Form 10-Q disclosing a net loss
of $1.93 million for the three months ended Sept. 30, 2020,
compared to a net loss of $1.33 million for the three months ended
Sept. 30, 2019.
For the nine months ended Sept. 30, 2020, the Company reported a
net loss of $4.89 million compared to a net loss of $4.42 million
for the same period a year ago.
As of Sept. 30, 2020, the Company had $6.56 million in total
assets, $35.90 million in total liabilities, and a total
shareholders' deficit of $29.34 million.
CEN Biotech said, "The accompanying condensed consolidated
financial statements have been prepared in contemplating
continuation of the Company as a going concern, which contemplates
the realization of assets and the satisfaction of liabilities in
the normal course of business. However, a substantial doubt has
been raised with regard to the ability of the Company to continue
as a going concern. The Company has incurred significant operating
losses and negative cash flows from operations since inception.
The Company had an accumulated deficit of $46,196,341 at September
30, 2020 and had no committed source of additional debt or equity
financing. The Company has not had any operating revenue and does
not foresee any operating revenue in the near term. The Company
has relied on the issuance of loans payable and convertible debt
instruments to finance its expenses, including notes that are in
default, as described in Notes 6, 7, 8, and 9. The Company will
continue to raise additional capital through placement of our
common stock, notes or other securities in order to implement its
business plan or additional borrowings, including from related
parties. The COVID-19 pandemic has hindered the Company's ability
to raise capital. There can be no assurance that the Company will
be successful in either situation in order to continue as a going
concern. The consolidated financial statements do not include any
adjustments that might result from the outcome of these
uncertainties.
"The Company's cash position may not be sufficient to support the
Company's daily operations or its ability to undertake any business
activity that will generate net revenue."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/Archives/edgar/data/1653821/000143774920022947/cenb20200930_10q.htm
About CEN Biotech
Headquartered in Ontario, Canada, CEN Biotech, Inc. --
http://www.cenbiotechinc.com/-- is focused on the manufacturing,
production and development of products within the cannabis
industry, including the LED lighting technology and hemp products.
The Company intends to explore the usage of hemp, which it intends
to cultivate for usage in industrial, medical and food products.
CEN Biotech reported a net loss of $5.65 million for the year ended
Dec. 31, 2019, compared to a net loss of $7.53 million for the year
ended Dec. 31, 2018. As of Dec. 31, 2019, the Company had $7.30
million in total assets, $32.83 million in total liabilities, and a
total shareholders' deficit of $25.53 million.
Mazars USA LLP, in New York, the Company's auditor since 2018,
issued a "going concern" qualification in its report dated April
14, 2020 citing that the Company has incurred significant operating
losses and negative cash flows from operations since inception.
The Company also had an accumulated deficit of $41,310,172 at Dec.
31, 2019. The Company is dependent on obtaining necessary funding
from outside sources, including obtaining additional funding from
the sale of securities in order to continue their operations. The
COVID-19 pandemic has hindered the Company's ability to raise
capital. These conditions raise substantial doubt about its
ability to continue as a going concern.
CENTURY 21: Puts Up Its Intellectual Property for Sale
------------------------------------------------------
Samantha McDonald of Footwear News reports that Century 21's
intellectual property assets are up for sale.
In a statement on November 12, 2020, Hilco Streambank announced
that it was seeking a buyer for the bankrupt retailer's IP,
including its trademarks, the C21Stores.com domain name, customer
data and social media assets. (The advisory firm is handling the
bankruptcy sale for the chain.)
"The Century 21 brand provides a trusted destination for name brand
apparel, accessories, home goods and more," said Hilco EVP David
Peress. "Century 21's customers are highly loyal across both the
retail and online channel with frequent visits as product
assortments are updated daily."
According to Hilco, Century 21 brought in total gross revenues of
more than $747 million in the 2019 fiscal year. Roughly $53 million
of those sales were attributed to the company's e-commerce
platform. Offers to acquire the assets are due by Nov. 16, 2020
with an auction scheduled for Nov. 19, 2020. The sale is subject to
the approval of a judge in the United States Bankruptcy Court for
the Southern District of New York.
JCPenney's Sale to Mall Giants Gets Thumbs-Up From Court, Sets
Sights on Holiday Season Reboot
Two months ago, on Sept. 10, 2020 Century 21 filed for bankruptcy
as well as motions to start going-out-of-business sales at its
brick-and-mortar outposts. The company has since been hosting
liquidation sales at its 13 stores across New York, New Jersey,
Pennsylvania and Florida -- aided by cash collateral that provided
it with enough funds to continue operations.
About Century 21
Century 21 Department Stores LLC and its affiliates are pioneers in
off-price retail offering access to designer brands at amazing
prices. They opened their iconic flagship location in downtown
Manhattan in 1961. As of the petition date, the Debtors have 13
stores across New York, New Jersey, Pennsylvania and Florida and an
online retail presence, operate seasonal pop-ups, and employ other
innovative retail concepts. Visit http://www.c21stores.com/for
more information.
Century 21 Department Stores LLC and its affiliates sought Chapter
11 protection (Bankr. S.D.N.Y. Lead Case No. 20-12097 on Sept. 10,
2020).
Century 21 was estimated to have $100 million to $500 million in
assets and liabilities as of the bankruptcy filing.
The Hon. Shelley C. Chapman is the case judge.
The Debtors have tapped Proskauer Rose LLP as their legal counsel,
Berkeley Research Group LLC as financial advisor, and Hilco
Merchant Resources LLC as liquidation consultant. Stretto is
Debtors' claims agent.
On September 16, 2020, the Office of the United States Trustee
appointed the official committee of unsecured creditors pursuant to
Section 1102(a)(1) of the Bankruptcy Code.
CHARTER NEX: S&P Affirms 'B' ICR on Recapitalization Plan
---------------------------------------------------------
S&P Global Ratings affirmed its 'B' issuer credit rating on Charter
NEX US Inc. and revised the outlook to negative from stable.
The rating affirmation follows the company's plan to recapitalize
its capital structure to extend debt maturities and pay a
shareholder distribution to its owners, which include affiliates of
financial sponsor companies Leonard Green & Partners L.P. and Oak
Hill Capital Partners. S&P assigned its 'B' issue-level and '3'
recovery ratings to the proposed credit facilities.
The negative outlook reflects the one-in-three potential for lower
ratings if market conditions or financial policies render the
company unable or unwilling to reduce its debt leverage, which will
rise to over 7x following this transaction.
The transaction significantly increases the company's debt
leverage. Specialty films producer Charter NEX US (doing business
as Charter Next Generation, or CNG) is refinancing its capital
structure and paying a distribution to its shareholders. It is
issuing $1.7 billion of senior secured credit facilities, including
a $100 million revolving facility due 2025 and a $1.6 billion term
loan B due 2027. It is also issuing $500 million of privately
placed senior unsecured payment-in-kind (PIK) toggle notes due 2028
(unrated).
S&P said, "We estimate the transaction will increase the adjusted
debt balance to roughly $2.1 billion from $1.5 billion. Growing
profitability resulted in the company's adjusted debt to EBITDA
ratio improving to 5.4x as of Sept. 30, 2020, from 9.1x at the same
point in the prior year, shortly after the completion of the
debt-funded Next Generation Films Inc. acquisition, which involved
a $710 million add-on term loan offering. With this transaction, we
estimate the company's adjusted debt to EBITDA will again rise
substantially to 7.2x at the end of this year. We see this as a
high level of debt leverage for a company of this size and we note
that it comes during a period of macroeconomic uncertainty because
of COVID-19."
The company increased the amount of PIK debt in its capital
structure. The company is refinancing $255 million of senior
unsecured PIK toggle notes with $500 million of similar notes.
S&P said, "We expect the interest rate on the new notes to be set
at three-month Libor plus an applicable margin of 750 basis points,
which is 25 basis points lower than the rate on the existing notes.
Although the issuer has the option to PIK 50% of the interest
during the first three years (subject to a 50 basis point premium),
we expect CNG to pay cash interest on the notes. Still, there
remains risk of a growing debt balance if the company opts to use
the PIK feature."
From an operational standpoint, the company is performing very
well. Charter Next Generation (the company rebranded its name this
year) enjoyed a strong start to 2020 despite shifts in end-market
demand. Demand for films used in certain food and beverage (50% of
the company's end-market volume), household cleaning products
(consumer, 32%), and healthcare and medical products (4%) increased
as the world sought to deal with the effects of the COVID-19
pandemic. However, sales to its more cyclical industrial markets
(14%) like aerospace and automotive were slow, which muted the
overall effect on volumes driven by COVID-19. Profitability was
strong in spite of these changes, as the company's adjusted EBITDA
margins increased almost 5% during the past year on low resin costs
and good operational efficiency and fortified its position as one
of the most profitable suppliers within rated packaging companies.
Some of the recent profitability improvement could be transitory.
Although the company's profit margins improved significantly during
the last year, there is a risk that some of these gains may be
temporary. Some of the progress could prove lasting, coming from
market share gains, productivity initiatives, and merger synergies,
but there could also be some retrenchment if production levels and
cost discipline cannot be sustained. This year, the company
completed a new facility on its Lexington, Ohio, campus with space
for 10 new production lines, and a drop in capacity utilization
could pose a challenge. S&P also expects energy prices to rise a
bit during the next couple of years, which could have a negative
effect on sales margin given the pass-through of resin price
changes to its customers. However, this should not impede the
company's absolute profitability too much.
The negative outlook reflects the one-in-three potential for a
downgrade as CNG's debt leverage will be elevated following the
proposed transaction. S&P estimates the company's adjusted debt to
EBITDA ratio will be roughly 7.2x at the end of this year. The
company has performed effectively since the onset of the COVID-19
pandemic, managing through changing demand patterns in some end
markets while achieving gains from productivity and integrating the
Next Generation acquisition. However, there is a risk that a
resurgence of cases during the pandemic's second wave could bring
about the resumption of economic shutdowns and reduced consumer and
business spending that could hurt the demand for the company's
specialty films to an extent not yet seen. There are still
uncertainties regarding the efficacy, deployment, and public
acceptance of vaccines. Though recent news is encouraging,
wide-scale adoption is unlikely to occur until late next year.
S&P said, "We could lower our ratings if CNG's adjusted debt to
EBITDA ratio remains above 7x on a sustained basis with no clear
prospects for improvement. This could occur if the pandemic is of a
greater magnitude and longer duration than we expect and the
negative effects of high unemployment and indiscriminate demand
destruction overtake food, consumer, and healthcare spending.
Another way for the company's performance to weaken is if the
additional capacity expansion it is undertaking does not translate
into increased EBITDA. We could also lower our ratings if the
company pursues further aggressive financial policies such as
additional debt-funded dividends or debt leverage-increasing
acquisitions, though we see this route as less likely in the near
term given the uncertainty in the macroeconomic environment."
"We could revise our outlook to stable if the company achieves
progress in deleveraging through ongoing profit and cash flow
growth, to the point that its adjusted debt to EBITDA ratio is
firmly under 7x and likely to remain there. The state of economic
conditions and industry competition will be important to this
outcome."
CHEMOURS COMPANY: Moody's Assigns B1 to New $750MM Unsec. Notes
---------------------------------------------------------------
Moody's Investors Service assigned a B1 rating to $750 million in
new senior unsecured notes due 2028 by The Chemours Company.
Proceeds of the issuance along with balance sheet cash are expected
to be used to refinance $908 million of Chemours' outstanding
6.625% senior notes due 2023. The outlook remains negative.
"The refinancing prudently repays the nearest maturity in 2023,
extending to 2025 the company's next maturing debt and lowering the
company's cost of debt capital with lower coupon debt," according
to Joseph Princiotta, SVP at Moody's and lead analyst for
Chemours.
Assignments:
Issuer: Chemours Company, (The)
Senior Unsecured Regular Bond/Debenture, Assigned B1 (LGD5)
RATINGS RATIONALE
Earlier this year, Moody's downgraded Chemours ratings one notch;
the CFR was downgraded to Ba3 from Ba2, the outlook remains
negative. The lower ratings primarily reflect the growing level of
litigation risk stemming from actions filed by states,
environmental regulators, water municipalities and private
plaintiffs associated with perfluorochemicals (or PFAS), a family
of chemicals used for decades to process a wide range of
fluoropolymers. Litigation risk reflects the growing PFAS caseload
and its impact on the potential ultimate liability. While there
have been no new PFAS settlements or court decisions that would
allow quantification of the liability, the caseload continues to
grow and negative developments and news flow continue on this
topic.
Chemours' credit profile reflects its position as a leading global
producer in TiO2 pigments, where scale, technology and more
flexibility allow for industry-leading margins, currently and over
the cycle. Its profile also reflects leading market positions
across much of the fluoroproducts branded franchise, which
continues to have a favorable secular growth outlook from Opteon,
notwithstanding the current price pressure from black-market
imports of older refrigerants that contribute to global warming.
Chemours is a leader and one of only two major producers in the new
HFO generation of refrigerant products that do not deplete the
ozone layer and greatly reduce their impact on global warming.
The fundamentals and outlook for TiO2 remain better than most
commodities in this environment. TiO2 markets came into the year
with favorable fundamentals and the potential for upside in volumes
and prices. Prices have been relatively stable through the crisis
in North America, but volumes fell by double-digit percentages
bottoming in the second quarter; third quarter exhibited good
sequential volume growth and Moody's expects the growth to continue
in the fourth quarter, but EBITDA will still be down for the year.
Meanwhile TiO2 producers are pushing for price increases to attempt
to offset cost pressures from higher ore prices; the ore price
trend and the success of pigment price hikes will be important
factors in the trendline for TiO2 EBITDA into the end of the year
through next year as well.
Chemour's total EBITDA is expected to be down roughly 20% to 25%
this year due to weaker demand for TIO2 pigment but also weakness
in the fluoroproducts segment stemming from weak auto OEM markets
as well as persistent black-market pressures on the refrigerants in
the EU. The auto OEM markets were weak coming into the year, but
the situation and outlook weakened further as auto manufacturing
plants closed due to Covid-19. Auto OEM production has rebounded
with plant re-openings but production and sales might not to return
to 2019 levels until 2022.
Chemours' credit profile also reflects the modest stress in balance
sheet leverage which is currently close to 5x on a gross adjusted
basis. But net adjusted leverage is lower in the high 3x range due
to large cash balances. Leverage is likely to plateau for a couple
of quarters before trending favorably as TiO2 and fluorochemical
volumes recover on the back of stronger coatings and plastics
demand and from higher auto unit production, respectively. However,
black market pressures continue to offset secular growth in
fluoroproducts.
Other negative factors in the credit aside from the litigation
include the historical cyclical nature of the TiO2 industry, which
was recovering from an inventory cycle prior to the Covid-19 impact
in demand. The company's Ti-Pure Value Stabilization initiatives,
which target price visibility and volume assurance to customers, is
intended to smooth the effects of cycles but its implementation led
to market share losses last year; in a rising price environment,
which Moody's believes is possible in the medium term, Chemour's
TiO2 market share should trend favorably.
ESG factors are material in the credit profile and were a main
driver of the downgrade earlier this year. PFAS litigation is
currently the prominent ESG factor and reflects the substantial and
growing litigation risk stemming from the growing number of actions
filed by states, environmental regulators, water municipalities and
private plaintiffs associated with perfluorochemicals (or PFAS), a
family of chemicals used for decades to process a wide range
fluoroproducts.
Outstanding lawsuits include 7 Natural Resource Damage suits
(NRDs), which allege environmental damage and seek to recover
remediation and other costs, by attorney generals in North
Carolina, New Jersey, Ohio, New Hampshire, New York, Michigan and
Vermont; lawsuits filed by public water suppliers in North
Carolina, private suits filed in New Jersey, New York, Long Island,
Georgia and other states and jurisdictions, PFOA personal injury
cases pending in Ohio; and a growing number of fire-fighting foam
cases filed in a number of states and consolidated in the
multidistrict litigation (MDL) in South Carolina federal court.
Firefighting foam litigation continues to grow and lawsuits filed
in other States have been rolled into the MDL in South Carolina
federal court. DuPont ("DuPont de Nemours, Inc.") and Chemours
never manufactured these foam products, but they made a foam
ingredient. The company reports that an AFFF case in Alaska was
recently dismissed.
PFOA personal injury cases are currently relatively modest in scale
but are increasing in number and recent trial experience has been
more negative than positive. Two of the now 82 pending personal
injury cases (up from about 50 last year) in the southern district
of Ohio concluded earlier this year, one in a hung jury and the
other with a $50 million jury award, but the latter is subject to a
motion for new trial and then an appeal by DuPont. A trial of six
other personal injury cases in Ohio has delayed due to COVID-19.
Chemours lawsuit against DuPont, seeking indemnification caps and
return of the 2015 spin-related dividend, was dismissed earlier
this year in the Delaware Chancery Court, sending the dispute back
to arbitration. Chemours is appealing the decision and has a
December 2, 2020 argument date before the Delaware Supreme Court,
but Moody's believes the ultimate resolution will be a settlement
between DuPont and Chemours, with Chemours likely bearing the brunt
of the PFAS costs over the next few years.
Chemours' SGL-1 rating indicates excellent liquidity of roughly
$1.7 billion and consisting of $956 million in balance sheet cash
and about $700 million in revolver availability (including $98
million L/C use) at September 30, 2020. On April 8, 2020, as a
precautionary measure to address macroeconomic uncertainty, the
company drew down approximately $300 million of its $800 million
revolver due April 2023. During the third quarter 2020, the company
repaid $300 million of its outstanding revolver borrowing with
balance sheet cash.
The revolver has a maximum secured Net Debt/EBITDA ratio of 2.0x
and a springing maturity inside the existing 2023 bonds. Moody's
expects the company to be in compliance with covenants over the
next 12 months. The TLB does not have maintenance covenants. As an
additional source of liquidity, Chemours entered into an $125
million accounts receivable securitization facility in July 2019
and amended and restated this facility in March 2020.
Working capital typically consumes cash in the first half of the
year but is a significant source of cash in the second half. To
better manage its liquidity as market demand weakness continues
including the effect of Covid-19, the company has reduced 2020
capex guidance by $125 million, deferred or reduced costs by $160
million and temporarily suspended its share repurchase program.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The negative outlook reflects growing litigation risk and potential
future costs associated with PFAS water contamination and other
related costs. Given the longer tail nature of this risk and the
costs that might result, it's possible that the negative outlook
might extend beyond the usual 18 months observation period.
Moody's would consider a downgrade if PFAS litigation begins to
result in adverse trial outcomes and significant costs, if
settlements with States, municipalities or other plaintiffs result
in expensive agreements, or if litigation emerges from a number of
other government entities, municipalities or private parties. A
downgrade would also be considered if cash balances and liquidity
were to deteriorate, if Debt/EBITDA were to exceed the 4.5x range,
or if RCF/Debt falls to single digits, on a sustainable basis.
Moody's would not consider an upgrade until there is better clarity
with respect to this litigation and all associated costs. If this
risk were to dissipate, Moody's would consider an upgrade if gross
adjusted Debt/EBITDA were sustained below 3.5x and RCF/Debt
remained above 20%, both on a sustained basis.
Chemours Company (The), headquartered in Wilmington, Delaware, is a
leading global provider of performance chemicals through three
reporting segments: Titanium Technologies, Fluoroproducts and
Chemical Solutions. Revenues for the last twelve months ended
December 31, 2019, were roughly $5.5 Billion.
The principal methodology used in these ratings was Chemical
Industry published in March 2019.
CHESAPEAKE ENERGY: Chunk of Assets Could be Purchased by Tapstone
-----------------------------------------------------------------
Brandon Martin of OKCFox reports that chuck of the oil patch owned
by Chesapeake Energy could be sold to Tapstone Energy.
A big chunk of the oil patch in Oklahoma could soon be changing
hands.
According to an article from the Oklahoman, Chesapeake Energy has
reached an agreement to sell its Mid-Continent operational area
holdings to Tapstone Energy as it continues to work through its
bankruptcy process.
Chesapeake reported earlier in the year that it held about 736,000
acres within that state that produced an average of about 14,000
barrels of oil daily, according to the article.
According to the Oklahoman, if the deal happens, it will be
executed as a 363 transaction under the federal bankruptcy code,
which means that the judge who oversees its restructuring will have
to approve the deal.
In a filing reporting Chesapeake's third-quarter operational and
financial results, company officials stated that Tapstone was the
bidder for the assets.
A bankruptcy court-supervised action for the assets also was
planned for Tuesday, allowing other pre-qualified buyers to submit
bids, according to the article.
The article stated that the auction results will be submitted to
the judge for final approval on Friday and that officials
anticipate they will close the deal to sell the asset on Dec. 11,
2020.
About Chesapeake Energy Corp.
Headquartered in Oklahoma City, Chesapeake Energy Corporation's
(NYSE: CHK) operations are focused on discovering and developing
its large and geographically diverse resource base of
unconventional oil and natural gas assets onshore in the United
States.
Chesapeake Energy reported a net loss of $308 million for the year
ended Dec. 31, 2019. As of Dec. 31, 2019, the company had $16.19
billion in total assets, $2.39 billion in total current
liabilities, $9.40 billion in total long-term liabilities, and
$4.40 billion in total equity.
Chesapeake Energy and its affiliates sought Chapter 11 protection
(Bankr. S.D. Tex. Lead Case No. 20-33233) on June 28, 2020, after
reaching terms of a Chapter 11 plan of reorganization to eliminate
approximately $7 billion of debt.
The Debtors tapped Kirkland & Ellis LLP as legal counsel, Jackson
Walker LLP as co-counsel and conflicts counsel, Alvarez & Marsal as
restructuring advisor, Rothschild & Co and Intrepid Financial
Partners as financial advisors, and Reevemark as communications
advisor. Epiq Global is the claims agent, maintaining the page
http://www.chk.com/restructuring-information
Wachtell, Lipton, Rosen & Katz serves as legal counsel to
Chesapeake Energy's Board of Directors.
MUFG Union Bank, N.A., the DIP facility agent and exit facilities
agent, has tapped Sidley Austin LLP as legal counsel, RPA Advisors
LLC as financial advisor, and Houlihan Lokey Capital Inc. as
investment banker.
Davis Polk & Wardell LLP and Vinson & Elkins L.L.P. serve as legal
counsel to an ad hoc group of first lien last out term loan lenders
while Perella Weinberg Partners and Tudor, Pickering, Holt & Co.
serve as the group's investment bankers.
Franklin Advisers, Inc., has tapped Akin Gump Strauss Hauer & Feld
LLP as legal counsel, FTI Consulting, Inc. as financial advisor,
and Moelis & Company LLC as investment banker.
On July 9, 2020, the Office of the U.S. Trustee appointed a
committee to represent unsecured creditors in Debtors' Chapter 11
cases. The unsecured creditors' committee has tapped Brown
Rudnick, LLP and Norton Rose Fulbright US, LLP as its legal
counsel, and AlixPartners, LLP as its financial advisor.
On July 24, 2020, the bankruptcy watchdog appointed a committee of
royalty owners. The royalty owners' committee is represented by
Forshey & Prostok, LLP.
CHESAPEAKE ENERGY: Weiner, Weiss Represents Caddo, 8 Others
-----------------------------------------------------------
In the Chapter 11 cases of Chesapeake Energy Corporation, the law
firm of Wiener, Weiss & Madison A Professional Corporation
submitted a verified statement under Rule 2019 of the Federal Rules
of Bankruptcy Procedure, to disclose that it is representing the
following creditors:
Caddo Parish
Caddo Parish Commission
c/o Dr. Woodrow Wilson, Jr.
505 Travis Street, Ste. 800
Shreveport, LA 71101
Industrial Development Board of the
Parish of Caddo, Inc.
c/o Kyle McInnis
President, Board of Directors
505 Travis Street, Ste. 800
Shreveport, LA 71101
Paul M. Davis
527 Lock Ridge Drive
Shreveport, LA 71106
Coushatta Bayou Land Company, L.L.C.
c/o Paul M. Davis, Manager
527 Lock Ridge Drive
Shreveport, LA 71106
Succession of John P. Davis, Jr.
c/o Paul M. Davis
Independent Administrator
527 Lock Ridge Drive
Shreveport, LA 71106
Caspiana Interests, LLC
c/o Ernest H. Turner, III
325 Haynes Avenue
Shreveport, LA 71105
Bugg DeSoto, LLC
c/o John L. Bugg, Jr., Manager
P. O. Box 4008
Horseshoe Bay, TX 78657
Estate of Gregary Roy Bott
c/o Sonja Bott
P.O. Box 5163
Shreveport, LA 71135
Caddo has unliquidated claims against one or more of the Debtors
based on proceeds due for both leased and unleased mineral
interests. Caddo submits it is the owner of and entitled to
proceeds attributable to its Louisiana mineral interests being held
by one or more of the Debtors and that, as part of its claims, it
is entitled to any other amounts due or to become due under any
agreements or applicable law. See Claim No. 120 (4232), and any
amendments thereto, filed in Chesapeake Operating, L.L.C., Case No.
20-33249, and Claim No. 36 (4000), and any amendments thereto,
filed in Chesapeake Louisiana, L.P., Case No. 20-33242, both of
which claims are incorporated into this Statement by reference.
IDB has unliquidated claims against one or more of the Debtors
based on proceeds that are attributable to its Louisiana mineral
interests that are being held by one or more of the Debtors. IDB
submits that it is the owner of and entitled to those proceeds
attributable to its Louisiana mineral interests being held by one
or more of the Debtors and that, as part of its claims, it is
entitled to any other amounts due or to become due under any
agreements or applicable law. See Claim No. 121 (4228), and any
amendments thereto, filed in Chesapeake Operating, L.L.C., Case No.
20-33249, and Claim No. 37 (3999), and any amendments thereto,
filed in Chesapeake Louisiana, L.P., Case No. 20-33242, both of
which claims are incorporated into this Statement by reference.
Davis, CBL and the Succession have unliquidated claims against one
or more of the Debtors based on their rights, as lessors, under
their respective mineral leases covering immovable property located
in Louisiana and Louisiana laws relative thereto. They submit that
they are the owners of and entitled to proceeds attributable to
their respective Louisiana mineral interests being held by one or
more of the Debtors and that, as part of their respective claims,
they are entitled to any other amounts due or to become due under
any agreements or applicable law. See Claim Nos. 57, 59 and 60, and
any amendments thereto, filed in Chesapeake Operating, L.L.C., Case
No. 20-33249, and Claim Nos. 5, 6 and 7, and any amendments
thereto, filed in Chesapeake Louisiana, L.P., Case No. 20-33242,
all of which claims are incorporated into this Statement by
reference.
Caspiana has claims against one or more of the Debtors based on one
or more of the Debtors' underpayment of mineral royalties to
Caspiana pursuant to Louisiana mineral leases and damages related
thereto. Caspiana submits it is the owner of and entitled to
proceeds attributable to its Louisiana mineral interests being held
by one or more of the Debtors and that, as part of its claims, it
is entitled to any other amounts due or to become due under any
agreements or applicable law. See Claim No. 62 (4074), and any
amendments thereto, filed in Chesapeake Operating, L.L.C., Case No.
20-33249, and Claim No. 8 (3966), and any amendments thereto, filed
in Chesapeake Louisiana, L.P., Case No. 20-33242, both of which
claims are incorporated into this Statement by reference.
Bugg has an unliquidated claim against one or more of the Debtors
based on proceeds attributable to Bugg's Louisiana mineral
interests. Bugg submits it owns any and all proceeds attributable
to its Louisiana mineral interests being held by one or more of the
Debtors and that, as part of its claim, it is entitled to any other
amounts due or to become due under any agreements or applicable
law. See Claim No. 64, and any amendments thereto, filed in
Chesapeake Operating, L.L.C., Case No. 20-33249, which claim is
incorporated into this Statement by reference.
Bott has claims against one or more of the Debtors based on one or
more of the Debtors' underpayment of mineral royalties pursuant to
Louisiana mineral leases and damages related thereto. Bott submits
it is the owner of and entitled to proceeds attributable to its
Louisiana mineral interests being held by one or more of the
Debtors and that, as part of its claims, it is entitled to any
other amounts due or to become due under any agreements or
applicable law. See Claim No. 10819, and any amendments thereto,
filed in Chesapeake Louisiana, L.P., which claim is incorporated
into this Statement by reference.
The WWM Creditors have engaged WWM authorizing WWM to represent
them in connection with the jointly administered cases but they
have not signed any instrument empowering WWM to act on their
behalf.
WWM does not own a claim against or interest in any of the Debtors
or their respective bankruptcy estates.
WWM does not believe that its representation of the interests of
any particular WWM Creditor will create a conflict between or be
adverse to the interests of any other WWM Creditor.
Pursuant to Bankruptcy Rule 2019, WWM will supplement this
Statement upon the material change of any fact contained in this
Statement.
Counsel for Caddo Parish, Industrial Development Board For The
Parish Of Caddo, Inc., Paul M. Davis, Coushatta Bayou Land Company,
L.L.C., Succession Of John P. Davis, Jr., Caspiana Interests, Llc,
Bugg Desoto, Llc And Estate Of Gregary Ray Bott can be reached at:
WIENER, WEISS & MADISON
A Professional Corporation
R. Joseph Naus, Esq.
Seth M. Moyers, Esq.
330 Marshall St., Suite 1000
P. O. Box 21990
Shreveport, LA 71120-1990
Tel: (318) 226-9100
Fax: (318) 424-5128
Email: rjnaus@wwmlaw.com
smoyers@wwmlaw.com
A copy of the Rule 2019 filing, downloaded from PacerMonitor.com,
is available at https://bit.ly/2IE5ost
About Chesapeake Energy Corp.
Headquartered in Oklahoma City, Chesapeake Energy Corporation's
(NYSE: CHK) operations are focused on discovering and developing
its large and geographically diverse resource base of
unconventional oil and natural gas assets onshore in the United
States.
Chesapeake Energy reported a net loss of $308 million for the year
ended Dec. 31, 2019. As of Dec. 31, 2019, the company had $16.19
billion in total assets, $2.39 billion in total current
liabilities, $9.40 billion in total long-term liabilities, and
$4.40 billion in total equity.
Chesapeake Energy and its affiliates sought Chapter 11 protection
(Bankr. S.D. Tex. Lead Case No. 20-33233) on June 28, 2020, after
reaching terms of a Chapter 11 plan of reorganization to eliminate
approximately $7 billion of debt.
The Debtors tapped Kirkland & Ellis LLP as legal counsel, Jackson
Walker LLP as co-counsel and conflicts counsel, Alvarez & Marsal as
restructuring advisor, Rothschild & Co and Intrepid Financial
Partners as financial advisors, and Reevemark as communications
advisor. Epiq Global is the claims agent, maintaining the page
http://www.chk.com/restructuring-information
Wachtell, Lipton, Rosen & Katz serves as legal counsel to
Chesapeake Energy's Board of Directors.
MUFG Union Bank, N.A., the DIP facility agent and exit facilities
agent, has tapped Sidley Austin LLP as legal counsel, RPA Advisors
LLC as financial advisor, and Houlihan Lokey Capital Inc. as
investment banker.
Davis Polk & Wardell LLP and Vinson & Elkins L.L.P. serve as legal
counsel to an ad hoc group of first lien last out term loan lenders
while Perella Weinberg Partners and Tudor, Pickering, Holt & Co.
serve as the group's investment bankers.
Franklin Advisers, Inc., has tapped Akin Gump Strauss Hauer & Feld
LLP as legal counsel, FTI Consulting, Inc. as financial advisor,
and Moelis & Company LLC as investment banker.
On July 9, 2020, the Office of the U.S. Trustee appointed a
committee to represent unsecured creditors in Debtors' Chapter 11
cases. The unsecured creditors' committee has tapped Brown
Rudnick, LLP and Norton Rose Fulbright US, LLP as its legal
counsel, and AlixPartners, LLP as its financial advisor.
On July 24, 2020, the bankruptcy watchdog appointed a committee of
royalty owners. The royalty owners' committee is represented by
Forshey & Prostok, LLP.
CHESAPEAKE ENERGY: Wins Jan. 25 Plan Exclusivity Extension
----------------------------------------------------------
At the behest of Chesapeake Energy Corporation and its affiliates,
Judge David R. Jones extended the period within which the Debtors
have the exclusive right to file a chapter 11 plan through and
including January 25, 2021, and to solicit acceptances of the plan
through and including March 25, 2021.
Since the Petition Date, the Debtors smoothly transitioned into
chapter 11 and stabilized their business operations, obtained Court
approval of important procedural and operational relief, obtained
$925 million of new money debtor-in-possession financing over the
objections of certain creditors and the official committee of
unsecured creditors, obtained approval to enter into the backstop
commitment agreement and pay certain fees in connection with the
contemplated exit facilities, rejected burdensome contracts, filed
their schedules and statements of financial affairs, and filed a
proposed chapter 11 plan of reorganization and accompanying
disclosure statement on September 11, 2020.
In addition, the Debtors undertook several key restructuring
initiatives:
(i) responding to numerous discovery requests with respect to
the Creditors' Committee's investigation and collected, reviewed,
and produced thousands of documents and participated in or
scheduled multiple depositions;
(ii) gained approval from the U.S. Bankruptcy Court for the
Southern District of Texas, Houston Division, for the Debtors'
backstop commitment agreement and payment of certain expenses
incurred in connection with the Debtor's contemplated exit
facilities;
(iii) gained approval for their non-insider retention programs
that provide for payment of quarterly cash bonus awards to
substantially all of the Debtors' non-insider workforce and certain
other retention based compensation; and
(iv) filed or responded to various pleadings requesting the
Bankruptcy Court to enforce or lift the automatic stay against
certain parties in accordance with section 362 of the Bankruptcy
Code.
Notwithstanding the substantial progress made to date, certain
tasks remain before the Debtors may emerge from chapter 11. Most
critically, the Debtors continue to assist the Committee in its
investigation, the Mid-Con Asset sale process must run its course,
contract negotiations and initiatives to create operational savings
are ongoing, solicitation must occur, and the Court must consider
confirmation of the Debtors' Plan. The Debtors and their key
stakeholders continue to negotiate critical documents required for
emergence, including key financing and corporate governance
documents.
About Chesapeake Energy
Headquartered in Oklahoma City, Chesapeake Energy Corporation's
(NYSE: CHK) operations are focused on discovering and developing
its large and geographically diverse resource base of
unconventional oil and natural gas assets onshore in the United
States.
Chesapeake Energy reported a net loss of $308 million for the year
ended Dec. 31, 2019. As of Dec. 31, 2019, the company had $16.19
billion in total assets, $2.39 billion in total current
liabilities, $9.40 billion in total long-term liabilities, and
$4.40 billion in total equity.
Chesapeake Energy and its affiliates sought Chapter 11 protection
(Bankr. S.D. Tex. Lead Case No. 20-33233) on June 28, 2020, after
reaching terms of a Chapter 11 plan of reorganization to eliminate
approximately $7 billion of debt.
Debtors have tapped Kirkland & Ellis LLP as legal counsel, Jackson
Walker LLP as co-counsel and conflicts counsel, Alvarez & Marsal as
restructuring advisor, Rothschild & Co, and Intrepid Financial
Partners as financial advisors, and Reevemark as communications
advisor. Epiq Global is the claims agent.
Wachtell, Lipton, Rosen & Katz serves as legal counsel to
Chesapeake Energy's Board of Directors.
MUFG Union Bank, N.A., the DIP facility agent, and exit facilities
agent, have tapped Sidley Austin LLP as legal counsel, RPA Advisors
LLC as a financial advisor, and Houlihan Lokey Capital Inc. as an
investment banker.
Davis Polk & Wardell LLP and Vinson & Elkins L.L.P. serve as legal
counsel to an ad hoc group of first lien last term loan lenders
while Perella Weinberg Partners and Tudor, Pickering, Holt & Co.
serve as the group's investment bankers. Franklin Advisers, Inc.
has tapped Akin Gump Strauss Hauer & Feld LLP as legal counsel, FTI
Consulting, Inc. as a financial advisor, and Moelis & Company LLC
as an investment banker.
On July 9, 2020, the Office of the U.S. Trustee appointed a
Committee to represent unsecured creditors in Debtors' Chapter 11
cases. The unsecured creditors' committee has tapped Brown Rudnick,
LLP and Norton Rose Fulbright US, LLP as its legal counsel, and
AlixPartners, LLP as its financial advisor.
On July 24, 2020, the bankruptcy watchdog appointed a committee of
royalty owners. The royalty owners' committee is represented by
Forshey & Prostok, LLP.
CHI OVERHEAD: Moody's Rates $455.5 Million in Secured Loans 'B2'
----------------------------------------------------------------
Moody's Investors Service assigned a B2 rating to C.H.I. Overhead
Doors, LLC's $40 million revolver and $415.5 million first-lien
term loan expiring in 2025. This $40 million revolver replaces the
existing $40 million revolver expiring in 2022 and the $415 million
first-lien term loan replaces the company's $435 million first-lien
term loan maturing in 2022. The B2 rating on the revolver and term
loan due 2022 will be withdrawn. CHI's B2 Corporate Family Rating,
and B2-PD Probability of Default Rating are not impacted by this
transaction. The outlook is stable.
The first-lien revolving credit facility and term loan have been
assigned a B2 as they are pari passu in a recovery scenario. Each
has a first-lien on substantially all assets. CHI's material
domestic subsidiaries provide upstream guarantees. The term loan
amortizes at 1% per year with a bullet payment at maturity. The
rating is equivalent to the B2 Corporate Family Rating given their
collective position as preponderance of debt in CHI's capital
structure.
The following ratings/assessments are affected by the action:
Assignments:
Issuer: C.H.I. Overhead Doors, LLC
Senior Secured Revolving Credit Facility, Assigned B2 (LGD3)
Senior Secured 1st Lien Term Loan, Assigned B2 (LGD3)
Withdrawals:
Issuer: C.H.I. Overhead Doors, LLC
Senior Secured Revolving Credit Facility, Withdrawn, previously
rated B2 (LGD3)
Senior Secured 1st Lien Term Loan, Withdrawn, previously rated B2
(LGD3)
RATINGS RATIONALE
CHI's B2 Corporate Family Rating reflects Moody's expectation of
leverage of 4.3x by year-end 2020, the company's small scale based
on revenues, the cyclicality of demand for garage doors -- the
company's sole product category, and the potential of capital
deployment for debt-financed acquisitions and shareholder returns.
The B2 rating also reflects CHI's strong operating margins, the
sharp recovery in the repair and remodeling market, free cash flow
generation throughout the year, and the extension of the company's
maturity profile.
The stable outlook reflects its expectations that CHI will maintain
high operating margins and a good liquidity profile as leverage
remains near 4.0x.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The rating could be upgraded if debt to EBITDA is sustained near
3.5x, a good liquidity profile is preserved, revenues approach $750
million, and ongoing positive end market trends drive sustained
organic growth. The rating could be downgraded if debt to EBITDA
exceeds 5.5x for a sustained period of time and the company's
liquidity profile deteriorates.
The principal methodology used in these ratings was Manufacturing
Methodology published in March 2020.
C.H.I. Overhead Doors, LLC, headquartered in Arthur, Illinois,
manufactures overhead doors for residential and commercial
applications throughout the United States and Canada. Kohlberg
Kravis Roberts & Co., L.P., through its affiliates, is the primary
owner of CHI. Revenue for the twelve months ended June 30, 2020 was
$415 million. CHI is privately owned and does not disclose
financial information publicly.
CLEARWATER SEAFOODS: S&P Places 'B' ICR on CreditWatch Positive
---------------------------------------------------------------
S&P Global Ratings placed its ratings, including the 'B' issuer
credit rating, on Clearwater Seafoods and Clearwater Seafoods L.P.
on CreditWatch with positive implications.
The CreditWatch placement follows announcement by Canada-based
Premium Brands Holdings Corp. (PBH; not rated) and a coalition of
Mi'kmaq First Nations that they have entered into a definitive
agreement to acquire all of the issued and outstanding common
shares of Clearwater Seafoods and units issued under various
Clearwater equity compensation plans for a transaction value of
approximately C$1 billion, including debt. The transaction, which
is subject to conditions including court and shareholder approvals
and compliance with the Competition Act (Canada), is expected to
close in first-half 2021.
Following the close of the transaction and the possible repayment
of Clearwater's existing debt, S&P may either resolve the
CreditWatch placement or discontinue the ratings.
"We expect that Clearwater will continue to operate as a distinct
entity post transaction close. We expect the acquisition to be
credit positive, given PBH's greater revenue and EBITDA scale and
product diversity compared with those of Clearwater. We also
believe the acquisition will provide Clearwater access to PBH's
customer relationships in Canada and the U.S.," S&P said.
CreditWatch
On closing of the transaction and possible repayment of
Clearwater's existing debt, S&P may either resolve the CreditWatch
placement or discontinue the ratings. Should S&P continue with the
CreditWatch resolution, it would be based on the rating agency's
view of the owners' business and financial risk profiles, their
ownership interests in Clearwater, and Clearwater's role and
importance to the owners, at which point the rating agency may
affirm or raise the rating on Clearwater.
CONSOL ENERGY: Moody's Assigns Caa2 Rating on New $100MM Bond
-------------------------------------------------------------
Moody's Investors Service assigned a Caa2 rating to CONSOL Energy
Inc.'s proposed $100 million tax-exempt bond offering. The bonds
will be issued by the Pennsylvania Economic Development Financing
Authority and guaranteed by CONSOL Energy Inc. Proceeds will be
used to fund expenses related to solid waste disposal facilities at
the company's Pennsylvania Mining Complex. Moody's also affirmed
all long-term ratings for CONSOL, including the B2 Corporate Family
Rating. The rating outlook is negative.
"The proposed tax-exempt offering is another step towards
strengthening CONSOL's liquidity during a very challenging period
for the thermal coal industry," said Ben Nelson, Moody's Vice
President -- Senior Credit Officer and lead analyst for CONSOL
Energy, Inc.
Assignments:
Issuer: Pennsylvania Economic Dev. Fin. Auth.
Gtd Senior Unsecured Revenue Bonds, Assigned Caa2 (LGD6)
Affirmations:
Issuer: CONSOL Energy Inc.
Probability of Default Rating, Affirmed B2-PD
Corporate Family Rating, Affirmed B2
Gtd Senior Secured 1st Lien Revolver, Affirmed B1 (LGD3)
Gtd Senior Secured 1st Lien Term Loan A , Affirmed B1 (LGD3)
Gtd Senior Secured 1st Lien Term Loan B, Affirmed B1 (LGD3)
Senior Secured 2nd Lien Regular Bond/Debenture, Affirmed Caa1
(LGD5)
Outlook Actions:
Issuer: CONSOL Energy Inc.
Outlook, Remains Negative
RATINGS RATIONALE
The Caa2 rating assigned to the proposed tax-exempt bonds reflects
the unsecured status of the bonds and, therefore, contractual
subordination to the company's secured debt obligations. The rating
remains subject to Moody's review of the final terms and conditions
of the proposed offering.
Moody's expects that CONSOL's management-adjusted EBITDA will fall
to about $275 million in 2020, down from $406 million in 2019.
Given significant uncertainty about future performance,
particularly with infection rates rising in the United States, its
baseline forecast incorporates an expected EBITDA range of $250-300
million and modest free cash flow in 2021. Moody's expects the
company will remain focused on using free cash flow to facilitate
overall debt reduction before its next debt maturities in 2023 ($73
million Term Loan A) and 2024 ($270 million Term Loan B), including
meaningful reduction of secured debt in the next 12-18 months.
Taken together, Moody's expects that the company will be able to
achieve adjusted financial leverage under 4.0x (Debt/EBITDA) and
maintain adequate liquidity to support operations.
Management has undertaken numerous actions to enhance the company's
liquidity position in response to the disruption of the thermal
coal industry following the global outbreaks of Coronavirus in
early 2020. These actions include: (i) operational adjustments,
including cost control measures and temporarily idling the Enlow
Fork Mine; (ii) adjustments to the company's existing financial
arrangements, including relaxation of financial maintenance
covenants under the revolving credit facility, execution of sale
leasebacks, and extension of a securitization agreement; (iii)
various completed and pending asset sales, including land and
mineral assets, gas wells, and coal reserves; and (iv) a pending
transaction to take in the company's master-limited partnership
that will eliminate ongoing cash outflows and improve cushion under
financial maintenance covenants that currently exclude EBITDA for
the proportion of the PAMC owned by the MLP. The MLP transaction is
expected to be funded with stock and close in the first quarter of
2021.
The SGL-3 reflects adequate liquidity to support operations over
the next 12-18 months. The company reported $22 million of cash and
$301 million of availability under an undrawn $400 million
revolving credit facility due 2023 at 30 September 2020.
Availability under the revolving credit facility is reduced by $99
million of letters of credit to support various obligations. The
credit agreement also contains financial maintenance covenants,
including Net Debt/EBITDA, Gross First Lien Debt/EBITDA, and Fixed
Charge Coverage ratio tests. Moody's expects that the company will
have an adequate cushion of compliance under these covenants with
the benefit of the transaction to take in the MLP and proceeds from
the proposed tax-exempt issuance.
Moody's also believes that investor concerns about the coal
industry's ESG profile are intensifying and coal producers will be
increasingly challenged by access to capital issues in the early
2020s. An increasing portion of the global investment community is
reducing or eliminating exposure to the coal industry with greater
emphasis on moving away from thermal coal. The aggregate impact on
the credit quality of the coal industry is that debt capital will
become more expensive over this horizon, particularly in the public
bond markets, and other business requirements, such as surety
bonds, which together will lead to much more focus on individual
coal producers' ability to fund their operations and articulate
clearly their approach to addressing environmental, social, and
governance considerations -- including reducing net debt in the
near-to-medium term. CONSOL reported about $688 million of debt
(down from $725 million at year-end) and $667 million of surety
bonds (up from $618 at year-end) to support employer-related and
reclamation-related items at 30 September 2020.
CONSOL's B2 CFR is supported by a solid contract position and
aggressive efforts to preserve liquidity. CONSOL's business
position is also enhanced by its low-cost longwall mines,
relatively stable customer base, and good access to export markets
for both thermal and metallurgical coals. Despite the company's
good business position, CONSOL is fairly concentrated compared to
other coal companies with reliance on a single mining complex with
three operating coal mines for the majority of its earnings and
cash flow. Four out of five longwalls are currently operational. An
additional mine is idled at present. CONSOL also has meaningful
legacy liabilities consistent with many rated coal companies,
though it has reduced this position significantly following the
sale of certain assets and managing cash servicing costs.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The negative outlook reflects macro- and industry-level uncertainty
that calls into question the company's ability to generate
meaningful free cash flow and reduce debt to maintain the rating.
Moody's could upgrade the rating with better visibility into the
demand for thermal coal, expectations for at least $50 million of
free cash flow sustained on an annual basis, and adjusted financial
leverage sustained below 3.0x, and good liquidity to support
operations. Moody's could downgrade the rating with expectations
for adjusted financial leverage above 3.75x, material cash burn
extending beyond the third quarter of 2020, substantive
deterioration in liquidity, or further intensification of ESG
concerns that call into question the company's ability to handle
upcoming financing requirements or access capital markets on
economic terms.
Environmental, social, and governance factors have a material
impact on CONSOL's credit quality. The company is exposed to ESG
issues typical for a company in the coal mining industry, including
increasing global demand for renewable energy that is detrimental
to demand for coal, especially in the United States and Western
Europe. From an environmental perspective the coal mining sector is
also viewed as: (i) very high risk for air pollution and carbon
regulations; (ii) high risk for soil and water pollution, land use
restrictions, and natural and man-made hazards; and (iii) moderate
risk for water shortages. Social issues include factors such as
community relations, operational track record, and health and
safety issues associated with coal mining, such as black lung
disease. CONSOL is highly exposed to thermal coal. Moody's believes
that thermal coal carries greater ESG-related risks than
metallurgical coal. Specific risks for CONSOL Energy include
meaningful exposure to thermal coal and potential negative
political actions in areas served by the company. CONSOL's actions
and commentary since becoming an independent company have been more
oriented toward debt reduction than many other coal companies,
including a reduction in balance sheet debt by about 30% since late
2017.
The principal methodology used in these ratings was Mining
published in September 2018.
CONTAINER STORE: S&P Upgrades ICR to 'B' on Performance Gains
-------------------------------------------------------------
S&P Global Ratings raised the issuer credit rating on Coppell,
Texas-based storage and organization specialty retailer The
Container Store Group Inc. (TCS) to 'B' from 'B-'. The outlook is
stable. S&P also assigned a 'B' issue-level rating and '3' recovery
rating to the company's proposed $200 million senior secured term
loan B.
The upgrade reflects improved credit measures from recent outsized
performance and lower funded debt following the refinancing
transaction.
TCS' should benefit from its successful partnership with The Home
Edit, which is driving new customer acquisition and high-margin
sales. Sales rebounded to positive 5% year-on-year in the second
quarter after falling nearly 28% in the first quarter due largely
to store closures related to COVID-19. The sales growth in the
quarter was amplified by margin expansion and EBITDA nearly
doubling in the period as gross margins grew and sales general and
administrative (SG&A) declined meaningfully. S&P doesn't expect
that pace of improvement to be sustained on the margin side but do
expect collaborative partnerships with social media to drive
incremental demand.
S&P said, "We also expect TCS's funded debt to decline to about
$200 million from about $250 million when the refinancing
transaction is complete. We now expect credit measures to improve
to the low-3x area in 2021 but note that the small scale and,
potentially, the volatility associated with marketing-related
demand drivers, could lead to unpredictable future results. Still,
TCS has improved its financial position, and we believe it has
better operating prospects, at least over the next year. Because of
the improvements, we have revised our financial risk profile to
aggressive from highly leveraged." TCS is controlled by a financial
sponsor (55%) but is also a public company and has indicated a
desire to maintain lower funded debt levels than it has
historically. We therefore have revised our financial policy
modifier to FS-5 from FS-6."
Covenant headroom should be ample.
The company reported its liquidity at about $160 million as of
Sept. 26, 2020 (a cash balance of $62 million and remaining
availability on its $100 million revolving credit facility) from
about $107 million as of June 27, 2020. As with other retailers,
S&P expects the company to continue to pull back on expenses and
capital spending to preserve sufficient liquidity for 2020.
S&P said, "We note the company is currently subject to a 4.25x
maximum leverage covenant and a 1x minimum fixed-charge coverage
ratio when the availability under its asset-based lending (ABL)
revolver declines below $10 million. We expect sufficient headroom
under the maximum leverage covenant of at least 15% over the next
12 months and do not expect the springing covenant to be applicable
given the current availability under the revolver."
"We continue to apply a negative one-notch comparable rating
analysis modifier to our anchor score on the company to reflect our
holistic view of its credit profile. This includes the highly
discretionary nature of the demand for its merchandise, which
renders it more vulnerable to economic downturns than its peers
with similar business risk profiles."
"The stable outlook reflects our view that TCS' leverage will
remain in the 3x area based on improved performance and a lower
funded debt level in the next 12 months. It will also maintain
adequate liquidity and continue generating positive free operating
cash flow (FOCF) due to the flexibility of its cost structure and
its ability to reduce total capital expenditure (capex). We also
believe TCS does not have any near-term maturity risks."
S&P could lower its rating on TCS if:
-- Flat to negative free operating cash flow generation;
-- Operating prospects deteriorate meaningfully and S&P expects
persistent cash flow volatility or leverage to rise to more than
4x;
-- Sales decline by double-digit percentage and EBITDA margin
suppressed to the first quarter of 2020 level, leading to weaker
profitability measures and competitive position; or
-- TCS significantly changes its financial policy which results in
a meaningfully releveraging event.
S&P could raise the rating if:
-- TCS expanded its scale and breadth of operations through the
successful acquisition of new customers and further traction on its
omni-channel efforts, leading S&P to conclude it would have more
stable results in a pressured macroeconomic and operating
environment;
-- S&P would need to believe the risk of a releveraging event were
low under the private equity sponsor ownership structure; and
-- S&P assesses the comparable rating analysis as neutral based on
its holistic view of TCS's credit profile, including consistent
positive comparable store sales, benefitting from favorable
consumer demand, and relatively similar scale compared with rated
peers.
COVIA HOLDINGS: Court Approves Disclosure Statement
---------------------------------------------------
Judge David R. Jones approved the Disclosure Statement explaining
Covia Holdings Corporation, et al.'s Plan of Reorganization.
The Court ruled that the Disclosure Statement is approved as
containing adequate information within the meaning of section 1125
of the Bankruptcy Code.
The Debtors asked the Court to overrule objections to the
Disclosure Statement, citing that:
* The solicitation procedures and confirmation timeline are
reasonable under the circumstances and the timing objections should
be overruled.
* No additional notice is required for the revised Disclosure
Statement.
* The solicitation and confirmation timelines are appropriate.
* The deadline to file the Plan Supplement is appropriate.
* The Disclosure Statement contains adequate information
regarding the
assumptions underlying the recovery model.
* The Disclosure Statement contains adequate information
regarding the
recoveries for General Unsecured claims.
* The Disclosure Statement contains adequate information
regarding the
releases and the bases for the Debtor releases.
* The release provisions, including the opt-out mechanism, are
appropriate and do not render the Plan patently unconfirmable.
* The release provisions are appropriate.
* The third-party releases are consensual and the opt-out
mechanism is
appropriate.
* The Plan does not Unfairly provide value to the senior
creditors.
* The Plan's classification of classes 5A, 5B, 5C, and 5D is
appropriate under Section 1122(a) of the Bankruptcy Code and
applicable law.
* The Plan satisfies the best interests test.
The Court set these dates (subject to modification as necessary)
with respect to the solicitation of votes to accept the Plan,
voting on the Plan, and confirming the Plan:
* Plan Supplement Filing Deadline will be on November 17, 2020.
* Voting Deadline will be on November 27, 2020 at 11:59 p.m.
(prevailing Central Time).
* Deadline to File Voting Report will be on December 3, 2020 at
5:00 p.m. (prevailing Central Time).
The Ad Hoc Group of Term Loan Lenders joined in the Debtors'
omnibus reply and said it supports the Debtors' efforts to include
additional disclosure in the Amended Disclosure Statement to
address the Committee's disclosure-related concerns. The Ad Hoc
Group disputes the allegations in the Committee's Standing Motion
that are asserted against the Debtors' Term Loan Lenders, and will
demonstrate at the appropriate time why the claims the Committee
seeks standing to assert against the Term Loan Lenders are reckless
and frivolous. According to the Ad Hoc Group, the Committee raises
a handful of other issues that should be addressed by the Court at
confirmation.
Solicitation Procedures/Timeline
The Court set these dates and deadlines with respect to
confirmation of the Plan, the Motion of the Official Committee of
Unsecured Creditors for (I) Leave, Standing and Authority to
Commence and Prosecute Certain Claims and Causes of Action on
Behalf of the Debtors' Estates and (II) Exclusive Settlement
Authority [Docket No. 610] (the "Standing Motion"), and the
Official Committee of Unsecured Creditors' Objection to the Lenders
Defendants' Claims [Docket No. 654] (collectively, the "Contested
Issues"), including the hearing for the Court to consider the
Contested Issues:
* Oct. 23, 2020, shall be the deadline for the substantial
completion of the production of documents responsive to the
Requests, subject to adjustment for cause shown, including based on
the scope of document requests served;
* Oct. 25, 2020, shall be the deadline by which Participating
Parties must serve a preliminary list of witnesses they intend to
offer at the Confirmation Hearing. Witness lists shall identify all
witnesses that each party will call or may call at the Confirmation
Hearing and shall provide a brief summary of each witness's
anticipated testimony. Witnesses identified for the first time on a
preliminary witness list shall be subject to a deposition,
notwithstanding a deposition notice not being served by the
deadline listed in Paragraph 1(b). Noticing of such depositions
need not provide seven (7) days' notice before the noticed
deposition date;
* Oct. 26, 2020, shall be the deadline for Participating Parties
to serve notices of deposition on fact witnesses. Deposition
notices must be served no later than five (5) business days prior
to the deposition date, and any objections thereto must be served
no later than the later of (i) two days before the deposition date;
and (ii) two days after the date the deposition notices are served.
Reasonable requests for limited fact depositions based on new
information discovered after October 26 will not be unreasonably
denied;
* Oct. 26, 2020, will be the deadline by which any party must
file its response to the Standing Motion;
* Nov. 9, 2020, will be the deadline by which the Committee must
file its reply in support of the Standing Motion;
* Nov. 9, 2020, will be the deadline by which Participating
Parties must file any motions to compel discovery responses and
document production. The Participating Parties shall meet and
confer concerning any discovery dispute before filing motions to
compel discovery or any oppositions thereto;
* Nov. 11, 2020, shall be the deadline for completing depositions
of fact witnesses;
* Nov. 12, 2020, shall be the date by which the Participating
Parties shall engage in the simultaneous exchange of reports
prepared by the expert witnesses. These reports must satisfy the
requirements of Rule 26(a)(2)(B) of the Federal Rules of Civil
Procedure;
* Nov. 16, 2020, shall be the deadline by which Participating
Parties must serve a preliminary list of exhibits they intend to
offer at the Confirmation Hearing;
* Nov. 16, 2020, shall be the deadline by which the Participating
Parties must file any oppositions to motions to compel discovery
responses and document production. The Participating Parties shall
meet and confer concerning any discovery dispute before filing
motions to compel discovery or any oppositions thereto;
* Nov. 18, 2020, shall be the date by which the Participating
Parties shall engage in the simultaneous exchange of rebuttal
expert witness reports. These disclosures must satisfy the
requirements of Rule 26(a)(2)(B) of the Federal Rules of Civil
Procedure;
* Nov. 20, 2020, shall be the deadline by which Participating
Parties must make deposition designations of a deposition
transcript and serve a final list of witnesses and exhibits they
intend to offer at the Confirmation Hearing. Witness lists shall
identify all witnesses that each Participating Party will call or
may call at the Confirmation Hearing and shall provide a brief
summary of each witness's anticipated testimony. Witnesses
identified for the first time on a final witness list shall be
subject to a deposition, notwithstanding a deposition notice not
being served by the deadline listed in Paragraph 1(b). Noticing of
such depositions need not provide seven (7) days' notice before the
noticed deposition date;
* Nov. 25, 2020, shall be the date on which all expert discovery
shall be complete, subject to extension for good cause shown;
* Nov. 28, 2020 at 5:00 p.m. (prevailing Central Time), shall be
the deadline by which any party, including the Participating
Parties, must file any objections to the Plan (the "Confirmation
Objection Deadline");
* Nov. 29, 2020, shall be the date on which counsel to the
Participating Parties shall meet and confer regarding the initial
pretrial conference;
* Nov. 30, 2020, shall be the date of an initial pretrial
conference;
* Nov. 30, 2020, shall be the deadline by which Participating
Parties must file motions in limine;
* Nov. 30, 2020, shall be the deadline by which any Participating
Parties objecting to a designation from a deposition transcript
must serve their objections and by which any Participating Parties
seeking to admit a deposition transcript excerpt as a fairness
designation or as counterevidence at the Confirmation Hearing must
serve notice identifying the specific excerpts to be offered;
* Dec. 2, 2020, shall be the deadline by which the Participating
Parties must file oppositions to any motions in limine;
* Dec. 3, 2020, shall be the deadline by which the Participating
Parties must file fairness designations to another Participating
Party's deposition counter designations;
* Dec. 3, 2020, shall be the deadline by which Participating
Parties must serve objections to final witness and exhibit lists
and objections to deposition counter-designations;
* Dec. 3, 2020, shall be the date by which the Participating
Parties must meet and confer with a view toward narrowing and
resolving their evidentiary disputes (the "Meet and Confer"). The
Meet and Confer may be held either in person or by telephone;
* Dec. 4, 2020, shall be the deadline for Participating Parties
to file pre-trial briefs and reply to all timely objections to the
Plan;
* Dec. 4, 2020, shall be the date of the final pretrial
conference; and
* Dec. 7-10, 2020, shall be the dates of the Confirmation
Hearing. The Confirmation Hearing shall commence on December 7,
2020 at 9:00 a.m. (prevailing Central Time). The Confirmation
Hearing will continue from day to day, as the Court's schedule
permits, until completed; provided, however, the Confirmation
Hearing may be continued from time to time by the Court or for good
cause shown. Trial time will be divided equally between Plan
supporters (50%) and Plan objectors (50%).
A copy of the Disclosure Statement Approval Order is available at:
https://cdn.pacermonitor.com/pdfserver/JGUDT6Y/132869720/Covia_Holdings_Corporation_et__txsbke-20-33295__0675.1.pdf
Attorneys for the Ad Hoc Group of Term Loan Lenders:
John F. Higgins
M. Shane Johnson
Megan N. Young-John
Porter Hedges LLP
1000 Main Street, 36th Floor
Houston, Texas 77002
(713) 226-6000
(713) 226-6248 (fax)
jhiggins@porterhedges.com
sjohnson@porterhedges.com
myoung-john@porterhedges.com
- and -
Brian S. Hermann
Andrew M. Parlen
Kyle J. Kimpler
Diane Meyers
Sean A. Mitchell
Paul, Weiss, Rifkind, Wharton & Garrison LLP
1285 Avenue of the Americas
New York, NY 10019
(212) 373-3000
(212) 757-3990 (fax)
bhermann@paulweiss.com
aparlen@paulweiss.com
kkimpler@paulweiss.com
dmeyers@paulweiss.com
smitchell@paulweiss.com
About Covia Holdings Corporation
Covia Holdings Corporation and its affiliates --
http://www.coviacorp.com/-- provide diversified mineral-based and
material solutions for the energy and industrial markets. They
produce a specialized range of industrial materials for use in the
glass, ceramics, coatings, foundry, polymers, construction, water
filtration, sports and recreation, and oil and gas markets.
Covia Holdings Corporation, based in Independence, Ohio, and its
affiliates sought Chapter 11 protection (Bankr. S.D. Tex. Lead Case
No. 20-33295) on June 29, 2020.
In its petition, Covia disclosed $2,504,740,814 in assets and
$1,903,952,839 in liabilities. The petition was signed by Andrew D.
Eich, executive vice president, chief financial officer, and
treasurer.
The Hon. Marvin Isgur presides over the case.
The Debtors tapped KIRKLAND & ELLIS LLP, and KIRKLAND & ELLIS
INTERNATIONAL LLP, as counsel; JACKSON WALKER L.L.P., as
co-counsel; KOBRE & KIM LLP, as special litigation counsel; PJT
PARTNERS LP, as investment banker; ALIXPARTNERS, LLP, as financial
advisor; and PRIME CLERK LLC, as claims and noticing agent.
COVIA HOLDINGS: Lexon Insurance Objects to Disclosure Motion
------------------------------------------------------------
Lexon Insurance Company objects to the motion of Covia Holdings
Corporation and its Debtor Affiliates for entry of an order
approving the adequacy of the Disclosure Statement.
Lexon claims that the Disclosure Statement and Plan fail to provide
any discussion of the Debtors' potential environmental liabilities
while the Disclosure Statement states that the purpose of the Plan
is to implement a comprehensive financial restructuring of the
Debtors' balance sheets in order to allow the Reorganized Debtors
to continue to operate their businesses.
