/raid1/www/Hosts/bankrupt/TCR_Public/201126.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Thursday, November 26, 2020, Vol. 24, No. 330
Headlines
ADVANCED CONTAINER: Operating Losses Cast Going Concern Doubt
AES CORPORATION: Moody's Affirms Ba1 CFR, Outlook Stable
AIR CANADA: S&P Affirms 'B+' ICR; Outlook Negative
AKRLOW LTD: Massachusetts Golf Club to Sell to Escalante for $10M
ALLEGIANT TRAVEL: S&P Alters Liquidity Assessment to Adequate
AMERICANN INC: Gets Two Licences from MCCC for Cannabis Cultivation
ARKLOW LIMITED: Dec. 10 Plan Confirmation Hearing Set
ARKLOW LIMITED: Unsecureds to Get 2.5% to 5% in Liquidating Plan
ASHFORD HOSPITALITY: Egan-Jones Cuts Sr. Unsecured Ratings to CCC-
AT HOME GROUP: S&P Upgrades ICR to 'B'; Outlook Positive
AZTEC/SHAFFER: Case Summary & 30 Largest Unsecured Creditors
BAUMANN & SONS: Gets Court OK to Hire Boris Benic as Auditor
BCP RENAISSANCE: Fitch Affirms B+ Rating on Senior Secured Debt
BEN CLYMER'S: Trustee Hires Setec as Computer Forensics Specialist
BENTON ENERGY: Seeks to Hire Kean Miller as Appeals Counsel
BIM'S INVESTMENTS: Involuntary Chapter 11 Case Summary
BIORESTORATIVE THERAPIES: Amended Joint Plan Confirmed by Judge
BIORESTORATIVE THERAPIES: Auctus-Backed Plan Effective Nov. 16
BOISE CASCADE: Egan-Jones Hikes Senior Unsecured Ratings to BB+
CAMBER ENERGY: Sets Date For 2021 Annual Meeting of Shareholders
CAPSTONE LOGISTICS: Moody's Withdraws B3 CFR Amid Debt Repayment
CARNIVAL CORP: Moody's Gives B2 Rating on New Senior Unsec. Notes
CBL & ASSOCIATES: Akin Gump Represents Noteholder Group
CENTURY CASINOS: S&P Affirms 'B-' ICR; Ratings Off Watch Negative
CENTURYLINK INC: S&P Rates New $750MM Senior Unsecured Notes 'BB-'
CHARLES RIVER: Moody's Upgrades CFR to Ba1, Outlook Stable
CLINIGENCE HOLDINGS: Posts $1.75 Million Net Income in 3rd Quarter
CMS ENERGY: Fitch Assigns BB+ Rating to Junior Subordinated Notes
COEUR MINING: Egan-Jones Hikes Senior Unsecured Ratings to CCC+
COMMERCIAL METALS: Moody's Alters Outlook on Ba1 CFR to Stable
COMSTOCK MINING: All Four Proposals Approved at Annual Meeting
COMSTOCK MINING: Posts $17.3 Million Net Income in Third Quarter
COOPER TIRE: Egan-Jones Raises Sr. Unsecured Debt Ratings to BB+
CUSHMAN & WAKEFIELD: S&P Alters Outlook to Neg., Affirms 'BB-' ICR
DEAN & DELUCA: Court Approves Bankruptcy Reorganization Plan
DIOCESE OF PHOENIX: Moody's Cuts Series 2020A Bonds to Ba2
DTI HOLDCO: Moody's Affirms Caa2 CFR; Alters Outlook to Stable
EAGLE PRESSURE: Files for Chapter 11 Bankruptcy Protection
ENERGY ALLOYS: Committee Hires McDermott Will as Legal Counsel
ENERGY ALLOYS: Sale of Interests in EH Subsidiaries to BioUrja OK'd
FAIR ISAAC: Egan-Jones Lowers Sr. Unsecured Debt Ratings to BB+
FIRSTENERGY CORP: Fitch Downgrades LT IDR to BB+, Outlook Negative
FORD MOTOR: Egan-Jones Lowers Commercial Paper Ratings to B
FRONTIER COMMUNICATIONS: CWA Seeks Regulatory Conditions on Plan
FRONTIER COMMUNICATIONS: Fitch Gives BB+(EXP) Rating on Sec. Notes
FRONTIER COMMUNICATIONS: Moody's Rates New $1B Secured Notes Caa2
GARRETT MOTION: Noteholders file 2nd Modified Statement
GERALDINE R. ROSINE: Trustee Selling El Sobrante Property for $370K
GOGO INC: Expects to Close Business Unit Sale in Early December
HANJIN INTERNATIONAL: Moody's Reviews B3 CFR for Upgrade
HAWAIIAN HOLDINGS: Board Appoints Members to Governance Committee
HUNTSMAN CORP: Egan-Jones Cuts Foreign Curr. Unsec. Rating to BB-
HUSKY ENERGY: Egan-Jones Cuts Sr. Unsecured Debt Ratings to B
IMAX CORP: Egan-Jones Lowers Senior Unsecured Ratings to BB
IONIS PHARMACEUTICALS: Egan-Jones Hikes Unsec. Debt Ratings to BB+
IRI HOLDINGS: S&P Alters Outlook to Stable, Affirms 'B-' ICR
J. C. PENNEY: Discloses Substantial Doubt on Staying Going Concern
J.C. PENNEY: Cigna Objects to Amended Joint Plan & Disclosures
J.C. PENNEY: Court Okays Shareholder Suits and Chapter 11 Plan
J.C. PENNEY: First Hartford Accuses Simon of Retailer Monopoly
J.J.W. METAL: Case Summary & 8 Largest Unsecured Creditors
J2 GLOBAL: Egan-Jones Hikes Sr. Unsecured Debt Ratings to BB
JAGUAR HEALTH: Issues 7.4M Shares from From Oct. 7 Through Nov. 19
JAMCO SERVICES: Case Summary & 20 Largest Unsecured Creditors
JEFFERY ARAMBEL: Plan Admin's Sale of 2 Properties Dismissed
JEFFERY ARAMBEL: Plan Admin's Sale of 3 Properties Dismissed
K&W CAFETERIAS: Dec. 9 Hearing on Business Sale Agreement
LEGACY EDUCATION: Has $4.7M Net Income for Quarter Ended Sept. 30
LIBBEY INC: Reports $83.8M Net Loss for Quarter Ended June 30
LILIS ENERGY: Reports $74.4-Mil. Net Loss for Sept. 30 Quarter
LSC COMMUNICATIONS: Phoenix Investors Buys Former Plant
LUVU BRANDS: Posts $329K Net Income for the Quarter Ended Sept. 30
LUX AMBER: Says Financial Condition Raises Going Concern Doubt
M/I HOMES: Egan-Jones Hikes Senior Unsecured Ratings to BB
MAHONING CONSUMER: Case Summary & 20 Largest Unsecured Creditors
MALLINCKRODT PLC: Gets Court Permission to Pause the Acthar Gel Sui
MALLINCKRODT PLC: Shareholders Seek Appointment of Equity Panel
MARIMED INC: Reports $1.7-Mil. Net Income for the Sept. 30 Quarter
MATTEL INC: Fitch Upgrades LT IDR to B, Outlook Positive
MDC HOLDINGS: Moody's Upgrades CFR to Ba1, Outlook Stable
MEDIACO HOLDING: Posts $3.5-Mil. Net Loss for Sept. 30 Quarter
MENTOR CAPITAL: Needs More Capital to Remain as Going Concern
METHANEX CORP: Egan-Jones Cuts Sr. Unsecured Ratings to B+
MIND TECHNOLOGY: Says Substantial Going Concern Doubt Exists
MOSES INVESTMENTS: U.S. Trustee Unable to Appoint Committee
MUSCLE MAKER: Has $662,000 Net Loss for Quarter Ended Sept. 30
MUSCLEPHARM CORP: Posts $678K Net Income in Third Quarter
MUSCLEPHARM CORP: SingerLewak LLP Raises Going Concern Doubt
MYCELL TECHNOLOGIES: Case Summary & 9 Unsecured Creditors
NANO MAGIC: Incurs $110,610 Net Loss in Third Quarter
NANOVIBRONIX INC: Has $922,000 Net Loss for Quarter Ended Sept. 30
NEWMARK GROUP: S&P Alters Outlook to Negative, Affirms 'BB+' ICR
NN INC: Moody's Upgrades CFR to B3, Outlook Stable
NORBORD INC: Moody's Reviews Ba1 CFR for Upgrade
NTN BUZZTIME: Management Concludes Going Concern Doubt Exists
OCUGEN INC: Discloses Substantial Doubt on Staying Going Concern
OIL INTERNATIONAL: Case Summary & 4 Unsecured Creditors
OIL STATES: Egan-Jones Lowers Senior Unsecured Ratings to CCC+
ONE AVIATION: Court Okays $5.25 Million Sale Amid Objections
ONESKY FLIGHT: Fitch Affirms B- LT IDR; Alters Outlook to Positive
OWENS & MINOR: Egan-Jones Hikes Sr. Unsecured Debt Ratings to B-
PATERSON PARKING: Moody's Affirms Ba1 Rating on Revenue Bonds
PENNYSLVANIA REAL: Russell Johnson Represents Utility Companies
PHUNWARE INC: Gets Noncompliance Notice fom Nasdaq
PLH GROUP: S&P Alters Outlook to Positive, Affirms 'B' ICR
POPULUS FINANCIAL: Moody's Reviews B3 CFR for Downgrade
PRECISION MEDICINE: S&P Assigns 'B-' ICR; Outlook Positive
PRO-PHARMA ADVISORY: Case Summary & 3 Unsecured Creditors
PROFESSIONAL INVESTORS 21: Involuntary Chapter 11 Case Summary
PROFESSIONAL INVESTORS 40: Involuntary Chapter 11 Case Summary
PROFESSIONAL INVESTORS 41: Involuntary Chapter 11 Case Summary
PURDUE PHARMA: Pleads Guilty to Role in Opioid Epidemic
RALPH LAUREN: Egan-Jones Lowers Sr. Unsec. Debt Ratings to BB
RENNOVA HEALTH: Posts $69.7 Million Net Loss in Third Quarter
RENT-A-CENTER INC: Egan-Jones Hikes Senior Unsecured Ratings to BB
ROMC LLC: Voluntary Chapter 11 Case Summary
ROYAL CARIBBEAN: Egan-Jones Lowers Senior Unsecured Ratings to B-
SANMINA CORP: Egan-Jones Hikes Sr. Unsecured Debt Ratings to BB+
SCHOOL DISTRICT SERVICES: U.S. Trustee Unable to Appoint Committee
SEALED AIR: Egan-Jones Hikes Sr. Unsec. Debt Ratings to BB-
SIGNIFY HEALTH: Moody's Affirms B2 CFR; Alters Outlook to Stable
SINCLAIR TELEVISION: Moody's Assigns Ba2 Rating on New Sec. Notes
SIRVA INC: S&P Affirms 'CCC+' ICR, Off CreditWatch Negative
SM ENERGY: Egan-Jones Hikes Senior Unsecured Ratings to CCC-
SMARTOURS LLC: Gets Court OK to Hire Nixon Peabody as Legal Counsel
SMARTOURS LLC: Gets OK to Hire Ariste Advisors as Financial Advisor
SMARTOURS LLC: Gets OK to Hire Cross & Simon as Delaware Counsel
SONOMA PHARMACEUTICALS: Posts $120K Net Income in Second Quarter
SOTHEBY'S: Moody's Rates $165MM Add-on Secured Notes 'B1'
SOTHEBY'S: S&P Alters Outlook to Stable, Affirms 'B+' ICR
STEIN MART: Sale of Intellectual Property for $4M Approved
STEWART STREET: U.S. Trustee Unable to Appoint Committee
SUGARHOUSE HSP: Moody's Reviews B3 CFR for Downgrade
SUNCOR ENERGY: Egan-Jones Lowers Senior Unsecured Ratings to BB+
SUNPOWER CORP: Egan-Jones Hikes Sr. Unsecured Ratings to B
SYMPLR SOFTWARE: Moody's Assigns B3 CFR, Outlook Stable
SYNEOS HEALTH: Moody's Assigns B2 Rating to New Sr. Unsec. Notes
TERMINIX GLOBAL: S&P Raises Senior Unsecured Notes Rating to 'B+'
TITAN INTERNATIONAL: Chief Accounting Officer to Quit Next Week
TOTAL MARKETING: Case Summary & 15 Unsecured Creditors
TOWN SPORTS: Committee Gets OK to Hire Cole Schotz as Legal Counsel
TOWN SPORTS: Committee Taps Berkeley Research as Financial Advisor
TOWN SPORTS: Gets Court Permission to Reject Certain Leases
TTK RE ENTERPRISE: $240K Northfield Sale to Neustadter Okayed
UNITED RESOURCE: Hires Victor Wrotslavsky as Expert Witness
VILLAGE EAST: Committee Gets OK to Hire Bell Ferris as Appraiser
WATERS RETAIL: Proposed Sale of All Assets Approved
WEYERHAESER COMPANY: Egan-Jones Hikes Sr. Unsecured Ratings to BB+
YOUFIT HEALTH: Dec. 21 Auction of Substantially All Assets
YOUFIT HEALTH: Reply in Support of Assets Bid Procedures Allowed
YUMA COUNTY: Moody's Lowers Tax Bond Rating to Ba2, Outlook Neg.
[^] Recent Small-Dollar & Individual Chapter 11 Filings
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ADVANCED CONTAINER: Operating Losses Cast Going Concern Doubt
-------------------------------------------------------------
Advanced Container Technologies, Inc. (formerly Medtainer, Inc.)
filed its quarterly report on Form 10-Q, disclosing a net income of
$86,737 on $671,853 of revenues for the three months ended Sept.
30, 2020, compared to a net loss of $276,331 on $526,143 of
revenues for the same period in 2019.
At Sept. 30, 2020, the Company had total assets of $2,881,125,
total liabilities of $1,915,774, and $965,351 in total
stockholders' equity.
Advanced Container said, "At September 30, 2020, the Company had a
working capital deficit of US$1,301,346. In addition, the Company
has generated operating losses since its inception and has notes
payable that are currently in default. These factors, among
others, raise substantial doubt about the ability of the Company to
continue as a going concern. The ability of the Company to
continue as a going concern is dependent on the successful
execution of its operating plan which includes increasing sales of
existing products while introducing additional products and
services, controlling operating expenses, negotiating extensions
of existing loans and raising either debt or equity financing."
A copy of the Form 10-Q is available at:
https://bit.ly/3nKPfAP
Advanced Container Technologies, Inc. (formerly Medtainer, Inc.) is
in the businesses of (i) selling and distributing hydroponic
containers called "AgPods" (the "AgPod Business") and (ii)
designing, branding and selling proprietary plastic medical grade
containers that can store pharmaceuticals, herbs, teas and other
solids or liquids and can grind solids and shred herbs, as well as
selling other products such as humidity control inserts,
smell-proof bags, lighters, and plastic lighter holders, and
providing private labeling and branding for purchasers of the
Company's containers and the other products (the "Container
Business"). The Company changed its corporate name to Advanced
Container Technologies, Inc. on October 3, 2020, and entered into
the AgPod Business on October 9, 2020, upon its acquisition of all
of the shares of Advanced Container Technologies, Inc., a
California corporation ("ACT") that was incorporated on June 2,
2020. On October 9, 2020, the Company transferred substantially
all of the assets and certain liabilities relating to the Container
Business to its wholly owned subsidiary, Med X Technologies, Inc.,
a California corporation ("Med X") that was incorporated on August
27, 2020. The Company is based in Corona, California.
AES CORPORATION: Moody's Affirms Ba1 CFR, Outlook Stable
--------------------------------------------------------
Moody's Investors Service affirmed the Ba1 corporate family rating
(CFR) and Ba1-PD probability of default rating of The AES
Corporation and assigned a Ba1 rating to the new senior unsecured
notes. Moody's also downgraded the company's previously secured
notes due in 2025 and 2030 to Ba1 from Baa3 in anticipation that
AES will release the security on these notes. The Speculative Grade
Liquidity Rating (SGL) of AES is unchanged at SGL-2 and the outlook
is stable.
AES intends to use the net proceeds from the new senior unsecured
notes issuance to fund the early redemption of other senior
unsecured notes that currently aggregate nearly $1.7 billion, net
of related costs, and to fund investments in green projects.
RATINGS RATIONALE
"The downgrade of AES Corporation's 2025 and 2030 notes to Ba1 is
driven by the anticipated release of the collateral package
securing the notes, making them pari-passu with the company's other
unsecured debt", said Nati Martel, Vice President/Senior Analyst.
The release reflects the fallaway provisions embedded in their
indentures that was triggered after AES achieved investment-grade
ratings from two rating agencies. AES' capital structure now
consists exclusively of senior unsecured debt obligations with
identical recovery prospects as per Moody's Loss Given Default
(LGD) methodology ("Loss Given Default for Speculative-Grade
Companies").
The affirmation of AES' Ba1 CFR with a stable outlook reflects the
group's scale and diversification as well as the structural
subordinated position of AES' parent company debt vis-a-vis the
debt outstanding at its subsidiaries. Moody's estimates that the
ratio of holding company debt to consolidated debt will remain
below 20% following the issuance of the new unsecured notes and the
redemption of the tendered unsecured notes.
The Ba1 CFR also considers the overall resilience shown by the
group's operations to the economic disruptions caused by the
coronavirus pandemic. The take or pay clauses embedded in the
long-term contracted operations of the majority of AES' independent
power producers (IPP) and project subsidiaries in both the US and
in emerging markets have helped to mitigate the impact of power
demand contraction on the group's cash flows. Also, AES did not
report a material increase in outstanding receivables at the end of
September compared to last year.
In the US, the full-year of operations of the AES Southland LLC
project that came online at the end of last year is helping to
mitigate the impact on consolidated cash flow of the reduction in
power demand at regulated utility subsidiaries Indianapolis Power &
Light Company (IPL; Baa1 stable) and Dayton Power & Light Company
(DP&L; Baa2 negative). For the last twelve-month period ended
September 2020, AES' consolidated cash flow pre-changes in working
capital (CFO pre-W/C) approximated $2.4 billion compared to nearly
$2.6 billion at year-end 2019.
Its view of AES' business risk profile considers that the US
subsidiaries currently represent around 35% of consolidated pre-tax
earnings. The group intends to grow these operations so that they
represent around 50% of pre-tax earnings through its renewable and
battery storage platforms as well as through growing investments in
both IPL and DP&L. To that end, and assuming the approval of a
recent regulatory settlement agreement reached in Ohio, AES' equity
contributions to DP&L could aggregate $300 million (2020: $150
million).
The aforementioned reduction in CFO pre-W/C along with an increase
in consolidated debt by around $1 billion has contributed to a
slight deterioration in AES' consolidated credit metrics. For
example, the ratio of consolidated CFO pre-W/C to debt of around
11% for the last twelve-month period ended September 2020 compares
to an average of approximately 12.5% during the 2017-2019 period.
However, Moody's expects that this ratio will become supportive of
the rating of AES by year-end 2020, including a ratio of
consolidated CFO pre-W/C to debt of around 12%. This expectation
reflects the combination of the early redemption of $445 million of
Empresa Electrica Angamos SpA's (Baa3 negative) debt obligations
that was completed in October 2020 along with scheduled project
debt amortizations, AES' repayment of the bulk of the outstanding
balance under its credit facility along with some incremental
improvement in the US utility cash flows.
Liquidity
The SGL-2 reflects good liquidity from both strong internal cash
flow generation and near-term asset sales. The availability of
external sources of liquidity is currently highly constrained as
AES had $274 million available under its $1 billion revolving
credit facility as of end of September 2020 (including $16 million
in letters of credit). However, Moody's anticipates that AES will
repay the bulk of the $710 million outstanding at the end of
September by the end of the year.
Borrowings under the facility are subject to conditionality
including a material adverse change clause representation. The
facility has two financial covenants including a minimum cash flow
coverage ratio of 2.5x and a maximum recourse debt to cash flow
ratio of not more than 5.75x (both metrics calculated on a
parent-only basis). Moody's anticipates that AES will remain in
compliance with substantial headroom.
The SGL-2 also factors in management's expectation that the
company's free cash flow will range between $725 million and $775
million this year and that it will receive net proceeds from the
sale of assets of around $650 million, including $424 million from
the recently announced sale of a 35% interest in the AES Southland
project.
Affirmations:
Issuer: AES Corporation, (The)
Corporate Family Rating, Affirmed Ba1
Probability of Default Rating, Affirmed Ba1-PD
Senior Unsecured Regular Bond/Debenture, Affirmed Ba1 (LGD4)
Assignments:
Issuer: AES Corporation, (The)
Senior Unsecured Regular Bond/Debenture, Assigned Ba1 (LGD4)
Downgrades:
Issuer: AES Corporation, (The)
GTD Senior Unsecured Regular Bond/Debenture (previously issued as
Senior Secured debt), Downgraded to Ba1 (LGD4) from Baa3 (LGD3)
Outlook Actions:
Issuer: AES Corporation, (The)
Outlook, Remains Stable
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
FACTORS THAT COULD LEAD TO AN UPGRADE
AES' ratings could be upgraded if there is a further improvement in
the consolidated financial profile, where the ratio of consolidated
CFO pre-W/C to consolidated debt reaches at least 16% on a
sustained basis. This threshold could be lowered if there is more
clarity on AES' evolving business risk profile which is expected to
become more US-focused.
FACTORS THAT COULD LEAD TO AN UPGRADE
A downgrade could occur if AES diverges from its de-risking
business strategy or implements more aggressive financial policies,
if consolidated leverage ratios increase, or if a more contentious
regulatory environment emerges in any of AES' key subsidiary
jurisdictions (such as Indiana or Ohio). Ratings could also be
downgraded if the ratio of consolidated FFO to consolidated debt
fell below 12%, for a sustained period of time.
The principal methodology used in these ratings was Unregulated
Utilities and Unregulated Power Companies published in May 2017.
AIR CANADA: S&P Affirms 'B+' ICR; Outlook Negative
--------------------------------------------------
S&P Global Ratings affirmed its ratings on Air Canada, including
its 'B+' issuer credit rating on the company, primarily reflecting
its expectation that credit measures will meaningfully improve for
the company over the next couple of years.
S&P said, "We expect Air Canada to generate weaker credit metrics
than previously assumed due in part to our view of a slower
recovery in air travel demand. We foresee a slower recovery in air
travel demand than previously anticipated, particularly within the
next two years. We now assume Air Canada's passenger revenue miles
(traffic) will be 70%-75% lower in 2020, 50%-55% lower in 2021,
25%-30% lower in 2022, and not return to 2019 levels until at least
2024. These traffic assumptions are modestly lower than our
previous review on the company and contribute to weaker cash flow
and earnings generation than we previously expected through 2021.
That said, the affirmation of our issuer credit rating on Air
Canada continues to reflect our expectation for credit measures to
meaningfully improve over the next couple of years. These include
adjusted funds from operations (FFO)-to-debt of about 12% and
adjusted debt-to-EBITDA of about 5x by 2022, with further
improvement thereafter."
"The negative outlook reflects our view that should the anticipated
effects of the pandemic become more severe, Air Canada's operating
results could recover more slowly than we expect or its liquidity
could come under pressure. We currently assume Air Canada's airline
passenger traffic in 2021 will be 50%-55% lower than in 2019, with
a gradual recovery over the next few years."
"We could lower the rating within the next 12 months if we believe
credit metrics will trend weaker than our current forecast, which
assumes adjusted FFO-to-debt approaching 12% in 2022. This could
occur if we believe the recovery will be weaker than we currently
assume, resulting in lower earnings and continued high cash flow
burn. We could also lower the rating if the company's liquidity
deteriorates."
"We could revise the outlook to stable within the next 12 months if
we gain more conviction that credit metrics will improve about in
line with our current expectations, which include adjusted
FFO-to-debt approaching 12% and near break-even free operating cash
flow (FOCF) generation by 2022. This could occur if the lifting of
international travel restrictions and a reduction in the public's
perceived risk of contracting the coronavirus contribute to a
meaningful increase in air travel demand."
AKRLOW LTD: Massachusetts Golf Club to Sell to Escalante for $10M
-----------------------------------------------------------------
Bill Doyle of Worcester Telegram reports that The International
Golf Club in Bolton, Massachusetts, will be sold to Escalante Golf
of Fort Worth, Texas, for $10 million if the club's many creditors
vote to approve a liquidation plan.
According to a disclosure statement that was mailed to creditors,
the creditors have until Dec. 4 to approve the liquidating plan for
Arklow Limited Partnership, the International Golf Club and Wealyn.
A bankruptcy court hearing on confirmation of the plan is scheduled
for Dec. 10, 2020.
Creditors include those who paid for memberships and others who
paid for weddings at the club, which did not open this year and
filed for chapter 11 bankruptcy in U.S. Bankruptcy Court for the
District of Massachusetts Central Division in Worcester in May
2020.
According to the disclosure statement, the liquidation plan will
use the proceeds of the sale, collection and other liquidation of
the club's assets to fund payments to the creditors in the order of
priority established under the bankruptcy code and applicable
non-bankruptcy law. The primary source of the funds will be the $10
million from the sale of the club to Escalante Golf, a private
equity firm which owns 17 golf courses in the U.S.
Confirmation of the liquidating plan is a condition to the closing
of the sale of the club to Escalante Golf, according to the
disclosure statement.
Andrew Ravesi and Nisha Patel paid a deposit of $10,000 to hold
their wedding ceremony and reception at the International on May
30. They were told they would get a refund, but they never did.
"I'm not entirely sure what to think at this point," Ravesi said
Tuesday, November 17, 2020. "As I said, I’m still trying to make
sense of this. My wife Nisha and I had already resigned ourselves
to thinking we wouldn't be getting anything back from our wedding
deposit. Getting anything back would be a surprise, but it's still
a sore spot for us. We're just looking forward to putting this all
behind us, as I’m sure anyone else affected by this is."
They ended up getting married on May 30, 2020, but at Barrett Park
in Leominster, Massachusetts, with only immediate family in
attendance. After the pandemic ends, they play to hold a larger
ceremony that everyone can attend.
Arklow Limited Partnership owns about 665 acres of real estate,
including 200 taken up by the International’s two golf courses,
54-room hotel, restaurant and function room. Arklow also owns
equipment necessary to operate the International, and leases the
rest, such as golf carts, mowers and turf equipment. Arklow's
limited partners are Florence Weadock, Brian Lynch, Daniel Weadock,
Ann Specht and Kevin Weadock.
On March 18, the club closed and laid off the majority of its
staff, a day after the state ruled all restaurants must close other
than takeout service due to the coronavirus. Owners Kevin Weadock
and Ann Specht informed managers that the coronavirus had worsened
the private club’s financial outlook and that the club would not
reopen, not even after the virus threat ended, according to
multiple people at the March 18, 2020 meeting. Members were told
only that the majority of the staff was let go.
Members heard nothing from the club until a week later when Kevin
Weadock emailed them to say the club would reopen when Gov. Charlie
Baker allowed golf courses to do so. People who had booked weddings
at the International weren't told anything. Golf courses were
allowed to reopen in mid-May, but the International had filed for
bankruptcy by then.
Nine days after the club closed, Bryan Weadock said he had taken
over control of the club in place of his brother Kevin. That day,
Bryan Weadock disputed rumors that the family was considering
bankruptcy, insisted the family has the finances to continue to run
the club, and said that it was not for sale.
Bryan Weadock also promised full refunds to anyone who had booked a
wedding, but most couples received nothing. Many couples lost
several thousand dollars.
The Weadock family also owns Twin Springs Golf Course, a nearby
nine-hole public course which has been closed since the
International declared bankruptcy.
About Arklow Limited Partnership
Arklow Limited Partnership owns 700 acres of real estate on which
Bolton, Mass.-based International Golf Club, and Resort, a
lifestyle destination, operates.
International Golf Club and Resort operates as three entities: The
International Golf Club, LLC, which oversees the golf courses and
memberships; Wealyn LLC, a limited liability company that manages
food and beverage service; and Arklow Limited Partnership.
Arklow Limited Partnership sought Chapter 11 protection (Bankr. D.
Mass. Case No. 20-40523) on May 4, 2020. It sought bankruptcy
protection along with The International Golf Club, LLC (Case No.
20-40524), and Wealyn, LLC (Case No. 20-40525), with Arklow
designated as the lead case. At the time of the filing, Arklow
disclosed assets of between $10 million and $50 million and
liabilities of the same range.
The Honorable Christopher J. Panos is the presiding judge.
Murphy & King, Professional Corporation is the Debtors' bankruptcy
counsel.
On July 31, 2020, the U.S. Trustee for Region 1 appointed a
committee to represent unsecured creditors in the Chapter 11 case
of Arklow Limited Partnership.
ALLEGIANT TRAVEL: S&P Alters Liquidity Assessment to Adequate
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S&P Global Ratings revised its assessment of Allegiant Travel Co.'s
liquidity to adequate from less than adequate. S&P also affirmed
its ratings, including its 'B' issuer credit rating and its 'B+'
rating (recovery rating: '2') on its $545 million term loan B and
$150 million senior secured notes.
As of Sept. 30, 2020, Allegiant had over $410 million in cash and
equivalents (excluding $300 million of minimum liquidity the
company's credit facilities require it to maintain). Other key
sources of liquidity include proceeds from the $150 million senior
secured notes that the company issued in October 2020. S&P also
expects funds from operations (FFO) of about $250 million; this
includes over $100 million in tax refunds related to losses in
2020, which the company expects to receive in early 2021, as a
result of net operating loss carryback provisions under the
Coronavirus Aid, Relief, and Economic Security (CARES) Act.
Significant uses of liquidity over the next 12 months include
capital spending of about $200 million, debt repayments of over
$200 million, and working capital requirements. Therefore, S&P now
expects that Allegiant's sources of liquidity will be about 1.5x
its uses over the next 12 months, despite S&P's expectation of
continued weakness in demand for air travel through that period.
Environmental, social, and governance (ESG) credit factors for this
credit rating change:
-- Health and safety
S&P said, "We could lower the rating over the next 12 months if
demand recovery is weaker than we anticipate, resulting in FFO to
debt falling below the low-teens-percent area for a sustained
period. We could also lower the rating if we foresee elevated
liquidity concerns due to prolonged operational weakness.
"We could revise the outlook to stable if the demand recovery is
stronger than we anticipate, such that we expect FFO to debt to
remain in the high-teens-percent area on a sustained basis. We
would also need the company's liquidity position to remain
adequate."
AMERICANN INC: Gets Two Licences from MCCC for Cannabis Cultivation
-------------------------------------------------------------------
AmeriCann received two licenses from the Massachusetts Cannabis
Control Commission. The licenses are for Cannabis Cultivation and
a license for Cannabis Product Manufacturing.
The Cultivation and Product Manufacturing licenses awarded to
AmeriCann will be used by AmeriCann to cultivate cannabis and
manufacturing cannabis infused products in Building 2 of the
Company's flagship development, the Massachusetts Cannabis Center
(MCC).
The MCC is a planned one million square foot sustainable
greenhouse, processing and product manufacturing project in
Freetown, Massachusetts which is being developed by AmeriCann.
Building 1 of the MCC is complete and AmeriCann's JV Partner
commenced operations in February of 2020 with a 30,000 square foot
state-of-the-art greenhouse and product manufacturing facility.
The Company's design plans for Building 2 include approximately
400,000 square feet of state-of-the-art cultivation and product
manufacturing space.
Adult use cannabis sales in Massachusetts exceeded $1 billion this
month since the beginning of the program in 2018.
About Americann
Headquartered in Denver, Colorado, AmeriCann is a specialized
cannabis company that is developing cultivation, processing and
manufacturing facilities. AmeriCann uses greenhouse technology
which is superior to the current industry standard of growing
cannabis in warehouse facilities under artificial lights.
AmeriCann is designing GMP Certified cannabis extraction and
product
manufacturing infrastructure. Through a wholly-owned subsidiary,
AmeriCann Brands, Inc., the Company intends to secure licenses to
produce cannabis infused products including beverages, edibles,
topicals, vape cartridges and concentrates. AmeriCann Brands, Inc.
plans to operate a Marijuana Product Manufacturing business at MMCC
with over 40,000 square feet of state-of-the art extraction and
product manufacturing infrastructure.
Americann reported a net loss of $4.90 million for the year ended
Sept. 30, 2019, compared to a net loss of $4.43 million for the
year ended Sept. 30, 2018. As of June 30, 2020, the Company had
$14.86 million in total assets, $8.48 million in total liabilities,
and $6.38 million in total stockholders' equity.
MaloneBailey, LLP, in Houston, Texas, the Company's auditor since
2016, issued a "going concern" qualification in its report dated
Jan. 14, 2020, citing that the Company has suffered recurring
losses from operations and has an accumulated deficit that raises
substantial doubt about its ability to continue as a going concern.
ARKLOW LIMITED: Dec. 10 Plan Confirmation Hearing Set
-----------------------------------------------------
Debtors Arklow Limited Partnership (Arklow), the International Golf
Club, LLC (IGC) and Wealyn, LLC (Wealyn) filed with the U.S.
Bankruptcy Court for the District of Massachusetts, Central
Division, a motion for entry of an order approving Disclosure
Statement with respect to Joint Plan of Reorganization.
On Nov. 10, 2020, Judge Christopher J. Panos granted the motion and
ordered that:
* The Disclosure Statement is approved as containing adequate
information within the meaning of Section 1125 of the Bankruptcy
Code, and to the extent not withdrawn, settled or resolved, all
objections to the Disclosure Statement are overruled.
* Dec. 4, 2020 is fixed as the last day for all persons and
entities entitled to vote on the Plan to deliver their Ballots.
* Dec. 10, 2020, at 11:00 a.m. held either telephonically or by
video conference is the hearing to consider confirmation of the
Plan.
* Dec. 4, 2020, is fixed as the last day to file any objection
to confirmation of the Plan.
A full-text copy of the amended disclosure statement dated November
10, 2020, is available at https://tinyurl.com/y6ek2wb3 from
PacerMonitor at no charge.
Counsel for the Debtors:
Harold B. Murphy, Esq.
D. Ethan Jeffery, Esq.
MURPHY & KING, P.C.
One Beacon Street
Boston, MA 02108
Telephone: (617) 423-0400
Facsimile: (617) 423-0498
E-mail: EJeffery@murphyking.com
About Arklow Limited Partnership
Arklow Limited Partnership owns 700 acres of real estate on which
Bolton, Mass.-based International Golf Club, and Resort, a
lifestyle destination, operates. International Golf Club and
Resort operates as three entities: The International Golf Club,
LLC, which oversees the golf courses and memberships; Wealyn LLC, a
limited liability company that manages food and beverage service;
and Arklow Limited Partnership.
Arklow Limited Partnership sought Chapter 11 protection (Bankr. D.
Mass. Case No. 20-40523) on May 4, 2020. It sought bankruptcy
protection along with The International Golf Club, LLC (Case No.
20-40524), and Wealyn, LLC (Case No. 20-40525), with Arklow
designated as the lead case. At the time of the filing, Arklow
disclosed assets of between $10 million and $50 million and
liabilities of the same range.
The Honorable Christopher J. Panos is the presiding judge. Murphy &
King, Professional Corporation is the Debtors' bankruptcy counsel.
On July 31, 2020, the U.S. Trustee for Region 1 appointed a
committee to represent unsecured creditors in the Chapter 11 case
of Arklow Limited Partnership.
ARKLOW LIMITED: Unsecureds to Get 2.5% to 5% in Liquidating Plan
----------------------------------------------------------------
Debtors Arklow Limited Partnership (Arklow), the International Golf
Club, LLC (IGC) and Wealyn, LLC (Wealyn) filed an Amended
Disclosure Statement with respect to their proposed Joint Plan of
Liquidation on November 10, 2020.
The Plan is a liquidating plan that utilizes the proceeds of the
sale, collection and other liquidation of the Debtors' assets to
fund payments to the holders of Allowed Claims in the order of
priority established under the Bankruptcy Code and applicable
non-bankruptcy law. The primary source of funds for the plan will
be the $10,000,000 realized from the sale of substantially all of
the Debtors’ assets to Escalante – International Golf Club, LLC
("Escalante"). The Sale is included in the Plan, and confirmation
of the Plan will constitute approval for the Debtors to close the
Sale in accordance with the Asset Purchase Agreement.
Escalante's offer, which included a premium for a sale through a
plan process, was, in Mr. Woolson's opinion, an offer that was
unlikely to be exceeded through a competitive bidding process. The
Debtors negotiated an asset purchase agreement (the "Asset Purchase
Agreement") that provides for a sale of substantially all of their
assets through the Plan. The Asset Purchase Agreement provides for
the sale of substantially all of the Debtors' assets to Escalante
free and clear of all liens, claims and encumbrances, with cure
claims associated with any assumed executory contracts to be paid
by Escalante. The Debtors believe that the Sale proposed in the
Plan and the Asset Purchase Agreement represents the highest and
best return on their assets.
The Plan provides for the orderly wind-down of the Debtors, and
contemplates the appointment of a Liquidating Agent who will be
responsible for liquidating the Debtor' remaining assets, including
causes of action, resolving contested Claims, and distributing
funds to the holders of Allowed Claims and Interests. The Debtors
believe that the Plan and the Sale present the highest value for
the Debtors' assets and will create the maximum amount of cash to
pay creditors with Allowed Claims.
The General Unsecured Claims are impaired under the Plan. Each
holder of a General Unsecured Claim shall be entitled to vote to
accept or reject the Plan. Each holder of an Allowed General
Unsecured Claim shall receive, on the later to occur of the
Effective Date or the date such Claim becomes Allowed, either: (i)
a Pro Rata share of the Plan Fund until such Allowed General
Unsecured Claim has been paid in full, or (ii) treatment as agreed
between the Debtors or the Reorganized Debtors and the holder of
the Allowed General Unsecured Claim. Depending on the total amount
of Allowed General Unsecured Claims, the Debtors estimate that the
recovery for Allowed General Unsecured Claims will be between 2.5
percent and 5 percent of such claims.
The holder of an Allowed Equity Interest shall receive, on the
later to occur of the Effective Date or the date such Equity
Interest becomes Allowed Equity Interest: (i) a Pro Rata share of
the Plan Fund, if any, after all Senior Allowed Claims have been
paid in full, or (ii) treatment as agreed between the Debtors or
the Reorganized Debtors and the holder of the Allowed Equity
Interests.
A full-text copy of the Amended Disclosure Statement dated November
10, 2020, is available at https://tinyurl.com/y6ek2wb3 from
PacerMonitor at no charge.
A full-text copy of the Disclosure Statement dated October 26,
2020, is available at https://tinyurl.com/yyh5tanj from
PacerMonitor.com at no charge.
About Arklow Limited Partnership
Arklow Limited Partnership owns 700 acres of real estate on which
Bolton, Mass.-based International Golf Club, and Resort, a
lifestyle destination, operates.
International Golf Club and Resort operates as three entities: The
International Golf Club, LLC, which oversees the golf courses and
memberships; Wealyn LLC, a limited liability company that manages
food and beverage service; and Arklow Limited Partnership.
Arklow Limited Partnership sought Chapter 11 protection (Bankr. D.
Mass. Case No. 20-40523) on May 4, 2020. It sought bankruptcy
protection along with The International Golf Club, LLC (Case No.
20-40524), and Wealyn, LLC (Case No. 20-40525), with Arklow
designated as the lead case. At the time of the filing, Arklow
disclosed assets of between $10 million and $50 million and
liabilities of the same range.
The Honorable Christopher J. Panos is the presiding judge. Murphy &
King, Professional Corporation is the Debtors' bankruptcy counsel.
On July 31, 2020, the U.S. Trustee for Region 1 appointed a
committee to represent unsecured creditors in the Chapter 11 case
of Arklow Limited Partnership.
ASHFORD HOSPITALITY: Egan-Jones Cuts Sr. Unsecured Ratings to CCC-
------------------------------------------------------------------
Egan-Jones Ratings Company, on November 10, 2020, downgraded the
foreign currency and local currency senior unsecured ratings on
debt issued by Ashford Hospitality Trust Incorporated to CCC- from
CCC. EJR also downgraded the rating on commercial paper issued by
the Company to D from C.