Lexon points out that it is unclear in the Disclosure Statement as
to how the Lexon Bonds are going to be treated under the Plan and
Restructuring Support Agreement because there is absolutely no
reference or discussion regarding the treatment of the surety bonds
in any of the aforementioned documents.
Lexon asserts that the Disclosure Statement and Plan fail to
discuss the requirement that the Reorganized Debtors must
demonstrate an ability to obtain government, licensing or
regulatory approval, as well as an ability to replace the Lexon
Bonds.
A full-text copy of the Lexon's objection to disclosure statement
motion dated September 17, 2020, is available at
https://tinyurl.com/y3n62tbu from PacerMonitor.com at no charge.
Lexon is represented by:
Lee E. Woodard, Esq.
HARRIS BEACH PLLC
333 W. Washington Street, Suite 200
Syracus, New York 13202
Telephone: (315) 423-7100
E-mail: bkemail@harrisbeach.com
About Covia Holdings Corporation
Covia Holdings Corporation and its affiliates
--http://www.coviacorp.com/-- provide diversified mineral-based
and material solutions for the energy and industrial markets. They
produce a specialized range of industrial materials for use in the
glass, ceramics, coatings, foundry, polymers, construction, water
filtration, sports and recreation, and oil and gas markets.
Covia Holdings Corporation, based in Independence, Ohio, and its
affiliates sought Chapter 11 protection (Bankr. S.D. Tex. Lead Case
No. 20-33295) on June 29, 2020.
In its petition, Covia disclosed $2,504,740,814 in assets and
$1,903,952,839 in liabilities. The petition was signed by Andrew D.
Eich, executive vice president, chief financial officer, and
treasurer.
The Hon. Marvin Isgur presides over the case.
The Debtors tapped KIRKLAND & ELLIS LLP, and KIRKLAND & ELLIS
INTERNATIONAL LLP, as counsel; JACKSON WALKER L.L.P., as
co-counsel; KOBRE & KIM LLP, as special litigation counsel; PJT
PARTNERS LP, as investment banker; ALIXPARTNERS, LLP, as financial
advisor; and PRIME CLERK LLC, as claims and noticing agent.
COVIA HOLDINGS: Unsecureds to Get 'Equity Pool' in Plan
-------------------------------------------------------
Covia Holdings Corporation, et al., proposed a plan that achieves a
value-maximizing restructuring that comprehensively addresses the
Debtors funded debt obligations and positions their businesses for
growth and long-term success.
According to the Disclosure Statement, following extensive
negotiations between the Debtors and an ad hoc group of their
prepetition senior secured term lenders, on June 29, 2020, the
Debtors entered into a restructuring support agreement, which was
amended and restated on July 7, 2020. As a result, the transactions
embodied by the Plan enjoy the support of Holders of approximately
$993 million, or 63.7%, of the Debtors prepetition term loan
indebtedness. The Plan will reduce the Debtors' funded debt by
nearly half; a reduction of approximately $735 million. The
consensus embodied in the Restructuring Support Agreement provides
a sound foundation for the Debtors Chapter 11 Cases to proceed in
an efficient, cost-effective, and value-maximizing manner.
The material terms of the Plan and Restructuring Support Agreement
are as follows:
* Each Holder of an Allowed Secured Tax Claim shall receive at
the option of the Reorganized Debtors: (1) payment in full in Cash
of such Holders Allowed Secured Tax Claim; or (2) equal semi-annual
Cash payments commencing as of the Effective Date or as soon as
reasonably practicable thereafter and continuing for five years, in
an aggregate amount equal to such Allowed Secured Tax Claim,
together with interest at the applicable non-default rate under
applicable non-bankruptcy law, subject to the option of the
applicable Reorganized Debtor to prepay the entire amount of such
Allowed Secured Tax Claim during such time period.
* Each Holder of an Allowed Other Secured Claim shall receive at
the option of the Reorganized Debtors (1) payment in full in Cash;
(2) Reinstatement of such Allowed Other Secured Claim,
notwithstanding any contractual provision or applicable
non-bankruptcy law that entitles the holder of such claim to demand
or to receive payment prior to the stated maturity of such Allowed
OtherSecured Claim from and after the occurrence of default; (3)
delivery of the collateral securing such Allowed Other Secured
Claim; or (4) such other treatment rendering such Allowed Other
Secured Claim Unimpaired.
* Each Holder of an Allowed Other Priority Claim shall receive
at the option of the Reorganized Debtors: (1) Cash in an amount
equal to such Allowed Other Priority Claim; or (2) such other
treatment rendering such Allowed Other Priority Claim Unimpaired.
* Each Holder of an Allowed Secured Term Loan Claim or an
Allowed Secured Swap Agreements Claim, respectively, shall receive
its Pro Rata share of (1) the Excess Cash; (2) the New Term Loan;
and (3) the Financing Claims Equity Pool.
* Each Holder of a Claim against Covia that is an Allowed
General Unsecured Claim, Term Loan Deficiency Claim, or Swap
Agreements Deficiency Claim shall receive, in full and final
satisfaction of such Allowed Claim, its Pro Rata share of the
Parent Unsecured Claims Equity Pool. Class 5A, owed $782 million
to $857 million, will recover 9% to 12%.
* Each Holder of a Claim against TechniSand that is an Allowed
General Unsecured Claim, Term Loan Deficiency Claim, or Swap
Agreements Deficiency Claim shall receive, in full and final
satisfaction of such Allowed Claim, its Pro Rata share of the
TechniSand Unsecured Claims Equity Pool. Class 5B, owed $633
million to $1.726 billion, will recover 1%.
* Each Holder of a Claim against Cheyenne that is an Allowed
General Unsecured Claim, Term Loan Deficiency Claim, or Swap
Agreements Deficiency Claim shall receive, in full and final
satisfaction of such Allowed Claim, its Pro Rata share of the
Cheyenne Unsecured Claims Equity Pool. Class 5C, owed $518 million
to $1.610 billion, will recover 0%
* Each Holder of a Claim against one or more Debtors other than
Covia, TechniSand, and Cheyenne that is an Allowed General
Unsecured Claim, Term Loan Deficiency Claim, or Swap Agreements
Deficiency Claim shall receive, in full and final satisfaction of
such Allowed Claim, its Pro Rata share of the Other Unsecured
Claims Equity Pool.
* All Intercompany Claims shall be, at the option of the
Reorganized Debtors with the consent of the Required Consenting
Stakeholders, (1) Reinstated or (2) distributed, contributed, set
off, settled, cancelled, released, or otherwise addressed.
* All Intercompany Interests shall be, at the option of the
Reorganized Debtors with the consent of the Required Consenting
Stakeholders, (1) Reinstated in accordance with Article III.G of
the Plan, distributed, contributed, or (2) cancelled, released, or
otherwise addressed.
* On the Effective Date, Covia Interests will be cancelled,
released, and extinguished without any distribution on account of
such Covia Interests.
* All Section 510(b) Claims, if any, will be discharged,
cancelled, released, and extinguished as of the Effective Date, and
will be of no further force or effect, and Holders of Allowed
Section 510(b) Claims will not receive any distribution on account
of such Allowed Section 510(b) Claims.
"Parent Unsecured Claims Equity Pool" means 28.4% of the New Common
Equity, less the amount of New Common Equity to satisfy any Allowed
Adequate Protection Superpriority Claims, and subject to dilution
by the Management Incentive Plan.
"TechniSand Unsecured Claims Equity Pool" means 2.6% of the New
Common Equity, subject to dilution by the Management Incentive
Plan
"Cheyenne Unsecured Claims Equity Pool" means 0.7% of the New
Common Equity, subject to dilution by the Management Incentive
Plan.
The Plan incorporates a settlement between the Debtors and the
Senior Creditors regarding the amount of the Debtors unencumbered
going concern distributable value and the form in which that value
will be distributed (the "Unencumbered Value Settlement"). The
Unencumbered Value Settlement takes into account certain disputed
issues, including: (1) how the Debtors estimated total enterprise
value should be allocated among the Debtors and their non-Debtor
foreign subsidiaries; and (2) whether certain of the Debtors
accounts receivable are subject to the security interests securing
the Debtors obligations under the Term Loan Credit Agreement (such
security interests, the "Term Loan Liens"). In addition, solely as
part of the Unencumbered Value Settlement, the Senior Creditors
have agreed that a change of control with respect to the
Reorganized Debtors will not constitute an event of default or an
acceleration event under the New Term Loan Documents. As described
in greater detail below, the Debtors believe that the Unencumbered
Value Settlement strikes a reasonable balance between divergent
views and legal theories. Accordingly, the Unencumbered Value
Settlement provides for reasonable recoveries to the Debtors
stakeholders—both secured and unsecured. Moreover, the recoveries
to the Debtors stakeholders under the Unencumbered Value Settlement
significantly exceed those that the Debtors anticipate would be
available in a liquidation, satisfying the "floor" established by
Section 1129(a)(7) of the Bankruptcy Code. Finally, the component
parts of the Unencumbered Value Settlement constitute an
interconnected, integrated, and indivisible compromise and are not
severable from one another. A more detailed discussion of the
Unencumbered Value Settlement is provided in Article II.E of this
Disclosure Statement.
Distributions under the Plan will be funded with, or effectuated
by, as applicable, (a) Cash held on the Effective Date by or for
the benefit of the Debtors, (b) the issuance of the New Common
Equity, (c) the issuance of the New Term Loan, and (d) the issuance
of or borrowings under the Exit Facility Credit Agreement.
A full-text copy of the Disclosure Statement dated October 14,
2020, is available at https://tinyurl.com/y3yvd9vg from
PacerMonitor.com at no charge.
Co-Counsel to the Debtors:
Matthew D. Cavenaugh
Vienna F. Anaya
Genevieve M. Graham
Victoria N. Argeroplos
JACKSON WALKER L.L.P.
1401 McKinney Street, Suite 1900
Houston, Texas 77010
Telephone: (713) 752 -4200
Facsimile: (713) 752-4221
Email: mcavenaugh@jw.com
vanaya@jw.com
ggraham@jw.com
vargeroplos@jw.com
- and -
Jonathan S. Henes, P.C.
KIRKLAND & ELLIS LLP
KIRKLAND & ELLIS INTERNATIONAL LLP
601 Lexington Avenue
New York, New York 10022
Telephone: (212) 446-4800
Facsimile: (212) 446-4900
Email: jonathan.henes@kirkland.com
- and -
Benjamin M. Rhode
Scott J. Vail
300 North LaSalle Street
Chicago, Illinois 60654
Telephone: (312) 862-2000
Facsimile: (312) 862-2200
Email: benjamin.rhode@kirkland.com
scott.vail@kirkland.com
About Covia Holdings
Covia Holdings Corporation and its affiliates --
http://www.coviacorp.com/-- provide diversified mineral-based and
material solutions for the energy and industrial markets. They
produce a specialized range of industrial materials for use in the
glass, ceramics, coatings, foundry, polymers, construction, water
filtration, sports and recreation, and oil and gas markets.
Covia Holdings Corporation, based in Independence, Ohio, and its
affiliates sought Chapter 11 protection (Bankr. S.D. Tex. Lead Case
No. 20-33295) on June 29, 2020.
In its petition, Covia disclosed $2,504,740,814 in assets and
$1,903,952,839 in liabilities. The petition was signed by Andrew D.
Eich, executive vice president, chief financial officer, and
treasurer.
The Hon. Marvin Isgur presides over the case.
The Debtors tapped KIRKLAND & ELLIS LLP, and KIRKLAND & ELLIS
INTERNATIONAL LLP, as counsel; JACKSON WALKER L.L.P., as
co-counsel; KOBRE & KIM LLP, as special litigation counsel; PJT
PARTNERS LP, as investment banker; ALIXPARTNERS, LLP, as financial
advisor; and PRIME CLERK LLC, as claims and noticing agent.
CRAZY CAT: Hires James & Haugland as Attorney
---------------------------------------------
Crazy Cat Cyclery, LLC, seeks authority from the U.S. Bankruptcy
Court for the Western District of Texas to employ James & Haugland,
P.C., as attorney to the Debtor.
Crazy Cat requires James & Haugland to:
a. analyze the Debtor's financial situation and render advice
to the Debtor in determining whether to file a petition in
bankruptcy;
b. prepare and file the Voluntary Petition, Schedules,
Statement of Financial Affairs, Plan of Reorganization and
Disclosure Statement;
c. represent the Debtor at the meeting of creditors and
confirmation hearing, and any adjourned hearings thereof;
d. represent the Debtor in adversary proceedings and other
contested bankruptcy matters;
e. give the Debtor legal advice with respect to powers and
duties as a Debtor-in-Possession;
f. prepare on behalf of the Debtor, as a Debtor-in-Possession,
the necessary applications, answers, orders, reports and
other papers;
g. assist the Debtor with any necessary documents for the
obtaining of post-petition credits, offsets, etc.; and
h. perform all of the legal services for the Debtor, as a
Debtor-in-Possession, which may be necessary herein.
James & Haugland will be paid at these hourly rates:
Corey W. Haugland $350
Jamie T. Wall $300
Paralegals $125
James & Haugland will also be reimbursed for reasonable
out-of-pocket expenses incurred.
Corey W. Haugland, partner of James & Haugland, P.C., assured the
Court that the firm is a "disinterested person" as the term is
defined in Section 101(14) of the Bankruptcy Code and does not
represent any interest adverse to the Debtors and their/its
estates.
James & Haugland can be reached at:
Corey W. Haugland, Esq.
JAMES & HAUGLAND, P.C.
609 Montana Avenue
El Paso, TX 79902
Tel: (915) 532-3911
Fax: (915) 541-6440
E-mail: chaugland@jghpc.com
About Crazy Cat Cyclery
Based in El Paso, Texas, Crazy Cat Cyclery, LLC filed a voluntary
petition under Chapter 11 of the Bankruptcy Code (Bankr. W.D. Tex.
Case No. 19-31773) on Oct. 25, 2019. At the time of the filing, the
Debtor had estimated assets of between $100,001 and $500,000 and
liabilities of between $500,001 and $1 million. Judge H.
Christopher Mott oversees the case. The Debtor tapped James &
Haugland, P.C. as its legal counsel, and Phillips & Baca, P.C. as
its accountant.
CRESTWOOD HOLDINGS: S&P Alters Outlook to Negative, Affirms B- ICR
------------------------------------------------------------------
S&P Global Ratings revised the ratings outlook to negative from
stable and affirmed its 'B-' issuer credit and issue-level ratings
on Crestwood Holdings LLC (Holdings). The recovery rating on the
term loan remains '3'.
S&P said, "The rating action on Holdings reflects our expectation
that its master limited partnership (MLP), Crestwood Equity
Partners L.P. (CEQP), will maintain its distribution over the
coming quarters. We previously expected distribution growth in
2021. In our view, CEQP's equity yield of 17%-18% is unsustainable
over the long term and would limit any distribution increases
unless its unit price improves. That said, CEQP has a distribution
coverage ratio of roughly 2x and is generating sufficient cash flow
to support current distribution levels. While CEQP has been
focusing on debt reduction, we believe it could pursue unit
repurchases rather than distribution growth if its equity yield
does not improve from current levels. Holdings' leverage ratio
covenant steps down to 7.25x on March 31, from 7.5x currently.
Without a growth in the distribution, we forecast Holdings to
violate this covenant. Nevertheless, we would expect the company to
take steps to cure any potential violations or to pursue an
amendment to its covenants in advance of any violations."
The 'B-' issuer credit rating on Holdings is three-notches below
that of its MLP, CEQP.
S&P typically rate general partners of MLPs two to five notches
below the issuer credit rating of the MLP when they do not
constitute a group, as is the case with Holdings. The three-notch
ratings differential reflects the structural subordination of
Holdings relative to CEQP's underlying cash flows and takes into
consideration S&P's assessment (positive, neutral, negative, or
very negative) of cash flow interruption risk, stand-alone debt
leverage, and cash flow diversity.
S&P said, "There are no structural features, such as financial
covenants or cash lock-up tests, that we deem highly restrictive to
distributions. We expect CEQP's distribution coverage ratio to be
in the 1.5x to 2x range over the next several years. CEQP's cash
flows are predominately fee-based, which provides some stability to
the distributions CEQP receives, but volumetric and counterparty
risk remains. As such, cash flow interruption risk is neutral."
"We forecast stand-alone debt leverage (debt at Crestwood Holdings
divided by distributions received from CEQP minus any expenses at
the general partner) will be approximately 7.25x in 2020 and fall
below 7x in 2021. Though CEQP is generating sufficient cash flow to
cover its distribution and even grow it from current levels, we
forecast it to keep its distribution unchanged from current levels
through 2022. This results in a negative assessment for stand-alone
debt leverage."
Crestwood Holdings' sole reliance on distributions from CEQP to
service its debt obligations results in a neutral cash flow
diversity assessment.
Though the ratings separation between Holdings and CEQP is three
notches, these assessments would imply a four-notch differential
between the general partner's rating and S&P's assessment of the
MLP's stand-alone credit profile (SACP).
S&P said, "We do not apply a four-notch differential in this case
because that would imply a 'CCC+' rating, and in our view, the
'CCC' criteria does not apply because we believe Holdings' has
sufficient liquidity and a sustainable capital structure in the
long term."
"The negative outlook reflects our expectation that we expect
Crestwood Holdings' to operate with marginal cushion on its
financial covenant at year-end and a potential covenant violation
next year. However, we expect steady distributions from CEQP and
adequate liquidity leading to stand-alone leverage in the 7.2x-7.5x
range in 2021 and improving to below 7x in 2022."
"We could lower the rating to 'CCC+' if Holdings' liquidity becomes
constrained due to a reduction in distribution levels and we
believe that it is vulnerable to nonpayment of financial
commitments."
"We could revise the outlook to stable if it is successful in
amending its covenants such that any covenant violations are no
longer expected or if CEQP grows its distributions while Holdings
maintains leverage below 7.5x."
CROSSPLEX VILLAGE: Hires Campbell Partners as Special Counsel
-------------------------------------------------------------
CrossPlex Village QALICB, LLC, seeks authority from the U.S.
Bankruptcy Court for the Northern District of Alabama to employ
Campbell Partners, LLC, as special conflict counsel to the Debtor.
CrossPlex Village requires Campbell Partners to assist and provide
legal services in relation to the pending construction defect
dispute with JohnsonKreis Construction Company, Inc.. Campbell
Partners will assert additional construction defect claims against
(i) the surety company that bonded JohnsonKreis' work; (ii) the
manufacturers of the defective product(s); and (iii) the issuer of
the builder's risk insurance policy.
Campbell Partners will be paid at these hourly rates:
Attorneys $400 to $450
Associates $300
Campbell Partners will also be reimbursed for reasonable
out-of-pocket expenses incurred.
Andrew P. Campbell, partner of Campbell Partners, LLC, assured the
Court that the firm is a "disinterested person" as the term is
defined in Section 101(14) of the Bankruptcy Code and does not
represent any interest adverse to the Debtor and its estates.
Campbell Partners can be reached at:
Andrew T. Campbell
CAMPBELL PARTNERS, LLC
505 20th Street North, Suite 1600
Birmingham, AL 35203
Tel: (205) 224-0750
Fax: (205) 383-2648
E-mail: andy@campbellpartnerslaw.com
About Crossplex Village Qalicb
CrossPlex Village QALICB, LLC, filed its voluntary petition for
relief under Chapter 11 of the Bankruptcy Code (Bankr. N.D. Ala.
Case No. 20-02586) on Aug. 10, 2020. At the time of the filing,
the Debtor disclosed assets of between $10 million and $50 million
and liabilities of the same range. The Debtor has tapped Helmsing,
Leach, Herlong, Newman & Rouse, P.C., as its legal counsel.
DBMP LLC: Asks Court to Extend Plan Exclusivity Thru Dec. 22
------------------------------------------------------------
DBMP LLC, requests the U.S. Bankruptcy Court for the Western
District of North Carolina, Charlotte Division, to extend the
exclusive periods for filing a Chapter 11 plan through and
including December 22, 2020, and to solicit acceptances through and
including February 22, 2021.
The Debtor says it has worked cooperatively with the Official
Committee of Asbestos Personal Injury Claimants (the "ACC") and the
future claimants' representative (the "FCR") on all matters
relating to the administration and advancement of the chapter 11
case. The Debtor has expressed an interest in engaging in
settlement negotiations with the ACC and the FCR and has provided
the ACC and the FCR with substantial information, including a copy
of its claims database, to assist in settlement discussions as soon
as the parties are prepared.
One of the Debtor's primary activities has been the ongoing
prosecution of its request for preliminary injunctive and
declaratory relief in a pending Adversary Proceeding, where the
Debtor has expended significant resources in responding to the
discovery requests propounded by the ACC in connection with the
said Proceeding. The Debtor also is preparing for depositions
requested by the ACC of individuals and corporate designees of both
the Debtor and its non-debtor affiliate, CertainTeed LLC.
The ACC and the FCR have propounded discovery requests on the
Debtor in connection with the Discovery Motions. The Debtor is in
the process of responding to those requests and scheduling a
deposition of Charles E. Bates, Ph.D., as requested by the ACC and
the FCR. Pursuant to the Adversary CMO, the hearing to consider the
Debtor's request for preliminary injunctive and declaratory relief
will commence on December 7, 2020, and continue, if needed, on
December 8 and 9, with a hearing on the Discovery Motions to be
scheduled to occur after the conclusion of the PI Hearing.
Notably, the Debtor's goal of confirming a plan of reorganization
that establishes a trust under section 524(g) of the Bankruptcy
Code contemplates both (a) an ongoing effort to pursue settlement
of issues with asbestos claimants and (b) the pursuit of (i)
information, through the Discovery Motions or otherwise, that will
assist in the negotiation and formulation of a plan, and (ii) if no
settlement is otherwise reached, an estimation proceeding.
About DBMP LLC
DBMP LLC is a North Carolina limited liability company and the
direct parent company of Millwork & Panel LLC, which manufactures
vinyl siding and polyvinyl chloride (PVC) trim products for the
construction market at facilities it owns in Claremont, N.C. and
Social Circle, Ga. It is a defendant in tens of thousands of
asbestos-related lawsuits pending in courts throughout the United
States.
DBMP sought protection under Chapter 11 of the Bankruptcy Code
(Bankr. W.D.N.C. Case No. 20-30080) on Jan. 23, 2020. At the time
of the filing, the Debtor disclosed assets of between $500 million
and $1 billion and liabilities of the same range.
Judge Laura T. Beyer oversees the case. The Debtor tapped Jones Day
as legal counsel; Robinson, Bradshaw & Hinson, P.A., and Schiff
Hardin LLP as special counsel; Bates White, LLC as a consultant;
and Epiq Corporate Restructuring, LLC as claims, noticing, and
balloting agent. The Official Committee of Asbestos Personal Injury
Claimants of DBMP LLC tapped Hamilton Stephens Steele Martin, PLLC,
as local counsel to the Committee.
DEGROFF RX: Hires Healthgrowth Advisors as Consultant
-----------------------------------------------------
DeGroff RX, LLC, seeks authority from the U.S. Bankruptcy Court for
the District of Connecticut to employ Healthgrowth Advisors, LLC,
as consultant to the Debtor.
DeGroff RX requires Healthgrowth Advisors to render the advisory
services related to the Debtor's inventory management practices,
expenses, staffing, profits, operation affront of store, business
growth and expansion opportunities, access to preferred partner
pricing and discounts, DIR fee reduction strategies and solutions
and financial and operating review of Debtor's business.
Healthgrowth Advisors will be paid based upon its normal and usual
hourly billing rates. The firm will also be reimbursed for
reasonable out-of-pocket expenses incurred.
To the best of the Debtor's knowledge the firm is a "disinterested
person" as the term is defined in Section 101(14) of the Bankruptcy
Code and does not represent any interest adverse to the Debtor and
its estates.
About DeGroff RX
DeGroff RX, LLC, a long-term care pharmacy in New Britain, Conn.,
sought protection under Chapter 11 of the Bankruptcy Code (Bankr.
D. Conn. Case No. 20-21162) on Sept. 28, 2020. Todd DeGroff,
member, signed the petition. At the time of the filing, Debtor had
total assets of $443,999 and liabilities of $6,483,521. Judge
James J. Tancredi oversees the case. Zeides, Needle & Cooper, P.C.
is Debtor's legal counsel.
DUNCAN MORGAN: Trustee Scraps Plan, Parties Agree on Dismissal
--------------------------------------------------------------
The Chapter 11 Trustee filed with the U.S. Bankruptcy Court for the
Eastern District of North Carolina, Raleigh Division, a Disclosure
Statement and Chapter 11 Plan for debtor Duncan Morgan, LLC on
September 18, 2020.
In the Plan, the orderly sale of Debtor's properties would fund the
obligations under the Plan.
The Plan provides for Bannor Michael MacGregor and Sharon MacGregor
(and if elected Northstar) to receive new membership interests in
the Debtor in satisfaction of any Allowed Claims of such parties.
The lone unsecured creditor is Judy & Tucker, CPA, owed the amount
of $1,625.00. A full-text copy of Trustee's Disclosure Statement
dated September 18, 2020, is available at
https://tinyurl.com/y67ezaxh from PacerMonitor.com at no charge.
But in October 2020, Kevin L. Sink, Chapter 11 Trustee for Duncan
Morgan, LLC, filed documents pursuant to Rule 9019 of the Federal
Rules of Bankruptcy Procedure, seeking approval of a compromise and
settlement between the Debtor and Bannor Michael MacGregor, Jean
Budler, Sharon MacGregor, Northstar Capital PTY Ltd. and Patricia
Lloyd Williams Trust, collectively, ("Parties to the Bankruptcy
Case"), and for approval of dismissal of case pursuant to 11 U.S.C.
Sec. 1112.
The Settlement Agreement represents the global resolution of all
the outstanding claims and disputes in this case, followed by (with
this Court's approval), the dismissal of this Chapter 11 case. As
more particularly set forth in the Settlement Agreement, the
resolution includes the following:
a. Transfer of 8337 Greywinds Drive property and cash to Budler
in full satisfaction of her asserted claim;
b. Execution of Notes and Deeds of Trust in favor of S.
MacGregor and Northstar with liens on all remaining real estate of
the Debtor;
c. Payment of administrative expense claim of S. MacGregor in
the amount of $2,475.00;
d. Payment of claim of Thomas, Judy & Tucker in the amount of
$1,625.00;
e. Payment of $60,000 to the Trust to release all liens against
real estate owned by the Debtor, with such payment deemed made to
MacGregor relating to his asserted claims;
f. Liquidation of Life Design Station International, Inc.
(“LDSI”) stock with proceeds going to S. MacGregor and
Northstar;
g. Payment of all quarterly fees due, including fees due on any
distributions under the Settlement Agreement;
h. Payment of Trustee’s attorneys fees and commissions, and
accountant’s fees(as approved by this Court);
i. MacGregor to retain 100% membership interests in the
Debtor;j.Resolution of all claims and disputes, including all
pending adversary proceedings; and
k. Dismissal of this Chapter 11 Case following the completion of
the foregoing
About Duncan Morgan
Duncan Morgan LLC is primarily engaged in renting and leasing real
estate properties.
Duncan Morgan sought Chapter 11 protection (Bankr. E.D.N.C. Case
No. 19-03113) on Oct. 10, 2019. The Debtor was estimated to have
$1 million to $10 million in assets and liabilities as of the
bankruptcy filing.
The Hon. David M. Warren is the case judge.
J.M. Cook, Esq., is the Debtor's counsel.
Kevin L. Sink was appointed as Chapter 11 trustee on Aug. 21, 2019.
The Chapter 11 Trustee can be reached at:
Kevin L. Sink
NICHOLLS & CRAMPTON, PA.
P.O. Box 18237
Raleigh, NC 27619
Telephone: 919-781-1311
Facsimile: 919-782-0465
E-mail: ksink@nichollscrampton.com
On Dec. 31, 2019, the Court appointed Jeff Horton of Allen Tate
Realty as the realtor for the Trustee.
DURRANI M.D.: Case Summary & 20 Largest Unsecured Creditors
-----------------------------------------------------------
Debtor: Durrani, M.D., & Associates, P.A.
9440 Bellaire Boulevard, Suite 206
Houston, TX 77036
Business Description: Durrani, M.D., & Associates, P.A. --
https://www.durranimd.com -- offers
comprehensive treatment for disorders of the
kidneys, bladder, and male reproductive
system as well as a focus on male and female
sexual health.
Chapter 11 Petition Date: November 13, 2020
Court: United States Bankruptcy Court
Southern District of Texas
Case No.: 20-35543
Judge: Hon. Christopher M. Lopez
Debtor's Counsel: Margaret M. McClure, Es .
LAW OFFICE OF MARGARET M. MCCLURE
909 Fannin, Suite 3810
Houston, TX 77010
Tel: 713-659-1333
Email: margaret@mmmcclurelaw.com
Estimated Assets: $100,000 to $500,000
Estimated Liabilities: $1 million to $10 million
The petition was signed by Omar H. Durrani, M.D., president.
A copy of the Debtor's list of six unsecured creditors is available
for free at PacerMonitor.com:
https://www.pacermonitor.com/view/DEAM7NQ/Durrani_MD__Associates_PA__txsbke-20-35543__0006.0.pdf?mcid=tGE4TAMA
A copy of the petition is available for free at PacerMonitor.com
at:
https://www.pacermonitor.com/view/CINMQZY/Durrani_MD__Associates_PA__txsbke-20-35543__0001.0.pdf?mcid=tGE4TAMA
ECOARK HOLDINGS: Posts $8.9 Million Net Income in Second Quarter
----------------------------------------------------------------
Ecoark Holdings, Inc., filed with the Securities and Exchange
Commission its Quarterly Report on Form 10-Q disclosing net income
of $8.98 million on $3.28 million of revenues for the three months
ended Sept. 30, 2020, compared to a net loss of $4.39 million on
$44,000 of revenues for the three months ended Sept. 30, 2019.
"We are proud of the Ecoark team for executing the timely filing of
our quarterly report, more than a week ahead of the deadline," said
Randy May, chief executive officer of Ecoark. "We continue to
drive strong growth across our operations, as evidenced by a 42%
sequential increase in revenue for our fiscal second quarter of
2021. Our strong operational results are further bolstering our
financial position, including a more than $1 million increase in
our cash balance and an approximately $20 million improvement in
our stockholders' equity position as compared to the same quarter
last year."
"We continue to pursue an uplist to the Nasdaq Capital Market, and
our application is currently active and under review," continued
Mr. May. "We remain confident in our standing and believe that our
most recent reported quarterly results further improve our position
and the strength of our application. We remain focused on
strategically investing in the growth of our oil and gas business,
and we are progressing towards our goal of generating positive cash
flow at the company level and achieving a material increase in oil
production per day."
For the six months ended Sept. 30, 2020, the Company reported a net
loss of $12.19 million on $5.59 million of revenues compared to a
net loss of $6.03 million on $79,000 of revenues for the nine
months ended Sept. 30, 2019.
As of Sept. 30, 2020, the Company had $33.50 million in total
assets, $15.71 million in total liabilities, and $17.79 million in
total stockholders' equity.
The Company has a working capital deficit of $6,731,000 as of
Sept. 30, 2020, and has an accumulated deficit as of Sept. 30, 2020
of $140,219,000. As of Sept. 30, 2020, the Company has $1,664,000
in cash and cash equivalents.
The Company alleviated the substantial doubt regarding this
uncertainty as of March 31, 2020 which continues to be alleviated
at Sept. 30, 2020 as a result of the Company's acquisition of
Banner Midstream on March 27, 2020 which bring revenue generating
subsidiaries with reserves of oil properties over $6,000,000 and
existing customer relationships over $2,000,000 coupled with the
raising of $12,253,000 in the exercise of warrants in the six
months ended Sept. 30, 2020.
Ecoark said, "If the Company raises additional funds by issuing
equity securities, its stockholders would experience dilution.
Additional debt financing, if available, may involve covenants
restricting its operations or its ability to incur additional debt.
Any additional debt financing or additional equity that the
Company raises may contain terms that are not favorable to it or
its stockholders and require significant debt service payments,
which diverts resources from other activities. If the Company is
unable to obtain additional financing, it may be required to
significantly scale back its business and operations. The
Company's ability to raise additional capital will also be impacted
by the recent outbreak of COVID-19.
"Based on this acquisition, company-wide consolidation, and
management's plans, the Company believes that the current cash on
hand and anticipated cash from operations is sufficient to conduct
planned operations for one year from the issuance of the unaudited
condensed consolidated financial statements."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/Archives/edgar/data/1437491/000121390020035566/f10q0920_ecoarkholdings.htm
About Ecoark Holdings
Rogers, Arkansas-based Ecoark Holdings, Inc., founded in 2011,
Ecoark is a diversified holding company. Ecoark Holdings has four
wholly-owned subsidiaries: Ecoark, Inc., a Delaware corporation
which is the parent of Zest Labs, Inc., 440IoT Inc., Banner
Midstream Corp., and Trend Discovery Holdings Inc. Through its
subsidiaries, the Company is engaged in three separate and
distinct
business segments: (i) technology; (ii) commodities; and (iii)
financial.
Ecoark reported a net loss of $12.14 million for the year ended
March 31, 2020, compared to a net loss of $13.65 million for the
year ended March 31, 2019. As of June 30, 2020, the Company had
$27.83 million in total assets, $30.50 million in total
liabilities, and a total stockholders' deficit of $2.67 million.
ENCORE CAPITAL: Fitch Rates New GBP250MM Secured Notes 'BB+(EXP)'
-----------------------------------------------------------------
Fitch Ratings has assigned Encore Capital Group, Inc.'s proposed
GBP250 million issue of senior secured notes an expected rating of
'BB+(EXP)'.
The assignment of a final rating is contingent on the receipt of
final documents conforming to information already reviewed.
Fitch expects the proceeds of the notes to be used principally to
repay an equivalent sum of other notes due 2023 issued by Encore's
subsidiary Cabot Financial (Luxembourg) S.A. Under Encore's
recently implemented global funding structure, senior secured notes
issued by Encore and Cabot Financial (Luxembourg) S.A. rank equally
with each other as senior secured obligations, guaranteed by most
Encore subsidiaries. Therefore, the refinancing has no net impact
on consolidated leverage or on the relative rank of the new notes.
Based in San Diego, Encore purchases portfolios of defaulted
receivables from financial service providers including banks,
credit unions, consumer finance companies, and commercial
retailers. It also provides debt servicing and portfolio management
services to credit originators for non-performing loans. In 9M20 it
reported income before taxes of USD235 million (9M19: USD144
million), with estimated remaining collections at end-3Q20 of
USD8.5 billion.
KEY RATING DRIVERS
The expected rating of the senior secured notes is equalised with
Encore's Long-Term Issuer Default Rating (IDR). The equalisation
reflects the prior claim on available security of a higher-ranking
super-senior debt level, which results in Fitch expecting average
rather than above-average recoveries for Encore's senior secured
notes.
Encore's Long-Term IDR reflects its leading franchise in the debt
purchasing sector in its chosen markets, its strong recent
profitability and its low leverage by the standards of the sector.
The rating also takes into account the concentration of Encore's
activities within debt purchasing and the potential for a prolonged
COVID-19-driven economic downturn to weaken collections performance
and portfolio asset quality. Its further factors in the need over
the longer term for debt purchasers to maintain adequate access to
funding with which to replenish their stocks.
RATING SENSITIVITIES
The notes' expected rating is primarily sensitive to changes in
Encore's Long-Term IDR. However, a downgrade of Encore's IDR would
not automatically lead to negative rating action on the notes,
depending on Fitch's view of the likely impact on recoveries of the
circumstances giving rise to the downgrade. Changes to Fitch's
assessment of relative recovery prospects for senior secured debt
in a default (e.g. as a result of a material shift in the
proportion of Encore's debt which is either unsecured or
super-senior secured) could also result in the senior secured debt
rating being notched up or down from the IDR.
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
Given the current economic backdrop, an upgrade of Encore's IDR is
unlikely in the short term. Over the medium to long term, positive
rating action would be subject to:
- Maintenance of gross debt/adjusted EBITDA consistently below
2.5x, while also developing a significant tangible equity position
via retention of profits; and
- Demonstration of collections and earnings resilience throughout
the course of the current global economic dislocation.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- A sustained fall in earnings generation, particularly if
leading to a weakening in key debt service ratios or other
financial efficiency metrics;
- Failure to adhere to management's public leverage guidance of
maintaining a net debt-to-adjusted EBITDA of 2x-3x;
- A weakening in asset quality, as reflected in acquired debt
portfolios significantly underperforming anticipated returns or
requiring material write-downs in expected recoveries; or
- An adverse operational event or significant disruption in
business activities (for example arising from regulatory
intervention in key markets adversely impacting collection
activities), thereby undermining franchise strength and
business-model resilience.
ESG CONSIDERATIONS
Fitch has assigned Encore an ESG relevance score of '4' in relation
to 'Customer Welfare - Fair Messaging, Privacy & Data Security', in
view of the importance of fair collection practices and consumer
interactions and the regulatory focus on them. Fitch has also
assigned an ESG relevance score of '4' for 'Financial
Transparency', in view of the significance of internal modelling to
portfolio valuations and associated metrics such as estimated
remaining collections. These factors have negative influences on
the rating, but their impacts are only considered moderate, and
they are features of the debt purchasing sector as a whole, and not
specific to Encore.
Except for the matters discussed, the highest level of ESG credit
relevance, if present, is a score of 3. This means ESG issues are
credit-neutral or have only a minimal credit impact on the
entity(ies), either due to their nature or to the way in which they
are being managed by the entity(ies).
ENSIGN DRILLING: Moody's Lowers CFR to Caa1, Outlook Negative
-------------------------------------------------------------
Moody's Investors Service downgraded Ensign Drilling Inc.'s
Corporate Family Rating (CFR) to Caa1 from B3, Probability of
Default Rating (PDR) to Caa1-PD/LD from B3-PD, senior unsecured
rating to Caa2 from Caa1 and Speculative Grade Liquidity (SGL)
Rating to SGL-4 from SGL-3. The outlook remains negative.
Moody's views Ensign's cumulative repurchase of $152 million of
notes in 2020 for a gain on repurchase of $92 million as a
distressed exchange, which Moody's views as a default. Accordingly,
an "/LD" (limited default) designation has been appended to
Ensign's PDR indicating that a limited default has occurred. This
designation will be removed within a few business days.
"The downgrade reflects Ensign's worsening liquidity profile during
a period of reduced oil and gas drilling activity and an increased
risk of loss or further subordination to unsecured debtholders"
commented Moody's Analyst Jonathan Reid.
Downgrades:
Issuer: Ensign Drilling Inc.
Corporate Family Rating, Downgraded to Caa1 from B3
Probability of Default Rating, Downgraded to Caa1-PD/LD from B3-PD
Speculative Grade Liquidity Rating, Downgraded to SGL-4 from SGL-3
Senior Unsecured Regular Bond/Debenture, Downgraded to Caa2 (LGD5)
from Caa1 (LGD5)
Outlook Actions:
Issuer: Ensign Drilling Inc.
Outlook, Remains Negative
RATINGS RATIONALE
Ensign's credit profile is challenged by: 1) a decline in EBITDA
driven by reduced capital spending from oil and gas production
companies which will lead to an increase in leverage over the next
12-18 months; 2) increased risk to unsecured noteholders due to
Ensign's ability to issue up to $125 million debt subordinated to
its credit facilities that would further subordinate its unsecured
notes and the potential that the company could continue to
repurchase unsecured notes at distressed prices; and 3) weak
liquidity driven by high revolver utilization and the need to
extend its credit facility beyond the current November 2021
maturity date in a depressed industry environment. The company
benefits from: 1) broad North American diversification in multiple
basins and broad international exposure with a significant number
of rigs in Australia, the Middle East and Latin America; 2) Moody's
expectation that the company will generate free cash flow despite
the expected decline in drilling activity; and 3) a high-quality
drilling rig fleet.
Ensign's liquidity is weak (SGL-4). As of September 30, 2020,
Ensign has about C$57 million of cash and Moody's expects it will
generate modestly positive free cash flow in 2020. While the
company has approximately C$124 million available under its C$900
million secured revolving credit facility, it matures in November
2021, and therefore the company has near term refinancing risk with
respect to the C$776 million of revolver borrowings outstanding.
The decline in EBITDA Ensign has experienced in 2020 creates a high
likelihood that the company will breach the financial covenants
applicable to its secured revolving credit facility within the next
few quarters, and consequently covenant relief is likely to be
required as part of the renewal of the credit facility. Alternative
sources of liquidity are limited principally to the sale of
Ensign's existing drilling rigs, and completion and well service
rigs, which are largely encumbered and market conditions are
unfavorable for such asset sales.
In accordance with Moody's Loss Given Default for Speculative-Grade
Companies (LGD) Methodology, the senior unsecured notes are rated
Caa2, one notch below the Caa1 CFR, reflecting the priority ranking
of the C$900 million revolving credit facility in the capital
structure.
The negative outlook reflects the refinancing risk and Moody's view
that Ensign could breach its financial covenants as a result of its
increase in leverage and that its credit metrics and liquidity
could deteriorate further if oil and gas producer capital spending
remain depressed.
Ensign is exposed to governance risk through its financial policies
that have led to high financial leverage. The company's willingness
to repurchase debt at distressed prices and its ability to issue
secured debt that would further subordinate its unsecured notes
leads to elevated risk of loss to unsecured noteholders.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be downgraded if the company is unable to obtain
an extension of its revolving credit facilities as well as covenant
relief. The ratings could also be downgraded if EBITDA/interest is
sustained below 1x or if Moody's views on recovery overall or for
Ensign's unsecured notes were to be reduced.
The ratings could be upgraded if Ensign generates sequential
improvements in EBITDA in an improving industry environment and
reduces refinancing risk by achieving a multi-year extension of its
revolving credit facility leading to improved liquidity. Lower risk
of further loss on its unsecured notes or subordination of its
unsecured notes could be supportive of a ratings upgrade.
Ensign is a Calgary, Alberta-based provider of land drilling rigs,
well servicing and directional services with operations in major
hydrocarbon basins throughout North and South America, the Middle
East and Australia.
The principal methodology used in these ratings was Global Oilfield
Services Industry Rating Methodology published in May 2017.
EYEPOINT PHARMACEUTICALS: Incurs $3.8-Mil. Net Loss in 3rd Quarter
------------------------------------------------------------------
EyePoint Pharmaceuticals, Inc., filed with the Securities and
Exchange Commission its Quarterly Report on Form 10-Q disclosing a
net loss of $3.80 million on $15.69 million of total revenues for
the three months ended Sept. 30, 2020, compared to a net loss of
$15.65 million on $2.51 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 $29.92 million on $27.31 million of total revenues
compared to net loss of $46.38 million on $11.73 million of total
revenues for the nine months ended Sept. 30, 2019.
As of Sept. 30, 2020, the Company had $76.79 million in total
assets, $69.19 million in total liabilities, and $7.59 million in
total stockholders' equity.
Eyepoint said, "The Company has a history of operating losses and
has not had significant recurring cash inflows from revenue. The
Company's operations have been financed primarily from sales of its
equity securities, issuance of debt and a combination of license
fees, milestone payments, royalty income and other fees received
from its collaboration partners. In the first quarter of 2019, the
Company commenced the U.S. launch of its first two commercial
products, YUTIQ and DEXYCU. However, the Company has not received
sufficient revenues from its product sales to fund operations and
the Company does not expect revenues from its product sales to
generate sufficient funding to sustain its operations in the
near-term. As of September 30, 2020, the Company has had recurring
operating losses since its inception and has an accumulated deficit
of approximately $495.2 million and working capital of $34.7
million. The Company had cash and cash equivalents of $28.7
million at Sept. 30, 2020.
"Accordingly, the foregoing conditions, taken together, continue to
raise substantial doubt about the Company's ability to continue as
a going concern for one year from the issuance of these financial
statements. The financial statements do not include any
adjustments that might result from the outcome of this
uncertainty."
Nancy Lurker, president and chief executive officer of EyePoint
Pharmaceuticals, said, "With the continued increase in patient
office visits and resumption of operations at many healthcare
facilities during the quarter, we were encouraged to see customer
demand for both YUTIQ and DEXYCU near pre-COVID-19 pandemic levels.
We enter the remaining months of 2020 with the EyePoint and
ImprimisRx combined sales teams mobilized to promote DEXYCU to
their established account base and our YUTIQ team continuing to
call on uveitis and retinal physician offices, subject to evolving
COVID-19-related restrictions."
Ms. Lurker continued, "With the recent completion of our good
laboratory practice (GLP) toxicology study of EYP-1901, a potential
six-month sustained delivery intravitreal anti-VEGF treatment for
wet age-related macular degeneration (wet AMD), we remain on track
to submit an Investigational New Drug (IND) application before the
end of the year. Upon acceptance of the IND by the U.S. Food and
Drug Administration (FDA), we look forward to initiating a Phase 1
trial of EYP-1901 in wet AMD, a sight-threatening eye disease that
is in significant need of longer-lasting treatment options that may
slow its progression. In addition, we continue to diligently
manage our cash and burn rate and ended October 31, 2020 with $30.5
million in cash."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1314102/000156459020051654/eypt-10q_20200930.htm
About EyePoint Pharmaceuticals
EyePoint Pharmaceuticals, formerly pSivida Corp. --
http://www.eyepointpharma.com-- headquartered in Watertown, MA, is
a specialty biopharmaceutical company committed to developing and
commercializing innovative ophthalmic products in indications with
high unmet medical need to help improve the lives of patients with
serious eye disorders. The Company currently has two
commercial products: DEXYCU, the first approved intraocular product
for the treatment of postoperative inflammation, and YUTIQ, a
three-year treatment of chronic non-infectious uveitis affecting
the posterior segment of the eye.
Eyepoint reported a net loss of $56.79 million for the year ended
Dec. 31, 2019. For the six months ended Dec. 31, 2018, the Company
reported a net loss of $44.72 million. As of June 30, 2020, the
Company had $69.68 million in total assets, $65.50 million in total
liabilities, and $4.18 million in total stockholders' equity.
Deloitte & Touche LLP, in Boston, Massachusetts, the Company's
auditor since 2008, issued a "going concern" qualification in its
report dated March 13, 2020, citing that the combination of the
Company's limited currently available cash, cash equivalents and
available borrowings, together with its history of losses, and the
uncertainty in timing of cash receipts from its newly launched
products raise substantial doubt about the Company's ability to
continue as a going concern.
FORD STEEL: Hires Muskat Mahony as Special Counsel
--------------------------------------------------
Ford Steel, LLC, seeks authority from the U.S. Bankruptcy Court for
the Southern District of Texas to employ Muskat Mahony & Devine,
LLP, as special counsel to the Debtor.
Ford Steel requires Muskat Mahony to provide legal advice on
employment-related issues, such as the hiring, retention, and
firing of employees, offering medical leave, accommodation of
disabilities, prevention of harassment and discrimination claims,
as well as other employment-related issues that may arise from time
to time.
Muskat Mahony will be paid based upon its normal and usual hourly
billing rates. The firm will also be reimbursed for reasonable
out-of-pocket expenses incurred.
Dorian B. Taibel, a partner of Muskat Mahony & Devine, LLP, assured
the Court that the firm is a "disinterested person" as the term is
defined in Section 101(14) of the Bankruptcy Code and does not
represent any interest adverse to the Debtor and its estates.
Muskat Mahony can be reached at:
Dorian B. Taibel, Esq.
MUSKAT MAHONY & DEVINE, LLP
1201 Louisiana St. Suite 850
Houston, TX 77002
Tel: (713) 987-7850
About Ford Steel
Ford Steel, LLC is in the business of steel product manufacturing
from purchased steel. It fabricates for a wide variety of
industries including the petrochemical industry, waste water
treatment, transmission communication and broadcast towers, mining,
and oil and gas industries. Visit http://www.fordsteelllc.comfor
more information.
Ford Steel filed a voluntary petition under Chapter 11 of the
Bankruptcy Code (Bankr. S.D. Texas Case No. 20-34405) on Sept. 1,
2020. Herbert C. Jeffries, managing member, signed the petition.
The Debtor was estimated to have $1 million to $10 million in both
assets and liabilities at the time of the filing. Judge Eduardo V.
Rodriguez oversees the case. Cooper & Scully, PC serves as Debtor's
legal counsel. Muskat Mahony & Devine, LLP, and Currin Wuest Mielke
Paul & Knapp, PLLC, as special counsel.
FORTRESS INVESTMENT: Fitch Affirms BB LongTerm IDR, Outlook Stable
------------------------------------------------------------------
Fitch Ratings has affirmed the Long-Term Issuer Default Ratings
(IDRs) of Foundation Holdco LP, the parent company and successor to
Fortress Investment Group LLC, and its rated subsidiaries
(collectively Fortress) at 'BB'. Fitch has also affirmed Fortress'
Short-Term IDRs at 'B' and FinCo I LLC's senior secured debt rating
at 'BB'. The Rating Outlook is Stable.
The rating actions have been taken as part of a periodic peer
review of the alternative investment manager (IM) industry, which
is comprised of nine publicly rated global firms.
KEY RATING DRIVERS
IDRs AND SENIOR DEBT
The rating affirmations reflect Fortress' established position as a
global alternative IM, experienced management team, stable cash
flow generation, moderate management fee exposure to net asset
value (NAV) movements, declining balance sheet co-investments, and
a solid liquidity profile.
Rating constraints for the alternative IM space include key person
risk, which is institutionalized throughout many limited
partnership agreements, reputational risk, which can impact the
company's ability to raise future funds, and legal and regulatory
risk, which could alter the alternative IM space. Rating
constraints more specific to Fortress include elevated leverage,
limited revenue diversity relative to more highly rated peers,
weaker operating margins, investment concentrations within its
private equity (PE) vehicles, historical underperformance in
certain funds and business segments and a fully secured funding
profile.
Since the acquisition of Fortress by SoftBank Group Corp. (SBG) in
December 2017, the firm has continued to operate as an independent
business and SBG has articulated that it is committed to
maintaining Fortress's leadership, business model, brand,
personnel, processes and culture. Therefore, to date, the ownership
change has had no impact on the ratings.
At June 30, 2020, Fortress had $45.5 billion in assets under
management (AUM), up 11.4% from 2Q19, as capital inflows into
credit private equity (PE) funds and growth in permanent capital
vehicles (PCVs) more than offset distributions from PE funds and
credit hedge funds. Credit PE funds represented the largest
business segment at 2Q20, accounting for 61.8% of the firm's AUM,
and were also the largest contributor to management fees over the
trailing 12 months (TTM) ended June 30, 2020, accounting for 38.5%
of fees, followed by credit hedge funds (30.3% of fees) and PCVs
(28.6% of fees). Fortress' traditional PE AUM has trended downward
over time, accounting for just 2.3% of AUM at 2Q20 and 1.9% of
management fees in the TTM ended June 30, 2020. Fortress' increased
focus on credit funds has resulted in lower AUM diversity relative
to other large alternative IM peers.
Fitch expects Fortress' growth in fee-earning AUM (FAUM) to
continue to be largely driven by additional capital deployment in
credit funds, although the firm is also focused on adding niche
strategy funds within its traditional PE segment. FAUM and
management fees from PCVs will be negatively affected by the
termination of the management agreement with Gannett Co., Inc.
(Gannett) on Dec. 31, 2021, but additional equity issuances within
other vehicles and/or new PCVs could offset this impact over time.
At June 30, 2020, Gannett's AUM amounted to 14.5% of AUM in the
PCVs segment and 2.7% of Fortress' total AUM.
Fortress' fee base is relatively stable as over 80% of its AUM is
in permanent equity or long-term fund structures that mature in
five or more years. However, a portion of management fees earned is
based on NAV of the applicable funds, which is subject to
fluctuations. Exposure to NAV-based fees declined following the
wind down of the liquid hedge fund business, which was completed in
2018, although credit hedge funds (17.2% of AUM at 2Q20) continue
to earn fees based on NAV. Still, this percentage is below the peer
group average. Given the firm's relatively predictable management
fees combined with its variable cost basis, Fitch believes there is
good forward visibility on the level of management fees and
fee-related earnings before interest, taxes, depreciation and
amortization (FEBITDA).
Fortress' FEBITDA margin for TTM ended June 30, 2020 amounted to
approximately 24.7%, which was up from 19.1% for the same period of
the prior year. Since Fortress does not report all incentive income
compensation separately, which Fitch adds back to FEBITDA, Fitch
believes that Fitch-calculated FEBITDA for Fortress is understated,
particularly in recent years when incentive income has been
meaningful. Management fees in the first six months of 2020 (1H20)
increased 11.0% from 1H19, driven by higher average AUM in credit
PE funds and PCVs, partially offset by a decline in management fees
from credit hedge funds. Fundraising was strong for Fortress in
2019 and 1H20, and the firm had approximately $13.0 billion of
uncalled capital at June 30, 2020, which should contribute to
management fee growth over time as capital is deployed. Fitch
believes that management fees will continue to grow over the
Outlook horizon, as the market disruptions caused by the
coronavirus pandemic have provided more attractive investment
opportunities for Fortress.
Incentive income declined 60.2% in 1H20, yoy, and was lower across
all business segments relative to 1H19. Fortress had $1.1 billion
of net undistributed incentive income (net of intrinsic clawback
but gross of compensation under employee profit sharing
arrangements), the realization of which would contribute to
additional cash flow generation. However, realized incentive income
can be volatile since it is dependent on the level and timing of
investment exits and fund performance.
Fortress' leverage, calculated by Fitch as debt (principal amount)
divided by FEBITDA, amounted to 9.9x on a TTM basis at June 30,
2020, which is down from 14.1x for the same period of the prior
year but remains above Fitch's quantitative benchmark range of
4.0x-6.0x for alternative IMs in the 'bb' rating category. As
previously noted, Fitch-calculated FEBITDA for Fortress is
understated because Fortress does not report all incentive income
compensation separately. Therefore, Fitch also assesses Fortress'
cash flow leverage by assuming a 35% FEBITDA margin (which is
consistent with historical margins in years before Logan Circle was
acquired). On this basis, leverage amounted to 7.0x for the TTM
ended June 30, 2020, down from 7.7x for the TTM ended June 30,
2019.
In connection with a term loan refinancing transaction in September
2020, Fortress repaid $96 million of borrowings outstanding under
its term loan thereby reducing the balance of the amended term loan
to $950 million. Pro forma for the repayment, Fitch estimates that
leverage declined to 6.3x, assuming a 35% FEBITDA margin based on
management fees for the TTM ended June 30, 2020. Fitch expects
leverage to continue to decline over the Outlook horizon given the
expectation for management fee growth as well as the potential for
additional debt prepayments resulting from the mandatory excess
cash flow sweep and/or voluntary prepayments. An inability to bring
leverage within the benchmark range by year-end 2021 would likely
result in negative rating momentum.
Fortress' funding profile is fully secured, which reduces the
firm's funding flexibility, in Fitch's view, and does not compare
favorably with that of more highly rated peers who are
predominantly funded with unsecured debt. In connection with the
acquisition by SBG, Fortress issued a $1.4 billion secured term
loan, which has subsequently been reduced to $950 million through
mandatory repayments required under the cash flow sweep as well as
voluntary prepayments. Fortress entered into a second amendment to
the term loan in September 2020, which extended the maturity date
to June 2025 from December 2022 and modified the pricing to LIBOR
plus 250bps from LIBOR plus 200bps. Fitch believes Fortress will
continue to pay down a portion of outstanding borrowings in advance
of the maturity date given the firm's strategy of reducing its
leverage over time.
Fortress' liquidity was sufficient at June 30, 2020, with $515.3
million of balance sheet cash and no near-term debt maturities,
although the term loan is subject to a mandatory cash flow sweep at
the current leverage level and will continue to be subject to a
25%-50% excess cash flow sweep until leverage declines below 2.0x.
For covenant purposes, the cash flow leverage ratio gives credit to
balance sheet cash (resulting in a net debt figure in the
numerator) and realized incentive income (increasing the
denominator). At June 30, 2020, leverage on this basis was 2.6x.
Fortress also has a $90.0 million revolving loan facility, which
was largely undrawn at June 30, 2020. The revolving loan facility
includes $20.0 million letter of credit subfacility, of which $1.9
million was utilized as of June 30, 2020, resulting in remaining
availability under the revolving loan facility of $88.1 million.
Fortress had remaining capital commitments of $220.9 million as of
June 30, 2020, of which $121.6 million is primarily related to
funds that are no longer in their investment or commitment period
and $99.3 million is related to funds that are in their investment
or commitment period. These commitments can be drawn by the funds
on demand.
Distributions to SBG are limited to amounts available in a
restricted payment basket to help ensure repayment of the term
loan, which Fitch views favorably. Any future distributions in
excess of the available basket will require a simultaneous paydown
of the term loan while leverage is above 2.0x. Fortress did not pay
any distributions to SBG during 2019 or 1H20. Fitch does not expect
Fortress to pay distributions in excess of the available basket to
SBG in the near term given the company's focus on reducing
leverage, although the long-term distribution policy is unclear.
Fitch would weigh the future distribution policy against the firm's
leverage and liquidity profile.
The Stable Outlook reflects Fitch's expectations for continued
deleveraging, the maintenance of sufficient liquidity to meet debt
service requirements and co-investment commitments to funds, and
management fee growth over the Outlook horizon, given solid
fundraising and an increase in distressed investment opportunities
in recent months.
The secured debt rating is equalized with the Long-Term IDR,
reflecting Fitch's expectation of average recovery prospects for
the debt class in a stress scenario.
SUBSIDIARY AND AFFILIATED COMPANIES
Rated subsidiaries of Foundation Holdco LP include FinCo I LLC,
which indirectly owns Fortress Investment Group LLC following the
SBG acquisition, and is the issuer of the secured term loan. Rated
subsidiaries also include FIG Parent, LLC and FinCo I Intermediate
HoldCo LLC, which, along with Foundation Holdco LP, serve as joint
and several guarantors of the secured term loan and are shell
holding companies above Fortress Investment Group LLC. The IDRs of
each entity are equalized with those of Foundation Holdco LP.
RATING SENSITIVITIES
IDRs AND SENIOR DEBT
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
The maintenance of leverage below 5.0x, continued FAUM growth,
increased revenue diversity, increased funding flexibility through
access to unsecured debt and/or more diversified funding sources,
and maintenance of solid liquidity levels.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
An inability to reduce Fitch-calculated leverage below 6.0x
(assuming a 35% FEBITDA margin) by year-end 2021, a reduction in
management fees resulting from significant realization activity or
material declines in asset values, and/or a diminished liquidity
profile.
Deterioration in the credit profile of SBG combined with inadequate
limitations on SBG's ability to extract liquidity from Fortress to
the detriment of its debt holders, could also pressure Fortress'
ratings.
The secured debt rating is equalized with the Long-Term IDR and
would be expected to move in tandem.
SUBSIDIARY AND AFFILIATED COMPANIES
The IDRs of FIG Parent, LLC, FinCo I LLC, FinCo I Intermediate
HoldCo LLC and Fortress Investment Group LLC are equalized with the
IDRs of Foundation Holdco LP and are, therefore, expected to move
in tandem.
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.
FORUM ENERGY: Incurs $21.5 Million Net Loss in Third Quarter
------------------------------------------------------------
Forum Energy Technologies, Inc., filed with the Securities and
Exchange Commission its Quarterly Report on Form 10-Q disclosing a
net loss of $21.55 million on $103.61 million of revenue for the
three months ended Sept. 30, 2020, compared to a net loss of
$532.98 million on $239.27 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 $64.19 million on $399.51 million of revenue compared
to a net loss of $554.61 million on $756.75 million of revenue for
the same period during the prior year.
As of Sept. 20, 2020, the Company had $924.02 million in total
assets, $496.74 million in total liabilities, and $427.28 million
in total equity.
Cris Gaut, chairman and chief executive officer, remarked, "U.S.
rig count and U.S. frac fleet count both declined sharply in the
third quarter as compared with the second. However, it appears
these measures of activity bottomed in the third quarter and have
continued to increase into the fourth quarter. As a result, we
believe the third quarter represents an inflection point in U.S.
drilling and completion activity, as well as for Forum.
"Forum bookings increased 8% sequentially, driven by orders for our
short-cycle completion products and our surface separation
production equipment products. Orders for these products rose as
our exploration and production and service company customers began
to increase spending commitments. Our revenues, however, decreased
due to the lower than anticipated activity levels in the quarter.
Given the increases in U.S. land activity that have occurred
already in the fourth quarter, we expect sequential improvement in
both orders and revenue in line with activity.
"Our on-going efforts to size our operations for the current level
of market activity continued to improve our earnings and our EBITDA
increased sequentially despite lower revenues in the quarter.
Accelerating cost reduction efforts allowed us to increase EBITDA
despite lower revenue in the third quarter. We have significantly
reduced fixed costs and are continuing initiatives to further
decrease direct and structural costs to generate positive EBITDA,
even at historically low levels of activity."
"I am pleased with the way our employees have responded to these
extremely challenging market conditions and look forward to seeing
the strong results Forum will deliver as market conditions continue
to improve."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1401257/000140125720000155/fet-20200930.htm
About Forum Energy
Forum Energy Technologies is a global oilfield products company,
serving the drilling, downhole, subsea, completions and production
sectors of the oil and natural gas industry. The Company's
products include highly engineered capital equipment as well as
products that are consumed in the drilling, well construction,
production and transportation of oil and natural gas. Forum is
headquartered in Houston, TX with manufacturing and distribution
facilities strategically located around the globe. For more
information, please visit www.f-e-t.com/
Forum Energy reported a net loss of $567.06 million for the year
ended Dec. 31, 2019, compared to a net loss of $374.08 million for
the year ended Dec. 31, 2018. As of June 30, 2020, the Company had
$1.06 billion in total assets, $625.88 million in total
liabilities, and $440.98 million in total equity.
* * *
As reported by the TCR on Aug. 21, 2020, S&P Global Ratings raised
its issuer credit rating on Houston-based oilfield products and
services provider, Forum Energy Technologies Inc., to 'CCC+' from
'SD' (selective default) after the company completed its debt
exchange for the majority of its 6.25% senior unsecured notes due
2021.
Also in August 2020, Moody's Investors Service upgraded Forum
Energy Technologies, Inc.'s Corporate Family Rating to Caa2 from
Ca. "The upgrade of Forum's ratings reflects the extended debt
maturity profile and resulting improvement in liquidity," said
Jonathan Teitel, a Moody's analyst.
FRE 355 INVESTMENT: Wins Dec. 1 Solicitation Exclusivity Extension
------------------------------------------------------------------
At the behest of FRE 355 Investment Group, LLC, and Mora House LLC,
Judge Stephen L. Johnson of the U.S. Bankruptcy Court for the
Northern District of California, Division 5, extended the period
within which the Debtors have the exclusive right to obtain
acceptances of a plan through and including December 1, 2020.