Headquartered in Dallas, Texas, Ashford Hospitality Trust, Inc.
operates as a self-advised real estate investment trust focusing on
the lodging industry.
AT HOME GROUP: S&P Upgrades ICR to 'B'; Outlook Positive
--------------------------------------------------------
S&P Global Ratings raised its issuer credit rating on U.S.-based
home decor retailer At Home Group Inc. to 'B' from 'B-'. The
outlook is positive.
At the same time, S&P raised its issue-level ratings on the
company's senior notes to 'B' from 'B-'. The recovery rating of '3'
is unchanged, indicating S&P's expectation of 50%-70% (rounded
estimate: 50%) recovery in the event of a payment default or
bankruptcy.
Customer demand continues to remain strong for At Home's home decor
merchandise against the backdrop of the COVID-19 pandemic.
At Home reported preliminary third-quarter results that were
materially above S&P's previous expectations, with comparable sales
of 44% and overall sales growth of 47%. The company's positive
performance follows a strong second quarter, in which the company
reported comparable sales growth of 42%. At Home has benefited from
consumers' increased focus on improving their home lives as they
socially distance and limit discretionary spending on travel and
experiences. S&P believes consumers are likely to continue spending
their disposable income on home decor merchandise through the
holiday season and in the first part of 2021.
S&P said, "We think the company's efforts to implement omni-channel
capabilities and the introduction of a local delivery platform via
its relationship with Postmates have improved its position amid
increased digital sales demand, but this remains weaker than many
retail peers. To the extent that store closures are mandated
through the winter as cases rise across the U.S., we view the
company as better positioned to transition sales to online than in
the first quarter of the year, but we would still expect
significant sales declines at closed locations."
"We believe future closures, if they occur, would be regionally
concentrated and unlikely to affect the company to the extreme
magnitude of the first quarter of fiscal 2021 (comparable sales
decline of 46.5%). However, we continue to believe the pandemic
creates significant potential volatility in At Home's performance,
not only to the extent that closures occur, but also if consumer
demand for home decor declines more than our expectations once an
effective vaccine is distributed and consumers resume more
normalized purchasing habits."
"We now forecast S&P Global Ratings-adjusted leverage will approach
4x by fiscal year-end 2021, then rise to the mid-to-high 4x area in
fiscal 2022."
Improved operating performance has led to significant growth in the
EBITDA base for fiscal 2021 and also allowed the company to fully
pay down its asset-based lending (ABL) revolving credit facility
borrowings, which have historically weighed on credit metrics. In
addition, At Home modestly reduced funded debt by $60 million
through the recent refinancing.
S&P said, "We now project adjusted leverage of about 4x in fiscal
2021 compared with 6.2x as of fiscal 2020. We anticipate At Home
will generate free operating cash flow (FOCF) of $200 million-$250
million in fiscal 2021 given reduced capital expenditures, strong
top line performance, and working capital inflows on lowered
overall inventory levels."
"However, we do not expect that current demand for home decor
products will persist through calendar 2021 (At Home's fiscal
2022), and thus forecast a modest decline in revenue and a more
significant decline in EBITDA as margins fall from elevated levels.
Thus, we forecast leverage will increase to the mid- to high-4x
area in fiscal 2022 as consumer demand softens and operating costs
normalize. As a result of our revised expectations for leverage to
remain below 5x, we are revising our financial risk assessment to
aggressive from highly leveraged."
Environmental, social, and governance (ESG) credit factors for this
credit rating change:
-- Health and safety
The positive outlook reflects that S&P could raise the rating on At
Home Group if it is highly confident performance would support
leverage in the mid-4x area and growth would be funded with
internally generated cash flow.
S&P could raise the rating if:
-- S&P is highly confident that company performance would remain
relatively stable even after the pandemic subsides and consumer
demand returns to more normalized levels, potentially against the
backdrop of a weakened economy;
-- S&P expected that leverage would be maintained in the mid-4x
area or better; and,
-- S&P believed At Home will generate sufficient cash to fully
fund capital expenditures, minimizing usage of the revolver to fund
future store growth.
S&P could revise the outlook back to stable if:
-- S&P expected leverage would be maintained in the high 4x-5x
range.
-- S&P anticipated cash flow generation would weaken such that the
company relied on the revolver to fund new store growth.
-- S&P expected At Home's performance would weaken once the
COVID-19 pandemic ends and then remain soft, including flat to
negative comparable sales growth or deteriorating margins, which
might result from higher promotional activity to attract customers.
AZTEC/SHAFFER: Case Summary & 30 Largest Unsecured Creditors
------------------------------------------------------------
Debtor: Aztec/Shaffer, LLC
DBA Aztec Events & Tents
DBA Shaffer Sports & Event
601 W. 6th Street
Houston, TX 77007
Business Description: Based in Houston, Texas, Aztec/Shaffer, LLC
-- https://aztecusa.com -- is a party rental
and tenting company serving the Houston
metropolitan area.
Chapter 11 Petition Date: November 24, 2020
Court: United States Bankruptcy Court
Southern District of Texas
Case No.: 20-35675
Judge: Hon. Marvin Isgur
Debtor's Counsel: Matthew Okin, Esq.
OKIN ADAMS LLP
1113 Vine St., Suite 240
Houston, TX 77002
Tel: (713) 228-4100
Email: info@okinadams.com
Estimated Assets: $10 million to $50 million
Estimated Liabilities: $10 million to $50 million
The petition was signed by A. Kelly Williams, authorized
representative.
A copy of the petition is available for free at PacerMonitor.com
at:
https://www.pacermonitor.com/view/EXPPEYY/AztecShaffer_LLC__txsbke-20-35675__0001.0.pdf?mcid=tGE4TAMA
List of Debtor's 30 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
1. PGA Champ Management Overpayment $6,431,058
112 PGA Tour Blvd.
Ponte Vedra Beach, FL 32082
Gordon Strickland
Email: GordonStrickland@pgatourhq.com
2. Colonial Country Club Overpayment $689,119
3735 Country Club Circle
Fort Worth, TX 76109
Michael Tothe
Tel: 817-840-2219
Email: mtothe@colonialfw.com
3. Travelers Championship Overpayment $661,210
90 State House Square
Hartford, CT 06103
Kevin Harrington
Tel: 860-982-2044
Email: kharrington@travelerschampionship.com
4. Sunbelt Rentals Equipment Rental $553,402
AMEX
PO Box 409211
Atlanta, GA 30384-9211
Lasha Carson
Tel: 614-541-5340
Email: lasha.carson@sunbeltrentals.com
5. American Express Company Credit $485,969
PO Box 650448 Card
Dallas, TX 75265-0448
Shawn McDowell
Tel: 512-894-5044
480-296-6784
Email: shawn.m.mcdowell@aexp.com
6. Vinson & Elkins Professional $291,448
PO Box 301019 Services
Dallas, TX 75303-1019
Erec R. Winandy
Tel: 713-758-2222
Email: ewinandy@velaw.com
7. 3M Open Overpayment $244,661
11074 Rodisson Rd.
Blaine, MN 55449
Jennifer Hines
Tel: 763-783-9000
Email: jhines@3mopen.com
8. Astros Golf Foundation Overpayment $139,289
501 Crawford Street,
Suite 500
Houston, TX 77002
Colby Callaway
Tel: 210-219-3538
Email: ccallaway@astrosgolf.com
9. Fabritex, Inc. Rental Inventory $134,050
1755 Zion CME
Church Rd.
Hartwell, GA 30643
Alexis Joiner
Tel: 706-376-6584 x225
Email: alexis@fabritex.com
10. Mainline Carpets Carpet/Mesh $133,967
PO BOX 3026
Dalton, GA 30721
Sandra Bailey
Tel: 800-227-3083
Email: sandrabailey@mainlinecarpets.com
11. Sanderson Farms Overpayment $129,390
Championship
576 Highland
Colony Parkway
Suite 110
Ridgeland, MS 39157
Jonah Beck
Tel: 601-898-4653
Email: jonah@sandersonfarmschampionship.com
12. Absolute Logistics, LLC Freight $103,625
PO Box 1832 Ardmore, OK 73402
Peggy Reece
Tel: 580-798-4310
Email: absoluteinc@cableone.net
13. Exeter 10901 Rent $102,000
Tanner, L.P.
101 West Elm Street,
Suite 600
Conshohocken, PA 19428
Tammy Diezi
Tel: 832-256-7991
Email: tdiezi@exeterpg.com
14. Amerisure Mutual Insurance $92,502
Insurance Co.
Lockbox #730502
Dallas, TX 75373-0502
Shari Fowler-Fazica
Tel: 800-842-0626
Email: slower@amerisure.com
15. Latham & Watkins Professional $86,781
PO Box 2130 Services
Carol Stream, IL
60132-2130
Cathy Birkeland
Tel: 312-876-7700
Email: cathy.berkeland@lw.com
16. United Healthcare Benefits $71,434
22561 Network Place
Chicago, IL 60673-1225
Jane Mayer
Tel: 218-279-7933
Email: jane_a_mayer@uhc.com
17. Enterprise FM Trust Fleet $70,970
PO Box 800089
Kansas City, MO6 4180-0089
Allen Caswell
Tel: 713-300-9115
Email: Allen.L.Caswell@efleets.com
18. Wrinkle, Gardner & Professional $67,040
Company, P.C. Services
PO Box 1707
Friendswood, TX 77549
Sandy Reeves
Tel: 281-338-1120
Email: sreeves@wrinklegardner.com
19. Extended Stay Housing $64,425
PO Box 49289
Charlotte, NC 28277-0076
Cori Alvidrez
Tel: 980-345-1654
Email: calvidrez@extendedstay.com
20. Texas Outhouse Sub-Rental $64,235
PO Box 4509-1
Houston, TX 77210-4509
Paulette Atkins
Tel: 713-785-8051
Email: collections@gtxwaste.com
1. Trinity Logistics Inc. Freight $45,295
PO Box 536203
Pittsburgh, PA 15253
Jolene Moorefield
Tel: 443-245-1110
Email: jolene.moorefield@trinitylogistics.com
22. alterDomus AIG Agent Fees $40,000
225 W. Washington
Street, 9th Floor
Chicago, IL 60606
Sam Buhler
Tel: 312-605-1009
Email: samuel.buhler@alterdomus.com
23. Event Carpet Pros, Inc. Merchandise $35,712
14301 Alondra Blvd.
La Mirada, CA 90638
Alma Recinos
Tel: 714-522-7600
Email: alma@eventcarpetpros.com
24. Volm Companies,Inc. Carpet/Mesh $34,885
BIN 88589
Milwaukee, WI
53288-0589
Monica Peterson
Tel: 715-627-3637
Email: ar@volmcompanies.com
25. Fred's Tents Sub-Rental $34,565
420 Hudson River Road
Waterford, NY 12188
Linda
Tel: 518-233-8368
Email: linda@wemaketents.com
26. Midsouth Glass Co., Inc. Rental Inventory $28,344
330 S. Parkway W.
Memphis, TN 38109
Nancy Jordan
Tel: 901-947-4146
Email: nancy@midco-mfg.com
27. Hendee Enterprises, Inc. Supplies $27,886
9350 South Point
Drive Houston, TX 77054
Michelle Canady
Tel: 713-796-6152
Email: michellec@hendee.com
28. Lyondell Chemical Overpayment $24,491
Company
c/o APRPO Box 370
Mt. Pleasant, SC 29465
Adam Fontaine
Tel: 843-416-2484
Email: afontaine@apaudit.com
29. Best Value Carriers, LLC Freight $22,940
2526 Valleydale Road
Hoover, AL 35244
Harry Doles
Tel: 855-293-2378
Email: bvc.harry@gmail.com
30. Meyer, Knight & Williams Professional $21,489
8100 Washington Avenue Services
Suite 1000
Houston, TX 77007
Tel: 713-868-2222
Email: ldk@mkwlaw.com
BAUMANN & SONS: Gets Court OK to Hire Boris Benic as Auditor
------------------------------------------------------------
Baumann & Sons Buses, Inc. and its affiliates received approval
from the U.S. Bankruptcy Court for the Eastern District of New York
to hire Boris Benic and Associates LLP as its auditor.
The Debtor needs the services of the firm to audit the Baumann &
Sons Buses Savings Trust (401(k) plan) for the years ending Dec.
31, 2020, and, if necessary, Dec. 31, 2021, in connection with the
plan's annual reporting obligations under ERISA.
Boris Benic will receive a fixed fee of $7,500 for each plan audit
conducted.
Boris Benic is a "disinterested person" as that term is defined in
Section 101(14) of the Bankruptcy Code, according to court filings.
The firm can be reached through:
Robert Puerto
Boris Benic and Associates LLP
500 Old Country Rd # 311
Garden City, NY 11530
Phone: 516-248-7361
Fax: 516-248-7382
About Baumann & Sons Buses
Baumann & Sons Buses, Inc. and ACME Bus Corp., along with their
non-debtor parent and two affiliates, operated a large school bus
transportation concern with contracts with a number of school
districts in Nassau, Suffolk and Westchester Counties.
On May 27, 2020, Nesco Bus Maintenance and several other creditors
filed involuntary petitions under Chapter 7 of the Bankruptcy Code
against Baumann & Sons and ACME Bus in the U.S. Bankruptcy Court
for the Eastern District of New York. On July 1, 2020, the court
converted the cases to cases under Chapter 11 (Bankr. E.D.N.Y. Lead
Case No. 20-72121).
On Aug. 3, 2020, Baumann & Sons' affiliates, ABA Transportation
Holding Co. Inc., Brookset Bus Corp. and Baumann Bus Company, Inc.,
each filed a voluntary petition for relief under Chapter 11 of the
Bankruptcy Code. The cases are jointly administered with Baumann &
Sons (Bankr. E.D.N.Y. Case No. 20-72121) as the lead case. Judge
Robert E. Grossman oversees the cases.
Klestadt Winters Jurellersouthard & Stevens, LLP serves as the
Debtors' legal counsel.
On July 27, 2020, the U.S. Trustee appointed a committee of
unsecured creditors. The committee selected SilvermanAcampora LLP
as its bankruptcy counsel.
BCP RENAISSANCE: Fitch Affirms B+ Rating on Senior Secured Debt
---------------------------------------------------------------
Fitch Ratings has affirmed the senior secured debt issued by BCP
Renaissance Parent, LLC (BCP) at 'B+'/'RR3'. The Rating Outlook
remains Negative.
RATING RATIONALE
The rating reflects continuing exposure to weak or unrated
counterparties for most revenue at the Rover Pipeline entity and
significant refinance risk at BCP in 2024 when the project's term
loan Bs (TLB) mature. Credit pressure on nearly all of Rover's
contracted shipper exploration and production counterparties began
in late 2019, driven by weak commodity prices. Credit deterioration
for smaller counterparties has occurred in 2020. Counterparty risk
is partly mitigated by the project's favorable position of offering
firm transportation to export natural gas volumes produced in the
Marcellus and Utica regions into higher-priced hubs, though there
is significant competition for this service. Under rating case
assumptions, leverage at TLB maturity is about 8x. The recovery
rating reflects a default scenario in which BCP is assumed unable
to refinance its debt at maturity and the recovery valuation is
based on a significant loss of volumes from low or unrated
shippers.
The outbreak of coronavirus and related government containment
measures worldwide creates an uncertain global environment for oil
and natural gas in the near term. Material changes in revenues and
costs are occurring across the sector and are and will continue to
evolve as economic activity and government restrictions respond to
the ongoing situation. Fitch's ratings are forward-looking in
nature, and Fitch will monitor developments in the sector as a
result of the virus outbreak as it relates to severity and
duration, and incorporate revised base and rating case qualitative
and quantitative inputs based on expectations for future
performance and assessment of key risks.
KEY RATING DRIVERS
Fixed-Price Contracts - Revenue Risk: Midrange
Revenue risk primarily reflects the fixed-price structure of the
take-or-pay shipping contracts at Rover that are intended to
provide revenue stability through 2032. However, these revenues are
significantly exposed to shippers that have weak creditworthiness
or are unrated by Fitch. In the event that a shipper is unable to
meet its commitments, Rover would be forced to remarket capacity at
prevailing market rates, which may demonstrate high volatility. The
potential for a longer-term reduction in demand and the prospect of
competing pipeline development could put downward pressure on the
pricing of any remarketed capacity.
Abundant Natural Gas - Supply Risk: Midrange
Fitch believes Rover should be able to remarket capacity based on
the fundamental economics of the Marcellus and Utica shale
production regions, particularly in the near to medium term when
Rover represents one of the only available transportation options
for the contracted shippers. Rover provides shippers with access to
multiple regions of steady industrial demand and gas storage
locations such that shipper netbacks would improve considerably
versus local markets which are oversupplied due to a lack of
takeaway capacity. The competitive position of Rover should support
full utilization of the pipeline system going forward, through
pricing could be lower than originally contracted following any
potential shipper bankruptcy or due to increased competition.
Established Operating Profile - Operation Risk: Midrange.
Operation risk is generally low based on the evaluation of the
independent technical expert, the asset's low complexity, the use
of conventional technology, and the operator's extensive
experience. Tempering the otherwise low-risk operating profile is
the limited operating history of the pipeline system and the lack
of risk transfer from the Rover operating company to third
parties.
High Leverage and Refinance Risk - Debt Structure: Weaker.
BCP's debt structure includes initially high leverage, variable
interest rate risk, and significant refinancing risk. The term
loans employ a partially amortizing structure that triggers a
balloon payment at maturity, and BCP's ability to refinance will be
dependent upon the efficacy of a cash sweep. Financial metrics are
generally robust during the seven-year tenor of the term loans but
BCP's project life coverage ratio (PLCR) around the time of debt
maturity falls to 1x under rating case assumptions. The risk of
structural subordination of BCP's indebtedness to Rover is low due
to the lack of distribution covenants at Rover in conjunction with
restrictions on additional indebtedness and capex activity.
Financial Profile
Debt service coverage ratios (DSCRs) average 1.34x under rating
case conditions during the tenor of the term loans and average
1.81x in the post-refinancing period under Fitch's assumption that
debt at maturity is refinanced into a similar structure, reflecting
the benefit of the flexible repayment profile and the long-term
value of Rover's contracts. Leverage at term loan debt maturity in
these conditions is 8.0x. Leverage does not decline below 4.0x
until 2034. Fitch estimates a PLCR of 0.91x in late 2024 when the
term loans mature, based on forecasts of cash flow available for
debt service (CFADS) through 2037, the extent of the model for the
transaction. The Rover useful asset life extends well beyond 2037
suggesting that the PLCR may be underestimated.
PEER GROUP
Fitch has assigned higher ratings to comparable pipeline systems,
such as Ruby Pipeline LLC (Ruby; BB/Negative) and Rockies Express
Pipeline, LLC (Rockies; BBB-/Negative). BCP's near term leverage is
about 9.0x, which is considerably weaker than the near-term
forecast of leverage at Ruby of around 6.0x and at Rockies of about
4.5x. Ruby and Rockies are also exposed to deterioration in credit
quality of some shippers, which is reflected in the Negative
Outlook on those ratings. About two-thirds of Ruby's shipping
contracts fall off in 2021, while Rover and Rockies have no or
minimal falloff over the next five years. Additionally, debt at the
peer pipelines is directly at the operating level. BCP has the
potential to rapidly de-lever under the term loans, suggesting some
capacity to improve the capital structure over time if economic
conditions are favorable and the shipper contracts remain in
force.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to a
positive rating action/upgrade:
-- Financial performance that allows BCP to consistently meet
targeted amortization and reduce leverage below 8.0x.
-- Improvement in the credit quality of the shipper
counterparties to the 'BB' rating category, such that the
proportion of contracted revenue exceeds about 75% of total
projected revenue.
Factors that could, individually or collectively, lead to a
negative rating action/downgrade:
-- Increased exposure to material merchant risk following a
shipper bankruptcy, such that Rover is forced to remarket capacity
at lower-than-contracted pricing.
-- Adverse market conditions that interfere with BCP's ability to
meet target amortization levels and/or refinance the balloon
maturity in 2024, particularly if leverage at that time exceeds
10.0x absent mitigating factors.
-- Additional indebtedness at Rover that is not offset by an
increase in revenue, such that cash distributions to BCP fall
materially below base case levels.
TRANSACTION SUMMARY
BCP is a special purpose company created to finance and acquire a
minority equity interest in the Rover pipeline project, which
consists of a greenfield 713-mile interstate pipeline designed to
transport 3.425 billion cubic feet per day (bcf/d) of natural gas.
The pipeline is primarily situated in northern Ohio, extending from
the Vector Pipeline interconnection in southeastern Michigan to
Ohio's eastern border, with laterals reaching into West Virginia
and Pennsylvania. The project has contracted 92% of the pipeline's
capacity with several natural gas producers/shippers under
long-term take-or-pay agreements with 15-20-year terms. An
affiliate of ETP Legacy, LP is operating the project.
CREDIT UPDATE
Weakening Counterparty Creditworthiness:
The credit quality of most of Rover's shipper counterparties
remains well below investment grade, and the credit profile of the
offtake portfolio as a whole has weakened during 2020 with downward
market pressures on many natural gas exploration and production
companies in many U.S. gas producing regions.
In August 2020, Fitch downgraded Antero Resources Corp. to 'B' from
'BB+' due to the financial impact of the sharp decline on natural
gas liquids and natural gas prices, among other factors. Antero
provides about 19% of Rover's forecast revenue. In October 2020,
Ascent Resources Utica Holdings, LLC (about one-third of Rover
revenue), completed an offer with lenders to exchange debt maturing
in 2022 with new debt due in 2025 and 2027 and avoid a possible
default.
In September 2020, Rover and some other large pipelines that have
shipping contracts with Gulfport Energy Corp. (Gulfport) petitioned
to the Federal Energy Regulatory Commission (FERC) to request,
among other things, that FERC declare that it has concurrent
jurisdiction with the U.S. Bankruptcy Court on any abrogated,
modified, or amended filed tariff rate, such as the filed rates
established in the Gulfport shipping contract with Rover. The
declaration was sought after Gulfport publicly noted substantial
doubt about its ability to remain a going concern in its 2020
second quarter 10-Q regulatory filing. FERC provided this
declaration to Rover in early October 2020.
On Oct. 15, 2020, and again on Nov. 2, 2020, Gulfport (about 5% of
Rover revenue) elected to defer making a scheduled interest payment
on certain debt issues. The company has a 30-day grace period to
make the payments before triggering an event of default under the
lending terms. Gulfport has entered into forbearance agreements
with various parties to effectively extend the grace period for the
Oct. 15 payment to Nov. 13, 2020. On Nov. 13, Gulfport filed
bankruptcy protection under Chapter 11 of the U.S. bankruptcy
code.
Favorably, in August 2020, Southwestern Energy Co. (Southwestern;
about 8% of Rover revenue) and Montage Resources Corp. (Montage;
about 6% of Rover revenue) announced that Southwestern would
acquire Montage. The merger was completed on Nov. 13, 2020.
Throughput Expansion:
In April 2020, FERC authorized Rover's request to increase pipeline
capacity by 175 million cubic feet per day (mmcf/d), for a total
mainline capacity of 3.425 billion cubic feet per day (bcf/d).
Rover achieved the increase solely from higher pipeline and
compression efficiencies and a lower than expected pipe roughness.
Contracting:
Rover entered an interconnection and operating agreement with
Eureka Midstream, LLC, for the installation on a meter station on
the Sherwood lateral in West Virginia and applied for FERC approval
of the project in November 2019. The station will be able to accept
300 mmcf/d of natural gas from the Eureka gathering system. The
project could provide additional shipping contract opportunities
for Rover and reduce exposure to spot revenue. In April 2020, FECR
approved Rover's installation and operation of the station, subject
to certain conditions.
Market Developments:
For the year ended Sept. 1, 2020, gas production in the Marcellus
grew about 5% while production from the Utica was essentially flat,
reflecting a significant drop in production in both fields in
December 2019 and steady but slow increase since that time. Volumes
on Rover were around 95% of capacity during February, March, and
April. Since May, volumes have been essentially at the increased
capacity of 3.425 bcf/d, a strong indication of Rover's favorable
market position.
Rover's competitive position has also improved due to adverse
developments for new planned pipelines, Mountain Valley and
Atlantic Coast, that were developed to provide large export
capacity from Rover's primary sourcing regions. Mountain Valley is
building a 2 bcf/d natural gas pipeline from northwestern West
Virginia to southern Virginia. The project continues to complete
construction but remains beset with regulatory delays. In early
November 2020, the U.S. Court of Appeals for the 4th Circuit
granted a stay on federal water crossing authorizations for the
pipeline. Mountain Valley currently plans to bring the project into
full service during the second half of 2021.
Atlantic Coast planned to build a 1.5 bcf/d natural gas pipeline
from West Virginia through Virginia and into southern regions of
North Carolina. In June 2020, the U.S. Supreme Court ruled in favor
of the pipeline regarding construction of its crossing under the
Appalachian Trail. But, in July, citing additional risk of
regulatory delays, co-sponsors Dominion Energy and Duke Energy
announced the cancellation of the entire pipeline.
Lawsuits and Claims:
Rover remains exposed to litigation involving construction-related
activities, but impact, if any, is likely to be very small. The
Ohio EPA has proposed penalties of $2.6 million for alleged
violations by Rover related to spilling drilling fluids and other
pollutants into waterways. In April 2020, the Ohio Supreme Court
took up the case for review but oral arguments have yet to be
scheduled. FERC is also investigating Rover's demolition of a
house, the Stoneman House, a potential historic structure,
allegedly without approval and notification to FERC.
Financial Performance:
Rover had good performance in 2019 and in the first half of 2020
compared to Fitch's rating case forecast. At Rover, revenue and
costs were about 2% above and 1% above Fitch's forecast.
Distributions from Rover to BCP were about 9% above Fitch's
forecast. For the year, Fitch estimates a DSCR of 1.51x for BCP
compared to the its rating case forecast of 1.42x. For the first
months of 2020, Rover revenue was about 2% below Fitch's
expectations.
FINANCIAL ANALYSIS
In its base case, Fitch assumes current levels of contract,
short-term, and spot volumes through term loan maturity in October
2024, reflecting actual performance along with expectations of
favorable market conditions over the near term. After October 2024,
Fitch applies a 10% reduction through 2037 to volumes associated
with short-term and spot sales and to all volumes associated with
shippers rated below 'BB-' or unrated by Fitch. The post-maturity
reduction to volume sales recognizes the potential for one or more
shipper bankruptcies and inability to remarket lost volumes fully
due to competitiveness issues. The case also assumes an effective
extension of the term facility and the high cash sweep at an all-in
average interest rate of about 8%. DSCRs average 1.48x during the
tenor of the term loan facility and 2.75x post-refinancing. At term
loan refinance, leverage is 6.9x and the PLCR based on revenue
through late 2037 is about 1.0x at an 8% discount rate.
Fitch's rating case further stresses the base case assumptions by
increasing O&M costs by 10% and adding another 5% haircut through
2037 to volumes associated with short-term and spot sales and to
all volumes associated with shippers that are rated below 'BB-' or
unrated by Fitch. DSCRs average 1.34x during the tenor of the term
loan and average 1.81x in the post-refinancing period, reflecting
the benefit of the flexible repayment profile and the long-term
value of Rover's contracts. At term loan refinance, leverage is
8.0x and the PLCR based on revenue through late 2037 is about 0.9x
at an 8% discount rate.
Recovery
Given the completion and strong market performance of Rover and
continued strong growth in production on natural gas from the
Marcellus, the recovery scenario is that Rover experiences a
permanent 30% reduction in volumes from shippers rated below the
'BB' category or unrated and from spot sales. In this scenario,
default is assumed to occur at maturity in 2024 when the debt
service reserve is exhausted. EBITDA (or rather, distributed cash
from Rover to BCP) is about $90 million, giving an enterprise value
(EV) of $722 million (vs. BCP's approximate $2 billion share of the
Rover $6 billion capital outlay) based on an 8x EBITDA multiple.
Total value for lenders in EV less 10% for administrative claims,
or $650 million. This value provides 55% return on the $1.18
billion in term loan debt outstanding at maturity in this scenario,
suggesting a recovery score of 'RR3'.
ESG CONSIDERATIONS
The highest level of ESG credit relevance, if present, is a score
of 3. This means ESG issues are credit-neutral or have only a
minimal credit impact on the entity, either due to their nature or
to the way in which they are being managed by the entity.
BEN CLYMER'S: Trustee Hires Setec as Computer Forensics Specialist
------------------------------------------------------------------
Todd Frealy, the Chapter 11 trustee for Ben Clymer's The Body Shop
Perris, Inc., seeks approval from the U.S. Bankruptcy Court for the
Central District of California to retain Setec Investigations as
his computer forensics specialist.
The Trustee requires Setec to:
(1) preserve, secure and ensure backups of all electronically
stored data (ESD) at the Debtor’s business facility;
(2) assist the Trustee to access, locate, retrieve,
investigate and analyze the ESD in connection with the estate's
review and recovery of assets, including, without avoidance and
other claims; and
(3) provide any other technical services required by the
Trustee related to the ESD or any other electronic or computer
forensic requirements of the Trustee deemed necessary by the
Trustee to carry out his duties in the administration of this case.
The Trustee seeks authority to pay Setec compensation up to the sum
of $20,000 without further order of the Court. Any compensation
requested by Setec in excess of $20,000 will not be paid absent
further order of the Court.
Setec will bill the estate at the hourly rate of $400 per person
for expert witness testimony.
Todd Stefan, president of Setec Investigations, assured the court
that neither Setec nor any of its associates or employees,
represent any interest adverse to that of the Trustee or the estate
in the matters on which it is to be retained, and its principals,
licensees, agents, associates and employees are disinterested
persons under Sec 101(14) of the United States Bankruptcy Code.
The firm can be reached through:
Todd Stefan
Setec Investigations
8391 Beverly Blvd #167
Los Angeles, CA 90048
Phone: +1 800-748-5440
About Ben Clymer's The Body Shop Perris
Ben Clymer's The Body Shop Perris Inc. is an auto body repair and
painting company offering, among other services, unibody and frame
repair, glass repair, dent removal, paintless dent removal, paint
matching on site, chip and scratch repair, and buffing and
polishing.
Ben Clymer's The Body Shop Perris sought protection under Chapter
11 of the Bankruptcy Code (Bankr. C.D. Cal. Case No. 20-14798) on
July 15, 2020. At the time of the filing, Debtor disclosed total
assets of $2,838,204 and total liabilities of $6,874,527. Judge
Scott C. Clarkson oversees the case.
Debtor is represented by the Law Offices of Robert M. Yaspan.
BENTON ENERGY: Seeks to Hire Kean Miller as Appeals Counsel
-----------------------------------------------------------
Benton Energy Service Company seeks authority from the U.S.
Bankruptcy Court for the Eastern District of Louisiana to hire Kean
Miller, LLP.
The firm will represent the Debtor in two separate appeals from the
orders of the U.S. District Court for the Eastern District of
Louisiana that denied the Debtor's motion to compel arbitration and
amended the court's final judgment in favor of Cajun Services
Unlimited, LLC and two other creditors.
Kean Miller will be paid for its services at these rates:
Robert Kallam $405 per hour
J. Eric Lockridge $395 per hour
Devin Ricci $325 per hour
Amanda Collura-Day $290 per hour
Shannan Rieger $290 per hour
Lauren Rucinski $265 per hour
Rachel Giroir $215 per hour
Other Paralegals $215 per hour
Since Dec. 16, 2019, the firm received retainers totaling $225,000
from the Debtor.
Kean Mille neither holds nor represents any interest adverse to the
Debtor and its estate with respect to the matters upon which it is
to be engaged, according to court filings.
The firm can be reached through:
Robert Kallam, Esq.
Kean Miller LLP
2020 W. Pinhook Road, Suite 303
Lafayette, LA 70508
About Benton Energy Service Company
Founded in 2002, Benton Energy Service Company is an oil service
company that provides casing and tubing services on land and
offshore. It conducts business under the name Besco Tubular.
Visit https://bescotubular.com for more information.
On Oct. 21, 2020, Cajun Services Unlimited, LLC (which conducts
business under the name Spoked Manufacturing), Shane Triche and
Heath Triche filed an involuntary petition for relief under Chapter
11 of the Bankruptcy Code against Benton Energy (Bankr. E.D. La.
Case No. 20-11808). The creditors are represented by Tori S.
Bowling, Esq., at Keogh, Cox & Wilson, Ltd.
The Steffes Firm, LLC serves as the Debtor's legal counsel.
BIM'S INVESTMENTS: Involuntary Chapter 11 Case Summary
------------------------------------------------------
Alleged Debtor: Bim's Investments, LLC
6663 W 41st Place
Davie FL 33314
Involuntary
Chapter 11
Petition Date: November 25, 2020
Court: United States Bankruptcy Court
Northern District of Florida
Case Number: 20-22899
Judge: Hon. Scott M. Grossman
Name of Petitioner: Abimbola Orukotan
c/o 5717 Mayo Street
Hollywood, Florida 33023
A full-text copy of the Involuntary Petition is available for free
at PacerMonitor.com at:
https://www.pacermonitor.com/view/TEZBGEY/Bims_Investments_LLC__flsbke-20-22899__0001.0.pdf?mcid=tGE4TAMA
BIORESTORATIVE THERAPIES: Amended Joint Plan Confirmed by Judge
---------------------------------------------------------------
Judge Robert E. Grossman has entered findings of fact, conclusions
of law and order confirming the Amended Joint Plan of
Reorganization of Debtor BioRestorative Therapies, Inc., and
unsecured creditor Auctus Fund, LLC.
The Plan complies with the applicable provisions of the Bankruptcy
Code and satisfies 11 U.S.C. Sec. 1129(a), (b), (c), (d). The
Proponents have met their burden of proving the elements of
Sections 1129 of the Bankruptcy Code by a preponderance of the
evidence.
The Proponents, their respective agents, accountants, financial
advisors, representatives and attorneys, through their
participation in the negotiation and preparation of the Plan and
the Disclosure Statement and their efforts to confirm the Plan,
have solicited acceptances and rejections of the Plan in good faith
and participated in the Chapter 11 Case in compliance with the
applicable provisions of the Bankruptcy Code.
Each of the discharge, release, injunction, and exculpation
provisions contained in the Plan falls within the jurisdiction of
this Court under 28 U.S.C. Sec. 1334(a), (b), and (d); and is
consistent with 11 U.S.C. Secs. 105, 1123, 1129, and other
applicable provisions of the Bankruptcy Code.
A full-text copy of the order dated October 30, 2020, is available
at https://tinyurl.com/y4zbdhvq from PacerMonitor.com at no
charge.
About BioRestorative Therapies
BioRestorative Therapies, Inc. --http://www.biorestorative.com/
--is a life science company focused on stem cell-based therapies.
It develops therapeutic products and medical therapies using cell
and tissue protocols, primarily involving adult stem cells.
BioRestorative Therapies sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. E.D.N.Y. Case No. 20-71757) on March 20,
2020. At the time of the filing, Debtor had estimated assets of
between $50 million and $100 million and liabilities of between $10
million and $50 million. Debtor is represented by Certilman Balin
Adler & Hyman, LLP.
BIORESTORATIVE THERAPIES: Auctus-Backed Plan Effective Nov. 16
--------------------------------------------------------------
On March 20, 2020 (the "Petition Date"), BioRestorative Therapies,
Inc. (the "Company") filed a voluntary petition commencing a case
under chapter 11 of title 11 of the U.S. Code (the "Chapter 11
Case") in the United States Bankruptcy Court for the Eastern
District of New York (the "Bankruptcy Court").
On August 7, 2020, the Company and Auctus Fund, LLC ("Auctus"), the
Company's largest unsecured creditor, and a shareholder, as of the
Petition Date, filed an Amended Joint Plan of Reorganization, and
on October 30, 2020, the Bankruptcy Court entered an order (the
"Confirmation Order") confirming the Plan, as amended. Amendments
to the Plan are reflected in the Confirmation Order. On November
16, 2020 (the "Effective Date"), the Plan became effective.
Pursuant to the Plan, as amended and confirmed by the Confirmation
Order, the following has occurred:
(i) Auctus has provided $3,500,000 in funding to the Company
(the "Initial Auctus Funding") and is to provide, subject to
certain conditions, additional funding to the Company in an amount
equal to $3,500,000, less the sum of the debtor-in-possession loans
made to the Company by Auctus during the Chapter 11 Case (inclusive
of accrued interest) (the "DIP Obligation") (approximately
$1,200,000 as of the Effective Date) and the costs incurred by
Auctus as the debtor-in-possession lender (the "DIP Costs"). In
addition, four other persons and entities (collectively, the "Other
Lenders") who held allowed general unsecured claims have provided
funding to the Company in the aggregate amount of approximately
$348,000 (the "Other Funding" and together with the Initial Auctus
Funding, the "Funding").
In consideration of the Funding, the Company has issued the
following:
(a) secured convertible promissory notes of the Company
(each, a"Secured Convertible Note") in the principal amount equal
to the Funding (110% of the Funding in the case of Auctus); the
payment of the Secured Convertible Notes shall be secured by the
grant of a security interest in substantially all of the Company's
assets; the Secured Convertible Notes have the following features:
(b) warrants (each, a "Class A Warrant") to purchase a
number of shares of Common Stock equal to the amount of the Funding
provided divided by $0.0005 (a total of 7,000,000,000 Class A
Warrants in consideration of the Initial Auctus Funding and a total
of approximately 697,000,000 Class A Warrants in the aggregate in
consideration of the Other Funding), such Class A Warrants having
an exercise price of $0.0005 per share; and
(c) warrants (each, a "Class B Warrant" and together with
the Class A Warrants, the "Plan Warrants") to purchase a number of
shares of Common Stock equal to the Funding provided divided by
$0.001 (a total of 3,500,000,000 Class B Warrants in consideration
of the Initial Auctus Funding and a total of approximately
348,500,000 Class B Warrants in the aggregate in consideration of
the Other Funding), such Class B Warrants having an exercise price
of $0.001 per share.
(ii) Auctus' DIP Obligation has been exchanged for the
following:
(a) a Secured Convertible Note in the principal amount of
approximately $1,349,591 (110% of the DIP Obligation);
(b) a Class A Warrant to purchase 2,453,802,480 shares of
Common Stock; and
(c) a Class B Warrant to purchase 1,226,901,240 shares of
Common Stock (as to which 84,344,369 shares of Common Stock have
been exercised on a net exercise basis, to the terms of the Class B
Warrant, with respect to the issuance of 81,796,200 shares of
Common Stock).
In addition, Auctus shall be entitled to receive a Secured
Convertible Note, a Class A Warrant and a Class B Warrant in
exchange for its allowed DIP Costs and allowed Plan costs in a
manner in which the DIP Obligation was treated.
(iii) The claim arising from the secured promissory notes of the
Company, dated February 20, 2020 and February 26, 2020, in the
original principal amounts of $320,200.49 and $33,561.50,
respectively, issued to John Desmarais ("Desmarais") (collectively,
the "Desmarais Notes"), is being treated as an allowed secured
claim in the aggregate amount of $490,698.81 and is being exchanged
for a Secured Convertible Note in such amount.
(iv) The claim arising from the promissory note issued in July
2017 by the Company to Desmarais in the original principal amount
of $175,000 is being treated as an allowed general unsecured claim
in the amount of $245,191.78 and is being satisfied and exchanged
for 24,519,200 shares of Common Stock.
(v) The claim arising from the promissory note issued in June
2016 by the Company to Tuxis Trust, an entity related to Desmarais,
in the original principal amount of $500,000 is being treated as
follows:
(vi) Holders of allowed general unsecured claims (other than
Auctus and the Other Lenders) are receiving shares of Common Stock
(in book entry form) in an amount equal to the allowed amount of
their respective claims multiplied by 100 (an aggregate
1,049,726,797 shares of Common Stock), with such shares being
subject to a leak-out restriction prohibiting each holder from
selling, without the consent of the Company, more than 33% of its
shares during each of the three initial 30 day periods following
the Effective Date.
(vii) Auctus and the Other Lenders have been issued, in respect of
their allowed general unsecured claims ($3,261,819 in the case of
Auctus and an aggregate of approximately $382,400 in the case of
the Other Lenders), a convertible promissory note of the Company
(each, an "Unsecured Convertible Note") in the allowed amount of
the claim, which Unsecured Convertible Notes have the following
material features:
(viii) The issuance of (a) the shares of Common Stock and the
Unsecured Convertible Notes to the holders of allowed general
unsecured claims and (b) the Secured Convertible Notes and Plan
Warrants to Auctus in exchange for the DIP Obligation and any
Common Stock into which those Secured Convertible Notes and those
Plan Warrants may be converted is exempt from the registration
requirements of the Securities Act of 1933, as amended, to
Bankruptcy Code Section 1145. Such securities shall be freely
transferable subject to Section 1145(b)(i) of the Bankruptcy Code.
The foregoing descriptions of the Plan, the Confirmation Order, the
Secured Convertible Notes, the Unsecured Convertible Notes, the
Class A Warrants and the Class B Warrants do not purport to be
complete and are qualified in their entirety by reference to the
texts of the Plan and the Confirmation Order, which are filed as
Exhibit A to the Amended Disclosure Statement with respect to the
Plan (filed as Exhibit 2.2 to the Company’s Current Report on
Form 8-K for an event dated October 30, 2020) and Exhibit 2.1 to
the Company's Current Report on Form 8-K for an event dated October
30, 2020, respectively, and are incorporated herein by reference,
and the texts of the forms of the Secured Convertible Note, the
Unsecured Convertible Note, the Class A Warrant and the Class B
Warrant, which are filed as Exhibits A, B, C and D, respectively,
to the Plan Supplement (filed as Exhibit 2.3 to the Company's
Current Report on Form 8-K for an event dated October 30, 2020) and
are incorporated herein by reference.
Shares Outstanding
As of the Effective Date, there were 1,639,203,270 shares of Common
Stock issued and outstanding. to the Plan, 1,049,726,797 shares of
Common Stock are issuable in respect of allowed general unsecured
claims. In addition, an aggregate of 15,226,203,720 shares of
Common Stock (subject to increase based on the antidilution
protection provisions of the Plan Warrants) are issuable to the
Class A Warrants and Class B Warrants issued as discussed above.
Further, an indeterminate number of shares of Common Stock are
issuable upon conversion of the Secured Convertible Notes and the
Unsecured Convertible Notes issued as discussed above.
(b) Effective as of November 16, 2020 (the Effective Date of the
Plan), as contemplated by the Plan, Mark Weinreb, A. Jeffrey Radov,
Paul Jude Tonna and Robert B. Catell resigned as directors of the
Company and Mr. Weinreb resigned as President, Chief Executive
Officer and Chairman of the Board of the Company.
(c) Effective as of the Effective Date, as contemplated by the
Plan, Lance Alstodt was elected President, Chief Executive Officer,
Chairman of the Board and a director of the Company and Francisco
Silva, the Company's Vice President, Research and Development, was
elected a director of the Company.
Mr. Alstodt, age 50, served as Executive Vice President and Chief
Strategy Officer of the Company from October 2018 to February 2020.
He is a senior healthcare executive with over 25 years of
experience in the medical device, biopharmaceutical and healthcare
services sectors. In 2013, Mr. Alstodt founded and became CEO of
MedVest Consulting Corporation ("MedVest"), an advisory and capital
firm that was formed to focus exclusively on the healthcare
industry. Prior to Medvest, he was a career investment banker with
over 20 years of experience with respect to acquisitions, leveraged
buyouts, private and public financings, exclusive sales, takeover
defenses, joint ventures, restructurings and general advisory
services.
(a) to the Plan, on November 16, 2020, the Company filed a
Certificate of Amendment to its Certificate of Incorporation (the
"Certificate of Amendment") to which, among other things, the
number of shares of Common Stock authorized to be issued by the
Company has been increased to 300,000,000,000 and the par value of
the shares of Common Stock has been reduced to $0.0001 per share.
The foregoing description of the Certificate of Amendment does not
purport to be complete and is qualified in its entirety by
reference to the text of the Certificate of Amendment, which is
filed as Exhibit 3.1 to this Current Report on Form 8-K and is
incorporated herein by reference.
About BioRestorative Therapies
BioRestorative Therapies, Inc. -- http://www.biorestorative.com/--
is a life science company focused on stem cell-based therapies. It
develops therapeutic products and medical therapies using cell and
tissue protocols, primarily involving adult stem cells.
BioRestorative Therapies sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. E.D.N.Y. Case No. 20-71757) on March 20,
2020. At the time of the filing, Debtor had estimated assets of
between $50 million and $100 million and liabilities of between $10
million and $50 million. The Debtor is represented by Certilman
Balin Adler & Hyman, LLP.
BOISE CASCADE: Egan-Jones Hikes Senior Unsecured Ratings to BB+
---------------------------------------------------------------
Egan-Jones Ratings Company, on November 12, 2020, upgraded the
foreign currency and local currency senior unsecured ratings on
debt issued by Boise Cascade Company to BB+ from BB-.
Headquartered in Boise, Idaho, Boise Cascade Company manufactures
and markets wood products.
CAMBER ENERGY: Sets Date For 2021 Annual Meeting of Shareholders
----------------------------------------------------------------
Camber Energy, Inc. had scheduled its 2021 Annual Meeting of
Shareholders to be held on Jan. 18, 2021 at 10:00 a.m. local time
Central Time, virtually by means of remote communication or at such
other time and location to be determined by the Company's Board of
Directors and set forth in the Company's proxy statement for the
2021 Annual Meeting. It is also possible that the 2021 Annual
Meeting may be held on a different date. Shareholders of record of
Company's common stock at the close of business on Nov. 30, 2020,
the planned record date for the 2021 Annual Meeting, will be
entitled to notice of, and to vote at, the 2021 Annual Meeting.
As the 2021 Annual Meeting will be held more than 30 days prior to
the first anniversary of the Company's 2020 annual meeting of
shareholders, which was held on March 11, 2020, shareholders of the
Company who wish to have a proposal considered for inclusion in the
Company's proxy materials for the 2021 Annual Meeting must provide
written notice that is received by the Company's Secretary at the
Company's corporate headquarters, 1415 Louisiana, Suite 3500,
Houston, Texas 77002, on or before the close of business on Dec. 1,
2020, which the Company has determined to be a reasonable time
before it expects to begin to print and send its proxy materials.
Any such shareholder proposal must be submitted and must comply
with the applicable rules and regulations of the Securities and
Exchange Commission, including Rule 14a-8 of the Securities
Exchange Act of 1934, as amended (as applicable), Nevada law and
the Company's Amended and Restated Bylaws.
About Camber Energy
Based in Houston, Texas, Camber Energy -- http://www.camber.energy
-- is primarily engaged in the acquisition, development and sale of
crude oil, natural gas and natural gas liquids from various known
productive geological formations, including from the Hunton
formation in Lincoln, Logan, Payne and Okfuskee Counties, in
central Oklahoma; the Cline shale and upper Wolfberry shale in
Glasscock County, Texas; and Hutchinson County, Texas, in
connection with its Panhandle acquisition which closed in March
2018.
Camber Energy reported a net loss of $3.86 million for the year
ended March 31, 2020, compared to net income of $16.64 million for
the year ended March 31, 2019. As of June 30, 2020, the Company
had $13.91 million in total assets, $1.71 million in total
liabilities, $6 million in temporary equity, and $6.20 million in
total stockholders' equity.
Marcum LLP, in Houston, Texas, the Company's auditor since 2015,
issued a "going concern" qualification in its report dated June 29,
2020, citing that the Company has incurred significant losses from
operations and had an accumulated deficit as of March 31, 2020 and
2019. These factors raise substantial doubt about its ability to
continue as a going concern.
CAPSTONE LOGISTICS: Moody's Withdraws B3 CFR Amid Debt Repayment
----------------------------------------------------------------
Moody's Investors Service has withdrawn all debt ratings for
Capstone Logistics Acquisition, Inc. after all the company's rated
debt has been repaid by the company.
RATINGS RATIONALE
Withdrawals:
Issuer: Capstone Logistics Acquisition, Inc.
Corporate Family Rating, Withdrawn, previously rated B3
Probability of Default Rating, Withdrawn, previously rated B3-PD
Senior Secured 1st Lien Bank Credit Facility, Withdrawn, previously
rated B2 (LGD3)
Senior Secured 2nd Lien Bank Credit Facility, Withdrawn, previously
rated Caa2 (LGD5)
Outlook Actions:
Issuer: Capstone Logistics Acquisition, Inc.
Outlook, Changed to Rating Withdrawn from Stable
Headquartered in Norcross, Georgia, Capstone Logistics Acquisition,
Inc. is a supply chain solutions provider offering managed
outsourced labor to owners of distribution centers for non-core
labor-intensive operations.
CARNIVAL CORP: Moody's Gives B2 Rating on New Senior Unsec. Notes
-----------------------------------------------------------------
Moody's Investors Service assigned a B2 rating to Carnival
Corporation's proposed senior unsecured note issuances. Carnival's
other ratings are unchanged including its corporate family rating
of B1, probability of default rating of B1-PD, senior secured
rating of Ba2, senior secured second lien rating of B1, and
existing senior unsecured rating of B2. The company's speculative
grade liquidity rating of SGL-2 also remains unchanged. The outlook
remains negative.
Proceeds of the planned $1.0 billion and EUR 350 million issuances
will be used for general corporate purposes, including possibly
repaying higher coupon debt and making certain vessel payments.
"This debt issuance, along with the $1.5 billion common stock
offering issued last week, further bolsters the company's liquidity
position during this period of suspended operations and material
monthly cash burn" stated Pete Trombetta, Moody's lodging and
cruise analyst.
Assignments:
Issuer: Carnival Corporation
Gtd Senior Unsecured Regular Bond/Debenture, Assigned B2 (LGD5)
RATINGS RATIONALE
Carnival's credit profile is supported by its good liquidity given
its significant cash balances and Moody's view that over the long
run, the value proposition of a cruise vacation relative to
land-based destinations, as well as a group of loyal cruise
customers, supports a base level of demand once health safety
concerns have been effectively addressed. The company also benefits
from its position as the largest worldwide cruise line in terms of
revenues, fleet size and number of passengers carried, with
significant geographic and brand diversification. In the short run,
Carnival's credit profile will be dominated by the length of time
that cruise operations continue to be highly disrupted and the
resulting impact on the company's cash consumption, liquidity and
credit metrics. The normal ongoing credit risks include Carnival's
near term very high leverage, the highly seasonal and
capital-intensive nature of cruise companies, competition with all
other vacation options, and the cruise industry's exposure to
economic and industry cycles as well as weather-related incidents
and geopolitical events. The company reported negative EBITDA in
the third quarter 2020 and Moody's expects Carnival's leverage and
coverage metrics to continue to weaken into 2021 at which point
they will begin a slow recovery.
The negative outlook reflects Carnival's very high leverage and the
uncertainty around the pace and level of recovery in demand that
will enable the company to reduce leverage to below 5.5x.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be downgraded further in the near term if the
company's liquidity weakened in any way or if the recovery in
cruising activity is delayed beyond its base assumptions which
include a resumption of US cruising in the first half of 2021 with
capacity days reaching at least 65% of their 2019 levels and
occupancy reaching at least 70% by the second quarter with
continued improvement from there. The ratings could also be
downgraded if there are indications that the company is not on a
path to restoring leverage to a sustainable level.
The outlook could be revised to stable if the impacts from the
spread of the coronavirus stabilize and cruise operations resume at
a level that enables the company to maintain debt/EBITDA below
5.5x. Ratings could be upgraded if the company is able to maintain
leverage below 4.5x with EBITA/interest expense of at least 3.0x.
Carnival Corporation and Carnival plc own the world's largest
passenger cruise fleet operating under multiple brands including
Carnival Cruise Line, Holland America, Princess Cruises, AIDA
Cruises, Costa Cruises, and P&O Cruises, among others. Carnival
Corporation and Carnival plc operate as a dual-listed company.
Headquartered in Miami, Florida, US and Southampton, United
Kingdom. Revenue for the latest twelve-month period ending August
31, 2020 were approximately $10.3 billion.
The principal methodology used in these ratings was Business and
Consumer Service Industry published in October 2016.
CBL & ASSOCIATES: Akin Gump Represents Noteholder Group
-------------------------------------------------------
Pursuant to Rule 2019 of the Federal Rules of Bankruptcy Procedure,
the law firm of Akin Gump Strauss Hauer & Feld LLP submitted a
verified statement to disclose that it is representing the Ad Hoc
Noteholder Group in the Chapter 11 cases of CBL & Associates
Properties, Inc., et al.
Akin Gump does not represent or purport to represent any other
entities in connection with these chapter 11 cases. Akin Gump does
not represent the Ad Hoc Noteholder Group as a "committee" and does
not undertake to represent the interests of, and is not a fiduciary
for, any creditor, party in interest, or entity other than the Ad
Hoc Noteholder Group. In addition, the Ad Hoc Noteholder Group does
not represent or purport to represent any other entities in
connection with the Debtors' chapter 11 cases.
As of Nov. 19, 2020, members of the Ad Hoc Noteholder Group and
their disclosable economic interests are:
Aegon USA Investment Management, LLC
227 W Monroe, Suite 6000
Chicago, IL 60606
* 2023 Notes: $51,934,000.00
* 2026 Notes: $13,309,000.00
BP Holdings J LP
1620 26th Street, Suite 6000N
Santa Monica, CA 90404
* 2023 Notes: $3,548,000.00
* 2024 Notes: $11,740,000.00
* Common Stock: 24,770 shares
Canyon Capital Advisors LLC
2000 Avenue of the Stars, 11th Fl.
Los Angeles, CA 90067
* Revolver: $68,526,740.09
* 2023 Notes: $104,838,000.00
* 2024 Notes: $62,416,000.00
* 2026 Notes: $82,627,000.00
Cetus Capital LLC
8 Sound Shore Drive, Suite 303
Greenwich, CT 06830
* Revolver: $10,000,000.00
* 2023 Notes: $9,500,000.00
* 2024 Notes: $13,838,000.00
* 2026 Notes: $34,771,000.00
Credit Suisse Securities (USA) LLC
11 Madison Avenue, 4th Fl.
New York, NY 10010
* 2023 Notes: $1,595,000.00
* 2024 Notes: $4,905,000.00
* 2026 Notes: $500,000.00
Farm Bureau Life Insurance Company
5400 University Avenue
West Des Moines, IA 50266
* 2023 Notes: $5,000,000.00
* 2024 Notes: $4,000,000.00
Fidelity Management and Research Company
245 Summer Street
Boston, MA 02110
* 2023 Notes: $15,000,000.00
* 2024 Notes: $32,159,000.00
* 2026 Notes: $13,000,000.00
Livello Capital Management LP
1 World Trade Center, 85th Fl.
New York, NY 10007
* 2023 Notes: $2,063,000.00
* 2024 Notes: $2,500,000.00
* 2026 Notes: $1,363,000.00
Namdar Realty Group
150 Great Neck Road, Suite 304
Great Neck, NY 11021
* 2023 Notes: $37,415,000.00
* Series D Preferred Stock: 125,731 shares
* Series E Preferred Stock: 280,074 shares
Oaktree Capital Management, L.P.
333 South Grand Ave., 28th Fl.
Los Angeles, CA 90071
* Revolver: $50,073,664.00
* Term Loan: $3,776,371.00
* 2023 Notes: $71,716,000.00
* 2024 Notes: $38,053,000.00
* 2026 Notes: $10,765,000.00
Pacific Investment Management Company LLC
650 Newport Center Drive
Newport Beach, CA 92660
* 2023 Notes: $18,968,000.00
* 2024 Notes: $27,260,000.00
* 2026 Notes: $225,113,000.00
Nothing contained in this Verified Statement should be construed as
a limitation upon, or waiver of, the rights of any member of the Ad
Hoc Noteholder Group 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 Senior Notes may become members of the Ad Hoc
Noteholder Group, and certain members of the Ad Hoc Noteholder
Group may cease to be members 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 to the Ad Hoc Noteholder Group can be reached at:
AKIN GUMP STRAUSS HAUER & FELD LLP
Marty L. Brimmage, Jr., Esq.
1700 Pacific Avenue, Suite 4100
Dallas, TX 75201
Telephone: (214) 969-2800
Facsimile: (214) 969-4343
Email: mbrimmage@akingump.com
- and -
Michael S. Stamer, Esq.
Meredith A. Lahaie, Esq.
Kevin Zuzolo, Esq.
One Bryant Park
New York, NY 10036
Telephone: (212) 872-1000
Facsimile: (212) 872-1002
Email: mstamer@akingump.com
mlahaie@akingump.com
kzuzolo@akingump.com
A copy of the Rule 2019 filing, downloaded from PacerMonitor.com,
is available at https://bit.ly/3pTRxQd
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. It seeks to continuously strengthen its
company and portfolio through active management, aggressive leasing
and profitable reinvestment in its properties.
CBL, 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, Texas, on Nov. 1, 2020
(Bankr. S.D. Texas Lead Case No. 20-35226).
The Debtors have tapped Weil, Gotshal & Manges LLP as their legal
counsel, Moelis & Company as restructuring advisor and Berkeley
Research Group, LLC as financial advisor. Epiq Corporate
Restructuring, LLC is the claims agent.
CENTURY CASINOS: S&P Affirms 'B-' ICR; Ratings Off Watch Negative
-----------------------------------------------------------------
S&P Global Ratings affirmed all ratings on Colorado-based gaming
operator Century Casinos Inc., including its 'B-' issuer credit
rating, and removed them from CreditWatch, where they were placed
with negative implications on March 20, 2020.
Lease-adjusted leverage should improve below 6x in 2021 following a
spike this year on the temporary closure of Century's casinos.
S&P's estimate that Century Casino's EBITDA will increase over the
next several quarters assumes a modest improvement in its EBITDA
margin relative to 2019 due to cost cuts over the past few months,
particularly related to labor and marketing expenses. Additionally,
S&P expects many of the company's lower-margin or loss-leading
amenities, such as buffets, will remain closed for some time to
comply with health and safety measures intended to limit the spread
of the coronavirus, further supporting margin improvement.
S&P said, "While we believe social distancing and other health and
safety measures designed to limit capacity in casinos may hurt the
company's revenue, we believe the effect will be less than we
previously expected because the historical peak utilization rates
in many markets were below these limits. Therefore, despite ongoing
capacity restrictions (and potential further limitations by various
states), we expect Century Casinos will continue to improve revenue
and EBITDA over the next few quarters as customers become more
comfortable with being in enclosed public spaces. Additionally, we
believe many cost cuts are sustainable, particularly if market
demand remains below pre-COVID-19 demand and competitors do not
significantly raise their marketing activity. That said, we believe
it may take Century Casinos several quarters to return to
pre-closure revenue and EBITDA because we expect capacity and other
social distancing restrictions will remain in place until a vaccine
or effective therapy to treat COVID-19 is widely available."
Century Casinos should have sufficient liquidity to meet its
short-term obligations. Since its casinos reopened in the second
quarter, Century has built cash and repaid the drawn amount on its
$10 million revolver in July 2020. As of Sept. 30, Century had
$62.1 million cash on the balance sheet and full availability under
its $10 million revolving credit facility. (It borrowed $7.4
million under its foreign subsidiary's credit facility for 12
months.)
S&P said, "Although $35.2 million of its total cash is held by
foreign subsidiaries and would not be available to fund U.S.
operations unless repatriated, we believe the company could
repatriate funds if needed. As a result, we estimate Century
Casinos has about eight months of liquidity in an unexpected
zero-revenue scenario. Even though we assume its casinos would
remain open and generate cash flow, if states further restrict
visitation or order property closures, particularly in Missouri
(more than 40% of EBITDAR) or West Virginia (more than 20% of
EBITDAR), this could significantly pressure liquidity if we expect
they will last beyond a few months. In Colorado, certain counties
placed additional capacity restrictions on casinos and suspended
table games. Table games are not a significant contributor to
Century's Colorado operations, and we do not expect suspensions or
stricter capacity limitations to greatly affect its operating
performance through the fourth quarter."
During the initial casino closures, Century burned about $8 million
per month, including debt service and rent. Century's monthly cash
burn during the closures was higher than that of other smaller
regional gaming operators. It has a relatively sizable lease
obligation with VICI Properties L.P. in connection with three
gaming operations acquired from Eldorado Resorts LLC in December
2019, which requires the company to make a committed payment of at
least $25 million per year. This fixed contractual rent reduces
Century's financial flexibility, particularly considering its small
EBITDA base and cash flow generating capacity. Notwithstanding, the
company disclosed that it previously received proposals for
incremental liquidity, which it did not execute, during the height
of the pandemic's uncertainty. Should liquidity be pressured
because its largest casinos are required to close for several
months and this threatens the company's ability to meet contractual
rent obligations, S&P believes Century would execute incremental
liquidity-enhancing transactions, including potentially with its
landlord.
The negative outlook reflects significant deterioration in Century
Casinos' credit measures this year and the elevated uncertainty in
S&P's updated base-case scenario around the extent of the pandemic
and the potential effect of an uneven economic recovery and high
unemployment on performance. It also reflects a weak macroeconomic
outlook into 2021 (particularly high unemployment), high
uncertainty about effective containment and treatment of the
coronavirus (including potential additional waves of infections and
tighter operating restrictions in gaming markets until an effective
vaccine or treatment is widely available), and continued
implementation of social distancing measures and their impact on
consumer discretionary spending.
S&P could lower the rating if:
-- Operating performance is weaker than it expects; and
-- Liquidity becomes pressured, leading S&P to conclude the
capital structure may be unsustainable over time.
Such a scenario could result from prolonged operating restrictions
or additional property closures, especially in its largest gaming
markets, or a prolonged recession in the U.S. that significantly
impairs consumer discretionary spending.
It is unlikely S&P will revise its outlook on Century Casinos to
stable over the next few quarters given the rising cases in the
company's operating markets and high uncertainty as to when the
coronavirus might be contained. It could do so if:
-- S&P believes operating performance is stabilizing; and
-- S&P anticipates lease-adjusted leverage will improve
comfortably below 7x.
CENTURYLINK INC: S&P Rates New $750MM Senior Unsecured Notes 'BB-'
------------------------------------------------------------------
S&P Global Ratings assigned its 'BB-' issue-level rating and '5'
recovery rating to CenturyLink Inc.'s (doing business as Lumen
Technologies) proposed $750 million senior unsecured notes due
2029. The company will use the net proceeds from these notes to
redeem $500 million of its wholly-owned subsidiary Qwest Corp.'s
6.125% notes due 2053 and for general corporate purposes, including
to repay its revolver borrowings. The '5' recovery rating indicated
its expectation for modest (10%-30%; rounded estimate: 15%)
recovery in the event of a payment default.
S&P said, "At the same time, we raised our issue-level rating on
Lumen's existing senior unsecured debt to 'BB-' from 'B+' and
revised our recovery rating to '5' from '6'. Pro forma for the debt
repayment, Qwest Corp. has total debt of about $3.7 billion, which
compares with $4.2 billion prior to the transaction. This reduction
of debt at Qwest improves recovery prospects for senior unsecured
noteholders at Lumen, which is the junior most debt in the capital
structure, in our hypothetical default scenario."
"Because the transaction does not affect Lumen's credit metrics,
our issuer credit rating and outlook on the company remain
unchanged. Furthermore, we view the transaction favorably because
it will reduce the interest expense associated with Qwest Corp.'s
high-cost debt."
While Lumen's top-line results were generally better than expected
during the third quarter of 2020 as the company achieved $730
million of its $800 million-$1 billion of targeted run-rate
synergies, its adjusted EBITDA (including integration and
transformation costs) still fell by 5% from the prior year period
due to revenue declines and COVID-19 related expenses.
S&P said, "Furthermore, we continue to believe small and midsize
businesses (SMB) and international customers, which account for
about 28% of the company's total revenue, face heightened risk.
Lumen's international segment was negatively affected by the
resurgence in COVID-19 cases during the third quarter, particularly
in Europe and Latin America. However, the revenue declines in its
SMB segment were somewhat muted because of government stimulus,
although we believe there is elevated risk that the company's
revenue declines will accelerate in 2021 without additional
government stimulus."
"Given the weak economic environment due to the coronavirus
pandemic and Lumen's exposure to business customers, which
represents about three-quarters of its revenue, we expect its
EBITDA to decline by about 4%-6% in 2020 and for discretionary cash
flow to be about $150 million-$300 million lower than the $2
billion it generated in 2019, although this is partially due to
higher levels of capital spending to upgrade its network. Because
of these factors, we expect the company's adjusted debt to EBITDA
to remain in the 4x area in 2020 before improving to the high-3x
area in 2021, assuming an economic recovery. Nonetheless, we
believe Lumen's credit metrics (including adjusted leverage of less
than 4.5x) will continue to support the current rating."
CHARLES RIVER: Moody's Upgrades CFR to Ba1, Outlook Stable
----------------------------------------------------------
Moody's Investors Service upgraded the ratings of Charles River
Laboratories International, Inc. including the Corporate Family
Rating to Ba1 from Ba2 and the Probability of Default Rating to
Ba1-PD from Ba2-PD. The senior secured ratings were upgraded to
Baa3 from Ba1, and the senior unsecured ratings to Ba2 from Ba3.
The outlook is stable. There is no change to Charles River's SGL-1
Speculative Grade Liquidity Rating.
"The ratings upgrade reflects our recognition of Charles River's
improved credit profile and strong revenue growth outlook for the
next several years," said Moody's Vice President, Morris
Borenstein. "Despite a high appetite for debt-funded M&A, Moody's
expect Charles River to continue to be disciplined, having
demonstrated a solid track record of rapid deleveraging
post-deals."
Charles River Laboratories International, Inc.:
Ratings upgraded:
Corporate Family Rating to Ba1 from Ba2
Probability of Default Rating to Ba1-PD from Ba2-PD
Senior secured credit facilities to Baa3 (LGD2) from Ba1 (LGD2)
Senior unsecured notes to Ba2 (LGD5) from Ba3 (LGD5)
Outlook actions:
The outlook is stable
RATINGS RATIONALE
Charles River's Ba1 Corporate Family Rating reflects its
competitive position as one of the largest early-stage contract
research organizations (CROs), and its good business diversity
across geography and customers. Charles River generates strong and
stable free cash and generally maintains moderate financial
leverage. Despite strong operating performance, the ratings are
constrained by Moody's expectation that Charles River will continue
to be very acquisitive, a governance risk consideration. In
addition, Charles River is vulnerable to reduced R&D budgets of its
customers. For example, a reduction in availability of funding for
academic or biotech research would have a negative impact on
Charles River. Moody's believes this risk is somewhat mitigated by
a robust biotech funding environment that provides multiple years
of spending runway.
Charles River's SGL-1 Speculative Grade Liquidity rating is
supported by Moody's expectation for strong free cash flow of more
than $450 million over the next 12 months. Charles River reported
cash of $243 million at September 26, 2020. Charles River's
liquidity is further supported by its $2.05 billion revolver. In
Moody's view, Charles River will continue to use this facility for
debt-funded M&A. At September 26, 2020, the revolver had $837
million drawn. Moody's expects ample cushion under Charles River's
financial maintenance covenants.
The stable outlook balances Charles River's good cash generation
and high single-digit EBITDA growth over the next 12-18 months with
Moody's expectations for further leveraging M&A transactions.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Factors that could lead to an upgrade include if Moody's expects
adjusted debt to EBITDA to be sustained below 3.5x with free cash
flow to debt above 20%. A disciplined approach to M&A and capital
deployment would also be needed.
The ratings could be downgraded if Charles River experiences
declining profits due to competitive pressures or a market
contraction. Specifically, the ratings could be downgraded if
adjusted debt to EBITDA is sustained above 4.5x.
The principal methodology used in these ratings was Business and
Consumer Service Industry published in October 2016.
Charles River Laboratories International, Inc., headquartered in
Wilmington, MA, is an early-stage contract research organization.
The company provides discovery and safety assessment services used
in early-stage drug development, as well as research models (e.g.
rodents) for use in scientific research, and manufacturing support
products and services. The company reported revenues of
approximately $2.8 billion for the twelve months ended Sept. 26,
2020.
CLINIGENCE HOLDINGS: Posts $1.75 Million Net Income in 3rd Quarter
------------------------------------------------------------------
Clinigence Holdings, Inc., filed with the Securities and Exchange
Commission its Quarterly Report on Form 10-Q disclosing net income
of $1.75 million on $350,032 of sales for the three months ended
Sept. 30, 2020, compared to a net loss of $857,630 on $194,608 of
sales for the three months ended Sept. 30, 2019.
For the nine months ended Sept. 30, 2020, the Company reported net
income of $860,730 on $1.19 million of sales compared to a net loss
of $3.45 million on $852,022 of sales for the same period during
the prior year.
As of Sept. 30, 2020, the Company had $6.97 million in total
assets, $1.59 million in total liabilities, and $5.38 million in
total stockholders' equity.
The Company has an accumulated deficit of $11,708,065, and a
working capital deficit of $1,031,180 at Sept. 30, 2020. The
Company said these factors, among others, raise substantial doubt
about its ability to continue as a going concern for a reasonable
period of time. The Company's continuation as a going concern is
dependent upon its ability to obtain necessary equity financing and
ultimately from generating revenues from its newly acquired
subsidiary to continue operations.
"As a result of the spread of the COVID-19 coronavirus, economic
uncertainties have arisen which are likely to negatively impact
operations. Other financial impact could occur though such
potential impact is unknown at this time. A pandemic typically
results in social distancing, travel bans and quarantine, and this
may limit access to our facilities, customers, management, support
staff and professional advisors. These factors, in turn, may not
only impact our operations, financial condition and demand for our
goods and services but our overall ability to react timely to
mitigate the impact of this event. Also, it may hamper our efforts
to comply with our filing obligations with the Securities and
Exchange Commission.
"The Company expects that working capital requirements will
continue to be funded through a combination of its existing funds
and further issuances of securities. Working capital requirements
are expected to increase in line with the growth of the business.
Existing working capital, further advances and debt instruments,
and anticipated cash flow are expected to be adequate to fund
operations over the next twelve months. The Company has no lines
of credit or other bank financing arrangements. The Company has
financed operations to date through the proceeds of a private
placement of equity and debt instruments. In connection with the
Company's business plan, management anticipates additional
increases in operating expenses and capital expenditures relating
to: (i) developmental expenses associated with a start-up business
and (ii) marketing expenses. The Company intends to finance these
expenses with further issuances of securities, and debt issuances.
Thereafter, the Company expects it will need to raise additional
capital and generate revenues to meet long-term operating
requirements. Additional issuances of equity or convertible debt
securities will result in dilution to current stockholders.
Further, such securities might have rights, preferences or
privileges senior to common stock. Additional financing may not be
available upon acceptable terms, or at all. If adequate funds are
not available or are not available on acceptable terms, the Company
may not be able to take advantage of prospective new business
endeavors or opportunities, which could significantly and
materially restrict business operations."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/Archives/edgar/data/1479681/000160706220000329/clnh093020form10q.htm
About Clinigence Holdings
Clinigence Holdings, a fully reporting, publicly-held company --
http://www.clinigencehealth.com/-- is a healthcare information
technology company providing an advanced, cloud-based platform that
enables healthcare organizations to provide value-based care and
population health management. The Clinigence platform aggregates
clinical and claims data across multiple settings, information
systems and sources to create a holistic view of each patient and
provider and virtually unlimited insights into patient
populations.
Clinigence recorded a net loss of $7.12 million for the year ended
Dec. 31, 2019, compared to a net loss of $950,129 for the year
ended Dec. 31, 2018. As of June 30, 2020, the Company had $7.17
million in total assets, $1.41 million in total liabilities, and
$5.76 million in total stockholders' equity.
Prager Metis CPA's LLC, in Hackensack, New Jersey, the Company's
auditor since 2019, issued a "going concern" qualification in its
report dated May 14, 2020 citing that the Company has an
accumulated deficit of $12,568,795, and a working capital deficit
of $3,367,101 at Dec. 31, 2019. These factors, among others, raise
substantial doubt regarding the Company's ability to continue as a
going concern.
CMS ENERGY: Fitch Assigns BB+ Rating to Junior Subordinated Notes
-----------------------------------------------------------------
Fitch Ratings has assigned a 'BB+' rating to CMS Energy
Corporation's junior subordinated notes (JSNs). The JSNs are
unsecured obligations and will rank subordinate and junior in right
of payment to all of CMS Energy's existing and future senior
indebtedness. The JSNs will rank equal in right of payment to the
company's existing JSNs and any other pari passu subordinated
indebtedness CMS Energy may incur in the future. Fitch allocates
50% equity credit to CMS Energy's JSNs. Net proceeds will be used
for the retirement of debt obligations and for general corporate
purposes.
CMS Energy's Long-Term Issuer Default Rating (IDR) is 'BBB' with a
Stable Outlook.
KEY RATING DRIVERS
Ownership of Consumers Energy: CMS Energy's ratings benefit from
the company's ownership of Consumers Energy, a regulated utility
that accounts for more than 95% of consolidated EBITDA. Consumers
Energy's low-risk integrated electric and natural gas distribution
operations bolster credit quality. Fitch Ratings expects Consumers
Energy to remain CMS Energy's lone core business and primary driver
of consolidated growth over the long term, further strengthening
CMS Energy's consolidated earnings mix.
Constructive Regulatory Environment: Consumers Energy operates
within a constructive regulatory environment overseen by the
Michigan Public Service Commission (MPSC). Supportive state
legislation and MPSC policies mitigate regulatory lag through the
use of a forward test year, a 10-month review period for general
rate cases (GRCs) and power supply and gas cost recovery
mechanisms.
Consumers Energy's natural gas utility business also benefits from
partial revenue decoupling, which annually reconciles Consumers
Energy's actual weather-normalized, nonfuel revenues with the
revenues approved by the MPSC.
Large Capex Plan: Consumers Energy has a large capex plan totaling
$12.2 billion over 2020-2024. Roughly 45% of this capex is for
electric utility operations, including existing generation, 14% for
new renewable generation and 41% for natural gas utility
operations. Concerns regarding the large capex plan are mitigated
by the MPSC's constructive ratemaking policies, including use of a
forward test year, which allows for timely recovery of capex.
Cost Reductions and NOLs: Management's focus on cost reductions
supports Consumers Energy's solid financial profile, reducing the
negative near-term financial impact from the utility's large capex
plan. In addition, the cash flow benefit from CMS Energy's net
operating loss carryforwards enables the utility to invest more
internal capital into improving the reliability of its service
while minimizing the need for external sources of capital. Fitch
expects ongoing operating cost reductions to average 2% per year.
Parent-Level Debt: Approximately one-quarter of consolidated
adjusted long-term debt (excluding debt at CMS Energy's bank
subsidiary EnerBank USA and securitization debt at Consumers
Energy) is parent-level debt, which significantly increases
consolidated leverage. Fitch does not currently expect the
coronavirus pandemic to have a material impact on CMS Energy's
credit quality.
FFO leverage is expected to be higher in 2020 due to $531 million
of one-time pension contributions, but then return within the
rating sensitivity threshold for the current ratings by 2021. Fitch
forecasts FFO leverage averaging around 5.0x and total debt with
equity credit/operating EBITDA at 5.0x-5.2x through 2023.
Parent/Subsidiary Linkage: Fitch uses a bottom-up approach in
determining the ratings on CMS Energy and Consumers Energy. The
linkage follows a weak parent/strong subsidiary approach. Fitch
considers Consumers Energy to be stronger than CMS Energy due to
the utility's low-risk regulated operations, Michigan's
constructive regulatory environment and CMS Energy's large amount
of parent-level debt.
There is moderate linkage between the Long-Term IDRs of CMS Energy
and Consumers Energy, created by the absence of guarantees and
cross defaults and the utility's good access to debt capital
markets. However, the utility's lack of strong ring-fencing
provisions and CMS Energy's reliance on Consumers Energy as its
predominant generator of cash flow would suggest closer linkage.
Fitch caps at two notches the difference between the Long-Term IDRs
of CMS Energy and Consumers Energy.
DERIVATION SUMMARY
The credit profile of CMS Energy is appropriately positioned
relative to its peer utility holding companies, DTE Energy Company
(BBB/Stable), Xcel Energy Inc. (BBB+/Stable) and WEC Energy Group,
Inc. (BBB+/Stable). CMS Energy's lower rating than Xcel and WEC is
partly driven by a greater proportion of parent-level debt that
results in higher consolidated leverage metrics. CMS Energy's FFO
leverage is expected to average around 5.0x through 2023, compared
with 4.7x-5.2x for DTE and 4.9x for Xcel. CMS Energy, DTE, Xcel and
WEC are parent holding companies with integrated electric and
natural gas distribution utility subsidiaries rated in the 'BBB' to
'A' range.
A constructive regulatory environment in Michigan drives the strong
business risk profile of CMS Energy, which Fitch views as
comparable with the operations of its peers in Michigan, Wisconsin
and Minnesota. Xcel and WEC benefit from their multistate
operations that add geographic and regulatory diversification.
Fitch views DTE's business risk profile as slightly weaker because
of its investments in nonregulated midstream operations.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Its Rating Case for the Issuer
Include:
-- Periodic GRC filings to recover Consumers Energy's investment
in rate base and associated costs;
-- Operating cost reductions averaging 2% per year;
-- Flat annual electric sales growth;
-- Annual natural gas sales growth averaging 0.0%-0.5%;
-- Total utility capex of $12.2 billion over 2020-2024;
-- Earnings per share growth of 6%-8% per year;
-- Normal weather.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to a
positive rating action/upgrade:
-- FFO leverage expected to be less than 4.8x on a sustained
basis.
Factors that could, individually or collectively, lead to a
negative rating action/downgrade:
-- FFO leverage expected to exceed 5.4x on a sustained basis.
LIQUIDITY AND DEBT STRUCTURE
Adequate Liquidity: Fitch considers liquidity for CMS Energy and
Consumers Energy to be adequate. CMS Energy has a $550 million
unsecured revolving credit facility (RCF) that will mature June 5,
2023. As of Sept. 30, 2020, CMS Energy had $5 million of LCs
outstanding and no borrowings outstanding, leaving $545 million of
availability under its RCF.
Consumers Energy primarily meets its short-term liquidity needs
through the issuance of CP under its $500 million CP program, which
is supported by its $850 million RCF. Consumers Energy's RCF will
mature June 5, 2023 and is secured by the utility's first mortgage
bonds (FMBs). Although the amount of outstanding CP does not reduce
the RCF's available capacity, Consumers Energy states it would not
issue CP in an amount exceeding the available RCF capacity.
Consumers Energy had no CP borrowings and $7 million of LCs
outstanding as of Sept. 30, 2020, leaving $843 million of unused
availability under its RCF.
Consumers Energy has a separate $250 million RCF that matures Nov.
19, 2022. This RCF had no borrowings and $1 million of LCs
outstanding at Sept. 30, 2020, leaving $249 million of
availability. Consumers Energy also has a fully used $30 million LC
facility that will mature April 18, 2022. Both facilities are
secured by the utility's FMBs.
CMS Energy's operations require modest cash on hand. The company
had $519 million of unrestricted cash and cash equivalents at Sept.
30, 2020, $199 million of which was at Consumers Energy.
CMS Energy and Consumers Energy have manageable long-term debt
maturity schedules over the next five years. At the parent level,
CMS Energy has $300 million of 5.05% senior unsecured notes due
March 15, 2022 and $250 million of 3.875% senior unsecured notes
due March 1, 2024. CMS Energy also has a $300 million, 364-day term
loan that matures February 2021.
The utility has $325 million of 3.375% FMBs due Aug. 15, 2023; $250
million of 3.125% FMBs due Aug. 31, 2024 and $51.5 million of 3.19%
FMBs due Dec. 15, 2024. Consumers Energy also has a $300 million,
364-day term loan that matures January 2021.
SUMMARY OF FINANCIAL ADJUSTMENTS
Financial statement adjustments that depart materially from those
contained in the published financial statements of the relevant
rated entity are disclosed below:
-- CMS Energy's junior subordinated notes are given 50% equity
credit;
-- Consumers Energy's securitization debt is removed from all
financial metric calculations.