The principal asset of FRE 355 is the Mora House, a
newly-constructed single-family dwelling located at 10718 Mora
Hills Drive, Los Altos Hills, California. The sole asset of Mora
House, LLC is the Mora Lot, an undeveloped parcel lot of
approximately 1.47 acres located immediately adjacent to the Mora
House. Both the Mora House and the Mora Lot are encumbered by the
secured debt of S&R. S&R holds a first position deed of trust on
the Mora House and the debt owed to S&R is cross-collateralized by
a second deed of trust on the Mora Lot, yet The Blanchard Trust
holds a senior deed of trust against the Mora Lot alone.
In July, Platinum Loan Servicing, Inc. as a servicing agent for S&R
("PLS") filed its Motion to Dismiss Chapter 11 Cases and Motion for
Relief from Stay. The Court has entered an order granting the
Motion for Relief From Stay.
The Debtors filed their Plan of Reorganization and Disclosure
Statement on September 17.
A status conference is set for December 3 at 10:00 a.m. via
Tele/Videoconference. A status conference statement due November
27.
In seeking an extension, the Debtors pointed out that:
(i) the Debtors' case does not have a large number of
creditors, but the claim of PLS is disputed and the culmination of
litigation between the parties that will reach its peak at a
contested confirmation hearing. This factor supports the granted
extension;
(ii) there have been no prior requests for extension;
(iii) the Debtors are not seeking an extension of exclusivity to
pressure creditors. The Blanchard Trust is expected to support the
plan. PLM’s litigation posture given the hearings set for
September 29, 2020, suggests that it will oppose confirmation if it
does not obtain relief notwithstanding it being given credit bid
rights. The extension to obtain acceptances will now allow the
Debtors' plan to be considered, without a competing plan and with a
singular focus on whether it is confirmable; and
(iv) unresolved contingencies like the amount of PLM's claim is
in dispute and unknown. This resolution, at least, must be known
before the viability of the plan can be fully assessed.
The Debtors said their counsel has attempted to negotiate with PLM.
The Debtors have added to the Plan a right to submit a credit bid
under Bankruptcy Code section 363(k); it is not known if that will
resolve PLM's challenges to confirmation.
About FRE 355 Investment Group
FRE 355 Investment Group, LLC, is a Single Asset Real Estate (as
defined in 11 U.S.C. Section 101(51B)). Together with Mora House
LLC, they are limited liability companies formed to own, develop,
and sell individual parcels of real property.
FRE 355 Investment Group filed a voluntary petition under Chapter
11 of the Bankruptcy Code (Bankr. N.D. Cal. Case No. 20-50628) on
April 13, 2020. In the petition signed by Melvin Vaugh, managing
member, the Debtor was estimated to have $10 million to $50 million
in both assets and liabilities.
Judge Stephen L. Johnson oversees the case. Michael W. Malter, Esq.
at Binder & Malter, LLP, is the Debtor's counsel.
FROGNAL HOLDINGS: Dec. 11 Plan Confirmation Hearing Set
-------------------------------------------------------
On Oct. 23, 2020, the U.S. Bankruptcy Court for the Western
District of Washington held a hearing to consider the Disclosure
Statement for the Plan of Reorganization proposed by debtor Frognal
Holdings, LLC.
On Nov. 6, 2020, Judge Timothy W. Dore approved the First Amended
Disclosure Statement and ordered that:
* Dec. 4, 2020, at 4:30 p.m. is fixed as the last day to file all
acceptances or rejections of the Plan.
* Dec. 4, 2020, at 4:30 p.m. is fixed as the last day to file any
objections to confirmation of the Plan.
* Dec. 11, 2020, at 9:30 a.m. is the hearing to consider
confirmation of the Plan.
A full-text copy of the order dated November 6, 2020, is available
at https://tinyurl.com/y2h6lquz from PacerMonitor.com at no
charge.
Attorneys for Debtor:
BUSH KORNFELD LLP
James L. Day
Christine M. Tobin-Presser
About Frognal Holdings
Frognal Holdings, LLC is a single asset real estate (as defined in
11 U.S.C. Section 101(51B)) whose principal property is located at
13500 60th Ave., West Edmonds, Wash. The property is a 112-lot
residential subdivision having an appraised value of $30.8
million.
Frognal Holdings filed its voluntary petition for relief under
Chapter 11 of the Bankruptcy Code (Bankr. W.D. Wa. Case No. Frognal
Holdings, LLC) on July 23, 2020. At the time of filing, Debtor
disclosed $30,921,624 in assets and $11,302,231 in liabilities.
Christine M. Tobin-Presser, Esq., at Bush Kornfeld LLP, is Debtor's
legal counsel.
FROGNAL HOLDINGS: Plan to Pay Creditors in Full From Sale/Refinance
-------------------------------------------------------------------
Debtor Frognal Holdings, LLC, filed with the U.S. Bankruptcy Court
for the Western District of Washington a Disclosure Statement for
Plan of Reorganization dated September 17, 2020.
In 1995, Shergar Land Corporation began the development of what
would later become a valuable, 112-lot residential lot development
in Snohomish County, Washington. Shergar, an affiliate of the
Debtor, originally obtained approval of a subdivision that created
a 7-acre plat then known as Lot 1 of Regatta Estates (the Regatta
Property).
In 2005, through a public tender process, Horseman's Trail LLC
(predecessor in title to Frognal Holdings LLC) acquired a strip of
land from the Mukilteo School District that would provide the
required second access to the Hillman Property, and consolidated
the strip together with the Regatta Property and the Hillman
Property as complete assemblage under a single ownership, initially
under the project name Horseman's Trail and referred to as Frognal
Estates (The Project).
The Debtor has received repeated expressions of interest from
lenders and from homebuilders with interest in purchasing or
participating in the Project. Appraisals undertaken in 2018 through
2020 have concluded that the Project has a value ranging from
$24,600,000 to $30,800,000. The Debtor filed its Chapter 11
bankruptcy to preserve the Property and to provide the Debtor with
a reasonable opportunity to fully pursue its options and execute on
the final phase of its business plan that has been 25 years in the
making, and to preserve the significant equity it has created in
the Project.
Each claimant in Classes 1, 2, 3, 4 and 5 will be paid in full,
with interest accruing at the rate specified in the Plan, from the
proceeds of either a refinance of the existing secured debt or the
sale of the Property (in either case, a Transaction). The Secured
Claims in Classes 1, 2, 3 and 4 shall be paid directly from the
closing of a Transaction, and Allowed General Unsecured Claims in
Class 5 shall be paid within five days following the closing of the
Transaction. The Holders of the Equity Interests shall retain their
interests following Confirmation and will continue to own, manage
and preserve the Property and shall be at all times responsible for
pursuing, negotiating, documenting and closing a Transaction in
accordance with the terms of the Plan.
The Plan provides for full payment of all creditors from the
proceeds of either a refinance of the existing secured financing or
a sale of the Debtor's real property.
A full-text copy of the Disclosure Statement dated September 17,
2020, is available at https://tinyurl.com/yxcnfbdu from
PacerMonitor.com at no charge.
The Debtor is represented by:
BUSH KORNFELD LLP
LAW OFFICES
601 Union St., Suite 5000
Seattle, Washington 98101-2373
Telephone (206) 292-2110
Facsimile (206) 292-2104
About Frognal Holdings
Frognal Holdings, LLC, is a Single Asset Real Estate (as defined in
11 U.S.C. Section 101(51B)), whose principal assets are located at
13500 60th Avenue, West Edmonds, WA 98026. The property is a
proposed 112-lot residential subdivision having an appraised value
of $30.8 million.
Frognal Holdings filed its voluntary petition for relief under
Chapter 11 of the Bankruptcy Code (Bankr. W.D. Wa. Case No.
20-11966) on July 23, 2020. At the time of filing, Debtor
disclosed $30,921,624 in assets and $11,302,231 in liabilities.
Christine M. Tobin-Presser, Esq., at Bush Kornfeld LLP, is the
Debtor's legal counsel.
GARRETT MOTION: Entwistle Updates List of Fund Shareholders
-----------------------------------------------------------
Pursuant to Rule 2019 of the Federal Rules of Bankruptcy Procedure,
the law firm of Entwistle & Cappucci LLP submitted a supplemental
verified statement to disclose an updated list of fund shareholders
that it is representing in the Chapter 11 cases of Garrett Motion,
Inc., et al.
In September 2020, certain fund shareholders retained E&C to
represent them in these jointly administered Chapter 11 Cases as
parties-in-interest by virtue of their equity security holdings of
Garrett Motion, Inc.
On September 24, 2020, E&C filed the Verified Statement of
Entwistle & Cappucci LLP Pursuant to Bankruptcy Rule 2019 setting
forth its representations on that date. This supplemental verified
statement supersedes the Verified Statement.
In October 2020, certain additional fund shareholders retained E&C
to represent them in these jointly administered Chapter 11 Cases as
parties-in-interest by virtue of their equity security holdings of
Garrett.
As of Nov. 10, 2020, each fund shareholders and their disclosable
economic interests are:
Shares
------
Gabelli Funds, LLC 824,442
One Corporate Center
Rye, New York 10580
S. Muoio & Co. LLC 182,266
509 Madison Avenue, Suite 406
New York, New York 10022
Esopus Creek Advisors LLC 525,000
81 Newtown Lane #307
East Hampton, New York 11937
Hutch Capital Management LLC 250,000
8401 Patterson Avenue, Suite 202
Richmond, Virginia 23229
No Fund Shareholder listed on Exhibit A has or is a party to any
agreement to act as a group or in concert with respect to its
interests in the Debtors and each Fund Shareholder listed on
Exhibit A has the unrestricted right to act as it chooses in
respect of such interests without deference to the actions or
interests of any other party. E&C submits this Supplemental
Verified Statement in an abundance of caution without conceding
that Bankruptcy Rule 2019 applies.
E&C does not hold any economic interest in relation to the
Debtors.
Counsel for Fund Shareholders can be reached at:
ENTWISTLE & CAPPUCCI LLP
Andrew J. Entwistle, Esq.
Frost Bank Tower
401 Congress Avenue, Suite 1170
Austin, TX 78701
Telephone: (512) 710-5960
Email: aentwistle@entwistle-law.com
- and -
Joshua K. Porter, Esq.
299 Park Avenue, 20th Floor
New York, NY 10171
Telephone: (212) 894-7282
Email: jporter@entwistle-law.com
A copy of the Rule 2019 filing, downloaded from PacerMonitor.com,
is available at https://bit.ly/2IsN6uR
About Garrett Motion
Based in Switzerland, Garrett Motion Inc. (NYSE: GTX) designs,
manufactures and sells highly engineered turbocharger and
electric-boosting technologies for light and commercial vehicle
original equipment manufacturers ("OEMs") and the global vehicle
and independent aftermarket.
Garrett Motion and its affiliates sought Chapter 11 protection
(Bankr. S.D.N.Y. Lead Case No. 20-12212) on Sept. 20, 2020.
Garrett disclosed $2,066,000,000 in assets and $4,169,000,000 in
liabilities as of June 30, 2020.
The Debtors tapped Sullivan & Cromwell LLP as counsel, Quinn
Emanuel Urquhart & Sullivan LLP as co-counsel, Perella Weinberg
Partners and Morgan Stanley & Co. LLC as investment bankers, and
AlixpartnersLP as restructuring advisor. Kurtzman Carson
Consultants LLC is the claims agent.
The U.S. Trustee for Region Region 2 on Oct. 5, 2020, appointed a
committee to represent unsecured creditors in the Chapter 11 case.
GARRETT MOTION: Proskauer Rose Represents Equity Holders
--------------------------------------------------------
Pursuant to Rule 2019 of the Federal Rules of Bankruptcy Procedure,
the law firm of Proskauer Rose LLP submitted a verified statement
to disclose that it is representing the ad hoc committee of equity
security holders in the Chapter 11 cases of Garrett Motion Inc., et
al.
The Ad Hoc Committee has retained Proskauer Rose LLP to represent
them as counsel in connection with the chapter 11 cases of Garrett
Motion Inc. and its affiliated debtors, including, without
limitation, with respect to the potential sale of substantially all
of the Debtors' assets and the restructuring of the Debtors'
outstanding indebtedness.
As of Nov. 1, 2020, members of the Ad Hoc Committee and their
disclosable economic interests are:
Ordinary Shares
---------------
Owl Creek Asset Management, L.P. 1,100,000
640 5th Avenue
20th Floor
New York, NY 10019 U.S.
Warlander Asset Management, LP 1,083,555
250 West 55th Street
33rd Floor
New York, NY 10019 U.S.
Jefferies LLC 432,766
520 Madison Avenue
10th Floor
New York, NY 10022 U.S.
Nothing contained in this Verified Statement is intended to or
should be construed as (a) a limitation upon, or waiver of any
right to assert, file and/or amend its claims in accordance with
applicable law and any orders entered in these chapter 11 cases by
any member of the Ad Hoc Committee, or (b) an admission with
respect to any fact or legal theory.
Additional holders of equity securities of Garrett Motion may
become individual clients of Proskauer and members of the Ad Hoc
Committee and certain members of the Ad Hoc Committee may cease to
be members in the future. The Ad Hoc Committee, through its
undersigned counsel, reserves the right to amend or supplement this
Verified Statement as necessary for that or any other reason in
accordance with the requirements set forth in Bankruptcy Rule
2019.
Counsel for the Ad Hoc Committee can be reached at:
Brian S. Rosen, Esq.
PROSKAUER ROSE, LLP
Eleven Times Square
New York, NY 10036-8299
Telephone: (212) 969-3000
Facsimile: (212) 969-2900
Email: brosen@proskauer.com
A copy of the Rule 2019 filing, downloaded from PacerMonitor.com,
is available at https://bit.ly/2Uq0DWq and https://bit.ly/3nlzz7a
About Garrett Motion
Based in Switzerland, Garrett Motion Inc. (NYSE: GTX) designs,
manufactures and sells highly engineered turbocharger and
electric-boosting technologies for light and commercial vehicle
original equipment manufacturers ("OEMs") and the global vehicle
and independent aftermarket.
Garrett Motion and its affiliates sought Chapter 11 protection
(Bankr. S.D.N.Y. Lead Case No. 20-12212) on Sept. 20, 2020.
Garrett disclosed $2,066,000,000 in assets and $4,169,000,000 in
liabilities as of June 30, 2020.
The Debtors tapped Sullivan & Cromwell LLP as counsel, Quinn
Emanuel Urquhart & Sullivan LLP as co-counsel, Perella Weinberg
Partners and Morgan Stanley & Co. LLC as investment bankers, and
AlixpartnersLP as restructuring advisor. Kurtzman Carson
Consultants LLC is the claims agent.
The U.S. Trustee for Region Region 2 on Oct. 5, 2020, appointed a
committee to represent unsecured creditors in the Chapter 11 case.
GGI HOLDINGS: Kane Russell Represents GlassRatner, 2 Others
-----------------------------------------------------------
In the Chapter 11 cases of GGI Holdings, LLC, et al., the law firm
of Kane Russell Coleman Logan PC submitted a verified statement
under Rule 2019 of the Federal Rules of Bankruptcy Procedure, to
disclose that it is representing GlassRatner Advisory & Capital
Group, LLC, dba B. Riley Advisory Services, 7650 FM 78 Leasing LLC
and 635 Gravois Road Leasing LLC.
As of Nov. 11, 2020, each Creditors and their disclosable economic
interests are:
635 Gravois Road Leasing, LLC
c/o Michael Shabsels
444 East 58th Street #3C
New York, NY 10022
* Nature of Claim: Lease Rejection
* Claim Amount: $1,744,189.72 plus interest, and attorney's fees
and other costs permitted under applicable law.
7650 FM 78 Leasing LLC
c/o Michael Shabsels
444 East 58th Street #3C
New York, NY 10022
* Nature of Claim: Lease
* Claim Amount: $112,831
GlassRatner Advisory & Capital Group, LLC
dba B. Riley Advisory Services
c/o Mark Shapiro
3500 Maple Avenue Suite 420
Dallas, TX 75219
* Nature of Claim: Professional Fees
* Claim Amount: As set forth in GlassRatner Advisory & Capital
Group, LLC, dba B. Riley Advisory Services' First
and Final Fee Application [Dkt. No. 612]
KRCL was retained as counsel by each of the Creditors to represent
it in asserting and prosecuting claims and causes of action against
one or more of the Debtors. KRCL shall serve as counsel to the
Creditors' during the Debtors' bankruptcy case. KRCL is authorized
to represent the Creditors pursuant to KRCL's standard engagement
letters used in the ordinary course of business. The Creditors have
been advised of, and have consented to, KRCL's representation of
each Creditor in the instant case.
KRCL does not own or have a claim against or interest in any of the
Debtors. Pursuant to Bankruptcy Rule 2019(a), KRCL reserves the
right to amend, revise, and/or supplement this Statement. Nothing
herein should be construed as an admission or factual
representation by any of the Creditors.
Counsel to GlassRatner Advisory & Capital Group, LLC, dba B. Riley
Advisory Services; 7650 FM 78 Leasing and 635 Gravois Road Leasing
LLC can be reached at:
KANE RUSSELL COLEMAN LOGAN PC
Joseph M. Coleman, Esq.
901 Main Street, Suite 5200
Dallas, TX 75202
Tel: 214-777-4200
Fax: 214-777-4299
E-mail: jcoleman@krcl.com
A copy of the Rule 2019 filing, downloaded from PacerMonitor.com,
is available at https://bit.ly/3lxDfSB
About Gold's Gym
Founded in 1965, Gold's Gym operates a network of company-owned and
franchised fitness centers. It owns and operates approximately 95
gyms domestically, and holds franchise agreements for more than 600
gyms domestically and internationally. Its majority owner is TRT
Holdings, Inc. -- acquired the business in 2004.
GGI Holdings, LLC, Gold's Gym International, Inc., and other
related entities sought Chapter 11 protection (Bankr. N.D. Tex.
Lead Case No. 20-31318) on May 4, 2020.
GGI Holdings was estimated to have assets and debt of $50 million
to $100 million.
The Hon. Harlin Dewayne Hale is the case judge.
The Debtors tapped Dykema Gossett PLLC as bankruptcy counsel. BMC
Group Inc. is the claims agent.
GUITAR CENTER: Preps for Chapter 11 Filing With Creditors' Support
------------------------------------------------------------------
Katherine Doherty of Bloomberg News reports that Guitar Center
Inc., the largest musical instrument retailer in the U.S., is
finalizing terms of a bankruptcy with support from the majority of
its creditors, according to people with knowledge of the plans.
The company could file for Chapter 11 bankruptcy as soon as this
weekend with a pre-packaged plan, said the people, who asked not to
be named because discussions are private. Stores would stay open
and operating during the process, the people added. The potential
filing follows weeks of negotiations between Guitar Center and its
creditors, and certain investors are set to provide new capital.
About Guitar Center
Guitar Center, Inc., headquartered in Westlake Village, Cal., is
the largest retailer of music products in the United States based
on revenues. The company operates stores and websites under the
Guitar Center and Music & Arts brands, and the Musician's Friend
website. GCI has been controlled by Ares Partners following a
distressed exchange in 2014.
Revenues for the fiscal year ended February 1, 2020 were
approximately $2.3 billion.
In April 2020, the Company reached a refinancing deal after some of
its stores were temporarily shut to stem the spread of Covid-19.
Guitar Center in October 2020 missed a $45 million interest payment
on its debt.
GULFPORT ENERGY: Case Summary & 30 Largest Unsecured Creditors
--------------------------------------------------------------
Lead Debtor: Gulfport Energy Corporation
3001 Quail Springs Parkway
Oklahoma City, Oklahoma 73134
Business Description: The Debtors are an independent
exploration and development company and
one of the largest producers of natural
gas in the contiguous United States.
The Debtors hold significant acreage
positions in the Utica Shale of Eastern
Ohio and the SCOOP Woodford and SCOOP
Springer plays in Oklahoma. For more
information, visit
https://www.gulfportenergy.com.
Chapter 11 Petition Date: November 13, 2020
Court: United States Bankruptcy Court
Southern District of Texas
Eleven affiliates that concurrently filed voluntary petitions for
relief under Chapter 11 of the Bankruptcy Code:
Debtor Case No.
------ --------
Gulfport Energy Corporation (Lead Debtor) 20-35562
Mule Sky LLC 20-35561
Gator Marine Ivanhoe, Inc. 20-35563
Gulfport MidCon, LLC 20-35564
Gulfport Midstream Holdings, LLC 20-35565
Gator Marine, Inc. 20-35566
Grizzly Holdings, Inc. 20-35567
Jaguar Resources LLC 20-35568
Puma Resources, Inc. 20-35569
Gulfport Appalachia, LLC 20-35570
Westhawk Minerals LLC 20-35571
Judge: Hon. David R. Jones
Debtors'
Local
Bankruptcy
Counsel: Matthew D. Cavenaugh, Esq.
Veronica A. Polnick, Esq.
Cameron A. Secord, Esq.
JACKSON WALKER L.L.P.
1401 McKinney Street, Suite 1900
Houston, Texas 77010
Tel: (713) 752-4200
Fax: (713) 752-4221
Email: mcavenaugh@jw.com
vpolnick@jw.com
csecord@jw.com
Debtors'
General
Bankruptcy
Counsel: Edward O. Sassower, P.C.
Steven N. Serajeddini, P.C.
KIRKLAND & ELLIS LLP
KIRKLAND & ELLIS INTERNATIONAL LLP
601 Lexington Avenue
New York, New York 10022
Tel: (212) 446-4600
Fax: (212) 446-4800
Email: edward.sassower@kirkland.com
Email: steven.serajeddini@kirkland.com
- and -
Christopher S. Koenig, Esq.
300 North LaSalle Street
Chicago, Illinois 60654
Tel: (312) 862-2000
Fax: (312) 862-2200
Email: chris.koenig@kirkland.com
Debtors'
Restructuring
Advisor: ALVAREZ & MARSAL NORTH AMERICA, LLC
Debtors'
Financial
Advisor: PERELLA WEINBERG PARTNERS L.P.
Debtors'
Financial
Advisor: TUDOR, PICKERING, HOLT & CO.
Debtors'
Tax
Services
Provider: PRICEWATERHOUSECOOPERS LLP
Debtors'
Claims,
Noticing,
Solicitation &
Administrative
Agent: EPIQ CORPORATE RESTRUCTURING, LLC
https://dm.epiq11.com/case/gulfport/info
Counsel for
the Special
Committee of
Gulfport Energy's
Board of Directors of
Gulfport Energy
Corporation: WACHTELL, LIPTON, ROSEN & KATZ
Financial Advisor
the Special
Committee of
Gulfport Energy's
Board of Directors
of Gulfport Energy
Corporation: CHILMARK PARTNERS
Counsel for the
Special Committee of
the Governing Body of
each Debtor other
than Gulfport Energy
Corporation: KATTEN MUCHIN ROSENMAN LLP
Financial
Advisor for the
Special Committee of
the Governing Body of
each Debtor other
than Gulfport Energy
Corporation: M-III PARTNERS, LP
Total Assets as of September 30, 2020: $2,375,559,000
Total Debts as of September 30, 2020: $2,520,336,000
The petitions were signed by Quentin R. Hicks, executive vice
president and chief financial officer.
A copy of Gulfport Energy's petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/63TTT4Y/Gulfport_Energy_Corporation__txsbke-20-35562__0001.0.pdf?mcid=tGE4TAMA
Consolidated List of Debtors' 30 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
1. UMB Bank, N.A. 6.000% Senior $596,955,040
120 South Sixth Street Notes due 2024
Suite 1400
Minneapolis, MN 55402
Attn: Gavin Wilkinson
Tel: (612) 337-7001
Email: gavin.wilkinson@umb.com
2. UMB Bank, N.A. 6.375% Senior $507,870,000
120 South Sixth Street Notes due 2025
Suite 1400
Minneapolis, MN 55402
Attn: Gavin Wilkinson
Tel: (612) 337-7001
Email: gavin.wilkinson@umb.com
3. UMB Bank, N.A. 6.375% Senior $374,617,000
120 South Sixth Street Notes due 2026
Suite 1400
Minneapolis, MN 55402
Attn: Gavin Wilkinson
Tel: (612) 337-7001
Email: gavin.wilkinson@umb.com
4. UMB Bank, N.A. 6.625% Senior $335,334,812
120 South Sixth Street Notes due 2023
Suite 1400
Minneapolis, MN 55402
Attn: Gavin Wilkinson
Tel: (612) 337-7001
Email: gavin.wilkinson@umb.com
5. Universal Pressure Pumping Trade Payables $5,166,998
777 NW 63rd St
Oklahoma City, OK 73116
Attn: William A. (Andy) Hendricks, Jr.
Title: President and CEO
Tel: (281) 765-7100
Fax: (281) 765-7175
Email: andy.hendricks@patenergy.com
6. Ohio Gathering Company LLC Trade Payables $2,266,829
1515 Arapahoe Street
Tower 1 Ste 1600
Denver, CO 80202
Attn: Frank Semple
Title: CEO
Tel: (303) 316-7777
Fax: (303) 290-8769
Email: franksemple@markwest.com
7. Markwest Utica EMG LLC Trade Payables $2,125,580
1515 Arapahoe St. Tower One,
Suite 1500
Denver, CO 80202
Attn: Frank Semple
Title: CEO
Tel: (303) 316-7777
Fax: (303) 290-8769
Email: franksemple@markwest.com
8. EQT Production Company, Corp. JIB Payables $2,063,065
625 Liberty Ave Ste 1700
Pittsburgh, PA 15222
Attn: David Khani
Title: CFO
Tel: (412) 395-2555
Email: dkhani@eqt.com
9. B&L Pipeco Services, Inc. Trade Payables $2,026,540
20465 Texas 249 Access Rd #200
Houston, TX 77070
Attn: Steve Tait
Title: CEO
Tel: (281) 955-3500
Email: stevet@blpipeco.com
10. Equitrans Water (OH), LLC Trade Payables $1,929,542
2200 Energy Drive
Canonsburg, PA 15317
Attn: Kirk Oliver
Title: CFO
Tel: (214) 904-9439
Email: kirk.oliver@energymp.com
11. Woodford Express, LLC Trade Payables $1,422,294
5550 N. Francis Avenue
Oklahoma City, OK 73118
Attn: Joseph L. Griffin
Title: CEO
Tel: (405) 437-0850
Email: joseph@explorermidstream.com
12. SB Directional Services LLC Trade Payables $1,380,092
5135 SW 29th St
Oklahoma City, OK 73179
Attn: Scott Burch
Title: Owner
Tel: (405) 926-7177
Email: scott.burch@sbdirectionalservices.com
13. Force Inc. Trade Payables $1,312,700
1380 Rte. 286 Hwy E., Suite 303
Indiana, PA 15701
Attn: Chris Force
Title: Vice President
Tel: (724) 465-9399
Fax: (724) 465-9829
Email: Chris.Force@oesinc.com
14. AES Drilling Fluids LLC Trade Payables $995,218
11767 Katy Freeway, Suite 230
Houston, TX 77079
Attn: Richard Baxter
Title: President
Tel: (281) 556-5628
Fax: (281) 589-7150
Email: richard.baxter@AESFluids.com
15. Cyclone Drilling Fluids LLC Trade Payables $920,545
320 Decker Dr Ste 100
Irving, TX 75062
Attn: Maurice Potts
Title: Manager
Tel: (903) 267-5768
Email: maurice@cycloneholdings.net
16. Pioneer Drilling Trade Payables $803,522
Services Ltd
1250 N.E. Loop 410, Ste 1000
San Antonio, TX 78209
Attn: Matt Porter
Title: Interim CEO
Tel: (210) 828-7689
Email: MPorter@pioneeres.com
17. Deep Well Services Trade Payables $787,117
719 West New Castle Street
Zelienople, PA 16063
Attn: Mark Marmo
Title: CEO
Tel: (724) 473-0687
Fax: (724) 473-0689
Email: mmarmo@deepwellservices.com
18. RWLS LLC Trade Payables $737,900
dba Renegade Services
1937 West Ave
Levelland, TX 79336
Attn: Chad Lassoued
Title: CEO
Tel: (806) 897-0736
Fax: (806) 568-0047
Email: classoued@renegadewls.com
19. Mountaineer Specialty, LLC Trade Payables $679,016
4171 Shinnston Pike
Clarksburg, WV 26301
Attn: James Davisson
Title: Manager
Tel: (304) 969-9180
20. Helmerich & Payne Trade Payables $647,685
Int Drillng, Corp.
1437 S Boulder Ave
Tulsa, OK 74119
Attn: John W. Lindsey
Title: CEO
Tel: (918) 742-5531
Email: john.lindsay@hpinc.com
21. Nextier Completion Solutions Trade Payables $543,282
3990 Rogerdale Rd
Houston, TX 77042
Attn: Robert Drummond
Title: CEO
Tel: (713) 325-6000
Email: robert.drummond@nextierofs.com
22. Gas Field Services LLC Trade Payables $532,199
17908 Hwy 19
Rosedale, VA 24280
Attn: Tom Shrader
Title: CEO
Tel: (276) 880-2323
Fax: (276) 880-3200
Email: tom@gasfieldsvc.com
23. Stallion Oilfield Trade Payables $423,521
Construction, Corp.
950 Corbindale Rd Ste 400
Houston, TX 77024
Attn: David C. Mannon
Title: CEO
Tel: (713) 528-5544
Fax: (713) 528-1276
Email: dmannon@stallionoilfield.com
24. Baker Hughes Trade Payables $385,744
Oilfield Operations LLC
17021 Aldine Westfield Road
Houston, TX 77073
Attn: Lorenzo Simonelli
Title: CEO
Phone: (713) 439-8600
Email: lorenzo.simonelli@bakerhughes.com
25. UnitedLex Trade Payables $379,747
6130 Sprint Parkway Suite 300
Overland Park, KS 66211
Attn: Daniel Reed
Title: CEO
Tel: (913) 685-8900
Email: daniel.reed@unitedlex.com
26. ROC Service Company, LLC Trade Payables $328,001
125 Technology Drive, Suite 200
Cannonsburg, PA 15330
Attn: Chase Johnson
Title: CEO
Tel: (724) 745-3319
Email: cjohnson@rocserviceco.com
27. LEAM Drilling Services, LLC Trade Payables $323,330
3114 W. Old Spanish Trail
New Iberia, LA 70560
Attn: Glenn Dubois
Title: CEO
Phone: (405) 440-9436
Email: gdubois@leam.net
28. Armada E&P OH, LLC Trade Payables $296,813
DBA Mud Masters
64054 Wintergreen Road
Lore City, OH 43755
Attn: Robert Smith
Title: President
Tel: (740) 955-0284
Email: robert.smith@armadawaste.com
29. Nine Downhole Technologies LLC Trade Payables $286,020
2001 Kirby Drive Suite 200
Houston, TX 77019
Attn: Ann G. Fox
Title: CEO
Tel: (281) 730-5100
Fax: (281) 605-1318
Email: ann.fox@nineenergyservice.com
30. Traco Production Trade Payables $283,789
Services, Inc.
425 Griffin Rd
Youngsville, LA 70592
Attn: John Nunnally
Title: CEO
Tel: (337) 857-6000
Fax: (337) 857-6001
Email: john.nunnally@qualityco.com
HELIUS MEDICAL: Incurs $3.48 Million Net Loss in Third Quarter
--------------------------------------------------------------
Helius Medical Technologies, Inc., filed with the Securities and
Exchange Commission its Quarterly Report on Form 10-Q disclosing a
net loss of $3.48 million on $131,000 of total operating revenue
for the three months ended Sept. 30, 2020, compared to a net loss
of $5.59 million on $150,000 of total operating revenue for the
three months ended Sept. 30, 2019.
For the nine months ended Sept. 30, 2020, the Company reported a
net loss of $11.59 million on $470,000 of total operating revenue
compared to a net loss of $4.45 million on $1.34 million of total
operating revenue for the same period during the prior year.
As of Sept. 30, 2020, the Company had $6.03 million in total
assets, $2.83 million in total liabilities, and $3.19 million in
total stockholders' equity.
As of Sept. 30, 2020, the Company had cash of $2.7 million,
compared to $5.5 million at Dec. 31, 2019. The Company had no debt
outstanding at Sept. 30, 2020. Subsequent to quarter end, the
Company raised $3.4 million of gross proceeds in a private
placement, which the Company expects will extend its cash runway
throughout most of the first quarter of 2021.
For the nine months ended Sept. 30, 2020, the Company had an
operating loss of $11.4 million, and as of Sept. 30, 2020, its
accumulated deficit was $116.4 million. For the nine months ended
Sept. 30, 2020, the Company had $0.5 million of revenue from the
commercial sale of products or services. The Company expects to
continue to incur operating losses and net cash outflows until such
time as it generates a level of revenue to support its cost
structure. There is no assurance that the Company will achieve
profitable operations, and, if achieved, whether it will be
sustained on a continued basis. The Company said these factors
indicate substantial doubt about its ability to continue as a going
concern within one year after the date the financial statements are
filed. The Company's condensed consolidated financial statements
have been prepared on the basis of continuity of operations,
realization of assets and satisfaction of liabilities in the
ordinary course of business; no adjustments have been made relating
to the recoverability and classification of recorded asset amounts
and classification of liabilities that might be necessary should
the Company not continue as a going concern.
The Company intends to fund ongoing activities by utilizing its
current cash on hand, cash received from the sale of its PoNS™
device in Canada and by raising additional capital through equity
or debt financings. On Oct. 26, 2020, the Company closed a private
placement and received net proceeds of approximately $3.2 million.
There can be no assurance that the Company will be successful in
raising that additional capital or that such capital, if available,
will be on terms that are acceptable to the Company. If the
Company is unable to raise sufficient additional capital, the
Company may be compelled to reduce the scope of its operations and
planned capital expenditures.
Management's Comments
"I'm very pleased by our team's performance during the third
quarter, especially given the challenging environment created by
the COVID pandemic," said Dane Andreeff, interim president and
chief executive officer of Helius. "We continued to make strong
progress in our strategy to obtain regulatory clearance in the U.S.
and submitted our request for de novo classification and clearance
to the FDA on August 4th. We look forward to working with the FDA
within the context of our Breakthrough Device Designation to
facilitate the review of our PoNS device, with the goal of making
it available to the estimated 1 million U.S. MS patients as quickly
as possible. While our sales performance in Canada continued to be
impacted by the disruption due to COVID, our commercial team has
done an impressive job of engaging and training Canadian clinics to
provide PoNS Treatment, expanding our network to a total of 27 PoNS
authorized clinics as of last week."
"Looking ahead, Helius remains committed to driving continued
progress with respect to the two primary aspects of our near-term
strategy: pursuing regulatory clearance in the U.S. and advancing
our commercialization in the Canadian market. By focusing on these
priorities, and continuing to operate as efficiently as possible,
we believe we are pursuing the best course to benefit our
customers, patients and shareholders. We look forward to building
on our recent successes and facilitating awareness, accessibility
and adoption of our revolutionary PoNS Treatment to bring 2020 to a
strong close."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/Archives/edgar/data/1610853/000156459020053577/hsdt-10q_20200930.htm
About Helius Medical
Helius Medical Technologies -- http://www.heliusmedical.com/-- is
a neurotech company focused on neurological wellness. The
Company's purpose is to develop, license and acquire unique and
non-invasive platform technologies that amplify the brain's ability
to heal itself. The Company's first product in development is the
Portable Neuromodulation Stimulator (PoNSTM).
Helius Medical reported a net loss of $9.78 million for the year
ended Dec. 31, 2019, compared to a net loss of $28.62 million for
the year ended Dec. 31, 2018. As of March 31, 2020, the Company
had $8.46 million in total assets, $3.25 million in total
liabilities, and $5.21 million in total stockholders' equity.
BDO USA, LLP, in Philadelphia, Pennsylvania, the Company's auditor
since 2017, issued a "going concern" qualification in its report
dated March 12, 2020 citing that the Company has incurred
substantial net losses since its inception, has an accumulated
deficit of $104.8 million as of Dec. 31, 2019 and the Company
expects to incur further net losses in the development of its
business. These conditions raise substantial doubt about its
ability to continue as a going concern.
HENRY FORD VILLAGE: Hires Dykema Gossett as Counsel
---------------------------------------------------
Henry Ford Village, Inc., seeks authority from the U.S. Bankruptcy
Court for the Eastern District of Michigan to employ Dykema Gossett
PLLC, as counsel to the Debtor.
Henry Ford Village requires Dykema Gossett to:
a. assist in the preparation, filing, and prosecution of
Debtor's bankruptcy petitions, schedules, statements of
financial affairs, and various motions essential to or
required in this Chapter 11 Case;
b. assist in the preparation, filing, and defense of
objections to various motions, claims, and actions by
creditors and parties-in-interest;
c. negotiate with various creditors, including any creditor
committees;
d. negotiate with potential plan proponents and/or purchasers
of Debtor's assets, and the preparation of related
agreements;
e. advise on matters regarding the restructuring of debts and
financial structure; and
f. provide any other bankruptcy related administrative matters
arising during the court of this Chapter 11 Case.
Dykema Gossett will be paid at these hourly rates:
Members $415 to $675
Associates $330 to $375
Paralegals $190
Dykema Gossett received a retainer of $261,168.19 from the Debtor
to prepare and file the Chapter 11 Case. As of the Petition Date,
Dykema Gossett held the remaining balance of the retainer in the
amount of $201,983.69 in its trust account.
Dykema Gossett will also be reimbursed for reasonable out-of-pocket
expenses incurred.
Sheryl L. Toby, partner of Dykema Gossett PLLC, assured the Court
that the firm is a "disinterested person" as the term is defined in
Section 101(14) of the Bankruptcy Code and does not represent any
interest adverse to the Debtor and its estates.
Dykema Gossett can be reached at:
Sheryl L. Toby, Esq.
Jong-Ju Chang, Esq.
DYKEMA GOSSETT PLLC
39577 Woodward Avenue, Suite 300
Bloomfield Hills, MI 48304
Tel: (248) 203-0700
Fax: (248) 203-0763
E-mail: SToby@dykema.com
JChang@dykema.com
About Henry Ford Village
Henry Ford Village, Inc. is a non-profit, non-stock corporation
established to operate a continuing care retirement community
located at 15101 Ford Road, Dearborn, Mich. It provides senior
living services comprised of 853 independent living units, 96
assisted living unites and 89 skilled nursing beds.
Henry Ford Village sought Chapter 11 protection (Bankr. E.D. Mich.
Case No. 20-51066) on Oct. 28, 2020. In the petition signed by CRO
Chad Shandler, Henry Ford Village was estimated to have $50 million
to $100 million in assets and $100 million to $500 million in
liabilities.
The Hon. Mark A. Randon is the case judge.
The Debtor has tapped Dykema Gossett PLLC as its legal counsel and
FTI Consulting, Inc., as its financial advisor. Kurzman Carson
Consultants, LLC, is the claims agent.
HENRY FORD VILLAGE: Hires Kurtzman as Claims and Noticing Agent
---------------------------------------------------------------
Henry Ford Village, Inc., seeks authority from the U.S. Bankruptcy
Court for the Eastern District of Michigan to employ Kurtzman
Carson Consultants, LLC, as counsel to the Debtor.
Henry Ford Village requires Kurtzman to:
a. maintain a copy of the Debtor's Schedules, listing
creditors and amounts owed, as well as a copy of the
mailing Matrix for the Debtor's Chapter 11 Case and
assist the Debtor with any updates to the Matrix
that may be required from time to time;
b. furnish a notice of the last date for the filing of proofs
of claim and a form for filing a proof of claim to
creditors and parties-in-interest;
c. docket all claims filed and maintaining the official claims
register on behalf of the Clerk and providing to the Clerk
an exact duplicate thereof;
d. specify in the claims register for each claim docket (i)
the claim number assigned, (ii) the date received, (iii)
the name and address of the claimant, (iv) the filed amount
of the claim, if liquidated, and (v) the allowed amount of
the claim;
e. implement necessary security measures to ensure the
completeness and integrity of the claims register and the
safekeeping of the original claims;
f. relocate, by messenger or overnight delivery or other
procedures that are satisfactory to the Clerk's Office, all
of the court-filed proofs of claim to the offices of
Kurtzman, either weekly or within another time frame
satisfactory to the Clerk's Office;
g. record all transfers of claims and providing notices of the
transfer as required pursuant to Bankruptcy Rule 3001(e);
h. maintain a mailing list for all entities who have filed
proofs of claim;
i. mail the Debtor's disclosure statement(s), plan(s),
ballot(s), and any other related solicitation materials to
holders of impaired claims and equity interests;
j. receive and tally ballots and responding to inquiries
respecting voting procedures and the solicitation of votes
on the plan;
k. maintain a Special Service List as specified in the
Debtor's First Day Motion for Entry of an Order
Establishing Special Service List;
l. serve motions, objections, replies, and other pleadings as
may be directed by the Debtor;
m. upon the closing of the case, the conversion of the case to
Chapter 7, or at some other time instructed by the Court,
provide to the Court or Clerk's Office the final version
of the claims register and transporting all original
documents, in proper format, to such location as may be
instructed by the Clerk's office, including to the Court or
to any federal archives record administration; and
n. provide any other services or notices as are necessary or
required as requested by the Debtor or the Court.
Kurtzman Carson will be paid at these hourly rates:
Securities Director/Solicitation Lead $193
Solicitation Consultant $184
Consultant/Senior Consultant $72-$175
Technology Consultant $31-$85
Analyst $27-$45
Kurtzman Carson will also be reimbursed for reasonable
out-of-pocket expenses incurred.
Evan Gershbein, partner of Kurtzman Carson Consultants LLC, assured
the Court that the firm is a "disinterested person" as the term is
defined in Section 101(14) of the Bankruptcy Code and does not
represent any interest adverse to the Debtor and its estates.
Kurtzman Carson can be reached at:
Evan Gershbein
KURTZMAN CARSON CONSULTANTS LLC
222 N. Pacific Coast Highway, 3rd Floor
El Segundo, CA 90245
Tel: (310) 823-9000
Fax: (310) 823-9133
About Henry Ford Village
Henry Ford Village, Inc. is a non-profit, non-stock corporation
established to operate a continuing care retirement community
located at 15101 Ford Road, Dearborn, Mich. It provides senior
living services comprised of 853 independent living units, 96
assisted living unites and 89 skilled nursing beds.
Henry Ford Village sought Chapter 11 protection (Bankr. E.D. Mich.
Case No. 20-51066) on Oct. 28, 2020. In the petition signed by CRO
Chad Shandler, Henry Ford Village was estimated to have $50 million
to $100 million in assets and $100 million to $500 million in
liabilities.
The Hon. Mark A. Randon is the case judge.
The Debtor has tapped Dykema Gossett PLLC as its legal counsel and
FTI Consulting, Inc., as its financial advisor. Kurzman Carson
Consultants, LLC is the claims agent.
HOSTESS BRANDS: S&P Alters Outlook to Stable, Affirms 'B+' ICR
--------------------------------------------------------------
S&P Global Ratings affirmed its 'B+' issuer credit rating on
U.S.-based Hostess Brands Inc. and its 'BB-' issue-level rating on
its senior secured credit facilities.
The rating agency revised its outlook to stable from negative to
reflect the company's on track integration of Voortman Cookies
Ltd., continued organic revenue growth, and healthy cash flow
generation. It expects Hostess to remain acquisitive and maintain
leverage below 5x.
S&P said, "The rating affirmation and outlook revision reflects
Hostess' on-track integration of Voortman, EBITDA improvement, and
favorable position in the snacking category. We estimate pro forma
leverage of about 5.1x for the 12 months ended Sept. 30, 2020, down
from 5.6x at the close of the Voortman acquisition. Leverage should
improve sequentially as one-time costs associated with integrating
Voortman and achieving the targeted synergies roll off. We expect
Voortman to contribute nearly $40 million of annual EBITDA in 2021,
factoring in synergies Hostess already executed. Revenues for the
Hostess base business grew about 3%, and Voortman contributed $26.8
million in revenue during the third quarter. EBITDA grew to nearly
$60 million for the quarter, including about $9 million from
Voortman, up from about $40 million in the same period last year.
We estimate the company generated more than $100 million of free
operating cash flow (FOCF) for the 12 months ended Sept. 30,
2020."
"We expect Hostess to maintain S&P Global Ratings-adjusted leverage
of 4x-5x. We expect continued leverage reduction despite the
company's new $100 million share repurchase authorization. We view
the program authorization as opportunistic, rather than a shift to
more aggressive shareholder returns. Hostess' sustained
profitability growth and good cash flow generation should support
discretionary share repurchases. We expect management to prioritize
opportunistic acquisitions and growth investments over shareholder
returns. If Hostess uses debt to fund acquisitions, we would expect
it to return adjusted leverage to below 5x within 12 months of
acquisition close."
Multipack demand has increased during the COVID-19 pandemic, and
the convenience channel has started to recover. Hostess saw
point-of-sales for its products rise in the third quarter, driven
by higher multipack sales of about 10%. Throughout the pandemic,
within the mass and grocery channels, consumers have been grabbing
indulgent items to consume at home. Additionally, consumers are
seeking packaged goods and center-of-the-store items over fresh,
unpackaged goods in the bakery section because of their longer
shelf life and perceived sanitation. The convenience channel is
seeing a recovery as stay-at-home mandates have eased, with
point-of-sale for single-serve items growing more than 2.5% during
the quarter.
Hostess participates in the fragmented and highly competitive snack
cake category (which is susceptible to changes in consumer
preferences, as well as health and wellness concerns). The company
also has a narrow business and product focus, as well as customer,
brand, and geographic concentration. Hostess has the No. 2 position
in the $6.6 billion U.S. sweet baked goods category, and it can
continue to grow through increased distribution and market share
gains. The overall category is fragmented, private-label
penetration is low, and concentration among the top three
brands--Hostess, Little Debbie, and Entenmanns--is high at 62%,
according to Nielsen. Hostess has expanded faster than the market
and has increased market share. Hostess is successful in
convenience, drug, and dollar stores, and it will focus on
increasing its penetration in other channels, such as club retail,
to fuel growth. The Cloverhill acquisition in 2018 added new
brands, which have greater presence in warehouse clubs, and
provided an entry point for the Hostess brand. The company has some
customer concentration, with its top 10 customers accounting for
62.3% of 2019 revenues. The largest, Walmart, accounts for 23.6%.
The loss of a major customer could disrupt operations and weaken
financial results. The Voortman acquisition provides Hostess with
cookie, wafer, and enrobing manufacturing capabilities that it can
use for new Hostess-branded products. Voortman is underpenetrated
in convenience and drug stores where Hostess has a strong presence,
which could lead to distribution gains in the future. Acquisitions
and mix shift over time have lowered Hostess' margins into the
mid-20% area from about 30%. However, S&P does not forecast further
contraction because of Hostess' direct-to-warehouse distribution
model, which yields lower overhead costs.
S&P said, "The stable outlook reflects our expectation that Hostess
will grow organic revenues in the low-single digits and expand
EBITDA. We also expect the company to maintain its current
financial policies, including not substantially exceeding leverage
of 5x after an acquisition and not funding large, debt-financed
share repurchases."
"We could lower our rating on Hostess if we expect its leverage to
stay above 5x because of a deterioration in operating performance
or more aggressive financial policies."
This could occur if Hostess:
-- Loses market share due to consumers shifting away from its
products to healthier alternatives or other brands;
-- Makes another large acquisition; or
-- Embarks on more aggressive shareholder-friendly activities such
as issuing a formal dividend policy or repurchasing stock with
debt.
Although unlikely during the next year, S&P could raise its rating
if Hostess increases its market share, scale, and diversity, or if
it maintains debt to EBITDA below 4x as the result of a less
aggressive financial policy.
INVESTCORP HOLDINGS: Fitch Affirms BB LT IDR, Outlook Stable
------------------------------------------------------------
Fitch Ratings has affirmed the Long-Term Issuer Default Rating
(IDR) and Short-Term IDR of Investcorp Holdings B.S.C. and its
related entities at 'BB' and 'B', respectively. The Rating Outlook
is Stable.
The rating actions have been taken as part of a periodic peer
review of the alternative investment manager (IM) industry, which
comprises nine publicly rated global firms.
KEY RATING DRIVERS
IDR AND SENIOR UNSECURED DEBT
The rating affirmation reflects the locked-in nature of most of
Investcorp's fee streams, its strong client franchise and high
degree of brand name recognition in the Gulf, supported by its
investment track record and long-term relationships in the region.
The affirmation also reflects the vulnerability of Investcorp's
business model to a market downturn and Fitch's view of the firm's
ability to maintain credit metrics in line with expectations.
Rating constraints include the firm's increased earnings volatility
and placement risk relative to peers, given its business model of
offering investments to clients on a fully underwritten
deal-by-deal (DBD) basis and its sizable co-investment portfolio,
which is subject to fair value changes. Activity fees, which are
earned from transactional activities and have comprised almost half
of Investcorp's core fees over the past several years, are also
susceptible to market volatility.
While the impact of oil price volatility on Investcorp's portfolio
companies is limited, depressed oil prices will likely have fiscal
impacts in the region. Still, Investcorp's Gulf investors have
demonstrated relatively low sensitivity to oil price movements, as
evidenced by record levels of DBD placement activity during
previous periods of volatility in the energy sector. While Fitch
believes Gulf investors will continue to explore opportunities to
diversify outside of the region, potential liquidity challenges
could disrupt efforts in the near term.
Assets under management (AUM) totaled $32.2 billion at fiscal
year-end 2020 (June 30, 2020), up 14.4% from FYE19, driven by a
combination of organic and inorganic growth. Fundraising and
placement activity remained solid during the year, with net client
flows representing 7.6% of beginning AUM. That said, Fitch believes
fundraising activity will be less certain during FY21, given the
continued economic impact of the coronavirus.
In September 2019, Investcorp entered the direct lending space with
an acquisition of a majority stake (76%) in CM Investment Partners
(CMIP), the investment advisor to CM Finance, a publicly-traded
business development company (BDC). As of June 30, 2020, the AUM
relating to CMIP amounted to $270.6 million.
In May 2020, Investcorp entered into a 50/50 joint venture (JV)
with Tages Group, a leading European alternative asset management
firm, which added $1.7 billion of AUM to the platform. The JV,
Investcorp-Tages Limited, will manage the absolute return
investments of the combined entities, which Fitch believes adds
scale and expands Investcorp's investor base, product suite and
geographic reach.
Fitch also believes execution risks are associated with
Investcorp's growth strategy to more than double AUM, to $50
billion, over the medium term through organic and inorganic growth.
Further, the firm's ability to meaningfully execute on certain
strategic initiatives, including the institutionalization of its
investor base and the ability to expand committed capital fund
structures, will be delayed by the impact the global coronavirus
pandemic, in Fitch's view.
Core operating performance, as measured by fee-related EBITDA
(FEBITDA), which excludes investment income from co-investments,
performance fees and performance-related compensation, deteriorated
in FY20, due to the economic impact of the coronavirus. FEBITDA was
almost halved at $80 million in FY20, compared with $150 million in
the prior year, primarily driven by a significant reduction in
activity fees, lower management fees and slightly higher expenses.
The firm's FEBITDA margin was 28.1% in FY20, which is in line with
Fitch's quantitative benchmark range for 'bbb' category alternative
IMs of 20%-30% and down from 43.7% in FY19.
Management fees declined 5.6% in FY20, which was primarily driven
by fund maturities, fee reductions on fund extensions and, to a
lesser extent, the suspension of fees on certain private equity
(PE) investments, due to the valuation impact of the coronavirus
pandemic. Also, in FY19, PE management fees were boosted by
catch-up fees and the acceleration of deferred fees for deals
exited during the year.
Activity fees were down 29% in FY20, reflecting reduced levels of
acquisitions, placements and exit activity during the year.
In FY20, Investcorp incurred losses of $110 million on its balance
sheet investments, compared with asset-based income of $89 million
in FY19, due to valuation declines in certain U.S. retail sector
exposures.
Realized net performance fees, which tend to be lumpy from period
to period due to deal activity and market volatility, totaled $2
million in FY20, down from $32 million in FY19.
Investcorp's leverage, as measured by debt to tangible equity,
amounted to 0.9x at FYE20, up from 0.4x at FYE19. The increase
reflects the valuation impact of balance sheet investments and a
change in Fitch's classification of debt. As part of its transition
to a holding company, client bank deposits (which were excluded
from prior leverage calculations) were transferred into a client
trust, which subsequently extended a $261 million revolving loan
facility to the company. There are no changes to the economics of
these liabilities, as balances and client distributions are
typically retained and primarily used to fund new investments.
Debt to FEBITDA increased to 9.3x at FYE20 from 2.6x at FYE19. On a
hybrid basis, leverage is in line with Fitch's 'bb' category
quantitative benchmark range for alternative investment managers
(IMs).
Fitch believes Investcorp maintained adequate liquidity as of FYE20
with $309 million of cash, deposits with financial institutions and
other liquid assets, along with $684 million of borrowing capacity
on its corporate revolvers and $233 million of available liquidity
from client trusts. Additionally, Investcorp had $810 million of
balance sheet co-investments at FYE20, which could serve as
additional collateral for debt, although it is comprised of
relatively illiquid investments. Aside from client assets, which
are due on demand, the firm's nearest debt maturity is June 2023.
Fitch believes the extension of credit offered by Investcorp's
clients provides flexibility to the firm to execute on investment
opportunities, although the withdrawal of client assets would
reduce the firm's liquidity. Still, Investcorp has long-standing
client relationships that have proven to be sticky throughout
various market cycles.
Debt service coverage, defined as FEBITDA divided by interest
expense, was 2.7x for FY20, which down from 3.6x in FY19 and in
line with Fitch's quantitative benchmark of 2x-4x for alternative
investment managers (IMs) in the 'bb' rating category.
Unfunded deal acquisitions and unfunded co-investment commitments
to various investments totaled $193 million at FYE20, which Fitch
believes will be funded over time with cash on hand and operating
cash flow. Fitch believes the company has significant discretion
over the timing of these funding commitments.
The Stable Outlook reflects Fitch's expectation that Investcorp
will maintain credit metrics in line with the agency's quantitative
benchmark range for 'bb' category alternative IMs.
The senior unsecured debt rating is equalized with Investcorp's
Long-Term IDR, reflecting the largely unsecured funding profile,
expectations for average recovery prospects under a stress scenario
and joint and several guarantees by Investcorp S.A., which is the
principal operating and asset owning arm of the firm.
RATING SENSITIVITIES
IDRs AND SENIOR UNSECURED DEBT
Factors that could, individually or collectively, lead to a
negative rating action/downgrade include:
-- Material declines in AUM that impair the firm's management
fee-generating capacity; a reduction in liquidity; or material
changes in leverage and/or interest coverage resulting from a
material degradation of balance sheet assets and/or weaker
investment performance that adversely impacts the firm's ability to
generate FEBITDA. More specifically, increases in balance sheet
and/or cash flow leverage, such that these metrics approach or
exceed 1.0x and 6.0x, respectively, under Fitch's hybrid leverage
analysis, could negatively affect ratings.
Factors that could, individually or collectively, lead to positive
rating action/upgrade include:
-- Fee-paying AUM growth, enhanced scalability of the platform
and AUM diversity, institutionalizing the investor base, an
increase in management fee contributions from committed capital
fund structures, a reduction in leverage and strengthened interest
coverage, while maintaining adequate liquidity and co-investment
funding.
The senior unsecured debt rating is equalized with Investcorp's
IDRs and, therefore, would be expected to move in tandem. Although
not envisioned by Fitch, an increase in secured debt as a
percentage of total debt could result in the unsecured debt rating
being notched below Investcorp's Long-Term IDR.
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.
IRB HOLDING: Moody's Upgrades CFR to B2; Alters Outlook to Stable
-----------------------------------------------------------------
Moody's Investors Service upgraded IRB Holding Corporation's
corporate family rating (CFR) to B2 from B3 and probability of
default rating (PDR) to B2-PD from B3-PD. Moody's also upgraded
IRB's senior secured bank ratings to B2 from B3, senior secured
notes rating to B2 from B3 and senior unsecured notes rating to
Caa1 from Caa3. In addition, Moody's assigned a B2 rating to IRB's
proposed incremental $2.575 billion senior secured term loan and
$250 million incremental senior secured revolver. The ratings
outlook has been revised to stable from negative.
Inspire Brands, Inc. (parent holding company of IRB) recently
announced that its wholly-owned subsidiary Vale Merger Sub, Inc.
signed a definitive agreement to acquire Dunkin' Brands Group Inc.
for approximately $11.3 billion. After the close of the
acquisition, Dunkin' will be the surviving entity and a
wholly-owned subsidiary of IRB and pay a management fee and
residual cash flow to IRB. The company is funding the acquisition
with about $2.8 billion of new debt, $1.55 billion of existing cash
and $4.9 billion of equity from affiliates of Roark Capital. IRB is
also assuming approximately $3.0 billion of securitized debt
currently outstanding at Dunkin'. A portion of the proceeds will
also be used to repay about $98 million of outstanding debt at
Jimmy Johns as well as fees and expenses. Moody's ratings and
outlook are subject to receipt and review of final documentation as
well as the company receiving all regulatory and shareholder
approvals.
"The upgrade reflects the significant additional scale, diversity
and cash flows that will come from the acquisition of Dunkin' as
well as improving operating trends at IRB's existing brands,"
stated Bill Fahy, Moody's Senior Credit Officer. The addition of
Dunkin' will increase the number of IRB's restaurants to around
31,600 from about 11,000 with systemwide sales of over $26 billion
placing it as one of the largest restaurant companies in the US.
"Despite these benefits, the rating is constrained by governance
considerations particularly financial strategies given the very
high initial pro forma leverage at around 9.0 times which is
expected to improve over the next 12 to 18 months as operating
performance improves and excess cash flows are used to repay
restricted group debt over and above required amortization," stated
Fahy.
Assignments:
Issuer: IRB Holding Corporation
Senior Secured Bank Credit Facility, Assigned B2 (LGD3)
Upgrades:
Issuer: IRB Holding Corporation
Probability of Default Rating, Upgraded to B2-PD from B3-PD
Corporate Family Rating, Upgraded to B2 from B3
Senior Secured Bank Credit Facility, Upgraded to B2 (LGD3) from B3
(LGD3)
Senior Unsecured Regular Bond/Debenture, Upgraded to Caa1 (LGD6)
from Caa3 (LGD6)
Outlook Actions:
Issuer: IRB Holding Corporation
Outlook, Changed To Stable From Negative
RATINGS RATIONALE
IRB's B2 CFR reflects the benefits of its market position as one of
the largest restaurant operators in the US post its acquisition of
Dunkin' based on number of restaurants with material scale,
multiple brands and an off-premise franchised focused business
model that will enable it to continue to operate through
drive-throughs, delivery and curbside pick-up during the
coronavirus pandemic. The ratings also factor in the financial
strategies of IRB including the material amount of contributed
equity to partially finance acquisitions and good liquidity.
However, IRB is constrained by its very high leverage, the
challenges of successfully integrating an acquisition on the scale
of Dunkin' and the continued difficulty of operating under the
challenges imposed by the coronavirus pandemic.
The stable outlook reflects its expectation that IRB will
successfully execute and integrate Dunkin' and achieve the targeted
levels of operating improvements and costs synergies. The outlook
also expects that IRB significantly reduce leverage prior to
undergoing any additional debt-financed acquisitions and will
maintain good liquidity.
The corona-virus 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
the restaurant sector from the current weak U.S. 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 corona-virus outbreak as a social risk under its ESG
framework, given the substantial implications for public health and
safety."
IRB's private ownership is a rating factor given the potential
implications from both a capital structure and operating
perspective. Financial policies are always a key concern of
privately-owned companies with regards to the potential for higher
leverage, extractions of cash flow via dividends, or more
aggressive growth strategies.
Restaurants are deeply entwined with sustainability, social and
environmental concerns given their operating model with regards to
sourcing food and packaging, as well as having an extensive labor
force and constant consumer interaction. While these may not
directly impact the credit, these factors could impact brand image
and result in a more positive view of the brand overall.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be downgraded in the event the integration of
Dunkin' takes materially longer than expected or operating
performance stalls to where debt to EBITDA remains above 6.5 times
or EBIT to interest falls below 1.5 times on a sustained basis. The
ratings could also be downgraded if IRB entered into a new
acquisition prior to credit metrics improving to these levels. A
deterioration in liquidity or the inability to generate positive
free cash flow could also result in a downgrade.
The ratings could be upgraded with a successful integration of
Dunkin' and sustained organic improvement in operating performance
resulting in stronger credit metrics with debt to EBITDA
approaching 5.25 times and EBIT to interest of over 2.0 times. A
higher rating would also require a more moderate financial policy
and good liquidity.
The B2 rating on the bank facilities reflect the material amount of
securitized debt that is contractually senior to these facilities
with regards to the assets and operations at Dunkin', Arby's, Sonic
and Jimmy Johns. The bank facilities do benefit from the material
amount of liabilities that are junior to these facilities,
including $485 million of senior unsecured notes and other
liabilities. The Caa1 rating on the senior unsecured notes reflect
the notes junior position to the significant amount of secured bank
debt and securitized debt.
IRB is the parent holding company of Arby's Restaurant Group, Inc.,
Buffalo Wild Wings, Sonic, Jimmy John's and ultimately Dunkin'. On
a pro forma basis post the acquisition of Dunkin', annual revenues
will be approximately $5.5 billion, systemwide sales will exceed
$26 billion and restaurant locations will be around 31,600.
The principal methodology used in these ratings was Restaurant
Industry published in January 2018.
IRB HOLDING: S&P Affirms 'B' ICR on Dunkin' Brands Acquisition
--------------------------------------------------------------
S&P Global Ratings affirmed its 'B' long-term issuer credit rating
on Atlanta-based restaurant franchisor and operator IRB Holding
Corp. (Inspire) and removed all ratings from CreditWatch, where the
rating agency placed them with positive implications on Nov. 2.
Inspire is issuing $2.575 billion of incremental first-lien term
loan to help fund its acquisition of Dunkin' Brands Group, Inc.
(Dunkin'). S&P assigned its 'B' issue-level rating to the company's
proposed term loan, affirmed its 'B' issue-level rating on the
company's other senior secured facilities, and revised its recovery
rating on the debt to '3' from '4'.
Meanwhile, the rating agency affirmed its 'CCC+' issue-level rating
on the company's unsecured notes; the '6' recovery rating is
unchanged.
S&P said, "The positive outlook reflects our view that integrating
Dunkin' into the Inspire Platform could lead to a higher rating as
the pace and sustainability of credit metric improvement becomes
clearer."
The affirmation reflects Inspire's very highly leveraged capital
structure following its acquisition of Dunkin', offset by its
improved scale, diversification, profitability, and cash
generation.
Inspire will have about $6.5 billion more in funded debt following
this transaction compared with the beginning of the year. This
considerable amount is despite a sizable cash contribution of
nearly $4.9 billion from its sponsor (Roark).
S&P said, "We forecast S&P Global Ratings-adjusted leverage above
9x in 2021 as integration expenses cut into the combined company's
profits. In 2022, leverage should improve to the low-to-mid-7x area
as integration costs moderate and possible meaningful synergy
benefits materialize, improving profitability. Inspire's business
model generally supports higher leverage, reflected by our forecast
for $350 million-$400 million of free operating cash flow (FOCF) in
2021 and over $600 million in 2022. Nevertheless, we believe
execution risks remain elevated while Dunkin' is being absorbed
into Inspire's increasingly complex platform and given the
company's high debt burden. Therefore, we continue to apply a
negative comparable ratings analysis modifier. Following this
transaction, Inspire will have completed four acquisitions in under
three years, demonstrating its aggressive growth strategy. However,
given this large-scale acquisition and the high level of debt
employed, we believe additional sizable acquisitions are unlikely
in the short term. In the longer term, we believe Inspire may
pursue further acquisitions after Dunkin' has been integrated into
its portfolio and leverage has improved."
Dunkin' complements Inspire's existing portfolio by improving
concept diversity and driving stronger, more stable cash flows.
Dunkin' is a fully franchised quick service restaurant (QSR)
concept, which also owns Baskin-Robbins. Its large, nationwide
presence adds significant scale to the combined business and its
good brand recognition improves Inspire's overall competitive
positioning, in S&P's view. However, S&P considers its overall
scale, geographic diversification and brand recognition to be
weaker than its closest peers, Restaurant Brands International and
Yum! Brands. The combined business will enjoy more evenly
distributed daypart sales because nearly half of Dunkin's sales are
in the morning, Inspire's least penetrated daypart. In addition,
geographic diversification also improves somewhat as Dunkin
complements Inspire's legacy brands' relative scarcity in the
northeastern U.S. The combined operations will consist of about 93%
franchised units, although company operated restaurants will
account for about 15% of systemwide sales.
S&P said, "We anticipate improving run-rate profit margins and cash
flow stability as Dunkin' is added into the Inspire portfolio,
owing to its fully franchised business model."
"We also expect incremental margin benefits as Inspire implements
shared services across its expanded portfolio. The company has a
track record of integrating its acquisitions and achieving cost
synergies to drive margin improvement. We expect EBITDA margins in
the mid- to high-20% range beginning in 2022, after integration
expenses roll off in 2021."
Inspire's diversified portfolio of brands position it to better
weather the challenges posed by COVID-19 as strong performance at
Sonic and Arby's offset weakness at other brands.
S&P said, "We believe QSR will continue to outperform casual dining
and fast-casual in the near term. In our view, the pandemic-related
disruption does not significantly affect Inspire's consolidated
performance because of the company's diversified brand portfolio.
In the past two quarters, deteriorating performance at Buffalo Wild
Wings (BWW) and Jimmy Johns (JJ) have been offset by strong sales
momentum at Sonic and Arby's. We believe sales will continue to
benefit at Sonic, owing to its drive-in platform, which allows
customers to eat a meal away from home while maintaining social
distancing. Operating performance at JJ has been slower to recover
but weekly sales have steadily improved and we expect pre-pandemic
sales levels over the next 12 months. BWW's casual dining model has
been the most heavily impacted, although management's quick action
to pivot to an off-premise model has prevented ongoing cash burn
and we expect it to gradually improve performance. Dunkin'
experienced very weak performance initially as the morning daypart
was heavily hit, but performance has since recovered. We anticipate
modestly positive comparable sales in 2021."
"The positive outlook reflects our view that, if Inspire integrates
Dunkin' into its platform and drives incremental synergies, it
might moderate its very high leverage and generate over $500
million of annual cash flow."
S&P could raise its ratings on Inspire if:
-- Improving performance and cost synergies result in higher
EBITDA margins and the rating agency expects S&P Global
Ratings-adjusted leverage will approach 7x;
-- S&P anticipates FOCF of $500 million or more over the coming 12
months; and
-- S&P believes execution risks associated with the Dunkin'
acquisition have abated.
S&P could revise its outlook to stable if:
-- S&P expects leverage will be sustained above 7x as performance
improvements fall short of management plan and expected synergies
are not realized, or the company continues to pursue sizable M&A
transactions delaying credit measure progress;
-- S&P anticipates less than $500 million of annual FOCF
generation; or
-- Management missteps related to the Dunkin' acquisition result
in integration challenges.
ITT HOLDINGS: S&P Places 'BB' ICR on CreditWatch Negative
---------------------------------------------------------
S&P Global Ratings placed the 'BB' issuer credit rating on ITT
Holdings LLC (IMTT) on CreditWatch with negative implications
following announcement by the its parent, Macquarie Infrastructure
Corp. (MIC), that it has agreed to sell IMTT to an affiliate of
Riverstone Holdings LLC (Riverstone) for total consideration of
about $2.685 billion.
In a related rating action, S&P placed MIC on CreditWatch with
negative implications. At the same time, the rating agency placed
the senior unsecured issue rating on IMTT on CreditWatch with
negative implications.
The CreditWatch placement mainly captures S&P's view that the new
sponsor will have a more aggressive financial policy.
Pro forma for the transaction, IMTT's financial policy will be
determined by Riverstone, which S&P considers a financial sponsor.
S&P said, "We think financial sponsors are more likely to use
leverage to fund transactions and, more generally, increase
financial returns. As a result, ratings are generally lower for
financial sponsor owned-companies in comparison to strategically
owned companies. We will reassess financial policy, forward
leverage, and any changes to the business strategy as we learn more
about Riverstone's plan and the transaction approaches the closing
date."
IMTT is having a strong year and outperforming S&P's previous
expectations from early 2020. Utilization at the company increased
materially this year from the 88% range to around 95% at the end of
the third quarter. The energy commodity markets were in contango
during an extended period in the first half of 2020, which drove
demand for IMTT's storage services and increased contracting
activity.
S&P said, "We think utilization will remain elevated going forward.
Under our current base case, we expect EBITDA to beat our
expectations for the full year 2020 and we expect cash flows to
grow incrementally year over year. We will be reassessing our base
case over the next several months."
J.C. PENNEY: Business on Course to Emerge Ch. 11 by Thanksgiving
----------------------------------------------------------------
Anne D'Innocenzio of Associated Press reports that the US
bankruptcy court approves sale of J.C. Penney. J.C. Penney is on
course to emerge from bankruptcy by Thanksgiving, after a U.S.
bankruptcy court approved the sale of the ailing 118-year-old
retailer to its two largest landlords and its primary lenders.
The U.S. Bankruptcy Court for the Southern District of Texas
approved a purchase agreement, announced earlier this fall, that
has substantially all of J.C. Penney's retail and operating assets
being acquired by Brookfield Asset Management Inc. and Simon
Property Group through a combination of cash and new term loan
debt. The approval followed a lengthy court hearing on Monday,
November 9, 2020.
Still, the retailer faces an uphill battle to attract shoppers this
holiday season as they stay away from the malls and stores for
safety reasons and shop online more. Meanwhile, Amazon and big
discounters like Walmart and Target are only getting stronger as
they offer low prices and one-stop shopping.
J.C. Penney filed for Chapter 11 bankruptcy protection in May 2020,
becoming one of the largest retailers to do so during the pandemic
amid a wave of store closures forced by the spread of COVID-19
infections in the U.S.
More than two dozen retailers have filed for bankruptcy protection
since the pandemic temporarily closed stores, restaurants, gyms and
other businesses nationwide. Retailers are worrying about the
effects on their business with a surge of new cases all over the
country.
The Plano, Texas, chain will shed nearly a third of its stores in
the next two years as it restructures, leaving just 600 locations
open.
With no other valid offers in sight, Penney's fate was hanging by
the wire. Its financing agreement expires on Nov. 16 and the sale
had to close by Nov. 20 to avoid the company going out of
business.
"Our goal from the beginning of this process has been to ensure
J.C. Penney will continue to serve customers for decades to come
and this court approval accomplishes that objective," said Jill
Soltau, CEO of J.C. Penney, in a statement.
About J.C. Penney Co. Inc.
J.C. Penney Company, Inc. -- http://www.jcpenney.com/-- is an
apparel and home retailer, offering merchandise from an extensive
portfolio of private, exclusive, and national brands at over 850
stores and online. It sells clothing for women, men, juniors, kids,
and babies.
On May 15, 2020, J.C. Penney announced that it has entered into a
restructuring support agreement with lenders holding 70% of its
first lien debt. The RSA contemplates agreed-upon terms for a
pre-arranged financial restructuring plan that is expected to
reduce several billion dollars of indebtedness.
To implement the plan, J.C. Penney and its affiliates on May 15,
2020, filed voluntary petitions for reorganization under Chapter 11
of the U.S. Bankruptcy Code (Bankr. S.D. Tex. Lead Case No.
20-20182). At the time of the filing, J.C. Penney disclosed assets
of between $1 billion and $10 billion and liabilities of the same
range.
Judge David R. Jones oversees the cases.
The Debtors have tapped Kirkland & Ellis and Jackson Walker, LLP as
legal counsel; Katten Muchin Rosenman, LLP as special counsel;
Lazard Freres & Co. LLC as investment banker; AlixPartners, LLP as
restructuring advisor; and KPMG, LLP as tax consultant. Prime Clerk
is the claims agent, maintaining the page
http://cases.primeclerk.com/JCPenney
A committee of unsecured creditors has been appointed in Debtors'
Chapter 11 cases. The committee is represented by Cole Schotz,
P.C., and Cooley, LLP.
JJE INC: Disclosures and Plan Hearing Rescheduled to Dec. 16
------------------------------------------------------------
Judge Mildred Caban Flores has entered an order that the hearing on
final approval of the disclosure statement and confirmation of the
plan of JJE Inc. scheduled for Oct. 27, 2020, at 1:30 p.m., is
rescheduled, for cause, for Dec. 16, 2020, at 9:00 a.m., via Skype
for Business.
About JJE Inc.
JJE, Inc., a Manati, P.R.-based home health care services, filed a
Chapter 11 petition (Bankr. D.P.R. Case No. 19-02034) on April 12,
2019. In the petition signed by Jenny Olivo, president, the Debtor
disclosed $295,244 in total assets and $1,953,718 in total
liabilities. Judge Mildred Caban Flores oversees the case.
Gratacos Law Firm, PSC is Debtor's legal counsel.
JJE INC: Unsecured Creditors to Recover 20% Over 6 Years
--------------------------------------------------------
Debtor JJE Inc. filed with the U.S. Bankruptcy Court for the
District of Puerto Rico an Amended Disclosure Statement describing
its Reorganization Chapter 11 Plan dated September 17, 2020.
Class IV General unsecured claims included are the creditors that
filed proofs of claim. The Debtor will award a total sum of
$25,965 which represents a 20% distribution for this class. To pay
the amount of $25,965, the Debtor will make the monthly payment of
$360.62 for 72 months. Each payment will be distributed in a pro
rate amount to all creditors and claimants included in this class.
Claims in this class are entitled to vote on the Plan.
The Plan will be funded with cash available proceeds from the
revenue that the hospice generates after paying operating expenses
and taxes. Debtor's income is based on the admissions of patients
to provide treatment, which is the Debtor's business. Debtor's
operating expenses consist of bank commissions, utilities, repairs
and maintenance, employee salaries and payroll taxes, insurance
expenses, office expenses, property taxes, municipal taxes, and
income taxes.
Taxes being paid by the Debtor are to the Internal Revenue Service,
to the Treasury Department of Puerto Rico, State Insurance Fund,
Department of Labor, and property taxes to the Municipal Revenue
Collection Center.
The Debtor will be able to make all the payments as proposed by the
Plan because the Debtor has an ending balance of $67,703.86 as of
June 2020. The Plan will become effective on the Effective Date
thirty days after the order of confirmation becomes final.
A full-text copy of the Amended Disclosure Statement dated
September 17, 2020, is available at https://tinyurl.com/y345ngps
from PacerMonitor at no charge.
The Debtor is represented by:
Victor Gratacos Diaz, Esq.
GRATACOS LAW FIRM, P.S.C.
P.O. Box 7571
Caguas, P.R. 00726
Tel: (787) 746-4772
Fax: (787) 746-3633
E-mail: bankruptcy@gratacoslaw.com
About JJE Inc.
JJE, Inc., is a home health care services provider based in Manati,
Puerto Rico. JJE, Inc., filed a Chapter 11 petition (Bankr. D.P.R.
Case No.19-02034) on April 12, 2019, and is represented by Victor
Gratacos Diaz, Esq., in Caguas, Puerto Rico. In the petition
signed by Jenny Olivo, president, the Debtor disclosed $295,244 in
total assets and $1,953,718 in total liabilities.
KD BELLE TERRE: Hires NAI Latter as Property Manager
----------------------------------------------------
KD Belle Terre, L.L.C., seeks authority from the U.S. Bankruptcy
Court for the Middle District of Louisiana to employ NAI Latter &
Blum Property Management, Inc., as property manager to the Debtor.
KD Belle Terre requires NAI Latter to manage the Debtor's shopping
center known as the Belle Terre Plaza located near the intersection
of U.S Highway 61 and LA Highway 3188 in LaPlace, LA.
NAI Latter will be paid a monthly fee of $1,700.
Adele Chauvin, partner of NAI Latter & Blum Property Management,
Inc., assured the Court that the firm is a "disinterested person"
as the term is defined in Section 101(14) of the Bankruptcy Code
and does not represent any interest adverse to the Debtor and its
estates.
NAI Latter can be reached at:
Adele Chauvin
NAI LATTER & BLUM PROPERTY
MANAGEMENT, INC.
430 Notre Dame St.
New Orleans, LA 70130
Tel: (866) 794-1022
About KD Belle Terre, L.L.C.
KD Belle Terre LLC is a single asset real estate debtor (as defined
in 11 U.S.C. Section 101(51B)), whose principal assets are located
at 150 Belle Terre Boulevard, La Place, La.
KD Belle Terre filed a Chapter 11 petition (Bankr. M.D. La. Case
No. 20-10537) on July 29, 2020. In the petition signed by Michael
D. Kimble, manager, the Debtor was estimated to have $1 million to
$10 million in both assets and liabilities.
Sternberg, Naccari & White, LLC serves as the Debtor's bankruptcy
counsel.
KLAUSNER LUMBER TWO: Court Extends Exclusivity Periods Thru Feb. 8
------------------------------------------------------------------
At the behest of Klausner Lumber Two, LLC, Judge Karen B. Owens
extended the Debtor's exclusive right to file a chapter 11 plan
from October 8, 2020, to February 8, 2021, and to solicit
acceptances from December 7, 2020, to April 7, 2021.
The Debtor and its professionals have made significant progress in
moving the case toward successful completion, including spending
considerable time addressing numerous issues involving creditors
and other parties in interest.
Notably, since the Petition Date, the Debtor has, among other
things:
(a) procured post-petition financing;
(b) prepared and filed its Schedules of Assets and Liabilities
and Statement of Financial Affairs;
(c) obtained Court orders to retain critical professionals and
establish procedures for the interim compensation of professionals;
(d) solicited third-party purchasers for the sale of the
Debtor's assets;
(e) negotiated extensively with the County and Carolina
Sawmills to resolve various issues, including with respect to the
Real Property, which would enable the Debtor to pursue a going
concern sale of its assets; and
(f) begun to simultaneously pursue litigation against Carolina
Sawmills for a judicial determination that Carolina Sawmills has no
liens or security interests in the Real Property or any of the
Debtor's personal property assets, which would similarly enable the
Debtor to move forward with a going-concern sale.
The Debtor said no party in interest is ready to submit a plan for
this chapter 11 case. The Debtor intends to use the additional time
to, among other things, resolve the asserted claims and liens of
Carolina Sawmills and pursue a going-concern asset sale which will
maximize recovery for the Debtor's estate.
About Klausner Lumber Two
Klausner Lumber Two, LLC, a sawmill company in Enfield, N.C.,
sought protection under Chapter 11 of the Bankruptcy Code (Bankr.
D. Del. Case No. 20-11518) on June 10, 2020. Robert Prusak, chief
restructuring officer, signed the petition. At the time of the
filing, Debtor had estimated assets of between $10 million and $50
million and liabilities of between $100 million and $500 million.
Judge Karen B. Owens oversees the case. The Debtor has tapped
Westerman Ball Ederer Miller Zucker & Sharfstein, LLP and Morris,
Nichols, Arsht & Tunnell, LLP as its bankruptcy counsel, Asgaard
Capital LLC as restructuring advisor, Cypress Holdings LLC as an
investment banker, and McCausland Keen + Buckman to provide legal
advice on intellectual property matters.
The U.S. Trustee for the District of Delaware appointed a committee
of unsecured creditors in Debtor's Chapter 11 case on June 25,
2020. The committee has tapped Elliott Greenleaf, P.C. as its
legal counsel and EisnerAmper LLP as its financial advisor.
LIFETIME BRANDS: Moody's Affirms B2 CFR; Alters Outlook to Stable
-----------------------------------------------------------------
Moody's Investors Service affirmed Lifetime Brands, Inc.'s
Corporate Family Rating (CFR) at B2, Probability of Default Rating
(PDR) at B2-PD, and senior secured term loan rating at B3. At the
same time Moody's changed the outlook to stable from negative, and
upgraded the company's Speculative Grade Liquidity rating to SGL-2
from SGL-3.
"T[he] ratings and outlook actions reflect Lifetime Brands' strong
operating performance year-to-date, resulting in meaningful
improvement in financial leverage and free cash flow generation,"
said Oliver Alcantara, Moody's lead analyst for the company. "Our
expectation for good consumer demand for the company's kitchenware
and home goods to continue at least through the first half of 2021
because home meal consumption remains elevated during the
coronavirus pandemic. Strong gains in e-commerce and the sequential
recovery in the company's brick and mortar channel should support
stable revenue and earnings next year following a strong fiscal
2020, which will support credit metrics remaining at around current
levels." Added Alcantara.
Moody's affirmed the ratings because an uneven economic recovery,
uncertainty created by the pandemic until there is a cure, or a
pullback from elevated spending levels on kitchen and homewares
experience in 2020 could weaken credit metrics. Lifetime Brands
also has modest exposure to foodservice channels that continue to
experience weaker volumes, and revenue in the company's tableware
and home solutions categories continues to contract.
Moody's upgraded the liquidity rating to SGL-2 because increased
consumer demand for kitchenware is improving free cash flow and
allowed the company to repay revolver drawings.
The following ratings/assessments are affected by the action:
Ratings Upgraded:
Issuer: Lifetime Brands, Inc.
Speculative Grade Liquidity Rating, Upgraded to SGL-2 from SGL-3
Ratings Affirmed:
Issuer: Lifetime Brands, Inc.
Corporate Family Rating, Affirmed B2
Probability of Default Rating, Affirmed B2-PD
GTD Senior Secured Term Loan B, Affirmed B3 (LGD4)
Outlook Actions:
Issuer: Lifetime Brands, Inc.
Outlook, Changed To Stable From Negative
RATINGS RATIONALE
Lifetime Brands' B2 CFR broadly reflects its relatively small scale
with annual revenue under $1.0 billion, and its elevated
debt/EBITDA leverage at around 5.1x for the last twelve months
(LTM) period ending September 30, 2020. The company's products are
discretionary in nature and susceptible to consumer spending, and a
prolonged period of high unemployment or weak economic conditions
will negatively impact demand. The rating also reflects Lifetime
Brands' relatively low mid-single digits operating profit margins,
its geographic and customer concentration, and the mature and
highly competitive nature of the kitchenware product category. The
company sources its products mostly from China, exposing the
company's supply chain to manufacturing issues affecting the region
such as the coronavirus outbreak. Production at the company's
suppliers has improved following earlier coronavirus-related
cutbacks, but supply chain risks remain.
The rating also considers the company's strong market position in
the homewares industry with many leading brands in narrowly defined
product categories, and its good brand and product diversification.
Lifetime Brands' well-diversified retail distribution channel,
which includes e-commerce, positions the company well to benefit
from the continued shift of consumer spending to online. Ecommerce
growth of approximately 66% year-to-date through 3Q-20, has more
than offset weakness in brick and mortar stores and foodservice.
Moody's expects sequential improvement in brick and mortar as
stores continue to reopen, and continued good consumer demand will
result in stable revenue and earnings, as well as credit metrics
remaining around current levels over the next 12-18 months.
Lifetime Brands SGL-2 liquidity rating reflects its relatively
healthy and historically higher cash balance of $42.7 million as of
September 30, 2020, as a result of strong operating results and
free cash flow generation year-to-date. The company's liquidity is
also supported by Moody's expectations for continued positive free
cash flow in fiscal 2021, albeit at a lower level relative to
fiscal 2020, of around $25 million. Lifetime Brands had about
$121.7 available under its $150 asset-based lending (ABL) revolving
facility due 2023, which provides the company with financial
flexibility to fund working capital seasonality.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The stable outlook reflects Moody's expectations for continued good
consumer demand for the company's kitchenware products and
sequential recovery in the brick and mortar channel over the next
12-18 months. These factors should support credit metrics remaining
around current levels and positive free cash flows on an annual
basis.
The ratings could be upgraded if the company consistently reports
organic revenue growth with a stable to higher EBITDA margin.
Debt/EBITDA sustained below 5.0x and sustained improvement in free
cash flow would also be necessary for an upgrade.
The ratings could be downgraded if Lifetime Brands' operating
performance deteriorates such that debt/EBITDA leverage is expected
to remain above 6.0x or free cash flow is expected to be weak.
Additional factors that could lead to a downgrade include a
deterioration of liquidity, or if the company's financial policies
become more aggressive, in particular regarding a material
debt-funded acquisition or shareholder returns.
The principal methodology used in these ratings was Consumer
Durables Industry published in April 2017.
Lifetime Brands, Inc. designs, sources and sells branded
kitchenware, tableware and other products used in the home.
Lifetime Brands is publicly traded (ticker: LCUT), and reported
revenue of approximately $747 million for the LTM period September
30, 2020.
LILIS ENERGY: Gets Court OK for $46.6M Sale to Ameredev
-------------------------------------------------------
Daniel Gill of Bloomberg Law reports that bankrupt Lilis Energy
Inc. won court approval of its $46.6 million asset sale to Ameredev
Texas LLC following a three-day virtual auction earlier this
month.
The sale, approved Friday by Judge Marvin Isgur of the U.S.
Bankruptcy Court for the Southern District of Texas, follows
settlements among key players that were approved last October
2020.
Isgur overruled an objection from Heritage Disposal Corp., the last
holdout after all others were withdrawn prior to Friday's hearing.
A hearing on the oil and gas producer's Chapter 11 liquidation plan
is set for Nov. 17, 2020.
About Lilis Energy Inc.
Lilis Energy, Inc. -- https://www.lilisenergy.com/ -- is a
publicly-traded, independent oil and natural gas company focused on
the exploration, development, production, and acquisition of crude
oil, natural gas, and natural gas liquids. Headquartered in Fort
Worth, Texas, Lilis is a pure play Permian Basin company with
focused operations in the Delaware Basin.
Lilis Energy and its affiliates sought protection under Chapter 11
of the Bankruptcy Code (Bankr. S.D. Tex. Lead Case No. 20-33274) on
June 28, 2020. As of Dec. 31, 2019, the Debtors had total assets of
$258.6 million and total liabilities of $251.2 million.
Judge David R. Jones oversees the cases.
The Debtors tapped Vinson & Elkins, LLP as legal counsel; Barclays
Capital, Inc., as investment banker and financial advisor; BDO, USA
LLP as accountant and tax advisor; and Stretto as notice, claims
and solicitation agent.
LONESTAR RESOURCES: Court Approves Plan that Cuts Debt by $390M
---------------------------------------------------------------
Alex Wolf of Bloomberg Law reports that Lonestar Resources US Inc.
won court approval to reorganize under a bankruptcy plan that
reduces its debt by $390 million.
The Fort Worth, Texas-based oil and gas company can emerge from
Chapter 11 through a plan that swaps debt for equity and hands 96%
of the company to noteholders, Judge David R. Jones of the U.S.
Bankruptcy Court for the Southern District of Texas ruled Tuesday,
November 10, 2020.
Lonestar reached a restructuring deal with its lenders before
filing for bankruptcy in September, carrying more than $500 million
in funded debt.
The plan received full support from voting creditors.
About Lonestar Resources
Headquartered in Fort Worth, Texas, Lonestar Resources US Inc. is
an independent oil and natural gas company, focused on the
development, production and acquisition of unconventional oil,
natural gas liquids and natural gas properties in the Eagle Ford
Shale in Texas, where the company has accumulated approximately
72,642 gross (53,831 net) acres in what it believes to be the
formation's crude oil and condensate windows, as of Dec. 31, 2019.
Visit http://www.lonestarresources.com/for more information.
On Sept. 30, 2020, Lonestar Resources and its affiliates filed
their voluntary petitions for relief under Chapter 11 of the
Bankruptcy Code (Bankr. S.D. Tex. Lead Case No. 20-34805).
As of March 31, 2020, Lonestar Resources had $616.35 million in
total assets, $586.73 million in total current liabilities, $19.28
million in total long-term liabilities, and $10.34 million in total
stockholders' equity.
The Debtors have tapped Latham & Watkins LLP and Hunton Andrews
Kurth LLP as their bankruptcy counsel, Rothschild & Co. and
Intrepid Financial Partners as investment bankers, and AlixPartners
LLP as financial advisor. Prime Clerk LLC is the claims and
noticing agent.
LONESTAR RESOURCES: Unsecured Claims Unimpaired in Prepackaged Plan
-------------------------------------------------------------------
Lonestar Resources US Inc., et al., have won court approval of its
Prepackaged Chapter 11 Plan of Reorganization that provides:
* Exit Facilities. On the effective date of the Plan (the
"Effective Date"), the reorganized Debtors shall enter into (a) a
first-out senior secured revolving credit facility in an amount
equal to 80% of the aggregate outstanding principal amount of loans
and letters of credit under the Company's existing revolving credit
facility of the Consenting RBL Lenders and any other lender under
the existing revolving credit facility that agrees to accept the
Plan (the "Accepting Lenders"); provided that, on the Effective
Date, the aggregate principal amount of the new revolving credit
facility shall not be less than $152 million (the "Exit RBL
Facility"), (b) a second-out-senior-secured term loan credit
facility in an amount equal to 20% of the aggregate outstanding
principal amount of loans and letters of credit under the
Company’s existing revolving credit facility of the Consenting
RBL Lenders and the Accepting Lenders (the "Second-Out Exit Term
Facility"), and (c) if necessary, a last-out-senior-secured term
loan credit facility in an amount equal to 100% of the aggregate
outstanding principal amount of loans and letters of credit of any
lenders under the existing revolving credit facility that are not
Consenting RBL Lenders or Accepting Lenders (the "Last-Out Exit
Term Facility").
* Distributions to Creditors and Equityholders. The Plan
provides for the following distributions to creditors and
equityholders:
-- RBL Lenders. On the Effective Date, each holder of an
allowed claim under the prepetition revolving credit facility that
agreed to accept the Plan will receive its pro rata share of: (i)
cash in an amount equal to all accrued and unpaid interest (at the
non-default rate so long as the RSA has not been terminated), fees,
and other amounts (excluding amounts owed for principal, undrawn
letters of credit and contingent reimbursement and indemnification
obligations) owing under the prepetition revolving credit facility
through the Effective Date, to the extent not previously paid (the
"RBL Cash Distribution"), (ii) revolving loans under the Exit RBL
Facility, (iii) warrants (the "New Warrants") to purchase up to 10%
of the new equity interests (the "New Equity Interests") to be
issued by the reorganized Company pursuant to the Plan (subject to
dilution only by the MIP Equity (as defined herein)), and (iv) term
loans under the Second-Out Exit Term Facility. Each holder of an
allowed claim under the prepetition revolving credit facility that
does not vote on the Plan or votes to reject the Plan shall receive
its pro rata share of: (x) the RBL Cash Distribution and (y) term
loans under the Last-Out Exit Term Facility.
-- Noteholders. On the Effective Date, each holder of an
allowed Notes claim will receive its pro rata share of 96% of the
New Equity Interests (subject to dilution by the MIP Equity and the
New Warrants).
-- General Unsecured Creditors. On or as soon as practicable
after the earliest to occur of the Effective Date and the date a
general unsecured claim becomes due in the ordinary course of
business, except to the extent that a holder agrees to less
favorable treatment, each holder of a general unsecured claim will
receive payment in full in cash on account of its allowed general
unsecured claim or such other treatment as would render such claim
unimpaired.
-- Preferred Equity Interests. All existing Series A-1
Preferred Stock (the "Preferred Stock") of the Company shall be
cancelled, and each holder of such Preferred Stock shall receive on
account of such Preferred Stock, its pro rata share of 3% of the
New Equity Interests (subject to dilution by the MIP Equity and the
New Warrants).
-- Common Equity Interests. All existing Class A Common Stock
(the "Common Stock") in the Company shall be cancelled, and each
holder of the Common Stock shall receive on account of such Common
Stock, its pro rata share of 1% of the New Equity Interests
(subject to dilution by the MIP Equity and the New Warrants).
* Management Incentive Plan. On or before the 60th day following
the Effective Date or as soon as reasonably practicable thereafter,
the reorganized Company shall enter into a management incentive
plan (the "Management Incentive Plan"), which shall (a) reserve 8%
of the New Equity Interests (or restricted stock units, options, or
other rights exercisable, exchangeable, or convertible into such
New Equity Interests) on a fully diluted basis (the "MIP Equity")
to certain members of senior management to be determined by the
directors of the initial board or other governing body of the
reorganized Company (the "New Board") and (b) otherwise contain
terms and conditions (including the form of awards, allocation of
awards, vesting and performance metrics) to be determined by the
New Board.
* Board Composition. The composition of the New Board will
consist of five (5) directors in total, which will include the
Chief Executive Officer of the reorganized Company and other
directors designated by certain holders of the Notes.
A full-text copy of the Disclosure Statement dated Oct. 14, 2020,
is available at https://tinyurl.com/y64o3hyh from PacerMonitor.com
at no charge.
A full-text copy of the Disclosure Statement dated Sept. 30, 2020,
is available at https://tinyurl.com/y2gpfmbd from PacerMonitor.com
at no charge.
A full-text copy of the confirmed Prepackaged Plan of
Reorganization is available at:
https://dd7pmep5szm19.cloudfront.net/2340/0001193125-20-293233.htm#d72913dex21.htm
Proposed Counsel for the Debtors:
Timothy A. Davidson II
Ashley L. Harper
HUNTON ANDREWS KURTH LLP
600 Travis Street, Suite 4200
Houston, Texas 77002
Telephone: (713) 220-4200
Facsimile: (713) 220-4285
David A. Hammerman
Keith A. Simon
Annemarie V. Reilly
Madeleine C. Parish
LATHAM & WATKINS LLP
885 Third Avenue
New York, New York 10022
Telephone: (212) 906-1200
Facsimile: (212) 751-4864
About Lonestar Resources
Headquartered in Fort Worth, Texas, Lonestar Resources US Inc. is
an independent oil and natural gas company, focused on the
development, production and acquisition of unconventional oil,
natural gas liquids and natural gas properties in the Eagle Ford
Shale in Texas, where the company has accumulated approximately
72,642 gross (53,831 net) acres in what it believes to be the
formation's crude oil and condensate windows, as of Dec. 31, 2019.
Visit http://www.lonestarresources.com/for more information.
On Sept. 30, 2020, Lonestar Resources and its affiliates filed
their voluntary petitions for relief under Chapter 11 of the
Bankruptcy Code (Bankr. S.D. Tex. Lead Case No. 20-34805).
As of March 31, 2020, Lonestar Resources had $616.35 million in
total assets, $586.73 million in total current liabilities, $19.28
million in total long-term liabilities, and $10.34 million in total
stockholders' equity.
The Debtors have tapped Latham & Watkins LLP and Hunton Andrews
Kurth LLP as their bankruptcy counsel, Rothschild & Co. and
Intrepid Financial Partners as investment bankers, and AlixPartners
LLP as financial advisor. Prime Clerk LLC is the claims and
noticing agent.
LOST D VENTURES: Plan of Reorganization Confirmed by Judge
----------------------------------------------------------
Judge Carlota M. Bohm of the U.S. Bankruptcy Court for the Western
District of Pennsylvania has entered an order finally approving the
Disclosure Statement and confirming the Plan of Reorganization of
Debtor Lost D Ventures, LLC.
The Court having been determined, after hearing and notice, that
the requirements for confirmation set forth in 11 U.S.C. Section
1129 have been satisfied. Plan Sections 10.5 and 16.3 related to
Third Party Releases shall be stricken as terms of the confirmed
Plan.
A full-text copy of the order dated Oct. 30, 2020, is available at
https://tinyurl.com/y2ot3pjz from PacerMonitor at no charge.
About Lost D Ventures
Lost D Ventures, LLC sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. W.D. Pa. Case No. 20-20239) on Jan. 22,
2020. At the time of the filing, the Debtor disclosed assets of
between $1 billion and $10 billion and liabilities of the same
range. Judge Carlota M Bohm oversees the case. The Debtor is
represented by Steidl & Steinberg.
LOST D VENTURES: U.S. Trustee Objects to Plan & Disclosures
-----------------------------------------------------------
The United States Trustee objects to the Chapter 11 Plan and
Disclosure Statement of debtor Lost D Ventures, LLC.
The United States Trustee claims that failure to provide sufficient
information regarding the releases is tantamount to this Court
granting injunctive relief against creditors without sufficient
findings of fact. The court disallowed the injunction, even though
there was testimony it would be "helpful" to the reorganization,
because there was no evidence that it was "necessary," or that the
injunction was given in exchange for "fair consideration."
The United States Trustee points out that the Chapter 11 Plan and
Disclosure Statement filed in this case does not disclose what
specific debts will be released upon confirmation of the plan.
The United States Trustee asserts that the relevancy of releases of
non-debtor third party fiduciaries is important for creditors to
obtain adequate information to vote on the plan since the chapter
11 plan provides for a distribution to non-priority general
unsecured creditors of less than 100%.
The United States Trustee further asserts that the Debtor has not
provided sufficient information in the Chapter 11 Plan and
Disclosure to allow creditors to obtain adequate information to
vote on confirmation and the approval of the Disclosure Statement
should be vacated and the Chapter 11 Plan Confirmation should be
denied.
A full-text copy of the order dated October 23, 2020, is available
at https://tinyurl.com/y3sjypm6 from PacerMonitor at no charge.
About Lost D Ventures
Lost D Ventures, LLC sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. W.D. Pa. Case No. 20-20239) on Jan. 22,
2020. At the time of the filing, the Debtor disclosed assets of
between $1 billion and $10 billion and liabilities of the same
range. Judge Carlota M Bohm oversees the case. The Debtor is
represented by Steidl & Steinberg.
LSB INDUSTRIES: Incurs $20.4 Million Net Loss in Third Quarter
--------------------------------------------------------------
LSB Industries, Inc., filed with the Securities and Exchange
Commission its Quarterly Report on Form 10-Q disclosing a net loss
of $20.40 million on $73.97 million of net sales for the three
months ended Sept. 30, 2020, compared to a net loss of $30.79
million on $75.49 million of net sales for the three months ended
Sept. 30, 2019.
For the nine months ended Sept. 30, 2020, the Company reported a
net loss of $40.22 million on $262.41 million of net sales compared
to a net loss of $35.70 million on $291.17 million of net sales for
the same period during the prior year.
As of Sept. 30, 2020, the Company had $1.07 billion in total
assets, $98.10 million in total current liabilities, $470.75
million in long-term debt, $19.25 million in noncurrent operating
lease liabilities, $5.59 million in other noncurrent accrued and
other liabilities, $32.66 million in deferred income taxes, $262.29
million in redeemable preferred stock, and $181.27 million in total
stockholders' equity.
As of Sept. 30, 2020, the Company's total cash position was $42.1
million. Additionally, the Company had approximately $36.3 million
of borrowing availability under its Working Capital Revolver giving
it total liquidity of approximately $78.4 million. During the
third quarter, the Company paid off the outstanding Revolver
balance in full. Total long-term debt, including the current
portion, was $486.0 million at Sept. 30, 2020 compared to $459.0
million at Dec. 31, 2019. The increase in long-term debt primarily
reflects the refinance of ammonia storage assets completed during
the third quarter. The aggregate liquidation value of the Series E
Redeemable Preferred at Sept. 30, 2020, inclusive of accrued
dividends of $128.9 million, was $268.7 million.
Interest expense for the third quarter of 2020 was $12.6 million
compared to $12.0 million for the same period in 2019.
Capital expenditures were approximately $4.3 million in the third
quarter of 2020. For the full year of 2020, total capital
expenditures related to capital work performed in 2020 are expected
to be between $25 million and $30 million, inclusive of investments
for margin enhancement purposes.
Mark Behrman, LSB Industries' president and CEO, stated, "Our third
quarter results reflected the ongoing drag from weak fertilizer
pricing and continued headwinds to industrial and mining demand
resulting from the impact of the COVID-19 pandemic on U.S. economic
activity. We remain acutely focused on managing and executing on
the aspects of business under our control. In this regard, our
plants continued to perform well, and we were able to offset much
of the year-over-year declines in pricing with stronger sales
volumes. Notably, had pricing been in line with the 2019 third
quarter and industrial and mining demand been consistent with the
pre-pandemic levels of early 2020, we would have posted an EBITDA
increase of over 70% relative to the third quarter of 2019.
Additionally, as we previously announced, we recently signed a
long-term agreement to supply between 70,000 to 100,000 additional
tons of nitric acid on an annual basis, which we expect to yield
meaningful incremental EBITDA in 2021."
"Our plant operations remained stable during the third quarter.
Our Pryor facility once again delivered a record operating
performance which led to a significant increase in UAN production
and sales volume as a result of the installation of a new urea
reactor in late 2019. We also benefitted from the absence of any
turnaround activity in the 2020 third quarter which translated into
year-over-year volume improvement as we performed turnarounds at
both our Pryor and El Dorado facilities in the 2019 third quarter.
"The oversupply of ammonia that has persisted for the past 18
months continued to pressure the nitrogen chemical industry in the
third quarter. Pricing for all major fertilizer categories was
impacted by the continued oversupply of ammonia and UAN in our
primary end markets. Pricing for our industrial products was also
impacted by excess ammonia inventory in the U.S. distribution
channel which continues to be impacted by lower demand for
industrial ammonia applications."
Mr. Behrman continued, "Looking ahead to the fourth quarter of 2020
and into 2021, we are cautiously optimistic that emerging demand
trends point to improving sales volume and pricing in the coming
months. On the agricultural side of our business, the fall harvest
is currently picking up momentum after some delay resulting from
warm weather throughout much of the country. Additionally, we have
seen a recent rise in corn prices as a result of the USDA making
downward adjustments to its corn crop and ending corn stock
forecasts and strong corn exports. We expect stronger corn prices
to result in higher plantings in 2021 which could translate into a
robust fall ammonia application in the coming weeks and boost
demand for orders of UAN and HDAN for the 2021 spring planting
season. In our industrial and mining business, while the effects
of COVID-19 protocols and restrictions continue to weigh on the
U.S. economy, we are seeing gradual improvement in demand for
nitric acid, industrial ammonia and ammonium nitrate as sectors
such as automotive manufacturing, home building, and copper mining
have increased activity. If the situation remains stable, stronger
demand in the agricultural and industrial sectors should drive
greater consumption of ammonia in the U.S. market, reducing the
current inventory buildup and allowing the Tampa ammonia benchmark
to rise, benefitting our selling prices. Our outlook for a
strengthening end market environment, our expectations for
continued operating performance improvement, and our recently
announced new customer agreements makes us cautiously optimistic
about prospects for growth in adjusted EBITDA and free cash flow in
the fourth quarter and in 2021."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/60714/000156459020051959/lxu-10q_20200930.htm
LSB Industries
Headquartered in Oklahoma City, Oklahoma, LSB Industries, Inc. --
http://www.lsbindustries.com-- manufactures and sells chemical
products for the agricultural, mining, and industrial markets. The
Company owns and operates facilities in Cherokee, Alabama, El
Dorado, Arkansas and Pryor, Oklahoma, and operates a facility for a
global chemical company in Baytown, Texas. LSB's products are
sold
through distributors and directly to end customers throughout the
United States.
LSB Industries reported a net loss attributable to common
stockholders of $96.44 million for the year ended Dec. 31, 2019,
compared to a net loss attributable to common stockholders of
$102.74 million for the year ended Dec. 31, 2018. As of March 31,
2020, the Company had $1.11 billion in total assets, $111.11
million in total current liabilities, $480.84 million in long-term
debt, $14.51 million in non-current operating lease liabilities,
$5.15 million in other non-current accrued and other liabilities,
$35.34 million in deferred income taxes, $243.70 million in
redeemable preferred stock, and $219.49 million in total
stockholders' equity.
* * *
As reported by the TCR on Aug. 5, 2020, S&P Global Ratings lowered
its issuer credit rating on LSB Industries to 'CCC' from 'CCC+'.
"The negative outlook reflects our view that LSB will continue to
be affected by lower agriculture selling prices and the impact of
COVID-19 on its industrial end markets. As a result of weaker
EBITDA for 2020 and 2021, we continue to view its leverage as
unsustainable. We expect leverage to remain high, with debt to
EBITDA well into the double-digits over the next 12 months," S&P
said.
In November 2016, Moody's Investors Service downgraded LSB's
corporate family rating (CFR) to 'Caa1' from 'B3', its probability
of default rating to 'Caa1-PD' from 'B3-PD', and the $375 million
guaranteed senior secured notes to 'Caa1' from 'B3'. LSB's 'Caa1'
CFR rating reflects Moody's expectations that the combined
uncertainty over operational reliability and the compressed
margins, resulting from the low nitrogen fertilizer pricing
environment, could result in continued weak financial metrics for a
protracted period.
LTI HOLDINGS: Moody's Affirms Caa1 CFR; Alters Outlook to Positive
------------------------------------------------------------------
Moody's Investors Service affirmed the ratings of LTI Holdings,
Inc. (Boyd) including the company's corporate family rating (CFR)
at Caa1, probability of default rating (PDR) at Caa1-PD, first lien
secured debt ratings at B3, and second-lien secured debt ratings at
Caa3. The outlook has been changed to positive.
The ratings affirmation results from the combination of Boyd's
still high financial leverage and $80 million still to be paid out
through the first half of 2022 to reimburse a customer from a
product liability issue. Boyd has also experienced some revenue
growth challenges, but new management is addressing the company's
go to market strategy and the company has had several new business
wins as a result.
The change to a positive outlook reflects Moody's view that Boyd's
ratings could be upgraded within the next few quarters assuming the
company is able to continue deleveraging while maintaining
sufficient liquidity to address the product liability payments
along with normal operating needs. Moody's acknowledges the
company's liquidity has improved over the last few quarters, but
the company has a large interest expense burden and product
liability payments. Boyd's financial leverage is also expected to
improve to the mid-6 times debt-to-EBITDA range by the end of 2021
from around 7.1 times debt-to-EBITDA at September 30, 2020.
RATINGS RATIONALE
LTI Holdings, Inc.'s (Boyd) ratings, including the Caa1 CFR reflect
the company's highly leveraged capital structure and cash flow
headwinds resulting from a product quality issue with a customer.
Boyd's top-line growth will remain susceptible to a material amount
of variability from quarter to quarter, largely driven by the
timing of its key customer's product launches or lack thereof.
Revenue pressure will develop if either large customer product
launches are delayed or their orders are canceled due to poor
product acceptance in the marketplace.
Boyd also has some customer concentration with its top five
representing more than one-third of total revenue. In addition, the
company faces execution risk associated with its footprint
expansion into Vietnam and Mexico, but the fact they are expanding
to meet customer demand in those regions is viewed favorably. Boyd
is also indirectly affected by trade tensions ranging from
customers losing market share to others facing restrictions on the
sale of certain products.
Boyd benefits from strong relationships with its key customers and
often ingrained nature in their customer's respective supply
chains, as a provider of typically low cost but often critical
products and Boyd's record of being able to supply those parts at
high volume. The company also generates a strong EBITDA margin
resulting in part from the specialization and value-add of its
product offerings, which are often patented, customized, or
proprietary. Boyd has broad geographic diversity of customers and a
manufacturing footprint operating throughout the US, Europe and
Asia. Moody's also has a favorable long-term outlook for demand in
Boyd's end markets, and anticipates that liquidity will remain
adequate over the next twelve months.
Boyd will maintain adequate liquidity through 2021 supported by a
cash balance of nearly $68 million on Sept. 30, 2020 and access to
an undrawn $125 million revolving credit facility that expires in
September 2023. The company's nearest debt maturity is the
revolver, followed by the first lien term loan in 2025. Moody's
expects Boyd's free cash flow (cash from operations less CAPEX less
dividends) to be limited at breakeven to $10 million for 2021.
Boyd has some social risk with a small number of unionized
employees at its manufacturing facilities in the US. The company
also has manufacturing facilities in China.
Boyd has limited environmental risk as it does not engage in the
processing of most of its raw materials, but it does generate some
wastewater from resurfacing that requires treatment to remove
contaminants. On the other hand, Boyd aims to create lightweight
thermal management and sealing solutions that contribute to trends
towards increasing fuel efficiency in aerospace and automobiles and
reducing carbon emissions.
Boyd has moderate to high corporate governance risk because the
company is private equity-owned and had been relatively aggressive
with acquisitions despite its high leverage. However, now that the
company must contend with the large product liability payment,
acquisitions are likely to be limited until a good portion of the
product liability payments have been made. If a large transaction
were to occur before then, even with meaningful equity funding the
ratings could face pressure.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Factors that could support an upgrade of Boyd's ratings include a
return to healthy topline growth with no erosion in margins,
debt-to-EBITDA firmly below 7.5 times with further deleveraging
anticipated, EBITDA margins sustained in excess of 20%, and
evidence that the company can satisfy a substantial portion of its
product liability such that free cash flow can amply cover payments
to such liabilities, allowing the company to repay debt.
Alternatively, the ratings could be downgraded if the company
experiences a deterioration in liquidity highlighted by material
revolver reliance, if contracts from major customers erode, or if
the company engages in any material acquisitions prior to the
company satisfying a significant portion of the product liability.
The following rating actions were taken:
Affirmations:
Issuer: LTI Holdings, Inc. (Boyd)
Corporate Family Rating, Affirmed Caa1
Probability of Default Rating, Affirmed Caa1-PD
Senior Secured 1st Lien Bank Credit Facility, Affirmed B3 (LGD3)
Senior Secured 2nd Lien Bank Credit Facility, Affirmed Caa3 (LGD5)
Outlook Actions:
Issuer: LTI Holdings, Inc. (Boyd)
Outlook, Changed To Positive From Stable
The principal methodology used in these ratings was Manufacturing
Methodology published in March 2020.
LTI Holdings, Inc. (Boyd Corporation) is a California-based
manufacturer of customized, precision products that provide thermal
management (prevent overheating) and environmental sealing (protect
from heat, moisture or radio-frequency) solutions to customers
serving a broad array of end markets including mobile electronics,
medical, and aerospace and defense among others. The company is
owned by funds affiliated with Goldman Sachs Merchant Banking,
which acquired the company in a September 2018 LBO transaction for
an enterprise value of nearly $3 billion. Boyd generated revenue
for the 12 months ended September 30, 2020 of roughly $1 billion.
MACQUARIE INFRASTRUCTURE: S&P Places 'BB' ICR on Watch Negative
---------------------------------------------------------------
S&P Global Ratings placed the 'BB' issuer credit rating on
Macquarie Infrastructure Corp. (MIC) on CreditWatch with negative
implications following announcement that the company has agreed to
sell one of its largest subsidiaries, ITT Holdings LLC (IMTT), to
an affiliate of Riverstone Holdings LLC for total consideration of
about $2.685 billion, including the assumption of IMTT's debt. MIC
plans to repay holdco debt and pay a special distribution with the
proceeds.
The rating agency also placed the 'BB' issue-level credit rating on
MIC's senior unsecured debt on CreditWatch with negative
implications. The recovery rating remains '3' (65%).
S&P said, "We based the Creditwatch placement on our expectation
that, pro forma for the transaction, MIC will derive most of its
cash flows from Atlantic Aviation FBO Inc., which has a 'b'
stand-alone credit profile, while it will derive about 20% of
EBITDA from Hawaii Gas (not rated)."
"We are placing the ratings on MIC on CreditWatch with negative
implications on the announcement that it will sell one of its major
subsidiaries, ITT Holdings LLC (IMTT). On a normal run rate basis,
IMTT contributes about 45% of MIC's EBITDA, so the sale of the
subsidiary greatly diminishes MIC's scale and diversification.
Furthermore, IMTT's cash flows were significantly more stable than
the other companies in the portfolio, which was especially evident
during 2020 when market contango for energy commodities drove
utilization of IMTT's storage terminals materially higher. At the
same time, the sharp decline in economic activity and travel
activity had a substantial negative impact on the other major
subsidiaries, Atlantic Aviation and Hawaii Gas. Pro forma for the
transaction, we expect MIC to derive about 80% of its EBITDA from
Atlantic aviation ('b' stand-alone credit profile) and 20% from
Hawaii Gas (not rated)."
MIC will use the cash proceeds from the transaction of roughly $1.6
billion to repay about $400 million in holdco debt, and pay a
special dividend to shareholders. There are also several
transaction costs, including capital gains taxes of approximately
$158 million, a contracted payment to MIC's external manager of
approximately $28 million, and additional transaction expenses of
approximately $25 million. The company also revealed its intent to
repay all of MIC's revolver with cash on hand. These actions will
result in lower consolidated forward-looking leverage and will
mitigate the expected negative effects on credit quality of the
transaction.
MALLINCKRODT PLC: Ferry, Harris Represent Municipalities
--------------------------------------------------------
Pursuant to Rule 2019 of the Federal Rules of Bankruptcy Procedure,
the law firms of Harris Beach PLLC and Ferry Joseph, P.A. submitted
a verified statement that they are representing the Municipalities
in the Chapter 11 cases of Mallinckrodt PLC, et al.
The Municipalities consist of seventeen (17) counties, cities and
other municipal entities in New York, Pennsylvania and Kentucky, as
follows: (1) City of Covington, State of Kentucky; (2) City of
Syracuse, State of New York; (3) City of Utica, State of New York;
(4) County of Oneida, State of New York; (5) County of Onondaga,
State of New York; (6) Village of Herkimer, State of New York; (7)
City of Rome, State of New York; (8) City of Lackawanna, State of
New York; (9) Wilkes-Barre Township, State of Pennsylvania; (10)
City of Hazelton, State of Pennsylvania; (11) County of
Northumberland, State of Pennsylvania; (12) County of Lycoming,
State of Pennsylvania ; (13) Wright Township, State of
Pennsylvania; (14) Hanover Township, State of Pennsylvania; (15)
West Pittston, State of Pennsylvania; (16) City of Geneva, State of
New York; and, (17) Wyoming, State of Pennsylvania.
Harris Beach PLLC and Ferry Joseph, P.A. serve as bankruptcy
counsel and Delaware counsel, respectively, to the Municipalities.
The information set forth above, which is based on information
provided by the applicable members of the Municipalities through
their counsel to Harris Beach and Ferry Joseph, is intended only to
comply with Rule 2019 of the Federal Rules of Bankruptcy Procedure
and is not intended for any other purpose. The Municipalities make
no representation herein as to the amount, validity, or priority of
any particular member's claims and reserves all respective rights
thereto. This Verified Statement should not be read to waive or
limit any of the rights of the Municipalities or its members to
assert, file, or amend any claims in accordance with applicable
procedures established by this Court.
The Municipalities reserve the right to amend or supplement this
Verified Statement as necessary in accordance with Rule 2019 of the
Federal Rules of Bankruptcy Procedure.
Counsel for the Municipalities can be reached at:
FERRY JOSEPH, P.A.
John D. McLaughlin, Jr., Esq.
824 Market Street, Suite 1000
Wilmington, DE 19801
Tel: (302) 575-1714
- and -
HARRIS BEACH PLLC
David M. Capriotti, Esq.
Wendy A. Kinsella, Esq.
333 W. Washington Street, Suite 200
Syracuse, NY 13202
Tel: (315) 423-7100
A copy of the Rule 2019 filing, downloaded from PacerMonitor.com,
is available at https://bit.ly/32FzPpw
About Mallinckdrodt
Mallinckrodt is a global business consisting of multiple
wholly-owned subsidiaries that develop, manufacture, market and
distribute specialty pharmaceutical products and therapies. The
company's Specialty Brands reportable segment's areas of focus
include autoimmune and rare diseases in specialty areas like
neurology, rheumatology, nephrology, pulmonology and
ophthalmology;
immunotherapy and neonatal respiratory critical care therapies;
analgesics; and gastrointestinal products. Its Specialty Generics
reportable segment includes specialty generic drugs and active
pharmaceutical ingredients. Visit http://www.mallinckrodt.com/for
more information.
On Oct. 12, 2020, Mallinckrodt plc and certain of its affiliates
sought Chapter 11 protection in Delaware in the U.S. (Bankr. D.
Del. Lead Case No. 20-12522) to seek approval of a restructuring
that would reduce total debt by $1.3 billion and resolve
opioid-related claims against them.
Mallinckrodt plc disclosed $9,584,626,122 in assets and
$8,647,811,427 in liabilities as of Sept. 25, 2020.
Judge John T. Dorsey oversees the cases.
The Debtors have tapped Latham & Watkins LLP and Richards, Layton &
Finger P.A. as their bankruptcy counsel; Arthur Cox and Wachtell,
Lipton, Rosen & Katz as corporate and finance counsel; Ropes &
Gray LLP as litigation counsel; Torys LLP as CCAA counsel;
Guggenheim Securities LLC as investment banker; and AlixPartners
LLP as restructuring advisor. Prime Clerk, LLC is the claims
agent.
MALLINCKRODT PLC: Kramer, et al. Update on Litigation Claimants
---------------------------------------------------------------
Pursuant to Rule 2019 of the Federal Rules of Bankruptcy Procedure,
the law firms of Kramer Levin Naftalis & Frankel LLP, Brown Rudnick
LLP, Gilbert LLP and Morris James LLP submitted an amended verified
statement to disclose an updated list of Governmental Plaintiff Ad
Hoc Committee that they are representing in the Chapter 11 cases of
Mallinckrodt PLC, et al.
As of Nov. 13, 2020, the Ad Hoc Committee Members of and their
disclosable economic interests are:
The Commonwealth of Kentucky
Attn: Daniel Cameron, Attorney General
1024 Capital Center Drive, Suite 200
Frankfort, KY 40601
* Unliquidated Claims
The State of New York
Attn: Letitia James, Attorney General
28 Liberty Street
New York, NY 10005
* Unliquidated Claims
The State of North Carolina
Attn: Joshua H. Stein, Attorney General
114 West Edenton Street
Raleigh, NC 27603
* Unliquidated Claims
The Commonwealth of Pennsylvania
Attn: Josh Shapiro, Attorney General
16th Floor, Strawberry Square
Harrisburg, PA 17120
* Unliquidated Claims
The State of Tennessee
Attn: Herbert H. Slatery III, Attorney General
John Sevier State Office Building
500 Charlotte Avenue
Nashville, TN 37219
* Unliquidated Claims
The State of Texas
Attn: Ken Paxton, Attorney General
209 West 14th Street
Austin, TX 78701
* Unliquidated Claims
The State of Wisconsin
Attn: John L. Kaul, Attorney General
17 W. Main St.
Madison, WI 57303
* Unliquidated Claims
Attn: Paul J. Hanly, Jr.
SIMMONS HANLY CONROY LLC
112 Madison Avenue
New York, NY 10016
Attn: Joseph F. Rice
MOTLEY RICE LLC 28 Bridgeside Blvd.
Mt. Pleasant, SC 29464
Attn: Paul T. Farrell Jr.
FARRELL LAW 422 Ninth St, 3rd Floor
Huntington, WV 25701
* See Plaintiffs' Renewed Motion to Approve Co- Leads, Co-Liaison,
and Executive Committee, In re: National Prescription Opiate
Litigation, Case No. 17-md-02804, MDL No. 2804, Jan. 4, 2018;
see also Margin Order Granting Dkt. No. 34
The Governmental Ad Hoc Committee filed its initial Verified
Statement Pursuant to Bankruptcy Rule 2019 on October 23, 2020 at
Dkt. No. 288. The Governmental Plaintiff Ad Hoc Committee files
this Amended Verified Statement to reflect that the State of
Florida has resigned from the Governmental Plaintiff Ad Hoc
Committee.
Nothing contained in this Verified Statement is intended to, nor
should be construed to, constitute: (a) a waiver or release of any
claims filed or to be filed against, or interests in, the Debtors
held by any Ad Hoc Committee Member or any other entity, (b) a
waiver of the sovereignty of any state that may be a member of the
Governmental Plaintiff Ad Hoc Committee, or (c) an admission with
respect to any fact or legal theory. Nothing herein should be
construed as a limitation upon, or waiver of, any rights of any Ad
Hoc Committee Member to assert, file and/or amend any proof of
claim in accordance with applicable law and any Orders entered in
these Bankruptcy Cases.
Other than as discussed herein, the Ad Hoc Committee Members and
the Governmental Plaintiff Ad Hoc Committee do not purport to act,
represent, or speak on behalf of any other entities in connection
with the Bankruptcy Cases.
The undersigned declares under penalty of perjury that this
Verified Statement is true and accurate to the best of his
knowledge, information and belief.
Ad Hoc Committee Counsel reserve the right to amend or supplement
this Verified Statement as necessary, in accordance with
Bankruptcy
Rule 2019.
Counsel for the Governmental Plaintiff Ad Hoc Committee can be
reached at:
Kenneth H. Eckstein, Esq.
Daniel M. Eggermann, Esq.
Megan M. Wasson, Esq.
Kramer Levin Naftalis & Frankel LLP
1177 Avenue of the Americas
New York, NY 10036
Tel: (212) 715-9100
E-mail: keckstein@kramerlevin.com
deggermann@kramerlevin.com
mwasson@kramerlevin.com
Jeffrey R. Waxman, Esq.
Eric J. Monzo, Esq.
Brya M. Keilson, Esq.
Morris James LLP
500 Delaware Avenue, Suite 1500
Wilmington, DE 19801
Tel: (302) 888-6800
E-mail: Jwaxman@morrisjames.com
Emonzo@morrisjames.com
Bkeilson@morrisjames.com
Scott D. Gilbert, Esq.
Kami E. Quinn, Esq.
Emily P. Grim Esq.
Gilbert LLP
700 Pennsylvania Ave., SE
Suite 400
Washington, DC 20003
Tel: (202) 772-2200
E-mail: gilberts@gilbertlegal.com
quinnk@gilbertlegal.com
grime@gilbertlegal.com
David J. Molton, Esq.
Gerard T. Cicero, Esq.
Brown Rudnick LLP
7 Times Square
New York, NY 10036
Tel: (212) 209-4800
E-mail: dmolton@brownrudnick.com
gcicero@brownrudnick.com
Steven D. Pohl, Esq.
Brown Rudnick LLP
One Financial Center
Boston, MA 02111
Tel: (617) 856-8594
E-mail: spohl@brownrudnick.com
Eric R. Goodman, Esq.
Brown Rudnick LLP
601 Thirteenth Street NW, Suite 600
Washington, DC 20005
Tel: (202) 536-1740
E-mail: egoodman@brownrudnick.com
A copy of the Rule 2019 filing, downloaded from PacerMonitor.com,
is available at https://bit.ly/36A70fh and https://bit.ly/35yX0E1
About Mallinckdrodt
Mallinckrodt -- http://www.mallinckrodt.com/-- is a global
business consisting of multiple wholly owned subsidiaries that
develop, manufacture, market and distribute specialty
pharmaceutical products and therapies. The company's Specialty
Brands reportable segment's areas of focus include autoimmune and
rare diseases in specialty areas like neurology, rheumatology,
nephrology, pulmonology and ophthalmology; immunotherapy and
neonatal respiratory critical care therapies; analgesics and
gastrointestinal products. Its Specialty Generics reportable
segment includes specialty generic drugs and active pharmaceutical
ingredients.
As of March 27, 2020, the Company had $10.17 billion in total
assets, $8.27 billion in total liabilities, and $1.89 billion in
total shareholders' equity.
On Oct. 12, 2020, Mallinckrodt plc and certain of its affiliates
sought Chapter 11 protection in Delaware in the U.S. (Bankr. D.
Del. Lead Case No. 20-12522) to seek approval of a restructuring
that would reduce total debt by $1.3 billion and resolve
opioid-related claims against the Company.
Mallinckrodt plc disclosed $9,584,626,122 in assets and
$8,647,811,427 in liabilities as of Sept. 25, 2020.
Latham & Watkins LLP, Ropes & Gray LLP and Wachtell, Lipton, Rosen
& Katz are serving as counsel to the Company, Guggenheim
Securities, LLC is serving as investment banker and AlixPartners
LLP is serving as restructuring advisor to Mallinckrodt. Hogan
Lovells is serving as counsel with respect to the Acthar Gel
matter. Prime Clerk LLC is the claims agent.
MALLINCKRODT PLC: Troutman, Gibson Update List of Term Lender Group
-------------------------------------------------------------------
Pursuant to Rule 2019 of the Federal Rules of Bankruptcy Procedure,
the law firms of Gibson, Dunn & Crutcher LLP and Troutman Pepper
Hamilton Sanders LLP submitted an amended verified statement to
disclose an updated list of Ad Hoc First Lien Term Lender Group
that they are representing in the Chapter 11 cases of Mallinckrodt
PLC, et al.
On or around May 2019, the Ad Hoc First Lien Term Lender Group was
formed and retained attorneys currently affiliated with Gibson,
Dunn & Crutcher LLP to represent them as counsel in connection with
a potential restructuring of the outstanding debt obligations of
the above-captioned debtors and certain of their subsidiaries and
affiliates.
In September 2020, the Ad Hoc First Lien Term Lender Group retained
Troutman Pepper Hamilton Sanders LLP as Delaware counsel.
On October 14, 2020, the Ad Hoc First Lien Term Lender Group filed
its Verified Statement of the Ad Hoc First Lien Term Lender Group
Pursuant to Bankruptcy Rule 2019 [Docket No. 194]. The Ad Hoc First
Lien Term Lender Group now files this First Amended Verified
Statement to amend and supplement the disclosures set forth on
Exhibit A of the Original Statement.
Gibson Dunn and TPHS represent the Ad Hoc First Lien Term Lender
Group in their capacity as lenders under that certain Credit
Agreement, dated as of March 19, 2014 among Mallinckrodt plc,
Mallinckrodt International Finance S.A., Mallinckrodt CB LLC,
Deutsche Bank AG New York Branch, as administrative agent and
collateral agent, and the lenders from time to time party thereto.
Gibson Dunn and TPHS do not represent or purport to represent any
other entities in connection with the Debtors' chapter 11 cases.
Gibson Dunn and TPHS do not represent the Ad Hoc First Lien Term
Lender Group as a "committee" and do not undertake to represent the
interests of, and are not fiduciaries for, any creditor, party in
interest, or other entity that has not signed a retention agreement
with Gibson Dunn or TPHS. In addition, the Ad Hoc First Lien Term
Lender Group does not represent or purport to represent any other
entities in connection with the Debtors' chapter 11 cases.
Upon information and belief formed after due inquiry, Gibson Dunn
and TPHS do not hold any disclosable economic interests in relation
to the Debtors.