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.
COEUR MINING: Egan-Jones Hikes Senior Unsecured Ratings to CCC+
---------------------------------------------------------------
Egan-Jones Ratings Company, on November 11, 2020, upgraded the
foreign currency and local currency senior unsecured ratings on
debt issued by Coeur Mining Incorporated to CCC+ from CCC.
Headquartered in Chicago, Illinois, Coeur Mining, Inc. operates as
a mining company.
COMMERCIAL METALS: Moody's Alters Outlook on Ba1 CFR to Stable
--------------------------------------------------------------
Moody's Investors Service changed Commercial Metals Company's (CMC)
outlook to stable from negative. At the same time Moody's affirmed
CMC's Corporate Family Rating (CFR) and its Probability of Default
Rating at Ba1 and Ba1-PD respectively. Moody's also affirmed the
Ba2 rating on the senior unsecured notes due in 2023, 2026 and
2027. The Speculative Grade Liquidity rating remains an SGL-2.
"The change in outlook to stable and affirmation of CMC's rating
reflect the strong operating performance the company exhibited in
its fiscal year ended August 31, 2020, improvement in credit
metrics and success in the full integration of the Gerdau S.A.
assets that were acquired in 2018. The company generated strong
earnings in 2020 which resulted in high free cash flow generation,
improvement of adjusted debt/EBITDA to 1.9x and adjusted
EBIT/interest to 6.7x and an overall good liquidity profile that
will support the company through an uncertain operating environment
going forward. While debt protections metrics are expected to
tighten in fiscal year 2021 due to weaker earnings, following a
very strong 2020 performance, metrics and overall liquidity will
continue to support the Ba1 CFR and stable outlook" said Carol
Cowan, Moody's Senior Vice President and lead analyst for CMC.
Affirmations:
Issuer: Commercial Metals Company
Corporate Family Rating, Affirmed Ba1
Probability of Default Rating, Affirmed Ba1-PD
Senior Unsecured Regular Bond/Debenture, Affirmed Ba2 (to LGD4 from
LGD5)
Outlook Actions:
Issuer: Commercial Metals Company
Outlook, Changed to Stable from Negative
RATINGS RATIONALE
The Ba1 CFR reflects the company's strong position in the rebar and
merchant bar markets as well as stable fundamentals in the
construction markets served which have been enhanced with the full
integration of the Gerdau assets. Earnings growth in fiscal year
2020 was supported by the North America segment which had an
improved cost profile and strong performance in its operating
segments as legacy back log in the downstream fabricated business
rolled off and better-priced contract work became a stronger
proportion reflecting improved rebar pricing for the year ended
August 31, 2019 (averaged around $693/ton) on new contracts. While
there is a lag in rebar pricing movement impacting new bids, and
rebar prices declined, on average, for the year ended August 31,
2020 (averaged around $598/ton) CMC's book of business remained
strong and on volumes and lower costs contributed to the earnings
improvement seen in its fiscal 2020. Consequently, CMC generated
Moody's adjusted EBITDA of $647 million compared to $557 million in
fiscal year 2019. However, the company's European segment with
operations out of Poland, saw a decline in earnings from 2019
driven by higher imports and weaker industry fundamentals. Overall,
the credit profile improved as adjusted debt/EBITDA declined to
1.9x, EBIT/interest expense climbed to 6.7x and the company's EBIT
margin improved to 8%.
The company's strong fiscal year 2020 performance which included a
net debt paydown of $175 million will support the company's credit
profile into fiscal year 2021, which is expected to have a more
challenging operating environment. While the construction markets
remained resilient through the company's fiscal 2020 and approved
contracts and contracts in process continued, it is expected that
new order bids could be more challenged in CMC's fiscal 2021,
particularly the back half as there is more visibility through the
balance of 2020 and into early 2021 given market and economic
recovery uncertainties. Moody's expects debt protection metrics to
tighten in 2021 with debt/EBITDA approaching 3x and interest
coverage dipping below 5x driven by its expectation of weaker
EBITDA of approximately $415 million. Nonetheless, despite the
anticipated contraction, the company has sufficient cushion to
absorb such movement and metrics are expected to continue to
support the Ba1 CFR. Additionally, CMC is expected to remain free
cash flow generative and exhibit a solid liquidity profile, further
supporting the ratings.
Average rebar prices bottomed at $560 per ton but have since
returned to near $600 as construction activity as picked up with
the addition of lower rebar imports. Rebar import duties,
specifically on imports from Turkey and Mexico imposed by Section
232 in 2018 have been maintained which will continue to support
rebar prices in the US market. Further, rebar imports are down more
than 6% through year to date September 2020 compared to the same
time in 2019 which will provide earnings support for CMC in a
challenging operating environment going forward.
The stable outlook considers the company's improved operations
after having fully integrated the Gerdau assets and the overall
improvement in the company's cost profile which should support
earnings and metrics through a weaker but improving operating
environment. The outlook is also supported by the company's good
liquidity profile.
The SGL-2 speculative grade liquidity rating reflects the company's
good liquidity profile supported by $542 million cash on hand as of
August 31, 2020 and expectations of moderate free cash flow
generation in fiscal 2021.The company has a $350 million (secured
by US inventory and US fabrication receivables) revolving credit
facility expiring June 23, 2022, mostly undrawn except for letters
of credit, and a $200 million accounts receivable securitization
program expiring in November 2021. The company also has a $75
million revolving credit facility in Poland expiring in March 2022,
mostly undrawn except for letters of credit.
The company remains comfortably in compliance with the maximum
debt/capital covenant of 60% and the minimum interest coverage
ratio requirement of 2.5x (EBITDA based).
The Ba2 rating of the senior unsecured notes reflects the effective
subordination to the revolving credit facility, secured by US
inventory and US fabrication receivables, which results in a higher
loss position for the unsecured debt, as well as to priority
accounts payable.
The steel industry faces numerous environmental risks, the most
critical being carbon transition risk. However, CMC with all of its
steelmaking capacity consisting of EAF's is well positioned for
stricter environmental standards in both its North American and
European segments. Further, the company's integrated recycling
capabilities which collect and process scrap material which are
used in the company's mills helps the company reduce its overall
carbon footprint and produce products that contain more recycled
material compared to other steel companies.
From a governance standpoint CMC has maintained a balanced capital
allocation strategy which includes dividends and share buy backs in
addition to maintaining low debt levels. The company recently fully
pre-paid its Term Loan A and has committed to maintaining leverage
below 3x through-the-cycle.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
CMC's rating could be upgraded should the EBIT margin be sustained
above 8%, debt/EBITDA be sustainable at or below 2.75x, the
EBIT/interest ratio above 4x and the (operating cash flow less
dividends)/debt ratio above 25%. Additional prerequisites would be
the ability to demonstrate consistent free cash flow and a solid
liquidity profile.
The rating could be downgraded if economic weakness and increased
competition dampen sales growth, leading to deterioration in
operating performance and credit metrics. Quantitatively, the
rating could be downgraded if the EBIT margin declines to 4%, and
the debt/EBITDA and EBIT/interest expense ratios are likely to be
sustained above 4.0 times and below 2.5 times, respectively.
The principal methodology used in these ratings was Steel Industry
published in September 2017.
Headquartered in Irving, Texas, Commercial Metals Company
manufactures steel through its seven minimills and two micro mills
in the United States. Total rolling capacity is approximately 5.9
million tons. CMC also has a presence in Europe through its
minimill in Poland which has about 1.2 million tons rolling
capacity. In addition, CMC operates steel fabrication facilities
and ferrous and nonferrous scrap metal recycling facilities.
Revenues for the twelve months ended August 31, 2020 were $5.5
billion.
COMSTOCK MINING: All Four Proposals Approved at Annual Meeting
--------------------------------------------------------------
Comstock Mining Inc. held its Annual Meeting of Stockholders on
Nov. 18, 2020, at which the stockholders:
(1) elected Corrado De Gasperis, Leo M. Drozdoff, Walter A.
Marting, Jr., Judd B. Merrill, and William J. Nance
as directors;
(2) ratified the appointment of DeCoria, Maichel & Teague P.S.
as
the Company's independent registered public accounting firm
for the fiscal year ending Dec. 31, 2020;
(3) approved a non-binding advisory resolution approving the
compensation of the Company's named executive officers; and
(4) approved the Comstock Mining Inc. 2020 Equity Incentive
Plan.
About Comstock Mining
Comstock Mining Inc. -- http://www.comstockmining.com/-- is a
Nevada-based, gold and silver mining company with extensive,
contiguous property in the Comstock District. The Company began
acquiring properties in the Comstock District in 2003. Since then,
the Company has consolidated a significant portion of the Comstock
District, amassed the single largest known repository of historical
and current geological data on the Comstock region, secured
permits, built an infrastructure and completed its first phase of
production. The Company continues evaluating and acquiring
properties inside and outside the district expanding its footprint
and exploring all of its existing and prospective opportunities for
further exploration, development and mining.
Comstock Mining recorded a net loss of $3.81 million for the year
ended Dec. 31, 2019, compared to a net loss of $9.48 million for
the year ended Dec. 31, 2018. As of Sept. 30, 2020, the Company
had $48.17 million in total assets, $12.98 million in total
liabilities, and $35.19 million in total equity.
Deloitte & Touche LLP, in Salt Lake City, Utah, the Company's
auditor since 2011, issued a "going concern" qualification in its
report dated March 30, 2020 citing that the Company has incurred
recurring losses and cash outflows from operations, has an
accumulated deficit and has debt maturing within 12 months from the
issuance date of the financial statements that raise substantial
doubt about its ability to continue as a going concern.
COMSTOCK MINING: Posts $17.3 Million Net Income in Third Quarter
----------------------------------------------------------------
Comstock Mining Inc. filed with the Securities and Exchange
Commission its Quarterly Report on Form 10-Q disclosing net income
of $17.33 million on $49,425 of total revenues for the three months
ended Sept. 30, 2020, compared to net income of $386,897 on $48,350
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 $18.34 million on $146,225 of total revenues compared to
a net loss of $3.53 million on $130,132 of total revenues for the
nine months ended Sept. 30, 2019.
As of Sept. 30, 2020, the Company had $48.17 million in total
assets, $12.98 million in total liabilities, and $35.19 million in
total equity.
Net cash used in investing activities for the nine months ended
Sept. 30, 2020, was $0.1 million, primarily for deposits made for
the investment in MCU LLC of $1.4 million, advances made to Sierra
Springs Opportunity Fund Inc. of $1.3 million and option payments
to purchase the remaining membership interests in Pelen LLC of $0.1
million, offset by cash provided of $1.4 million form proceeds from
the sale of Tonogold common shares, $1.1 million from Tonogold for
payments toward the purchase of Comstock Mining LLC, the entity
that owns the Lucerne mine, and proceeds from deposits and sale of
mining and non-mining assets of $0.2 million.
Net cash provided by investing activities for the nine months ended
Sept. 30, 2019, was $1.7 million, primarily from $3.9 million in
proceeds from Tonogold for payments toward the purchase of Comstock
Mining LLC, the entity that owns the Lucerne mine, offset by $1.6
million in property purchases, $0.4 million in deposits made for
the investment in MCU and $0.2 million for the investment in Sierra
Springs Opportunity Fund Inc.
Net cash provided by financing activities for the nine months ended
Sept. 30, 2020, was $3.2 million, primarily from net proceeds from
the sale of common stock of $4.2 million and proceeds from issuance
of Promissory Notes of $4.2 million, offset by principal payments
on long term debt of approximately $5.1 million and common stock
issuance costs of $0.1 million. Net cash provided by financing
activities for the nine months ended Sept. 30, 2019, was $0.4
million, primarily from net proceeds from the sale of common stock
of $ 3.8 million offset by principal payments on long-term debt of
$3.1 million and common stock issuance costs of $0.3 million.
"Future operating expenditures above management's expectations,
including exploration and pre-development expenditures in excess of
planned proceeds from notes receivable, planned proceeds from the
sale of Tonogold securities and Silver Springs Properties and
amounts to be raised from the issuance of equity under the S-3
Shelf, declines in the market value of properties held for sale, or
declines in the share price of the Company's common stock would
adversely affect the Company's results of operations, financial
condition and cash flows. If the Company was unable to obtain any
necessary additional funds, this could have an immediate material
adverse effect on liquidity and could raise substantial doubt about
the Company's ability to continue as a going concern. In such
case, the Company could be required to limit or discontinue certain
business plans, activities or operations, reduce or delay certain
capital expenditures or sell certain assets or businesses. There
can be no assurance that the Company would be able to take any such
actions on favorable terms, in a timely manner or at all," Comstock
Mining said.
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1120970/000112097020000060/lode-20200930.htm
About Comstock Mining
Comstock Mining Inc. -- http://www.comstockmining.com-- is a
Nevada-based, gold and silver mining company with extensive,
contiguous property in the Comstock District. The Company began
acquiring properties in the Comstock District in 2003. Since then,
the Company has consolidated a significant portion of the Comstock
District, amassed the single largest known repository of historical
and current geological data on the Comstock region, secured
permits, built an infrastructure and completed its first phase of
production. The Company continues evaluating and acquiring
properties inside and outside the district expanding its footprint
and exploring all of its existing and prospective opportunities for
further exploration, development and mining.
Comstock Mining recorded a net loss of $3.81 million for the year
ended Dec. 31, 2019, compared to a net loss of $9.48 million for
the year ended Dec. 31, 2018. As of June 30, 2020, the Company had
$44.40 million in total assets, $16.76 million in total
liabilities, and $27.63 million in total equity.
Deloitte & Touche LLP, in Salt Lake City, Utah, the Company's
auditor since 2011, issued a "going concern" qualification in its
report dated March 30, 2020 citing that the Company has incurred
recurring losses and cash outflows from operations, has an
accumulated deficit and has debt maturing within 12 months from the
issuance date of the financial statements that raise substantial
doubt about its ability to continue as a going concern.
COOPER TIRE: Egan-Jones Raises Sr. Unsecured Debt Ratings to BB+
----------------------------------------------------------------
Egan-Jones Ratings Company, on November 9, 2020, upgraded the
foreign currency and local currency senior unsecured ratings on
debt issued by Cooper Tire & Rubber Company to BB+ from B-.
Headquartered in Findlay, Ohio, Cooper Tire & Rubber Company
manufactures and markets replacement tires.
CUSHMAN & WAKEFIELD: S&P Alters Outlook to Neg., Affirms 'BB-' ICR
------------------------------------------------------------------
S&P Global Ratings revised its outlook on Cushman & Wakefield to
negative from stable. S&P also affirmed its issuer credit and debt
ratings at 'BB-'. The recovery rating on the senior debt remains
'3', reflecting its expectation of meaningful recovery (50%-70%;
rounded estimate 55%) in the event of default.
S&P said, "The outlook revision on Cushman & Wakefield (C&W)
reflects our view that higher leverage may continue into 2021 if
adjusted EBITDA does not recover materially or if the company does
not significantly decrease debt. On a last-12-months basis, debt to
adjusted EBITDA was 6.3x at Sept. 30, 2020, and may increase after
the fourth quarter given current trends."
"Previously, we expected C&W to maintain leverage of 4.0x to 5.0x
as measured by debt to adjusted EBITDA. The increase in leverage
has largely been a result of lower adjusted EBITDA, and we expect
adjusted EBITDA for 2020 to decrease by over 30% from 2019 levels
due to declines in leasing and capital markets fee revenues. Cost
reduction projects completed in the first half of the year that we
do not add back and C&W's contribution of some of its business to
the Vanke Service joint venture during the first quarter also
affected adjusted EBITDA. While the company maintains almost $1
billion in cash on its balance sheet, we do not net cash against
debt in our calculation of leverage because the company remains
financial sponsor controlled, in our view. We consider ownership of
over 40% as control, and a financial sponsor consortium led by TPG
continues to hold an approximate 49% ownership stake in C&W."
"Through Sept. 30, 2020, the company reported a 33% decline in
leasing fee revenues and a 32% decline in capital markets fee
revenues. The capital markets and leasing segments generated just
over 45% of total fee revenues for 2019 and has had a higher
adjusted EBITDA margin than the properties management/facilities
management segment. We expected the capital markets sector to be
the most volatile in times of stress across the commercial real
estate services sector, with potential decreases in capital markets
revenues of as much as 30%-70% in a severe recession scenario, in
our view. In this context, the impact to capital markets was on the
lower end of our expected range. However, leasing was affected more
than we expected. This was largely due to the nature of the stress,
which has had an impact on leasing activity as companies wait to
react to the potential long-term consequences COVID-19 , which
depends on how companies consider their office footprint."
"We expect the company to continue to invest excess cash flows in
cost-reduction projects, recruiting, and in-fill acquisitions.
Given the company's ample balance sheet cash of almost $1 billion,
its $1 billion revolver that is currently undrawn, and its strong
ability to generate free cash flow, the company has ample means to
lower debt, though this has not been a focus in the past."
"The negative outlook reflects our expectation that current macro
trends could lead to sustained leverage above 5.0x debt to adjusted
EBITDA over the next 12 months. Higher leverage could be the result
of lower-than-expected fee revenues from leasing and capital
markets, or a material debt-funded acquisition."
"We could lower the rating on C&W over the next 12 months if we
expect debt to adjusted EBITDA to remain above 5.0x on a sustained
basis."
"If C&W reduces leverage to less than 5x debt to adjusted EBITDA on
a sustainable basis, we would consider revising the outlook to
stable. We could also revise the outlook to stable if
financial-sponsor ownership decreases below 40% and net debt to
adjusted EBITDA is comfortably below 5.0x."
DEAN & DELUCA: Court Approves Bankruptcy Reorganization Plan
------------------------------------------------------------
Alex Wolf of Bloomberg Law reports that Dean & DeLuca New York Inc.
won court approval to reorganize in bankruptcy under a consensual
plan that cuts the gourmet grocer's debt by roughly $300 million.
Judge Michael E. Wiles of the U.S. Bankruptcy Court for the
Southern District of New York approved the Chapter 11 plan during a
telephonic hearing Tuesday, November 24, 2020, capping the
company's nearly eight-month stint in bankruptcy.
Dean & DeLuca built consensus around its revised restructuring plan
after the company and stakeholder groups reached a mediated
settlement agreement. The Plan establishes a nearly $8 million
trust for priority and unsecured creditors.
About Dean & Deluca New York
Dean & DeLuca New York, Inc., is a multi-channel retailer of
premium gourmet and delicatessen food and beverage products under
the Dean & DeLuca brand name. It traces its roots to the opening of
the first Dean & DeLuca store in the Soho district of Manhattan,
New York City by Joel Dean and Giorgio DeLuca in 1977.
Affiliate Dean & DeLuca, Inc. was incorporated in Delaware in 1999.
On Sept. 29, 2014, Pace Development Corporation, through its wholly
owned subsidiary, Pace Food Retail Co., Ltd., acquired 100% of the
shares of Dean & DeLuca, Inc. from its then shareholders.
Dean & DeLuca New York and six affiliates sought protection under
Chapter 11 of the Bankruptcy Code (Bankr. S.D.N.Y. Lead Case No.
20-10916) on March 31, 2020. At the time of the filing, the Debtors
had estimated assets of between $10 million and $50 million and
liabilities of between $100 million and $500 million.
The Debtors tapped Brown Rudnick LLP as their legal counsel,
Stretto as claims and noticing agent, and Saul Ewing Arnstein &
Lehr LLP as special counsel.
The U.S. Trustee for Region 2 appointed a committee to represent
unsecured creditors in Debtors' bankruptcy cases. The committee is
represented by Arent Fox, LLP.
DIOCESE OF PHOENIX: Moody's Cuts Series 2020A Bonds to Ba2
----------------------------------------------------------
Moody's Investors Service has downgraded the rating on The Roman
Catholic Church of The Diocese of Phoenix's (the diocese, AZ) $25
million of outstanding Taxable General Obligation Bonds, Series
2020A (fixed rate, maturing 2040) to Ba2 from Baa3. The outlook is
stable.
RATINGS RATIONALE
The downgrade to Ba2 reflects the worsening core social and
business risks for a particular sector that has seen a substantial
and now recently increasing trend of preemptive bankruptcy, a
pattern that, significantly, shows no correlation to soundness of
financial operations, balance sheets and other nominal fundamental
credit strength. The sector thus exhibits a high level of
unpredictability where financial strength itself may be an
inducement for defensive bankruptcy filing. As of October 2020, six
diocese/archdiocese have filed for bankruptcy in calendar 2020,
bringing the total to 30, a 25% increase and representing 15% of
the 196 particular churches in the US. The Diocese of Phoenix's
management actions continue to provide for stability in core
operations. However, uncertainties around timing for receipt of its
recent claims, and if and when settlements are made and at what
amounts underpins speculative sector conditions. While the Diocese
of Phoenix continues to maintain good levels of cash and
investments, with sound reserves, its more modest scope of
operations is a limiting credit factor.
The State of Arizona passed legislation in May 2019 extending the
statute of limitations for victims of childhood sexual abuse to sue
in civil court to age 30. The prior statute of limitations ended
two years after a victim turned 18. The legislation also provided a
"window" for those over 30 to sue in civil court until December 31,
2020. Currently, the diocese reports the potential for up to eight
new cases since May 2020. Currently, one claim is active and two
claims have been served, with no information provided yet on the
remaining six cases. This is the highest level of activity since
the peak in 2007 following the Maricopa County Attorney's Office
indictments in 2003.
The diocese's fiscal 2020 fiscal results were stronger than budget
due to management's proactive expense realignments made in response
to curtailed revenues following the coronavirus outbreak. While
wealth levels are down slightly due to the diocese purchase of $18
million of its $25 million of Series 2020A bonds in June 2020,
spendable cash and investments are 1.1x expenses, 3.2x relative to
debt, with 216 monthly days cash on hand at fiscal end 2020.
Budgeted 2021 operations are tracking on target, with more than
balanced operations expected. The Diocese of Phoenix is a growing
Roman Catholic diocese in the demographically and economically
strong Phoenix area. Governance and management have been effective
at-risk management in recent years, which includes establishment of
specific reserves for its self-insured exposures.
Moody's regards the coronavirus outbreak as a social risk under its
ESG framework, given the substantial implications for public health
and safety. The diocese reports that the bishop has allowed
parishes to hold masses, with appropriate social distancing
protocols to prevent coronavirus outbreaks.
RATING OUTLOOK
The stable outlook reflects the current low level of litigation
against the diocese, combined with management's identified
strategies to manage near-term misconduct uncertainties and
maintain positive operations. Should downside risks accelerate, the
rating or outlook could be negatively impacted.
FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATING
- Mitigation of litigation exposure and demonstrated ability to
manage potential escalation of self-insurance claims
FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATING
- Increase of sexual misconduct claims and corresponding
uninsured settlement amounts, escalating possibilities of
reorganization
- Escalation of downside risks associated with the coronavirus
pandemic, including revenue declines as operations of affiliated
entities are disrupted
LEGAL SECURITY
Payments under the bond indenture are a general obligation of the
diocese, the broadest pledge available, strengthened by the
diocese's Canon Law status, which gives the bishop of the diocese
significant input into the governance of all Catholic institutions
operating within the territory of the diocese. Under the bond
indenture, the diocese also maintains a debt service reserve fund
equal to 1.2x the total debt service requirement for the upcoming
year.
PROFILE
The Roman Catholic Church of The Diocese of Phoenix, established in
1969, is one of three dioceses serving the State of Arizona. The
geographic area includes Maricopa, Mohave, Yavapai and Coconino
Counties (excludes Navajo Indian Reservation) and the Pinal County
portion of the Gila River Indian Reservation. The diocese reported
1.2 million members for fiscal year 2019 across 117 parishes, with
41 schools and nearly 14,800 students, though the Chancery and
Pastoral Center for the Diocese of Phoenix is not responsible for
direct administration of the parishes and schools. Each of the
parishes and other diocesan entities are separately incorporated
under civil law. The Pastoral Center's Moody's adjusted operating
revenue was $73 million for the fiscal year ending June 30, 2020.
METHODOLOGY
The principal methodology used in this rating was Nonprofit
Organizations (Other Than Healthcare and Higher Education)
published in May 2019
DTI HOLDCO: Moody's Affirms Caa2 CFR; Alters Outlook to Stable
--------------------------------------------------------------
Moody's Investors Service affirmed the ratings of DTI Holdco, Inc.,
including the Corporate Family Rating at Caa2, the Probability of
Default Rating at Caa2-PD, and the first lien senior secured credit
facility (revolver and term loan) rating at Caa2. The outlook was
changed to stable from negative.
The affirmation of the Caa2 CFR and the stable outlook reflect the
company's improved liquidity position following the October 2020
amendment and extension of its revolving credit facility and
Moody's expectation that Epiq's earnings will stabilize over the
next 12-18 months as the economy slowly begins to recover from the
COVID-19 pandemic. Epiq has received some insurance recoveries in
the second and third quarters of 2020 to offset operating costs and
business interruption losses from the March 2020 ransomware attack
and is expected to collect the remaining proceeds in the first
quarter of 2021. However, Moody's expects the company's cash flow
and liquidity to remain volatile over the next 12-18 months as the
company experiences swings in working capital from the uncertain
timelines of client projects. Moody's views the company's capital
structure as unsustainable over the longer-term without a material
increase in sustained earnings or a significant restructuring of
Epiq's balance sheet on commercially viable terms.
Affirmations:
Issuer: DTI Holdco, Inc.
Corporate Family Rating, Affirmed Caa2
Probability of Default Rating, Affirmed Caa2-PD
Senior Secured Bank Credit Facility, Affirmed Caa2 (LGD3)
Outlook Actions:
Issuer: DTI Holdco, Inc.
Outlook, Changed To Stable From Negative
RATINGS RATIONALE
The Caa2 CFR reflects Epiq's very high debt-to-EBITDA leverage
estimated to be in excess of 10.0x (Moody's adjusted and expensing
all capitalized software development costs and purchased software)
at September 30, 2020, uncertainty regarding the timing of cash
collections from the company's insurance carriers from the March
2020 ransomware attack, and the unsustainability of the company's
capital structure without a material increase in earnings or a
balance sheet restructuring. The company's high debt-to-EBITDA
(Moody's adjusted and expensing all capitalized software
development costs and purchased software) is expected to remain in
excess of 8.0 times over the next 12-18 months. The market for
eDiscovery remains acutely competitive with low organic growth and
persistent pricing pressure. Despite the company's large scale (by
revenue) and diverse business segments relative to direct peers
within the global eDiscovery market, its market share continues to
erode since the merger of DTI and Epiq in 2016. It's unclear
whether the company can recoup its lost market share when the
economy returns to some normalcy.
The stable outlook reflects Moody's view that the company's
revenues will grow at low single-digit growth rates, the company
can collect the remaining insurance proceeds on a timely basis, and
liquidity will remain adequate.
Moody's expects Epiq to have adequate liquidity over the next 12-15
months. Sources of liquidity consist of approximately $40.9 million
of unrestricted cash on Sept. 30, 2020 and expectation for a
minimally positive level of free cash flow (before any insurance
recoveries) over the next 12 months. Epiq is expected to receive
the remaining insurance recoveries in early 2021. The company's $90
million revolving credit facility (to be reduced to $75 million on
March 31, 2021) has approximately $55 million outstanding and will
expire in September 2022. There are no financial maintenance
covenants under the first lien term loan but the revolver has a
springing financial covenant of first lien net leverage of 8.5x,
with step-downs towards 7.5x through Dec. 31, 2021 when drawn 30%.
The company's reported first lien net leverage ratio was
approximately 6.2 times as of September 30, 2020. Moody's expects
the company will maintain a modest cushion to the covenant and also
notes the potential for financial sponsor support could alleviate
the near-term liquidity stress. Along with the springing financial
maintenance covenant, Epiq must also maintain a minimum of $25
million in liquidity between available revolver capacity and
balance sheet cash. Given current revolver drawings, maintaining
compliance with the liquidity covenant could be at risk if Epiq is
unable to collect the remaining payments from its insurance carrier
on a timely basis.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be downgraded if the timing of insurance
recoveries is materially delayed, operating performance and
financial results do not improve, liquidity deteriorates or the
company is unable to address its maturities on commercially viable
terms.
Ratings could be upgraded if the company demonstrates a
stabilization of the business while improving its liquidity
profile, with an acceptable cushion to its financial covenants.
Additionally, Moody's adjusted debt-to-EBITDA below 8.0 times and
improvement in free cash flow would support a ratings upgrade.
Headquartered in New York, NY, DTI is a global provider of legal
service solutions, namely litigation and administrative support
services for corporations and law firms in North America, Europe
and Australia. DTI is majority-owned by an investor group
controlled by OMERS Private Equity, Inc., Harvest Partners, L.P.,
and management. The company generated annual revenue of
approximately $950 million as of Sept. 30, 2020.
The principal methodology used in these ratings was Business and
Consumer Service Industry published in October 2016.
EAGLE PRESSURE: Files for Chapter 11 Bankruptcy Protection
----------------------------------------------------------
Clarissa Hawes of FreightWaves reports that the Texas oilfield
services company, Eagle Pressure Controls LLC filed for bankruptcy
protection, leaving small-business truckers that haul oilfield
equipment in the lurch.
Eagle Pressure Controls LLC and its wholly owned subsidiary, Eagle
PCO LLC of Navasota, Texas, recently filed for Chapter 11 in the
U.S. Bankruptcy Court for the Southern District of Texas.
The company filed its petition three months after the Occupational
Safety and Health Administration (OSHA) slapped it with a hefty
fine following a fatal oil well fire that killed three workers in
January 2020.
Eagle PCO is also facing mounting lawsuits stemming from the oil
well fire.
Chapter 11 filing hurts heavy haulers
In its filing, Eagle PCO lists both its assets and liabilities as
between $1 million and $10 million. The oilfield services company
states that it has up to 199 creditors. The company maintains that
no funds will be available for unsecured creditors once it pays
administrative fees.
Among the company’s unsecured creditors — which are last in
line for payment in Chapter 11 cases — are three Odessa,
Texas-based equipment haulers, collectively owed nearly $16,000.
The three companies named in the petition are Nobster's Hot Shot &
Crane, Permian Machinery Movers Inc. and Pradon Construction &
Trucking Co., a heavy equipment hauler.
According to Eagle PCO’s financials, its gross revenues were $5.7
million as of its bankruptcy petition in November. This is a
significant drop from nearly $28 million the oilfield services
company reported in 2019.
The company's largest unsecured creditors include American Express,
which is owed more than $439,000, Bestway Oilfield of Channelview,
Texas, owed nearly $271,000 and Meyer Service Co. of Corpus
Christi, Texas, owed more than $198,400. The OSHA office in Austin,
Texas, is also listed as an unsecured creditor — owed $55,300.
A creditor's meeting is scheduled for 10:30 a.m. on Dec. 8, 2020.
Legal Woes
In late August 2020, OSHA fined three oil and gas companies
following a six-month investigation into a deadly rig explosion
that killed three workers in January 2020.
One worker died immediately when natural gas in the well sparked a
fire, according to initial reports. Two later died of their
injuries in the hospital.
Eagle Pressure Control, along with Forbes Energy Service of Alice,
Texas, and Chesapeake Energy Corp., which owned the well, were
fined more than $387,000 for alleged safety violations.
Chesapeake Energy, headquartered in Oklahoma City, filed for
Chapter 11 protection in June 2020.
The families of the three men killed in the well explosion in late
January 2020 in Burleson, Texas, filed suit against Chesapeake.
Also named in the suits are subcontractors Eagle Pressure Control
and Forbes Energy, among other companies, hired by Chesapeake to
change out a section of the wellhead.
Double Whammy
An oil glut and slumping sales amid the COVID-19 pandemic have
forced several oil and gas companies to file for bankruptcy
protection since March 2020.
A price war between OPEC and Russia, which caused oil prices to
tank, forced several oil and gas companies into bankruptcy as well.
The lack of business and nonpayment from debtors have forced
oilfield equipment haulers in the oil patch also to file
bankruptcy.
About Eagle Pressure Controls
Eagle Pressure Control -- https://eaglepressurecontrol.com -- is a
Houston-based provider of comprehensive pressure control support to
the oil & gas field services industry.
Eagle PCO LLC and Eagle Pressure Control LLC sought Chapter 11
protection (Bankr. S.D. Tex. Case Nos. 20-35474 and 20-35475) on
Nov. 6, 2020.
Eagle PCO was estimated to have $1 million to $10 million in assets
and liabilities. Eagle Pressure was estimated to have less than
$50,000 in assets and at least $1 million in liabilities.
The Hon. David R. Jones is the case judge.
PENDERGRAFT & SIMON LLP, led by Leonard Simon, is the Debtors'
counsel.
ENERGY ALLOYS: Committee Hires McDermott Will as Legal Counsel
--------------------------------------------------------------
The official committee of unsecured creditors of Energy Alloys
Holdings, LLC and its affiliates seeks approval from the U.S.
Bankruptcy Court for the District of Delaware to retain McDermott
Will & Emery, LLP as its legal counsel.
The firm will provide these services:
(a) advise the committee with respect to its rights, duties
and powers in the Debtors' Chapter 11 cases;
(b) assist and advise the committee in its consultations and
negotiations with the Debtors and other parties-in-interest;
(c) assist the committee in analyzing the claims of creditors
and the Debtors' capital structure and in negotiating with holders
of claims and equity interests;
(d) assist the committee in its investigation of the acts,
conduct, assets, liabilities and financial condition of the Debtors
and their insiders and of the operation of the Debtors'
businesses;
(e) assist the committee in its analysis of, and negotiations
with, the Debtors or any third party concerning matters related to,
among other things, the assumption or rejection of certain leases
of non-residential real property and executory contracts, asset
dispositions, financing of other transactions and the terms of a
plan of reorganization for the Debtors;
(f) assist and advise the committee as to its communications
with the general creditor body regarding significant matters in the
cases;
(g) represent the committee at all hearings and other
proceedings before the court;
(h) review and analyze applications, orders, statements of
operations and schedules filed with the court;
(i) advise the committee with respect to any legislative,
regulatory or governmental activities;
(j) assist the committee in its review and analysis of the
Debtors' various agreements;
(k) prepare legal papers;
(l) investigate and analyze any claims belonging to the
Debtors' estates; and
(m) perform other legal services.
The standard hourly rates charged by McDermott for professionals
and paraprofessionals employed in its offices are provided below:
Partners $875 - $2,000
Senior Counsel $755 - $1605
Employee Counsel $320 - $1515
Associates $545 - $995
Paraprofessionals $115 - $650
The standard hourly rates for McDermott's attorneys expected to
represent the committee are:
Timothy W. Walsh, Partner $1,375
Kristin K. Going, Partner $1,055
Andrew B. Kratenstein, Partner $1,185
David R. Hurst, Partner $1,050
Stacy A. Lutkus, Employee Counsel $890
Daniel Thomson, Associate $675
Natalie Rowles, Associate $610
Timothy Walsh, Esq., a partner at McDermott Will, disclosed in
court filings that the firm is a "disinterested person" as that
term is defined in section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Timothy W. Walsh, Esq.
Kristin K. Going, Esq.
McDermott Will & Emery, LLP
340 Madison Avenue
New York, NY 10173
Telephone: (212) 547-5615
Facsimile: (212) 547-5444
Email: twwalsh@mwe.com
kgoing@mwe.com
About Energy Alloys
Founded in 1995, Energy Alloys Holdings LLC and its affiliates are
privately-owned distributors and resellers of tube and bar products
sold into the oil and gas industry for the exploration of
hydrocarbons. Visit https://www.ealloys.com for more information.
On Sept. 9, 2020, Energy Alloys Holdings LLC and seven of its
affiliates filed for bankruptcy protection (Bankr. D. Del., Lead
Case No. 20-12088). Bryan Gaston, chief restructuring officer,
signed the petitions. The Debtors were estimated to have
consolidated assets of $10 million to $50 million, and consolidated
liabilities of $100 million to $500 million.
Judge Mary Walrath presides over the cases.
The Debtors tapped Richards, Layton & Finger, P.A. as their
bankruptcy counsel, Akin Gump Strauss Hauer & Feld LLP as corporate
counsel, Moelis & Company as investment banker, and Epiq Corporate
Restructuring LLC as claims and noticing agent and administrative
advisor. Ankura Consulting Group, LLC provides interim management
services.
The U.S. Trustee for Regions 3 and 9 appointed a committee to
represent unsecured creditors in the Debtors' Chapter 11 cases on
Sept. 23, 2020. The committee is represented by McDermott Will &
Emery, LLP.
ENERGY ALLOYS: Sale of Interests in EH Subsidiaries to BioUrja OK'd
-------------------------------------------------------------------
Judge Mary F. Walrath of the U.S. Bankruptcy Court for the District
of Delaware authorized Energy Alloys Holdings, LLC and its
affiliates to sell all, or any portion or combination of their
equity interests in their non-Debtor foreign subsidiaries with
direct or indirect operations in the United Kingdom, Singapore and
Dubai, to BioUrja Commodities, LLC, on the terms of their Purchase
Agreement, dated as of Nov. 10, 2020, as amended by the First
Amendment to Purchase Agreement, dated as of Nov. 17, 2020.
The aggregate consideration for the Assets is (A) $16,338,000,
minus (B) the outstanding amount of Indebtedness set forth on the
Payoff Letters received from the Persons identified on the Closing
Indebtedness Schedule as of the Closing, plus (C) the amount, if
any, by which Net Working Capital exceeds the Net Working Capital
Target, minus (D) the amount, if any, by which Net Working Capital
is less than the Net Working Capital Target, plus (E) the Closing
Date Cash Amount, minus (F) any Company Group Transaction
Expenses.
The Purchase Agreement is approved and the Debtors are authorized
to execute and perform under any and all ancillary documents
contemplated by the Purchase Agreement and the Order.
YAS International, LLC ("YAS") is approved as the Backup Bidder for
the EH Equity & Assets, and the purchase agreement submitted by YAS
is approved and authorized as the Backup Bid and will remain open
as the Backup Bid pursuant to the terms of the Bidding Procedures.
In the event that the Stalking Horse Bidder cannot or does not
consummate the transactions contemplated by the Purchase Agreement
in accordance with the Order, the Debtors may (with the consent of
the First Lien Agent) designate YAS to be the Successful Bidder and
the Backup Bid to be the Successful Bid upon the filing of a notice
to such effect with the Court.
The sale is free and clear of Liens, Claims, Encumbrances and
Interests, with all such Liens, Claims, Encumbrances and Interests
attaching to the proceeds of the Sale.
Pursuant to Bankruptcy Rules 7062, 9014, and 6004(h), the Order
will be effective immediately upon entry and the Debtors and the
Successful Bidder are authorized to close the Sale immediately upon
its entry.
A copy of the Agreements is available at
https://tinyurl.com/y2utc5cu from PacerMonitor.com free of charge.
About Energy Alloys Holdings
Founded in 1995, Energy Alloys Holdings LLC and its affiliates are
privately-owned distributors and resellers of tube and bar products
sold into the oil and gas industry for the exploration of
hydrocarbons. Visit https://www.ealloys.com for more information.
On Sept. 9, 2020, Energy Alloys Holdings LLC and seven of its
affiliates filed for bankruptcy protection (Bankr. D. Del. Lead
Case No. 20-12088). Bryan Gaston, chief restructuring officer,
signed the petitions. Judge Mary Walrath presides over the cases.
The Debtors were estimated to have consolidated assets of $10
million to $50 million, and consolidated liabilities of $100
million to $500 million.
The Debtors have tapped Richards, Layton & Finger, P.A., as
bankruptcy counsel, Akin Gump Strauss Hauer & Feld LLP as corporate
counsel, Moelis & Company as investment banker, and Epiq Corporate
Restructuring LLC as claims and noticing agent. Ankura Consulting
Group, LLC provides interim management services.
The U.S. Trustee appointed a committee of unsecured creditors on
Sept. 23, 2020. The committee is represented by McDermott Will &
Emery, LLP.