As of Nov. 10, 2020, members of the Ad Hoc First Lien Term Lender
Group and their disclosable economic interests are:
Apollo Capital Management, L.P.
9 West 57th Street, 43rd Floor
New York, NY 10019
* First Lien Credit Agreement Claims: $8,889,906
Benefit Street Partners LLC
9 West 57th Street, 49th Floor
New York, NY 10019
* First Lien Credit Agreement Claims: $19,661,645
* $20,000,000 5.75 Senior Notes due 2022
Blackrock Financial Management, Inc.
55 East 52nd Street
New York, NY 10055
* First Lien Credit Agreement Claims: $13,165,436.59
Canyon Capital Advisors LLC
2000 Avenue of the Stars, 11th Floor
Los Angeles, CA 90067
* First Lien Credit Agreement Claims: $87,905,246
* $5,000,000 10% Senior Notes due 2025
Canyon CLO Advisors LLC
2000 Avenue of the Stars, 11th Floor
Los Angeles, CA 90067
* First Lien Credit Agreement Claims: $23,400,000
CCP Credit Master Lux S.a r.l.
8 Rue Genistre, L-1623 Luxembourg
Grand Duchy of Luxembourg
* First Lien Credit Agreement Claims: $11,610,784
CIFC Asset Management LLC
875 Third Avenue, 24th Floor
New York, NY 10022 Asset Management LLC
* First Lien Credit Agreement Claims: $63,751,646
Contrarian Capital Management, L.L.C.
411 West Putnam Avenue, Suite 425
Greenwich, CT 06830
* First Lien Credit Agreement Claims: $25,029,004
CSCP III Master Lux S.a r.l.
8 Rue Genistre, L-1623 Luxembourg
Grand Duchy of Luxembourg
* First Lien Credit Agreement Claims: $13,604,336
Eaton Vance Management and
Boston Management and Research
2 International Place, 9th Floor
Boston, MA 02110
* First Lien Credit Agreement Claims: $192,451,524
First Eagle Alternative Credit, LLC
227 West Monroe Street, Suite 3200
Chicago, IL 60606
* First Lien Credit Agreement Claims: $106,443,593
First Trust Advisors
120 E Liberty Drive
Suite 400
Wheaton, IL 60187
* First Lien Credit Agreement Claims: $50,467,613
* $25,000,000 10% First Lien Notes due 2025
* $1,500,000 5.625% Senior Notes due 2023
* $2,000,000 5.5% Senior Notes due 2025
Glendon Capital Management, L.P.
2425 Olympic Boulevard, Suite 500E
Santa Monica, CA 90404
* First Lien Credit Agreement Claims: $57,606,120
Marathon Asset Management, LP
One Bryant Park, 38th Floor
New York, NY 10036
* First Lien Credit Agreement Claims: $20,750,356
Neuberger Berman Investment Advisers LLC and
Neuberger Berman Loan Advisers LLC
190 South LaSalle Street, 23rd Floor
Chicago, IL 60603
* First Lien Credit Agreement Claims: $39,897,650
Octagon Credit Investors, LLC
250 Park Avenue, 15th Floor
New York, NY 10177
* First Lien Credit Agreement Claims: $83,709,678
PGIM, Inc.
655 Broad Street, 9th Floor
Newark, New Jersey 07102
* First Lien Credit Agreement Claims: $120,356,783
Redwood Capital Management, LLC
910 Sylvan Ave.
Englewood Cliffs, NJ 07632
* First Lien Credit Agreement Claims: $43,216,464
Silver Point Capital, LP
Two Greenwich Plaza
Greenwich, CT 06830
* First Lien Credit Agreement Claims: $231,875,472
Symphony Asset Management LLC
TIAA-CREF Investment Management, LLC and
Teachers Advisors, LLC
555 California Street, Suite 3100
San Francisco, CA 94104-1534
* First Lien Credit Agreement Claims: $51,449,419
Trimaran Advisors, L.L.C. and
Trimaran Advisors Management, L.L.C.
600 Lexington Ave.
New York, New York 10022
* First Lien Credit Agreement Claims: $17,971,991
Counsel for the Ad Hoc First Lien Term Lender Group can be reached
at:
TROUTMAN PEPPER HAMILTON SANDERS LLP
David M. Fournier, Esq.
Kenneth A. Listwak, Esq.
Hercules Plaza, Suite 5100
1313 N. Market Street, P.O. Box 1709
Wilmington, DE 19899-1709
Telephone: (302) 777-6500
Facsimile: (302) 421-8390
E-mail: david.fournier@troutman.com
ken.listwak@troutman.com
- and -
Scott J. Greenberg, Esq.
Michael J. Cohen, Esq.
Mark A. Kirsch, Esq.
Matthew L. Biben, Esq.
GIBSON, DUNN & CRUTCHER LLP
200 Park Avenue
New York, NY 10166
Telephone: (212) 351-4000
Facsimile: (212) 351-4035
Email: sgreenberg@gibsondunn.com
mcohen@gibsondunn.com
mkirsch@gibsondunn.com
mbiben@gibsondunn.com
A copy of the Rule 2019 filing, downloaded from PacerMonitor.com,
is available at https://bit.ly/38Ijiox and https://bit.ly/3lyE3H0
About Mallinckdrodt
Mallinckrodt -- http://www.mallinckrodt.com/-- is a global
business consisting of multiple wholly owned subsidiaries that
develop, manufacture, market and distribute specialty
pharmaceutical products and therapies. The company's Specialty
Brands reportable segment's areas of focus include autoimmune and
rare diseases in specialty areas like neurology, rheumatology,
nephrology, pulmonology and ophthalmology; immunotherapy and
neonatal respiratory critical care therapies; analgesics and
gastrointestinal products. Its Specialty Generics reportable
segment includes specialty generic drugs and active pharmaceutical
ingredients.
As of March 27, 2020, the Company had $10.17 billion in total
assets, $8.27 billion in total liabilities, and $1.89 billion in
total shareholders' equity.
On Oct. 12, 2020, Mallinckrodt plc and certain of its affiliates
sought Chapter 11 protection in Delaware in the U.S. (Bankr. D.
Del. Lead Case No. 20-12522) to seek approval of a restructuring
that would reduce total debt by $1.3 billion and resolve
opioid-related claims against the Company.
Mallinckrodt plc disclosed $9,584,626,122 in assets and
$8,647,811,427 in liabilities as of Sept. 25, 2020.
Latham & Watkins LLP, Ropes & Gray LLP and Wachtell, Lipton, Rosen
& Katz are serving as counsel to the Company, Guggenheim
Securities, LLC is serving as investment banker and AlixPartners
LLP is serving as restructuring advisor to Mallinckrodt. Hogan
Lovells is serving as counsel with respect to the Acthar Gel
matter. Prime Clerk LLC is the claims agent.
MARUTI REALSTATE: Seeks to Extend Plan Exclusivity Thru Dec. 14
---------------------------------------------------------------
Maruti Realstate LLC requests the U.S. Bankruptcy Court for the
District of Maryland, Baltimore Division, to extend by 90 days the
exclusive periods during which the Debtor may file a Chapter 11
plan and solicit acceptances for the plan to December 14, 2020, and
February 12, 2021, respectively.
Since the Petition Date, the Debtor has taken significant steps
toward restructuring its businesses and advancing this case forward
and has now posed a clear path to reorganization by way of
converting this case to Subchapter V and having the case jointly
administered with the case of affiliate, Compass Beer Pump, LLC.
The Debtor is currently in discussions with a real estate broker to
market and sells the Wiltshire Road property in Baltimore.
The Debtor was formed in 2018 to reacquire the Maruti properties --
consisting of properties at 3 Compass Road, Middle River, MD 21220;
and at 10 Wiltshire Road, Baltimore, MD 21221 -- after an entity
owned by First Mariner Bank recorded Deeds in Lieu of Foreclosure
for the Maruti Properties, pursuant to Purchase Money Deeds of
Trust, Security Agreements, and Assignments of Contracts, Leases
and Rents held by First Mariner Bank. To reacquire the Properties,
the Debtor's managing member sought "alternative" financing from
Itria Ventures LLC.
Unbeknownst to the Debtor's managing member, and at the time he was
dealing with a personal/family emergency, JMD Real Estate LLC, an
entity owned and managed by the President of Itria, purchased the
Maruti Properties from an entity/affiliate owned by First Mariner
Bank. Itria then loaned money to the Debtor and charged it a
"Finders Fee" of $182,300.00 in exchange for the assignment of the
purchase of the Maruti Properties.
Through a series of events based upon the Debtor's reliance on
certain verbal agreements and representations made by Itria and the
misunderstanding of the nature of the agreements being executed by
the Debtor and its managing member, the Debtor ultimately executed
documents for a loan amount in excess of $200,000.00 more than
originally requested and with a significantly higher than agreed
upon monthly payment.
Itria thereafter reneged on its verbal representations regarding
repayment of the loan, and sought a confessed judgment against the
Debtor and numerous guarantors, including Compass, in the State of
New York, ultimately obtaining a judgment for $1,131,012.20 on May
13, 2019.
On February 7, 2020, in the case styled Itria Ventures LLC v.
Maruti Realstate, LLC (Circuit Court for Baltimore County, Case
No.: C-03-CV-20-000487), the state court appointed The Casey Group,
Ltd. as receiver for the Debtor. On April 29, 2020, the state court
entered an order appointing Casey as receiver for Compass in the
case styled Itria Ventures LLC v. Compass Beer Pump, LLC (Circuit
Court for Baltimore County, Case No.: C-03-CV-20-0001921). The
Receiver has taken the position that the appointment encompassed
assets related to both the Debtor and Compass, which position
caused significant and irreparable financial damage to Compass when
the Receiver froze bank accounts and interfered with the management
of Compass' assets.
Compass has filed an adversary proceeding to avoid Itria's lien
against Compass' assets. Itria has moved to dismiss the adversary
proceeding.
On August 17, 2020, Compass filed its Chapter 11, Subchapter V
Plan.
On August 27, 2020, Itria filed a motion to dismiss the Debtor's
case. The Debtor has opposed the motion.
The Debtor and Compass have sought joint administration of their
cases.
While the Debtor and Compass had hoped that a negotiated resolution
of Itria's claim might transpire during the course of these
proceedings, such yet to come to fruition. The Debtor is looking
to proceed with a cramdown of Itria's claim, as is similarly
proposed under Compass' Subchapter V Plan.
The Debtor believes that a ninety (90) day extension of the
Exclusive Periods "will give it a better handle on its future
revenue growth and, thereby, a better idea as to the expected debt
repayment structure and timeline."
About Maruti Realstate
Maruti RealState LLC is a Maryland limited liability corporation
with its principal place of business at 3 Compass Road, Middle
River, MD 21220. Primarily engaged in renting and leasing real
estate properties, it also owns a commercial property known as 10
Wiltshire Road, Baltimore, MD 21221.
Compass Beer Pump, LLC owns and operates a liquor store known as
"Beer Pump Wine and Spirits" inside the Compass Road Property,
while the Wiltshire Road Property operated as a convenience store.
Maruti RealState LLC filed its voluntary petition under Chapter 11
of the Bankruptcy Code (Bankr. D. Md. Case No. 20-15329) on May 18,
2020. The petition was signed by Rajesh Patel, a member. At the
time of filing, the Debtor estimated $1 million to $10 million in
both assets and liabilities.
Alan M. Grochal, Esq. at Tydings & Rosenberg LLP represents the
Debtor as counsel and Tydings & Rosenberg LLP as its attorney.
No creditors committee has been appointed in this case.
MD AMERICA: Hires FTI Consulting as Financial Advisor
-----------------------------------------------------
MD America Energy, LLC, and its debtor-affiliates seek authority
from the U.S. Bankruptcy Court for the Southern District of Texas
to employ FTI Consulting, Inc., as financial advisor to the
Debtors.
MD America requires FTI Consulting to:
a. assist with the development of the Debtors' cash flow
forecast and regular variance reporting;
b. assist with the development and review of the Debtors'
business plan;
c. support the preparation of first day motions and develop
procedures and processes necessary to implement such
motions;
d. assist with developing accounting and operating procedures
to segregate prepetition and post-petition business
transactions;
e. assist the Debtors with the development of chapter 11
communications;
f. render general financial advice, financial analytics and
modeling as directed by the Debtors' management;
g. assist in the development and analysis of various strategic
alternatives available to the Debtors;
h. assist in the development of a plan of reorganization or
liquidation and disclosure statement;
i. assist in determining potential creditor recoveries under
alternative scenarios;
j. assist in analyzing and developing strategies to address
the Debtors' existing obligations;
k. assist the Debtors with information and analyses required
pursuant to the Debtors' debtor-in-possession ("DIP")
financing including, but not limited to, preparation for
hearings regarding the use of cash collateral and DIP
financing;
l. assist with sizing and securing DIP financing, as needed;
m. attend meetings, presentations and negotiations as may be
requested by the Debtors;
n. assist with claims reconciliation and objections;
o. assist management with operational requirements and
management of relationships with vendors and other
stakeholders;
p. provide court testimony, as needed; and
q. render such other general business consulting or such other
assistance as Debtors' management or counsel may deem
necessary that are consistent with the role of a financial
advisor and not duplicative of services provided by other
professionals in this proceeding.
FTI Consulting will be paid at these hourly rates:
Senior Managing Directors $920 to $1,295
Directors/Senior Directors/Managing Directors $690 to $905
Consultants/Senior Consultants $370 to $660
Administrative/Paraprofessionals $150 to $280
Prior to the Petition Date, FTI Consulting received from the
Debtors advance payments totaling $743,049.84. FTI Consulting
incurred fees and reimbursable expenses for the prepetition period
in the amount of $676,744.84. The portion of the Advance Payment
Retainer not applied to prepetition fees and disbursements in the
amount of $66,275.00.
FTI Consulting will also be reimbursed for reasonable out-of-pocket
expenses incurred.
David Rush, partner of FTI Consulting Inc., assured the Court that
the firm is a "disinterested person" as the term is defined in
Section 101(14) of the Bankruptcy Code and does not represent any
interest adverse to the Debtors and their estates.
FTI Consulting can be reached at:
David Rush
FTI CONSULTING, INC.
1301 McKinney St, Suite 3500
Houston, TX 77002
Tel: (713) 654-5001
About MD America Energy
MD America Energy, LLC is a Texas-based oil and gas operating
company engaged in the acquisition, development, exploitation and
production of crude oil and natural gas properties in East Texas.
Assets currently consist of approximately 71,000 net acres with
over 300 drilled and operated wells.
MD America Energy, which is the principal operating entity,
currently owns approximately 64,683 net acres with 256 operated
wells, focused in the Brazos Valley in East Texas and over 100
miles of low-pressure natural gas gathering lines owned and
operated by MD America's subsidiary, MD America Pipeline LLC. For
more information, visit https://www.mdae.com/
On Oct. 12, 2020, MD America Energy and its affiliates sought
Chapter 11 protection (Bankr. S.D. Texas Case No. 20-34966) to seek
confirmation of their prepackaged Chapter 11 plan. At the time of
the filing, MD America Energy had estimated assets of between $50
million and $100 million and liabilities of between $100 million
and $500 million.
The Debtors have tapped Porter Hedges LLP as their legal counsel,
Paladin Management Group LLC as restructuring advisor, and FTI
Consulting, Inc. as financial advisor. Prime Clerk LLC is the
claims agent.
MD AMERICA: Hires Mr. Avila of Paladin Management as CRO
--------------------------------------------------------
MD America Energy, LLC, and its debtor-affiliates seek authority
from the U.S. Bankruptcy Court for the Southern District of Texas
to employ Mr. Scott Avila of Paladin Management Group, LLC, as
chief restructuring officer to the Debtors.
MD America requires Paladin Management to:
a. assist the Debtors in cash management and cash flow
forecasting processes, including the monitoring of actual
cash flow versus projections;
b. assist the Debtors' in their analysis of their liquidity
outlook, debt service capacity and appropriate capital
structure;
c. assist the Debtors in (i) identifying various operational,
managerial, financial and strategic restructuring
alternatives, and (ii) understanding the business
and financial impact of same;
d. assist the Debtors in their preparation of contingency
plans to reflect the impact of restructuring alternatives;
e. assist the Debtors in the sale or monetization of the
Debtors' assets;
f. assist the Debtors in connection with the Debtors'
communicate and negotiations with other parties, include
its secured lenders, significant vendors, etc.;
g. assist the Debtors in connection with their preparation of
various financial reports which may be required during
discussions with the Debtors' Board, lenders and other
stakeholders; and
h. provide advice and recommendations with respect to other
related matters as the Debtors or their professionals may
request from time to time, as agreed to by the Firm.
Paladin Management will be paid at these hourly rates:
Managing Partner $695
Partner $625 to $645
Director $495 to $525
Consultant $295 to $325
Prior to the Petition Date, Paladin Management received advance
payments totaling $520,000. Paladin Management incurred fees and
reimbursable expenses for the prepetition period in the amount
$376,000. The portion of the Advance Payment Retainer not applied
to prepetition fees and disbursements in the amount of $144,000.
Paladin Management will also be reimbursed for reasonable
out-of-pocket expenses incurred.
Scott Avila, partner of managing partner of Paladin Management
Group, LLC, assured the Court that the firm is a "disinterested
person" as the term is defined in Section 101(14) of the Bankruptcy
Code and does not represent any interest adverse to the Debtors and
their estates.
Paladin Management can be reached at:
Scott Avila
PALADIN MANAGEMENT GROUP, LLC
633 W. 5th Street, 28th Floor
Los Angeles, CA 90071
Tel: (213) 320-5500
About MD America Energy
MD America Energy, LLC is a Texas-based oil and gas operating
company engaged in the acquisition, development, exploitation and
production of crude oil and natural gas properties in East Texas.
Assets currently consist of approximately 71,000 net acres with
over 300 drilled and operated wells.
MD America Energy, which is the principal operating entity,
currently owns approximately 64,683 net acres with 256 operated
wells, focused in the Brazos Valley in East Texas and over 100
miles of low-pressure natural gas gathering lines owned and
operated by MD America's subsidiary, MD America Pipeline LLC. For
more information, visit https://www.mdae.com/
On Oct. 12, 2020, MD America Energy and its affiliates sought
Chapter 11 protection (Bankr. S.D. Texas Case No. 20-34966) to seek
confirmation of their prepackaged Chapter 11 plan. At the time of
the filing, MD America Energy had estimated assets of between $50
million and $100 million and liabilities of between $100 millionand
$500 million.
The Debtors have tapped Porter Hedges LLP as their legal counsel,
Paladin Management Group LLC as restructuring advisor, and FTI
Consulting, Inc., as financial advisor. Prime Clerk LLC is the
claims agent.
MIRION TECHNOLOGIES: S&P Alters Outlook to Neg., Affirms 'B' ICR
----------------------------------------------------------------
S&P Global Ratings revised its outlook on San Ramon, Calif.-based
nuclear measurement solutions provider Mirion Technologies Inc. to
negative from stable and affirmed its 'B' issuer credit rating on
the company and its 'B' issue-level rating on the first-lien term
loan and revolver. The recovery rating remains '3'.
S&P said, "The negative outlook reflects our view that the
company's weaker credit metrics arising from debt issuances in
fiscal year 2020 and the current proposed transaction in fiscal
year 2021 could lead to a lower rating over the next 12 months if
the company fails to restore leverage below 6.5x over the next
year."
"Acquisitions will expand and diversify Mirion's business; however,
we could lower the rating if leverage is not restored over the next
12-18 months.We anticipate Mirion's acquisition of Project Sierra
will temporarily increase S&P adjusted leverage from an
already-high 7x, which is above our 6.5x downgrade threshold for
the current rating. Although we expect EBITDA from Project Sierra
and recently completed acquisitions to result in leverage of under
6.5x over the next 12-18 months, the negative outlook indicates
that we could lower our rating if Mirion's credit measures do not
improve over the next year, highlighting potential integration risk
associated with its recent acquisitions and high business
seasonality. Mirion's five acquisitions since the start of fiscal
year 2020 (ending June 30) and Project Sierra in fiscal year 2021
will account for 25% of pro forma revenues and pro forma EBITDA of
about $130 million, which we expect will only somewhat offset the
$310 million in additional first-lien add-on debt associated with
these acquisitions. Positively, we believe Project Sierra helps
bolster Mirion's presence in the medical space, a market with high
growth potential, and should also provide about $5 million in
synergy opportunities." The prior acquisitions increase the
company's nuclear medical capabilities and increase vertical
integration within its nuclear sector."
The Project Sierra acquisition is positive for Mirion, increasing
its scale and diversity into medical end markets, and providing
incremental recurring revenue. Mirion will use proceeds from the
incremental term loan debt and equity from the sponsor to fund the
acquisition of Project Sierra. Project Sierra primarily provides
radiation therapy measurement equipment and software used by
medical physicists to ensure cancer patient treatments are
delivered as intended by radiation oncologists. The company
reported approximately $93 million in 2020 revenues with EBITDA
margins in the mid-20% area, similar to the current EBITDA margins
of the legacy Mirion profile. Although the transaction modestly
improves S&P's view of the consolidated business, including
increased scale, geographic diversity, and margin profile, its
overall view of Mirion's business remains unchanged.
Mirion should be able to restore its credit measures to levels that
support S&P's current rating in the next 12-18 months, though the
company's financial policy decisions will be a key factor in the
deleveraging path. Mirion's leading position in the niche radiation
detection, monitoring, and services market, coupled with its
long-term revenue visibility, should enable it to delever to below
6.5x over the next 12-18 months.
S&P said, "We expect Mirion to maintain its leading or secondary
market positions across all its product categories, supported by
its brand reputation and strong customer relationships. We also
expect product innovation in Mirion's high-margin dosimetry
services to support growth in its military and health care end
markets. Still, we believe the company to be highly acquisitive and
could contemplate additional acquisitions that support its growth
strategy. This view of the company's financial policies is
incorporated into our rating and outlook. Although leveraging, the
proposed acquisition transaction is anticipated to be funded in
part with an equity contribution from Charterhouse Capital of $70
million. Given our forecast for leverage over the next 12 months,
there is limited capacity for future debt financed acquisitions at
the current rating until credit measures improve to more normalized
levels, at 6.5x or below."
Mirion's operating performance has been resilient through the first
six months of 2020. Through the first six months of 2020 (second
half of fiscal 2020), Mirion generated roughly $251 million in
revenues, up about 7% year over year, experiencing only a marginal
decline in adjusted EBITDA margin of about 200 basis points to the
low- to mid-20% area. While top-line performance experienced a
modest revenue impact of $15 million from COVID-19, the overall
increase is driven by large new customer wins, as well as
acquisitions that expanded the company's capabilities in radiation
therapy and medical diagnostic markets and expanding product
development. Free cash flow during this period has also improved
around $10 million despite an increase in capital expenditure
spending.
S&P said, "The negative outlook reflects our view that the
company's weaker credit metrics resulting from debt financed
acquisitions indicate a one-in-three chance of a lower rating over
the next 12-18 months if the company fails to restore leverage
below 6.5x during this time period. Overall, we believe the
company's presence across the nuclear power plant life cycle, its
large installed base, and the growth of its medical businesses
should support a path to delever below 6.5x, though integration
risk and future financial policy decisions are key risks to our
forecast."
S&P could lower its rating on Mirion over the next 12-18 months if
adjusted debt to EBITDA remains elevated above 6.5x, which could
occur if:
-- The company pursues additional debt-funded acquisitions or
pursues shareholder returns that limit its ability to reduce its
leverage below 6.5x; or
-- The company's operating performance deteriorates due to an
underperformance in its Asian markets because of unfavorable
regulatory changes, a decline in national defense spending, or a
stronger U.S. dollar such that its free operating cash flow or
liquidity materially diminishes.
S&P could revise the outlook to stable on Mirion over the next
12-18 months if it expects adjusted debt to EBTIDA to improve and
sustained below 6.5x, which could occur if:
-- The company successfully integrates its recent acquisitions and
is able to grow its EBITDA such that the proposed debt increase is
fully offset; or
-- The company applies a portion of its balance sheet cash for
debt repayment.
MONDORIVOLI LLC: Hires Kutner Brinen as Attorney
------------------------------------------------
Mondorivoli, LLC, seeks authority from the U.S. Bankruptcy Court
for the District of Colorado to employ Kutner Brinen, P.C., as
attorney to the Debtor.
Mondorivoli, LLC requires Kutner Brinen to:
a. provide the Debtor with legal advice with respect to its
powers and duties;
b. aid the Debtor in the development of a plan of
reorganization under Chapter 11;
c. file the necessary petitions, pleadings, reports, and
actions that may be required in the continued
administration of the Debtor's property under Chapter 11;
d. take necessary actions to enjoin and stay until a final
decree the continuation of pending proceedings and to
enjoin and stay until a final decree herein the
commencement of lien foreclosure proceedings and all
matters as may be provided under the Bankruptcy Code; and
e. perform all other legal services for the Debtor that may be
necessary.
Kutner Brinen will be paid at these hourly rates:
Lee M. Kutner $550
Jeffrey S. Brinen $475
Jenny M. Fujii $380
Keri L. Riley $320
Maureen M. Gerardo $200
Paralegal $75
Counsel holds a pre-petition retainer for payment of post-petition
fees and costs in the amount of $37,183. Counsel was also paid
pre-petition fees and costs, including the filing fee, by the
Debtor in the amount of $2,817, including the filing fee.
Kutner Brinen will also be reimbursed for reasonable out-of-pocket
expenses incurred.
Keri L. Riley, partner of Kutner Brinen, P.C., assured the Court
that the firm is a "disinterested person" as the term is defined in
Section 101(14) of the Bankruptcy Code and does not represent any
interest adverse to the Debtor and its estates.
Kutner Brinen can be reached at:
Jeffrey S. Brinen, Esq.
KUTNER BRINEN, P.C.
1660 Lincoln Street, Suite 1850
Denver, CO 80264
Tel: (303) 832-2400
Fax: (303) 832-1510
E-mail: jsb@kutnerlaw.com
About Mondorivoli
Mondorivoli, LLC was formed in 2012 for the purpose of investing in
commercial real estate in the Durango, Colorado area.
Mondorivoli, LLC, based in Durango, CO, filed a Chapter 11 petition
(Bankr. D. Colo. Case No. 20-17048) on October 27, 2020. In the
petition signed by Jean-Pierre Bleger, manager, the Debtor was
estimated to have $10 million to $50 million in assets and $1
million to $10 million in liabilities. The Hon. Joseph G. Rosania
Jr. presides over the case. Kutner Brinen, P.C., serves as
bankruptcy counsel to the Debtor.
MORIAH POWDER: Court Extends Plan Exclusivity Thru April 30
-----------------------------------------------------------
At the behest of US Realm Powder River, LLC, the Honorable Cathleen
D. Parker of the U.S. Bankruptcy Court for the District of Wyoming
extended the period within which the Debtor has the exclusive right
to file a chapter 11 plan through and including April 30, 2021, and
to obtain acceptances of the plan through and including June 30,
2021.
An extension of exclusivity will give the Debtor the necessary time
to negotiate and finalize a hedging transaction with Delek Royalty
US, LLC, the parent entity of Powder River VPP, LLC, the senior
secured creditor of the Debtor, and also to allow the Debtor to
begin enjoying the benefit of higher prices and build up its cash
resources to fund a plan.
According to U.S. Realm, the recently locked-in gas pricing will
generate surplus cash to fund a plan. "80% of Debtor's future gas
production through October 2021 is now subject to set pricing at
amounts that will generate cash surplus on a going-forward basis,"
the Debtor said.
About Moriah Powder River
Moriah Powder River, LLC, now known as US Realm Powder River, LLC,
is a privately held natural gas company with headquarters in
Sheridan, Wyoming, and operates in the Powder River Basin located
in northeast Wyoming.
Moriah Powder River filed a voluntary petition for relief under
Chapter 11 of the Bankruptcy Code (Bankr. D. Wyo. Case No.
19-20699) on Oct. 31, 2019. The petition was signed by Craig
Camozzi, chief operating officer.
At the time of filing, the Debtor estimated $100 million to $500
million in assets and $50 million to $100 million in liabilities.
The Honorable Cathleen D. Parker oversees the case. Bradley T.
Hunsicker, Esq., at Markus Williams Young & Zimmermann LLC, is the
Debtor's legal counsel, and Hall & Evans, LLC as its special
counsel.
No creditors' committee has been appointed in this case, nor has
any trustee or examiner been appointed.
MYOMO INC: Incurs $2.78 Million Net Loss in Third Quarter
---------------------------------------------------------
Myomo, Inc. filed with the Securities and Exchange Commission its
Quarterly Report on Form 10-Q disclosing a net loss of $2.78
million on $1.93 million of revenue for the three months ended
Sept. 30, 2020, compared to a net loss of $2.79 million on $606,619
of revenue for the same period in 2019.
For the nine months ended Sept. 30, 2020, the Company reported a
net loss of $9.86 million on $3.79 million of revenue compared to a
net loss of $7.95 million on $2.32 million of revenue for the same
period a year ago.
As of Sept. 30, 2020, the Company had $15.35 million in total
assets, $2.37 million in total liabilities, and $12.98 million in
total stockholders' equity.
"We achieved record revenue in the third quarter with deliveries of
MyoPros authorized for insurance reimbursement at their highest
level ever. As COVID-19 restrictions were lifted beginning
mid-year, we were able to fit devices on patients while also
securing a large number of new authorizations for patients in our
pipeline," stated Paul R. Gudonis, Myomo's chairman and chief
executive officer. "The shift to direct billing is supporting both
revenue growth and margin improvement, while our ongoing digital
transformation helped us grow our pipeline and backlog via
telehealth and social media marketing. As a result, Myomo entered
the fourth quarter with a record backlog of MyoPros to provide to
patients and submit to insurers for payment," he added.
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/Archives/edgar/data/1369290/000156459020052980/myo-10q_20200930.htm
About Myomo
Headquartered in Cambridge, Massachusetts, Myomo, Inc. --
http://www.myomo.com/-- is a wearable medical robotics company
that offers expanded mobility for those suffering from neurological
disorders and upper limb paralysis. Myomo develops and markets the
MyoPro product line. MyoPro is a powered upper limb orthosis
designed to support the arm and restore function to the weakened
or
paralyzed arms of patients suffering from CVA stroke, brachial
plexus injury, traumatic brain or spinal cord injury, ALS or other
neuromuscular disease or injury.
Myomo reported a net loss of $10.71 million for the year ended Dec.
31, 2019, compared to a net loss of $10.32 million for the year
ended Dec. 31, 2018. As of Dec. 31, 2019, the Company had $6.60
million in total assets, $4.77 million in total liabilities, and
$1.82 million in total stockholders' equity.
Myomo stated in its 2019 Annual Report that, "We have a history of
losses since inception. For the years ended December 31, 2019 and
2018, we incurred net losses of approximately $10.7 million and
$10.3 million, respectively. At December 31, 2019, we had an
accumulated deficit of approximately $56.1 million. We expect to
continue to incur operating and net losses for the foreseeable
future as we expand our sales and marketing efforts, invest in
product development and establish the necessary administrative
functions to support our growing operations and being a public
company. Our losses in future periods may be greater than the
losses we would incur if we developed our business more slowly. In
addition, we may find that these efforts are more expensive than
we
currently anticipate or that these efforts may not result in
increases in our revenues, which would further increase our losses.
Our cash and cash equivalents balance at December 31, 2019 was
approximately $4.5 million, which includes gross proceeds of
approximately $3.0 million from a term loan ("Term Loan") from
Chicago Venture Partners ("CVP") entered into in October 2019, but
excludes net proceeds from a public offering of our common stock
completed in February 2020 of approximately $13.7 million,
Subsequent to the closing of our public equity offering, we repaid
approximately $2.0 million to CVP, comprising 50% of the
outstanding balance of the Term Loan and a prepayment fee. There
can be no assurance that our existing cash plus the cash raised in
the offering will be sufficient to achieve cash flow breakeven."
NINE ENERGY: Incurs $18.5 Million Net Loss in Third Quarter
-----------------------------------------------------------
Nine Energy Service, Inc., filed with the Securities and Exchange
Commission its Quarterly Report on Form 10-Q disclosing a net loss
of $18.50 million on $49.52 million of revenues for the three
months ended Sept. 30, 2020, compared to a net loss of $20.63
million on $202.30 million of revenues for the three months ended
Sept. 30, 2019.
For the nine months ended Sept. 30, 2020, the Company reported a
net loss of $343.57 million on $248.88 million of revenues compared
to net income of $2.77 million on $669.53 million of revenues for
the same period during the prior year.
As of Sept. 30, 2020, the Company had $438.46 million in total
assets, $384.86 million in total liabilities, and $53.60 million in
total stockholders' equity.
During the third quarter of 2020, the Company reported net cash
provided by operating activities of $2.3 million, compared to $1.6
million for the second quarter of 2020. Capital expenditures
totaled $2.2 million during the third quarter of 2020.
As of Sept. 30, 2020, Nine's cash and cash equivalents were $80.3
million, and the Company had $39.5 million of availability under
the revolving credit facility, which remains undrawn, resulting in
a total liquidity position of $119.8 million as of Sept. 30, 2020.
Availability under the revolving credit facility decreased as
compared to June 30, 2020 due to a reduction in accounts receivable
and inventory balances.
During the third quarter, the Company repurchased approximately
$23.1 million of the senior notes for a repurchase price of
approximately $7.0 million in cash. As a result, the Company
recorded a $15.8 million gain on extinguishment of debt with no
cash tax obligation. Subsequent to Sept. 30, 2020, the Company
repurchased an additional $0.5 million of the senior notes for a
repurchase price of approximately $0.2 million in cash. To date,
the Company has repurchased approximately $53.3 million of the
senior notes for a repurchase price of approximately $14.6 million
in cash, leaving $346.7 million of bonds outstanding.
"The US market remained very challenged in Q3 with total US
completions and new wells drilled down again quarter over quarter,"
said Ann Fox, president and chief executive officer, Nine Energy
Service. "That said, we believe that we have passed through the
trough during the May-June timeframe and we saw sequential activity
and revenue increases month over month throughout the course of Q3,
but did not reach April revenue or activity levels. Although the
percentage basis increases appear very robust, the absolute
activity levels remain bleak with increases coming off a very low
base. We do expect Q4 to be better sequentially than Q3 from an
activity and revenue perspective. As activity returns, however
many competitors are trying to buy market share, driving down
prices and offsetting much of the revenue increases."
"This quarter, our team capitalized on opportunities that better
position the company from a financial and operational perspective.
Once again, we saw an opportunity to purchase additional bonds on
the open market at a significant discount, lowering our annual cash
interest expense, while reducing our overall debt outstanding.
During and subsequent to Q3, the Company repurchased $23.6 million
par value of bonds for $7.2 million of cash. To date, Nine has
repurchased approximately $53.3 million of bonds for $14.6 million
leaving $346.7 million of bonds outstanding and an undrawn ABL. We
have been very purposeful in balancing near and medium-term
liquidity needs with the refinancing of our debt and our top
priority continues to be the preservation of cash. On the
operational side, we organically expanded cementing into the
Haynesville, adding size and scale to the cementing service line
without increasing our 2020 capex guidance of $10-$15 million."
"On the technology side, I remain extremely happy with the
performance of our dissolvable plugs and the customers' appetite
for a dissolvable option. We are currently running trials with
some of the largest acreage holders with over 80% of the tools
deployed run by public operators across multiple basins. We also
continue to penetrate the cold temperature markets, running
approximately 35% of the low-temp Stinger products in the Permian
and approximately 46% in the Northeast. We are confident once we
see a real recovery in activity, the dissolvable tools will begin
generating growth."
"Our operational team once again demonstrated their ability to gain
market share, growing our percentage of stages completed from
approximately 16% in Q3 of 2019 to approximately 22% in Q3 of 2020.
I am confident we can continue to differentiate through our service
execution and technology and be well positioned as activity
increases."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1532286/000153228620000018/nine-20200930.htm
About Nine Energy Service
Nine Energy Service is an oilfield services company that offers
completion solutions within North America and abroad. The Company
brings years of experience with a deep commitment to serving
clients with smarter, customized solutions and resources that drive
efficiencies. Serving the global oil and gas industry, Nine
continues to differentiate itself through superior service quality,
wellsite execution and cutting-edge technology. Nine is
headquartered in Houston, Texas with operating facilities in the
Permian, Eagle Ford, SCOOP/STACK, Niobrara, Barnett, Bakken,
Marcellus, Utica and throughout Canada.
Nine Energy incurred net losses of $217.75 million in 2019, $52.98
million in 2018, and $67.68 million in 2017. As of Dec. 31, 2019,
the Company had $850.89 million in total assets, $461.02 million in
total liabilities, and $389.88 million in total stockholders'
equity.
* * *
In March 2020, Moody's Investors Service downgraded Nine Energy
Service, Inc.'s Corporate Family Rating to Caa1 from B2,
Probability of Default Rating to Caa1-PD from B2-PD and senior
unsecured notes rating to Caa2 from B3. Nine's Speculative Grade
Liquidity rating remains unchanged at SGL-2. The outlook remains
negative. "Nine's rating downgrades reflect pressures on credit
quality in the weak commodity price environment and lower capital
spending by the upstream energy sector," said Jonathan Teitel,
Moody's Analyst.
As reported by the TCR on Nov. 9, 2020, S&P Global Ratings lowered
its issuer credit rating on Nine Energy Service Inc. to 'SD'
(selective default) from 'CCC+'. The downgrade reflects the
company's recent open market debt repurchases, under which it
repurchased a total of more than $50 million of its unsecured notes
principal year-to-date at less than 30 cents on the dollar.
NINEPOINT MEDICAL: Hires Stretto as Claims and Noticing Agent
-------------------------------------------------------------
Ninepoint Medical, Inc., seeks authority from the U.S. Bankruptcy
Court for the District of Delaware to employ Stretto, as claims and
noticing agent to the Debtor.
Ninepoint Medical requires Stretto to:
(a) assist the Debtor with the preparation and distribution of
all required notices and documents in accordance with the
Bankruptcy Code and the Bankruptcy Rules in the form and
manner directed by the Debtor and/or the Court, including:
(i) notice of any claims bar date, (ii) notice of any
proposed sale of the Debtor's assets, (iii) notices of
objections to claims and objections to transfers of
claims, (iv) notices of any hearings on a disclosure
statement and confirmation of any plan of reorganization,
including under Bankruptcy Rule 3017(d), (v) notice of the
effective date of any plan, and (vi) all other notices,
orders, pleadings, publications and other documents as the
Debtor, Court, or Clerk may deem necessary or appropriate
for an orderly administration of this chapter 11 case;
(b) maintain an official copy of the Debtor's schedules of
assets and liabilities and statements of financial affairs
(collectively, the "Schedules"), listing the Debtor's
known creditors and the amounts owed thereto;
(c) maintain (i) a list of all potential creditors, equity
holders and other parties-in-interest and (ii) a "core"
mailing list consisting of all parties described in
Bankruptcy Rule 2002(i), (j) and (k) and those parties
that have filed a notice of appearance pursuant to
Bankruptcy Rule 9010; update and make said lists available
upon request by a party-in-interest or the Clerk;
(d) furnish a notice to all potential creditors of the last
date for filing proofs of claim and a form for filing a
proof of claim, after such notice and form are approved by
the Court, and notify said potential creditors of the
existence, amount and classification of their respective
claims as set forth in the Schedules, which may be
effected by inclusion of such information (or the lack
thereof, in cases where the Schedules indicate no debt due
to the subject party) on a customized proof of claim form
provided to potential creditors;
(e) maintain a post office box or address for receiving claims
and returned mail, and process all mail received;
(f) maintain an electronic platform for purposes of filing
proofs of claim;
(g) for all notices, motions, orders or other pleadings or
documents served, prepare and file or cause to be filed
with the Clerk an affidavit or certificate of service
within seven days of service which includes (i) either
a copy of the notice served or the docket number(s) and
title(s) of the pleading(s) served, (ii) a list of persons
to whom it was mailed (in alphabetical order) with their
addresses, (iii) the manner of service, and (iv) the date
served;
(h) process all proofs of claim received, including those
received by the Clerk, check said processing for accuracy,
and maintain the original proofs of claim in a secure
area;
(i) maintain the official claims register (the "Claims
Register") on behalf of the Clerk; upon the Clerk's
request, provide the Clerk with a certified, duplicate
unofficial Claims Register; and specify in the Claims
Register the following information for each claim
docketed: (i) the claim number assigned, (ii) the date
received, (iii) the name and address of the claimant and
agent, if applicable, who filed the claim, (iv) the
address for payment, if different from the notice address;
(v) the amount asserted, (vi) the asserted
classification(s) of the claim (e.g., secured, unsecured,
priority, etc.), and (vii) any disposition of the claim;
(j) provide public access to the Claims Registers, including
complete proofs of claim with attachments, if any, without
charge;
(k) implement necessary security measures to ensure the
completeness and integrity of the Claims Register and the
safekeeping of the original claims;
(l) record all transfers of claims and provide any notices of
such transfers as required by Bankruptcy Rule 3001(e);
(m) relocate, by messenger or overnight delivery, all of the
court-filed proofs of claim to the offices of Stretto,
not less than weekly;
(n) upon completion of the docketing process for all claims
received to date for each case, turn over to the Clerk
copies of the Claims Registers for the Clerk's review
(upon the Clerk's request);
(o) monitor the Court's docket for all notices of appearance,
address changes, and claims-related pleadings and orders
filed and make necessary notations on and/or changes to
the claims register and any service or mailing lists,
including to identify and eliminate duplicative names and
addresses from such lists;
(p) identify and correct any incomplete or incorrect addresses
in any mailing or service lists;
(q) assist in the dissemination of information to the public
and respond to requests for administrative information
regarding this chapter 11 case as directed by the
Debtor or the Court, including through the use of a case
website and/or call center;
(r) if this chapter 11 case is converted to a case under
chapter 7 of the Bankruptcy Code, contact the Clerk's
office within three (3) days of notice to Stretto of
entry of the order converting the case;
(s) 30 days prior to the close of this chapter 11
case, to the extent practicable, request that the Debtor
submit to the Court a proposed order dismissing Stretto as
claims, noticing, and solicitation agent and terminating
its services in such capacity upon completion
of its duties and responsibilities and upon the
closing of this chapter 11 case;
(t) within seven (7) days of notice to Stretto of entry of
an order closing this chapter 11 case, provide to the
Court the final version of the Claims Register as of
the date immediately before the close of the case; and
(u) at the close of these chapter 11 cases, (i) box and
transport all original documents, in proper format, as
provided by the Clerk's office, to (A) the Philadelphia
Federal Records Center, 14700 Townsend Road, Philadelphia,
PA 19154-1096 or (B) any other location requested by the
Clerk's office, and (ii) docket a completed SF-135 Form
indicating the accession and location numbers of the
archived claims.
Stretto will be paid at these hourly rates:
Director of Solicitation $210
Solicitation Associate $190
COO and Executive VP No charge
Director $175-$210
Associate/Senior Associate $65-$165
Analyst $30-$50
Prior to the Petition Date, the Debtors provided Stretto an advance
in the amount of $5,000.
Stretto will also be reimbursed for reasonable out-of-pocket
expenses incurred.
Sheryl Betance, managing director of corporate restructuring of
Stretto, assured the Court that the firm is a "disinterested
person" as the term is defined in Section 101(14) of the Bankruptcy
Code and does not represent any interest adverse to the Debtor and
its estates.
Stretto can be reached at:
Sheryl Betance
STRETTO
410 Exchange, Ste. 100
Irvine, CA 92602
Tel: (714) 716-1872
E-mail: sheryl.betance@stretto.com
About Ninepoint Medical
NinePoint Medical, Inc. is a privately-held medical device company
that designs, manufactures, and sells an Optical Coherence
Tomography (OCT) imaging platform for the evaluation of human
tissue microstructure.
NinePoint Medical, Inc. Case No. 20-12618) on Oct. 16, 2020. In
the petition signed by CRO Brian Ayers, the Debtor was estimated to
have $1 million to $10 million in assets and $10 million to $50
million in liabilities. The Hon. Karen B. Owens oversees the case.
McDermott Will & Emergy LLP, serves as bankruptcy counsel. Rock
Creek Advisors LLC, is the restructuring advisor. Stretto, is the
claims and noticing agent.
NORTHERN LIGHT: Moody's Affirms Ba1 Rating on $389MM Debt
---------------------------------------------------------
Moody's Investors Service affirmed Northern Light Health's (NLH)
(ME) (previously Eastern Maine Health Systems) Ba1 rating,
affecting approximately $389 million of debt. The outlook was
revised to negative from stable.
RATINGS RATIONALE
The outlook revision to negative from stable reflects expectations
of very narrow headroom under quarterly covenants over the next
year, driven by a potential multi-year period of weak margins. The
material impact of COVID, which resulted in minimal cashflow in
fiscal 2020, will challenge margin improvement because of prolonged
volume recovery and sustained higher costs to prepare for and treat
COVID patients. Temporarily elevated liquidity will decline to
moderate pre-COVID levels after repayment of the Medicare advance.
The affirmation of the Ba1 rating reflects expected margin
improvement from further cost reductions, which will build on
successful multi-year strategies before COVID. Further, newly
recruited clinicians will help reduce pre-COVID volume backlogs and
contain temporary labor costs. The system's dominant market
position over a broad geography will limit competitive challenges.
RATING OUTLOOK
The negative outlook reflects the expected continuation of narrow
covenant headroom over the next year, and a potential multi-year
period to return to pre-COVID margins. While expected to improve in
fiscal 2021, margins will likely remain weak given the material and
ongoing impact of COVID.
FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGS
- Significant and sustained improvement in operating margins
- Growth in days cash on hand
- Improvement in leverage metrics
FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGS
- Prolonged period of narrow headroom, covenant breach, or
increased risk of acceleration
- Inability to show progressive margin improvement in fiscal 2021
and 2022
- Meaningful increase in leverage
- Decline in liquidity or absolute unrestricted investments below
FYE19 level
- Dilutive acquisition or merger
LEGAL SECURITY
The bonds are secured by a pledge of gross receipts of the
obligated group (represents virtually all system revenue) as well
as a mortgage lien on facilities. There are additional indebtedness
tests and a debt service reserve fund.
PROFILE
Northern Light Health is comprised of 10 hospitals located across
Maine, including the flagship Eastern Maine Medical Center located
in Bangor. The system employs over 750 physicians and has the
largest geographic footprint in the state.
METHODOLOGY
The principal methodology used in these ratings was Not-For-Profit
Healthcare published in December 2018.
NPC INT'L: Wendy's May Refuse Franchise Permission from Flynn
-------------------------------------------------------------
Josh Saul and Leslie Patton of Bloomberg News reports that Wendy's
Co. may not give permission for Flynn Restaurant Group to become a
franchisee of the Frosty seller, creating a potential roadblock for
a $816 million bankruptcy sale, a lawyer for the chain said in
court Friday. November 13, 2020.
Flynn, the largest eatery franchisee in the U.S., was approved
Friday as the so-called stalking horse bidder to buy about 1,300
Pizza Hut and Wendy’s restaurants from bankrupt restaurant
operator NPC International Inc.
"We are not hopeful that we can grant consent to Flynn," lawyer
Sean O'Neal of law firm Cleary Gottlieb Steen & Hamilton said on
behalf of Wendy's.
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.
NPC INTERNATIONAL: Sets Lease Sale Procedures for De Minimis Assets
-------------------------------------------------------------------
NPC International, Inc. and affiliates ask the U.S. Bankruptcy
Court for the Southern District of Texas to authorize (i) the Lease
Sale Procedures in connection with the sale(s) of certain unexpired
nonresidential real property leases, and (ii) the De Minimis Asset
Sale Procedures in connection with the sale of certain assets that
are of relatively de minimis value compared to the Debtors' total
asset base, including certain fee-owned properties.
For the past several months the Debtors, with the assistance of
their retained real estate advisor -- A&G Realty Partners, LLC --
and their other advisors, have been engaged in a comprehensive
review and analysis to refine and optimize their go-forward
restaurant footprint and, ultimately, their lease portfolio for
both their Wendy's and Pizza Hut businesses.
In connection with those efforts, the Debtors spent the early part
of these chapter 11 cases negotiating and memorializing the Pizza
Hut Restaurant Closure Consent Agreement, dated Aug. 13, 2020 with
Pizza Hut, LLC to optimize their go-forward Pizza Hut restaurant
footprint. The Closure Agreement provides the Debtors with the
flexibility to close up to 300 of their Pizza Hut restaurants, and
the Debtors have filed a motion to approve lease rejection
procedures [Docket No. 664] in order to reject leases in an orderly
and streamlined manner to the extent they determine it is in the
best interest of the estates to do so.
Accordingly, the Debtors, with the assistance of A&G, are currently
marketing the leases of certain restaurants closed pursuant to the
Closure Agreement to determine whether it is in the best interest
of the estates to sell or reject the underlying leases free and
clear of liens, claims, encumbrances, and interests, pursuant to
one or more Lease Purchase Agreements executed by and between the
Debtors and certain entity or entities that submit the highest or
otherwise best offer for the Leases as determined by the Debtors in
their business judgment pursuant to the Lease Sale Procedures. As
the Debtors are marketing leases only for restaurants that have
closed, it is imperative that the Debtors commence and finalize the
Lease Sale(s) as soon as possible to avoid the accrual of any
unnecessary administrative expenses for these restaurants,
including, but not limited to, future rent obligations.
While they lease almost all of their locations, the Debtors also
own certain of their restaurant locations in fee -- and certain
restaurants authorized to close under the Closure Agreement were
operated on that owned real property. As part of their efforts to
maximize value for all of their stakeholders, the Debtors intend to
market their owned real property relating to the store closures
through one or more sale transactions during the pendency of these
chapter 11 cases. Additionally, they may also intend to sell other
assets relating to closing restaurants (or office spaces), such as
equipment, to the extent such sales provide value for the Debtors
("De Minimis Assets").
The Debtors submit that obtaining Court approval of each De Minimis
Asset Sale would be administratively burdensome, costly to the
Debtors’ estates, and could eliminate or substantially undermine
economic benefits that would be realized from such sales. They
propose to utilize the De Minimis Asset Sale Procedures to obtain
more expeditious and cost-effective review by parties in interest.
The Debtors propose to sell the Leases through one or more sale
transactions pursuant to: (a) the terms of an assumption and
assignment agreement(s) or, (b) should the Successful Bidder be the
current landlord and/or counterparty to a Lease, a lease
termination agreement, with the applicable agreement to be
negotiated by and between the Debtors and proposed purchaser(s)
and, if necessary, executed upon completion of one or more auctions
for the Leases.
Specifically, the Debtors will implement the following Lease Sale
Procedures:
(a) Bid Deadline: Oct. 23, 2020 at 4:00 p.m. (CT)
(b) Qualified Bid: The Debtors will require a qualified bid to
meet the following requirements in their business judgment and in
consultation with the Ad Hoc Priority/1L Group and Creditors'
Committee: (i) enclose a proposed assumption and assignment
agreement and/or lease termination agreement that specifically
identifies the Lease(s) proposed to be assumed and assigned and the
proposed consideration; (ii) confirm that the offer will remain
open and irrevocable until the closing of a Lease Sale to the
Successful Bidder or the Next Highest Bidder; (iii) be accompanied
by a Minimum Deposit in an amount equal to 10% of the purchase
price identified in the Lease Purchase Agreement as a minimum good
faith deposit; (iv) not be conditioned on obtaining financing or
the outcome of any due diligence by the bidder; and (v) fully
disclose the identity of each entity that will be bidding for the
Lease(s) or otherwise participating in connection with such bid,
and the complete terms of any such participation.
(c) Sale Notice Parties: Qualified Bids must be submitted on
or before the Bid Deadline to (i) A&G Realty Partners (Attn.: Mike
Matlat (mike@agrep.com)) (ii) counsel to the Debtors, Weil, Gotshal
& Manges LLP, 767 Fifth Avenue, New York, New York 10153 (Attn:
Michael Buschmann, Esq. (Michael.Buschmann@weil.com)).
(d) Auction(s): If they receive more than one Qualified Bid
for all or certain of the Leases, the Debtors will hold Auction(s)
with respect to the Lease Sale(s), which will commence on Nov. 13,
2020 at 10:00 a.m. (CT) or such later time as the Debtors may
provide so long as such change is communicated reasonably in
advance by the Debtors to all bidders and other invitees. The
Auction will be conducted by video or telephonic conference, the
detail of which will be provided to Qualified Bidders in advance of
the Auction. A minimum Qualified Bid amount for the Leases may be
announced and/or posted prior to the Auction. Such minimum
Qualified Bid amounts may be established based upon a variety of
factors, including, but not limited to, the highest bids received
prior to the Auction.
(e) Notice of Successful Bid(s): As soon as reasonably
practicable following the conclusion of the Bid Deadline or the
Auction(s), as applicable, the Debtors will file a Notice of
Successful Bid(s). The Post-Sale Notices will identify the
identity of the Successful Bidder(s), the amount of the Successful
Bid(s), and will include a substantially final version of the
Purchase Agreement.
(f) Lease Sale Hearing: Nov. 23, 2020 at TBD (CT)
In connection with the Lease Sale(s), the Debtors will ask to
assume and assign the respective Lease(s) to the Successful Bidder.
The Lease Sale Objection Deadline is Nov. 20, 2020 at 4:00 p.m.
(CT).
The Debtors ask the Court approves the form and manner of service
for the Assignment Notice, the Lease and De Minimis Asset Sale
Procedures Order, and the Post-Sale Notice(s). They propose that
within one business day after entry of the Lease and De Minimis
Asset Sale Procedures Order, the Debtors will file on the docket
and serve the Assignment Notice and the Lease and De Minimis Asset
Sale Procedures Order by overnight delivery, on all the Affected
Counterparties and parties entitled to notice under Bankruptcy Rule
2002 and Local Rule 2002-1.
The Debtors ask authorization to sell or purchase De Minimis Assets
outside of the ordinary course of business pursuant to these
procedures:
a. Non-Noticed Sales: For property that, in the Debtors' good
faith determination, has a fair market value of less than $350,000
and is proposed to be sold in a sale, or in a series of related
sales ("Non-Noticed Sale"):
i. The Debtors are authorized to consummate the sale of
such property without further order of the Bankruptcy Court or
notice to any party if the Debtors determine in a reasonable
exercise of their business judgment that such a sale is in the best
interest of their estates; provided that the Debtors will provide
e-mail notification to counsel to the Creditors' Committee and
counsel to the Ad Hoc Priority/1L Group three business days prior
to the consummation of such sale or purchase.
ii. Any such sale of property will be free and clear of
all Liens, with any valid and properly perfected Liens attaching
only to the sale proceeds.
iii. Within 30 days of each quarterly period, commencing
with the period ending Dec. 31, 2020, the Debtors will file with
the Bankruptcy Court a report summarizing any Non-Noticed Sale that
were completed pursuant to the De Minimis Asset Sale Procedures
during the immediately preceding quarter, and serve it on the
interested parties.
b. Noticed Sales: For property that has a fair market value
equal to or greater than $350,000, and less than or equal to
$1,000,000, and is proposed to be sold in a sale, or in a series of
related sales ("Noticed Sales"):
i. The Debtors are authorized to consummate such a sale
without further order of the Court, subject to the procedures set
forth herein, if the Debtors determine in a reasonable exercise of
their business judgment that such a sale is in the best interest of
their estates.
ii. Any such sale will be free and clear of all Liens,
with any valid and perfected Liens attaching only to the sale
proceeds.
iii. The Debtors shall, at least seven days prior to
closing such sale, serve the Sale Notice to the Notice Parties.
iv. Parties objecting to a Noticed Sale must file and
serve a written objection so that such objection is filed with the
Bankruptcy Court and is actually received by the Notice Parties as
well as the counsel to the Debtors no later than five business days
after the date the Debtors serve the relevant Sale Notice.
c. Sale or Purchase Pursuant to Motion. For property that, in
the Debtors' good faith determination, has a fair market value
greater than $1 million and is proposed to be sold in a sale, or in
a series of related sales, the Debtors will ask authority to sell
such property pursuant to a motion and in accordance with the
Bankruptcy Code, Bankruptcy Rules, and Local Rules.
The Debtors will continue to market the Leases, and, after approval
of the Lease Sale Procedures, conduct one or more Auctions if
necessary and complete the disposition of the Leases in a manner
best-tailored to generate value for their estates while
simultaneously limiting their exposure to burdensome and
unnecessary administrative expenses. For these reasons, the
Debtors submit that the Court should approve the Lease Sale(s) to
the Purchaser(s) selected by them pursuant to the Lease Sale
Procedures.
To maximize the value received and limit the incurrence of
additional administrative expenses, the Debtors ask to sell the
Leases as soon as possible after approval of the Lease Sale
Procedures. They submit that ample cause exists to justify a
waiver of the 14-day stay imposed by Bankruptcy Rules 6004(h) and
6006(d), to the extent applicable.
A copy of the Sale Procedures is available at
https://tinyurl.com/y3l9eekn from PacerMonitor.com free of charge.
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, 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.
OAK LAWN, IL: Moody's Affirms Ba1 Rating on $60MM GOULT Debt
------------------------------------------------------------
Moody's Investors Service has affirmed the Ba1 rating on the
village of Oak Lawn, IL's general obligation unlimited tax (GOULT)
debt. The outlook has been revised to negative from stable. The
rating action applies to $60 million of rated debt.
RATINGS RATIONALE
The Ba1 reflects the Village's limited financial position that is
being pressured by COVID-19 driven revenue declines and large and
growing fixed costs, though liquidity is adequate and may be
boosted next year by leasing certain governmental assets. The
rating also reflects the risk associated with the funding of public
safety pension plans below state mandated levels which could result
in a diversion of state shared revenue and the Village's high and
growing pension burden. The rating also considers the Village's
moderately sized tax base with above average resident income levels
and close proximity to Chicago (Ba1 negative).
Moody's regards the coronavirus outbreak as a social risk under its
ESG framework, given the substantial implications for public health
and safety. The economic and fiscal consequences of the coronavirus
crisis are a key driver for this rating action.
RATING OUTLOOK
The negative outlook reflects its expectation that the Village's
financial position will remain challenged over the next several
years given a strained revenue environment and growing fixed costs.
The Village's pension underfunding also creates a direct risk to
liquidity because it is not in compliance with state law. Finally,
the negative outlook reflects the Village's high pension burden
which is likely to continue to grow given the Village's funding
practices.
FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGS
- Significant and sustained improvement in fund balance and
liquidity
- A moderated pension burden
- Material budgetary adjustments that enable more adequate
funding of pensions
FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGS
- Further narrowing of fund balance and liquidity
- Diversion of state revenues to pension funds that creates
additional operating pressures
LEGAL SECURITY
The Village's general obligation unlimited tax debt is secured by
the Village's full faith and credit pledge and a property tax levy
unlimited as to rate or amount to cover debt service.
PROFILE
The Village of Oak Lawn is an inner ring Chicago suburb located
about twenty miles southwest of downtown with an estimated
population of just over 56,000.
METHODOLOGY
The principal methodology used in these ratings was US Local
Government General Obligation Debt published in July 2020.
OMNIQ CORP: Reports $3.8 Million Net Loss for Third Quarter
-----------------------------------------------------------
OMNIQ Corp. filed with the Securities and Exchange Commission its
Quarterly Report on Form 10-Q disclosing a net loss attributable to
the company of $3.78 million on $15.83 million of total revenues
for the three months ended Sept. 30, 2020, compared to a net loss
attributable to the company of $1.44 million on $13.09 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 attributable to the company of $8.65 million on $42.31
million of total revenues compared to a net loss attributable to
the company of $2.61 million on $45.84 million of total revenues
for the same period during the prior year.
As of Sept. 30, 2020, the Company had $40.33 million in total
assets, $43.49 million in total liabilities, and a total
stockholders' deficit of $3.16 million.
"Our strong top-line growth in the third quarter, both year over
year and sequentially, reflects the underlying strength, quality
and reliability of our product offerings, combined with the quality
and strength of our unique, diversified customer base," said Shai
Lustgarten, CEO of OMNIQ. "As we stated in our recent Letter to
Shareholders in October, we are seeing traction in our Supply Chain
Mobility and Smart City markets across multiple industries.
Specifically, our "contactless" technologies apply to many
organizations that are increasingly focused on productivity,
health, and safety due to the ongoing COVID-19 pandemic. Our
third-quarter results reflect the successful efforts of our sales
team and the increasing interest in our technology solutions, and
thanks to our investments in R&D in the area of advanced AI
technology, we started the fourth quarter with increasing demand
for our AI-based solutions that we expect to improve our gross
margin in the near future as we work to take the Company towards
profitability.
"Despite the economic uncertainties resulting from the pandemic, we
remain steadfast in cementing our position as a supplier of choice
for Internet-of-Things-enabled supply chain solutions, as well as
advanced AI-based machine vision solutions powered by deep
neural-network algorithms for Fortune 500 companies, institutions,
government agencies and municipalities around the world. We pride
ourselves in the accuracy and efficiency of our object
identification technologies, and helping our growing roster of
customers with a broad range of applications, from supply chain
logistics, to parking and traffic management, to border control, to
campus safety, to law enforcement, and many more. We see
tremendous opportunity in our fast-growing target markets and our
team at OMNIQ is working relentlessly to deliver growth and to
create value for our shareholders. We also believe that our plan
to uplist to a senior stock exchange, if completed, will increase
investor awareness and broaden our institutional and stakeholder
base."
As of Sept. 30, 2020, the Company had cash in the amount of $5.6
million of which $533,000 is on deposit and restricted as
collateral for a letter of credit and a corporate purchasing card,
and a working capital deficit of $24.6 million, compared to cash in
the amount of $2.1 million, of which $533 thousand was restricted,
and a working capital deficit of $20.2 million as of Dec. 31,
2019.
The Company's accumulated deficit was $53.8 million and $45.1
million at Sept. 30, 2020 and Dec. 31, 2019, respectively.
The Company's operations resulted in net cash provided of $1.5
million during the nine months ended Sept. 30, 2020, compared to
net cash provided of $4.9 million during the nine months ended
Sept. 30, 2019, a decrease of $3.4 million. The changes in the
non-cash working capital accounts are primarily attributable the
large increases in accounts receivable and accounts payable during
the first nine months of 2020.
Net cash provided by investing activities was $61,000 for the nine
months ended Sept. 30, 2020, compared to net cash used of $270,000
for the nine months ended Sept. 30, 2019, an increase of $331,000,
primarily attributable to a decrease in other assets.
The Company's financing activities provided net cash of $1.9
million during the nine months ended Sept. 30, 2020, compared to
net cash used of $3.1 million during the nine months ended Sept.
30, 2019. For the nine months ended Sept. 30, 2020, the Company
received cash from the line of credit with Action Capital of
approximately $1.9 million and also from the PPP Loan of $888,000.
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/Archives/edgar/data/278165/000149315220021146/form10-q.htm
About OMNIQ Corp.
Headquartered in Salt Lake City, Utah, OMNIQ Corp. (OTCQB: OMQS) --
http://www.omniq.com/-- provides computerized and machine vision
image processing solutions that use patented and proprietary AI
technology to deliver data collection, real time surveillance and
monitoring for supply chain management, homeland security, public
safety, traffic & parking management and access control
applications. The technology and services provided by the Company
help clients move people, assets and data safely and securely
through airports, warehouses, schools, national borders, and many
other applications and environments.
Omniq reported a net loss attributable to common stockholders of
$5.31 million for the year ended Dec. 31, 2019, compared to a net
loss attributable to common stockholders of $5.41 million for the
year ended Dec. 31, 2018. As of June 30, 2020, the Company had
$41.33 million in total assets, $42.05 million in total
liabilities, and a total stockholders' deficit of $725,000.
Haynie & Company, in Salt Lake City, Utah, the Company's auditor
since 2019, issued a "going concern" qualification in its report
dated March 30, 2020, citing that the Company has a deficit in
stockholders' equity, and has sustained recurring losses from
operations. This raises substantial doubt about the Company's
ability to continue as a going concern.
ONCE A DOG: Creditors to Get Paid From Property Sale Proceeds
-------------------------------------------------------------
Debtor Once a Dog, Inc., filed with the U.S. Bankruptcy Court for
the District of Maryland, Greenbelt Division, a Plan of
Reorganization and a Disclosure Statement on Sept. 18, 2020.
Class IV consists of the allowed unsecured claims of the City of
Frederick, David Schiller, Eugene Souder, Potomac Edison, and all
other creditors who timely file an allowed unsecured claim. The
allowed claims of all creditors who hold general unsecured claims
will be satisfied pro rata from the proceeds of the sale of the
Property.
The Shareholders will receive a distribution pro rata from the
proceeds of the sale of the Property, to the extent that proceeds
are available after satisfaction of all claims in Class IV.
The Plan provides for the payment of all administrative expenses
and payment of the secured and general unsecured claims of
creditors from the sale of the Debtor's improved real property
located at 6 S. Bentz St., Frederick, MD 21701 free and clear of
all liens, claims, encumbrances and interests to David Schiller for
One Million Dollars ($1,000,000). The sale will generate funds
sufficient to fully satisfy the claims of all secured,
administrative, and priority creditors, and to make a distribution
to the unsecured creditors on the basis of pro rata distribution of
the remaining net proceeds.
A full-text copy of the Disclosure Statement dated September 18,
2020, is available at https://tinyurl.com/yxv2h598 from
PacerMonitor.com at no charge.
Attorney for Debtor:
Michael G. Wolff .
Wolff & Orenstein, LLC
15245 Shady Grove Road
Suite 465, North Lobby
Rockville, Maryland 20850
Tel: (301) 250-7232
E-mail: MWolff@wolawgroup.com
About Once A Dog Inc.
Once A Dog, Inc.is a single asset real estate debtor (as defined in
11 U.S.C. Section 101(51B)).
On March 9, 2020, creditor Sidney Schiller filed an involuntary
petition against Once A Dog under Chapter 11 of the U.S. Bankruptcy
Code (Bankr. D. Md. Case No. 20-13102). The case is assigned to
Judge Thomas J. Catliota. Wolff & Orenstein, LLC, is the Debtor's
legal counsel.
PACIFIC DRILLING: Akin Gump Represents Crossover Group
------------------------------------------------------
In the Chapter 11 cases of Pacific Drilling S.A., et al., the law
firm of Akin Gump Strauss Hauer & Feld LLP submitted a verified
statement under Rule 2019 of the Federal Rules of Bankruptcy
Procedure, to disclose that it is representing the Ad Hoc Crossover
Group.
Akin Gump represents certain unaffiliated holders of claims arising
from (a) the 8.375% first lien senior secured notes due 2023 issued
under that certain Indenture, dated as of September 26, 2018, by
and among Pacific Drilling First Lien Escrow Issuer Limited, as
escrow issuer, Wilmington Trust, National Association, as trustee
and as collateral agent, and the guarantors named therein, and (b)
the 11.000%/12.000% second lien secured PIK notes due 2024 issued
under that certain Indenture, dated as of September 26, 2018, by
and among Pacific Drilling Second Lien Escrow Issuer Limited, as
escrow issuer, the Indenture Trustee, as trustee and junior lien
collateral agent, and the guarantors named therein.
Akin Gump does not represent or purport to represent any other
entities in connection with the chapter 11 cases of the
above-captioned debtors and debtors-in-possession. Akin Gump does
not represent the Ad Hoc Crossover Group as a "committee" and does
not undertake to, and does not, represent the interests of, and is
not a fiduciary for, any creditor, party in interest, or entities
other than the Ad Hoc Crossover Group. In addition, neither the Ad
Hoc Crossover Group nor any member of the Ad Hoc Crossover Group
represents or purports to represent, or serves as fiduciary for,
any other entities in connection with the Debtors' chapter 11
cases.
As of Nov. 4, 2020, each of the Ad Hoc Crossover Group and their
disclosable economic interests are:
GoldenTree Asset Management LP
300 Park Avenue
New York, NY 10022
* $91,325,000.00 of First Lien Notes
* $3,180,000.00 of Second Lien PIK Notes
Hayfin Capital Management LLP
One Eagle Place
SW1Y 6AF United Kingdom
* $64,000,000.00 of First Lien Notes
* $22,930,662.00 of Second Lien PIK Notes
Pacific Investment Management Company LLC
650 Newport Center Drive
Newport Beach, CA 92660
* $334,101,000.00 of First Lien Notes
* $30,899,000.00 of Second Lien PIK Notes
Whitebox Advisors LLC
3033 Excelsior Boulevard Suite 500
Minneapolis, MN 55416
* $53,001,000.00 of First Lien Notes
* $49,080,926.00 of Second Lien PIK Notes
* Short 666,187 shares of common equity issued by
Pacific Drilling S.A.
Nothing contained in this Verified Statement should be construed as
a limitation upon, or waiver of, any rights of the Ad Hoc Crossover
Group or any member of the Ad Hoc Crossover Group, including any
right to assert, file and/or amend any claim in accordance with
applicable law and any orders entered in these chapter 11 cases.
Additional holders of First Lien Notes or Second Lien PIK Notes may
become members of the Ad Hoc Crossover Group, and certain members
of the Ad Hoc Crossover Group may cease to be members of the Ad Hoc
Crossover Group in the future. Akin Gump reserves the right to
amend or supplement this Verified Statement in accordance with the
requirements set forth in Bankruptcy Rule 2019.
Counsel for the Ad Hoc Crossover Group can be reached at:
AKIN GUMP STRAUSS HAUER & FELD LLP
Marty L. Brimmage Jr., Esq.
Lacy M. Lawrence, Esq.
2300 N. Field Street, Suite 1800
Dallas, TX 75201
Telephone: (214) 969-2800
Facsimile: (214) 969-4343
Email: mbrimmage@akingump.com
llawrence@akingump.com
Michael S. Stamer, Esq.
One Bryant Park
New York, NY 10036
Telephone: (212) 872-1000
Facsimile: (212) 872-1002
Email: mstamer@akingump.com
- and -
James Savin, Esq.
Kevin Eide, Esq.
2001 K Street, N.W.
Washington, DC 20006
Telephone: (202) 887-4000
Facsimile: (202) 887-4288
Email: jsavin@akingump.com
keide@akingump.com
A copy of the Rule 2019 filing, downloaded from PacerMonitor.com,
is available at https://bit.ly/3nw1hOF
About Pacific Drilling
Pacific Drilling (NYSE: PACD) provides deepwater drilling services.
Pacific Drilling's fleet of seven drillships represents one of the
youngest and most technologically advanced fleets in the world. On
the Web: http://www.pacificdrilling.com/
On Nov. 12, 2017, Pacific Drilling S.A. along with affiliates each
filed a voluntary petition for relief under Chapter 11 of the
United States Bankruptcy Code (Bankr. S.D.N.Y. Lead Case No.
17-13193). In that case, Pacific tapped Togut, Segal & Segal LLP
as counsel; Evercore Partners International LLP as investment
banker; and AlixPartners, LLP, as restructuring advisor.
Pacific Drilling S.A. and its affiliates returned to Chapter 11
bankruptcy (Bankr. S.D. Tex. Lead Case No. 20-35212) on Oct. 30,
2020, to seek approval of a bankruptcy-exit plan that will cut
debt
by $1.1 billion.
As of June 30, 2020, Pacific Drilling had $2,166,943,000 in assets
and $1,142,431,000 in liabilities.
In the present case, Greenhill & Co. is acting as financial advisor
to the Debtors, Latham & Watkins LLP and Jones Walker LLP are
serving as legal counsel, and AlixPartners is acting as
restructuring advisor to Pacific Drilling in connection with the
restructuring. Prime Clerk LLC is the claims agent.
Houlihan Lokey is acting as financial advisor and Akin Gump Strauss
Hauer & Feld LLP is acting as legal advisor to the noteholders.
PEABODY ENERGY: Moody's Downgrades CFR to Caa1
----------------------------------------------
Moody's Investors Service downgraded Peabody Energy Corporation's
Corporate Family Rating to Caa1 from B3 and senior secured debt
ratings to Caa1 from B3. The downgrade is driven primarily by
eroding liquidity and an increased likelihood of a debt
restructuring. The ratings are placed on review for downgrade. In
addition, Moody's downgraded the company's Speculative Grade
Liquidity rating to SGL-4 from SGL-3.
Downgrades:
Issuer: Peabody Energy Corporation
Probability of Default Rating, Downgraded to Caa1-PD from B3-PD;
Placed Under Review for further Downgrade
Speculative Grade Liquidity Rating, Downgraded to SGL-4 from SGL-3
Corporate Family Rating, Downgraded to Caa1 from B3; Placed Under
Review for further Downgrade
Gtd. Senior Secured Revolving Credit Facility, Downgraded to Caa1
(LGD3) from B3 (LGD3); Placed Under Review for further Downgrade
Gtd. Senior Secured 1st Lien Term Loan, Downgraded to Caa1 (LGD3)
from B3 (LGD3); Placed Under Review for further Downgrade
Issuer: Peabody Securities Finance Corporation
Senior Secured Regular Bond/Debenture, Downgraded to Caa1 (LGD3)
from B3 (LGD3); Placed Under Review for further Downgrade
Outlook Actions:
Issuer: Peabody Energy Corporation
Outlook, Changed To Rating Under Review From Negative
Issuer: Peabody Securities Finance Corporation
Outlook, Changed To Rating Under Review From Negative
RATINGS RATIONALE / FACTORS THAT COULD LEAD TO AN UPGRADE OR
DOWNGRADE OF THE RATINGS
The review will focus on the company's effort to amend financial
maintenance covenants of its senior secured credit facilities and
extend the maturity of its $459 million 6% Senior Secured Notes due
2022. Management announced during the third quarter earnings
conference call that the company has reached a standstill agreement
with surety bond providers related to recent collateral requests
that is contingent on the company achieving certain milestones by
31 December 2020, which can be extended to 29 January 2021 for
purposes of increasing participation. The standstill agreement
requires the company post $75 million of additional collateral in
2020 and $25 million of collateral per year through 2025 -- subject
to adjustment if the company generates more than $100 million of
free cash flow or more than $10 million of asset sales in a
twelve-month period. If the conditions are met and the agreement is
completed, surety providers have agreed to maintain existing bonds
and refrain from requesting additional collateral through the
earlier of the maturity date of the credit agreement and December
2025. A long-term agreement in accordance with the proposed terms
would substantially reduce the risk associated with the company's
reclamation-related surety bonds. However, failure to reach an
agreement could result in a downgrade of more than one notch.
Peabody's eroding liquidity, including an expected covenant
violation for the fourth quarter of 2020 and collateral requests
from surety bond providers, drives the downgrade of the SGL rating
to SGL-4. The company reported $815 million of cash and $45 million
of availability under multiple liquidity facilities on 30 September
2020. Liquidity facilities include a $540 million revolving credit
facility due 2023 and a $250 million securitization program. The
company has substantial cash borrowings and $335 million of letters
of credit posted against these facilities. Moody's does not expect
that the company will be able to maintain compliance with financial
maintenance covenants (including a quarterly Net Debt/EBITDA test
of 2.0x with cash netting limited to $800 million) in the fourth
quarter of 2020. While the company is pursuing an amendment to
address the expected covenant violation, the SGL rating does not
consider amendments that have not been executed. A set of
transactions that provides greater covenant flexibility, addresses
debt maturities in 2022, limits collateral requests, and leaves a
reasonable amount of cash on the balance sheet could result in a
higher SGL rating.
The Caa1 CFR balances an asset base capable of supporting higher
ratings with a confluence of negative factors that create more
immediate financial pressures that the company must address in the
very near term. Peabody has a diverse platform of thermal and
metallurgical coal mines in Australia and the United States. Most
of the company's US thermal coal is sold to domestic utilities and
all the US-produced metallurgical coal is sold into the seaborne
market. Most of the company's coal produced in Australia is sold
into the seaborne thermal and metallurgical coal markets in Asia.
Like other rated coal producers, environmental and social factors
have a material impact on the company's credit quality by
increasing the cost of capital. The rating also takes into
consideration that some mining assets have less favorable operating
prospects in the coming years and, therefore, could be subject to
more significant reclamation-related spending over the rating
horizon. Recent management commentary also increase the risk
related to a debt exchange below par value occurring in the very
near term and recent trading prices suggest that the exchange could
occur below par value, which could be considered a limited default
under Moody's definition of default that includes situations not
considered a legal default under the company's debt agreements.
Environmental, social, and governance factors have a material
impact on Peabody's credit quality. The company is exposed to ESG
issues typical for a company in the coal mining industry, including
increasing global demand for renewable energy that is detrimental
to demand for coal, especially in the United States and Western
Europe. From an environmental perspective, the coal mining sector
is also viewed as: (i) very high risk for air pollution and carbon
regulations; (ii) high risk for soil and water pollution, land use
restrictions, and natural and man-made hazards; and (iii) moderate
risk for water shortages. Specific social issues with respect to
Peabody include the future operational status of the company's
North Goonyella metallurgical coal mine that is not operational
following a mine fire. The company continues to weigh its strategic
development alternatives while the North Goonyella commercial
process is advancing. Governance-related risks have increased in
early 2020 following a change in the CFO and the company's
announcement that it would nominate two directors from its largest
shareholder and one independent director. Peabody returned more
than $1.6 billion of cash to shareholders from 2017-2019 and
subsequently suspended its dividend and has eliminated share
repurchases in an effort to preserve cash.
Peabody Energy Corporation is a leading global pure-play coal
producer with coal mining operations in the US and Australia and
about 4 billion tons of proven and probable reserves. The company
generated $4.6 billion in revenues in 2019.
The principal methodology used in these ratings was Mining
published in September 2018.
PIMLICO RANCH: Creditors to be Paid in Full Over 5 Years
--------------------------------------------------------
Pimlico Ranch, LLC, a California Limited Liability Company, filed
with the U.S. Bankruptcy Court for the Central District of
California, Riverside Division, a Plan of Reorganization and a
Disclosure Statement on Sept. 18, 2020.
Debtor's major asset is the vacant land which has an appraised
value in excess of $5 million.
The Plan and Disclosure Statement contemplate the Debtor completing
development of its Property. Debtor's Plan provides for the
subdivision of the Property into an additional 10 lots for a total
of 35 buildable lots of about one acre and which will be developed
as a gated community with the completion and sale of 35 luxury
homes of 3,900 to 5,000 square feet with expected initial sales
prices between $1,000,000 and $1,300,000. Debtor anticipates that
it will obtain approval for the subdivision of 35 lots by February
2021.
The Plan provides for the extension of the maturity date for Prime
first deed of trust to two years after the effective date. The
Prime Loan shall become all due and payable on the earlier of the
refinance of the Property or two years after the effective date.
There is also over $4,000,000 of general unsecured debt that mainly
is related to the effort to develop the Property.
The Debtor is working with a consortium of experienced developers
of luxury homes who will provide the expertise and assist in the
financing required for the Project. The Consortium consists mostly
of general unsecured creditors that are already owed money for the
work that has been done on the Project. The Consortium has an
interest in getting the Project fone since it is the only way they
will recover their losses. Debtor will maintain its interest in the
Project and the Plan provides carve outs for Debtor's creditors as
the houses are sold. The Plan provides for the payment of 100% of
all allowed creditor claims, without interest, over time.
The Debtor's member has committed to contribute new value in the
amount of $100,000 over the Plan timeframe. The amount of $100,000
will be deposited with Debtor's attorneys as an initial deposit for
new value. The initial sale prices for the homes is anticipated to
be between $1,000,000 and $1,300,000 with projected revenues in
excess of $40,000,000 and net revenues in excess of $15,000,000
from the Project.
It is anticipated that the Plan will be a 100% plan and will be all
creditors their full claim during the 60 month Plan period.
Class 4 General Unsecured Claims are impaired. The Debtor estimates
that the total amount of unsecured Claims is approximately
$593,670. Beginning on first day of the twelfth month after the
Effective Date and each month thereafter, Debtor shall pay the
amount of $10,000 into a pot for general unsecured. As each of the
finished homes are sold and until the General Unsecured Creditors
are paid 100% of their allowed claim (without interest), Debtor
shall also pay 5% of the total sale price of each home to the
Unsecured Pot. In or before the 60th month of the Plan Debtor
shall deposit a sufficient amount into the Unsecured pot to pay the
amount remaining to pay the allowed general unsecured claims (the
"Final Unsecured Payment").
A full-text copy of the Disclosure Statement dated September 18,
2020, is available at https://tinyurl.com/y2vjyvkx from
PacerMonitor.com at no charge.
A full-text copy of the Disclosure Statement dated September 21,
2020, is available at https://tinyurl.com/y6xbhwlh from
PacerMonitor.com at no charge.
General Counsel for the Debtor:
ROBERT M. YASPAN
JOSEPH G. McCARTY
DEBRA R. BRAND
Law Firm of Robert M. Yaspan
21700 Oxnard Street, Suite 1750
Woodland Hills, CA 91367
Tel: (818) 774-9929
Fax: (818) 774-9989
About Pimlico Ranch
Pimlico Ranch, LLC, is is a real estate developer. It owns vacant
land and 25-unit residential subdivision in Murrieta, California,
having an appraised value of $5.5 million.
Pimlico Ranch filed its voluntary petition for relief under Chapter
11 of the Bankruptcy Code (Bankr. C.D. Cal. Case No. 20-13407) on
June 22, 2020. In the petition signed by Ben R. Clymer, managing
member, the Debtor estimated $5,500,000 in assets and $6,719,670 in
liabilities. Robert M. Yaspan, Esq., at the Law Firm of Robert M.
Yaspan represents the Debtor as counsel.
PIMLICO RANCH: Perris Trustee Says Plan Unconfirmable
-----------------------------------------------------
Todd A. Frealy, the chapter 11 trustee ("Trustee") for the
bankruptcy estate of Ben Clymer's The Body Shop Perris, Inc.
("Perris Inc."), files his objection to the "Disclosure Statement
to First Amended Plan of Reorganization" filed by Pimlico Ranch,
LLC.
"The Disclosure Statement... fails to provide adequate
information regarding matters upon which the Plan hinges, such as
the development of the Property, financing, new value contribution,
claims and treatment of claims. The DS is also confusing and
inconsistent. Therefore, creditors, including the estate of
Perris Inc. which is a creditor of Pimlico having filed its
“Proof of Claim" on September 1, 2020 (Claim No. 3-1), are unable
to make an informed choice regarding approval or rejection of the
Plan," the Trustee said in court filings.
"The Plan is also patently unconfirmable. The good faith of
Pimlico in proposing the Plan is in doubt and the Plan is not
feasible and violates the absolute priority rule. Pimlico is also
seeking major adjustments to the note held by Prime Lending LLC
which is secured by the Property which Prime has not agreed to;
Pimlico must "cram down"
the Plan provisions on Prime which is unlikely to occur. Prime has
also objected to the DS and the Plan. Concurrently with the hearing
on the DS, the Court will consider the Trustee's motion for
substantive consolidation ("SubCon Motion") of the Perris Inc.
estate with Pimlico's estate and two other businesses solely owned
and controlled by Randolph Ben Clymer. If the SubCon Motion is
approved as to Pimlico, the DS and Plan are moot.
In its objection to the Disclosure Statement, the Trustee points
out that:
* The Disclosure Statement fails to describe Clymer's experience
and qualifications.
* The Disclosure Statement also fails to describe the
"Consortium" of the experienced developers of luxury homes that
Clymer intends to work with.
* The Disclosure Statement also fails to discuss the Plan
Projections adequately.
* There is no discussion in the Disclosure Statement as to the
likelihood or status of Pimlico's obtaining such financing or the
terms.
* The Disclosure Statement should include a detailed discussion
of these construction loans.
* The Disclosure Statement also omits any discussion as to the
claim of Perris Inc., how Pimlico intends to treat such claim when
it is liquidated and the impact on the Plan and Plan Projections.
* The Disclosure Statement contains minimal and inadequate
discussion as to how it intends to "cram down" the provisions of
the Plan on Prime.
* The Disclosure Statement also includes minimal and inadequate
discussions as to the basis for reducing the interest rate
chargeable by Prime from 12%-20% to 5%.
* The Disclosure Statement doesn't mention the $140,000
financing needed by January 2021 to cover development costs, and
construction loans of $9 million which are critical to the Project
and the Plan Projections.
* There is no explanation as to why Mr. Lighthouse is
subordinating his claim or whether any of the unsecured claims are
even valid and legitimate.
* The qualifications of Clymer to develop the Project is also
not discussed in the DS.
* The Disclosure Statement and Plan also fail to the show any
effort, let alone the "careful, extensive and focused effort," that
would be necessary to fulfill the requirements of LaSalle.
Attorneys for Todd A. Frealy, Chapter 11 Trustee of
Bankruptcy Estate of Ben Clymer's The Body Shop
Perris, Inc.:
MONICA Y. KIM (SBN 180139)
LEVENE, NEALE, BENDER, YOO & BRILL L.L.P.
10250 Constellation Boulevard, Suite 1700
Los Angeles, California 90067
Telephone: (310) 229-1234
Facsimile: (310) 229-1244
Email: MYK@LNBYB.COM
About Pimlico Ranch
Pimlico Ranch, LLC, is is a real estate developer. It owns vacant
land and 25-unit residential subdivision in Murrieta, California,
having an appraised value of $5.5 million.
Pimlico Ranch filed its voluntary petition for relief under Chapter
11 of the Bankruptcy Code (Bankr. C.D. Cal. Case No. 20-13407) on
June 22, 2020. In the petition signed by Ben R. Clymer, managing
member, the Debtor disclosed $5,500,000 in assets and $6,719,670 in
liabilities. Robert M. Yaspan, Esq., at the Law Firm of Robert M.
Yaspan represents the Debtor as counsel.
PLASKOLITE PPC: S&P Alters Outlook to Positive, Affirms 'B-' ICR
----------------------------------------------------------------
S&P Global Ratings revised its outlook to positive from negative
and affirmed all its ratings on U.S.-based acrylic and
polycarbonate plastic sheet manufacturer Plaskolite PPC
Intermediate II LLC, including its 'B-' issuer credit rating.
The positive outlook reflects the possibility that S&P could raise
its rating on Plaskolite over the next few quarters if strong
demand continues, along with cost management, such that S&P expects
debt leverage to remain below 7x with EBITDA interest coverage
above 1.5x.
The coronavirus pandemic and the need for safety products to reduce
the spread have increased demand for Plaskolite's products.
Plaskolite is benefiting from a surge in demand for PPE such as
face shields and protective barriers to combat the transmission of
the coronavirus, as well as increased spending on bath and spa
products from heighted repair and remodel spending. With a backlog
of over $200 million S&P has good visibility into 2021 and expect
demand for Plaskolite's plastic sheet to extend well into the year,
with safety shields being used in a variety of end markets such as
retail and restaurants, grocery stores, and doctors' offices. Even
if demand for these subside somewhat in the second half of 2021,
other end markets like school systems and office buildings may need
these products as they reopen even when a vaccine becomes
available.
S&P said, "We now expect leverage to improve to about 6x compared
to prior expectations of close to 9x We expect a 60%-65% increase
in EBITDA in 2020, which will result in leverage declining to about
6x compared to prior expectations of close to 9x and 9.8x in 2019.
Plaskolite has a variable cost structure, with only about 20% of
its costs fixed. However, a high proportion (over 70%) of its
variable costs are tied to unpredictable raw material price
fluctuations such as its methyl methacrylate monomer (MMA) and
polycarbonate resin. Plaskolite has tried to ensure continued
supply of these necessary inputs and recently extended an MMA
supply contract for the next five years at stable prices and has a
contract for PC resin through Dec. 31, 2021. In 2020, we expect
lower materials costs as a result of recessionary pressures and for
earnings to benefit from recently implemented price increases, as
well as a shift in product mix toward higher-margin products. As a
result, EBITDA margins should improve to 18%-19% from 14.4% in
2019. We expect that Plaskolite could maintain these metrics or
even improve them in 2021 if it maintains control of its costs,
especially those it can control."
Plaskolite's competitive position is driven by good market position
in niche markets, but is tempered by participation in cyclical,
competitive, and commoditized end markets Plaskolite has a No. 1
market share in the niche North American acrylic (40%) and
polycarbonate sheet (45%) markets. It also has a loyal and
long-standing customer base supported by its large manufacturing
footprint. The company has historically set itself apart from its
competitors with its ability to meet customized product
specifications and differentiated range of products and serves
diverse and loosely correlated end markets that have historically
resulted in stable margins. Plaskolite also operates in a
commoditized and competitive market and is exposed to volatile
input costs. It also has significant supplier concentration with
several key raw material inputs which have only one or two
suppliers each. The company is also smaller in scale and scope than
other building material companies S&P rates with about $720
million-$730 million in revenues expected in 2020.
S&P said, "We expect Plaskolite to generate positive free cash
flows over the next two years. We expect Plaskolite to generate
close to $50 million in free cash flows in 2020, increasing to
about $70 million-$80 million in 2021. We also expect the company
to remain acquisitive but believe these will be bolt-on and funded
through internally generated cash. In our experience, sponsor-owned
companies typically have more aggressive financial policies and are
more likely to pursue debt-financed acquisitions or dividend
distributions over time." However, the company's sponsor PPC
Investment Partners does not have a history of seeking
debt-financed dividends from its portfolio companies."
S&P said, "The positive outlook reflects that we could raise our
rating on Plaskolite over the next few quarters if strong demand
continues, along with cost management, such that we expect debt
leverage remains below 7x with EBITDA interest coverage above
1.5x."
"The improvement in Plaskolite's performance has been quick and is
still evolving. We could raise our rating on the company if we
believe it can maintain credit measures near current levels even if
it reverts to its traditional product mix. We would also be more
likely to raise the rating if the company uses its excess cash
flows for debt repayments."
An upgrade scenario would most likely incorporate the following:
-- EBITDA margins expected to remain above 15%;
-- Debt to EBITDA expected to remain below 7x; and
-- EBITDA interest coverage sustained above 2x.
S&P said, "We could revise our outlook back to stable if EBITDA
expansion slows. This could occur if costs increase, or selling,
general, and other expenses continue increasing as the company
grows. Although unlikely, we could also revise the outlook to
stable if Plaskolite adopts a more aggressive financial policy."
Conditions meeting a downside scenario include:
-- EBITDA interest coverage below 2x.
-- Negative discretionary cash flow (DCF; operating cash flow less
capital spending and dividends); and
-- Leverage above 7x as a result of debt-financed dividends or
acquisitions.
PRIMO FOODS: Seeks to Hire Luke Lirot as Special Counsel
--------------------------------------------------------
Primo Foods and Beverage, LLC, seeks authority from the U.S.
Bankruptcy Court for the Western District of Texas to employ the
Law Offices of Luke Lirot, P.A., as special counsel to the Debtor.
Primo Foods requires Luke Lirot to represent in the prosecution of
claims and render legal services in the following cases:
a. GT Management, Inc., etc., v. Manatee County, Florida, Case
No.2012-CA-1224, in the Circuit Court for the 12 th
Judicial Circuit in and for Manatee County, Florida; and
b. AL-ROB CORPORATION, a Florida Corporation; et al v. UNITED
STATES SMALL BUSINESS ADMINISTRATION; et al; CIVIL CASE NO.
8:20-CV-01497-WFJ-JSS, UNITED STATES DISTRICT COURT,
MIDDLE DISTRICT OF FLORIDA, TAMPA DIVISION
Luke Lirot will be paid at these hourly rates:
Partners $425
Associates $200
Paralegals $90
Luke Lirot will also be reimbursed for reasonable out-of-pocket
expenses incurred.
Luke Lirot, partner of the Law Offices of Luke Lirot, P.A., assured
the Court that the firm is a "disinterested person" as the term is
defined in Section 101(14) of the Bankruptcy Code and does not
represent any interest adverse to the Debtor and its estates.
Luke Lirot can be reached at:
Luke Lirot, Esq.
LAW OFFICES OF LUKE LIROT, P.A.
2240 Belleair Road, Suite 190
Clearwater, FL 33764
Tel: (727) 536-2100
About Primo Foods and Beverage
Primo Foods and Beverage, LLC, a Fla.-based limited liability
company, sought protection under Chapter 11 of the Bankruptcy Code
(Bankr. W.D. Tex. Case No. 20-60627) on Sept. 21, 2020. At the
time of the filing, the Debtor was estimated to have assets of
between $1,000,001 and $10 million and liabilities of the same
range. Joyce W. Lindauer Attorney, PLLC is the Debtor's legal
counsel. The Law Offices of Luke Lirot, P.A., is special counsel.
PRO-CRETE READY: Case Summary & 20 Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: Pro-Crete Ready Mix, LLC
120 W. Ave K
Midlothian, TX 76065
Business Description: Pro-Crete Ready Mix, LLC operates a concrete
factory in Dallas, Texas.
Chapter 11 Petition Date: November 13, 2020
Court: United States Bankruptcy Court
Northern District of Texas
Case No.: 20-43507
Debtor's Counsel: Eric A. Liepins, Esq.
ERIC A. LIEPINS
12770 Coit Road
Suite 1100
Dallas, TX 75251
Tel: 972-991-5591
Fax: 972-991-5788
Email: eric@ealpc.com
Total Assets: $131,000
Total Liabilities: $1,907,531
The petition was signed by Terry Daniels, managing member.
A copy of the petition containing, among other items, a list of the
Debtor's 20 largest unsecured creditors is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/7PMJSAI/Pro-Crete_Ready_Mix_LLC__txnbke-20-43507__0001.0.pdf?mcid=tGE4TAMA
QUARTER HOMES: Progress Residential Buying Spur House for $225K
---------------------------------------------------------------
Quarter Homes, LLC, asks the U.S. Bankruptcy Court for the District
of Arizona to authorize the sale of the house located at 28779 N.
Spur Drive, San Tan Valley, Arizona to Progress Residential Homes,
LLC, for $225,000, subject to higher and better offers.
Quarter Homes owns 44 homes (single family residences) located in
Maricopa, Pinal, and Navajo County. The homes are covered by
blanket deeds of trust, assignments of leases and rents, and
security agreements ("DOT Assignments and Security Agreements"),
serviced by Midland Loan Servicing on behalf of Wilmington Trust,
National Association, as Trustee for the benefit of holders of
CoreVest American Finance 2018-1 Mortgage Pass Through
Certificates. Due to the bankruptcy filing, CoreVest passed
servicing of the loans to Situs AMC.
The DOT Assignments and Security Agreements are part of a master
loan agreement providing the terms of the original $6.9 million
(now approximately $5 million) loan that Quarter Homes has from
CoreVest. Under the terms of the Loan Documents, Quarter Homes is
required to pay back a certain release price (the proportional
share of that home with regard to the original loan), along with a
pre-payment fee, and a yield-maintenance fee.
Upon closing of the sale and receipt of the Release Price,
Situs/CoreVest is obligated to release its lien so that clear title
can be passed to the buyer. Here, although it has not yet been
calculated to the exact dollar amount, it is anticipated that the
Release Price will be approximately $147,000 (approximately
$111,200 in principal, $22,770 in the contract-required 20%
principal reduction, and $13,000 in yield maintenance/prepayment
fees).
The home was marketed pursuant to the Debtor's previously filed
motion to employ Maria Todd and A&M Management as a broker for the
Spur House. The Court approved that motion on Sept. 28, 2020.
The sale price for the Spur House is $255,000, pursuant to the
terms of the Purchase Contract. The Debtor does not anticipate
that the Buyer's offer will be subject to other higher and better
offers at the sale hearing. Upon Court approval, the Spur House
will be sold free and clear of liens, claims, and encumbrances,
with CoreVests' lien to attach to the extent of the aforementioned
Release Prices, which Release Price will be paid to CoreVest at the
close of escrow.
In addition, Quarter Homes is responsible for certain other closing
costs including the commission of the Buyer's broker ($7,650),
escrow, title, and other fees in the approximate amount of $10,350.
After the deduction of the Release Price, the A&M Broker
commission, and the other Closing Costs, the sale of the Spur House
to the Buyer will result in net proceeds after costs of sale of
approximately $90,000. This amount will be paid to Quarter Homes
at closing. This amount is more than anticipated under the
Debtor's plan projections -- which anticipated a sale price of
approximately $227,500.
If the sale of the Spur House is approved by the Court, the
transaction is scheduled to close on Nov. 20, 2020, or as otherwise
agreed by the Debtor and the buyer. The Debtor's agents have
communicated with the Buyer and the Buyer is ready to promptly
close escrow.
The Debtor has marketed the house with A&M Broker since September
2020 and believes the offers from the proposed buyer represent the
best price attainable for the Spur House. For that reason, Quarter
Homes believes that the sale need not be subject to higher and
better offers. Moreover, subjecting the Buyer to higher and better
bids at the last moment of the sale process could cause him to
terminate the sale.
Having said that, to the extent that the Court believes procedures
are necessary, the Debtor would submit that any party desiring to
bid provide counsel for the Debtor with a $5,000 cashier's check
(or cash) on the date of the sale, and that bids occur in
increments of $1,000.
The Debtor further asks a waiver of the 14-day stay pursuant to
Rule 6004(h) to allow the order approving the relief sought to take
effect immediately. Fed. R. Bankr. P. 6004(h).
A copy of the Contract is available at https://tinyurl.com/y5xkj3dc
from PacerMonitor.com free of charge.
About Quarter Homes
Quarter Homes, LLC, located at 15446 N Greenway Hayden Loop Ste
1029, Scottsdale, Arizona, owns commercial real estate, undeveloped
land, and residential properties located in Arizona. Quarter Homes
sought Chapter 11 protection (Bankr. D. Ariz. Case No. 20-07065) on
June 11, 2020. In the petition signed by David Turcotte,
president, the Debtor was estimated to have assets and liabilities
in the range of $1 million to $10 million. The Debtor tapped
Warren J. Stapleton, Esq., at Osborn Maledon, P.A.
QUINCY MEDIA: Moody's Affirms B2 CFR; Alters Outlook to Positive
----------------------------------------------------------------
Moody's Investors Service changed the outlook on Quincy Media,
Inc.'s ratings to positive from stable. Concurrently, Moody's
affirmed the company's B2 corporate family rating (CFR), B2-PD
probability of default rating (PDR), Ba2 rating on the senior
secured revolving credit facility, and B2 rating on the senior
secured term loans.
The change in outlook to positive from stable reflects Quincy's
strong performance in 2020 on the back of record political
advertising as well as its prudent financial policy -- as evidenced
by its consistently low leverage. Absent any further voluntary debt
repayment in Q4 2020, Moody's now expects that the company's
leverage (Moody's Adjusted Debt/2 year average EBITDA) will be near
2.4x at the end of 2020 and that Quincy will be able to continue to
lower leverage to near 2.25x by the end of 2021 as a function of
EBITDA growth on the back of increased retransmission fees,
Olympics advertising in the summer as well as a general recovery of
core advertising expected in the second half of 2021.
Affirmations:
Issuer: Quincy Media, Inc.
Probability of Default Rating, Affirmed B2-PD
Corporate Family Rating, Affirmed B2
Senior Secured Term Loan, Affirmed B2 (LGD4)
Senior Secured Revolving Credit Facility, Affirmed Ba2 (LGD1)
Outlook Actions:
Issuer: Quincy Media, Inc.
Outlook, Changed To Positive From Stable
RATINGS RATIONALE
Quincy's B2 CFR continues to reflect the company's geographic
concentration and heavy dependence on its NBC and ABC affiliate
stations. In addition, the company is exposed to core TV
advertising which remains volatile and in a slow structural decline
as a result of media fragmentation, shifts in audience vides
consumption and displacement of ad budgets towards digital
platforms.
Quincy's B2 CFR also reflects the company's long-dated family
ownership and balanced financial policy, evidenced by the company's
moderate leverage (Moody's Adjusted Debt/2 year average EBITDA) of
2.4x for the last twelve months ended September 30, 2020. The
company's retransmission fees, represent about 36% of total revenue
for the last twelve months ended September 30, 2020. These revenues
are more predictable and much less volatile than advertising and
are expected to grow by low double digits annually over the next
few years, and this despite an increase in cord cutting trends to
around 7% for traditional MVPDs -- partly mitigated by sharp
increases in virtual MVPD subscribers, although from a much smaller
base.
Its analysis of Quincy's credit profile considers the effect of the
coronavirus pandemic on TV core advertising and its base case
remains that recovery of ad demand will remain gradual and
dependent on a still uncertain and tenuous economic recovery, given
the increasing infection rates across the US.
Quincy has a good liquidity profile supported by positive free cash
flow generation ($70 million of FCF for the 12 months ended
September 30, 2020), a fully undrawn $30 million revolving credit
facility, and substantial cushion under its 5.00x maximum total
leverage covenant. The company's credit facility matures in
November 2022 and Moody's expects Quincy to refinance these
maturities in 2021.
The Ba2 (LGD1) rating on the company's senior secured revolving
credit facility reflects the "first out" priority of claim of the
revolver in an event of default, ahead of the B2 (LGD4) rated
senior secured term loans. The instrument ratings reflect the
probability of default of the company, as reflected in the B2-PD
PDR, an average expected family recovery rate of 50% at default,
and the particular instruments' rankings in the capital structure.
The positive outlook reflects Moody's expectations that Quincy
should be able to mitigate the impact from the coronavirus pandemic
on both accelerating cord-cutting trends and core advertising
declines so that it maintains leverage (Moody's adjusted on a
two-year basis) below 3x in 2021.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
A positive action on the ratings could be considered should core
advertising continue to improve sequentially from the COVID related
lows of Q2 2020 allowing the company to maintain:
-- Leverage (Moody's Adjusted Debt/2-year average EBITDA)
comfortably below 3.0x, and
-- Moody's Adjusted 2-year average Free Cash Flow/Debt above 10%
A downgrade of the ratings could occur should:
-- Leverage (Moody's Adjusted Debt/2-year average EBITDA) is
sustained above 4x, or
-- Moody's Adjusted 2-year average Free Cash Flow/Debt falls
below 5%
Established in 1926, Quincy Media, Inc. is a family-owned
broadcaster and media company. Quincy owns and operates television
stations in 16 US markets, broadcasting all major affiliates
including NBC, ABC, CBS and FOX. Other assets include interactive
media platforms, two newspapers, and two radio stations.
Headquartered in Quincy, IL, the company generated net revenue of
approximately $268 million for the last twelve months ended
September 30 2020.
The principal methodology used in these ratings was Media Industry
published in June 2017.
RAINBOW LAND: Wants Plan Exclusivity Extended Until Dec. 15
-----------------------------------------------------------
Rainbow Land & Cattle Company, LLC, asks the U.S. Bankruptcy Court
for the District of Nevada to extend the Debtor's exclusive period
to file and obtain confirmation of a plan of reorganization to and
including December 15, 2020.
The Debtor has engaged in the good-faith process toward
reorganization, like the Debtor has its Plan of Reorganization on
file, and set the Plan for hearing. The Debtor has continued to
timely pay its bills, in fact, the Debtor's timely filed monthly
operating reports will show that the Debtor has been throughout
this case paying all of its bills as they become due, including its
payments of United States Trustee fees.
The Debtor is not seeking an extension of its exclusive time
periods in order to pressure creditors but rather, it is necessary
since the Court held the first hearing set on its plan as a status
only hearing. The Court set the evidentiary hearing on the Debtor's
Plan for December 11, 2020, at 10:00 a.m.
About Rainbow Land & Cattle Company
Rainbow Land & Cattle Company, LLC, a privately held company
engaged in activities related to real estate, sought protection
under Chapter 11 of the Bankruptcy Code (Bankr. D. Nev. Case No.
19-50627) on May 30, 2019. The petition was signed by John H.
Huston, its managing member. The Debtor previously sought
bankruptcy protection (Bankr. D. Nev. Case No. 12-14009) on April
4, 2012.
At the time of the filing, the Debtor disclosed assets of between
$1 million and $10 million and liabilities of the same range.
The case has been assigned to Judge Bruce T. Beesley. The Debtor
tapped Holly E. Estes, Esq., at Estes Law, P.C., as legal counsel,
Timothy W. Nelson as an interest rate expert, Arthur J. Hill as a
feasibility expert, and B. Kent Vollmer as real estate appraiser
and valuation expert.
RANDOLPH HOSPITAL: Seeks Plan Exclusivity Extension Thru Dec. 4
---------------------------------------------------------------
Randolph Hospital, Inc. d/b/a Randolph Health and certain of its
affiliates request the U.S. Bankruptcy Court for the Middle
District of North Carolina, Greensboro Division, to extend the
exclusive periods during which the Debtors may file a Chapter 11
plan and solicit acceptances for the plan by 90 days to December 4,
2020, and February 1, 2021, respectively.
The Debtors are operating their businesses and managing their
properties as debtors-in-possession. On August 13, 2020, the
Debtors filed a motion in connection with the proposed sale of
substantially all of the Debtor's assets, and the bidding
procedures motion was granted on September 8.
The Debtors needed additional time beyond the current exclusivity
period of October 5, 2020, in order to complete the sale process
and prepare, negotiate, and file a liquidation plan after the sale
is completed.
About Randolph Hospital
Randolph Hospital -- https://www.randolphhealth.org/ -- operates as
a hospital that provides inpatient and outpatient services in North
Carolina. The Company offers, among other services, cancer care,
imaging, maternity services, cardiac services, surgical services,
outpatient specialty clinics, rehabilitation services, and
emergency services.
Randolph Hospital, Inc. and its affiliates, MRI of Asheboro, LLC
and Randolph Specialty Group Practice, each filed a voluntary
petition for relief under chapter 11 of the Bankruptcy Code (Bankr.
M.D.N.C. Lead Case No. 20-10247) on March 6, 2020. In the petition
signed by CRO Louis E. Robichaux IV, Randolph Hospital was
estimated to have $100 million to $500 million in both assets and
liabilities. The Debtor is represented by Jody A. Bedenbaugh, Esq.,
and Graham S. Mitchell, Esq., at Nelson Mullins Riley & Scarborough
LLP.
William Miller, the bankruptcy administrator for the U.S.
Bankruptcy Court for the Middle District of North Carolina,
appointed a committee to represent unsecured creditors in the
Chapter 11 cases. The committee retained Spilman Thomas & Battle,
PLLC as counsel; Sills Cummis & Gross, P.C., as co-counsel; and
Gibbins Advisors, LLC, as financial advisor.
Melanie L. Cyganowski was appointed as patient care ombudsman in
Debtors' bankruptcy cases. The PCO is represented by Otterbourg
P.C. as her legal counsel effective May 5, 2020.
RENTPATH HOLDINGS: Plan Exclusivity Extended to February 22
-----------------------------------------------------------
At the behest of RentPath Holdings, Inc. and its affiliates, the
U.S. Bankruptcy Court for the District of Delaware extended the
periods within which the Debtors have the exclusive rights to file
a plan through and including February 22, 2021, and to obtain
confirmation of a plan to April 22, 2021.
The Debtors commenced these chapter 11 cases to pursue a
going-concern, value-maximizing sale transaction for the benefit of
the Debtors' stakeholders and made significant progress toward that
goal: the going concern sale of substantially all of the Debtors'
assets to CSGP Holdings, LLC ("CoStar"). In particular, the Sale
Transaction is subject to, among other things, review by the FTC
under the Hart-Scott-Rodino Act ("HSR").
Since the entry of the First Extension Order, the Debtors and their
advisors have been working diligently to ensure that the Federal
Trade Commission ("FTC") process moves as quickly as possible. Due
to Debtors' efforts, they were able to certify substantial
compliance to the FTC's Second Request for Additional Information
on July 31, 2020.
On June 10, 2020, the Bankruptcy Court confirmed the Debtors'
Modified Joint Chapter 11 Plan, which contemplates, among other
things, the going concern sale. The Plan will not become effective
until regulatory approvals in connection with the Sale Transaction
are obtained.
The Debtors said additional time is required to obtain clearance
and consummate the Sale Transaction with CoStar. Moreover, if the
Debtors are unable to consummate the Sale Transaction with CoStar,
additional time will be required for the Debtors to implement the
Plan pursuant to the Back-Up Bid. Although the Debtors and their
advisors are continuing to actively communicate and coordinate with
the FTC on various issues related to the HSR clearance process,
additional time is required.
The granted extension will allow the Debtors sufficient time to
consummate the value-maximizing transactions embodied in the Plan
and successfully emerge from chapter 11.
About RentPath
RentPath is a digital marketing solutions company that empowers
millions nationwide to find apartments and houses for rent.
RentPath Holdings, Inc., and 11 affiliates sought Chapter 11
protection (Bankr. D. Del. Lead Case No. 20-10312) on Feb. 12,
2020.
RentPath Holdings was estimated to have $100 million to $500
million in assets and $500 million to $1 billion in liabilities as
of the bankruptcy filing.
Weil, Gotshal & Manges LLP and Richards Layton & Finger are serving
as legal counsel, Moelis & Company LLC is serving as a financial
advisor, and Berkeley Research Group, LLC is serving as
restructuring advisor to RentPath. Prime Clerk LLC is the claims
agent.
REVLON INC: Inks Deal With Carl Icahn to Prevent Bankruptcy
-----------------------------------------------------------
Revlon, Inc. (NYSE: REV) announced Nov. 13, 2020, the closing of
its previously-announced exchange offer and consent solicitation by
Revlon Consumer Products Corporation, its direct wholly-owned
operating subsidiary that was made pursuant to the amended and
restated offering memorandum and consent solicitation statement,
dated October 23, 2020. In the Exchange Offer, the Company offered
to exchange any and all its 5.75% Senior Notes due 2021 issued
pursuant to that certain indenture, dated February 8, 2013, by and
among the Company, the guarantor parties thereto and U.S. Bank,
National Association, as trustee (as amended, supplemented or
modified, the "Indenture") for (i) the cash consideration or (ii)
the Mixed Consideration, in each case as described in the Offering
Memorandum.
In closing the Exchange Offer, the Company accepted for exchange
$236 million in aggregate principal amount of the Notes and
provided to the holders of those Notes the consideration specified
in the Offering Memorandum.
In connection with the closing, the Company gave irrevocable notice
under the Indenture that it is optionally redeeming, on December
14, 2020, the remaining $106.8 million in aggregate principal
amount of the Notes that did not tender into the Exchange Offer at
a price equal to 100% of their aggregate principal amount, together
with interest accrued on such Notes to, but excluding, the date of
redemption, in accordance with the terms of the Indenture. As a
result of such notice and the irrevocable deposit of funds with the
Indenture trustee sufficient to effect such redemption, the Notes
and the Indenture were discharged in full, effective as of November
13, 2020.
Deal With Carl Icahn
The New York Post reports that Revlon's embattled chairman Ron
Perelman has reached a deal with corporate raider Carl Icahn that
could help keep the cosmetics giant out of bankruptcy, The Post has
learned.
Revlon on Wednesday, November 11, 2020, said that holders of $236.5
million of its $343 million in bonds, or 69 percent, have agreed to
accept lower debt repayments to help keep the struggling company
afloat. Icahn, a billionaire investor who has waged war against
Perelman before, is among the lenders who have agreed to the new
terms, according to sources close to the situation.
The terms of the exchange couldn't immediately be learned, but
Revlon had been offering lenders either 32.5 cents on the dollar in
cash or a mixture of cash and bonds worth about 50 cents on the
dollar.
The cosmetics giant -- whose sales have been devastated by the
coronavirus crisis, which has tanked demand for beauty products --
hammered out the deal under pressure of a Nov. 16 deadline to
restructure $343 million in bonds or trigger payment on $1 billion
in senior loans that might have forced the company into
bankruptcy.
And while it's too early early to say whether the deal will allow
the company to avoid filing for Chapter 11 bankruptcy protection,
sources with knowledge of the exchange say it's a big step in that
direction.
Revlon said it may leave the exchange window open in hopes that
some holdouts may still tender their bonds. The company, which will
determine by Friday whether it can complete the exchange offer,
said it may decide by Thursday at 9 a.m. to extend the exchange.
Meanwhile, The Wall Street Journal on Wednesday reported that
Revlon needs 80 percent of bondholders to agree to the exchange to
stave off bankruptcy.
To avoid default, Revlon needs $200 million in leftover cash after
paying bondholders. The company as of Sept. 18 reported having $344
million in cash and money it could borrow through existing loans.
As The Post reported exclusively on Monday, bondholders were
initially reluctant to take the offer after learning that some 26
percent of the bonds are backed by mystery owners who will need to
be paid in full because they can't participate in the negotiations
-- raising speculation that some of those holders could be
affiliated with Perelman. Those investors now represent the bulk of
the holdouts.
If Revlon can refinance the $343 million in bonds, it will then
have until 2024 before its next debt maturity giving it the ability
to withstand the pandemic's impact on its earnings, a Revlon lender
told The Post. The company is losing about $10 million a quarter.
About Revlon Inc.
Headquartered in New York, New York, 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.
REWALK ROBOTICS: Incurs $3.34 Million Net Loss in Third Quarter
---------------------------------------------------------------
ReWalk Robotics Ltd. filed with the Securities and Exchange
Commission its Quarterly Report on Form 10-Q disclosing a net loss
of $3.34 million on $747,000 of revenues for the three months ended
Sept. 30, 2020, compared to a net loss of $3.39 million on $1.23
million of revenues for the three months ended Sept. 30, 2019.
"Our most important measurements in the quarter were the
achievements with CMS certification and the additional German
insurance contract as they are the strategic drivers of growth for
our company," said Larry Jasinski, chief executive officer. "The
revenue for the quarter was impacted by the limited market access
to train and process insurance submissions due to the current
environment. We anticipate that our results will remain choppy
until COVID-19 restrictions lessen."
For the nine months ended Sept. 30, 2020, the Company reported a
net loss of $10.03 million on $3.17 million of revenues compared to
a net loss of $11.97 million on $3.69 million of revenues for the
nine months ended Sept. 30, 2019.
As of Sept. 30, 2020, the Company had $26.23 million in total
assets, $9.44 million in total liabilities, and $16.79 million in
total shareholders' equity.
As of Sept. 30, 2020, ReWalk had $18.1 million in cash on its
balance sheet and $3.4 million in short- and long-term debt.
The Company has an accumulated deficit in the total amount of
approximately $179 million as of Sept. 30, 2020 and negative cash
flow from operations of $10 million, and further losses are
anticipated in the development of its business. The Company said
those factors raise substantial doubt about its ability to continue
as a going concern. The ability to continue as a going concern is
dependent upon the Company obtaining the necessary financing to
meet its obligations and repay its liabilities arising from normal
business operations when they become due.
The Company intends to finance operating costs over the next twelve
months with existing cash on hand, continued close examination of
its operating spend and potential reduction in specific areas, and
future issuances of equity and debt securities, or through a
combination of the foregoing. However, the Company will need to
seek additional sources of financing if the Company requires more
funds than anticipated during the next 12 months or in later
periods.
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/Archives/edgar/data/1607962/000117891320003076/zk2025078.htm
About ReWalk Robotics
ReWalk Robotics Ltd. -- http://www.rewalk.com/-- develops,
manufactures, and markets wearable robotic exoskeletons for
individuals with lower limb disabilities as a result of spinal cord
injury or stroke. ReWalk's mission is to fundamentally change the
quality of life for individuals with lower limb disability through
the creation and development of market leading robotic
technologies. Founded in 2001, ReWalk has headquarters in the
U.S., Israel and Germany.
ReWalk incurred net losses of $15.55 million in 2019, $21.67
million in 2018, and $24.72 million in 2017. As of June 30, 2020,
the Company had $22.71 million in total assets, $10.81 million in
total liabilities, and $11.90 million in total shareholders'
equity.
Kost Forer Gabbay & Kasierer, a member of Ernst & Young Global, in
Haifa, Israel, the Company's auditor since 2014, issued a "going
concern" qualification in its report dated Feb. 20, 2020, citing
that the Company has suffered recurring losses from operations, has
a working capital deficiency, and has stated that substantial doubt
exists about the Company's ability to continue as a going concern.
RGN-PORTLAND VII: Case Summary & Unsecured Creditor
---------------------------------------------------
Debtor: RGN-Portland VII, LLC
3000 Kellway Drive
Suite 140
Carrollton, TX 75006
Business Description: RGN-Portland VII, LLC is primarily engaged
in renting and leasing real estate
properties.
Chapter 11 Petition Date: November 13, 2020
Court: United States Bankruptcy Court
District of Delaware
Case No.: 20-12984
Debtor's Counsel: Ian J. Bambrick, Esq.
FAEGRE DRINKER BIDDLE & REATH LLP
222 Delaware Avenue, Suite 1410
Wilmington, Delaware 19801
Tel: (302) 467-4200
Email: Ian.Bambrick@faegredrinker.com
Debtor's
Financial
Advisor: ALIXPARTNERS
Debtor's
Restructuring
Advisor: DUFF & PHELPS, LLC
Estimated Assets: $100,000 to $500,000
Estimated Liabilities: $1 million to $10 million
The petition was signed by James S. Feltman, responsible officer.
The Debtor listed LPF Pearl West, LLC as its sole unsecured
creditor holding a claim of $66,393.
A copy of the petition is available for free at PacerMonitor.com
at:
https://www.pacermonitor.com/view/FZ4TEFQ/RGN-Portland_VII_LLC__debke-20-12984__0001.0.pdf?mcid=tGE4TAMA
The Debtor will move for joint administration of its case for
procedural purposes only pursuant to Rule 1015(b) of the Federal
Rules of Bankruptcy Procedure under the case captioned In re
RGN-Group Holdings, LLC, et al. (Bankr. D. Del. Case No. 20-11961).
RTW RETAILWINDS: Plan Exclusivity Extended Thru January 2021
------------------------------------------------------------
At the behest of RTW Retailwinds, Inc. and its affiliates, the
Honorable John K. Sherwood the U.S. Bankruptcy Court for the
District of New Jersey extended the period within which the Debtors
have the exclusive right to file a Chapter 11 plan of
reorganization through and including January 11, 2021, and solicit
acceptances through and including March 10, 2021.
The Debtors filed these chapter 11 cases with the intent to conduct
a going concern sale process of their eCommerce business and
simultaneously initiate a wind-down of their business operations
and liquidation of their inventory in approximately 387 retail
stores.
And since the Petition Date, the Debtors, together with its
employees and professionals, have been focused on and made
significant strides to maximize value for the benefit of their
estates. Among other things, the Debtors have:
(i) concluded a sale process for the going concern sale of the
Debtors' e-commerce business through which substantially all of the
Debtors' e-commerce and related assets were sold to a purchaser;
(ii) concluded store closing sales at the Debtors' brick and
mortar locations and rejected all store leases;
(iii) prepared and filed the Debtors' Schedules of Assets and
Liabilities and Statements of Financial Affairs;
(iv) prepared and filed the Debtors' monthly operating reports;
(v) retained Debtors' professionals;
(vi) addressed, and resolved in a timely manner, challenges
related to the Debtors' business and chapter 11 efforts;
(vii) prosecuted a key employee incentive and key employee
retention motion;
(viii) resolved cure objections;
(ix) responded to creditor inquiries; and
(x) filed the Disclosure Statement, Plan, and Disclosure
Statement Approval and Procedures Motion.
The Debtors submit that their progress to date and the nature and
extent of activity contemplated for the next couple of months
provides ample cause to extend the Exclusive Periods. In addition,
the Debtors have worked diligently to inform and involve the
Committee in these Chapter 11 Cases. The Debtors intend to continue
to consult and work cooperatively with the Committee on all major
issues, including confirmation of the Plan.
"The granted time will provide us with a full and fair opportunity
to resolve open case issues, evaluate certain administrative and
priority claims, afford the key parties in interest time to
finalize negotiation and continue our efforts to confirm the Plan
proposed without the distraction of ill-formed competing plans,"
the Debtors said.
A copy of the Debtors' Motion to Extend is available from
PacerMonitor.com at https://bit.ly/3eL3Mct at no extra charge.
A copy of the Court's Extension Order is available from
PacerMonitor.com at https://bit.ly/3liaold at extra charge.
About RTW Retailwinds
RTW Retailwinds, Inc. [OTC PINK: RTWI], formerly known as New York
& Company, Inc., is a specialty women's omnichannel retailer with a
powerful multi-brand lifestyle platform providing curated fashion
solutions that are versatile, on-trend, and stylish at a great
value. The specialty retailer, first incorporated in 1918, has
grown to now operate 378 retail and outlet locations in 32 states
while also growing a substantial eCommerce business. The Company's
portfolio includes branded merchandise from New York & Company,
Fashion to Figure, and Happy x Nature. The Company's branded
merchandise is sold exclusively at its retail locations and online
at http://www.nyandcompany.com/,http://www.fashiontofigure.com/,
http://www.happyxnature.com/,and through its rental subscription
businesses at http://www.nyandcompanycloset.com/and
http://www.fashiontofigurecloset.com/
RTW Retailwinds, Inc. and its affiliates sought protection under
Chapter 11 of the Bankruptcy Code (Bankr. D.N.J. Case No. 20-18445)
on July 13, 2020. The petitions were signed by Sheamus Toal, CEO,
CFO, and treasurer. As of July 13, 2020, the Debtors reported total
assets of $405,356,610 and total liabilities of $449,962,395.
The Honorable John K. Sherwood presides over the cases. Michael D.
Sirota, Esq., Stuart Komrower, Esq., Ryan T. Jareck, Esq., and
Matteo W. Percontino, Esq. of Cole Schotz P.C. serve as counsel to
the Debtors. Berkeley Research Group, LLC, has been tapped as
financial advisor to the Debtors; B. Riley FBR, Inc. as investment
banker; and Prime Clerk, LLC as claims and noticing agent.
SCHOOL OF EXCELLENCE: S&P Lowers 2004A Revenue Bond Rating to 'B-'
------------------------------------------------------------------
S&P Global Ratings lowered its rating three notches to 'B-' from
'BB-' on the Texas Public Finance Authority Charter School Finance
Corp.'s series 2004A revenue bonds, issued for the School of
Excellence in Education (SEE). The outlook is stable.
"The downgrade reflects our view of the school's declining
enrollment trends, especially drops greater than 20% in four of the
past five years," said S&P Global Ratings credit analyst Chase
Ashworth. "In addition, the rating action reflects consistently
negative financial performance since fiscal 2017, debt service
coverage below 1x since fiscal 2017; and weakening liquidity
levels. We believe the school has elevated governance risk under
our environmental, social, and governance (ESG) factors, due to
management's inability to stabilize enrollment trends and improve
financial performance. We also believe enrollment trends have been
exacerbated by the effects of the COVID-19 pandemic."
S&P assessed SEE's enterprise profile as highly vulnerable,
reflecting the school's seventh consecutive year of enrollment
declines due to increased competition within the San Antonio
market; weak academic performance; and management's inability to
implement a strategic plan to stem enrollment declines. S&P
assessed SEE's financial profile at vulnerable, based on the
school's lease-adjusted maximum annual debt service coverage that
has been below 1x the past three fiscal years with similar results
anticipated for fiscal 2020, a recent history of widening negative
margins, and decreasing liquidity. Since there are no financial
covenants, there have been no covenant violations. S&P believes,
combined, these credit factors lead to an anchor of 'b', and final
rating of 'B-'.
SERVICE PROPERTIES: Moody's Downgrades CFR to Ba2, Outlook Neg.
---------------------------------------------------------------
Moody's Investors Service downgraded the ratings of Service
Properties Trust, including its corporate family rating to Ba2 from
Ba1 and its guaranteed and non-guaranteed senior unsecured ratings
to Ba1 and Ba2, from Baa3 and Ba1, respectively. The speculative
grade liquidity rating remains unchanged at SGL-3. The rating
outlook remains negative.
The ratings downgrade reflects further changes to SVC's capital
structure, with the company amending its credit agreement to extend
financial covenant waivers through July 2022 and to deliver first
lien mortgages on 74 properties totaling approximately $1.84
billion in aggregate gross book value in order to secure
obligations under the agreement. Moody's expects that the company
will continue to use secured debt financing to fund capital needs
on a go-forward basis.
Downgrades:
Issuer: Service Properties Trust
-- Corporate family rating, Downgraded to Ba2 from Ba1
-- Gtd. senior unsecured debt, Downgraded to Ba1 from Baa3
-- Gtd. senior unsecured debt shelf, Downgraded to (P)Ba1 from
(P)Baa3
-- Senior unsecured debt, Downgraded to Ba2 from Ba1
-- Senior unsecured debt shelf, Downgraded to (P)Ba2 from (P)Ba1
-- Senior subordinate shelf, Downgraded to (P)Ba3 from (P)Ba2
-- Junior subordinate shelf, Downgraded to (P)Ba3 from (P)Ba2
-- Preferred shelf, Downgraded to (P)B1 from (P)Ba3
-- Preferred shelf non-cumulative, Downgraded to (P)B1 from
(P)Ba3
Outlook Actions:
Issuer: Service Properties Trust
-- Outlook remains Negative
RATINGS RATIONALE
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
commercial real estate from the current weak 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. The action
in part reflects the impact on SVC, the breadth and severity of the
shock, and the broad deterioration in credit quality it has
triggered.
The ratings downgrade also reflects the termination of the
company's management agreements with its two largest operators,
Marriott and IHG, due to their failure to pay minimum returns,
which covered a total of 225 properties as of September 30, 2020.
Moody's expects SVC to rebrand and transition the majority of these
assets to the Sonesta brand, resulting in material near-term
capital costs as well as a significant increase to overall operator
concentration. Positively, the company has entered into agreements
to sell 39 existing hotels, 24 Marriott branded hotels and 15
Wyndham branded hotels, for a total sales price of $218 million and
expected to close in the first quarter of 2021. Moody's expects
proceeds from these asset sales to be used to reduce outstanding
indebtedness on the balance sheet.
The REIT's SGL-3 rating continues to reflect an adequate liquidity
profile over the next twelve months. In connection with the amended
credit agreement, SVC repaid its $400 million term loan using
undrawn amounts under its credit facility. Near-term debt
maturities include $50 million in senior notes due in February 2021
and $580 million due in 2022, including amounts outstanding on the
facility. Moody's expects the company to repay the remaining $50
million note due in February 2021 with additional borrowings on the
revolver or new guaranteed debt financings. As of September 30,
2020, liquidity was supported by approximately $920 million in
availability on the revolver and $48 million in cash on hand. Given
the company's significant revenue and cash flow shortfall and the
possibility of a public bond covenant violation, Moody's expects
the company will be required to draw down the remaining balance on
its line of credit by the first quarter of 2021 in order to have
ample liquidity to run the business.