FAIR ISAAC: Egan-Jones Lowers Sr. Unsecured Debt Ratings to BB+
---------------------------------------------------------------
Egan-Jones Ratings Company, on November 16, 2020, upgraded the
foreign currency and local currency senior unsecured ratings on
debt issued by Fair Isaac Corporation to BB+ from BBB-.
Headquartered in San Jose, California, Fair Isaac Corporation
provides analytics, including predictive modeling, decision
analysis, intelligence management, decision management systems, and
consulting services.
FIRSTENERGY CORP: Fitch Downgrades LT IDR to BB+, Outlook Negative
------------------------------------------------------------------
Fitch Ratings has downgraded the Long-Term (LT) Issuer Default
Ratings (IDR) of FirstEnergy Corporation (FE) and FirstEnergy
Transmission (FET) to 'BB+' from 'BBB-'. Fitch has also downgraded
FE and FET's Short-Term IDRs to 'B' from 'F3'. Allegheny Generating
Company's LT IDR has been downgraded to 'BBB-' from 'BBB'. The LT
IDRs of FE's remaining operating utility subsidiaries have been
downgraded to 'BBB-' from 'BBB' and their Short-Term IDRs affirmed
at 'F3'. The Rating Outlook for FE and its subsidiaries remains
Negative.
The rating action reflects recent disclosure of a $4.3 million
payment from FE to an individual who is now a government official
involved in regulating FE's Ohio-based utility distribution
subsidiaries. Fitch believes the disclosure significantly deepens
regulatory, political, legal and liquidity risks already heightened
by investigations underway at the Department of Justice (DOJ) and
SEC. The $4.3 million payment was made in early 2019.
As a result of the disclosure, FE and FET were out of compliance
with representations and warranties contained in the companies'
credit facilities, specifically Section 4.01 (m) Anti-Corruption
Laws and Sanctions. FE, FET and its bank group entered into a
waiver agreement and amendments to the credit agreements, restoring
FE's and FET's ability to draw on the credit facilities. In Fitch's
opinion, a central concern from a credit perspective is the
inability to rule out future corrupt activity at FE that could
similarly block borrowings under the company's credit facilities.
In addition, Fitch expects disclosure of the payment will
significantly and adversely affect FE's regulatory standing in Ohio
and could affect rate regulation in the utility holding company's
other jurisdictions. FE, in addition to Ohio, serves parts of
Pennsylvania, New Jersey, West Virginia and Maryland, and a very
small portion of New York. FE's transmission operations are
regulated by the Federal Energy Regulatory Commission (FERC).
FE's internal investigation continues, and resulted in the
departure of five senior executives and has revealed violation of
FE's code of conduct by former CEO Charles E. Jones and the $4.3
million payment. Future adverse developments from ongoing federal
investigations and FE's internal review cannot be ruled out and are
reflected in the instant credit rating downgrades and Negative
Rating Outlook.
KEY RATING DRIVERS
Criminal Investigation: Concerns regarding potential illicit
activity at FE emerged in July 2020 with the indictment of Ohio
Assembly Speaker Larry Householder; four associates; and a
nonprofit organization, Generation Now, in connection with a
continuing DOJ investigation. The complaint alleges Householder and
his associates engaged in bribery and other illegal actions
designed to ensure House Bill (H.B.) 6 would be enacted and remain
in effect in light of a referendum effort to repeal the
legislation.
While the indictment does not explicitly name FE or its affiliates,
pseudonyms referred to in the affidavit are widely believed to
refer to FE; its corporate services subsidiary, FirstEnergy Service
Company and former subsidiary, Energy Harbor. FE received subpoenas
and is cooperating with the DOJ investigation. Former FE subsidiary
FirstEnergy Solutions emerged from bankruptcy as a separate entity
in February 2020 and was renamed Energy Harbor.
While FE and its subsidiaries have not been named in the DOJ
investigation, Fitch believes future criminal charges against FE
cannot be ruled out in light of pay-to-play allegations contained
in the affidavit. If FE becomes a target of the criminal
investigation and is ultimately convicted, it could be subject to
fines and penalties, civil litigation and resulting financial
pressure, reputational risk, regulatory, political and liquidity
challenges, higher cost of capital, and erosion of confidence in
management and the effectiveness of its corporate governance and
internal controls. The SEC also initiated investigations of FE.
FE Internal Review: Concerns regarding federal investigations and
potential criminal exposure are exacerbated by revelations of
potentially corrupt activity, and violations of FE's internal
policies and code of ethics that have come to light in FE's
internal investigation. The investigation resulted in the departure
of five senior executives, including former CEO Charles E. Jones.
The internal review also uncovered the $4.3 million, potentially
corrupt payment to an official involved in regulating the rates of
FE's Ohio-based utilities. The internal review is ongoing and
further negative developments cannot be ruled out.
Leadership Changes: Steven Strah was appointed acting CEO on Oct.
29, 2020, replacing Charles E. Jones. Current FE board member
Christopher Pappas assumed the newly created role of executive
director reporting to the non-executive chairman of FE's board of
directors, Donald Misheff. Pappas in his new role will be charged
with developing enhanced internal controls and governance policies
and procedures. In addition, Pappas will oversee the FE management
team's execution of strategic initiatives and engage with FE's
external stakeholders.
Deteriorating Risk Profile: On the political front, H.B. 6 appears
to be in play in Ohio in the wake of the DOJ investigation. If the
legislation is overturned, decoupling in Ohio may be rolled back,
which would negatively affect the business risk profiles of Ohio
Edison Company (OE), Cleveland Electric Illuminating Company (CE)
and Toledo Edison Company (TE). In addition, Fitch believes
disclosure of the $4.3 million payment to a government official
involved in regulating OE's, CE's and TE's rates is likely to
worsen the utilities' standing with regulators, further challenging
creditworthiness.
Parent-Subsidiary Rating Linkage: Fitch considers FE's subsidiary
utility operating companies (opcos) to be generally stronger than
their corporate parent, reflecting the utilities' relatively low
business risk profile, balanced rate regulation and FFO-adjusted
leverage. While operational and strategic ties are robust,
prescribed regulatory capital structures for FE's opcos leads to
moderate rating linkage, allowing the utilities' IDRs to be notched
above FE's IDR. Fitch applies a bottom-up approach rating FE's
opcos. FE's utility subsidiary IDRs reflect their standalone credit
profiles and moderate rating linkage with FE, while FE's IDR
incorporates a consolidated approach.
Coronavirus Pressures Commercial and Industrial Sales: Fitch
expects the coronavirus pandemic will have an adverse effect on
projected credit metrics in 2020 and 2021, which will prove
manageable for FE. Fitch's conservative rating case assumes sales
fluctuations in 2020 will result in flat yoy residential revenue
and a decline of 5%-6% in commercial and industrial (C&I) revenue
with weak, albeit improving, revenue trends extending into 2021. In
this scenario, Fitch estimates FFO leverage of 6.0x in 2021 and
5.8x in 2022, well inside Fitch's 6.3x downgrade trigger for FE.
FE's systemwide load declined less than 2% in 3Q20, compared with
3Q19. However, the increase in residential revenues related to
stay-at-home orders in FE's service territory more than offset C&I
customer class revenue declines.
Pure Utility Business Model: With the emergence of FES from
bankruptcy as Energy Harbor on Feb. 27, 2020, and divestiture of
Allegheny Energy Supply Company LLC's (Supply) generating capacity,
virtually all of FE's consolidated earnings and cash flows will be
provided by 10 electric operating utilities and its regulated
transmission business. Fitch believes approvals of
grid-modernization and infrastructure improvement plans by Ohio,
Pennsylvania and New Jersey regulators and authorization of revenue
decoupling for FE's three Ohio operating utilities are supportive
credit developments.
Manageable Leverage: While FE's consolidated leverage is
manageable, parent-only leverage is high. FE's consolidated balance
sheet debt totaled $22.3 billion as of Sept. 30, 2020, including
$7.8 billion of parent-only debt. FE's parent-only debt accounted
for approximately 35% of consolidated debt as of Sept. 30, 2020.
Focus on Regulated Growth: FE's strategic focus on investing
significant capital in and improving returns from its core
distribution utility and regulated transmission units is
credit-supportive in Fitch's view. Fitch expects FE's utility
distribution system capex to average approximately $1.7 billion per
year in 2020-2023. Transmission investment is forecast at $1.2
billion in 2020 and $1.2 billion-$1.5 billion per annum during 2021
through 2023. Fitch expects FE's combined utility and transmission
planned capex to approximate $2.9 billion-$3.2 billion per year in
2020-2023. Management foresees $20 billion of post-2023
transmission investment opportunities.
Concern regarding FE's large capex program are mitigated by
constructive FERC regulation from a credit perspective and
perceived improvement in regulation across FE's jurisdictional
service territory, as evidenced by constructive outcomes in New
Jersey, Ohio, Pennsylvania and West Virginia in recent years.
Management is positioning the company's regulated operations to
provide earnings per share growth of 6%-8% in 2018-2021 and 5%-7%
through 2023.
ESG Considerations: FE has Environmental, Social and Governance
(ESG) Relevance Scores of '5' for Management Strategy, '5' for
Governance Structure, '5' for Group Structure and '5' for financial
transparency. The scores are linked to uncertainties associated
with the ongoing federal investigations of FE discussed, are highly
relevant to the ratings and had a negative impact on FE's credit
profile, resulting in previous credit rating downgrades of FE and
several of its subsidiaries.
Except for the matters discussed, the highest level of ESG credit
relevance, if present, is a score of 3 - ESG issues are credit
neutral or have only a minimal credit impact on the entity, either
due to their nature or the way in which they are being managed by
the entity.
DERIVATION SUMMARY
FE's 'BB+'/Negative IDR is lower than peers American Electric Power
(AEP, BBB+/Stable); Exelon Corporation (EXC, BBB+/Stable) and WEC
Energy Group, Inc. (BBB+/Stable), reflecting uncertainty regarding
federal investigations, FE's internal review and violation of
internal controls by senior executives. FE and peers AEP, EXC and
WEC are large utility holding companies with operations spanning
several states. Common FE peer characteristics include relatively
low business risk profiles, generally supportive price regulation
and management focus on rate base growth and maximizing operating
utility returns.
FE's parent-only debt approximates 35%, similar to WEC's
parent-only leverage (approximately 30%), but considerably higher
than AEP's and EXC's, both of which are less than 20%. With the
emergence of FES from bankruptcy and divestiture of Supply, which
did not file in bankruptcy, FE recast itself as a pure utility
holding company composed of regulated utility and transmission
businesses.
While EXC continues to operate a large merchant-generation
business, its consolidated earnings and cash flows are
predominantly regulated. AEP exited the merchant-generation
business and virtually all other diversified businesses to focus on
its core regulated operations. WEC's operations are predominantly
integrated, combination electric, natural gas and gas local
distribution utilities. FE, AEP, EXC and WEC have a legacy of
expanding utility operations through M&A activity. FE's and EXC's
utility operations are primarily lower risk pure transmission and
distribution utilities operating in the Midwest and Mid-Atlantic
regions. Compared with FE, AEP and WEC have a greater proportion of
somewhat higher risk, integrated electric utilities, including
coal-fired generation. FE is more highly levered than AEP, EXC or
WEC. Fitch estimates FE's FFO-adjusted leverage at 6.0x in 2021 and
5.8x in 2022, which compares with 5.0x or better for AEP, EXC and
WEC.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within Our Rating Case for the Issuer
Include
-- Fitch estimates C&I customer-class revenue declines 6% in 2020
and gradually recovers through YE 2021;
-- Baseline load is flat at FE's electric distribution business,
excluding the effects of the coronavirus pandemic;
-- Distribution and transmission utility rate base growth of
4.5% and 8.5%, respectively, in 2019-2023;
-- Transmission capex of approximately $1.2 billion in 2020 and
$1.2 billion-$1.45 billion annually during 2021-2023;
-- Distribution utility capex approximates $1.7 billion annually
in 2020-2023;
-- Continuation of generally balanced rate regulation.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade for FE:
-- Conclusion of federal and FE's internal investigations
resolving uncertainty regarding FE's legal exposure.
-- Better than expected operations resulting in FFO leverage of
6.5x or better coupled with meaningfully improved internal controls
and corporate governance;
-- Meaningful, secular improvement in jurisdictional rate
regulation across FE's service territory;
-- FE's continued strategic focus on relatively low-risk utility
and transmission businesses.
Factors that could, individually or collectively, lead to negative
rating action/downgrade for FE:
-- An adverse outcome in the DOJ's ongoing bribery investigation,
including federal criminal or civil charges:
--Further disclosure of wrongdoing at FE from internal or
external investigations, and increasing exposure to fines,
penalties and other challenges, including enhanced liquidity risk;
-- Continued weak internal controls and corporate governance;
-- Significant deterioration in FE's rate regulation or
unanticipated operating or other developments, resulting in lower
than expected earnings and cash flows and higher leverage,
including greater than expected impact from the coronavirus
pandemic;
-- A change in corporate strategy embracing investment in
businesses with higher risk profiles;
-- These or other factors resulting in sustained FFO leverage
greater than 7.3x.
Factors that could, individually or collectively, lead to positive
rating action/upgrade for OE, Pennsylvania Power Company (PP), CE
or TE include:
-- A credit rating upgrade at the utilities' corporate parent
FE;
-- FFO leverage of 5.0x or better on a sustained basis;
-- Continued balanced jurisdictional price regulation.
Factors that could, individually or collectively, lead to negative
rating action/downgrade for OE, PP, CE or TE include:
-- An adverse credit rating action at FE;
-- FFO leverage of higher than 6.0x;
-- Significant deterioration in jurisdictional price regulation;
-- An unexpected, catastrophic event resulting in a prolonged
outage;
Factors that could, individually or collectively, lead to positive
rating action/upgrade for Metropolitan Edison Company (ME),
Pennsylvania Electric Company (PN) or West Penn Power Company (WP)
include:
-- A credit rating upgrade at the utilities' corporate parent
FE;
-- FFO leverage of 5.0x or better on a sustained basis;
-- Continued balanced jurisdictional price regulation.
Factors that could, individually or collectively, lead to negative
rating action/downgrade for ME, PN or WP include:
-- An adverse credit rating action at FE;
-- FFO leverage higher than 6.0x;
-- Significant deterioration in jurisdictional price regulation;
-- An unexpected, catastrophic event resulting in a prolonged
outage.
Factors that could, individually or collectively, lead to positive
rating action/upgrade for Jersey Central Power & Light Company
(JCP&L) include:
-- A credit rating upgrade at the utility's corporate parent;
-- FFO leverage of 5.0x or better on a sustained basis;
-- Continued balanced jurisdictional price regulation;
Factors that could, individually or collectively, lead to negative
rating action/downgrade for JCP&L include:
-- An adverse credit rating action at FE;
-- FFO leverage of higher than 6.0x;
-- Deterioration in jurisdictional price regulation;
-- An unexpected, catastrophic event resulting in a prolonged
grid outage.
Factors that could, individually or collectively, lead to positive
rating action/upgrade for FET, American Transmission System, Inc.
(ATSI), Mid-Atlantic Interstate Transmission, LLC (MAIT) and
Trans-Allegheny Interstate Line Company (TrAIL) include:
-- An upgrade at FE along with FFO leverage sustaining at 5.0x or
lower;
-- Continued balanced FERC rate regulation.
Factors that could, individually or collectively, lead to negative
rating action/downgrade for FET, ATSI, MAIT and TrAIL include:
-- An adverse rating actions at FE;
-- FFO leverage sustaining at 6.0x or higher due to deterioration
in regulatory oversight or other factors;
-- An unexpected catastrophic outage or event.
Factors that could, individually or collectively, lead to positive
rating action/upgrade for MP and PE include:
-- A credit rating upgrade at the utilities' corporate parent;
-- FFO leverage of 5.0x or better;
-- Continued balanced jurisdictional price regulation.
Factors that could, individually or collectively, lead to negative
rating action/downgrade for MP and PE include:
-- An adverse rating action at FE;
-- FFO leverage of worse than 6.0x on a sustained basis;
-- Deterioration in jurisdictional price regulation;
-- An unexpected, catastrophic event resulting in prolonged
outages.
Factors that could, individually or collectively, lead to positive
rating action/upgrade for Allegheny Generating Co.:
-- An upgrade at MP and FFO leverage of 5.0x or lower at
Allegheny Generating Co.
Factors that could, individually or collectively, lead to negative
rating action/downgrade for Allegheny Generating Co.
-- Deterioration in the company's FFO leverage to above 6.0x;
-- Meaningful deterioration in its regulatory compact;
-- Downgrade of corporate parent and off-taker MP;
-- A prolonged catastrophic outage at Bath County Project.
LIQUIDITY AND DEBT STRUCTURE
While FE's liquidity position is generally solid in Fitch's
opinion, recent disclosure of the company's lack of compliance with
covenants contained in the Representations and Warranties section
of its credit agreements injects a measure of uncertainty with
regard to liquidity. If further lapses emerge unrelated to the
waiver provided by its bank group regarding the $4.3 million
payment discussed, FE and FET could again be unable to comply with
their Representation and Warranties regarding corrupt activity and
be required to seek another waiver. In this scenario, FE's and
FET's access to their revolvers would be restricted until such a
waiver is granted by the companies' bank group.
The company renegotiated its revolving credit agreements in October
2018, reducing its consolidated borrowing capacity to $3.5 billion
from $5.0 billion and extending its committed revolving bank
facilities through December 2022. FE had total liquidity of roughly
$3.6 billion as of Aug. 10, 2020, including undrawn FE and FET
credit facilities of $2.5 billion and $1 billion, respectively,
plus approximately $141 million of cash and cash equivalents.
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
FirstEnergy Corporation: Management Strategy: 5, Group Structure:
5, Governance Structure: 5, Financial Transparency: 5
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.
FORD MOTOR: Egan-Jones Lowers Commercial Paper Ratings to B
-----------------------------------------------------------
Egan-Jones Ratings Company, on November 18, 2020, downgraded the
foreign commercial paper and local commercial paper ratings on debt
issued by Ford Motor Company to B from A3.
Headquartered in Detroit, Michigan, Ford Motor Company Limited
manufactures and sells automobiles.
FRONTIER COMMUNICATIONS: CWA Seeks Regulatory Conditions on Plan
----------------------------------------------------------------
Mike Robuck of Fierce Telecom reports that the Communications
Workers of America (CWA) is seeking conditions be imposed by a
Connecticut government agency in regards to Frontier's Chapter 11
reorganization plan.
On Monday, November 23, 2020, the CWA submitted a brief to the
Connecticut Public Utilities Regulatory Authority (PURA) that
sought to make sure the bankruptcy plan improved services and kept
jobs in Connecticut. PURA is tasked with reviewing Frontier's
bankruptcy plan.
Frontier said it has received regulatory approval, or "favorable
determination," from 11 of the 25 states in its footprint. Those
states include: Arizona, Georgia, Illinois, Minnesota, Nebraska,
Nevada, New York, South Carolina, Texas, Utah, and Virginia.
The CWA submitted an opening brief on Monday, November 23, 2020,
asking PURA to impose conditions to the bankruptcy plan that
insures Frontier Communications of Connecticut (SNET) improves
service quality for customers while also preserving union jobs.
The CWA represents more than 1,600 Frontier employees who are
working as technicians and call center representatives in
Connecticut. In April of 2016, CWA represented 2,397 employees in
Connecticut. Over the last four years, the company has cut 740
positions, or 30% of the workforce.
"CWA technicians have watched in frustration as Frontier has failed
to invest in its network and workforce in recent years, leading to
the declining condition of Frontier’s Connecticut plant," CWA
said in its press release. "Significant cuts in staffing have meant
fewer technicians in the field to provide critical maintenance and
respond to customer issues."
While the CWA didn't mention it, automation has played a role in
some job reductions across the telecoms industry.
"The CWA members who work at Frontier know firsthand what the
company needs to do to come out of this bankruptcy process stronger
and ready to provide quality service to its customers," said CWA
Local 1298 President Dave Weidlich, in a statement. "That's why we
want to make sure that PURA uses its oversight process to hold
Frontier accountable to its consumers and workers — not Wall
Street hedge funds like Elliott Management that only care about
making a quick buck."
Frontier Communications filed for bankruptcy on April 14, 2020 to
start a prearranged $10 billion debt-cutting proposal backed by its
largest bondholders. In August 2020, the U.S. Bankruptcy Court for
the Southern District of New York approved Frontier's plan for
reorganization.
"Frontier is seeking to restructure under Chapter 11 to eliminate
more than $10 billion of debt and nearly $1 billion in annual
interest obligations," a Frontier spokesperson said in an email to
FierceTelecom. "The company’s successful restructuring will
enable it to make investments in its network and operations, and to
continue to be a competitive provider of communications services in
Connecticut and twenty-four other states.
"We look forward to addressing all appropriate issues in our few
remaining approval states, including Connecticut."
CWA's brief also raised "serious" concerns about the future of the
company under its proposed new owners. According to the proposed
bankruptcy plan, four investment firms will own between 20% and 28%
of the new company: Elliott Management, Franklin Mutual, Golden
Tree Asset Management, and HG Vora.
Last 2019, Elliott Management stirred the pot at AT&T by sending an
open letter to its board of directors that criticized its debt load
and work in wireless, among other concerns. Earlier this month,
Elliott announced it would be selling its stake in AT&T.
Elliott Management is also the largest stakeholder in the newly
formed Windstream, which emerged from its Chapter 11 bankruptcy in
September as a privately-held company.
The CWA has asked PURA to do the following:
* Impose strict, enforceable conditions that require the profits
and cash flow generated in Connecticut be reinvested in the network
coupled with service quality and employment requirements.
* Require SNET to maintain the current level of capital spending
and in-state employment at the least through 2024. SNET should also
consider requiring the approval of any acquisitions or divestitures
by Frontier in other jurisdictions.
In August 2020, the CWA and The Utility Reform Network (TURN) filed
comments with the FCC that raised concerns that Frontier would
split off its more profitable fiber assets, among other items, as
part of its restructuring plan.
About Frontier Communications
Frontier Communications Corporation (NASDAQ: FTR) offers a variety
of services to residential and business customers over its
fiber-optic and copper networks in 29 states, including video,
high-speed internet, advanced voice, and Frontier Secure digital
protection solutions.
Frontier Communications Corporation and 103 related entities sought
Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 20-22476) on
April 14, 2020. Judge Robert D. Drain oversees the cases.
The Debtors tapped Kirkland & Ellis LLP as legal counsel; Evercore
as financial advisor; and FTI Consulting, Inc., as restructuring
advisor. Prime Clerk is the claims agent, maintaining the page
http://www.frontierrestructuring.com/and
https://cases.primeclerk.com/ftr
The U.S. Trustee for Region 2 appointed a committee to represent
unsecured creditors in Debtors' Chapter 11 cases. The committee
tapped Kramer Levin Naftalis & Frankel LLP as its counsel; Alvarez
& Marsal North America, LLC as financial advisor; and UBS
Securities LLC as investment banker.
FRONTIER COMMUNICATIONS: Fitch Gives BB+(EXP) Rating on Sec. Notes
------------------------------------------------------------------
Fitch Ratings has assigned a 'BB+(EXP)'/'RR1' rating to Frontier
Communications Corp.'s proposed $1.8 billion first lien senior
secured exit notes due 2028, and a 'BB+(EXP)'/'RR1' rating to the
proposed offering of $1 billion of second lien senior secured exit
notes due 2029. Net proceeds from the note offerings, together with
the proceeds from an incremental term loan DIP-to-exit facility,
and cash on hand, will be used to repay in full the outstanding
prepetition second lien notes in the amount of $1.6 billion, and
the prepetition first lien term loan B in the amount of $1.7
billion, as well as related interest, fees and expenses.
Frontier's Long-Term Issuer Default Rating (IDR) is 'BB-(EXP)'. The
Rating Outlook is Stable.
Fitch expects to assign the ratings following Frontier's emergence
from bankruptcy in early 2021. The expected ratings will be
reviewed for material changes prior to Fitch assigning final
ratings. Material changes may include changes in the company's
capital structure at emergence, any material deviations from
current assumptions, and Fitch's issuance of updated criteria or
criteria exposure drafts. Expected ratings, similar to any other
rating, can be upgraded, downgraded, placed on Rating Watch or
withdrawn.
KEY RATING DRIVERS
Low Leverage Upon Emergence from Bankruptcy: Frontier's 'BB-(EXP)'
and Stable Outlook is supported by relatively low leverage for the
rating and relatively low leverage compared with other telecom
operators in Fitch's U.S. telecom universe. Fitch expects gross
leverage of 2.8x at YE 2021 and net leverage of 2.4x. Absent
additional rural broadband support, leverage, both gross and net,
could rise to 0.4x to 0.5x.
A much improved FCF position will result from a reduction in
interest expense of more than $1 billion annually. Fitch believes
the company will have the opportunity to increase investments in
key strategic areas, including fiber to the home and greater fiber
investment to support enterprise and wholesale services, including
fiber to the tower. The rating is constrained by the near-term
expected decline in legacy revenues and the need to continue to
take costs out of the business.
Managing Coronavirus Effects: Fitch believes the risk of the
coronavirus pandemic on the operational performance of the telecom
sector is low relative to other sectors. Enterprise revenues have
some pressure with businesses temporarily closed with the effect on
small businesses more pronounced.
This was mitigated by increased use in communication services to
conduct business as travel is down materially and remote working
continues. Stability in consumer revenues is supported by demand
for broadband, not only for work-at-home, but remote learning and
increased consumption of entertainment services, such as video and
gaming.
Capital Allocation: Frontier is expected to emerge from bankruptcy
in early 2021. The current holders of the senior unsecured debt
will become the new owners of the company as a result of the
restructuring support agreement (RSA). The capital allocation
policy remains uncertain while the company is in bankruptcy, with
respect to more aggressive investment plans, and an articulated
capital structure. Fitch believes the company and parties to the
RSA are targeting a net leverage ratio of less than 3.0x based on
the anticipated level of debt at emergence.
Challenging Operating Environment: The rating incorporates a
challenging operating environment for wireline operators. Fitch
expects Frontier's revenue trends remain negative in the next
couple of years on an organic basis. The expiration of CAF II
funding in 2022 will affect the company.
Fitch expects this latter effect to be mitigated by the next
generation of broadband support through the Rural Digital
Opportunity Fund, although Fitch's assumptions exclude potential
funding from this program. The de-emphasis of products, such as
video, will affect revenues but will have a far lower effect on
EBITDA margins, given programming cost offsets.
FCF and Debt: Fitch is estimating FCF will be around $500 million
in 2021, when the company is expected to emerge from bankruptcy.
FCF could decline to around $250 million to $300 million in 2022
upon the expiration of CAF II funding. The effect on FCF due to the
expiration of CAF II funding could be mitigated by additional
broadband funding support. Following the emergence from bankruptcy,
Frontier will have a much more tenable capital structure.
Asset Sales: Frontier sold operations in Washington, Oregon, Idaho
and Montana, the Northwest operations, to WaveDivision Capital, LLC
for $1.35 billion in cash, subject to closing adjustments. This
cash, combined with existing cash, will be used to settle claims in
bankruptcy. Fitch estimated the transaction multiple was
approximately 5.3x based on 2019 estimated EBITDA. Fitch-calculated
EBITDA is before restructuring, other charges and a goodwill
impairment for operations.
Secured Debt Notching: Frontier parent secured debt is notched up
two levels from the Long-Term IDR. The secured debt benefits from
certain guarantees and equity pledges. The first mortgage bonds of
Frontier Southwest are also notched up two levels from the IDR,
given the security provided by a first lien on substantially all of
its assets. For rated entities with IDRs of 'BB-' or above, Fitch
does not perform a bespoke analysis of recovery upon default for
each issuance. Instead, Fitch uses notching guidance whereby an
issuer's secured debt can be notched upward zero to two rating
levels.
Unsecured Debt Notching: For corporate entities rated 'BB-' and
above, the rating assigned to an issuer's senior unsecured debt
instrument assumes an average recovery available for these
creditors in the event of bankruptcy. When average recovery
prospects are present, IDRs and unsecured debt instrument ratings
are equal, with no notching.
For subsidiary unsecured debt, Fitch notes the structural seniority
to Frontier parent debt, and the rating is notched up one level to
'BB(EXP)'/'RR2'. At any rating level where the bespoke approach is
not used, analysts can denote contractual or structural
subordination that is detrimental to the unsecured debt by rating
it lower than the IDR. A bespoke style analysis determining
below-average recoveries could lead to a rating lower than the IDR.
The 'B+(EXP)'/'RR5' rating assigned to Frontier Florida's unsecured
debt reflects that Frontier Florida is a guarantor of Frontier's
secured credit facility.
Parent-Subsidiary Relationship: Fitch linked Frontier's IDRs to its
operating subsidiaries based on strong operational ties.
DERIVATION SUMMARY
Frontier has higher exposure to the more volatile residential
market compared with CenturyLink, Inc. (BB/Stable), a wireline
peer, and to some extent, Windstream Services, LLC. Incumbent
wireline operators within the residential market face wireless
substitution and competition from cable operators, such as Comcast
Corp. (A-/Stable) and Charter Communications Inc. Fitch rates
Charter's indirect subsidiary, CCO Holdings, LLC(BB+/Stable).
Cheaper alternative offerings, such as voice over internet protocol
and over-the-top video services provide additional challenges.
Incumbent wireline operators had modest success with bundling
broadband and satellite video service offerings in response to
these threats. Fitch expects Frontier to emerge from bankruptcy
with lower leverage than higher-rated peers CenturyLink and
Charter.
Frontier needs to improve its competitive position in the
enterprise market. In this market, Frontier is smaller than AT&T
Inc. (A-/Stable), Verizon Communications Inc. (A-/Stable) and
CenturyLink.
All three companies have an advantage with national or
multinational companies, given extensive footprints in the U.S. and
abroad. Frontier has a slightly smaller enterprise business than
wireline peer Windstream. Compared with Frontier, AT&T and Verizon,
have wireless offerings providing more service diversification.
Frontier's gross leverage is expected to be slightly higher than
AT&T and Verizon following emergence from bankruptcy.
KEY ASSUMPTIONS
-- Revenues decline just above 10% in 2020, largely reflecting
the sale of the Pacific Northwest properties on May 1, 2020;
-- Revenue declines at a slightly lower rate in 2021 and 2022,
due to the partial year of the Northwest assets in 2020, and the
loss of CAF II revenues, respectively;
-- EBITDA margin is expected to decline to the high 30% range in
2020 and 2021 from the low 40% range in 2019. The loss of CAF II
funding further lowers EBTIDA margins in 2022. Pressure in 2022
could be partly offset by future rural broadband subsidies;
-- Capital spending reflects company plans of approximately $1.3
billion in 2020. Thereafter, capital intensity ranges from 16% to
18%;
-- Cash taxes are nominal in 2020-2023.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Gross leverage, defined as total debt with equity
credit/operating EBITDA, expected to be sustained at or below 3.0x,
with FFO leverage of 3.0x, while consistently generating positive
FCF margins in the mid-single digits;
-- Greater certainty around capital allocation, given the new
shareholder base upon emergence from bankruptcy;
-- Successful execution on cost reduction plans;
-- Consistent gains in revenues from anticipated investments in
fiber/broadband product areas;
-- Demonstrating stable EBITDA and FCF growth;
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- A weakening of operating results, including deteriorating
EBITDA margins and an inability to stabilize revenue erosion in key
product areas or offset EBITDA pressure through cost reductions.
-- Discretionary management decisions, including but not limited
to, execution of M&A activity that increases gross leverage beyond
4.5x, with FFO leverage of 4.5x, in the absence of a credible
deleveraging plan.
LIQUIDITY AND DEBT STRUCTURE
Frontier has a substantial amount of liquidity at this current
point-in-time with more than$1.7 billion of unrestricted cash. At
emergence, the company expects to have $150 million of unrestricted
cash and an undrawn $625 million credit facility. First-lien debt
is expected to be $3.96 billion, second-lien debt is expected to
total $1 billion, and subsidiary debt is expected to total $856
million. Parent takeback debt is expected to be $750 million, and
whether or not it is secured or unsecured will be determined at
emergence. Fitch expects to provide a final rating on the takeback
debt at that time.
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
Frontier Communications Corporation: Management Strategy: 4
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.
FRONTIER COMMUNICATIONS: Moody's Rates New $1B Secured Notes Caa2
-----------------------------------------------------------------
Moody's Investors Service assigned a Caa2 rating to Frontier
Communications Corporation's (New) (Frontier) proposed $1 billion
second lien debtor-in-possession-to-exit (DIP-to-Exit) secured
notes. Moody's is also assigning a B3 rating to the company's
proposed $1.8 billion first lien DIP-to-Exit secured notes.
Aggregate net proceeds from the second lien DIP-to-Exit secured
notes and first lien DIP-to-Exit secured notes (together, Follow-on
Debt Issuance) plus a previously announced $500 million first lien
DIP-to-Exit term loan add-on (Add-on Term Loan) will be used to
refinance Frontier's existing $1.694 billion prepetition term loan
B and existing $1.6 billion prepetition 8.5% second lien notes due
2026. Concurrent with the issuance of this Follow-on Debt Issuance
and previously announced Add-on Term Loan, Frontier is also
pursuing an amendment to its existing $625 million first lien
DIP-to-Exit revolving credit facility (unrated) that will extend
the existing three-year maturity by one year to four years from the
date of the company's emergence from bankruptcy. The company's
first lien DIP-to-Exit financings are currently comprised of an
existing $500 million first lien DIP-to-Exit term loan (which is
currently expected to be $1 billion pro forma for the Add-on Term
Loan) and $1.15 billion of first lien DIP-to-Exit secured notes.
Moody's ratings only apply to the post-bankruptcy exit portion of
the company's first lien DIP-to-Exit financings (including the
Add-on Term Loan) and Follow-on Debt Issuance. Moody's does not and
has not rated the initial debtor-in-possession portion of
Frontier's first lien DIP-to-Exit financings (including the Add-on
Term Loan) and Follow-on Debt Issuance while the company remains in
bankruptcy.
On August 27, 2020 the US Bankruptcy Court for the Southern
District of New York confirmed Frontier's plan of reorganization.
The company expects to complete its financial restructuring process
and emerge from Chapter 11 bankruptcy protection sometime in early
2021 (Bankruptcy Exit). The Bankruptcy Exit date is uncertain due
to the need to obtain remaining regulatory approvals. Upon
emergence the company will reduce its prepetition senior unsecured
funded debt by approximately $11 billion and annual interest
expense by approximately $1 billion. Prepetition holders of the
company's senior unsecured debt will receive new common stock and
$750 million of takeback debt (unrated). Given the company's
anticipated repayment of its prepetition second lien notes prior to
Bankruptcy Exit, Moody's expects that this takeback debt will be in
the form of junior lien notes. The ratings on the company's first
lien DIP-to-Exit financings (including Add-on Term Loan) and
Follow-on Debt Issuance are not expected to be impacted by the
final form of the takeback debt. Frontier's first lien DIP-to-Exit
financings, pro forma for the Add-on Term Loan and other first lien
DIP-to-Exit secured debt associated with the Follow-on Debt
Issuance, and existing $625 million first lien DIP-to-Exit
revolving credit facility (unrated) are pari passu. An existing
$850 million prepetition revolving credit facility ($749 million
drawn as of June 30, 2020) was fully paid down on September 17,
2020 using a portion of $2.29 billion of existing balance sheet
cash (as of June 30, 2020). Pro forma for the Follow-on Debt
Issuance and the Add-on Term Loan, Frontier's only remaining
outstanding prepetition debt will be $856 million of various
unsecured and secured notes held at the company's operating
subsidiary levels which will be unrated. Initially, the borrower
under the first lien DIP-to-Exit revolving credit facility, first
lien DIP-to-Exit financings (including the Add-on Term Loan) and
Follow-on Debt Issuance will be Frontier Communications Corporation
as debtor in possession. After conversion of the first lien
DIP-to-Exit revolving credit facility, first lien DIP-to-Exit
financings (including the Add-on Term Loan) and Follow-on Debt
Issuance to actual exit financings at Bankruptcy Exit, the borrower
will be a new domestic entity that succeeds to the business and
operations of Frontier Communications Corporation as debtor in
possession pursuant to the plan of reorganization. While the
company has stated in public filings that it intends to remain a
publicly-traded company at Bankruptcy Exit through the public
listing of new common stock issued to unsecured debtholders
pursuant to the plan of reorganization, Moody's notes that no
official decision has yet been made regarding this matter.
Moody's existing ratings are contingent upon Frontier's emergence
from bankruptcy consistent with the terms of the August 27, 2020
confirmation order and are subject to change based on the company's
performance during bankruptcy.
Assignments:
Issuer: Frontier Communications Corporation (NEW)
Senior Secured 1st Lien Notes, Assigned B3 (LGD4)
Senior Secured 2nd Lien Notes, Assigned Caa2 (LGD5)
RATINGS RATIONALE
Frontier's B3 CFR rating reflects the high execution risks
post-bankruptcy of the company's modernization plan across its
operating segments to reverse continuing revenue and EBITDA
declines. Moody's expects revenue and EBITDA contraction will be in
excess of Frontier's rated peers through at least year-end 2022;
this applies even on a pro forma basis that excludes the company's
northwest US operations sold on May 1, 2020. Moody's believes
Frontier's bottoms-up designed modernization plan is likely still
evolving, but now expects stepped-up capital investments through
2028 with capital intensity peaking in 2022. Underscoring the
upfront nature and immensity of its turnaround effort the company
plans almost $7 billion of total capital spending for the five-year
period from 2020 to 2024, a portion of which will target the
conversion of 2.9 million homes out of the 11 million copper homes
currently passed to fiber passings. This substantial effort will
target multiple states across Frontier's footprint for network
upgrades, with a focus on the larger markets in Connecticut,
California, Texas and Florida.
As Frontier has historically endured high new customer churn, a
critical element of the company's success-based investing stage --
the extending of upgraded fiber networks laterally to new customer
homes -- is dependent upon effective customer targeting to better
achieve economic paybacks and longer and higher value customer
relationships. The modernization plan will need to incorporate
significantly improved customer care efficiencies to proactively
reduce churn, enhanced sales force capabilities and productivity
and reduced operational costs, including field costs. Despite a
reduced debt load after its emergence from bankruptcy, Frontier
will continue to operate at a competitive disadvantage versus
cable, fiber overbuilder and wireless competitors in the bulk of
its market footprint until meaningful network upgrades bolster its
value proposition. Evidence of good execution on this metric will
be steady market share expansion followed by sustained revenue and
EBITDA growth. Until then, Frontier's broadband speeds and
competitive value proposition to both consumer and commercial
customers is largely limited by a legacy copper network spanning
almost 80% of 14 million broadband-capable homes passed in its
25-state footprint, which includes 3 million fiber home passings
and 1.2 million fiber broadband subscribers. Frontier also faces
continued steady top line and margin pressures in its commercial
and wholesale business segments, which comprise about 50% of
overall revenue.
Post-bankruptcy operational enhancements include new leadership,
consultant hires, sales force and account management structural
changes and a greater prioritizing of strategic product offerings.
While strengthened financial flexibility post-bankruptcy will
afford Frontier a longer turnaround runway than it had
pre-bankruptcy, strengthening its existing core business will
require deft operational skills in the face of high single-digit
revenue declines accompanied by strong EBITDA pressures through at
least 2022. The company's debt leverage (Moody's adjusted) will
increase from projected lower levels at Bankruptcy Exit of around
3x to nearer 4x by year-end 2022, which only heightens the need for
steady and timely strategic execution success.
Post-bankruptcy, Frontier's financial policy includes a long term,
sustainable net leverage target (company defined) of under 3x, the
prioritization of reinvestment of discretionary cash flow into its
business versus shareholder friendly actions and potential asset
optimizations through non-core dispositions, but such potential
optimizations would not be anticipated until the later years of the
current modernization plan.