ESG considerations are material to Service Properties Trust's
credit profile. Moody's regards the coronavirus outbreak as a
social risk under Moody's ESG framework, given the substantial
implications for public health and safety. The REIT's ratings also
consider governance risks associated with its external management
structure, which Moody's believes creates potential conflicts of
interest between management and investors. SVC is managed by The
RMR Group (RMR), which also manages several other REITs and
operating companies.
The negative outlook reflects near-term liquidity pressures as well
as the increased risk of material revenue and earnings loss as
travel restrictions put in place across the US related to the
spread of the COVID-19 coronavirus cause significant declines in
occupancy and revenue per available room (RevPAR).
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
A ratings upgrade is unlikely in the intermediate term and would
require material improvement in the overall lodging outlook.
Additionally, a return to a largely unsecured funding strategy and
demonstration of improving earnings stability through economic and
real estate cycles, would be needed for an upgrade.
Ratings could be downgraded further should the company fail to
maintain adequate liquidity cushion. Additionally, failure to
demonstrate measured improvement in cash flow, occupancy, ADR,
and/or RevPAR over the next twelve-month period could also lead to
downward ratings pressure.
The principal methodology used in these ratings was REITs and Other
Commercial Real Estate Firms published in September 2018.
SIWF HOLDINGS: S&P Upgrades ICR to 'B' on Healthy Demand
--------------------------------------------------------
S&P Global Ratings raised the issuer credit rating on U.S.-based
SIWF Holdings Inc. (Springs) to 'B' from 'B-'. S&P also raised its
issue-level rating on the first-lien term loan to 'B' from 'B-' and
the issue-level rating on the second-lien term loan to 'CCC+' from
'CCC'.
The stable outlook reflects S&P's forecast that healthy demand for
residential window coverings and sustainable margin improvement
will enable Springs to sustain leverage below 7x and generate
relatively good free cash flow.
S&P said, "The upgrade reflects our belief that the return of
demand in Springs' residential segment and its significant margin
expansion will result in stronger-than-expected credit metrics.
While COVID-19-related lockdowns and customer store closures
pressured its topline from mid-March into its second quarter,
subsequent strong demand in its residential segment and a return to
full capacity in its production facilities resulted in double-digit
year-over-year revenue growth in the third quarter. As a result,
leverage for the 12 months ended Sept. 26, 2020, declined to the
high-5x from above 7x in the prior quarter. Additionally, pricing
gains, favorable product mix, manufacturing efficiencies, and
cost-management initiatives taken in response to the pandemic,
including headcount reductions and lower marketing spend, led to
EBITDA margin for the first nine months of 2020 expanding more than
400 basis points compared to the same period in 2019, to the
low-20% range. Due to the better-than-expected sales trends and
EBITDA growth, we now expect the company to maintain leverage in
the high-5x and generate free operating cash flow of $70 million in
2020, significantly better than our prior expectations near the
beginning of the pandemic of leverage reaching the 9x area and
minimal cash flow."
"We expect the company to maintain EBITDA margin around 2020
levels, despite investment to support new product launches. We
forecast that price increases, and cost savings from more efficient
manufacturing processes and supply chain improvements, will enable
Springs to maintain adjusted EBITDA margin around 20% over the next
two years. While we believe it has historically lagged its largest
competitor Hunter Douglas N.V. on price, the company has recently
been able to raise prices to chip away at this gap. We expect it
will continue to be more competitive on price in 2021 due to stable
demand, and product refreshes and innovations. Additionally, the
introduction of automated manufacturing processes in a greater
portion of its product lines, and improvements to its IT
infrastructure, have led to increased production efficiency and
substantial cost savings. Furthermore, we expect Springs to
continue to realize cost reductions in its supply chain through a
more disciplined sourcing strategy, and leveraging of its large
scale. Modestly offsetting some of these gains, we expect the
company to increase its marketing and personnel spend from 2020
levels to support sales of its planned product launches in 2021."
Springs' market share in residential window coverings leaves it
well positioned to benefit from favorable demand dynamics, but
risks from competition, an uncertain macroeconomic environment, and
softness in its commercial channel remain.
S&P said, "We believe increased consumer investment in their
dwellings, due to stay-at-home measures and a broader adoption of
work from home arrangements, as well as favorable housing market
trends will drive strong demand for residential window coverings.
In September 2020, S&P Global economists noted that various housing
market indicators--including sales of new and existing homes,
pending sales, and building permits--reached levels not seen since
at least 13 years prior. Additionally, Euromonitor estimates that
the North America window coverings market, in which Springs is one
of the leading players, will expand at a compound annual growth
rate of about 5.5% over the next two years. We believe its national
scale, entrenched retailer relationships, diverse window covering
product portfolio, and manufacturing capabilities enable it to
benefit from these favorable demand trends. However, we expect the
company to face stiff competition from its larger rival, who holds
the No. 1 position in residential window coverings, as it seeks to
gain market share." Furthermore, sales in the residential segment
are susceptible to declines in discretionary consumer spending, and
a prolonged economic recession with high unemployment could curtail
expected demand."
"We also expect its sizeable commercial segment, which accounts for
around 20% of its sales, will continue to experience headwinds due
to COVID-19-related project delays and weigh on sales in upcoming
quarters. The channel was initially more insulated from disruption
than residential as construction's essential designation allowed
projects to continue, but worksite measures to contain the spread
of the virus have since resulted in build out pauses. As such, we
expect the segment to continue to experience revenue declines until
construction conditions normalize, the timeline of which is
uncertain."
"The stable outlook reflects our forecast for Springs' leverage to
be in the high-5x area in 2020 and the mid-5x area in 2021. We also
expect the company to generate relatively good free cash flow for
the rating, due to healthy demand for residential window coverings
and cost savings driving profitability growth."
"We could lower our ratings on Springs if we believe it will
sustain leverage of more than 7x, or its free cash flow declines
significantly from forecast levels. We believe this could occur if
softness in its commercial channel persists for an extended period
due to project disruption, if competition from its larger
competitor intensifies, or if residential demand falls
significantly due to a prolonged recession that dampens consumer
discretionary income. Leverage could also increase above 7x if the
company were to issue a debt-funded dividend to its
financial-sponsor owners."
"Although unlikely given its financial-sponsor ownership, we could
raise our ratings if we believe Springs is committed to a financial
policy that will enable it to reduces its leverage below 5x and
sustain it at that level."
SKLAR EXPLORATION: Moye White, CMG Represent JF Howell, 2 Others
----------------------------------------------------------------
Pursuant to Rule 2019 of the Federal Rules of Bankruptcy Procedure,
the law firms of Moye White LLP and The Craig M. Geno Firm, PLLC
submitted a verified statement that they are representing the Ad
Hoc Committee of Working Interest Owners of Sklar Exploration
Company, LLC and Sklarco, LLC in the Chapter 11 cases of Sklar
Exploration Company, LLC.
As of Nov. 6, 2020, members of the Ad Hoc Committee and their
disclosable economic interests are:
JF Howell Interests, LP
350 North St. Paul Street, Suite 2900
Dallas, Texas 75201
* Working Interest Owner
McCombs Energy, Ltd.
750 East Mulberry Avenue, Suite 403
San Antonio, Texas 78212
* Working Interest Owner
Pruet Production Co.
217 West Capital Street, Suite 201
Jackson, Mississippi 39201
* Working Interest Owner
On or about October 28, 2020, the Ad Hoc Committee retained the
Firms to represent them in connection with the Ad Hoc Committee's
interests as working interest owners. Each member of the Ad Hoc
Committee, in its capacity as such, is aware of, has requested and
consented to the Firm's representation of the Ad Hoc Committee.
No member of the Ad Hoc Committee represents or purports to
represent any other entities in connection with these chapter 11
cases.
Nothing contained in this Verified Statement or Exhibit A shall be
construed as a limitation upon, or waiver of, any rights of any
member of the Ad Hoc Committee to assert, file and/or amend its
proofs of claims or interests in accordance with applicable law and
any orders entered in these chapter 11 cases. The information
contained herein is intended only to comply with Bankruptcy Rule
2019 and is not intended for any other purpose.
The Firms do not hold any claims against, or interests in, the
Debtors.
The Firms will amend or supplement this Verified Statement as
necessary to comply with Bankruptcy Rule 2019.
Counsel to the Ad Hoc Committee of Working Interest Owners of Sklar
Exploration Company, LLC and Sklarco, LLC can be reached at:
Timothy M. Swanson, Esq.
MOYE WHITE LLP
1400 16th Street, 6th Floor
Denver, CO 80202-1486
Tel: (303) 292-2900
Fax: (303) 292 4510
Email: Tim.Swanson@moyewhite.com
- and -
Craig M. Geno
Law Offices of Craig M. Geno, PLLC
587 Highland Colony Parkway
Ridgeland, MS 39157
Tel: (601) 427-0048
Fax: (601) 427-0050
Email: cmgeno@cmgenolaw.com
A copy of the Rule 2019 filing, downloaded from PacerMonitor.com,
is available at https://bit.ly/3lsaYNt
About Sklar Exploration Company
Sklar Exploration Company, LLC -- https://sklarexploration.com/ --
is an independent exploration production company owned and managed
by Howard F. Sklar. With offices in Boulder, Colo., Shreveport,
La., and Brewton, Ala., Sklar owns interests in oil and gas wells
located throughout the United States. Its exploration and
production activities have historically focused on the
hydrocarbon-rich Lower Gulf Coast basins and in the Interior Gulf
Coast basins of East Texas, North Louisiana, South Mississippi,
South Alabama, and the Florida Panhandle.
Sklar Exploration Company and Sklarco, LLC, sought protection under
Chapter 11 of the Bankruptcy Code (Bankr. D. Colo. Lead Case No.
20-12377) on April 1, 2020. At the time of the filing, Sklar
Exploration had estimated assets of between $1 million and $10
million and liabilities of between $10 million and $50 million.
Sklarco disclosed assets of between $10 million and $50 million
and
liabilities of the same range. Judge Elizabeth E. Brown oversees
the cases.
The Debtors are represented by Kutner Brinen, P.C. CR3 Partners,
LLC is Debtors' chief restructuring officer.
SMOKEY TOPCO: S&P Assigns 'B-' ICR on Proposed Debt Refinancing
---------------------------------------------------------------
S&P Global Ratings assigned its 'B-' issuer credit rating to
U.S.-based provider of software development and information
technology (IT) operations (DevOps) tools Smokey TopCo Ltd. (d/b/a
SmartBear Software) following the company's entry into agreement to
receive an equity investment from Vista Equity Partners.
Concurrent with the new equity investment, SmartBear is seeking to
refinance its existing credit facilities with a new senior secured
term loan and revolving credit facility and a new second lien term
loan.
The rating action reflects the company's high initial S&P-adjusted
pro-forma leverage of about 12x as of transaction close, and S&P's
expectation that leverage will remain above 10x through the next 12
to 24 months.
At the same time, S&P assigned its 'B-' issue-level and '3'
recovery ratings to the $435 million first-lien credit facility,
consisting of a $50 million revolving credit facility due 2025 and
a $385 million first-lien term loan due 2027. The borrower is AQA
Acquisition Holding, Inc.
S&P said, "Leverage will be high at over 10x through the next 12 to
24 months, with limited prospects for material deleveraging. The
'B-' issuer credit rating reflects SmartBear's high initial S&P
Global Ratings-adjusted pro-forma leverage of about 12x at
transaction close, and we anticipate leverage will remain above 10x
through the next 12 to 24 months. We expect SmartBear to generate
considerable free cash flow of around $20 to $30 million annually
and EBITDA interest coverage of around mid-1.0x should enable the
firm to maintain all debt support payments, although we do not
expect material reductions in leverage over the next two years. A
$50 million revolver provides additional liquidity, which is
expected to be undrawn at close."
A growing DevOps end market will support continued revenue growth,
but the competitive landscape remains fragmented. As companies
across industries increasingly rely on internally developed
software tools to modernize their business processes, demand for
DevOps tools, such as those offered by SmartBear, has grown to
support the work of internal developer teams. While DevOps tools
span throughout the entire software development lifecycle,
SmartBear, with a small scale of around $150 million in revenue,
offers products primarily around API lifecycle management and test
automation. SmartBear competes with other small best-of-breed
vendors, such as Eggplant and Tricentis, as well as large software
vendors that are better capitalized, such as IBM and Broadcom.
SmartBear's go-to-market strategy emphasizes a developer focused
approach, offering products that require minimal implementation
costs as well as trials.
S&P said, "While a bottom up sales approach may be effective as
spending decisions are increasingly made on the developer level, we
see potential risk that SmartBear could lose share to vendors that
offer an integrated suite to large customers on an organizational
level if customer willingness to spend declines. Furthermore, as
players in the space consolidate competition through acquisitions,
SmartBear can face bigger vendors that are able to offer
overlapping products at more attractive prices. While SmartBear
serves companies across all industries, customers in the IT and
financial & insurance industries represent roughly half of its
total revenues. In addition, the company does not have strong
channel partnerships that many software vendors rely on, limiting
the customer base it is able to reach. We expect the market to
remain highly competitive, meaning pricing power will continue to
be limited."
An acquisition-heavy growth strategy has given SmartBear a diverse
set of DevOps tools, albeit at the expense of cohesiveness and
brand identity. While SmartBear has been able to grow organically
in the low teen percentage area, overall growth has been
substantially bolstered by acquisitions, with the most recent one
being TM4J completed in March of 2020. SmartBear has made several
tuck-in acquisitions since its founding, and while this has
resulted in a comprehensive DevOps portfolio, these acquisitions
have left SmartBear with a collection of unique products with
distinct names that have lacked a cohesive SmartBear brand. Without
sufficient integration, the broad product selection can have a
negative impact on user experience and lead to customer attrition.
Furthermore, the aforementioned developer based sales approach may
cause SmartBear to lose out on cross selling opportunities, since
the company may lack insight on the enterprise level. The majority
of its customer base is under low value contracts, using only a few
SmartBear products on average, largely as a result of SmartBear's
decentralized sales approach. While the company is making efforts
to mitigate this through its One SmartBear initiative, S&P sees
uncertainty around whether or not SmartBear will be able to improve
its brand identity.
Recent strong operating performance suggests resilience of customer
demand even amid macroeconomic uncertainty. SmartBear increased
revenues by around 19% in third-quarter fiscal 2020 (ended Sept.
30, 2020), driven by strong growth in software as a service (SaaS)
and term based licenses. While the company experienced a slow down
in billings earlier in the year due to the COVID-19 pandemic, more
moderate new license billings have largely been offset by healthy
renewal trends as the company exited the third quarter. Demand
softness as a result of the pandemic has also been partially
mitigated by the company's diverse customer base and high retention
near 90%. While S&P expects the billing weakness in fiscal 2020 to
translate into more muted revenue growth in fiscal 2021, S&P
expects demand to remain robust for its API lifecycle management
and test management products. S&P expects the company to maintain
its double-digit revenue growth going forward, as well as increase
its recurring revenue base to over 90% in the coming years.
S&P said, "The stable outlook on SmartBear reflects our expectation
that the company will grow revenues in the mid-to high-teen percent
area while maintaining profitability and cash flow generation. We
expect the company's recurring revenue base, which represents about
90% of its total revenues, to grow with strength in its SaaS
products."
"We could lower the rating if SmartBear suffers from
weaker-than-expected revenue growth as a result of competitive
pressures that lead to market loss, failure to integrate
acquisitions, or deterioration in profitability, thus leading to
increased leverage or breakeven cash flow. We would also downgrade
SmartBear if it cannot maintain adequate liquidity on a sustained
basis."
"Although unlikely over the next 12 months given SmartBear's high
starting leverage, we would consider an upgrade if the company
maintains revenue growth and expands EBITDA margins such that S&P
Global Ratings-adjusted leverage is sustained under 7x and its free
operating cash flow (FOCF)-to-debt ratio remains above 5%."
SOUTHLAND ROYALTY: Wants Plan Exclusivity Extended Thru Dec. 21
---------------------------------------------------------------
Southland Royalty Company LLC requests the U.S. Bankruptcy Court
for the District of Delaware to extend the exclusive period during
which the Debtor may file a plan of reorganization and to solicit
acceptances, through and including December 21, 2020, and February
24, 2021, respectively.
The Debtor says it has made substantial progress in its chapter 11
case and will continue to do so going forward. In addition to
consummating the sale of the San Juan Assets, the Debtor has
expended significant efforts on resolving certain issues that must
be addressed before the Debtor can proceed with a sale process for
its assets in Wamsutter, Wyoming, and/or with the proposal of a
chapter 11 plan.
The San Juan Assets refers to the auction of the Debtor's assets in
and relating to the San Juan basin in Colorado and New Mexico.
Following the auction, the Debtor selected MorningStar Operating
LLC as the successful bidder. On May 28, 2020, the Court entered an
order approving the sale of the San Juan Assets to MorningStar
Operating LLC and the Debtors closed the sale of the San Juan
Assets.
After closing, the Debtor continued to attend to certain
post-closing matters and fulfilling other obligations under the
asset purchase agreement. The Debtor's remaining assets consist
primarily of certain mineral and leasehold interests in oilfields
in the Wamsutter region of Wyoming.
The Debtor says it also needs the time to deal with the complaint
they filed against Wamsutter LLC ("Williams"). Through the Amended
Complaint, the Debtor seeks declaratory and other relief pertaining
to certain gas gathering agreements by and between the Debtor and
Williams, and other interests claimed by Williams, which have a
direct impact on the Debtor's sale process and ability to
reorganize and a trial began on September 21, 2020.
Moreover, approximately 57 entities at some point asserted some
form of statutory lien against the Debtor's assets. The Debtor
investigated all these lien claims by reviewing any lien notices
and associated invoices. This process required the Debtor to
analyze over 1,000 invoices to validate the amounts and properties
the claimants asserted a lien against. Furthermore the Debtor had
to analyze and determine the mineral interests associated with over
100 unique wells claimants asserted liens against. To establish
what rights these lien claimants have, on July 17, 2020, the Debtor
commenced 44 adversary proceedings seeking a declaratory judgment
as to the validity, priority, and extent of certain statutory oil
and gas liens (the "M&M Adversary Proceedings"). The Court
scheduled the Proceedings no earlier than January 15, 2021. In the
meantime, the Debtor is working diligently with the defendants in
the M&M Adversary Proceedings to resolve these actions consensually
where possible.
Throughout the course of this chapter 11 case, the Debtor has
sought to manage liquidity and preserve estate resources by
reducing burdensome obligations, either through the powers of the
Bankruptcy Code or negotiations with key creditor constituencies.
In the end, the Debtor brokered a compromise between the Committee
and its prepetition lenders that held the Committee's challenge to
the liens of the prepetition lenders in abeyance. This compromise
preserved estate resources by deferring potentially costly
litigation until other issues are resolved.
Accomplishing these tasks has been a labor-intensive process, which
fully occupied the Debtor's representatives and professionals. With
these issues, an extension of the exclusivity periods is needed by
the Debtor.
About Southland Royalty
Southland Royalty Company LLC -- http://www.southlandroyaltyco.com/
-- is a privately held independent exploration and production
company engaged in the acquisition and development of hydrocarbons.
Headquartered in Fort Worth, Southland Royalty Company conducts its
business across four states, with the majority of operations in
Wyoming and New Mexico. Southland Royalty Company was formed
principally to produce and extract hydrocarbons in the Wamsutter
field of the Green River Basin and in the San Juan Basin.
Southland Royalty Company sought Chapter 11 protection (Bankr. D.
Del. Case No. 20-10158) on Jan. 27, 2020. In the petition signed
by CRO Frank A. Pometti, the Debtor was estimated to have $100
million to $500 million in assets and $500 million to $1 billion in
liabilities.
The Debtor tapped Shearman & Sterling LLP as bankruptcy counsel;
Young Conaway Stargatt & Taylor, LLP as Delaware counsel; AP
Services, LLC as interim management services provider; PJT Partners
Inc. as investment banker; and Epiq Corporate Restructuring, LLC as
claims and noticing agent.
SOUTHLAND ROYALTY: Wins OK to Reject Gathering Pact With Williams
-----------------------------------------------------------------
Law360 reporets that a Delaware bankruptcy judge ruled Friday, Nov.
13, 2020, that bankrupt gas driller Southland Royalty can reject a
gas gathering agreement with affiliates of The Williams Cos. and
sell the operating assets subject to the deal free and clear of any
obligations under the contract because it is not a covenant that
runs with the land.
In the opinion, U.S. Bankruptcy Judge Karen B. Owens said the issue
of whether contracts dealing with the production, gathering and
transportation of oil and natural gas products can be rejected in
bankruptcy has drawn split decisions in different jurisdictions.
About Southland Royalty
Southland Royalty Company LLC -- http://www.southlandroyaltyco.com/
-- is a privately held independent exploration and production
company engaged in the acquisition and development of hydrocarbons.
Headquartered in Fort Worth, Southland Royalty Company conducts its
business across four states, with the majority of operations in
Wyoming and New Mexico. Southland Royalty Company was formed
principally to produce and extract hydrocarbons in the Wamsutter
field of the Green River Basin and in the San Juan Basin.
Southland Royalty Company sought Chapter 11 protection (Bankr. D.
Del. Case No. 20-10158) on Jan. 27, 2020. In the petition signed by
CRO Frank A. Pometti, the Debtor was estimated to have $100
million to $500 million in assets and $500 million to $1 billion in
liabilities.
The Debtor tapped Shearman & Sterling LLP as bankruptcy counsel;
Young Conaway Stargatt & Taylor, LLP as Delaware counsel; AP
Services, LLC as interim management services provider; PJT
Partners
Inc. as investment banker; and Epiq Corporate Restructuring, LLC as
claims and noticing agent.
SUMMIT MIDSTREAM: Posts $25.6 Million Net Income in Third Quarter
-----------------------------------------------------------------
Summit Midstream Partners, LP, filed with the Securities and
Exchange Commission its Quarterly Report on Form 10-Q disclosing
net income of $25.63 million on $90.15 million of total revenues
for the three months ended Sept. 30, 2020, compared to a net loss
of $11.13 million on $100.18 million of total revenues for the
three months ended Sept. 30, 2019.
For the nine months ended Sept. 30, 2020, the Company reported net
income of $86.11 million on $287.06 million of total revenues
compared to a net loss of $48.38 million on $331.28 million of
total revenues for the same period during the prior year.
As of Sept. 30, 2020, the Company had $2.57 billion in total
assets, $1.67 billion in total liabilities, $85.80 million in
mezzanine capital, and $816.63 million in total partners' capital.
Heath Deneke, president, chief executive officer and chairman,
commented, "Summit generated $59.8 million of adjusted EBITDA
during the third quarter, which was slightly above our expectations
in August. Our results improved throughout the third quarter as
customers continued to return previously shut-in production to
service in large part due to strengthening of natural gas prices.
Given that most of the temporary production shut-ins that impacted
our financial results in the second and third quarters have been
restored or are in the process of being restored, we continue to
expect full-year 2020 adjusted EBITDA to be within our $250 million
to $260 million guidance range."
"We continue to make excellent progress advancing the Double E
project while locking in substantial savings relative to the
original development budget. Although the project did not receive
FERC approval in the third quarter of 2020 as originally
anticipated, we were pleased that FERC issued the 7(c) certificate
authorizing the project in October. This approval represents a
significant milestone for the project and enables us to advance
plans to secure third-party financing to fund the vast majority, if
not all, of our remaining Double E capital expenditures. We expect
to have third-party financing in place concurrent with receipt of
FERC's notice to proceed with construction, which is expected to be
obtained in the first quarter of 2021. Given the success we've had
in locking in capital savings relative to budget, the total
estimated cost to complete Double E is now expected to come in
under $430 million, gross, which represents an approximate 15%
reduction relative to the original capital budget. As a result,
SMLP's 70% share of development capital is now estimated to be
approximately $300 million, of which, approximately $175 million
remains to be spent as of September 30, 2020."
"Due to the delay in receiving FERC approval on the Double E
project and the associated impact to the timing of our third-party
financing plans, SMLP now expects to directly fund an incremental
$10 million to $20 million of Double E capital in 2020 beyond what
was previously assumed in our capital guidance for the year. As a
result, we are revising SMLP's 2020 capital expenditure guidance to
$55 million to $65 million."
"We also continued to make significant progress on our liability
management strategy in the third quarter of 2020, completing and
announcing several transactions, consistent with our primary
objectives to reduce leverage, simplify the balance sheet and
create long-term value for stakeholders across our capital
structure. Since closing of the GP Buy-In Transaction in May,
including the October 2020 privately negotiated transaction to
repurchase $95.6 million of our 2025 senior notes at a substantial
discount to par value, we have repurchased a total of $306.5
million face value of our aggregate senior notes and reduced net
indebtedness by more than $150 million relative to the end of 2019.
Additionally, we exchanged 62,816 Series A Preferred Units for
approximately 12.3 million SMLP common units during 3Q 2020,
reducing the face value of SMLP's aggregate Series A Preferred
Units by approximately $62.8 million at an implied discount of 84%
based on SMLP's common unit trading price at closing. Furthermore,
during the third quarter, we executed a transaction support
agreement to retire the $155.2 million SMP Holdings Term Loan
through a settlement with the Term Loan lenders. Upon closing of
the TL Restructuring, we plan to make a $26.5 million cash payment
to SMP Holdings, representing a full settlement of the $180.75
million DPPO, and will release the 34.6 million SMLP common units
that were previously pledged as collateral to Term Loan lenders.
In exchange, the lenders will forgive the full amount of the $155.2
million Term Loan and the GP interest will be released from the
collateral package. The TL Restructuring has garnered the support
and consent from 100% of the lenders and is expected to close in
the fourth quarter of 2020. Together with the Series A Preferred
Equity Exchange, the senior note repurchases and the full
settlement of the DPPO, SMLP has eliminated approximately $550.1
million of its fixed capital obligations since closing the GP
Buy-In Transaction. These liability management transactions have
been highly accretive to SMLP's equity valuation given the
substantial discounts captured and I believe that SMLP is far
better situated for long-term success as a result of these
initiatives."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1549922/000156459020051994/smlp-10q_20200930.htm
About Summit Midstream Partners
Summit Midstream Partners is a value-driven limited partnership
focused on developing, owning and operating midstream energy
infrastructure assets that are strategically located in
unconventional resource basins, primarily shale formations, in the
continental United States. SMLP provides natural gas, crude oil
and produced water gathering services pursuant to primarily
long-term and fee-based gathering and processing agreements with
customers and counterparties in six unconventional resource basins:
(i) the Appalachian Basin, which includes the Utica and Marcellus
shale formations in Ohio and West Virginia; (ii) the Williston
Basin, which includes the Bakken and Three Forks shale formations
in North Dakota; (iii) the Denver-Julesburg Basin, which includes
the Niobrara and Codell shale formations in Colorado and Wyoming;
(iv) the Permian Basin, which includes the Bone Spring and Wolfcamp
formations in New Mexico; (v) the Fort Worth Basin, which includes
the Barnett Shale formation in Texas; and (vi) the Piceance Basin,
which includes the Mesaverde formation as well as the Mancos and
Niobrara shale formations in Colorado. SMLP has an equity
investment in Double E Pipeline, LLC, which is developing natural
gas transmission infrastructure that will provide transportation
service from multiple receipt points in the Delaware Basin to
various delivery points in and around the Waha Hub in Texas. SMLP
also has an equity investment in Ohio Gathering, which operates
extensive natural gas gathering and condensate stabilization
infrastructure in the Utica Shale in Ohio. SMLP is headquartered in
Houston, Texas.
SMLP reported a net loss of $369.83 million for the year ended Dec.
31, 2019, compared to net income of $42.35 million for the year
ended Dec. 31, 2018. As of June 30, 2020, the Company had $2.58
billion in total assets, $1.71 billion in total liabilities, $78.56
million in mezzanine capital, and $796.24 million in total
partners' capital.
* * *
As reported by the TCR on Aug. 11, 2020, S&P Global Ratings raised
its issuer credit rating on Summit Midstream Partners L.P. (SMLP)
to 'CCC' from 'SD'. "We could lower our rating on SMLP if it
announced a restructuring of its general partner's debt or missed
an interest or amortization payment over the next 6 months," S&P
said.
TAILORED BRANDS: Bankruptcy Court Confirms Reorganization Plan
--------------------------------------------------------------
Tailored Brands, Inc. and certain of its subsidiaries on Nov. 13,
2020, announced that the U.S. Bankruptcy Court for the Southern
District of Texas has confirmed the Company's Plan of
Reorganization. As a result, Tailored Brands expects to
successfully emerge from Chapter 11 protection by the end of
November, after it has satisfied the customary conditions to the
effectiveness of the Plan.
"We are extremely pleased to have reached this milestone. Over the
past three months, we have not only continued to advance steadily
through this financial restructuring but also implemented new buy
online, pick up in store and contactless payment technology to
better serve our customers during the pandemic; further curated our
assortments to make them more shoppable and relevant; opened our
first next generation store in Shenandoah, Texas; developed new
partnerships; and continued to advance important diversity, equity
and inclusion initiatives, consistent with our corporate values.
These and other actions taken while in Chapter 11 are the
continuation of a strategic transformation that started well before
COVID-19 and will position us to compete and succeed for the long
term,” said Tailored Brands President and Chief Executive Officer
Dinesh Lathi.
"Our deep appreciation goes out to our employees, customers,
vendors, landlords and lenders for the ongoing support they have
shown us. We look forward to entering the peak holiday season with
this process behind us and to being positioned to grow our business
by providing customers with selection, convenience, service and
value across all our brands," Lathi continued.
Under the terms of the Plan, Tailored Brands will emerge with a
strengthened capital structure having eliminated $686 million of
funded debt from its balance sheet. The capital structure of the
reorganized company is expected to consist of a $430 million ABL
facility, a $365 million exit term loan and $75 million of cash
from a new debt facility to support ongoing operations and
strategic initiatives.
Additional resources for customers and other stakeholders can be
accessed by visiting the Company's restructuring website at
TailoredStronger.com. Court filings and other documents related to
the Chapter 11 process are available at
http://cases.primeclerk.com/TailoredBrands,by calling the
Company's claims agent at (877) 461-5690 (Toll-Free) or (347)
817-4089 (Local/International) or by sending an email to
TailoredBrandsInfo@PrimeClerk.com.
About Tailored Brands
Tailored Brands, Inc., (NYSE: TLRD) is an omni-channel specialty
retailer of menswear, including suits, formal wear and a broad
selection of polished and business casual offerings. It delivers
personalized products and services through its convenient network
of over 1,400 stores in the United States and Canada as well as its
branded e-commerce websites at http://www.menswearhouse.com/and
http://www.josbank.com.Its brands include Men's Wearhouse, Jos. A.
Bank, Moores Clothing for Men and K&G.
Tailored Brands reported a net loss of $82.28 million for the year
ended Feb. 1, 2020, compared to net earnings of $83.24 million for
the year ended Feb. 2, 2019. As of Feb. 1, 2020, the Company had
$2.42 billion in total assets, $2.52 billion in total liabilities,
and a total shareholders' deficit of $98.31 million.
On Aug. 2, 2020, Tailored Brands and its subsidiaries sought
Chapter 11 protection (Bankr. S.D. Tex. Lead Case No. 20-33900) on
Aug. 2, 2020. As of July 4, 2020, Tailored Brands disclosed
$2,482,124,043 in total assets and $2,839,642,691 in total
liabilities.
The Hon. Marvin Isgur is the case judge.
The Debtors tapped Kirkland & Ellis LLP as general bankruptcy
counsel; Jackson Walker L.L.P., Stikeman Elliot LLP and Mourant
Ozannes as co-bankruptcy counsel; PJT Partners LP as financial
advisor; Alixpartners, LLP as restructuring advisor; and A&G Realty
Partners, LLC as the real estate consultant and advisor. Prime
Clerk LLC is the claims agent.
TAILORED BRANDS: Creditors Committe's Objection to Plan
-------------------------------------------------------
The Official Committee of Unsecured Creditors of Tailored Brands,
Inc., and its Debtor Affiliates early this month filed an objection
to the Fourth Amended Joint Plan of Reorganization of the Debtors.
The Committee claimed that the Plan is Not Fair and Equitable to
Holders of Class 5(b) Other General Unsecured Claims Because it
Distributes Property to the Term Loan Lenders of a Value Well in
Excess of 100% of Their Claims.
The Committee pointed out that the Plan as proposed violates the
best interest of creditors test because General Unsecured Creditors
of WPC would receive or retain more under a hypothetical Chapter 7
than they are receiving under the Plan.
The Committee asserted that the Creditors of WPC are being unfairly
treated under the Plan, based on the Debtors' significantly
depressed liquidation valuation of their assets, and have good
cause to reject the Plan.
The Committee further asserted that the WPC's general unsecured
creditors must be separately classified and their treatment revised
to comport with the requirements of the Bankruptcy Code.
The Committee stated that the Plan releases as to the senior
management recipients of bonus payments are improper because they
are without consideration and do not meet the requirements for a
release under applicable law.
The Committee said that the bonus payments made by the Debtors
clearly contravene the goals of BAPCA in amending sections 503 and
548 to limit the payments of executive bonuses in the absence of
close bankruptcy court and stakeholder scrutiny.
A full-text copy of the Committee's objection to Fourth Amended
Joint Plan dated November 6, 2020, is available at
https://tinyurl.com/y2pnwnmp from PacerMonitor.com at no charge.
Lead Counsel for the Official Committee of Unsecureds:
NORTON ROSE FULBRIGHT US LLP
William R. Greendyke (SBT 08390450)
Jason L. Boland (SBT 24040542)
Bob B. Bruner (SBT 24062637)
Julie G. Harrison (SBT 24092434)
Fulbright Tower
1301 McKinney, Suite 5100
Houston, TX 77010
Telephone: (713) 651-5151
Email: william.greendyke@nortonrosefulbright.com
jason.boland@nortonrosefulbright.com
bob.bruner@nortonrosefulbright.com
julie.harrison@nortonrosefulbright.com
-and-
PACHULSKI STANG ZIEHL & JONES LLP
Jeffrey N. Pomerantz
Ira D. Kharasch
Paul J. Labov
Maxim B. Litvak (SBT 24002482)
Steven W. Golden (SBT 24099681)
10100 Santa Monica Blvd., 13th Floor
Los Angeles, CA 90067-4100
Telephone: (310) 227-6910
Email: jpomerantz@pszjlaw.com
ikharasch@pszjlaw.com
plabov@pszjlaw.com
mlitvak@pszjlaw.com
sgolden@pszjlaw.com
About Tailored Brands
Tailored Brands, Inc., (NYSE: TLRD) is an omni-channel specialty
retailer of menswear, including suits, formalwear and a broad
selection of polished and business casual offerings. It delivers
personalized products and services through its convenient network
of over 1,400 stores in the United States and Canada as well as its
branded e-commerce websites at http://www.menswearhouse.com/and
http://www.josbank.com. Its brands include Men's Wearhouse, Jos.
A. Bank, Moores Clothing for Men and K&G.
Tailored Brands reported a net loss of $82.28 million for the year
ended Feb. 1, 2020, compared to net earnings of $83.24 million for
the year ended Feb. 2, 2019. As of Feb. 1, 2020, the Company had
$2.42 billion in total assets, $2.52 billion in total liabilities,
and a total shareholders' deficit of $98.31 million.
On Aug. 2, 2020, Tailored Brands and its subsidiaries sought
Chapter 11 protection (Bankr. S.D. Tex. Lead Case No. 20-33900) on
Aug. 2, 2020. As of July 4, 2020, Tailored Brands disclosed
$2,482,124,043 in total assets and $2,839,642,691 in total
liabilities.
The Hon. Marvin Isgur is the case judge.
The Debtors tapped Kirkland & Ellis LLP as general bankruptcy
counsel; Jackson Walker L.L.P., Stikeman Elliot LLP and Mourant
Ozannes as co-bankruptcy counsel; PJT Partners LP as financial
advisor; Alixpartners, LLP as restructuring advisor; and A&G Realty
Partners, LLC as the real estate consultant and advisor. Prime
Clerk LLC is the claims agent.
TAILORED BRANDS: Porter, Gibson 3rd Updated List of Term Lenders
----------------------------------------------------------------
Pursuant to Rule 2019 of the Federal Rules of Bankruptcy Procedure,
the law firms of Gibson, Dunn & Crutcher LLP and Porter Hedges LLP
submitted a third amended verified statement to disclose an updated
list of Ad Hoc Group of Term Loan Lenders that they are
representing these creditors in the Chapter 11 cases of Tailored
Brands, Inc., et al.
In April 2020, certain members of the Ad Hoc Group of Term Loan
Lenders retained Gibson, Dunn & Crutcher LLP to represent them as
counsel in connection with a potential restructuring of the
outstanding debt obligations of the above-captioned debtors and
certain of their subsidiaries and affiliates. Subsequently, on or
about July 31, 2020, Gibson Dunn contacted Porter Hedges LLP to
serve as Texas co-counsel to the Ad Hoc Group of Term Loan
Lenders.
As of the date of this Third Amended Verified Statement, Gibson
Dunn and Porter Hedges represent the members of the Ad Hoc Group of
Term Loan Lenders in their capacities as lenders under that certain
Term Credit Agreement, dated as of June 18, 2020, by and among the
Men's Wearhouse, Inc., as borrower, Tailored Brands, Inc., as
holdings, certain of the other Debtors, as guarantors, Wilmington
Savings Fund Society, FSB, as successor administrative agent and
collateral agent, and the several lenders from time to time parties
thereto.
Gibson Dunn and Porter Hedges do not represent or purport to
represent any other entities in connection with the Debtors'
chapter 11 cases. Gibson Dunn and Porter Hedges do not represent
the Ad Hoc Group of Term Loan Lenders as a "committee" and do not
undertake to represent the interests of, and are not fiduciaries
for, any creditor, party in interest, or other entity that has not
signed a retention agreement with Gibson Dunn or Porter Hedges. In
addition, the Ad Hoc Group of Term Loan Lenders does not represent
or purport to represent any other entities in connection with the
Debtors' chapter 11 cases. Each member of the Ad Hoc Group of Term
Loan Lenders does not represent the interests of, nor act as a
fiduciary for, any person or entity other than itself in connection
with the Debtors' chapter 11 cases.
Upon information and belief formed after due inquiry, Gibson Dunn
and Porter Hedges do not hold any disclosable economic interests in
relation to the Debtors.
As of Nov. 9, 2020, members of the Ad Hoc Group of Term Lenders and
their disclosable economic interests are:
CIFC Asset Management, LLC
875 3rd Ave
New York NY 10022
* Term Loan Indebtness: $11,222,842.79
CIFC VS Management LLC
875 3rd Ave
New York NY 10022
* Term Loan Indebtness: $8,938,786.47
CIFC CLO Management LLC
875 3rd Ave
New York NY 10022
* Term Loan Indebtness: $35,373,902.36
CVC Credit Partners, LLC
5th Ave, 42nd Floor
New York, NY 10019
* Term Loan Indebtness: $43,710,761.73
Intermediate Capital Group
600 Lexington Ave.
New York, NY 10022
* Term Loan Indebtness: $51,698,844.68
* Unsecured Notes Indebtness: $898,000.00
PGIM, Inc.
655 Broad Street, 7th Floor
Newark, NJ 07012
* Term Loan Indebtness: $65,098,735.70
Silver Point Capital, LP
c/o Silver Point Capital
Credit Admin
Two Greenwich Plaza, First Floor
Greenwich, CT 06830
* Term Loan Indebtness: $183,359,934.00
* Unsecured Notes Indebtedness: $2,595,000.00
Voya Investment Management Co. LLC
7337 E. Doubletree Ranch Road
Scottsdale, AZ 85258
* Term Loan Indebtness: $15,953,232.81
Voya Alternative Asset Management LLC
7337 E. Doubletree Ranch Road
Scottsdale, AZ 85258
* Term Loan Indebtness: $33,914,616.10
Voya Investment Trust Co.
7337 E. Doubletree Ranch Road
Scottsdale, AZ 85258
* Term Loan Indebtness: $9,940,578.09
Aegon USA Investment Management, LLC
27 West Monroe Street, Suite 6000
Chicago, IL 60606
* Term Loan Indebtness: $17,557,366.51
ALCOF II NUBT, L.P.
c/o Arbour Lane Fund II GP, LLC
700 Canal Street, 4th Floor
Stamford CT, 06902
* Term Loan Indebtness: $63,448,404.00
Canaras Capital Management, LLC
130 West 42nd Street, Suite 1500
New York, NY 10036
* Term Loan Indebtness: $8,064,939.78
Carlson Capital, L.P.
2100 McKinney Ave, Suite 1800
Dallas, TX 75201
* Term Loan Indebtness: $20,037,478.44
First Eagle Alternative Credit, LLC
227 W. Monroe, Suite 3200
Chicago, IL, 60606
* Term Loan Indebtness: $19,509,635.40
The Guardian Life Insurance Company of America
10 Hudson Yards, 20th Floor
New York, NY 10001
* Term Loan Indebtness: $29,651,642.00
H.I.G. Capital
200 Crescent Court, Suite 1414
Dallas, TX 75201
* Term Loan Indebtness: $5,878,646.58
Marathon Asset Management
One Bryant Park, 38th Floor
New York, New York 10036
* Term Loan Indebtness: $12,752,849.00
Marble Point Credit Management LLC
600 Steamboat Road, 2nd Floor
Greenwich, CT 06830
* Term Loan Indebtness: $26,396,230.53
MJX Asset Management LLC
12 E 49th Street, 38th Floor
New York, NY 10017
* Term Loan Indebtness: $34,526,518.51
Teachers Advisors LLC
8500 Andrew Carnegie Boulevard
Charlotte, NC 28262
* Term Loan Indebtness: $24,210,237.41
Five Arrows Managers North America LLC
633 West 5th Street, Suite 6700
Los Angeles, CA 90
* Term Loan Indebtness: $6,349,594.00
WhiteStar Asset Management, LLC
Crescent Court, Suite 1175
Dallas, TX 75201
* Term Loan Indebtness: $5,792,323.01
Trinitas Capital Management, LLC
Crescent Court, Suite 1175
Dallas, TX 75201
* Term Loan Indebtness: $14,180,980.79
Wells Fargo Bank, N.A.
45 Fremont St, Floor 29
San Francisco, CA 94105
* Term Loan Indebtness: $5,360,238.89
ZAIS Group, LLC
101 Crawfords Corner Road, Suite 1206
Holmdel, NJ 07733
* Term Loan Indebtness: $21,550,126.89
Canyon Capital Advisors, LLC
2000 Avenue of the Stars, 11th Floor
Los Angeles, CA 90067
* Term Loan Indebtness: $2,923,766.67
Canyon CLO Advisors LLC
2000 Avenue of the Stars, 11th Floor
Los Angeles, CA 90067
* Term Loan Indebtedness: $1,949,177.78
Benefit Street Partners
399 Boylston Street, Suite 901
Boston, MA 02116
* Term Loan Indebtedness: $29,144,206.00
Crescent Capital Group, LP
11100 Santa Monica Blvd, Suite 2000
Los Angeles, CA 90025
* Term Loan Indebtedness: $20,577,729.66
Rockford Tower Capital Management, LLC
299 Park Ave, Suite 40
New York, NY 10171
* Term Loan Indebtedness: $9,328,590.00
Par-Four Investment Management, LLC
50 Tice Boulevard
Woodcliff Lake, NJ 07677
* Term Loan Indebtedness: $7,340,041.07
Steele Creek Investment Management LLC
201 South College Street, Suite 1690
Charlotte, NC 28244
* Term Loan Indebtedness: $11,695,066.67
Cowen Special Investments LLC
599 Lexington Avenue, 21st Floor
New York, NY 10022
* Term Loan Indebtedness: $2,610,400.68
Counsel for the Ad Hoc Group of Term Loan Lenders can be reached
at:
PORTER HEDGES LLP
Aaron J. Power, Esq.
1000 Main Street, 36th Floor
Houston, TX 77002-2764
Telephone: (713) 226-6000
Facsimile: (713) 226-6248
Email: apower@porterhedges.com
- and -
GIBSON, DUNN & CRUTCHER LLC
Scott J. Greenberg, Esq.
Matt J. Williams, Esq.
Keith R. Martorana, Esq.
Jeremy D. Evans, Esq.
200 Park Ave.
New York, NY 10166
Tel: (212) 351-4000
Fax: (212) 351-4035
Email: sgreenberg@gibsondunn.com
mjwilliams@gibsondunn.com
kmartorana@gibsondunn.com
jevans@gibsondunn.com
A copy of the Rule 2019 filing, downloaded from PacerMonitor.com,
is available at https://bit.ly/3kwvefl
About Tailored Brands
Tailored Brands, Inc., (NYSE: TLRD) is an omni-channel specialty
retailer of menswear, including suits, formalwear and a broad
selection of polished and business casual offerings. It delivers
personalized products and services through its convenient network
of over 1,400 stores in the United States and Canada as well as its
branded e-commerce websites at http://www.menswearhouse.com/and
http://www.josbank.com. Its brands include Men's Wearhouse, Jos.
A. Bank, Moores Clothing for Men and K&G.
Tailored Brands reported a net loss of $82.28 million for the year
ended Feb. 1, 2020, compared to net earnings of $83.24 million for
the year ended Feb. 2, 2019. As of Feb. 1, 2020, the Company had
$2.42 billion in total assets, $2.52 billion in total liabilities,
and a total shareholders' deficit of $98.31 million.
On Aug. 2, 2020, Tailored Brands and its subsidiaries sought
Chapter 11 protection (Bankr. S.D. Tex. Lead Case No. 20-33900) on
Aug. 2, 2020. As of July 4, 2020, Tailored Brands disclosed
$2,482,124,043 in total assets and $2,839,642,691 in total
liabilities.
The Hon. Marvin Isgur is the case judge.
The Debtors tapped Kirkland & Ellis LLP as general bankruptcy
counsel; Jackson Walker L.L.P., Stikeman Elliot LLP and Mourant
Ozannes as co-bankruptcy counsel; PJT Partners LP as financial
advisor; Alixpartners, LLP as restructuring advisor; and A&G Realty
Partners, LLC as the real estate consultant and advisor. Prime
Clerk LLC is the claims agent.
TAILORED BRANDS: Reaches Plan Settlement With Unsecureds
--------------------------------------------------------
Jeremy Hill of Bloomberg News reports that Tailored Brands won
bankruptcy court approval of its plan to hand ownership to lenders
after sweetening the recovery for unsecured creditors.
Among other things, impaired unsecured creditors will now receive
7.5% of the reorganized equity in Tailored Brands as well as
warrants to buy additional stock.
That equity payout is more than five times higher than what was
initially offered to unsecured creditors, Jeffrey Pomerantz of
Pachulski Stang Ziehl & Jones says on behalf of the group.
Settlement came after "virtually around-the-clock" negotiations
with the unsecured creditors and term lenders, Aparna Yenamandra of
Kirkland & Ellis said in a Friday, November 13, 2020.
About Tailored Brands Inc.
Tailored Brands, Inc., (NYSE: TLRD) is an omni-channel specialty
retailer of menswear, including suits, formal wear and a broad
selection of polished and business casual offerings. It delivers
personalized products and services through its convenient network
of over 1,400 stores in the United States and Canada as well as its
branded e-commerce websites at http://www.menswearhouse.com/and
http://www.josbank.com.Its brands include Men's Wearhouse, Jos.
A. Bank, Moores Clothing for Men and K&G.
Tailored Brands reported a net loss of $82.28 million for the year
ended Feb. 1, 2020, compared to net earnings of $83.24 million for
the year ended Feb. 2, 2019. As of Feb. 1, 2020, the Company had
$2.42 billion in total assets, $2.52 billion in total liabilities,
and a total shareholders' deficit of $98.31 million.
On Aug. 2, 2020, Tailored Brands and its subsidiaries sought
Chapter 11 protection (Bankr. S.D. Tex. Lead Case No. 20-33900) on
Aug. 2, 2020. As of July 4, 2020, Tailored Brands disclosed
$2,482,124,043 in total assets and $2,839,642,691 in total
liabilities.
The Hon. Marvin Isgur is the case judge.
The Debtors tapped Kirkland & Ellis LLP as general bankruptcy
counsel; Jackson Walker L.L.P., Stikeman Elliot LLP and Mourant
Ozannes as co-bankruptcy counsel; PJT Partners LP as financial
advisor; Alixpartners, LLP as restructuring advisor; and A&G Realty
Partners, LLC as the real estate consultant and advisor. Prime
Clerk LLC is the claims agent.
TEEWINOT LIFE: Mintz, Levin Represent Michael Luther, Tribute
-------------------------------------------------------------
In the Chapter 11 cases of Teewinot Life Sciences Corporation, the
law firm of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
submitted a verified statement under Rule 2019 of the Federal Rules
of Bankruptcy Procedure, to disclose that it is representing the
following clients:
a. Michael Luther, the former Chief Executive Officer and
creditor of the Debtor and
b. Tribute Ventures, LLC, potential licensee or purchaser of
certain of the Debtor's assets.
Mr. Luther is the former CEO of the Debtor. Further information
with respect to the nature and amount of the claim of Mr. Luther is
set forth in the proof of claim filed by the Mr. Luther in this
case. The address of Mr. Luther is as follows: 1 Spencer Court,
Andover, MA 02111. Mintz represents Mr. Luther as a creditor in the
above captioned case.
On October 27, 2020, Tribute made an offer to the Debtor for either
a non-exclusive license of the Technology or, alternatively, the
outright purchase of the Technology. The Offer remains outstanding.
The address of Tribute is: Tribute Ventures, LLC, 234 West Canton
Street, Unit 1, Boston, MA 02116. Mintz represents Tribute with
regard to the Offer in the above-captioned case.
The Clients are aware of and have consented to their
contemporaneous representation by Mintz in the above-captioned case
as set forth herein. Mintz is not currently aware of any
prepetition claims of Mintz against the Debtor.
Nothing contained herein is with prejudice to any right, remedy, or
claim of the Clients or otherwise and all such rights are expressly
preserved.
Mintz reserves its right to supplement or amend this statement.
Counsel for the Clients can be reached at:
MINTZ, LEVIN, COHN, FERRIS, GLOVSKY
and POPEO, P.C.
Adrienne K Walker, Esq.
One Financial Center
Boston, MA 02111
Tel: (617) 542-6000
Fax: (617) 542-2241
Email: awalker@mintz.com
A copy of the Rule 2019 filing, downloaded from PacerMonitor.com,
is available at https://bit.ly/3psTmDy
About Teewinot Life Sciences Corp.
Teewinot Life Sciences Corp. operates as a Tampa, Fla.-based
biotechnology pharmaceutical company focused on the biosynthetic
production of pure pharmaceutical grade cannabinoids.
Teewinot Life Sciences sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. M.D. Fla. Case No. 20-06489) on Aug. 27,
2020. Scott Foss-Kilburn, chief restructuring officer, signed the
petition. At the time of the filing, the Debtor disclosed assets
of $25,993,546 and liabilities of $13,671,110.
Stichter, Riedel, Blain & Postler, P.A., is the Debtor's legal
counsel.
TEMPUR SEALY: S&P Raises ICR to BB on Strong Operating Performance
------------------------------------------------------------------
S&P Global raised its issuer credit rating on U.S.-based Tempur
Sealy International Inc. to 'BB' from 'BB-' to reflect the improved
credit metrics.
At the same time, S&P is raising its issue-level rating on the
company's senior unsecured debt to 'BB' from 'BB-'. The recovery
rating remains '3' indicating its expectation for a meaningful
recovery (50%-70%; rounded recovery: 65%).
Tempur Sealy has executed well amid the pandemic and a weak
economic environment. The company's top line grew about 17.2% for
the nine months ended Sept. 30, 2020, to about $2.6 billion versus
$2.2 billion for the same period a year ago. This resulted in 30.6%
adjusted EBITDA growth to about $670 million and adjusted leverage
of 2.5x for the 12 months ended Sept. 30, 2020, compared to 3.6x
leverage for the same period a year ago. This was due primarily to
distribution gains at Mattress Firm and Big Lots, as well as strong
demand tailwinds as consumers stayed home more due to the COVID-19
pandemic. S&P believes the company's robust portfolio and increased
distribution has also helped it gain share. Mattress demand
troughed in second quarter fiscal 2020, when sales declined 8% in
the quarter year over year due to COVID-19-related nonessential
store closures and consumer caution against shopping indoors.
However, once shelter-in-place orders were lifted around the nation
and mattress stores reopened, sales quickly rebounded. This rebound
was driven by consumers spending more time at home due to
work-from-home procedures and reallocation of travel and leisure
spending to home products. While EBITDA expansion was the primary
driver of lower leverage, the company also repaid its $200 million
364-day term loan that it had preemptively drawn at the start of
the pandemic and it redeemed $200 million on its $450 million
5.625% senior unsecured notes due 2023, driving additional
deleveraging and interest cost savings. S&P expects full-year
fiscal 2020 adjusted leverage of about 2.5x.
S&P said, "We believe sales will moderate, but we expect the
company to maintain a leading market position and strong credit
metrics. We expect at least low-single-digit sales growth in 2021,
driven by continued reallocation of travel and leisure spending
primarily in the first half of the fiscal year. We expect that as a
vaccine is released and consumers resume normal spending behaviors,
mattress sales will start to moderate. We expect the company to
continue maintaining its leading market positions, leveraging its
strong cash flows to reinvest in the company, including opening
additional Tempur retail locations, adding mattress production
capacity, and increasing its online capabilities. Despite a
moderation in sales, we continue to expect the company to increase
year-over-year EBITDA through product mix improvement as Tempur
retail stores reopen, increased operating efficiency due to
COVID-related operating labor overtime and inefficiencies related
to component shortages, pricing increases, lapping the demand
trough suffered in the second quarter of fiscal 2020. We believe
that in a sustained economic downturn without fiscal stimulus
support, demand trends could weaken from current levels,
particularly given a strong pull-forward of mattress demand in
fiscal 2020. We also believe consumers could trade down to cheaper
mattresses if economic conditions worsen, which could hurt Tempur's
margins as it benefits from favorable mix with the higher-end
Tempur brand. Its Sealy brand and private-label businesses are
lower margin. We expect leverage of 2x-2.5x in fiscal 2021 driven
primarily by EBITDA expansion. In the event of a further downturn
where demand softens, we believe that leverage could rise to
3x-3.5x."
The company announced that it will start paying a quarterly
dividend beginning in 2021, targeting a payout of 15% of net
income, an annual target of at least 3% of shares outstanding.
S&P said, "While this will be an additional permanent use of cash,
we believe given the company's strong cash flow performance, it
will maintain its dividend payment without increasing leverage
above 3x. However, we believe that the dividend will reduce cash
flow cushion and financial flexibility during periods of operating
weakness. Additionally, we expect the company to continue making
tuck-in acquisitions to further bolster its growth and will
continue opportunistic share repurchases. Tempur Sealy recently
increased its program authorization to $300 million. We do not
expect the company to make more than $200 million in annual
repurchases."
"The stable outlook reflects our expectation that the company will
maintain leverage below 3.5x as demand for mattresses remain robust
and it continues to gain market share. We also expect the company
to maintain financial policies consistent with maintaining leverage
below 3x."
"We could lower the rating if operating performance deteriorates or
the company demonstrates more aggressive financial policies such
that we would expect leverage to remain above 3.5x."
This could happen if:
-- Macroeconomic conditions remain soft, causing consumers to
defer mattress purchases;
-- The company experiences heightened competition and loses market
share at key retailers; or
-- It implements large, debt-financed share repurchases or
acquisitions.
While unlikely over the next 12 months, S&P could raise the rating
if:
-- S&P expects the company to sustain leverage of 2.5x or below;
-- It demonstrates more conservative financial policies and
allocates more cash to debt reduction over shareholder returns; or
-- S&P views the business more favorably because the company has
improved its scale, product mix, and geographic reach.
TENNECO INC: Fitch Assigns BB Rating on Proposed $500MM Sec. Notes
------------------------------------------------------------------
Fitch Ratings has assigned a rating of 'BB'/'RR2' to Tenneco Inc.'s
(TEN) proposed issuance of $500 million in senior secured notes due
2029. Proceeds from the proposed notes will be used to redeem the
company's existing EUR415 million 4.875% senior secured notes due
2022. Based on Euro/U.S. Dollar exchange rates in effect on Sept.
30, 2020, the principal value of the 4.875% senior secured notes
equated to $486 million.
The proposed notes will be secured by the same collateral that
secures TEN's existing senior secured notes and its senior secured
credit facility. The latter consists of a revolver, term loan A and
term loan B. As such, the proposed notes will rank pari passu with
the company's existing first lien secured debt and senior to the
company's senior unsecured notes.
The refinancing of the senior secured notes will help to de-risk
TEN's balance sheet by shifting an intermediate term maturity
further into the future while having a minimal effect on the
company's leverage.
TEN's Long-Term Issuer Default Rating (IDR) is 'B+' and its Rating
Outlook is Negative.
KEY RATING DRIVERS
Ratings Overview: TEN's ratings reflect Fitch's macroeconomic
forecast and expectations for vehicle production in 2020 and the
next several years. Based on Fitch's expectations for a weakened
macro environment resulting from the coronavirus, TEN's credit
protection metrics could be weaker for a longer period of time than
Fitch had envisioned prior to the pandemic. TEN's leverage
increased substantially when it acquired Federal-Mogul LLC (FM) in
2018, and Fitch had anticipated that leverage would fall back in
line with the company's previous 'BB-' IDR by late 2020. However,
leverage reduction was slower than expected prior to the pandemic,
and with the coronavirus now driving much weaker economic
conditions in most global regions, Fitch expects leverage could
remain elevated through at least YE 2021.
The Negative Outlook reflects the high level of uncertainty with
respect to the duration and depth of the global economic downturn,
which heightens the risk that TEN's metrics could weaken further
for a longer period. That said, Fitch could revise TEN's Outlook to
Stable if a stronger-than-expected economic recovery in the North
American or European markets leads an accelerated pace of
improvement in the company's credit profile.
Planned Separation Delayed: A key piece of TEN's strategy following
its acquisition of FM has been to divide the combined company into
two separate entities by spinning off its aftermarket and
ride-performance businesses into a new company called DRiV. TEN
originally targeted the spin to occur in late 2019 and subsequently
delayed the target to mid-2020. The spinoff is now delayed until
the company reduces its consolidated net leverage (according to its
calculations) to below 3.0x. Actual net leverage (according to the
company's calculations) was 5.5x at Sept. 30, 2020. Most of the
synergies targeted at the time of the acquisition appear to have
been achieved, and Fitch believes the company is largely ready to
separate operationally, but increased leverage resulting from the
coronavirus pandemic is likely to delay the separation
indefinitely.
With the timing of the separation unclear, TEN is also considering
other options, including the potential sale of a portion of its
business. Fitch expects proceeds from any sale would be primarily
used for debt reduction, which would strengthen the company's
credit profile. However, the extent of any improvement in the
metrics would also depend on the level of EBITDA, FFO and FCF
divested with a sale.
Leverage to Peak in 2020: Fitch expects TEN's leverage will peak in
2020 as a result of lower EBITDA and FFO in the face of weak market
conditions. Fitch then expects leverage to decline over subsequent
years as market conditions improve. That said, based on Fitch's
macro forecast, Fitch expects gross EBITDA leverage (debt,
including off-balance sheet factoring/Fitch-calculated EBITDA) to
remain above 5.0x and FFO leverage to be near 6.0x at YE 2021.
FCF Pressure: Fitch expects TEN's FCF to be pressured in 2020 by a
decline in FFO, offset by working capital benefits from lower sales
volumes and inventory management. Also supporting FCF will be the
company's plan to cut capex to about $380 million in 2020. In 2021,
Fitch expects FCF to improve on higher FFO, but this could be
offset somewhat by higher working capital on rising production
volumes and more normalized capex. That said, efforts currently
underway to improve the company's working capital performance and
capex efficiency could lead to higher FCF than Fitch's
expectations. Beyond 2021, Fitch expects FCF to strengthen on
further global vehicle production growth.
DERIVATION SUMMARY
TEN has a relatively strong competitive position focusing on
powertrain, clean air and ride performance technologies for
original equipment manufacturers (OEMs) of passenger vehicles,
commercial vehicles and off-road equipment. It also has a large
presence in branded automotive aftermarket parts and components.
The company's Tier 1 technologies are likely to grow in demand over
the intermediate term as OEMs increasingly focus on ways to improve
powertrain fuel efficiency, reduce emissions and improve vehicle
ride quality. At the same time, the company's aftermarket business
insulates it somewhat from the heavier cyclicality of the Tier 1
business, while providing growth opportunities as the on-road
vehicle fleet ages in both developed and developing markets.
Although the company's clean air and powertrain businesses will
likely be pressured over the longer term as the global auto
industry increasingly focuses on electrification, in the
intermediate term, tightening emissions regulations will likely
drive increased demand for TEN's emission control products for
internal combustion engines. At the same time, growing demand for
increasingly sophisticated active suspension systems is likely to
result in higher demand for the ride control business' more
profitable active suspension systems. However, compared with auto
suppliers that focus on high-technology vehicle safety and
automation systems, such as Aptiv PLC (BBB/Stable) or Visteon
Corporation, TEN's business remains more tied to engine and
suspension products that affect vehicle performance
characteristics.
In terms of size, TEN is among the largest U.S. auto suppliers, but
it is smaller than the largest global auto suppliers, such as
Continental AG (BBB/Stable), Magna International Inc. or Robert
Bosch GmbH (F1+). Over the intermediate term, Fitch expects TEN's
margins to be roughly consistent with issuers in the 'BB' range,
although they could by pressured in the near to intermediate term
by weaker macro conditions. Fitch expects TEN's credit protection
metrics, particularly leverage and coverage, will be more
consistent with a 'B'-range IDR for an extended period.
TEN had planned to split into two separate companies by mid-2020:
an aftermarket and ride performance business (DRiV) and a
powertrain technologies business (New Tenneco). The timing of that
separation is now unclear, and TEN has been looking at other
options, such as potential asset sales, in addition to its original
plans to split the company. Fitch's ratings on TEN are based on the
company's current organizational structure and do not incorporate
any potential separation of the business.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Its Rating Case for the Issuer:
-- Global auto production declines by at least 15% in 2020,
before rising about 8% in 2021;
-- Global aftermarket part demand declines about 10% in 2020
before rising in 2021;
-- Capex declines to around $400 million in 2020 and then runs at
about 3.5%-4.0% of revenues in the following years;
-- The company repays its revolver borrowings with available cash
over the next several years;
-- The company maintains a solid liquidity position, including
cash and credit facility availability over the next several years.
KEY RECOVERY RATING ASSUMPTIONS
The recovery analysis assumes that TEN would be reorganized as a
going concern in bankruptcy rather than liquidated.