The instrument ratings reflect the probability of default of
Frontier, as reflected in the B3-PD probability of default rating,
an average expected family recovery rate of 50% at default, and the
loss given default (LGD) assessment of the debt instruments in the
capital structure based on a priority of claims. The upsized first
lien DIP-to-Exit term loan and first lien DIP-to-Exit secured notes
are rated B3 (LGD4), in line with the B3 CFR, reflecting the
benefits from a first lien pledge of stock of certain subsidiaries
of Frontier which represent approximately 90% of Frontier's total
EBITDA and 80% of Frontier's total assets, and guarantees from a
subset of these subsidiaries (although the guarantor details are
not disclosed). Based on a priority of claim waterfall, Moody's
ranks the first lien DIP-to-Exit revolving credit facility, first
lien DIP-to-Exit term loan and first lien DIP-to-Exit secured notes
behind structurally senior debt issued by various operating
subsidiaries as well as pension and trade payables of subsidiaries.
The first lien DIP-to-Exit revolving credit facility, first lien
DIP-to-Exit term loan and first lien DIP-to-Exit secured notes are
ranked ahead of the Caa2 rated second lien DIP-to-Exit secured
notes and expected takeback debt (unrated) at Bankruptcy Exit.
Moody's views Frontier's liquidity as good. At Bankruptcy Exit
Moody's expects the company to have $150 million in unrestricted
cash and cash equivalents and full borrowing capacity availability
on its $625 million first lien DIP-to-Exit revolving credit
facility. Reduced prepetition interest helps support moderate free
cash flow generation in 2021 but Moody's expects free cash flow to
be around negative $350 million in 2022 due to stepped-up capital
spending and contracting revenue over the next several years. The
company is expected to have high capital spending (Moody's
adjusted) of approximately $1.3 billion in 2021 and $1.7 billion in
2022. Moody's expects the company will need to draw down on a
portion of its revolver by year-end 2022 as a result of its
front-loaded capital spending ambitions. As there is a high level
of uncertainty regarding Frontier's ability to deliver sustained
operational improvements through network investment, any shortfalls
in expectations for future free cash flow generation would limit
financial flexibility and likely impair the company's ability to
maintain its planned pace of network upgrades. Post-bankruptcy,
prepetition unsecured debt holders will have the bulk of economic
and voting control over Frontier's strategic decisions as its
modernization plan is implemented.
The stable outlook reflects Moody's expectations over the next
12-18 months for continuing high single-digit revenue and EBITDA
declines, slightly decreasing EBITDA margins, moderate but slightly
increasing debt/EBITDA (Moody's adjusted) and moderate free cash
flow generation initially. Good liquidity and the company's ability
to smooth out early peaks in planned discretionary capital spending
further supports the stable outlook.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Given the company's current competitive positioning, network
upgrade execution risks and uncertainties regarding share growth
traction across its end markets, upward pressure is limited but
could develop should Frontier's free cash flow to debt (Moody's
adjusted) track towards mid-single-digit levels as a percentage of
Moody's adjusted debt on a sustainable basis.
An upgrade would also require steady market share capture gains
across the company's network footprint in both consumer and
commercial end markets over several years, consolidated revenue and
EBITDA growth and maintenance of a good liquidity profile.
Downward pressure on the rating could arise should the company's
liquidity deteriorate or should execution of its share capture and
growth strategy materially stall or weaken.
The principal methodology used in these ratings was
Telecommunications Service Providers published in January 2017.
Frontier is an Incumbent Local Exchange Carrier (ILEC)
headquartered in Norwalk, CT and the fourth largest wireline
telecommunications company in the US. Frontier generated $6.7
billion of revenue in the last 12 months ended Sept. 30, 2020,
which excludes revenue from northwest operations sold in May 2020.
GARRETT MOTION: Noteholders file 2nd Modified Statement
-------------------------------------------------------
Pursuant to Rule 2019 of the Federal Rules of Bankruptcy Procedure,
the law firm of Ropes & Gray LLP submitted a second supplemental
verified statement to disclose an updated list of Ad Hoc Group of
Secured Noteholders that it is representing in the Chapter 11 cases
of Garrett Motion, Inc., et al.
The Ad Hoc Group of Secured Noteholders by and through their
undersigned counsel, of 5.125% Senior Notes due 2026 issued
pursuant to that certain Indenture, dated as of September 27, 2018,
together with any other agreements or documents executed in
connection therewith, by and among Garrett L X I S.À.R.L. and
Garrett Borrowing LLC, Garrett Motion Inc., the Guarantors party
thereto, Deutsche Trustee Company Limited, as indenture trustee,
Deutsche Bank AG, London Branch, as security agent and paying
agent, and Deutsche Bank Luxembourg S.A., as registrar and transfer
agent.
During September 2020, members of the Ad Hoc Group of Secured
Noteholders retained attorneys with the firm of Ropes & Gray LLP to
represent them as counsel in connection with the outstanding debt
obligations of the above-captioned debtors and debtors in
possession.
On October 5, 2020, Ropes & Gray, on behalf of the Ad Hoc Group of
Secured Noteholders, filed the Verified Statement of the Ad Hoc
Group of Secured Noteholders Pursuant to Bankruptcy Rule 2019 [Dkt.
No. 159]. On October 20, 2020, Ropes & Gray, on behalf of the Ad
Hoc Group of Secured Noteholders, filed the Supplemental Verified
Statement of the Ad Hoc Group of Secured Noteholders Pursuant to
Bankruptcy Rule 2019 [Dkt. No. 250]. On October 21, 2020, Ropes &
Gray, on behalf of the Ad Hoc Group of Secured Noteholders, filed
the Corrected Supplemental Verified Statement of the Ad Hoc Group
of Secured Noteholders Pursuant to Bankruptcy Rule 2019 [Dkt No.
260] that corrected the Supplemental 2019 Statement.
Upon information and belief formed after due inquiry, Ropes & Gray
does not hold any disclosable economic interests in relation to the
Debtors.
As of Nov. 19, 2020, members of the Ad Hoc Group and their
disclosable economic interests are:
AllianceBernstein L.P.
150 4th Avenue N.
Nashville, TN 37219
* Term Loan B Obligations ($): $3,085,413
* Note Obligations (€): 35,121,000
Benefit Street Partners LLC
9 W. 57th Street
Suite 4920
New York, NY 10019
* Note Obligations (€): 8,000,000
* Equity Interests (Shares): 1,339,839
Diameter Capital Partners LP
24 W. 40th Street
5th Floor
New York, NY 10018
* Term Loan B Obligations (€): 32,924,411
* Term Loan B Obligations ($): 24,423,712
* Note Obligations (€): 66,525,000
KSAC Europe Investments S.a.r.l.
1A, rue Thomas Edison
Strassen L-1445
Luxembourg
* Note Obligations (€): 50,655,000
Lord, Abbett & Co LLC
90 Hudson Street
Jersey City, NJ 07302-3973
* Note Obligations (€): 14,100,000
P. Schoenfeld Asset Management LP
1350 Avenue of the Americas
21st Floor
New York, NY 10019
* Term Loan B Obligations ($): 8,500,000
* Note Obligations (€): 20,500,000
Robeco Institutional Asset Management B.V.
P.O. Box 973
3000 AZ
Rotterdam
The Netherlands
* Note Obligations (€): 34,990,000
Ropes & Gray does not represent or purport to represent any other
entities in connection with the Debtors' chapter 11 cases. Ropes &
Gray does not represent the Ad Hoc Group of Secured Noteholders as
a "committee" and does not undertake to represent the interests of,
and is not a fiduciary for, any creditor, party in interest, or
other entity that has not signed a retention agreement with Ropes &
Gray. No member of the Ad Hoc Group of Secured Noteholders
represents or purports to represent any other member or entity in
connection with the Debtors’ Chapter 11 Cases. In addition, each
member of the Ad Hoc Group of Secured Noteholders (a) does not
assume any fiduciary or other duties to any other member of the Ad
Hoc Group of Secured Noteholders and (b) does not purport to act or
speak on behalf of any other member of the Ad Hoc Group of Secured
Noteholders in connection with these Chapter 11 Cases.
Nothing contained in this Second Supplemental 2019 Statement is
intended or shall be construed to constitute: (i) a waiver or
release of the rights of the members of the Ad Hoc Group of Secured
Noteholders to have any final order entered by, or other exercise
of the judicial power of the United States performed by, an Article
III court; (ii) a waiver or release of the rights of the members of
the Ad Hoc Group of Secured Noteholders to have any and all final
orders in any and all non-core matters entered only after de novo
review by a United States District Judge; (iii) consent to the
jurisdiction of the Court over any matter; (iv) an election of
remedies; (v) a waiver or release of any rights the members of the
Ad Hoc Group of Secured Noteholders may have to a jury trial; (vi)
a waiver or release of the right to move to withdraw the reference
with respect to any matter or proceeding that may be commenced in
these chapter 11 cases against or otherwise involving the members
of the Ad Hoc Group of Secured Noteholders; (vii) any affect or
impairment of any claims against the Debtors held by any member of
the Ad Hoc Group of Secured Noteholders, (viii) a limitation upon,
or waiver of, any rights of any member of the Ad Hoc Group of
Secured Noteholders to assert, file, and/or amend any proof of
claim in accordance with applicable law, or (ix) a waiver or
release of any other rights, claims, actions, defenses, setoffs or
recoupments to which the members of the Ad Hoc Group of Secured
Noteholders are or may be entitled, in law or in equity, under any
agreement or otherwise, with all such rights, claims, actions,
defenses, setoffs or recoupments being expressly reserved. This
Second Supplemental 2019 Statement may be amended or supplemented
as necessary in accordance with Bankruptcy Rule 2019.
Counsel to the Ad Hoc Group of Secured Noteholders can be reached
at:
ROPES & GRAY LLP
Mark I. Bane, Esq.
Matthew M. Roose, Esq.
Daniel G. Egan, Esq.
1211 Avenue of the Americas
New York, NY 10036-8704
Telephone: 212.596.9000
Facsimile: 212.596.9090
Email: mark.bane@ropesgray.com
matthew.roose@ropesgray.com
daniel.egan@ropesgray.com
A copy of the Rule 2019 filing, downloaded from PacerMonitor.com,
is available at https://bit.ly/36ZodPw
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 as investment banker; MORGAN STANLEY & CO. LLC as
investment banker; and ALIXPARTNERS LLP as restructuring advisor.
KURTZMAN CARSON CONSULTANTS LLC is the claims agent.
GERALDINE R. ROSINE: Trustee Selling El Sobrante Property for $370K
-------------------------------------------------------------------
Kari Bowyer, the Chapter 11 Trustee of the estate of Geraldine Rose
Rosine, asks the U.S. Bankruptcy Court for the Northern District of
California to authorize the sale of the real property located at
4121 Miflin Avenue, El Sobrante, California to Javier Navarro and
Elvia Cotes Chavez for $370,000, subject to overbid.
The Property is co-owned with The Exemption Trust of the R&G 1993
Family Trust UDT Dated Feb. 1, 1993, which holds a 30% interest in
the Property. The estate holds a 70% interest in the Property
through the Geraldine R. Rosine 2009 Revocable Living Trust UDT
dated Jan. 28, 2009. There is a judgment lien recorded against the
Property by the Mark Thorson Revocable Trust. The Exemption Trust
and the Thorson Trust have entered into an agreement with the
Trustee that allows for the sale of the Property free and clear of
their interests. An order was entered on Jan. 8, 2020 approving
the compromise.
The Property is a residential property. The Trustee's real estate
broker, Andy Buchanan of Intero Real Estate Services – Los Altos,
actively marketed the Property, including advertising and showing
the Property to prospective buyers. Although there was a slighter
higher offer received, due to the contingencies and other concerns
related to the proposed buyer, the Trustee believes that the offer
from the Buyers is the best offer received. Based on the Trustee's
real estate agent's assessment of value and marketing efforts, the
Trustee believes that the proposed sale of the Property is in the
best interest of the estate. The Buyers have removed all
contingencies and the sale is subject to overbid.
The Buyers have agreed to purchase the Property for the total sum
of $370,000, subject to Court approval and overbid, on the terms of
their purchase contract. The Trustee anticipates paying from the
proceeds of sale a real estate commission of 6% of the commission
on the Purchase Price to the Buyers' agent. She also proposes to
pay associated costs of sale, including but not limited to,
pro-rated real property taxes, county transfer taxes, and a natural
hazard zone disclosure report.
The Thorson Trust recorded an abstract of judgment in the amount of
$1,652,582 on Feb. 14, 2018 with the Contra Costa County recorder's
office as document no. 2018-0023584-00. The current amount of the
Thorson Trust lien is approximately $2,051,605. The Trustee and
the Thorson Trust reached an agreement that authorizes the sale of
the Property free and clear of the lien of the Thorson Trust.
As provided in the agreement, the lien is to reattach to the net
proceeds attributable to the Bankruptcy Estate's interest in the
Property until it is paid and the Trustee is to pay 90% of the net
proceeds, i.e. proceeds remaining after payment of costs of sale,
pro rata property taxes, income tax incurred by the estate in
connection with the sale, broker commission, and other related
charges, attributable to the Bankruptcy Estate's interest in the
Property to the Thorson Trust. The Thorson Trust has requested
that the Trustee make further payments on account of its lien after
March 1, 2021 and has agreed to an extension of the time for
interest to accrue on account of its lien to April 1, 2021. The
Trustee asks authority to pay this amount to the Thorson Trustee as
a partial payment of the lien after March 1, 2021.
Donald Carlson and Sharon Carlson are the beneficiaries under a
deed of trust against the Property in the amount of $3,000 recorded
with the Contra Costa County Recorder on June 9, 1976, Book No.
7895, Page 29. The Trustee is informed by the Debtor that there
are no liens against the Property other than the Thorson Trust
lien. Given the date and amount of the lien, it appears that the
lien may have been paid off some time ago and the deed of trust was
not properly removed from title at the time. The Carlsons could be
compelled to accept monetary satisfaction of its lien, since its
right is only to the remaining amount owed under the terms of the
note.
The Exemption Trust holds a 30% interest in the Property. Under
the terms of the compromise noted above, the Exemption Trust has
agreed that the Trustee may sell the Property free and clear of
their co-owner interest and that the Trustee will hold the sale
proceeds attributable to this 30% interest until the closing of the
case or further Court order. The Trustee's accountant in the case
estimates that there may be taxes incurred by the Exemption Trust
in connection with the sale of the Property in an amount up to
$5,000. The Trustee asks authority to forward up to the amount to
the Exemption Trust from the proceeds attributable to the Exemption
Trust's interest in the Property, if requested by the Exemption
Trust, so that the Exemption Trust may pay taxes incurred by it in
connection with the sale.
The Trustee's accountant in the case, estimates that there may be
taxes incurred by the Bankruptcy Estate in connection with the sale
of the Property in an amount up to $11,000. The Trustee asks
authority to pay this amount from the proceeds attributable to the
Bankruptcy Estate's interest in the Property.
There is personal property that will need to be removed prior to
the closing of the sale, and there may be inspection and repair
fees that will need to be paid prior to closing of the sale. The
Trustee asks authority to pay these costs, estimated to not exceed
$10,000, and, in the event these fees are advanced by the Trustee's
real estate agent, the Trustee asks authority to reimburse the
agent.
The Trustee employed Denzil Clements as special counsel to proceed
with the eviction of the tenants at the Property in order to
maximize the sale price. An order was entered on Jan. 9, 2020
authorizing the employment of Denzil Clements as special counsel.
As provided in the application for his employment, Mr. Clements is
to be paid a flat fee of $1,440 for the eviction of one tenant ad
$50 for each additional tenant. The Trustee asks authority to pay
to Mr. Clements the total sum of $950 in connection with the
eviction of the tenants at the Property.
The Trustee will ask that the Court's order allows her to make
minor modifications to the purchase agreement including how title
is to be vested to the Buyers as they may instruct. She will also
ask that the Court's order provides that in the event the Buyers do
not close the sale transaction, she will be authorized to sell the
Property on the same terms and at the same or greater price to an
alternate purchaser without a further order of the Court, unless
the alternate purchaser is an insider, then she would only be
authorized to sell the Property to the alternate purchaser after
further order of the Court after providing 24 hours' notice to the
Debtor's counsel and Office of the U.S. Trustee by an Ex Parte
Application. The Trustee will also retain the right to negotiate
minor changes to the sale agreement, without further Court order.
The Property will be sold on an "as is, where is, with all faults"
basis, free and clear of all liens.
Finally, the Trustee asks the Court that the order approving on the
motion be effective upon entry, and the 14-day stay otherwise
imposed by Bankruptcy Rule 6004(h), and/or any other applicable
rule, will not apply, in order that the transactions described can
be closed prior to the expiration of such 14-day period.
A copy of the Contract is available at https://tinyurl.com/y64wzwqz
from PacerMonitor.com free of charge.
Geraldine Rose Rosine sought Chapter 11 protection (Bankr. N.D.
Cal. Case No. 18-42185) on Sept. 20, 2018. The Debtor tapped Craig
V. Winslow, Esq., at Law Office of Craig V. Winslow as counsel.
Kari Bowyer was appointed as Chapter 11 Trustee on Aug. 29, 2019.
GOGO INC: Expects to Close Business Unit Sale in Early December
---------------------------------------------------------------
Gogo Inc. reported that, based on significant progress in obtaining
required governmental and regulatory approvals related to the
previously announced sale of Gogo's commercial aviation business to
Intelsat Jackson Holdings S.A., including receiving all necessary
approvals by the Federal Communications Commission, Gogo now
expects to close the CA Sale in early December 2020. Closing of
the CA Sale remains subject to the satisfaction of customary
closing conditions set forth in the purchase and sale agreement,
dated as of Aug. 31, 2020, by and between Gogo and Intelsat, and
the receipt of remaining governmental and regulatory approvals.
About Gogo Inc.
Gogo Inc. -- http://www.gogoair.com/-- is an inflight internet
company that provides broadband connectivity products and services
for aviation. It designs and sources innovative network solutions
that connect aircraft to the Internet, and develop software and
platforms that enable customizable solutions for and by its
aviation partners. Gogo's products and services are installed on
thousands of aircraft operated by the leading global commercial
airlines and thousands of private aircraft, including those of the
largest fractional ownership operators. Gogo is headquartered in
Chicago, IL, with additional facilities in Broomfield, CO, and
locations across the globe.
Gogo Inc. reported a net loss of $146 million for the year ended
Dec. 31, 2019, compared to a net loss of $162.03 million for the
year ended Dec. 31, 2018. As of Sept. 30, 2020, the Company had
$984.45 million in total assets, $1.63 billion in total
liabilities, and a total stockholders' deficit of $647.19 million.
* * *
As reported by the TCR on Sept. 4, 2020, Moody's Investors Service
changed Gogo Inc.'s outlook to positive from stable following the
company's announcement that it had agreed to sell its commercial
aviation (CA) business to Intelsat Jackson Holdings S.A.
Concurrently, Moody's affirmed Gogo's Caa1 corporate family
rating.
As reported by the TCR on March 20, 2020, S&P Global Ratings placed
all of its ratings on Gogo Inc., including its 'CCC+' issuer credit
rating, on CreditWatch with negative implications. S&P placed its
ratings on Gogo on CreditWatch with negative implications because
the company does not have sufficient liquidity cushion to absorb a
significant and prolonged cut to global air travel.
HANJIN INTERNATIONAL: Moody's Reviews B3 CFR for Upgrade
--------------------------------------------------------
Moody's Investors Service has placed on review for upgrade the B3
corporate family rating (CFR) of Hanjin International Corporation
(HIC). The outlook has been changed to rating under review from
negative.
The review follows the announcement on Nov. 16, by HIC's parent,
Korean Air Lines Co., Ltd., (KAL), that it will raise around KRW2.5
trillion in new equity in March 2021 and acquire a controlling
stake in Asiana Airlines Co., Ltd. for KRW1.5 trillion in June
2021[1].
"The review for upgrade reflects our expectation that the proposed
acquisition, if completed, will significantly improve KAL's scale
and competitive position. Additionally, KAL's planned equity
raising and increased importance to the Korean economy will
substantially mitigate the risk associated with Asiana's poor
liquidity and financial leverage," says Sean Hwang, a Moody's
Assistant Vice President and Analyst.
"The resultant improvement in KAL's credit quality would in turn
benefit HIC's credit quality, given the likelihood that KAL will
provide financial support to HIC when needed," adds Hwang.
RATINGS RATIONALE / FACTORS THAT COULD LEAD TO AN UPGRADE OR
DOWNGRADE OF THE RATING
HIC's credit quality is closely linked to that of its parent KAL,
given Moody's assessment of a strong likelihood of support from
KAL, which results in a two-notch uplift to HIC's CFR from its
standalone credit quality. This assessment considers KAL's 100%
ownership in HIC, and its provision of parent loans in September
2020 to repay all of HIC's external debt.
KAL's proposed acquisition of Asiana will enhance KAL's scale, with
proforma revenue increasing to KRW19.6 trillion from KRW12.7
trillion based on the two companies' 2019 results, and the size of
its fleet growing to 246 aircraft from 164 as of September 2020.
KAL will become the only full-service carrier and the largest
player by far in Korea's airline industry, with a proforma market
share of 38% for its international passenger business, and a 67%
share for cargo based on 2019 volumes.
Moody's expects the improved scale and competitive position will
improve KAL's profitability through cost synergies and reduced
competition, and result in capital spending savings over the next
3-5 years.
Despite Asiana's high financial leverage (adjusted debt/EBITDA of
around 14x in 2019), the impact of the acquisition on KAL's
leverage will be substantially mitigated by KAL's plan to raise
KRW2.5 trillion in new equity. KAL plans to use the proceeds to
fund the KRW1.5 trillion share acquisition cost and use the
remaining KRW1.0 trillion for its debt repayment in 2021. The
KRW1.5 trillion will also likely be retained by Asiana to repay
maturing debt.
Moody's estimates that KAL will record adjusted debt/EBITDA --
combining Asiana's financials -- of around 8.0x in 2022, assuming a
gradual recovery in passenger demand and gradual reduction in debt
based on the equity raising and asset sales proceeds. This includes
the KRW0.8 trillion that KAL expects to receive by the end of 2020
from the sale of its in-flight meal and duty-free shopping
division.
Given both KAL's and Asiana's large near-term debt maturities, the
combined entity's liquidity sources will be insufficient to cover
its large debt maturities through the end of 2021. However, the
associated risk is substantially mitigated by the high possibility
of further liquidity support from the Korean government and the
continued rollover of its bank borrowings, given the company's
increasing strategic importance to Korea's economy.
With KRW7.0 trillion in revenue in 2019, Asiana is Korea's
second-largest airline company after KAL. Asiana had a fleet of 82
aircraft (70 passenger, 12 cargo) and served diverse routes (74
international passenger, 10 domestic passengers, and 27
international cargo) as of September 2020.
Moody's review will focus on the completion of KAL's proposed
equity issuance, which is currently scheduled for March 2021, as
well as the progress in relation to the proposed acquisition and
the company's plan to address near-term debt maturities at both KAL
and Asiana.
The principal methodology used in this rating was Business and
Consumer Service Industry published in October 2016.
Hanjin International Corp. (HIC) is a wholly-owned subsidiary of
Korean Air Lines Co., Ltd. (KAL) and owns the Wilshire Grand Center
(WGC), a 73-story Class A mixed-use building located in Los Angeles
in the US.
Established in 1962, KAL is a leading airline company based in
Korea. It owns a fleet of 141 passenger aircraft and 23 cargo
aircraft, serving 121 destinations across 43 countries as of
September 2020. KAL is also engaged in the aerospace and catering
businesses, as well as the hotel business in the US through HIC.
HAWAIIAN HOLDINGS: Board Appoints Members to Governance Committee
-----------------------------------------------------------------
The Board of Directors of Hawaiian Holdings, Inc. appointed C.
Jayne Hrdlicka and Michael E. McNamara, who were appointed to the
Board on July 27, 2020, to the Governance and Nominating Committee
of the Board and the Compensation Committee of the Board,
respectively.
About Hawaiian Holdings
Hawaiian Holdings, Inc.'s primary asset is sole ownership of all
issued and outstanding shares of common stock of Hawaiian Airlines,
Inc. The Company is engaged in the scheduled air transportation of
passengers and cargo amongst the Hawaiian Islands (the Neighbor
Island routes) and between the Hawaiian Islands and certain cities
in the United States (the North America routes together with the
Neighbor Island routes, the Domestic routes), and between the
Hawaiian Islands and the South Pacific, Australia, New Zealand and
Asia (the International routes), collectively referred to as its
Scheduled Operations. The Company offers non-stop service to
Hawai'i from more U.S. gateway cities (13) than any other airline,
and also provide approximately 170 daily flights between the
Hawaiian Islands. In addition, the Company operates various
charter flights.
As of Sept. 30, 2020, the Company had $4.09 billion in total
assets, $962.63 million in total current liabilities, $1.03 billion
in total long-term liabilities, $1.38 billion in other liabilities
and deferred credits, and $717.21 million in stockholders' equity.
* * *
As reported by the TCR on July 17, 2020, S&P Global Ratings lowered
all ratings on Hawaiian Holdings Inc., including lowering the
issuer credit rating to 'CCC+' from 'B', and removed them from
CreditWatch, where it placed them with negative implications on
March 13, 2020. S&P expects Hawaiian to generate a significant cash
flow deficit in 2020 because of COVID-19's impact on air
travel.
HUNTSMAN CORP: Egan-Jones Cuts Foreign Curr. Unsec. Rating to BB-
-----------------------------------------------------------------
Egan-Jones Ratings Company, on November 9, 2020, downgraded the
foreign currency senior unsecured rating on debt issued by Huntsman
Corporation to BB- from BB.
Headquartered in Texas, Huntsman Corporation is a global
manufacturer and marketer of differentiated and specialty
chemicals.
HUSKY ENERGY: Egan-Jones Cuts Sr. Unsecured Debt Ratings to B
-------------------------------------------------------------
Egan-Jones Ratings Company, on November 19, 2020, downgraded the
foreign currency and local currency senior unsecured ratings on
debt issued by Husky Energy Inc. to B from B+. EJR also downgraded
the rating on commercial paper issued by the Company to B from A3.
Headquartered in Calgary, Canada Husky Energy Inc. is involved in
the exploration, development, and production of crude oil and
natural gas in Canada and in international areas.
IMAX CORP: Egan-Jones Lowers Senior Unsecured Ratings to BB
-----------------------------------------------------------
Egan-Jones Ratings Company, on November 9, 2020, downgraded the
foreign currency and local currency senior unsecured ratings on
debt issued by IMAX Corporation to BB from BB+.
Headquartered in Mississauga, Canada IMAX Corporation offers
end-to-end cinematic solution combining proprietary software,
theater architecture, and equipment.
IONIS PHARMACEUTICALS: Egan-Jones Hikes Unsec. Debt Ratings to BB+
------------------------------------------------------------------
Egan-Jones Ratings Company, on November 9, 2020, upgraded the
foreign currency and local currency senior unsecured ratings on
debt issued by Ionis Pharmaceuticals Incorporated to BB+ from BB.
Headquartered in Carlsbad, California, Ionis Pharmaceuticals, Inc.
operates as a biotechnology company.
IRI HOLDINGS: S&P Alters Outlook to Stable, Affirms 'B-' ICR
------------------------------------------------------------
S&P Global Ratings revised its outlook on IRI Holdings Inc. to
stable from negative and affirmed its 'B-' issuer credit rating.
S&P said, "The outlook revision reflects our expectation that IRI
will generate FOCF to debt of at least 3% over the next 12 months,
which is our threshold for a stable outlook. We believe this level
of cash flow generation will exceed its debt service obligations,
including its mandatory amortization payments, while the company
outgrows its PIK securities over the next 12 months."
The company continues to benefit from high customer retention
rates, a contracted revenue profile, and good growth amid the
ongoing coronavirus pandemic. While the COVID-19 related shutdowns
negatively affected major retailers and consumer spending, IRI's
clients in several business categories considered essential,
including consumer packaged goods (CPG), saw a material increase in
the demand for their products. This led to elevated demand for the
company's data and analytics services and solutions, which more
than offset the decreases in its other business segments or client
verticals that were adversely affected by the shutdowns. IRI also
leveraged its platform and capabilities to launch new analytics
tools for its clients, which increased its revenue while improving
its operating leverage.
IRI has multiyear contracts across its customer bases in the food,
health care, beauty, and other categories. These contracts provide
it with good revenue visibility because they average 2–5 years in
length and cover approximately two-thirds or more of its total
revenue as of the beginning of each year. Additionally, the company
has high historical customer retention rates of more than 95%.
IRI's industry also has significant barriers to entry given the
capital intensity and required lead time to collect data, which
somewhat protects its market share.
IRI is exposed to the secularly challenged retail and CPG
industries. These industries continue to face secular headwinds,
including store closures in the retail industry and cost
rationalization across both the retail and CPG sectors, including
reduced advertising and marketing spending. S&P expects these
trends to continue following the pandemic and believe they may
pressure IRI's growth rates. Furthermore, physical retail stores
could see increased competition from e-commerce companies after the
pandemic, which has pushed a large percentage of shoppers online.
Additionally, competition from their well-established peers in the
industry could lead to additional pricing pressure, potentially
limiting their revenue growth.
IRI has a significant debt burden, although its strong FOCF
generation has improved its liquidity position.
S&P said, "We expect IRI's adjusted leverage to remain elevated
above 9.0x over the next 12 months due to its significant debt
burden. The company has materially improved its EBITDA margins over
the last 12 months, mainly due to COVID-19 related cost actions but
also through lower one-time outsize start-up costs. We expect
continued revenue expansion, combined with IRI's improved EBITDA
margins, to support its deleveraging going forward."
"We also expect the company to generate FOCF of between $55 million
and $60 million in 2020 and $65 million and $70 million in 2021.
This will be sufficient to comfortably cover its mandatory
amortization payments of about $13 million annually and the growth
of its PIK securities, which will accrue dividends of about $30
million over the next 12 months."
"We treat all of IRI's preferred equity units as debt in our
adjusted leverage calculations."
"The stable outlook reflects our expectation that IRI will generate
FOCF to debt of at least 3%, which we view as sufficient to service
its debt while outgrowing its PIK preferred securities over the
next 12 months. The outlook also reflects our expectation that the
company will continue to organically increase its revenue while
managing its cost structure through lower outsize start-up costs
and improved operating leverage."
"We could lower our issuer credit rating on IRI if it underperforms
our expectations such that its FOCF declines below $50 million on a
sustained basis. Below this amount, it would no longer be
generating sufficient cash flow to service its debt while
outgrowing its PIK, which would lead to an unsustainable capital
structure."
"We could raise our rating on IRI if it improves its FOCF to debt
above 5% while reducing its adjusted leverage below the mid-6.0x
area on a sustained basis. This could occur if the company
maintains its revenue and EBITDA growth in the mid-single digit
percent area annually over the next 24 months without incurring
additional debt."
J. C. PENNEY: Discloses Substantial Doubt on Staying Going Concern
------------------------------------------------------------------
J. C. Penney Company, Inc. filed its quarterly report on Form 10-Q,
disclosing a net loss of $398 million on $1,459 million of total
revenues for the three months ended Aug. 1, 2020, compared to a net
loss of $48 million on $2,619 million of total revenues for the
same period ended August 3, 2019.
At Aug. 1, 2020, the Company had total assets of $8,403 million,
total liabilities of $8,492 million, and $89 million in total
stockholders' deficit.
The Company said, "The risks and uncertainties surrounding the
COVID-19 pandemic and the Chapter 11 Cases, the defaults under our
debt agreements, and our current financial condition, raise
substantial doubt as to the Company's ability to continue as a
going concern. Future plans, including those in connection with
the Chapter 11 Cases, are not yet finalized, fully executed or
approved by the Bankruptcy Court, and therefore cannot be deemed
probable of mitigating this substantial doubt within 12 months of
the date of issuance of these financial statements. As a result of
these risks and uncertainties, the amount and composition of our
assets, liabilities, officers and/or directors could be
significantly different following the outcome of the Chapter 11
Cases, and the description of our operations, properties, liquidity
and capital resources included in this quarterly report may not
accurately reflect our operations, properties, liquidity and
capital resources following the Chapter 11 Cases."
A copy of the Form 10-Q is available at:
https://bit.ly/3lZZrVX
About J.C. Penney Co.
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.
J.C. PENNEY: Cigna Objects to Amended Joint Plan & Disclosures
--------------------------------------------------------------
Cigna Health and Life Insurance Company ("CHLIC"), Cigna Life
Insurance Company of New York ("CLICNY"), and Life Insurance
Company of North America ("LINA," and collectively with CHLIC, and
CLICNY, "Cigna") object to the adequacy of the Disclosure Statement
and confirmation of the Amended Joint Chapter 11 Plan of
Reorganization of J.C. Penney Company, Inc. and Its Debtor
Affiliates.
Cigna asserts that:
* The Plan and Disclosure Statement fail to account for the
Employee Healthcare Claims incurred prior to the Plan Effective
Date in the event that the ASO Agreement is rejected or otherwise
terminated under the Plan.
* The Amended Plan and Disclosure Statement fail to disclose
whether and how Run-Out Claims, employee healthcare claims incurred
prior to any Termination Date, will be funded after the Effective
Date of the Plan.
* The Plan must be amended to provide for, and any order
confirming the Plan must direct, the full satisfaction of Run-Out
Claims Obligations through the end of the Run-Out Period to provide
adequate information relating to Run-Out Claims following any
rejection of the ASO Agreement.
A full-text copy of Cigna's objection dated Nov. 20, 2020, is
available at https://tinyurl.com/y6yoajk8 from PacerMonitor at no
charge.
Counsel for Cigna:
CONNOLLY GALLAGHER LLP
Jeffrey C. Wisler
Kelly M. Conlan
1201 North Market Street, 20th Floor
Wilmington, DE 19801
Telephone: (302) 757-7300
Facsimile: (302) 658-0380
jwisler@connollygallagher.com
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.
J.C. PENNEY: Court Okays Shareholder Suits and Chapter 11 Plan
--------------------------------------------------------------
Law360 reports that retailer J. C. Penney on Tuesday got approval
for its Chapter 11 plan from a Texas bankruptcy judge after equity
committee objections were overcome by an offer by the judge to
allow shareholder suits that he had screened for valid claims.
At the remote hearing, the ad hoc equity holders' committee agreed
to drop its objections to J. C. Penney's proposal to distribute the
proceeds of its $1.75 billion asset sale after U.S. Bankruptcy
Judge David Jones proposed striking shareholder legal releases from
the plan and taking it on himself to sort shareholder suits based
on individual claims from derivative claims.
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.
J.C. PENNEY: First Hartford Accuses Simon of Retailer Monopoly
--------------------------------------------------------------
Law360 reports that a south Texas shopping center owner has
requested a state court's help in preventing landlord Simon
Property Group, which recently acquired J.C. Penney's operating
assets, from using allegedly anti-competitive behavior to restrict
retail locations and close the mall's J. C. Penney store.
First Hartford Realty Corp. , which owns The Shoppes at Rio Grande
Valley LP in Edinburg, Texas, filed an amended complaint Monday,
November 23, 2020, in Hidalgo County District Court that launched
violation of the Texas Free Enterprise and Antitrust Act of 1983
claims against Simon Property based on the landlord's $1.75 billion
Chapter 11 purchase of J.C. Penney.
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.
J.J.W. METAL: Case Summary & 8 Largest Unsecured Creditors
----------------------------------------------------------
Debtor: J.J.W. Metal Corp.
Urb. Los Arboles
502 Street T-12
Palmer, PR 00721
Chapter 11 Petition Date: November 23, 2020
Court: United States Bankruptcy Court
District of Puerto Rico
Case No.: 20-04536
Debtor's Counsel: Charles A. Cuprill, Esq.
CHARLES A. CUPRILL, PSC LAW OFFICES
356 Fortaleza Street (2nd Floor)
San Juan, PR 00901
Tel: 787-977-0515
Fax: 787-977-0518
Email: ccuprill@cuprill.com
Debtor's
Financial
Consultant: LUIS R. CARRASQUILLO & CO., P.S.C.
Total Assets: $1,649,341
Total Liabilities: $1,750,865
The petition was signed by Jorge Rodriguez Quinones, president.
A copy of the petition containing, among other items, a list of the
Debtor's eight unsecured creditors is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/OVCSO3Q/JJW_METAL_CORP__prbke-20-04536__0001.0.pdf?mcid=tGE4TAMA
J2 GLOBAL: Egan-Jones Hikes Sr. Unsecured Debt Ratings to BB
------------------------------------------------------------
Egan-Jones Ratings Company, on November 19, 2020, upgraded the
foreign currency and local currency senior unsecured ratings on
debt issued by J2 Global Incorporated to BB from BB-.
Headquartered in Los Angeles, California, J2 Global, Inc. provides
cloud-based communications and storage messaging services.
JAGUAR HEALTH: Issues 7.4M Shares from From Oct. 7 Through Nov. 19
------------------------------------------------------------------
Jaguar Health, Inc., entered into a privately negotiated exchange
agreement with a holder of one of its outstanding secured
promissory notes which resulted in the aggregate issuance by the
Company of more than 5% of the Company's issued and outstanding
shares of common stock, as last reported in the Company's Quarterly
Report on Form 10-Q filed on Nov. 16, 2020.
From Oct. 7, 2020 through Nov. 19, 2020, the Company issued
7,443,166 shares of Common Stock at an effective price per share
equal to the Minimum Price (as defined under Nasdaq Listing Rule
5635(d)) in the following transactions:
On Nov. 17, 2020, pursuant to an exchange agreement dated Nov. 17,
2020, the Company issued 1,314,974 shares of Common Stock to the
holder of a royalty interest entitling the holder to receive
$500,000 of future royalties on sales of Mytesi (crofelemer) and
certain up-front license fees and milestone payments from licensees
and/or distributors, which Royalty Interest was issued by the
Company pursuant to that certain Securities Purchase Agreement,
dated March 4, 2020, in exchange for the cancellation of such
Royalty Interest.
On Nov. 18, 2020, pursuant to an exchange agreement dated Nov. 18,
2020, the Company issued 3,157,895 shares of Common Stock to a
noteholder in exchange for a $600,000 reduction in the outstanding
balance of the secured promissory note held by such noteholder.
On Nov. 19, 2020, pursuant to an exchange agreement dated Nov. 19,
2020, the Company issued 2,970,297 shares of Common Stock to a
noteholder in exchange for a $600,000 reduction in the outstanding
balance of the secured promissory note held by such noteholder.
The shares of Common Stock that were exchanged for the royalty
interest and portions of the secured promissory note in the
transactions were issued in reliance on the exemption from
registration provided under Section 3(a)(9) of the Securities Act
of 1933, as amended.
About Jaguar Health
Jaguar Health, Inc. -- http://www.jaguar.health-- is a commercial
stage pharmaceuticals company focused on developing novel,
sustainably derived gastrointestinal products on a global basis.
The Company's wholly owned subsidiary, Napo Pharmaceuticals, Inc.,
focuses on developing and commercializing proprietary human
gastrointestinal pharmaceuticals for the global marketplace from
plants used traditionally in rainforest areas. Its Mytesi
(crofelemer) product is approved by the U.S. FDA for the
symptomatic relief of noninfectious diarrhea in adults with
HIV/AIDS on antiretroviral therapy.
Jaguar reported a net loss of $38.54 million for the year ended
Dec. 31, 2019, compared to a net loss of $32.15 million for the
year ended Dec. 31, 2018. As of Sept. 30, 2020, the Company had
$36.23 million in total assets, $28.43 million in total
liabilities, and $7.81 million in total stockholders' equity.
Mayer Hoffman McCann P.C., in San Francisco, California, the
Company's auditor since 2019, issued a "going concern"
qualification in its report dated April 2, 2020 citing that the
Company has experienced losses since inception, significant cash
used in operations, and is dependent on future financing to meet
its obligations and fund its planned operations. These conditions
raise substantial doubt about its ability to continue as a going
concern.
JAMCO SERVICES: Case Summary & 20 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: Jamco Services, LLC
d/b/a Jam Construction
6308 S County Rd 1270
Midland Texas 79706
Business Description: Jamco Services, LLC d/b/a Jam Construction
-- https://www.jamcoservices.com --
is a full-service heavy equipment
construction company. Some of its services
include drilling construction, frac pit
construction, site remediation, oilfield
construction, game fencing, pit lining, and
oilfield construction.
Chapter 11 Petition Date: November 25, 2020
Court: United States Bankruptcy Court
Western District of Texas
Case No.: 20-70142
Debtor's Counsel: James Seth Moore, Esq.
CONDON TOBIN SLADEK THORNTON, PLLC
8080 Park Lane, Suite 700
Dallas, TX 75231
Tel: 214-265-3852
Email: smoore@ctstlaw.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Javier Almodova, president.
A copy of the Debtor's list of 20 largest unsecured creditors is
available for free at PacerMonitor.com at:
https://www.pacermonitor.com/view/LKHWWNI/Jamco_Services_LLC_dba_Jam_Construction__txwbke-20-70142__0004.0.pdf?mcid=tGE4TAMA
A copy of the petition is available for free at PacerMonitor.com
at:
https://www.pacermonitor.com/view/K2CQHBA/Jamco_Services_LLC_dba_Jam_Construction__txwbke-20-70142__0001.0.pdf?mcid=tGE4TAMA
JEFFERY ARAMBEL: Plan Admin's Sale of 2 Properties Dismissed
------------------------------------------------------------
Judge Ronald H. Sargis of the U.S. Bankruptcy Court for the Eastern
District of California dismissed without prejudice the proposed
auction sale by Focus Management Group USA, Inc., the Plan
Administrator in the case of Jeffery Edward Arambel, of the
following real properties and improvements:
a. Lismer Ranch: approximately 400 acres of land (APNs
021-021-004, 021-021-005, 021-021-006, 021-022-001, 021-022-051,
and 021-022-052); and
b. Rogers Ranch: approximately 284 acres of land (APNs
021-024-012, 021-024-011, 021-024-010, 021-024-009, 021-024-008,
and 021-022-047).
The Auction Properties have been extensively exposed to the market.
The Auction Properties are in whole or in part within the City of
Patterson's general plan.
The proposed Auction sale of the Auction Properties is on a
non-contingent "as is, where is," subject to certain environmental
disclosures related to the Property as set forth in the Proposed
Agreement.
The Plan Administrator proposed to sell the Property free and clear
of all claims, liens, encumbrances, and interests.
A hearing on the Motion was held on Nov. 19, 2020 at 10:30 a.m.
Jeffery Edward Arambel sought Chapter 11 protection (Bankr. E.D.
Cal. Case No. 18-90029) on Jan. 17, 2018. The Debtor tapped Reno
F.R. Fernandez, III, Esq., as counsel.
JEFFERY ARAMBEL: Plan Admin's Sale of 3 Properties Dismissed
------------------------------------------------------------
Judge Ronald H. Sargis of the U.S. Bankruptcy Court for the Eastern
District of California dismissed without prejudice the proposed
auction sale by Focus Management Group USA, Inc., the Plan
Administrator in the case of Jeffery Edward Arambel, of the
following real properties and improvements:
a. Begun Ranch: approximately 1,109.41 acres of land (APNs
021-012-024, 021-012-025 APN, 021-012-026, 021-012-02, 021-012-028,
021-012-029, 021-012-033, 021-012-034, and 021-024-013);
b. Murphy Rangeland: approximately 240.54 acres of land (APNs
021-010-025-0001, 021-010-026-000, 021-010-027-000, and
021-010-028-000); and
c. Carlilie Ranch: approximately 160 acres of land (APN
021-007-002-000).
The Auction Properties have been extensively exposed to the market.
The proposed Auction sale of the Auction Properties is on a
non-contingent "as is, where is," subject to certain environmental
disclosures related to the Property as set forth in the Proposed
Agreement.
The Plan Administrator proposed to sell the Property free and clear
of all claims, liens, encumbrances, and interests.
A hearing on the Motion was held on Nov. 19, 2020 at 10:30 a.m.
Jeffery Edward Arambel sought Chapter 11 protection (Bankr. E.D.
Cal. Case No. 18-90029) on Jan. 17, 2018. The Debtor tapped Reno
F.R. Fernandez, III, Esq., as counsel.
K&W CAFETERIAS: Dec. 9 Hearing on Business Sale Agreement
---------------------------------------------------------
Judge Benjamin A. Kahn of the U.S. Bankruptcy Court for the Middle
District of North Carolina has entered an order amending the
Court's Sales Procedures Order that authorized K&W Cafeterias,
Inc.'s bidding procedures in connection with the auction sale of
(i) assets used in its restaurant operations, and (ii) real estate
owned by its affiliates, Allred Investment Co., LLC and DGV, LLC,
that is currently leased to the Debtor for use in its restaurant
operations.
On Oct. 30, 2020, the Court entered its Order Granting Motion to
Sell. In the Order Granting Motion to Sell, the Bidding Procedures
set a hearing date for both the Stalking Horse Agreement and the
Disqualification Hearing as Dec. 10, 2020, at 9:30 a.m. (ET).
The Order Granting Motion to Sell is amended so that the hearing on
both the Stalking Horse Agreement and the Disqualification Hearing
will occur on Dec. 9, 2020 at 9:30 a.m. (ET), to be held virtually
in accordance with the procedures for such hearing set forth in the
Order Establishing Procedures for Telephonic and/or Virtual Hearing
as a Result of the COVID-19 Pandemic, available at the Court's
website: http://www.ncmb.uscourts.gov.
No other dates are affected by the Order.
A copy of the Bidding Procedures is available at
https://tinyurl.com/y2t9x4n5 from PacerMonitor.com free of charge.
About K&W Cafeterias
K&W Cafeterias, Inc., a company based in Winston Salem, N.C., filed
a Chapter 11 petition (Bankr. M.D.N.C. Case No. 20-50674) on Sept.
2, 2020. Judge Benjamin A. Kahn presides over the case. In the
petition signed by Dax C. Allred, president, the Debtor disclosed
$30,085,274 in assets and $22,189,229 in liabilities.
The Debtor has tapped Northen Blue, LLP as its bankruptcy counsel,
and Bell Davis & Pitt P.A. and Constangy Brooks Smith & Prophete
LLP as special counsel.
William Miller, U.S. bankruptcy administrator, appointed a
committee to represent unsecured creditors in Debtor's Chapter 11
case. The committee is represented by Waldrep Wall Babcock &
Bailey PLLC as bankruptcy counsel.
LEGACY EDUCATION: Has $4.7M Net Income for Quarter Ended Sept. 30
-----------------------------------------------------------------
Legacy Education Alliance, Inc., filed its quarterly report on Form
10-Q, disclosing net income of $4,689,000 on $9,181,000 of revenue
for the three months ended Sept. 30, 2020, compared to a net income
of $1,647,000 on $22,055,000 of revenue for the same period in
2019.
At Sept. 30, 2020, the Company had total assets of $9,868,000,
total liabilities of $37,159,000, and $27,291,000 in total
stockholders' deficit.
The Company said, "For the nine months ended September 30, 2020 we
had an accumulated deficit, a working capital deficit and a
negative cash flow from operating activities. These circumstances
raise substantial doubt as to our ability to continue as a going
concern. Our ability to continue as a going concern is dependent
upon our ability to generate profits by expanding current
operations as well as reducing our costs and increasing our
operating margins, and to sustain adequate working capital to
finance our operations. The failure to achieve the necessary
levels of profitability and cash flows would be detrimental to
us."
A copy of the Form 10-Q is available at:
https://bit.ly/3fmiQh8
Legacy Education Alliance, Inc., is a provider of educational
training on the topics of personal finance, entrepreneurship, real
estate and financial markets investing strategies and techniques.
The Company maintains its headquarters in Cape Coral, Florida.
LIBBEY INC: Reports $83.8M Net Loss for Quarter Ended June 30
-------------------------------------------------------------
Libbey Inc. filed its quarterly report on Form 10-Q, disclosing a
net loss of $83,794,000 on $77,827,000 of total revenues for the
three months ended June 30, 2020, compared to a net loss of
$43,767,000 on $206,969,000 of total revenues for the same period
in 2019.
At June 30, 2020, the Company had total assets of $606,677,000,
total liabilities of $779,164,000, and $172,487,000 in total
shareholders' deficit.
The Company said, "The risks and uncertainties surrounding the
Chapter 11 Cases, the events of default under our credit
agreements, and the results of operations due to the spread of the
COVID-19 pandemic impacting the Company's business raise
substantial doubt as to the Company's ability to continue as a
going concern. Our ability to continue as a going concern is
dependent upon, among other things, our ability to become
profitable, maintain profitability and successfully implement our
Chapter 11 plan of reorganization. As the progress of these plans
and transactions is subject to approval of the Bankruptcy Court
and, therefore, not within our control, successful reorganization
and emergence from bankruptcy cannot be considered probable and
such plans do not alleviate substantial doubt about our ability to
continue as a going concern."
A copy of the Form 10-Q is available at:
https://bit.ly/390adaZ
Libbey Inc. manufactures glass tableware products in five countries
and markets them to customers in over 100 countries. The Company
is based in Toledo, Ohio.
About Libbey Inc.
Based in Toledo, Ohio, Libbey Inc. (NYSE American: LBY) is one of
the largest glass tableware manufacturers in the world. Libbey
operates manufacturing plants in the U.S., Mexico, China, Portugal
and the Netherlands. In existence since 1818, Libbey supplies
tabletop products to retail, foodservice and business-to-business
customers in over 100 countries. Libbey's global brand portfolio,
in addition to its namesake brand, includes Libbey Signature,
Master's Reserve, Crisa, Royal Leerdam, World Tableware, Syracuse
China, and Crisal Glass. In 2019, Libbey's net sales totaled
$782.4 million. For more information, visit http://www.libbey.com/
Libbey Glass Inc. and 11 of its affiliates sought Chapter 11
protection (Bankr. D. Del. Lead Case No. 20-11439) on June 1, 2020.
In the petition signed by CEO Michael P. Bauer, Libbey Glass was
estimated to have $100 million to $500 million in assets and $500
million to $1 billion in liabilities as of the bankruptcy filing.
The Hon. Laurie Selber Silverstein is the case judge.
The Debtors tapped Latham & Watkins LLP and Richards, Layton &
Finger, P.A., as counsel; Alvarez & Marsal North America, LLC as
financial advisor; and Lazard Ltd as investment banker. Prime
Clerk LLC is the claims agent, maintaining the page
https://cases.primeclerk.com/libbey
LILIS ENERGY: Reports $74.4-Mil. Net Loss for Sept. 30 Quarter
--------------------------------------------------------------
Lilis Energy, Inc., filed its quarterly report on Form 10-Q,
disclosing a net loss of $74,403,000 on $9,987,000 of total
revenues for the three months ended Sept. 30, 2020, compared to a
net loss of $20,409,000 on $11,597,000 of total revenues for the
same period in 2019.
At Sept. 30, 2020, the Company had total assets of $139,063,000,
total liabilities of $233,945,000, and $354,919,000 in total
stockholders' deficit.
The Company said, "We have experienced losses and working capital
deficiencies, and at times in the past, negative cash flows from
operations. Additionally, our liquidity and operating forecasts
have been negatively impacted by the recent decrease in commodity
prices and resulting temporary shut-in of wells, which has
negatively impacted our ability to comply with debt covenants under
our Revolving Credit Agreement. Commodity price volatility, as
well as concerns about the COVID-19 pandemic, which has
significantly decreased worldwide demand for oil and natural gas.
These factors have restricted our access to liquidity and lead the
company to seek relief through filing our Chapter 11 cases. As a
result, the Company has concluded these matters raise substantial
doubt about the Company's ability to continue as a going concern
for a twelve-month period following the date of issuance of these
consolidated financial statements.
"Fluctuations in oil and natural gas prices have a material impact
on our financial position, results of operations, cash flows and
quantities of oil, natural gas and NGL reserves that may be
economically produced. Historically, oil and natural gas prices
have been volatile, and may be subject to wide fluctuations in the
future. If continued depressed prices persist, the Company will
continue to experience impairment of oil and natural gas
properties, operating losses, negative cash flows from operating
activities, and negative working capital.
"We face uncertainty regarding the adequacy of our liquidity and
capital resources and have extremely limited access to additional
financing. The Interim DIP Order entered by the Bankruptcy Court
on June 29, 2020 approved the DIP Facility on an interim basis,
thereby allowing us to borrow up to US$5.0 million under the DIP
Facility, which we borrowed on June 30, 2020.
"On August 21, 2020, we borrowed the additional US$10.0 million new
money loans under the DIP Facility following receipt of a final
order by the Bankruptcy Court approving the DIP Facility and the
DIP Credit Agreement. In addition to the cash requirement
necessary to fund ongoing operations, we have incurred significant
professional fees and other costs in connection with preparation
for the Chapter 11 Cases and expect that we will continue to incur
significant professional fees, costs and other expenses throughout
our Chapter 11 Cases.
"The Company's operations and its ability to develop and execute
its business plan are subject to a high degree of risk and
uncertainty associated with the Chapter 11 Cases. The outcome of
the Chapter 11 Cases is subject to a high degree of uncertainty and
is dependent upon factors that are outside of the Company's
control, including actions of the Bankruptcy Court and the
Company's creditors. There can be no assurance that the Debtors
will confirm the Plan with the Bankruptcy Court and consummate a
sale of substantially all of their assets pursuant to the Sales
Process or complete an alternative Chapter 11 plan."
A copy of the Form 10-Q is available at:
https://bit.ly/2INChnm
Lilis Energy, Inc., is an independent oil and natural gas company
focused on the acquisition, development, and production of
conventional and unconventional oil and natural gas properties in
the core of the Delaware Basin in Winkler, Loving, and Reeves
Counties, Texas and Lea County, New Mexico. Lilis Energy, Inc.,
was incorporated in 2007 and is headquartered in Houston, Texas.
LSC COMMUNICATIONS: Phoenix Investors Buys Former Plant
-------------------------------------------------------
An affiliate of Phoenix Investors, a national private commercial
real estate firm headquartered in Milwaukee, Wisconsin, announced
its acquisition from LSC Communications Printing Company, Inc.
("LSC") of its former plant in Lynchburg, Virginia.
LSC is an American multinational commercial printing company based
in Chicago, Illinois. The company was established in 2016 as part
of a corporate spin-off from RR Donnelley. Later, LSC agreed to be
sold to Quad Graphics. After the Department of Justice ruled it
would block the proposed purchase of LSC by Quad Graphics, the
companies terminated the merger. Finally, LSC and 21 affiliated
debtors filed Chapter 11 bankruptcy. According to the company's
CFO, Andrew Coxhead, LSC is the largest producer of books in the
United States.
The plant is located at 4201 Murray Place ("Property") and the
first phases were built in 1970. The Property totals approximately
760,000 square feet on 50 acres. The infrastructure of the Property
is robust with 32 loading docks, 62 slots for trailer storage, 523
passenger parking spots, 8 drive-in doors, and two interior rail
spurs with interior loading and 6-railcar capacity, supported by
Norfolk Southern.
"We were pleased to work with LSC as it winds down and sells
certain shuttered former print manufacturing plants across the
United States," said Frank P. Crivello, Chairman and Founder of
Phoenix Investors. "We plan to close on our purchase of LSC's
former plant in Mattoon, Illinois before year end."
"Ultimately, we were attracted to the robust infrastructure offered
by this facility; it is set up well for use by a wide range of
tenants of various sizes for distribution or manufacturing. In
order to make the facility more attractive to prospective tenants,
we plan to make additional improvements to facilitate the occupancy
of tenants over the next year," said David Marks, President & CEO
of Phoenix Investors. "Given the shortage of industrial space in
this region, we will explore build-to-suit projects in 2021 on the
surplus land we acquired."
The transaction was brokered by Daniel R. Knopf and Armando Nuñez,
both Senior Vice Presidents at CBRE, Inc.
About Phoenix Investors
Phoenix Investors is a national commercial real estate firm based
in Milwaukee, WI whose core business is the revitalization of
former manufacturing facilities throughout the United States. This
strategy leads to positively transforming communities and
restarting the economic engine in the communities we serve.
Phoenix's affiliate companies hold interests in industrial, retail,
office, and single tenant net-leased properties in approximately 34
million square feet, spanning 22 states. NREI's most recent survey
ranked Phoenix Investor's as having the 28th largest total
industrial real estate portfolio. Today, Phoenix principally
specializes in the renovation and repositioning of large, former
single tenant industrial facilities throughout the United States
that were previously owned by major corporate clients, REITs, or
financial institutions.
For more information, please visit https://phoenixinvestors.com/
About LSC Communications
LSC Communications, Inc. -- http://www.lsccom.com/-- is a Delaware
corporation established in 2016 with its headquarters located in
Chicago, Illinois. The Company offers a broad range of traditional
and digital print products, print-related services, and office
products. The Company serves the needs of publishers,
merchandisers, and retailers worldwide, with a service offering
that includes e-services, logistics, warehousing and fulfillment
and supply chain management services. The Company prints
magazines, catalogs, directories, books, and some direct mail
products, and manufactures office products, including filing
products, envelopes, note-taking products, binder products, and
forms. The Company has offices, plants, and other facilities in
28
states, as well as operations in Mexico, Canada, and the United
Kingdom.
LSC Communications, Inc., based in Chicago, IL, and its
debtor-affiliates sought Chapter 11 protection (Bankr. S.D.N.Y.
Lead Case No. 20-10950) on April 13, 2020. In its petition, the
Debtor disclosed $1,649,000,000 in assets and $1,721,000,000 in
liabilities. The petition was signed by Andrew B. Coxhead, chief
financial officer.
The Debtors hired SULLIVAN & CROMWELL LLP as counsel; YOUNG CONAWAY
STARGATT & TAYLOR, LLP, as co-counsel; EVERCORE GROUP L.L.C., as
investment banker; LIXPARTNERS LLP as restructuring advisor; PRIME
CLERK LLC as notice, claims and balloting agent.
LUVU BRANDS: Posts $329K Net Income for the Quarter Ended Sept. 30
------------------------------------------------------------------
Luvu Brands, Inc., filed its quarterly report on Form 10-Q,
disclosing a net income of $329,000 on $5,367,000 of net sales for
the three months ended Sept. 30, 2020, compared to a net loss of
$45,000 on $4,094,000 of net sales for the same period in 2019.
At Sept. 30, 2020, the Company had total assets of $5,297,000,
total liabilities of $6,236,000, and $939,000 in total
stockholders' deficit.
The Company said that there is substantial doubt about its ability
to continue as a going concern, citing an accumulated deficit of
approximately $7.8 million and a working capital deficit of
approximately $1.3 million as of September 30, 2020.
The Company further stated, "In view of these matters, realization
of a major portion of the assets in the accompanying consolidated
balance sheet is dependent upon continued operations of the
Company, which in turn is dependent upon the Company's ability to
meet its financing requirements, and the success of its future
operations. Management believes that actions presently being taken
to revise the Company's operating and financial requirements
provide the opportunity for the Company to continue as a going
concern.
"These actions include an ongoing initiative to increase sales,
gross profits and our gross profit margin. To that end, we
evaluated various options for increasing the throughput of our
compressed foam products and during the first quarter of fiscal
2018, we purchased new foam compression equipment for installation
during the second quarter of fiscal 2018. These actions have
yielded higher factory throughput at a lower cost of goods sold.
However, these operational improvements have been more than offset
by rising wages and raw material costs. We also plan to continue
to manage discretionary expense levels to be better aligned with
current and expected revenue levels. We estimate that the
operational and strategic growth plans we have identified over the
next twelve months will, at a minimum, require approximately
$150,000 of funding, of which we estimate will be provided by debt
financing and, to a lesser extent, cash flow from operations as
well as cash on hand.
"The ability of the Company to continue as a going concern is
dependent upon its ability to successfully accomplish the plans and
eventually secure other sources of financing and attain profitable
operations. However, management cannot provide any assurances that
the Company will be successful in accomplishing these plans. The
accompanying financial statements do not include any adjustments
that might be necessary if the Company is unable to continue as a
going concern.
"Although we have three separate brands with diverse channels of
distribution, the continued COVID-19 pandemic may negatively impact
our business operations and the operations of our suppliers and
customers as a result of quarantines, facility closures and travel
and logistics restrictions. There is substantial uncertainty
regarding the duration and degree of COVID-19's continued effects
over time. The extent to which the COVID-19 pandemic impacts our
business going forward will depend on numerous evolving factors we
cannot reliably predict, including the duration and scope of the
pandemic or recurrence thereof, timing of development and
deployment of an effective vaccine, governmental, business and
individuals' actions in response to the pandemic and the impact on
economic activity including the possibility of recession or
financial market instability."
A copy of the Form 10-Q is available at:
https://bit.ly/3nNYVuD
Luvu Brands, Inc., designs, manufactures, and markets various
wellness, lifestyle, and casual seating products worldwide. The
Company was formerly known as Liberator, Inc. and changed its name
to Luvu Brands, Inc. in November 2015. Luvu Brands, Inc. was
founded in 2000 and is headquartered in Atlanta, Georgia.
LUX AMBER: Says Financial Condition Raises Going Concern Doubt
--------------------------------------------------------------
Lux Amber, Corp. filed its quarterly report on Form 10-Q,
disclosing a net loss of $560,609 on $290,260 of revenues for the
three months ended July 31, 2020, compared to a net loss of
$325,303 on $381,503 of revenues for the same period in 2019.
At July 31, 2020, the Company had total assets of $3,716,486, total
liabilities of $2,299,802, and $1,416,684 in total equity.
Lux Amber said, "The Company's financial condition raises
substantial doubt about the Company's ability to continue as a
going concern. The Company has limited cash, its current
liabilities exceed its current assets as of July 31, 2020 and has
incurred reoccurring losses from operations during the three months
ended July 31, 2020. The Company is relying on capital from
investors to meet the majority of its operating expenses."
A copy of the Form 10-Q is available at:
https://bit.ly/3nItIc7
Lux Amber, Corp., designs and markets jewelry products. The Company
offers bracelets, necklaces, beads, chaplets, and pendants. Lux
Amber provides its services in China.
M/I HOMES: Egan-Jones Hikes Senior Unsecured Ratings to BB
----------------------------------------------------------
Egan-Jones Ratings Company, on November 10, 2020, upgraded the
foreign currency and local currency senior unsecured ratings on
debt issued by M/I Homes Incorporated to BB from BB-.
Headquartered in Columbus, Ohio, M/I Homes, Inc. builds
single-family homes.
MAHONING CONSUMER: Case Summary & 20 Largest Unsecured Creditors
----------------------------------------------------------------
Debtor: Mahoning Consumer Discount Company
Mahoning Finance
2418 Wilmington Road
New Castle, PA 16105
Business Description: Established in 1925 in Mahoningtown, PA,
Mahoning Consumer Discount Company --
http://mahoningfinance.com-- provides small
loans to railroaders who lived and worked in
Mahoningtown. Mahoning Finance licensed by
the Pennsylvania Department of Banking.
Chapter 11 Petition Date: November 23, 2020
Court: United States Bankruptcy Court
Western District of Pennsylvania
Case No.: 20-23280
Debtor's Counsel: Robert O. Lampl, Esq.
ROBERT O LAMPL LAW OFFICE
Benedum Trees Building
223 Fourth Avenue, 4th Floor
Pittsburgh, PA 15222
Tel: 412-392-0330
Email: flampl@lampllaw.com
Total Assets: $2,338,067
Total Liabilities: $1,657,918
The petition was signed by Suzanne Rearick, manager.
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/PCX6JJI/Mahoning_Consumer_Discount_Company__pawbke-20-23280__0001.0.pdf?mcid=tGE4TAMA
MALLINCKRODT PLC: Gets Court Permission to Pause the Acthar Gel Sui
-------------------------------------------------------------------
Jeremy Hill of Bloomberg News reports that Mallinckrodt Plc. won
permission from its bankruptcy judge to pause a lawsuit regarding
the drug maker's Acthar gel, over a request from plaintiffs who
wanted to press on with their claims against co-defendants.
U.S. Bankruptcy Judge John Dorsey ruled on Monday, November 23,
2020, that the suit should be paused, like the thousands of other
actions pending against Mallinckrodt, in part because letting it go
forward could jeopardize the drug maker's restructuring plan.
Mallinckrodt had argued that letting the suit proceed may
incentivize other parties that have already signed on to its
restructuring deal.
About Mallinckdrodt PLC
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: Shareholders Seek Appointment of Equity Panel
---------------------------------------------------------------
The ad hoc committee of equity holders of Mallinckrodt plc has
expressed support for the appointment of a committee that will
represent equity holders in the company's Chapter 11 case.
In a motion filed with the U.S. Bankruptcy Court for the District
of Delaware, the ad hoc committee criticized the company's
management, saying it has abandoned equity holders by negotiating a
restructuring support agreement that extinguishes all existing
equity interests but provides for the issuance to the management 10
percent ownership in the restructured company.
"Management's self-interested negotiations will result in a massive
benefit to management at the expense of equity upon whose back the
company was built, without equity holders having a seat at the
table to fight or negotiate for themselves," the ad hoc committee
said in court papers.
The ad hoc committee also questioned the provisions in the
agreement that give the management "overly broad releases and
indemnity."
"It is very likely that no one has investigated whether there may
be valid claims against management, yet management wants those
potential claims released," the ad hoc committee said.
The ad hoc committee is represented by:
Kathleen M. Miller, Esq.
Robert K. Beste, Esq.
Smith Katzenstein & Jenkins LLP
1000 West Street, Suite 1501
P.O. Box 410
Wilmington, DE 19801
Phone: 302-652-8400
Email: kmiller@skjlaw.com
Email: rbeste@skjlaw.com
-- and --
Lawrence P. Eagel, Esq.
Bragar Eagel & Squire, P.C.
810 Seventh Avenue, Suite 620
New York, NY 10019
Phone: 212-308-5858
Fax: 212-214-0506
Email: eagel@bespc.com
-- and --
Brent B. Barriere, Esq.
Tristan Manthey, Esq.
Fishman Haygood, L.L.P.
201 St. Charles Avenue, Suite 4600
New Orleans, LA 70170-4600
Phone: 504-586-5252
Fax: 504-586-5250
Email: tmanthey@fishmanhaygood.com
Email: bbarriere@fishmanhaygood.com
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.comfor
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 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.
MARIMED INC: Reports $1.7-Mil. Net Income for the Sept. 30 Quarter
------------------------------------------------------------------
MariMed Inc. filed its quarterly report on Form 10-Q, disclosing
net income of $1,695,826 on $13,461,504 of total revenues for the
three months ended Sept. 30, 2020, compared to a net loss of
$7,299,662 on $11,223,699 of total revenues for the same period in
2019.
At Sept. 30, 2020, the Company had total assets of $72,450,782,
total liabilities of $57,641,915, and $83,867 in total
stockholders' equity.
The Company said, "In connection with the preparation of its
financial statements for the nine months ended September 30, 2020,
the Company's management evaluated the Company's ability to
continue as a going concern in accordance with ASU 2014-15,
Presentation of Financial Statements–Going Concern (Subtopic
205-40), which requires an assessment of relevant conditions or
events, considered in the aggregate, that are known or reasonably
knowable by management on the issuance dates of the financial
statements which indicate the probable likelihood that the Company
will be unable to meet its obligations as they become due within
one year after the issuance date of the financial statements.
"As part of its evaluation, management assessed known events,
trends, commitments, and uncertainties, which at the time included
the status of the Company's consolidation plan, the continuing
impact of the COVID-19 pandemic on its operations, developments
concerning GenCanna's bankruptcy proceedings, recent cannabis
industry investment activity, price movements of public cannabis
stock, actions and/or results of certain bellwether cannabis
companies, the level of cannabis investor confidence, and changes
to state laws governing recreational (adult-use) and medical
cannabis.
"Management also reviewed certain key liquidity metrics of the
Company as well as other factors in its evaluation, and determined
that there currently exists a substantial doubt that the Company
will be able to continue as a going concern within one year after
the issuance date of these financial statements without additional
funding or the continued profitability growth of its cannabis
operations in Illinois and Massachusetts."
A copy of the Form 10-Q is available at:
https://bit.ly/2UQhPo9
MariMed Inc., a multi-state cannabis operator, is dedicated to
improving the health and wellness of people through the use of
cannabinoids and cannabis products. The Company develops, owns,
and manages seed to sale state-licensed cannabis facilities, which
are models of excellence in horticultural principles, cannabis
cultivation, cannabis-infused products, and dispensary operations.
MariMed has an experienced management team that has produced
consistent growth and success for the Company and its managed
business units. The Company is based in Norwood, Massachusetts.
MATTEL INC: Fitch Upgrades LT IDR to B, Outlook Positive
--------------------------------------------------------
Fitch Ratings has upgraded Mattel, Inc.'s Long-Term Issuer Default
Rating (IDR) to 'B' from 'B-'. The Rating Outlook is positive. All
of Mattel's outstanding debt has also been upgraded by one notch.
The upgrade reflects Mattel's stabilizing operating trajectory,
with EBITDA expected to improve to approximately $625 million in
2020 from the 2017/2018 trough of approximately $270 million,
largely on cost reductions. EBITDA improvement caused FCF to turn
positive in 2019 after four years of outflows; gross debt/EBITDA
improved from the 11x peak in 2017/2018 to 6.4x in 2019, and Fitch
expects further improvement to the mid-4x in 2020. Revenue, which
declined from a $6.5 billion peak in 2013 to $4.5 billion in 2018,
has stabilized in the $4.5 billion range.
The Positive Outlook reflects increasing confidence that the
company has successfully addressed many of its operating
challenges, yielding improvements to Mattel's cash flow and
leverage profile as well as its financial flexibility. An upgrade
would result from evidence that Mattel could sustain its current
operating trajectory, including stable revenue and EBITDA above
$600 million, yielding meaningfully positive FCF and leverage in
the mid-4x.
KEY RATING DRIVERS
EBITDA Stabilizing: Fitch expects EBITDA around $625 million in
2020, up from approximately $460 million in 2019 and the trough
average around $270 million in 2017/2018, albeit well below the
$1.4 billion peak in 2012/2013. EBITDA improvement is the result of
Mattel's structural simplification cost reduction program, with
over $1 billion in expected run-rate savings achieved from its 2017
inception through the end of 2020. Key features of the program
include reducing manufacturing complexity, reducing organizational
headcount and optimizing marketing spend. The company has also
announced a target of moving toward a capital-light operation by
outsourcing key manufacturing functions.
EBITDA improvement of close to $350 million from trough levels has
significantly trailed gross savings due to business reinvestment
and continued top line challenges. Revenue, which had declined
every year following the $6.5 billion peak in 2013, was flat at
$4.5 billion from 2018 to 2019 and is expected to be around $4.5
billion in 2020. Fitch believes market share losses have been due
to historical brand mis-management, exacerbated by the 2017
bankruptcy of Toys 'R' Us and subsequent liquidation of its U.S.
business.
Flat revenue in 2020 is the likely result of a number of competing
forces stemming from the coronavirus pandemic. Mattel's sales at
retail have benefitted from shelter in place activity with families
spending more time playing with toys. The company's 1H revenue,
however, declined approximately 14% to $1.3 billion on supply chain
delays due to the pandemic and reduced orders from temporarily
closed retail customers; Fitch expects other retailers may have
slowed re-reorders as they focused efforts on essential categories
like grocery, health and cleaning supplies. While toy sales at
retail have generally benefitted from the pandemic, leading
toymakers like Mattel have seen declines in sales of toys connected
with theatrical releases, given delays in filming and exhibition
schedules.
Revenue in 2021 could turn positive at around 3% even if consumer
demand decelerates given retailer need to replenish inventory
levels; improved entertainment release schedules could also benefit
Mattel as the year progresses. Assuming the company is successful
in its topline initiatives, revenue growth in 2022 could be in the
2% range. Topline expansion, alongside achievement of the final
stages of Mattel's cost reduction efforts, could drive EBITDA
toward $650 million by 2022. Risks to continued EBITDA growth
include potential investments to drive topline growth and the
potential negative revenue impact over time from reduction to
productive costs.
FCF and Leverage Improving: Mattel's cash flow and leverage
profiles improved alongside EBITDA growth in 2019 and continued
improvement is expected over the next two to three years. Mattel's
FCF turned negative in 2015, troughing at an outflow of
approximately $640 million in 2017. During the 2016-2018 period,
the company issued approximately $750 million of debt (net of
repayments) to support ongoing operations given weak cash trends.
FCF turned positive at $65 million in 2019, largely on EBITDA
growth, but aided by reduced capex and the suspension of Mattel's
dividend of around $500 million per year (approximately $310
million in 2017 due to a mid-year suspension). FCF could improve to
around $150 million in 2020 on continued EBITDA growth, and could
trend in the low-$200 million range beginning in 2021.
Gross leverage has similarly improved alongside EBITDA growth
following the approximately 11x peak in 2017/2018. Leverage in 2019
improved to 6.4x and is expected to decline to the mid-4x beginning
2020. Mattel's stabilizing cash flow and leverage characteristics
improve its financial flexibility while reducing refinancing risk
as the company approaches upcoming maturities including its
asset-based revolver in November 2022 and $250 million of unsecured
notes in March 2023.
Challenged Topline Execution: Mattel's net revenue steadily
declined from a peak of $6.5 billion in 2013 to $4.5 billion in
2018/2019 and is expected to remain at $4.5 billion in 2020. Fitch
believes the company has been unable to effectively evolve its
product portfolio commensurate with changes in children's play
patterns. Children are increasingly digitally-oriented and
marginally less interested in traditional toys. The industry is
also challenged by the phenomenon of children, particularly girls,
outgrowing traditional toys at a younger age, with greater interest
in consumer electronics, beauty, sports and social media. Relative
to Mattel, Hasbro, Inc. (BBB-/Negative) has more successfully
responded to these changes through brand storytelling and creating
digital experiences and revenue streams to support its portfolio's
customer relevance and create additional sales opportunities. Fitch
recognizes that all toy manufacturers were negatively impacted in
2017/2018 by the bankruptcy of Toys 'R' Us and the eventual
liquidation of its U.S. business, but expects some of the company's
market share was captured by other retailers.
Mattel's goal of regaining top-line growth in the medium-term may
prove challenging in the absence of improving performance at
Fisher-Price, Thomas and Friends and American Girl, which
collectively generated approximately $1.4 billion, or 28% of total
gross revenue in 2019, compared with $1.5 billion in 2018 and $1.8
billion in 2017. Through the third quarter of 2020, gross sales for
these brands were down 12% compared with Mattel's overall 3%
decline.
Overall, the company's stabilizing revenue trajectory is
encouraging. However, to be considered for further positive rating
actions Fitch would need to see evidence that the company's recent
cost reduction efforts did not eliminate productive expenses.
Mattel would therefore need to demonstrate sustained
stable-to-growing topline and EBITDA to yield an upgrade from
current rating levels.
Adequate Near-Term Liquidity: As of Sept. 30, 2020, Fitch estimates
Mattel's liquidity totaled approximately $1 billion and consisted
of $452 million of cash and equivalents and an estimated $540
million of availability (defined as borrowing base less outstanding
borrowings and letters of credit) under its $1.6 billion senior
secured revolving credit facilities due November 2022.
Given expectations of positive FCF in the $150 million to low-$200
million range beginning 2020, Fitch expects excess liquidity after
seasonal borrowings and letters of credit to be at least $1
billion. The company's next maturities include its ABL in November
2022 and $250 million of unsecured bonds due March 2023. Under its
covenants, Mattel has the capacity to continue issuing guaranteed
debt to refinance these maturities.
Accounting Restatements: In November 2019, Mattel filed an amended
2018 10K, which corrected certain tax-related entries for 3Q17 and
4Q17; together these corrections had no impact on Mattel's full
year 2017 results or its cash flows. This action followed an
independent investigation, initiated after a whistleblower letter
was sent to management. The company determined there were material
weaknesses in its internal controls over financial reporting. As
remediation, the company replaced its lead audit partner although
PricewaterhouseCoopers LLP remains the company's external audit
firm. The company has also added controls and processes to its
accounting function to reduce the risk of future errors. Finally,
Mattel announced the departure of the company's CFO, which may be
related to the investigation.
As a consequence of Mattel's accounting errors, Fitch has assigned
the company's ESG score for Financial Transparency of '4' as
Mattel's credit profile could be affected by continued concerns
regarding the company's accounting function, though Fitch
recognizes the company's steps taken to reduce future risk. In
December 2019, the company received a subpoena from the SEC
requesting documentation and information regarding the issue, and
per the company's 2019 10K (filed Feb. 25, 2020) is responding to
the SEC's request.
DERIVATION SUMMARY
Mattel's upgrade to 'B' from 'B-' reflects its stabilizing
operating trajectory, with EBITDA expected to improve to
approximately $625 million in 2020 from the 2017/2018 trough of
approximately $270 million, largely on cost reductions. EBITDA
improvement caused FCF to turn positive in 2019 after four years of
outflows; gross debt/EBITDA improved from the 11x peak in 2017/2018
to 6.4x in 2019 and is expected to be in the mid-4x range expected
in 2020. Revenue, which declined from a $6.5 billion peak in 2013
to $4.5 billion in 2018, has stabilized in the $4.5 billion range.
The Positive Outlook reflects increasing confidence that the
company has successfully addressed many of its operating
challenges, yielding improvements to Mattel's cash flow and
leverage profile as well as its financial flexibility. An upgrade
would result from evidence that Mattel could sustain its current
operating trajectory, including stable revenue and EBITDA above
$600 million, yielding positive FCF and leverage in the mid-4x.
Mattel is one of the largest companies in the approximately $90
billion global toy industry, generating revenue of $4.5 billion in
2018, similar to other leading players including Hasbro Inc.
(BBB-/Negative), The Lego Group, and Bandai Namco Holdings, which
generate annual revenue of $4.6 billion-$5.5 billion.
Hasbro's (BBB-/Negative) operating results have been significantly
less volatile than Mattel's; with revenue increasing at a five-year
CAGR of 2.0% through 2019 compared with a 5.6% decline at Mattel in
the same period. Hasbro's revenue growth is attributed to its
successful focus on brand extensions and product innovation, and
entertainment licensing wins, such as its takeover of the Disney
princess license from Mattel beginning in 2016. Hasbro's 'BBB-'
ratings reflect the company's elevated leverage profile following
the acquisition of Entertainment One Ltd. (eOne) for $4 billion
plus transaction expenses. The Negative Outlook reflects concerns
that gross debt/EBITDA could be sustained above 3.5x, and therefore
ratings could be stabilized with greater confidence that a
combination of good organic growth, synergy achievement and debt
reduction yield gross debt/EBITDA below 3.5x.
KEY ASSUMPTIONS
Fitch's Key Assumptions Within the Rating Case for the Issuer
-- Revenue in 2020 is expected to be around $4.5 billion, similar
to 2018/2019 levels, given a number of competing external factors
related to the coronavirus pandemic. This would imply modestly
positive 4Q revenue growth. Revenue beginning 2021 is expected to
expand in the 2% to 3% range annually, assuming continued growth in
Barbie, Hot Wheels and licensed entertainment brands with weaker
results at the Fisher-Price, Thomas and Friends and American Girl
brands.
-- EBITDA is forecast to increase to around $625 million in 2020,
well above the approximately $460 million in 2019 and the
approximately $270 million trough in 2017/2018 largely due to
Mattel's structural simplification cost savings, partially offset
by inflation pressures and topline reinvestments. EBITDA beginning
2021 could grow modestly, in line with topline expansion, as the
company concludes its cost reduction program.
-- FCF is expected to be around $150 million in 2020, above the
$65 million recorded in 2019 and the four years of negative cash
flow which preceded 2019. FCF is expected to trend in the low-$200
million range beginning 2021 on modest EBITDA growth and reduced
cash restructuring charges. Fitch's FCF projection assumes
dividends, which were last paid in 2017, continue to be suspended
over the medium term. Working capital is assumed to be neutral in
Fitch's forecasts although they could positively or negatively
affect reported FCF. FCF could be used to support new growth
initiatives, resume the company's share buyback program or repay
upcoming debt maturities.
-- Gross leverage (total debt/operating EBITDA) is forecast to
decline to the mid-4x range in 2020 compared with 6.6x in 2019.
Gross leverage could remain in the mid-4x range beginning 2021
given Fitch's EBITDA projections and flat debt levels. Mattel's
next maturities include its $1.6 billion ABL due November 2022 and
$250 million of unsecured notes due March 2023. Fitch assumes the
2023 maturity will be refinanced although Mattel could choose
internally generated cash to repay these notes.