Fitch has assumed a 10% administrative claim.
Going-Concern (GC) Approach
TEN's recovery analysis reflects a severe downturn in vehicle
demand and estimates the going concern EBITDA at $1.18 billion,
which reflects Fitch's view of a sustainable, post-reorganization
EBITDA level upon which the valuation of the company would be
based. The going concern EBITDA considers TEN's customer supply
agreements with most major global OEMs, with its products embedded
in the powertrains and suspension systems of many global vehicles;
the critical nature of its emission control technologies; and the
less-cyclical nature of its branded aftermarket products. The $1.18
billion ongoing EBITDA assumption is about 4% below TEN's actual
EBITDA of $1.22 billion in 2019 (as calculated by Fitch).
Fitch has used a 6x multiple to calculate a post-reorganization
valuation. According to the "Automotive Bankruptcy Enterprise
Values and Creditor Recoveries" report published by Fitch in
October 2019, about 42% of auto-related bankruptcies had exit
multiples above 5x, with about 26% in the 5x to 7x range. However,
the median multiple observed across 19 issuers was only 4.9x.
Within the report, Fitch observed that 93% of the bankruptcy cases
analyzed were resolved as a going concern. Automotive issuers in
bankruptcy were typically weighed down by capital structures that
became untenable during a period of severe demand weakness, due
either to economic cyclicality or the loss of a significant
customer, or they were subject to significant operational issues.
While TEN has a highly leveraged capital structure, Fitch believes
the company's business profile is stronger than most of those
included in the automotive bankruptcy observations.
Fitch utilizes a 6x EV multiple based on TEN's strong global market
position, including its position as a supplier to a number of top
global vehicle platforms, and the non-discretionary nature of its
aftermarket products. For comparison, Brookfield Business Partners'
acquisition of Clarios Global LP in 2019 valued the company at an
EV over 8x, while BorgWarner Inc.'s acquisition of Delphi
Technologies PLC valued the company at 6.4x preliminary 2019
adjusted EBITDA (in both cases excluding expected post-acquisition
cost savings). All of TEN's rated debt is guaranteed by certain,
primarily domestic, subsidiaries.
Consistent with Fitch's criteria, the recovery analysis assumes
that an estimated $1.0 billion in off-balance-sheet factoring is
replaced with a super-senior facility that has the highest priority
in the distribution of value. Fitch also assumes a full draw on the
company's $1.5 billion secured revolver. The revolver, secured term
loans and secured notes receive second priority in the distribution
of value after the factoring. As such, the first lien secured debt,
excluding factoring, totals about $6.0 billion, which results in a
Recovery Rating of 'RR2' with an expected recovery in the 71%-90%
range.
The $725 million of senior unsecured notes have the lowest priority
in the distribution of value. This results in a Recovery Rating of
'RR6' with an expected recovery in the 0%-10% range, owing to the
significant amount of secured debt positioned above it in the
hierarchy.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- A sustained value-added FCF margin of 1.0% on a consistent
basis;
-- Sustained decline in EBITDA leverage to 3.5x or lower;
-- Sustained decline in FFO leverage to 4.0x or lower;
-- Sustained increase in FFO interest coverage of 3.5x or
higher.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- A sustained value-added FCF margin of break-even or below;
-- Sustained EBITDA leverage above 4.5x over the intermediate
term;
-- Sustained FFO leverage above 5.0x over the intermediate term;
-- Sustained FFO interest coverage below 2.5x over the
intermediate term;
-- An adverse outcome from the ongoing antitrust investigation
that leads to a significant decline in liquidity or an increase in
leverage.
LIQUIDITY AND DEBT STRUCTURE
Adequate Liquidity: Fitch expects TEN's liquidity to remain
sufficient for the company to withstand the operating pressures of
the current slowdown. As of Sept. 30, 2020, the company had $716
million in unrestricted cash and cash equivalents (excluding
Fitch's adjustments for not readily available cash), and $1.1
billion in availability on its $1.5 billion secured revolver.
Following the proposed refinancing of the 2022 notes, the company
will have no significant maturities until 2023, when its revolver
and the bulk of its term loan A mature.
According to its criteria, Fitch has treated $320 million of TEN's
cash and cash equivalents as not readily available for purposes of
calculating net metrics. This is based on Fitch's estimate of the
amount of cash the company needs to keep on hand to cover
seasonality in its business.
Debt Structure: TEN's debt structure primarily consists of
borrowings on its secured credit facility (which includes the term
loan A, term loan B and revolver), senior secured notes that were
assumed as part of the FM acquisition, senior unsecured notes and
off-balance sheet factoring that Fitch treats as debt.
TEN's off-balance sheet factoring includes the effect of
supply-chain financing programs that the company has with some of
its aftermarket customers to whom the company has entered into
extended payment terms. If the financial institutions involved in
these programs were to curtail or end their participation, TEN
might need to borrow from its revolver to offset the effect, but it
could also mitigate at least a portion of the effect by exercising
its contractual right to shorten the payment terms with these
particular aftermarket customers.
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
TEN has an ESG Relevance Score of '4[+]' for GHG Emissions & Air
Quality due to the company's positioning as a top supplier of
products that reduce vehicle emissions from internal combustion
engines, which has a positive impact on the credit profile, and is
relevant to the ratings in conjunction with other factors.
TEN has an ESG Relevance Score of '4' for Management Strategy due
to the complexity of the company's strategy to merge with FM and
then split into two companies, which has a negative impact on the
credit profile, and is relevant to the ratings in conjunction with
other factors.
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.
TENNECO INC: Moody's Assigns Ba3 Rating on New $500MM Sec. Notes
----------------------------------------------------------------
Moody's Investors Service assigned a Ba3 rating to Tenneco Inc.'s
proposed $500 million senior secured notes. Tenneco's existing
ratings, including the Corporate Family and Probability of Default
ratings at B2 and B2-PD, respectively, the existing senior secured
debt rating at Ba3 and senior unsecured debt rating at Caa1 are all
unaffected. The Speculative Grade Liquidity rating remains SGL-3.
The outlook is stable.
The proceeds from these notes, along with a nominal amount of cash
on hand, will be used to redeem the existing 4.875% €415 million
fixed rate senior secured notes due 2022 in addition to paying the
related call premiums, fees and expenses.
Ratings Assigned:
Issuer: Tenneco Inc.
New Senior Secured Regular Bond/Debenture, at Ba3 (LGD3)
Ratings Unaffected:
Issuer: Tenneco Inc.
Corporate Family Rating, at B2
Probability of Default Rating, at B2-PD
Senior Secured Bank Credit Facility, at Ba3 (LGD3)
Existing Senior Secured Regular Bond/Debenture, at Ba3 (LGD3)
Senior Unsecured Regular Bond/Debenture, at Caa1 (LGD6)
Outlook:
Issuer: Tenneco Inc.
Outlook, Remains Stable
RATINGS RATIONALE
Tenneco's ratings continue to reflect a strong competitive position
as a Tier One OEM automotive supplier, with a sizeable aftermarket
business composed of well-known brand names. The Clean Air business
(about 28% of value-added revenues) will remain important as auto
OEMs address increasingly more stringent emission regulations. The
MotorParts business (22% of value-added revenues) should continue
to benefit from increasing average vehicle age and stable growth
while the Ride Performance business (19% of value-added revenues)
should experience trends consistent with global automotive
production. While Moody's believes the internal combustion engine
will retain sizeable vehicle penetration for some time, albeit with
smaller engine sizes, Tenneco's Powertrain business (about 31% of
value-added revenues) faces long-term pressures as the auto
industry progresses towards adoption of electric propulsion.
The company's debt-to-EBITDA for the latest twelve months ended
June 30 2020 exceeded 14x (after Moody's standard adjustments) with
negative EBITA-to-interest coverage, reflecting the dramatic
decline in global automotive production during the second quarter
of 2020. Moody's believes that a recovery of global automotive
demand to 2019 levels is not likely until 2023 at the earliest,
noting lingering macroeconomic impacts from the coronavirus
pandemic. As such, Moody's expects Tenneco's debt leverage and
interest coverage to improve, yet remain weak through at least the
first half of 2021.
The stable outlook reflects Tenneco's strong cash position and
financial covenant flexibility to support operating performance as
industry conditions recover, balanced against the expectation of
weak but improving, credit metrics through 2021. The expected
gradual recovery of automotive industry conditions impacted by the
coronavirus pandemic could be interrupted by a second wave of
infection rates, or from falling vehicle demand due to extended
weak macroeconomic conditions from high unemployment levels.
Tenneco's liquidity is adequate, reflected by the SGL-3 Speculative
Grade Liquidity Rating, supported by cash on hand and meaningful
cushion under the financial maintenance covenants. Cash as of Sept.
30, 2020 was approximately $715 million with availability under the
$1.5 billion revolving credit facility of nearly $1.1 billion (the
company repaid $1.1 billion of the facility during Q3 2020).
Moody's expects Tenneco to generate positive free cash flow over
the next couple of quarters, enabling further repayment of revolver
borrowings. The credit facility has two financial covenants, a
maximum senior secured net leverage ratio and a minimum interest
coverage ratio. These covenants are not expected to be triggered
over the next twelve months.
Tenneco also relies on significant accounts receivable
factoring/securitization facilities as a source of financing
(included in Moody's adjusted debt calculations). If unable to
maintain and extend these programs, additional borrowings under the
revolving credit facility would be required to meet liquidity
needs.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded with stronger than anticipated profit
and cash flow growth from sustained stability in global automotive
demand or the ability to manage the volatility, with increasing
product penetration and faster than expected realized synergies.
Consideration for a higher rating could result from debt-to-EBITDA
sustained below 5.5x, and EBITA-to-interest coverage, inclusive of
restructuring, above 1.5x, while maintaining an adequate liquidity
profile.
The ratings could be downgraded if the company is unable to
demonstrate operating performance resulting from previously
announced merger synergies and additional cost-saving actions in
2021 above levels generated in 2019. The ratings could also be
downgraded if debt-to-EBITDA is expected to be sustained over 6.5x
or EBITA-to-interest coverage sustained below 1x through 2021.
The automotive industry exposes the company to material
environmental risks arising from increasing regulations on carbon
emissions. Tenneco's Clean Air division helps the company address
this customer risk with products targeting emission reduction. Yet,
the company's Powertrain division products may face pressure as
increasing build rates of hybrid vehicles reduce the size of
internal combustion engines paired with these vehicles. The
Powertrain division's ability to develop competitive products
driving engine efficiency will be important to the company's
competitive position.
The principal methodology used in these ratings was Automotive
Supplier Methodology published in January 2020.
Tenneco Inc., headquartered in Lake Forest, Illinois, is one of the
world's leading designers, manufacturers and marketers of
Aftermarket, Ride Performance, Clean Air and Powertrain products
and technology solutions for light vehicle, commercial truck,
off-highway, industrial and the aftermarket. Revenues for the
latest twelve months ended September 30, 2020 were nearly $15
billion.
TRANS-LUX CORP: Incurs $758K Net Loss in Third Quarter
------------------------------------------------------
Trans-Lux Corporation filed with the Securities and Exchange
Commission its Quarterly Report on Form 10-Q disclosing a net loss
of $758,000 on $2.89 million of total revenues for the three months
ended Sept. 30, 2020, compared to a net loss of $277,000 on $4.47
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 $3.15 million on $6.86 million of total revenues
compared to a net loss of $1.16 million on $11.82 million of total
revenues for the nine months ended Sept. 30, 2019.
As of Sept. 30, 2020, the Company had $9.26 million in total
assets, $14.13 million in total liabilities, and a total
stockholders' deficit of $4.86 million.
Trans-Lux said, "Due to the onset of the coronavirus in the nine
months ended September 30, 2020, the Company experienced delays in
shipments from suppliers in Asia, followed by a brief shutdown of
our manufacturing facility in Missouri, as well as a reduction in
sales orders from customers. As a result, the Company incurred a
net loss of $3.2 million in the nine months ended September 30,
2020 and had a working capital deficiency of $5.9 million as of
September 30, 2020.
"The Company is dependent on future operating performance in order
to generate sufficient cash flows in order to continue to run its
businesses. Future operating performance is dependent on general
economic conditions, as well as financial, competitive and other
factors beyond our control, including the impact of the current
economic environment, the spread of major epidemics (including
coronavirus) and other related uncertainties such as government
imposed travel restrictions, interruptions to supply chains and
extended shut down of businesses. In order to more effectively
manage its cash resources, the Company had, from time to time,
increased the timetable of its payment of some of its payables,
which delayed certain product deliveries from our vendors, which in
turn delayed certain deliveries to our customers.
"There is substantial doubt as to whether we will have adequate
liquidity, including access to the debt and equity capital markets,
to operate our business over the next 12 months from the date of
issuance of this Form 10-Q. A stockholder of the Company has
committed to providing additional capital up to $2.0 million, to
the extent necessary to fund operations. The Company continually
evaluates the need and availability of long-term capital in order
to meet its cash requirements and fund potential new
opportunities."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/Archives/edgar/data/99106/000151316220000222/form10q.htm
About Trans-Lux
Headquartered in New York, New York, Trans-Lux Corporation --
http://www.trans-lux.com/-- designs and manufactures TL Vision
digital video displays for the financial, sports and entertainment,
gaming, education, government, and commercial markets. With a
comprehensive offering of LED Large Screen Systems, LCD Flat Panel
Displays, Data Walls and scoreboards (marketed under Fair-Play by
Trans-Lux), Trans-Lux delivers comprehensive video display
solutions for any size venue's indoor and outdoor display needs.
Trans-Lux reported a net loss of $1.40 million for the year ended
Dec. 31, 2019, compared to a net loss of $4.69 million for the year
ended Dec. 31, 2018. As of June 30, 2020, the Company had $10.78
million in total assets, $14.94 million in total liabilities, and a
total stockholders' deficit of $4.15 million.
TRAXIUM LLC: Taps Gertz & Rosen at Bankruptcy Counsel
-----------------------------------------------------
Traxium, LLC received approval from the U.S. Bankruptcy Court for
the Northern District of Ohio to hire Gertz & Rosen, Ltd. to handle
its Chapter 11 case.
Gertz & Rosen's current hourly rates are as follows:
Marc P. Gertz $395
Peter G. Tsarnas $275
Colin G. Skinner $250
Paralegals $ 75
The Debtors paid Gertz & Rosen a $56,868 retainer.
Peter Tsarnas, Esq., a partner at Gertz & Rosen, disclosed in court
filings that the firm is a "disinterested person" within the
meaning of sections 101(14) and 327 of the Bankruptcy Code.
The firm can be reached through:
Peter G. Tsarnas, Esq.
Gertz & Rosen, Ltd.
11 South Forge Street
Akron, OH 44304
Tel: 330-376-8336
Email: ptsarnas@gertzrosen.com
About Traxium, LLC
Traxium, LLC is a holding company comprised of commercial printing
and marketing businesses.
Traxium, LLC filed its voluntary petition for relief under Chapter
11 of the Bankruptcy Code (Bankr. N.D. Ohio Case No. 20-51888) on
Oct. 16, 2020. The petition was signed by George Schmutz, chief
executive officer. At the time of filing, the Debtor disclosed
$4,420,019 in assets and $5,665,021 in liabilities.
Peter G. Tsarnas, Esq. at Gertz & Rosen, Ltd., is Debtor's legal
counsel.
VALARIS PLC: Govt. Watchdog Questions Executive Bonus Plan
----------------------------------------------------------
Maria Chutchian of Reuters reports that offshore driller Valaris
Plc is facing pushback from the federal government's bankruptcy
watchdog to its proposed bonus plan, which could result in payments
of up to $11 million to 12 top executives.
The U.S. Trustee's office said in papers filed Thursday with the
U.S. Bankruptcy Court for the Southern District of Texas that the
company, represented by Kirkland & Ellis, has not shown that the
performance targets the executives would have to meet to receive
incentive bonuses are sufficiently difficult. The bonus motion
comes a few months into the London-based driller's Chapter 11 case,
which it filed in the aftermath of a rig accident and falling oil
prices.
About Valaris PLC
Valaris plc (NYSE: VAL) provides offshore drilling services. It is
an English limited company with its corporate headquarters located
at 110 Cannon St., London. Visit http://www.valaris.com/for more
information.
On Aug. 19, 2020, Valaris and its affiliates sought Chapter 11
protection (Bankr. S.D. Tex. Lead Case No. 20-34114).
The Debtors tapped Kirkland & Ellis LLP and Slaughter and May as
their bankruptcy counsel, Lazard as investment banker, and Alvarez
& Marsal North America LLC as their restructuring advisor. Stretto
is the claims agent, maintaining the page
http://cases.stretto.com/Valaris
Kramer Levin Naftalis & Frankel LLP and Akin Gump Strauss Hauer &
Feld LLP serve as legal advisors to the consenting noteholders
while Houlihan Lokey Inc. serves as their financial advisor.
VERTEX ENERGY: Incurs $1.95 Million Net Loss in Third Quarter
-------------------------------------------------------------
Vertex Energy, Inc., filed with the Securities and Exchange
Commission its Quarterly Report on Form 10-Q disclosing a net loss
of $1.95 million on $37.38 million of revenues for the three months
ended Sept. 30, 2020, compared to a net loss of $1.16 million on
$37.80 million of revenues for the quarter ended Sept. 30, 2019.
For the nine months ended Sept. 30, 2020, the Company reported a
net loss of $8.45 million on $94.96 million of revenues compared to
a net loss of $6.86 million on $120.78 million of revenues for the
nine months ended Sept. 30, 2019.
As of Sept. 30, 2020, the Company had $125.15 million in total
assets, $61.07 million in total liabilities, $52.90 million in
total temporary equity, and $11.18 million in total equity.
As of Sept. 30, 2020, the Company had total cash and availability
on its lending facility of $15.5 million (including $10.1 which is
required to be used for our SPVs) and $1.4 million, respectively.
Vertex had total long-term debt outstanding of $11.1 million as of
Sept. 30, 2020, which included $4.2 million related to funds
received under the Paycheck Protection Program which is part of the
recently enacted Coronavirus Aid, Relief, and Economic Security Act
("CARES Act"). Under the terms of the PPP, the entire balance of
the loan may be forgiven to the extent that cash proceeds are used
for qualifying expenses. As of Nov. 10, 2020, the Company believes
it has allocated the entirety of PPP funds received toward
qualifying expenses.
During August and September, two Hurricanes brought severe flooding
and high winds that adversely impacted operations in the Gulf Coast
and, specifically at the Company's Marrero, Louisiana refinery,
while also limiting outbound shipments of finished product along
adjacent waterways between Houston and New Orleans for
approximately two weeks. Weather-related disruptions at the
Marrero refinery more than offset organic growth in direct Used
Motor Oil (UMO) collections and a strong performance at the
Heartland refinery, which operated at peak capacity during the
third quarter of 2020.
Management Commentary
"Despite pandemic and hurricane-related headwinds, we generated
both sequential and year-over-year growth in Adjusted EBITDA during
the third quarter," stated Benjamin P. Cowart, president and CEO of
Vertex. "As shelter-in-place orders were lifted earlier this year,
travel activity increased back toward normal levels during the
third quarter, contributing to improved availability of UMO
feedstock. To that end, total direct collections increased 36% on a
sequential basis in the third quarter, supported by increased
vehicle miles traveled, together with organic volume growth from
new customers."
"We initiated a Phase One start-up of operations at our Myrtle
Grove facility during the third quarter," continued Cowart.
"Beginning in the first quarter 2021, we plan to begin supplying
our Marrero refinery with pre-treated intermediates from Myrtle
Grove, consistent with our continued focus on asset optimization.
We are currently in discussions with third-parties to fund a
project at Myrtle Grove that would allow us to begin commercially
treating raw vegetable and other organic waste oils that refiners
can use as a feedstock in the production of renewable diesel fuel.
Our development team is currently evaluating three separate
technologies that will allow us to begin a renewable diesel
pre-treatment process. This project has the potential to be a
significant catalyst for growth, further positioning our business
as a leading supplier of renewable and alternative feedstocks."
"Refined product spreads are challenged and remain below long-term
historical levels. As the global economy recovers, we anticipate
increased demand for low-sulfur marine fuels, together with a
corresponding recovery in margin realization. In the interim, we
intend to allocate resources toward quick-hit organic growth
investments that leverage our expertise as a recycler of used
automotive waste streams, while continuing to reduce non-essential
costs throughout the organization," continued Cowart.
"Consistent with our commitment to maximize value for all investors
in Vertex, we have launched an internal review of strategic
alternatives for our business," concluded Cowart. "These
alternatives may include continuing as a public standalone
organization, going private or selling certain assets to a
strategic partner, subject to the review and approval of our Board
of Directors. There is no formal timeline for this process, nor
have we chosen any one specific alternative at this time. We will
provide further updates on the matter at such time that our Board
determines appropriate."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/890447/000162828020016131/vtnr-20200930.htm
About Vertex Energy
Houston-based Vertex Energy, Inc. (NASDAQ: VTNR) is a specialty
refiner of alternative feedstocks and marketer of petroleum
products. Vertex is one of the largest processors of used motor
oil in the U.S., with operations located in Houston and Port Arthur
(TX), Marrero (LA) and Heartland (OH). Vertex also co-owns a
facility, Myrtle Grove, located on a 41-acre industrial complex
along the Gulf Coast in Belle Chasse, LA, with existing
hydro-processing and plant infrastructure assets, that include nine
million gallons of storage. The Company has built a reputation as
a key supplier of Group II+ and Group III base oils to the
lubricant manufacturing industry throughout North America.
Vertex reported a net loss of $5.48 million for the year ended Dec.
31, 2019, compared to a net loss of $1.98 million for the year
ended Dec. 31, 2018.
VISTAGEN THERAPEUTICS: Incurs $3.64 Million Net Loss in 2nd Quarter
-------------------------------------------------------------------
VistaGen Therapeutics, Inc., filed with the Securities and Exchange
Commission its Quarterly Report on Form 10-Q disclosing a net loss
attributable to common stockholders of $3.64 million on $334,000 of
total revenues for the three months ended Sept. 30, 2020, compared
to a net loss attributable to common stockholders of $5.65 million
on $0 of total revenues for the three months ended Sept. 30, 2019.
For the six months ended Sept. 30, 2020, the Company reported a net
loss attributable to common stockholders of $7.11 million on
$334,000 of total revenues compared to a net loss attributable to
common stockholders of $12.16 million on $0 of total revenues for
the six months ended Sept. 30, 2019.
As of Sept. 30, 2020, the Company had $20.27 million in total
assets, $16.05 million in total liabilities, and $4.22 million in
total stockholders' equity.
Vistagen stated that although certain transactions have generated
approximately $20.0 million in net cash proceeds to the Company
between April 1, 2020 and Nov. 12, 2020, the Company believes it is
probable that its cash position at Sept. 30, 2020, which reflects
such net proceeds, will not be sufficient to fund its planned
operations for the twelve months following the issuance of these
financial statements, which raises substantial doubt that the
Company can continue as a going concern.
The Company added, "Our future working capital requirements will
depend on many factors, including, without limitation, potential
impacts related to the current COVID-19 pandemic, the scope and
nature of opportunities related to our success and the success of
certain other companies in nonclinical and clinical trials,
including our development and commercialization of our current
product candidates and various applications of our stem cell
technology platform, the availability of, and our ability to
obtain, government grant awards and agreements, and our ability to
enter into collaborations on terms acceptable to us. To further
advance the clinical development of PH94B, PH10, and AV-101 and, to
a lesser extent, our stem cell technology platform, as well as
support our operating activities, we plan to continue to carefully
manage our routine operating costs, including our employee
headcount and related expenses, as well as costs relating to
regulatory consulting, contract manufacturing, research and
development, investor and public relations, business development,
legal, intellectual property acquisition and protection, public
company compliance and other professional services and operating
costs.
"Notwithstanding the foregoing, there can be no assurance that our
current strategic collaborations under the EverInsight Agreement
and the Bayer Agreement will generate revenue from future potential
milestone payments, or that future financings or government or
other strategic collaborations will be available to us in
sufficient amounts, in a timely manner, or on terms acceptable to
us, if at all. If we are unable to obtain substantial additional
financing on a timely basis when needed in 2021 or thereafter, our
business, financial condition, and results of operations may be
harmed, the price of our stock may decline, we may be required to
reduce, defer, or discontinue certain of our research and
development activities and we may not be able to continue as a
going concern. As noted above, these Condensed Consolidated
Financial Statements do not include any adjustments that might
result from the negative outcome of this uncertainty."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/Archives/edgar/data/1411685/000165495420012266/vtgn10q_sep302020.htm
About VistaGen
Headquartered in San Francisco, California, VistaGen Therapeutics
-- http://www.vistagen.com-- is a clinical-stage biopharmaceutical
company developing new generation medicines for CNS diseases and
disorders where current treatments are inadequate, resulting in
high unmet need. VistaGen's pipeline is focused on clinical-stage
CNS drug candidates with a differentiated mechanism
of action, an exceptional safety profile in all clinical studies to
date, and therapeutic potential in multiple large and growing CNS
markets.
VistaGen reported a net loss attributable to common stockholders of
$22.04 million for the fiscal year ended March 31, 2020, compared
to a net loss attributable to common stockholders of $25.73 million
for the fiscal year ended March 31, 2019. As of March 31, 2020,
the Company had $5.77 million in total assets, $11.50 million in
total liabilities, and a total stockholders' deficit of $5.73
million.
OUM & CO. LLP, in San Francisco, California, the Company's auditor
since 2006, issued a "going concern" qualification in its report
dated June 29, 2020, citing that the Company has not yet generated
sustainable revenues, has suffered recurring losses and negative
cash flows from operations and has a stockholders' deficit, all of
which raise substantial doubt about its ability to continue as a
going concern. VistaGen Therapeutics, Inc. filed with the
Securities and Exchange Commission its Quarterly Report on Form
10-Q disclosing a net loss attributable to common stockholders of
$3.64 million on $334,000 of total revenues for the three months
ended Sept. 30, 2020, compared to a net loss attributable to common
stockholders of $5.65 million on $0 of total revenues for the three
months ended Sept. 30, 2019.
For the six months ended Sept. 30, 2020, the Company reported a net
loss attributable to common stockholders of $7.11 million on
$334,000 of total revenues compared to a net loss attributable to
common stockholders of $12.16 million on $0 of total revenues for
the six months ended Sept. 30, 2019.
As of Sept. 30, 2020, the Company had $20.27 million in total
assets, $16.05 million in total liabilities, and $4.22 million in
total stockholders' equity.
Vistagen stated that although certain transactions have generated
approximately $20.0 million in net cash proceeds to the Company
between April 1, 2020 and Nov. 12, 2020, the Company believes it is
probable that its cash position at Sept. 30, 2020, which reflects
such net proceeds, will not be sufficient to fund its planned
operations for the twelve months following the issuance of these
financial statements, which raises substantial doubt that the
Company can continue as a going concern.
The Company added, "Our future working capital requirements will
depend on many factors, including, without limitation, potential
impacts related to the current COVID-19 pandemic, the scope and
nature of opportunities related to our success and the success of
certain other companies in nonclinical and clinical trials,
including our development and commercialization of our current
product candidates and various applications of our stem cell
technology platform, the availability of, and our ability to
obtain, government grant awards and agreements, and our ability to
enter into collaborations on terms acceptable to us. To further
advance the clinical development of PH94B, PH10, and AV-101 and, to
a lesser extent, our stem cell technology platform, as well as
support our operating activities, we plan to continue to carefully
manage our routine operating costs, including our employee
headcount and related expenses, as well as costs relating to
regulatory consulting, contract manufacturing, research and
development, investor and public relations, business development,
legal, intellectual property acquisition and protection, public
company compliance and other professional services and operating
costs.
"Notwithstanding the foregoing, there can be no assurance that our
current strategic collaborations under the EverInsight Agreement
and the Bayer Agreement will generate revenue from future potential
milestone payments, or that future financings or government or
other strategic collaborations will be available to us in
sufficient amounts, in a timely manner, or on terms acceptable to
us, if at all. If we are unable to obtain substantial additional
financing on a timely basis when needed in 2021 or thereafter, our
business, financial condition, and results of operations may be
harmed, the price of our stock may decline, we may be required to
reduce, defer, or discontinue certain of our research and
development activities and we may not be able to continue as a
going concern. As noted above, these Condensed Consolidated
Financial Statements do not include any adjustments that might
result from the negative outcome of this uncertainty."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/Archives/edgar/data/1411685/000165495420012266/vtgn10q_sep302020.htm
About VistaGen
Headquartered in San Francisco, California, VistaGen Therapeutics
-- http://www.vistagen.com/-- is a clinical-stage
biopharmaceutical company developing new generation medicines for
CNS diseases and disorders where current treatments are inadequate,
resulting in high unmet need. VistaGen's pipeline is focused on
clinical-stage CNS drug candidates with a differentiated mechanism
of action, an exceptional safety profile in all clinical studies to
date, and therapeutic potential in multiple large and growing CNS
markets.
VistaGen reported a net loss attributable to common stockholders of
$22.04 million for the fiscal year ended March 31, 2020, compared
to a net loss attributable to common stockholders of $25.73 million
for the fiscal year ended March 31, 2019. As of March 31, 2020,
the Company had $5.77 million in total assets, $11.50 million in
total liabilities, and a total stockholders' deficit of $5.73
million.
OUM & CO. LLP, in San Francisco, California, the Company's auditor
since 2006, issued a "going concern" qualification in its report
dated June 29, 2020, citing that the Company has not yet generated
sustainable revenues, has suffered recurring losses and negative
cash flows from operations and has a stockholders' deficit, all of
which raise substantial doubt about its ability to continue as a
going concern.
VIVUS INC: Rolls New Plan, Offers Stockholders Drug Royalties
-------------------------------------------------------------
Law360 reports that biotech company Vivus Inc. rolled out an
amended Chapter 11 plan in Delaware that would grant participating
former stockholders payments from a new subsidiary formed to
distribute available royalties from a drug prospect that equity
investors previously branded as undervalued.
The revised plan, filed late Tuesday, November 10, 2020, emerged
from mediation after Judge Laurie Selber Silverstein rejected the
original version and ordered formation of an equity committee in
September 2020. The court's rejection cited in part unanswered
questions about Vivus' overall value and prospects for developing a
version of the drug tacrolimus, or VI-1016, for treatment of
pulmonary hypertension.
About Vivus Inc
Vivus Inc -- https://www.vivus.com/ -- is a biopharmaceutical
company committed to the development and commercialization of
innovative therapies that focus on advancing treatments for
patients with serious unmet medical needs. VIVUS has three approved
therapies and one product candidate in clinical development. Qsymia
(phentermine and topiramate extended release) is approved by FDA
for chronic weight management. The Company commercializes Qsymia in
the U.S. through a specialty sales force supported by an internal
commercial team and license the commercial rights to Qsymia in
South Korea. VIVUS was incorporated in 1991 in California and
reincorporated in 1996 in Delaware. As of the Petition Date, VIVUS
is a publicly traded company with its shares listed on the Nasdaq
Global Market LLC under the ticker symbol "VVUS." The Company
maintains its headquarters in Campbell, California.
Vivus Inc and three of its affiliates sought protection under
Chapter 11 of the Bankruptcy Code (Bankr. D. Del., Case No.
20-11779) on July 7, 2020. The petitions were signed by Mark Oki,
chief financial officer. Hon. Laurie Selber Silverstein presides
over the cases.
As of May 31, 2020, the Debtors reported total assets of
$213,884,000 and total liabilities of $281,669,000.
Weil Gotshal & Manges LP serves as general counsel to the Debtors,
while Richards, Layton & Finger, P.A. acts as local counsel to the
Debtors. Ernst & Young is the Debtors' financial advisor, and Piper
Sandler Companies acts as investment banker. Stretto is claims and
noticing agent to the Debtors.
On Sept. 22, 2020, the United States Trustee appointed the official
committee of equity security holders. The equity committee is
represented by Morris, Nichols, Arsht & Tunnell LLP.
WASHINGTON PRIME: Incurs $40.2 Million Net Loss in Third Quarter
----------------------------------------------------------------
Washington Prime Group Inc. filed with the Securities and Exchange
Commission its Quarterly Report on Form 10-Q disclosing a net loss
attributable to the company of $40.23 million on $123.68 million of
total revenues for the three months ended Sept. 30, 2020, compared
to a net loss attributable to the company of $913,000 on $161.20
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 attributable to the company of $111.89 million on $375.05
million of total revenues compared to a net loss attributable to
the company of $16.33 million on $491.46 million of total revenues
for the same period during the prior year.
As of Sept. 30, 2020, the Company had $4.21 billion in total
assets, $3.48 billion in total liabilities, $3.26 million in
redeemable noncontrolling interests, and $727.73 million in total
equity.
Washington Prime said, "Our ability to meet our obligations as they
come due may be impacted by our ability to remain compliant with
financial covenants in our unsecured debt arrangements or to obtain
additional waivers or amendments that impact the related covenants.
During the third quarter of 2020, we executed amendments to our
Facility and December 2015 Term Loan ... that provide certain
covenant relief through the third quarter of 2021. The Company was
in compliance with all applicable covenants as of the end of the
most recently completed fiscal quarter ended that September 30,
2020. Additionally, the Company is actively working on measures
with existing debt investors that would result in deleveraging of
its balance sheet if execution is successful. When considering the
amended financial covenant requirements and the positive impact
from the potential deleveraging measures described above, the
Company projects, based upon internal estimates, that it will
remain in compliance with these revised financial covenants along
with other unsecured debt covenants through at least November 6,
2021. However, with the continued uncertainty caused by the
COVID-19 pandemic, significant risks remain and any material
adverse effect on our income and expenses could impact our ability
to maintain compliance with our credit facility and bond covenants.
Additionally, there can be no assurances of the terms or
conditions that any such deleveraging transaction would include or
that the Company will be able to consummate such transaction on a
timely basis, or at all."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1594686/000159468620000034/wpg-20200930.htm
About Washington Prime Group
Headquartered in Columbus Ohio, Washington Prime Group Inc. --
http://www.washingtonprime.com-- is a retail REIT and a recognized
company in the ownership, management, acquisition and development
of retail properties. The Company combines a national real estate
portfolio with its ex pertise across the entire shopping center
sector to increase cash flow through rigorous management of assets
and provide new opportunities to retailers looking for growth
throughout the U.S. Washington Prime Group is a registered
trademark of the Company.
* * *
As reported by the TCR on June 3, 2020, Fitch Ratings downgraded
the ratings of Washington Prime Group, Inc. and its operating
partnership, Washington Prime Group, L.P., including the Long-Term
Issuer Default Rating, to 'CCC+' from 'B'. Fitch said the
deterioration of the operating performance of WPG's mall assets and
its capital access has severely limited the company's ability to
navigate coronavirus-related retailer tenant stress.
Moody's Investors Service also downgraded the senior unsecured debt
and corporate family ratings of Washington Prime Group, L.P. to
Caa3 from Caa1. "WPG's Caa3 corporate family rating reflects its
large, geographically diversified portfolio of retail assets, which
includes a mix of enclosed malls (71% of Comp NOI) and open-air
centers (29%) across the US.," Moody's said, according to a TCR
report dated June 1, 2020.
As reported by the TCR on Aug. 25, 2020, S&P Global Ratings lowered
its issuer credit rating on Washington Prime Group Inc. (WPG) to
'CCC' from 'CCC+'. "We believe WPG will likely violate its
financial covenants unless its rent collection and EBITDA
generation materially improve from second quarter and stabilize
over the next few quarters," S&P said.
Z-LINE DESIGNS: Files for Chapter 7 Bankruptcy
----------------------------------------------
Alex Barreira of San Francisco Business Times reports that Z-Line
Designs Inc., a local manufacturer of home and office furniture,
filed for Chapter 7 bankruptcy Thursday, November 5, 2020,
according to court records.
Z-Line Designs is located at 181 Pullman St in Livermore, according
to the filing, but its website and social media list its corporate
office in San Ramon and manufacturing facilities in China and
Taiwan.
Z-Line Designs describes itself online as "the nation’s leading
import manufacturer of home office, home entertainment, seating,
home décor, and ready-to-assemble furniture."
The Chapter 7 filing indicates assets will be liquidated to meet
debt obligations, rather than a reorganization of the company to
workout repayment as would be the case with a Chapter 11
bankruptcy.
As recently as 10 years ago the company had thousands of employees,
offered products at major retailers retailers like Wal-Mart and
Office Max and owned three business jets, according to a 2009
profile of Sexton for Business Jet Magazine. Z-Line also sponsored
two professional race cars, including one driven by Kyle Bush's
racing team, on the NASCAR and IndyCar circuits.
"Going bankrupt isn't fun," Sexton said in the article. "You have
to pick yourself up and go back to work."
About Z-Line Designs
Z-Line Designs Inc., is a Livemore, California-based manufacturer
of home and office furniture.
Z-Line Designs filed a Chapter 7 bankruptcy petition (Bankr. N.D.
Cal. Case No. 20-41754) on Nov. 5, 2020. In the petition signed by
James Sexton, Z-Line Design's CEO and president, the company was
estimated to have assets of less than $500,000, and is facing
liabilities of between $1 million and $10 million.
The Chapter 7 trustee:
Michael G. Kasolas
P.O. Box 27526
San Francisco, CA 94127
The Debtor's counsel:
E. Vincent Wood
Law Offices Of E. Vincent Wood
Tel: 925-278-6680
E-mail: calendar@woodbk.com
[*] Bankruptcies Spiraling for Companies Large and Small
--------------------------------------------------------
Steve Metzer of The Journal Record reports that since the arrival
of COVID-19 on the world stage, well-known and well-established
companies have fallen like dominoes to bankruptcy: Pier I Imports,
Hertz Inc., Stage Stores, Gold's Gym, GNC, Men's Wearhouse and many
others.
Across the country, according to BankruptcyData, which tracks
numbers for the restructuring industry, commercial bankruptcies
have increased by well more than half this year, with at least 207
very large companies each with more than $50 million in assets
throwing in the towel prior to Sept. 1, 2020. According to the
American Bankruptcy Institute, Chapter 11 filings are expected to
soar even higher in coming months, and if the economy remains sour
and unemployment high, business failures and bankruptcy filings may
break all-time records in 2021.
Untold numbers of small businesses also have been brutalized by the
pandemic. According to the U.S. Census Bureau, nearly eight in 10
reported suffering "moderate-to-large" negative impacts even before
the latest spike in COVID-19. The U.S. Small Business
Administration’s massive Paycheck Protection Program helped to
keep many afloat for a while, but it came to an end in April.
Scores of subsequent small business failures have been difficult to
track, as many have occurred outside bankruptcy court.
"(In many cases) probably, all you need to do is call the utilities
and tell them to turn them off and then close your door," William
Dunkelberg, chief economist at the National Federation of
Independent Business, told Bloomberg News recently.
While many small business closures might occur quietly, they'll
have an alarming effect on the economy. According to the SBA, small
businesses account for nearly half of jobs and about 44% of
economic activity across the United States.
Troubling financial realities facing many people and businesses hit
hard by the pandemic were discussed in a recent JR Now forum
organized by The Journal Record, with input offered by attorneys at
the firm of Crowe & Dunlevy experienced in helping clients sort
through options. William H. Hoch, who chairs the firm's Bankruptcy
& Creditor's Rights practice group, and Crissie Stephenson, who
assists individuals and companies in restructuring matters and
bankruptcy-related litigation, spoke about the current environment
with nearly a quarter of American families reporting a loss or
anticipated loss of employment income and thousands of business
owners struggling to keep bills paid and doors open.
Both attorneys said they’d witnessed the "paralyzing fear" that
can consume a person facing the possibility of business failure.
However, they insisted that people can and do survive tough times.
The first step is to remain clear-eyed as to realities and to reach
out for assistance well before situations might become dire.
"The failure of a business in a situation like people are
experiencing right now is very, very common. They are not in this
alone," Hoch assured. "To think that you can sidestep this is just
not possible. It’s going to impact everybody."
For some, early communication with banks or other creditors might
yield positive results.
"What we have experienced … is that there are so many people in
difficult situations, and the banks prefer communication and trying
to work something out rather than bankruptcy or something akin to a
bankruptcy," Hoch said.
For some, however, it may be important to acknowledge that the
pandemic will end up having more than just a temporary effect on
bottom lines. Stephenson said businesses in the hospitality
industry have been especially affected, to the point that outlooks
for 2021 and beyond may be starkly different than they were at the
outset of 2020. Many hotels, for example, may not be able to count
on business travel accounting for 40% of business in the future, as
it has in the past.
"There's no sort of magical ball prediction as to when that kind of
travel is going to return, if it is ever going to return," she
said.
The attorneys said they had received inquiries from businesses in
the hospitality sector, as well as from firms in the oil and gas
industry, from niche businesses in the health care industry and
others. Some small business owners have depleted their personal
savings and even borrowed heavily from family members or friends
trying to hold out for better days. A fear, the lawyers said, is
that some may wait too long to reach out for help and that windows
of opportunity for working things out may close.
"That's the worst thing they can do. You need to start dealing with
it immediately," Stephenson said. "If you do get a default letter
… ignoring it is the absolute worst thing you can do."
Hoch agreed. He said people in such circumstances are well-advised
to get their financial records and statements in order with an
accountant, to keep up with communications with creditors and to
reach out for legal assistance earlier rather than later. There may
very well be strong alternatives to declaring bankruptcy and
closing shop.
"I guarantee you, as soon as they walk out of those meetings they
will feel better, because they have an action plan," Hoch said.
"Every time, you can see the relief."
If renegotiating or restructuring debt is not possible, placing a
business in receivership – under the care of a trustee to wind
down affairs – could be an option. If bankruptcy seems
inevitable, there are different kinds to consider. Chapter 11
describes when an owner opts to reorganize debt, working out
payment plans with creditors often for reduced amounts. In such
cases businesses may remain open. Chapter 7 describes when an owner
completely liquidates a business and any proceeds are used to pay
debts. Afterward, the business can no longer operate.
[*] Q3 Has Highest Chapter 11 Filings Since Great Recession
-----------------------------------------------------------
Polsinelli wrote that the impact of COVID-19 is becoming evident in
the accelerating Chapter 11 filings. The amount of Chapter 11
bankruptcy filings in the third quarter, which are tracked in the
newest Polsinelli-TrBK Distress Indices Report, have hit the
highest level since 2010. This trend is expected to continue into
2021.
The third quarter shows clear signs of the pandemic's impact on
bankruptcy filings and is a continuation of the filing spike from
the prior quarter. The filings occurring now are either defensive
– to stop creditor enforcement actions – or offensive – to
implement a restructuring agreement with creditors. This is the
sixth consecutive quarter where Chapter 11 distress has measured
over 50 points; the Index hasn't seen that level of distress since
2011.
"We're starting to really see the impact of the pandemic and
resulting shutdown on overall Chapter 11 bankruptcy filings over
the last few quarters" said Polsinelli Shareholder Jeremy Johnson,
a bankruptcy and restructuring attorney and co-author of the
report. "Although it's difficult for anyone to predict what the
economy will do the rest of 2020 and into 2021, we do anticipate
filings continuing this momentum as we deal with the fallout from
the pandemic. We recommend that companies avoid filing unless they
have an exit strategy or their hand is forced by a creditor."
The report, released Nov. 12 by Am Law 100 firm Polsinelli, also
highlights economic distress in both the real estate and health
care industries. In the third quarter, the Real Estate Index shows
the distress levels remain relatively stable, but it's anticipated
that 2021 could see a rise in filings if landlords and tenants
cannot reach resolution.
In the health care space, the third quarter brought the 14th
consecutive quarter of high distress (an increase of more than 100
points). In fact, there were fewer than 15 filings in all of the
third quarter.
In the health care space, the third quarter brought the 14th
consecutive quarter of high distress (an increase of more than 100
points). In fact, there were fewer than 15 filings in all of the
third quarter.
The Polsinelli-TrBK Distress Indices are the backbone of a
quarterly research report series that uses Chapter 11 filing data
– bankruptcies with more than $1 million in assets – as a proxy
for measuring financial distress in the overall U.S. economy and
breakdowns of distress specifically in the real estate and health
care services sectors. It is the only current measurement that
tracks both Main Street and Wall Street statistics.
Other significant updates in the report include:
The Chapter 11 Distress Research Index was 81.17 for the third
quarter of 2020. The Chapter 11 Index increased more than 12 points
since the last quarter. Compared with the same period one year ago,
the Index has increased more than 26 points and compared with the
benchmark period of the fourth quarter of 2010, it is down
approximately 19 points.
The Real Estate Distress Research Index was 29.12 for the third
quarter of 2020. The Real Estate Index decreased approximately one
point since the last quarter. Compared with the same period one
year ago, the Index has increased almost four points and compared
with the benchmark period of the fourth quarter of 2010, it is down
approximately 70 points.
The Health Care Services Distress Research Index was 468.33 for
the third quarter of 2020. The Health Care Index decreased 42
points since the last quarter. Compared with the same period one
year ago, the Index has increased more than 86 points and compared
with the benchmark period of the fourth quarter of 2010, it is up
more than 360 points. This Index has exceeded the benchmark score
for the last 20 quarters and continues to track significantly
higher than the other indices.
The Polsinelli-TrBK Distress Indices track the increase or decrease
in all Chapter 11 filings with more than $1 million in assets since
the fourth quarter of 2010. Unlike the public markets, the
Polsinelli-TrBK Distress Indices include both public and private
companies, creating a broader economic view and one that may show
developing trends on Main Street before they appear on Wall
Street.
To access the full report, graphs and all past analysis, visit
www.distressindex.com.
About Polsinelli
Polsinelli is an Am Law 100 firm with 900 attorneys in 21 offices
nationwide. Recognized by legal research firm BTI Consulting as one
of the top firms for excellent client service and client
relationships, the firm’s attorneys provide value through
practical legal counsel infused with business insight, and focus on
health care, financial services, real estate, intellectual
property, middle-market corporate, labor and employment and
business litigation. Polsinelli PC, Polsinelli LLP in California.
[^] BOND PRICING: For the Week from November 9 to 13, 2020
----------------------------------------------------------
Company Ticker Coupon Bid Price Maturity
------- ------ ------ --------- --------
24 Hour Fitness Worldwide HRFITW 8.000 1.391 6/1/2022
24 Hour Fitness Worldwide HRFITW 8.000 1.391 6/1/2022
AMC Entertainment Holdings AMC 5.750 11.476 6/15/2025
AMC Entertainment Holdings AMC 6.125 11.105 5/15/2027
AMC Entertainment Holdings AMC 5.875 10.513 11/15/2026
American Airlines 2013-1
Class B Pass
Through Trust AAL 5.625 97.750 1/15/2021
American Energy-
Permian Basin LLC AMEPER 12.000 1.398 10/1/2024
American Energy-
Permian Basin LLC AMEPER 12.000 1.398 10/1/2024
American Energy-
Permian Basin LLC AMEPER 12.000 1.398 10/1/2024
BPZ Resources BPZR 6.500 3.017 3/1/2049
Basic Energy Services BASX 10.750 21.500 10/15/2023
Basic Energy Services BASX 10.750 19.985 10/15/2023
Blue Ridge Bankshares BRBS 6.750 95.709 12/1/2025
Blue Ridge Bankshares BRBS 6.750 95.709 12/1/2025
Bristow Group Inc/old BRS 4.500 6.000 6/1/2023
Bristow Group Inc/old BRS 6.250 6.030 10/15/2022
Buffalo Thunder
Development Authority BUFLO 11.000 50.125 12/9/2022
CBL & Associates LP CBL 5.250 37.362 12/1/2023
CEC Entertainment CEC 8.000 5.000 2/15/2022
Calfrac Holdings LP CFWCN 8.500 9.066 6/15/2026
Calfrac Holdings LP CFWCN 8.500 9.066 6/15/2026
Callon Petroleum Co CPE 6.250 42.691 4/15/2023
Callon Petroleum Co CPE 6.375 27.857 7/1/2026
Callon Petroleum Co CPE 6.125 38.099 10/1/2024
Callon Petroleum Co CPE 8.250 30.752 7/15/2025
Chesapeake Energy Corp CHK 11.500 15.500 1/1/2025
Chesapeake Energy Corp CHK 5.500 6.250 9/15/2026
Chesapeake Energy Corp CHK 6.625 4.875 8/15/2020
Chesapeake Energy Corp CHK 8.000 5.000 6/15/2027
Chesapeake Energy Corp CHK 5.750 5.875 3/15/2023
Chesapeake Energy Corp CHK 4.875 5.875 4/15/2022
Chesapeake Energy Corp CHK 11.500 14.280 1/1/2025
Chesapeake Energy Corp CHK 8.000 6.050 1/15/2025
Chesapeake Energy Corp CHK 7.000 6.000 10/1/2024
Chesapeake Energy Corp CHK 7.500 6.250 10/1/2026
Chesapeake Energy Corp CHK 8.000 5.689 3/15/2026
Chesapeake Energy Corp CHK 8.000 5.689 3/15/2026
Chesapeake Energy Corp CHK 8.000 5.844 1/15/2025
Chesapeake Energy Corp CHK 8.000 5.720 6/15/2027
Chesapeake Energy Corp CHK 8.000 5.689 3/15/2026
Chesapeake Energy Corp CHK 8.000 5.844 1/15/2025
Chesapeake Energy Corp CHK 8.000 5.720 6/15/2027
Chinos Holdings CNOHLD 7.000 0.332 N/A
Chinos Holdings CNOHLD 7.000 0.332 N/A
Corning GLW 7.000 118.448 5/15/2024
Dean Foods Co DF 6.500 0.750 3/15/2023
Dean Foods Co DF 6.500 0.833 3/15/2023
Diamond Offshore Drilling DOFSQ 7.875 5.508 8/15/2025
Diamond Offshore Drilling DOFSQ 5.700 7.000 10/15/2039
Diamond Offshore Drilling DOFSQ 4.875 7.000 11/1/2043
Diamond Offshore Drilling DOFSQ 3.450 7.000 11/1/2023
ENSCO International VAL 7.200 5.400 11/15/2027
EnLink Midstream Partners LP ENLK 6.000 50.000 N/A
Energy Conversion Devices ENER 3.000 7.875 6/15/2013
Energy Future Competitive
Holdings Co LLC TXU 1.022 0.072 1/30/2037
Exela Intermediate LLC /
Exela Finance Inc EXLINT 10.000 29.941 7/15/2023
Exela Intermediate LLC /
Exela Finance Inc EXLINT 10.000 30.786 7/15/2023
Extraction Oil & Gas XOG 7.375 25.000 5/15/2024
Extraction Oil & Gas XOG 5.625 25.000 2/1/2026
Extraction Oil & Gas XOG 7.375 24.448 5/15/2024
Extraction Oil & Gas XOG 5.625 24.565 2/1/2026
FTS International FTSINT 6.250 33.000 5/1/2022
Federal Home Loan Banks FHLB 2.620 99.442 11/20/2029
Ferrellgas Partners LP /
Ferrellgas Partners
Finance Corp FGP 8.625 18.000 6/15/2020
Ferrellgas Partners LP /
Ferrellgas Partners
Finance Corp FGP 8.625 20.000 6/15/2020
Fleetwood Enterprises FLTW 14.000 3.557 12/15/2011
Foresight Energy LLC /
Foresight Energy
Finance Corp FELP 11.500 0.469 4/1/2023
Foresight Energy LLC /
Foresight Energy
Finance Corp FELP 11.500 0.469 4/1/2023
Frontier Communications FTR 10.500 46.750 9/15/2022
Frontier Communications FTR 7.125 43.750 1/15/2023
Frontier Communications FTR 8.750 42.000 4/15/2022
Frontier Communications FTR 9.250 41.750 7/1/2021
Frontier Communications FTR 6.250 42.750 9/15/2021
Frontier Communications FTR 10.500 46.248 9/15/2022
Frontier Communications FTR 10.500 46.248 9/15/2022
GNC Holdings GNC 1.500 1.250 8/15/2020
General Electric Co GE 5.000 87.963 N/A
General Electric Co GE 3.650 99.782 11/15/2020
Global Eagle Entertainment GEENQ 2.750 0.500 2/15/2035
Global Marine GLBMRN 7.000 24.674 6/1/2028
Goodman Networks GOODNT 8.000 53.000 5/11/2022
Great Western Petroleum
LLC / Great Western
Finance Corp GRTWST 9.000 58.250 9/30/2021
Great Western Petroleum
LLC / Great Western
Finance Corp GRTWST 9.000 56.754 9/30/2021
Guitar Center GTRC 13.000 47.018 4/15/2022
Hertz Corp/The HTZ 6.250 45.500 10/15/2022
Hi-Crush HCR 9.500 3.951 8/1/2026
Hi-Crush HCR 9.500 3.951 8/1/2026
High Ridge Brands Co HIRIDG 8.875 2.914 3/15/2025
High Ridge Brands Co HIRIDG 8.875 2.914 3/15/2025
HighPoint Operating Corp HPR 7.000 37.565 10/15/2022
HighPoint Operating Corp HPR 8.750 27.225 6/15/2025
Host Hotels & Resorts LP HST 4.750 105.514 3/1/2023
ION Geophysical Corp IO 9.125 67.634 12/15/2021
ION Geophysical Corp IO 9.125 72.991 12/15/2021
ION Geophysical Corp IO 9.125 72.991 12/15/2021
ION Geophysical Corp IO 9.125 72.991 12/15/2021
Inn of the Mountain Gods
Resort & Casino INNMTN 9.250 97.125 11/30/2020
International Wire Group ITWG 10.750 88.657 8/1/2021
International Wire Group ITWG 10.750 88.657 8/1/2021
J Crew Brand LLC / J Crew
Brand Corp JCREWB 13.000 53.950 9/15/2021
JC Penney Corp JCP 6.375 0.063 10/15/2036
JC Penney Corp JCP 7.400 0.625 4/1/2037
JC Penney Corp JCP 5.875 9.000 7/1/2023
JC Penney Corp JCP 7.625 0.010 3/1/2097
JC Penney Corp JCP 8.625 0.250 3/15/2025
JC Penney Corp JCP 5.875 8.536 7/1/2023
JC Penney Corp JCP 8.625 2.500 3/15/2025
JCK Legacy Co MNIQQ 6.875 0.598 3/15/2029
JCK Legacy Co MNIQQ 7.150 0.041 11/1/2027
Jonah Energy LLC / Jonah
Energy Finance Corp JONAHE 7.250 2.507 10/15/2025
Jonah Energy LLC / Jonah
Energy Finance Corp JONAHE 7.250 2.452 10/15/2025
K Hovnanian Enterprises HOV 5.000 11.057 2/1/2040
K Hovnanian Enterprises HOV 5.000 11.057 2/1/2040
LSC Communications LKSD 8.750 16.063 10/15/2023
LSC Communications LKSD 8.750 15.492 10/15/2023
Liberty Media Corp LMCA 2.250 46.625 9/30/2046
Lonestar Resources America LONE 11.250 7.750 1/1/2023
Lonestar Resources America LONE 11.250 7.331 1/1/2023
MAI Holdings MAIHLD 9.500 16.149 6/1/2023
MAI Holdings MAIHLD 9.500 16.149 6/1/2023
MAI Holdings MAIHLD 9.500 16.149 6/1/2023
MBIA Insurance Corp MBI 11.497 28.750 1/15/2033
MBIA Insurance Corp MBI 11.497 28.750 1/15/2033
MF Global Holdings Ltd MF 9.000 15.625 6/20/2038
MF Global Holdings Ltd MF 6.750 15.625 8/8/2016
Mashantucket Western
Pequot Tribe MASHTU 7.350 16.257 7/1/2026
Men's Wearhouse Inc/The TLRD 7.000 1.750 7/1/2022
Men's Wearhouse Inc/The TLRD 7.000 1.465 7/1/2022
NGL Energy Partners LP /
NGL Energy Finance Corp NGL 7.500 49.333 11/1/2023
NWH Escrow Corp HARDWD 7.500 40.500 8/1/2021
NWH Escrow Corp HARDWD 7.500 40.500 8/1/2021
Nabors Industries NBR 5.750 30.002 2/1/2025
Nabors Industries NBR 5.100 46.093 9/15/2023
Nabors Industries NBR 0.750 27.375 1/15/2024
Nabors Industries NBR 5.500 48.596 1/15/2023
Nabors Industries NBR 5.750 30.140 2/1/2025
Nabors Industries NBR 5.750 30.140 2/1/2025
Neiman Marcus Group LLC/The NMG 7.125 4.382 6/1/2028
Neiman Marcus Group
LTD LLC / Neiman Marcus
Group LLC / Mariposa
Borrower / NMG NMG 8.000 4.750 10/25/2024
Neiman Marcus Group
LTD LLC / Neiman Marcus
Group LLC / Mariposa
Borrower / NMG NMG 8.750 5.182 10/25/2024
Neiman Marcus Group
LTD LLC / Neiman Marcus
Group LLC / Mariposa
Borrower / NMG NMG 14.000 27.250 4/25/2024
Neiman Marcus Group
LTD LLC / Neiman Marcus
Group LLC / Mariposa
Borrower / NMG NMG 14.000 27.250 4/25/2024
Neiman Marcus Group
LTD LLC / Neiman Marcus
Group LLC / Mariposa
Borrower / NMG NMG 8.000 4.151 10/25/2024
Neiman Marcus Group
LTD LLC / Neiman Marcus
Group LLC / Mariposa
Borrower / NMG NMG 8.750 5.182 10/25/2024
Nine Energy Service NINE 8.750 28.682 11/1/2023
Nine Energy Service NINE 8.750 28.632 11/1/2023
Nine Energy Service NINE 8.750 28.900 11/1/2023
Northwest Hardwoods HARDWD 7.500 35.625 8/1/2021
Northwest Hardwoods HARDWD 7.500 35.250 8/1/2021
OMX Timber Finance
Investments II LLC OMX 5.540 0.573 1/29/2020
Oasis Petroleum OAS 6.875 26.000 3/15/2022
Oasis Petroleum OAS 6.875 26.000 1/15/2023
Oasis Petroleum OAS 2.625 26.250 9/15/2023
Oasis Petroleum OAS 6.250 26.000 5/1/2026
Oasis Petroleum OAS 6.500 26.000 11/1/2021
Oasis Petroleum OAS 6.250 20.750 5/1/2026
Optimas OE Solutions
Holding LLC / Optimas OE
Solutions Inc OPTOES 8.625 65.250 6/1/2021
Optimas OE Solutions
Holding LLC / Optimas OE
Solutions Inc OPTOES 8.625 66.172 6/1/2021
Owens & Minor OMI 3.875 101.830 9/15/2021
Party City Holdings PRTY 6.125 41.185 8/15/2023
Party City Holdings PRTY 6.125 41.185 8/15/2023
Peabody Energy Corp BTU 6.000 40.554 3/31/2022
Peabody Energy Corp BTU 6.375 26.279 3/31/2025
Peabody Energy Corp BTU 6.375 25.617 3/31/2025
Peabody Energy Corp BTU 6.000 39.292 3/31/2022
Pride International LLC VAL 7.875 8.150 8/15/2040
Pride International LLC VAL 6.875 6.263 8/15/2020
Renco Metals RENCO 11.500 24.875 7/1/2003
Revlon Consumer Products REV 5.750 97.685 2/15/2021
Revlon Consumer Products REV 6.250 26.657 8/1/2024
Rolta LLC RLTAIN 10.750 4.187 5/16/2018
SESI LLC SPN 7.125 25.507 12/15/2021
SESI LLC SPN 7.125 26.250 12/15/2021
SESI LLC SPN 7.750 24.960 9/15/2024
Sable Permian Resources
Land LLC / AEPB
Finance Corp AMEPER 7.125 0.771 11/1/2020
SandRidge Energy SD 7.500 0.500 2/15/2023
Sears Holdings Corp SHLD 6.625 2.292 10/15/2018
Sears Holdings Corp SHLD 6.625 2.292 10/15/2018
Sears Roebuck Acceptance SHLD 7.500 0.809 10/15/2027
Sears Roebuck Acceptance SHLD 6.750 0.415 1/15/2028
Sears Roebuck Acceptance SHLD 6.500 0.689 12/1/2028
Sempra Texas Holdings Corp TXU 5.550 13.500 11/15/2014
Senseonics Holdings SENS 5.250 30.063 1/15/2025
Senseonics Holdings SENS 5.250 45.750 2/1/2023
Summit Midstream Partners SMLP 9.500 16.000 N/A
TerraVia Holdings TVIA 5.000 4.644 10/1/2019
Toys R Us TOY 7.375 1.628 10/15/2018
Transworld Systems TSIACQ 9.500 27.000 8/15/2021
Ultra Resources Inc/US UPL 11.000 5.125 7/12/2024
Voyager Aviation Holdings
LLC / Voyager Finance Co VAHLLC 9.000 47.020 8/15/2021
Voyager Aviation Holdings
LLC / Voyager Finance Co VAHLLC 9.000 47.057 8/15/2021
*********
Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par. Prices are
obtained by TCR editors from a variety of outside sources during
the prior week we think are reliable. Those sources may not,
however, be complete or accurate. The Monday Bond Pricing table
is compiled on the Friday prior to publication. Prices reported
are not intended to reflect actual trades. Prices for actual
trades are probably different. Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy or
sell any security of any kind. It is likely that some entity
affiliated with a TCR editor holds some position in the issuers
public debt and equity securities about which we report.
Each Tuesday edition of the TCR contains a list of companies with
insolvent balance sheets whose shares trade higher than $3 per
share in public markets. At first glance, this list may look like
the definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical cost
net of depreciation may understate the true value of a firm's
assets. A company may establish reserves on its balance sheet for
liabilities that may never materialize. The prices at which
equity securities trade in public market are determined by more
than a balance sheet solvency test.
On Thursdays, the TCR delivers a list of recently filed
Chapter 11 cases involving less than $1,000,000 in assets and
liabilities delivered to nation's bankruptcy courts. The list
includes links to freely downloadable images of these small-dollar
petitions in Acrobat PDF format.
Each Friday's edition of the TCR includes a review about a book of
interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.
Monthly Operating Reports are summarized in every Saturday edition
of the TCR.
The Sunday TCR delivers securitization rating news from the week
then-ending.
TCR subscribers have free access to our on-line news archive.
Point your Web browser to http://TCRresources.bankrupt.com/and use
the e-mail address to which your TCR is delivered to login.
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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
Tumanda, Valerie Udtuhan, Howard C. Tolentino, Carmel Paderog,
Meriam Fernandez, Joel Anthony G. Lopez, Cecil R. Villacampa,
Sheryl Joy P. Olano, Psyche A. Castillon, Ivy B. Magdadaro, Carlo
Fernandez, Christopher G. Patalinghug, and Peter A. Chapman, Editors.
Copyright 2020. All rights reserved. ISSN: 1520-9474.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers. Information contained
herein is obtained from sources believed to be reliable, but is
not guaranteed.
The TCR subscription rate is $975 for 6 months delivered via
e-mail. Additional e-mail subscriptions for members of the same
firm for the term of the initial subscription or balance thereof
are $25 each. For subscription information, contact Peter A.
Chapman at 215-945-7000.
*** End of Transmission ***