-- If achieved, the projections, including stable revenue and
EBITDA near 2020 levels, could support an upgrade from Mattel's
current 'B' rating.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- A positive rating action could result if Mattel sustains
revenue and EBITDA close to expected 2020 levels of $4.5 billion
and approximately $625 million, respectively. These levels would
yield gross leverage (gross debt/EBITDA) in the mid-4x range and
FCF above $200 million annually.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Resumption of negative topline trends or EBITDA declining
below $500 million, yielding gross debt/EBITDA approaching mid-6x
would reduce Fitch's confidence in Mattel's longer-term operating
trajectory;
-- Fitch could stabilize Mattel's outlook if the company's
operating improvements stall, yielding EBITDA toward the low-$500
million range, FCF trending modestly positive, and gross
debt/EBITDA sustaining above 5.0x.
LIQUIDITY AND DEBT STRUCTURE
Adequate Near-Term Liquidity: As of Sept. 30, 2020, Fitch estimates
Mattel's liquidity totaled approximately $1 billion and consisted
of $452 million of cash and equivalents and estimated $540 million
of availability (defined as borrowing base less outstanding
borrowings and letters of credit) under its $1.6 billion senior
secured revolving credit facilities due November 2022.
The $1.6 billion credit facilities consist of a $1.31 billion
asset-based lending facility, with availability subject to a
borrowing base, and a fully funded $294.0 million facility. The
$1.31 billion facility is secured by the inventory and accounts
receivable of its large subsidiaries in developed markets while the
$294 million facility is secured by certain U.S. fixed assets and
intellectual property of the U.S. borrowers and certain equity
interests in various subsidiaries of Mattel. The net book value of
the accounts receivable and inventory currently pledged as
collateral under the $1.31 billion facility was approximately $800
million per Mattel's 2019 10-K, which equates to approximately 60%
of total working capital assets (total A/R of $937 million and
inventory of $496 million) as of Dec. 31, 2019. Fitch consequently
assumes 60% of Mattel's total inventory and receivables on an
ongoing basis serve as collateral for the $1.31 billion facility
and then applies a 30% haircut to calculate NOLV and an 85% advance
rate against the NOLV to derive the quarterly borrowing base. Fitch
assumes the $294 million fixed asset and IP facility is well
collateralized and fully available at all times.
Given expectations of positive FCF of at least $150 million
annually beginning 2020, Fitch expects excess liquidity after
seasonal borrowings and letters of credit to at least meet the
current projected $1 billion level.
The company's next maturities include its ABL in November 2022 and
$250 million of unsecured bonds due March 2023. Under its
covenants, Mattel currently has the capacity to continue issuing
guaranteed debt to refinance these maturities.
Recovery Considerations:
Fitch has assigned Recovery Ratings (RRs) to the various debt
tranches based on a bespoke analysis in accordance with its
criteria.
Given operational seasonality, Fitch's recovery analysis is based
on the firm's average recovery prospects over the course of a year.
Fitch's recovery analysis is based on an average liquidation value
(based upon quarter-end projected collateral values) of $3.2
billion, which exceeds the estimated going-concern value of
approximately $2.1 billion. Fitch assumes 75% of the book value for
receivables and 50% of the book value inventory and net fixed
assets under a net orderly liquidation value. In addition, Fitch
has valued Mattel's intellectual property, including the Barbie,
Fisher-Price, Hot Wheels and Thomas & Friends power brands, at
approximately $2 billion in recovery.
Approximately $2.9 billion of value is available to satisfy claims
in a liquidation scenario after deducting 10% for administrative
claims. As noted, the $1.31 billion facility is secured by the
inventory and accounts receivable of its large subsidiaries in
developed markets which roughly equates to approximately 60% of
total working capital assets based on the 10K disclosures, while
the $294 million facility is secured by certain U.S. fixed assets
and intellectual property of the U.S. borrowers and certain equity
interests in various subsidiaries of Mattel and Fitch assumes this
facility is over collateralized. As a result, Fitch has assigned a
'BB'/'RR1' rating for the senior secured revolving credit
facilities, reflecting outstanding recovery (91%-100%). The
remaining portion of the collateral value is then assigned to the
senior secured guaranteed notes, which are guaranteed by the same
subsidiaries that guarantee the credit facilities. The remaining
unencumbered value is then allocated on a pro rata basis to the
guaranteed (on the residual left after applying the remainder of
the collateral value of the guarantee subsidiaries) and
nonguaranteed notes. This results in ratings of 'BB-'/'RR2' for the
guaranteed unsecured notes, reflecting superior (71%-90%) recovery
and 'B+'/'RR3' for the non-guaranteed unsecured notes, reflecting
good recovery (51%-70%).
Fitch's going-concern valuation is based on a $300 million
going-concern EBITDA, similar to 2018 results as Fitch views
Mattel's recent trough EBITDA as representative of a somewhat
distressed scenario. Fitch applies a 7.0x enterprise value/EBITDA
multiple, at the upper end of the typical 5.0x-7.0x range for
consumer products companies under a distressed scenario given
Mattel's historically strong brand franchises.
SUMMARY OF FINANCIAL ADJUSTMENTS
Historical EBITDA has been adjusted for stock-based compensation,
severance and restructuring expenses, and product recall 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
Mattel, Inc.: Financial Transparency: 4
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.
MDC HOLDINGS: Moody's Upgrades CFR to Ba1, Outlook Stable
---------------------------------------------------------
Moody's Investors Service upgraded the Corporate Family Rating and
senior unsecured notes of M.D.C. Holdings, Inc. to Ba1 from Ba2,
senior unsecured shelf to (P)Ba1 from (P)Ba2 and the Probability of
Default Rating (PDR) to Ba1-PD from Ba2-PD. The company's
speculative grade liquidity rating is unchanged at SGL-2. The
outlook remains stable.
The upgrade considers Moody's expectation of continued improvement
in credit metrics through 2021, including leverage trending to 31%
as a result of increased retained earnings and interest coverage
increasing to 8.3x. The upgrade also recognizes substantial
improvement in operating results over the past three years,
resulting in a strengthening of key credit metrics that Moody's
expects will be maintained.
The stable outlook reflects Moody's expectation that M.D.C. will
grow organically within its existing markets while maintaining a
conservative capital structure.
Upgrades:
Issuer: M.D.C. Holdings, Inc.
Corporate Family Rating, Upgraded to Ba1 from Ba2
Probability of Default Rating, Upgraded to Ba1-PD from Ba2-PD
Senior Unsecured Notes, Upgraded to Ba1 (LGD4) from Ba2 (LGD4)
Senior Unsecured Shelf, Upgraded to (P)Ba1 from (P)Ba2
Outlook Actions:
Issuer: M.D.C. Holdings, Inc.
Outlook, Remains Stable
RATINGS RATIONALE
The Ba1 CFR reflects M.D.C.'s successful asset-lite business model
and build-to-order strategy, which minimizes the company's land and
home impairment risk through cycles. The rating also takes into
account the company's focus on entry-level buyers, which has
demonstrated strong demand over the past several years. Demand for
new single-family housing across all product categories has
increased as a result of the COVID-19 pandemic, with families
seeking to relocate to suburban areas with more personal space as
they spend more time at home. Finally, with a presence across ten
U.S. states, M.D.C. has good geographic diversity with exposure to
high growth markets in the west coast, east coast and mountain
regions of the country. These factors are offset by industry cost
pressures including land, labor and materials that could negatively
impact gross margin as well as the cyclical nature of the
homebuilding industry that could lead to protracted revenue
declines.
Despite Moody's expectations of negative free cash flow over the
next 12 to 18 months as a result of increased land investment to
support growth, Moody's expects M.D.C. to maintain good liquidity
over the same time period. In addition to over $500 million of
unrestricted cash at September 30, 2020, the company had $965
million availability on its $1 billion senior unsecured revolver
and is expected to maintain ample cushion on its maintenance
covenants.
M.D.C.'s governance risk is low and reflects the maintenance of a
conservative financial policy, with no joint ventures or
off-balance sheet recourse obligations, as well as low financial
leverage.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if M.D.C. demonstrates maintenance of
strong credit metrics, including homebuilding debt to book
capitalization below 35% and EBIT interest coverage in the high
single digits on a sustained basis. An upgrade would also require
maintenance of a very good liquidity profile, including strong free
cash flow generation. Finally, an upgrade would require a
meaningful increase in size and scale while maintaining its
conservative financial policy and demonstrating a commitment to
attaining and maintaining an investment-grade rating, both to
Moody's and to the debt capital markets. The ratings could be
downgraded if M.D.C. shifts to a more aggressive financial policy
or if operating results decline such that debt leverage approaches
45%, EBIT interest coverage declines below 5x or liquidity
weakens.
The principal methodology used in these ratings was Homebuilding
and Property Development Industry published in January 2018.
Founded in 1972 and headquartered in Denver, CO, M.D.C. Holdings,
Inc. is a mid-sized national homebuilder that builds and sells
primarily single-family detached homes to first time and first-time
move up buyers under the name "Richmond American Homes". The
homebuilding divisions operate across three regions, including the
states of Arizona, California, Nevada, Washington, Oregon,
Colorado, Utah, Virginia, Maryland, and Florida. For the 12-month
period ended September 30, 2020, the company's revenue and net
income were approximately $3.8 billion and $313 million,
respectively.
MEDIACO HOLDING: Posts $3.5-Mil. Net Loss for Sept. 30 Quarter
--------------------------------------------------------------
MediaCo Holding Inc. filed its quarterly report on Form 10-Q,
disclosing a net loss of $3,528,000 on $9,360,000 of net revenues
for the three months ended Sept. 30, 2020, compared to a net income
of $1,442,000 on $11,007,000 of net revenues for the same period in
2019.
At Sept. 30, 2020, the Company had total assets of $148,148,000,
total liabilities of $131,068,000, and $6,621,000 in total
deficit.
The Company said that there is substantial doubt about its ability
to continue as a going concern through November 13, 2021.
MediaCo Holding further stated, "The Company has been and continues
to be negatively impacted by COVID-19, which the Company expects to
negatively impact revenues and profitability for an undetermined
period of time. Management has considered these circumstances in
assessing the Company's liquidity over the next year. Liquidity is
a measure of an entity's ability to meet potential cash
requirements, maintain its assets, fund its operations, and meet
the other general cash needs of its business. The Company's
liquidity is impacted by general economic, financial, competitive,
and other factors beyond its control. The Company's liquidity
requirements consist primarily of funds necessary to pay its
expenses, principally debt service and operational expenses, such
as labor costs, and other related expenditures. The Company
generally satisfies its liquidity needs through cash provided by
operations. In addition, the Company has taken steps to enhance
its ability to fund its operational expenses by reducing various
costs and is prepared to take additional steps as necessary.
"The Company has debt service obligations of approximately US$7.7
million due under its Senior Credit Facility from November 13,
2020, the date of issuance of these financial statements, through
November 13, 2021. The Company expects its revenues and
profitability will continue to be adversely impacted by the
COVID-19 pandemic. Because the duration and severity of the impact
is unknown as of the filing of this Form 10-Q, management is unable
to determine with certainty that the Company will be able to meet
its liquidity needs for the next twelve months with cash and cash
equivalents on hand, projected cash flows from operations, and/or
additional borrowings. Under the terms of its Senior Credit
Facility, the amount of debt outstanding thereunder is limited to a
formula based on 60% of the fair value of the Company's FCC
licenses plus a multiple of the Company's Billboard Cash Flow (as
defined in the Senior Credit Facility). Management is also unable
to determine whether the Company will be in compliance with its
debt covenants and the limits of its borrowing base for the next
twelve months. If necessary, management intends to request a
waiver or amendment to its Senior Credit Facility and seek
additional borrowings from Standard General. While the Company has
been successful in obtaining waivers and amendments under its
Senior Credit Facility and has also received additional liquidity
from Standard General in the past, no assurances can be made that
the Company will be successful or receive such liquidity in the
future. Accordingly, there is substantial doubt about our ability
to continue as a going concern through November 13, 2021.
Furthermore, depending on the duration and severity of the impact
the COVID-19 pandemic has on our businesses, we may record
impairments of assets in the future."
A copy of the Form 10-Q is available at:
https://bit.ly/3kNN9OJ
MediaCo Holding Inc. is an Indiana corporation formed in 2019 by
Emmis Communications Corporation to facilitate the sale of a
controlling interest in Emmis' radio stations WQHT-FM and WBLS-FM
to SG Broadcasting LLC, an affiliate of Standard General L.P.
pursuant to an agreement entered into on June 28, 2019. The sale
closed on November 25, 2019.
MENTOR CAPITAL: Needs More Capital to Remain as Going Concern
-------------------------------------------------------------
Mentor Capital, Inc., filed its quarterly report on Form 10-Q,
disclosing a net loss of $389,966 on $1,231,530 of total revenue
for the three months ended Sept. 30, 2020, compared to a net loss
of $339,724 on $1,071,337 of total revenue for the same period in
2019.
At Sept. 30, 2020, the Company had total assets of $4,753,805,
total liabilities of $2,539,494, and $2,214,311 in total
shareholders' equity.
The Company disclosed factors that have raised substantial doubt
about its ability to continue as a going concern.
Mentor Capital said, "The Company has a significant accumulated
deficit of US$10,581,116 as of September 30, 2020. The Company
continues to experience negative cash flows from operations. The
Company's operating results in 2019 were significantly impacted by
G Farma's default on the notes receivable, failure of consideration
related to G Farma's purchase of shares of Common Stock, and loss
of value of the equity interest in G Farma Equity Entities
resulting in full impairment of these investments in the aggregate
amount of US$1,686,653. In addition, in 2019, the Company recorded
a bad debt reserve on the G Farma equipment leases receivable of
US$765,001 and recorded an additional bad debt reserve of US$19,519
in the nine months ended September 30, 2020.
"The Company management believes it is more likely than not that
Electrum will prevail in the legal action, in which the Company has
an interest. However, there is no surety that Electrum will
prevail in its legal action or that we will be able to recover our
funds and our percentage of the Litigation Recovery if Electrum
does prevail.
"The Company will be required to raise additional capital to fund
its operations and will continue to attempt to raise capital
resources from both related and unrelated parties until such time
as the Company is able to generate revenues sufficient to maintain
itself as a viable entity. These factors have raised substantial
doubt about the Company's ability to continue as a going concern.
These financial statements are presented on the basis that we will
continue as a going concern. The going concern concept
contemplates the realization of assets and satisfaction of
liabilities in the normal course of business. The financial
statements do not include any adjustments that might be necessary
if the Company is unable to continue as a going concern. There can
be no assurances that the Company will be able to raise additional
capital or achieve profitability. However, the Company has
approximately 6.2 million warrants outstanding in which the Company
can reset the exercise price substantially below the current market
price. These condensed consolidated financial statements do not
include any adjustments that might result from repricing the
outstanding warrants."
A copy of the Form 10-Q is available at:
https://bit.ly/2Kk5mqD
Headquartered in Plano, Texas, Mentor Capital, Inc., is an
operating, acquisition, and investment business. Subsidiaries in
which the Company has a controlling financial interest are
consolidated. The Company has determined that there are two
segments: (1) the cannabis and medical marijuana segment which
includes the cost basis of membership interests of Electrum, the
contractual interest in the Electrum legal recovery, the notes
receivable from G Farma, the contractual interest in the G Farma
legal recovery, the equity in G Farma Equity Entities, finance
leases to G Farma and finance leases to Pueblo West, the operation
of subsidiaries in the cannabis and medical marijuana sector, and
in 2019, included the fair value of cannabis stock securities
investments, and (2) the Company’s long standing investment in
WCI which works with business park owners, governmental centers,
and apartment complexes to reduce their facility related operating
costs. The Company also has a small investment in General Dynamics
Corp. (NYSE: GD), an aerospace and defense corporation.
METHANEX CORP: Egan-Jones Cuts Sr. Unsecured Ratings to B+
----------------------------------------------------------
Egan-Jones Ratings Company, on November 12, 2020, downgraded the
foreign currency and local currency senior unsecured ratings on
debt issued by Methanex Corporation to B+ from BB-.
Headquartered in Vancouver, Canada Methanex Corporation is a
Canadian company that supplies, distributes and markets methanol
worldwide.
MIND TECHNOLOGY: Says Substantial Going Concern Doubt Exists
------------------------------------------------------------
MIND Technology, Inc., filed its quarterly report on Form 10-Q,
disclosing a net loss of $6,604,000 on $5,086,000 of total revenues
for the three months ended July 31, 2020, compared to a net loss of
$3,137,000 on $6,820,000 of total revenues for the same period in
2019.
At July 31, 2020, the Company had total assets of $43,492,000,
total liabilities of $9,804,000, and $33,688,000 in total equity.
MIND Technology said, "The Company has a history of losses, has had
negative cash from operating activities in the last two years and
may not have access to sources of capital that were available in
prior periods. In addition, the COVID-19 pandemic and the decline
in oil prices during the first six months of fiscal 2021 have
created substantial doubt and could have a material adverse effect
on the Company's business, financial position, results of
operations and liquidity. Accordingly, substantial doubt has
arisen regarding the Company's ability to continue as a going
concern."
A copy of the Form 10-Q is available at:
https://bit.ly/337GQQ5
MIND Technology, Inc., through its wholly owned subsidiary, Seamap
International Holdings Pte, Ltd. ("Seamap"), and its wholly owned
subsidiary, Klein Marine Systems, Inc. ("Klein"), designs,
manufactures and sells a broad range of proprietary products for
the seismic, hydrographic and offshore industries with product
sales and support facilities based in New Hampshire, Singapore,
Malaysia, the United Kingdom and Texas. The Company is based in
The Woodlands, Texas.
MOSES INVESTMENTS: U.S. Trustee Unable to Appoint Committee
-----------------------------------------------------------
The Office of the U.S. Trustee on Nov. 23 disclosed in a court
filing that no official committee of unsecured creditors has been
appointed in the Chapter 11 case of Moses Investments, LLC.
About Moses Investments
Moses Investments, LLC filed a voluntary petition for under Chapter
11 of the Bankruptcy Code (Bankr. W.D. Tex. Case No. 20- 51748) on
Oct. 13, 2020, listing under $1 million in both assets and
liabilities. Judge Craig A. Gargotta oversees the case. The Law
Office of Albert W. Van Cleave III, PLLC serves as the Debtor's
legal counsel.
MUSCLE MAKER: Has $662,000 Net Loss for Quarter Ended Sept. 30
--------------------------------------------------------------
Muscle Maker, Inc. filed its quarterly report on Form 10-Q,
disclosing a net loss of $662,080 on $1,152,545 of total revenues
for the three months ended Sept. 30, 2020, compared to a net loss
of $2,348,829 on $1,113,458 of total revenues for the same period
in 2019.
At Sept. 30, 2020, the Company had total assets of $12,117,088,
total liabilities of $5,066,836, and $7,050,252 in total
stockholders' equity.
The Company said, "As of September 30, 2020, the Company had a cash
balance, a working capital surplus and an accumulated deficit of
US$6,063,811, US$3,062,692, and US$60,750,370, respectively.
During the three and nine months ended September 30, 2020, the
Company incurred a pre-tax net loss of US$662,080 and US$7,655,768,
respectively. These conditions indicate that there is substantial
doubt about the Company's ability to continue as a going concern
for at least one year from the date of the issuance of these
condensed consolidated financial statements.
"Although management believes that the Company has access to
capital resources, there are no commitments in place for new
financing as of the date of the issuance of these condensed
consolidated financial statements and there can be no assurance
that the Company will be able to obtain funds on commercially
acceptable terms, if at all. The Company expects to have ongoing
needs for working capital in order to (a) fund operations; plus (b)
expand operations by opening additional corporate-owned
restaurants. To that end, the Company may be required to raise
additional funds through equity or debt financing. However, there
can be no assurance that the Company will be successful in securing
additional capital. If the Company is unsuccessful, the Company
may need to (a) initiate cost reductions; (b) forego business
development opportunities; (c) seek extensions of time to fund its
liabilities, or (d) seek protection from creditors."
A copy of the Form 10-Q is available at:
https://bit.ly/3fjV7hs
Muscle Maker, Inc., operates under the name Muscle Maker Grill as a
franchisor and owner-operator of Muscle Maker Grill restaurants.
The company is based in Burleson, Texas.
MUSCLEPHARM CORP: Posts $678K Net Income in Third Quarter
---------------------------------------------------------
MusclePharm Corporation filed with the Securities and Exchange
Commission its Quarterly Report on Form 10-Q disclosing net income
of $678,000 on $16.08 million of net revenue for the three months
ended Sept. 30, 2020, compared to a net loss of $5.08 million on
$21.17 million of net revenue for the three months ended Sept. 30,
2019.
For the nine months ended Sept. 30, 2020, the Company reported net
income of $365,000 on $49.31 million of net revenue compared to a
net loss of $15.47 million on $62.25 million of net revenue for the
nine months ended Sept. 30, 2019.
As of Sept. 30, 2020, the Company had $10.22 million in total
assets, 37.48 million in total liabilities, and a total
stockholders' deficit of $27.26 million.
The Company has incurred significant losses and experienced
negative cash flows since inception. As of Sept. 30, 2020, the
Company had cash of $1.1 million, a decline of $0.4 million from
the Dec. 31, 2019 balance of $1.5 million. As of Sept. 30, 2020,
the Company had a working capital deficit of $25.4 million, a
stockholders' deficit of $27.3 million and an accumulated deficit
of $195.5 million resulting from recurring losses from operations.
The Company said that as a result of its history of losses and
financial condition, there is substantial doubt about its ability
to continue as a going concern.
"The ability to continue as a going concern is dependent upon us
generating profits in the future and/or obtaining the necessary
financing to meet our obligations and repay our liabilities arising
from normal business operations when they come due. Management is
evaluating different strategies to obtain financing to fund our
expenses and achieve a level of revenue adequate to support our
current cost structure. Financing strategies may include, but are
not limited to, private placements of capital stock, debt
borrowings, partnerships and/or collaborations," MusclePharm said.
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/Archives/edgar/data/1415684/000149315220022349/form10-q.htm
About MusclePharm
Headquartered in Denver, Colorado, MusclePharm Corporation
(OTCQB:MSLP) -- http://www.musclepharm.com/and
http://www.musclepharmcorp.com/-- develops, manufactures, markets
and distributes branded nutritional supplements. The Company
offers a broad range of performance powders, capsules, tablets and
gels that satisfy the needs of enthusiasts and professionals
alike.
MusclePharm reported a net loss of $18.93 million for the year
ended Dec. 31, 2019, compared to a net loss of $10.76 million for
the year ended Dec. 31, 2018. As of Dec. 31, 2019, the Company had
$14.54 million in total assets, $42.49 million in total
liabilities, and a total stockholders' deficit of $27.95 million.
SingerLewak LLP, in Los Angeles, California, the Company's auditor
since 2019, issued a "going concern" qualification in its report
dated Aug. 24, 2020, citing that the Company has suffered recurring
losses from operations, accumulated deficit and its total
liabilities exceed its total assets. This raises substantial doubt
about the Company's ability to continue as a going concern.
MUSCLEPHARM CORP: SingerLewak LLP Raises Going Concern Doubt
------------------------------------------------------------
On Aug. 25, 2020, MusclePharm Corporation filed with the U.S.
Securities and Exchange Commission its annual report on Form 10-K,
disclosing a net loss of $18,927,000 on $79,667,000 of net revenue
for the year ended Dec. 31, 2019, compared to a net loss of
$10,755,000 on $88,113,000 of net revenue for the year ended in
2018.
The audit report of SingerLewak LLP dated Aug. 24, 2020, states
that the Company has suffered recurring losses from operations,
accumulated deficit and its total liabilities exceed its total
assets. This raises substantial doubt about the Company’s
ability to continue as a going concern.
The Company's balance sheet at Dec. 31, 2019, showed total assets
of $14,540,000, total liabilities of $42,492,000, and a total
stockholders' deficit of $27,952,000.
A copy of the Form 10-K is available at:
https://bit.ly/392taJV
MusclePharm Corporation develops, manufactures, markets and
distributes branded sports nutrition products and nutritional
supplements. The Company is headquartered in Burbank, California.
MYCELL TECHNOLOGIES: Case Summary & 9 Unsecured Creditors
---------------------------------------------------------
Debtor: MyCell Technologies LLC
521 Fifth Avenue
21st Floor
New York, NY 10175
Business Description: MyCell Technologies LLC is an intellectual
property and investment holding company
which specializes in the development of
proprietary liquid formulations of stable,
concentrated omega‐3s for use in food,
beverage, pet, medical and nutritional
products.
Chapter 11 Petition Date: November 25, 2020
Court: United States Bankruptcy Court
Southern District of New York
Case No.: 20-12748
Judge: Hon. James L. Garrity, Jr.
Debtor's Counsel: Eric H. Horn, Esq.
A.Y. STRAUSS LLC
101 Eisenhower Parkway, Suite 412
Roseland, NJ 07068
Tel: 973-287-5006
Fax: 973-226-4104
Email: ehorn@aystrauss.com
Total Assets: $10,637
Total Liabilities: $1,412,021
The petition was signed by Glenn R. Langberg, director.
A copy of the petition containing, among other items, a list of the
Debtor's nine unsecured creditors is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/H3XDHMI/MyCell_Technologies_LLC__nysbke-20-12748__0001.0.pdf?mcid=tGE4TAMA
NANO MAGIC: Incurs $110,610 Net Loss in Third Quarter
-----------------------------------------------------
Nano Magic Inc. filed with the Securities and Exchange Commission
its Quarterly Report on Form 10-Q disclosing a net loss of $110,610
on $1.10 million of total revenues for the three months ended Sept.
30, 2020, compared to a net loss of $265,580 on $505,343 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 $770,703 on $2.70 million of total revenues compared to
a net loss of $728,076 on $1.88 million of total revenues for the
nine months ended Sept. 30, 2019.
As of Sept. 30, 2020, the Company had $4.26 million in total
assets, $2.95 million in total liabilities, and $1.31 million in
total stockholders' equity.
The Company had losses from operations and net cash used by
operations of $1,031,083 and $878,668, respectively, for the year
ended Dec. 31, 2019. Furthermore, at Sept. 30, 2020, the Company
had an accumulated deficit of $8,460,248. The Company said these
factors raise substantial doubt about its ability to continue as a
going concern within one year after the date that the financial
statements are issued.
"Management cannot provide assurance that the Company will
ultimately achieve profitable operations or become cash flow
positive, or raise additional debt and/or equity capital. During
2018 management took measures to reduce operating expenses. During
2019 and the first three quarters of 2020, management closely
monitored costs. In addition, the Company raised equity capital in
2018, 2019 and 2020," the Company stated.
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/Archives/edgar/data/891417/000149315220022090/form10-q.htm
About Nano Magic
Headquartered in Bloomfield Hills, Michigan, Nano Magic --
http://www.nanomagic.com-- develops, commercializes and markets
consumer and industrial products powered by nanotechnology that
solve everyday problems for customers in the optical,
transportation, military, sports and safety industries. Its primary
business is the formulation, marketing and sale of products powered
by nanotechnology including the ULTRA CLARITY brand eyeglass
cleaner, its defogging products and nano-coating products for glass
and ceramics.
NANOVIBRONIX INC: Has $922,000 Net Loss for Quarter Ended Sept. 30
------------------------------------------------------------------
NanoVibronix, Inc. filed its quarterly report on Form 10-Q,
disclosing a net loss of $922,000 on $150,000 of revenues for the
three months ended Sept. 30, 2020, compared to a net loss of
$815,000 on $101,000 of revenues for the same period in 2019.
At Sept. 30, 2020, the Company had total assets of $4,102,000,
total liabilities of $835,000, and $3,267,000 in total
stockholders' equity.
NanoVibronix said, "The Company's ability to continue to operate is
dependent mainly on its ability to successfully market and sell its
products and the receipt of additional financing until
profitability is achieved. The Company currently incurs and
historically has incurred losses from operations and expects to do
so in the foreseeable future. In 2020, the Company raised US$4,223
thousands of net proceeds from the sale of common stock in
underwritten public offerings, received US$200 thousands through
the issuance of notes payable from a related party and received
US$42 thousands from the Paycheck Protection Program. Despite the
recent financing, the Company may not have sufficient resources to
fund its operations for the next twelve months from the date of
this filing. These conditions raise substantial doubt about the
Company's ability to continue as a going concern. During the next
twelve months management expects that the Company may need to raise
additional capital to finance its losses and negative cash flows
from operations and may continue to be dependent on additional
capital raising as long as its products do not reach commercial
profitability.
"Management's plans include the continued commercialization of the
Company's products and raising capital through the sale of
additional equity securities, debt or capital inflows from
strategic partnerships. There are no assurances, however, that the
Company will be successful in obtaining the level of financing
needed for its operations. If the Company is unsuccessful in
commercializing its products and raising capital, it will need to
reduce activities, curtail or cease operations. The financial
statements do not include any adjustments with respect to the
carrying amounts of assets and liabilities and their classification
that might be necessary should the Company be unable to continue as
a going concern."
A copy of the Form 10-Q is available at:
https://bit.ly/35V4tgO
NanoVibronix, Inc., through its subsidiary, NanoVibronix Ltd.,
focuses on the manufacture and sale of noninvasive biological
response-activating devices that target biofilm prevention, wound
healing, and pain therapy. Its principal products include
UroShield, an ultrasound-based product to prevent bacterial
colonization and biofilm in urinary catheters, enhance antibiotic
efficacy, and decrease pain and discomfort associated with urinary
catheter use; PainShield, a patch-based therapeutic ultrasound
technology to treat pain, muscle spasm, and joint contractures; and
WoundShield, a patch-based therapeutic ultrasound device, which
facilitates tissue regeneration and wound healing. The company
sells its products in the United States, Israel, Europe, India, and
internationally through distributor agreements. NanoVibronix was
founded in 2003 and is based in Elmsford, New York.
NEWMARK GROUP: S&P Alters Outlook to Negative, Affirms 'BB+' ICR
----------------------------------------------------------------
S&P Global Ratings revised its outlook on Newmark Group Inc. to
negative from stable. At the same time, S&P affirmed its 'BB+'
issuer credit and unsecured debt ratings on Newmark. The recovery
rating on the debt remains '3', reflecting its expectation of
meaningful recovery (50%-70%; rounded estimate 65%) in the event of
default.
S&P said, "The outlook revision reflects our view that company
could maintain leverage above 2.0x into 2021, our previously cited
metric for a downgrade, if EBITDA does not recover materially and
the company does not significantly reduce debt. On a 12-month
basis, debt to EBITDA was above 2.0x at the end of the second
quarter before decreasing to below 2.0x at the end of the third
quarter. Lower leverage in the third quarter was due to a decrease
in debt from the redemption of a portion of its exchangeable
preferred units (EPUs)."
"The y/y decline in EBITDA was mitigated by the company's NASDAQ
earn-out during the third quarter, which we include in our
calculation of EBITDA. Increase in leverage during the year has
largely been a result of lower EBITDA, and we expect EBITDA for
2020 to decrease over 20% from 2019 levels due to declines in
leasing and capital markets fee revenues."
Through Sept. 30, 2020, Newmark reported a 38% decline in leasing
fee revenues and a 30% decline in capital markets fee revenues. The
capital markets and leasing segments generated just over 60% of
total revenues for 2019--higher than other rated peers. S&P
expected the capital markets sector to be the most volatile in
times of stress across the commercial real estate (CRE) services
sector, with potential decreases in capital markets revenues of as
much as 30%-70% in a severe recession scenario. The impact on
capital markets was on the lower end of S&P's expected range, but
leasing was affected much more than S&P expected. This was largely
due to the nature of the stress, which has had a significant toll
on leasing activity as companies wait to react to the potential
long-term consequences of the COVID-19 pandemic.
S&P said, "The negative outlook reflects our expectation that
current macroeconomic trends could lead to leverage sustainably
above 2.0x net debt to adjusted EBITDA over the next 12 months.
Higher leverage could arise from lower-than-expected fee revenues
from leasing and capital markets, or a material debt-funded
acquisition."
"We could lower the rating if we expect leverage to remain
sustainably above 2.0x net debt to adjusted EBITDA over the next 12
months."
"We could revise the outlook to stable if we expect net debt to
adjusted EBTIDA to remain sustainably below 2x."
NN INC: Moody's Upgrades CFR to B3, Outlook Stable
--------------------------------------------------
Moody's Investors Service upgraded the ratings of NN, Inc.,
including the Corporate Family Rating (CFR) to B3 from Caa2, the
Probability of Default Rating to B3-PD from Caa3-PD and the senior
secured rating to B3 from Caa2. The Speculative Grade Liquidity
Rating was upgraded to SGL-3 from SGL-4. The rating outlook is
stable. This rating action concludes the review for upgrade
initiated on August 25, 2020.
The upgrades reflect sharply improved financial flexibility
resulting from the use of $700 million of net proceeds from the
recent sale of the Life Sciences division to pay down debt. The
upgrades also include Moody's expectation that NN's remaining
segments will generate steadily improving margins and free cash
flow through 2021 as favorable key end market drivers resume
following the macroeconomic disruptions in 2020.
RATINGS RATIONALE
The ratings reflect an operating model positioned to benefit from
improving end market trends in autos and aerospace & defense,
enhanced financial flexibility (debt-to-EBITDA expected to be below
3x by year-end 2021) and good overall diversification (end market,
geographic, customer) despite a modest revenue base. Additionally,
NN's mix of highly engineered products creates meaningful barriers
to entry, highlighted by longstanding customer relationships.
The Power Solutions segment is poised to address increasing power
generation and transmission megatrends, providing key parts to
smart meters for smart grid applications. The Mobile Solutions
segment provides fuel-efficient technologies, helping customers
meet emission/CAFE standards and vehicle safety requirements. In
addition to attractive growth opportunities in electric and hybrid
vehicle markets, both segments also generate revenue from aerospace
& defense end markets which are starting to see some positive
developments.
Historically, the company had negative free cash flow (four out of
the past five years) and high leverage resulting from an aggressive
acquisition strategy funded largely with debt and reliance on
cyclical end markets, namely the automotive sector. Even with the
high-growth/high-margin Life Sciences segment, NN was unable to
de-lever. Margin performance has also been uneven but should be
positively impacted by cost reductions taken in the first half of
2020 along with Moody's expectations for strengthening volumes and
increasing content per vehicle going forward.
Moody's took the following rating actions on NN, Inc.:
- Corporate Family Rating, upgraded to B3 from Caa2
- Probability of Default Rating, upgraded to B3-PD from Caa3-PD
- Senior Secured Rating, upgraded to B3 (LGD3) from Caa2 (LGD3)
- Speculative Grade Liquidity Rating, upgraded to SGL-3 from
SGL-4
Rating outlook changed to Stable from Rating Under Review
The B3 rating on the senior secured debt, equivalent to the CFR,
reflects the overwhelming majority of the debt capital structure
and Moody's expectation that future borrowings will likely be
senior secured instruments.
The SGL-3 Speculative Grade Liquidity Rating reflects expectations
for a run-rate cash position of $30 million - $40 million and
breakeven-to-modestly positive free cash flow during 2021. Current
availability under the $60 million revolving credit facility is $45
million and expected to remain in that range until revolving
capacity drops to $50 million in June 2021. With the Life Sciences
sale, the net leverage covenant is now set at 3.5x until the
facility expires in July 2022.
Governance considerations acknowledge the company's willingness to
sell its largest and highest-margin business to strengthen the
balance sheet and alleviate going concern issues. The elimination
of the dividend also demonstrates a commitment to improving the
credit risk profile. The company added three new directors in
late-2019/early-2020 (seven of eight independent) with the chairman
role separate from the CEO position, benefiting controls and
oversight. Accordingly, financial policy contributed to the rating
outcomes.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded with expectations for the EBITA
margin to approach 7%, leading to sustained and meaningfully
positive free cash flow into 2022. Positive organic revenue trends
could also result in upward rating pressure as focus shifts to the
remaining, recently challenged operating segments. Maintenance of a
solid, or even improving, liquidity profile would also be a key
factor for a potential upgrade. The ratings could be downgraded due
to the inability to increase revenues and margins through 2021.
Deteriorating liquidity or EBITA-to-interest remaining below 1x
could also place downward pressure on ratings. A shift to a more
aggressive financial policy, namely large debt-funded acquisitions,
could also lead to negative rating action.
The principal methodology used in these ratings was Manufacturing
Methodology published in March 2020.
NN, Inc. provides fuel-efficient technologies for the general
industrial and automotive end markets through its Mobile Solutions
segment and power management and aerospace applications for the
electrical and aerospace and defense end markets through its Power
Solutions segment. Revenues for the latest twelve months ended
Sept. 30, 2020 were nearly $760 million. With the sale of Life
Sciences, pro forma 2021 revenues are expected to be in the $450
million - $500 million range.
NORBORD INC: Moody's Reviews Ba1 CFR for Upgrade
------------------------------------------------
Moody's Investors Service placed the Ba1 corporate family rating,
Ba1-PD probability of default rating (PDR) and Ba1 senior secured
note rating of Norbord Inc. on review for upgrade. The review
follows the company's announcement that it has signed an agreement
to be acquired by Baa3-rated West Fraser Timber Co. Ltd., the
world's largest lumber producer.
"The review for upgrade was prompted by the possibility that
Norbord's credit profile will improve once it is acquired by West
Fraser, a larger more diversified company," said Ed Sustar, Moody's
Senior Vice President.
On Review for Upgrade:
Issuer: Norbord Inc.
Corporate Family Rating, Placed on Review for Upgrade, currently
Ba1
Probability of Default Rating, Placed on Review for Upgrade,
currently Ba1-PD
Senior Secured Regular Bond/Debenture, Placed on Review for
Upgrade, currently Ba1 (LGD3)
Outlook Actions:
Issuer: Norbord Inc.
Outlook, Changed To Rating Under Review From Stable
RATINGS RATIONALE / FACTORS THAT COULD LEAD TO AN UPGRADE OR
DOWNGRADE OF THE RATINGS
Moody's review will focus on the possible legal and/or implicit
credit support to be provided by West Fraser; the final capital
structure and post-closing credit metrics, taking into
consideration that most of the debt at Norbord will likely be
refinanced by West Fraser; the size, pace and allocations of any
cost synergies that can be realized; and Norbord's ability to
maintain good liquidity.
The transaction is expected to close in the first quarter of 2021
and is subject to shareholder approval and other customary closing
conditions. As part of the transaction, West Fraser has secured
$1.3 billion in committed credit facilities, which may be used to
backstop Norbord's approximately $677 million of debt, which has a
change of control put.
The principal methodology used in these ratings was Paper and
Forest Products Industry published in October 2018.
Headquartered in Toronto, Ontario, Norbord is an international
producer of panel boards. It is the largest producer of oriented
strand board (OSB) in North America and third largest in Europe.
LTM September 2020 sales were almost $2 billion.
Headquartered in Vancouver, British Columbia, West Fraser is the
leading North American producer of lumber and is the largest
plywood producer in Canada. The company also produces pulp and
newsprint in Western Canada. LTM September 2020 sales were about $4
billion.
NTN BUZZTIME: Management Concludes Going Concern Doubt Exists
-------------------------------------------------------------
NTN Buzztime, Inc., filed its quarterly report on Form 10-Q,
disclosing a net loss of $1,481,000 on $1,477,000 of total revenue
for the three months ended Sept. 30, 2020, compared to a net loss
of $351,000 on $4,580,000 of total revenue for the same period in
2019.
At Sept. 30, 2020, the Company had total assets of $5,054,000,
total liabilities of $4,559,000, and $495,000 in total
shareholders' equity.
The Company disclosed that management concluded that there is
substantial doubt regarding the Company's ability to continue as a
going concern through the twelve-month period subsequent to the
issuance date of its financial statements.
The Company said, "During the three and nine months ended September
30, 2020, the Company incurred a net loss of US$1,481,000 and
US$4,722,000, respectively. As of September 30, 2020, the Company
had US$1,710,000 of unrestricted cash, total debt outstanding of
US$3,350,100, which is gross of approximately US$1,000 in
unamortized debt issuance costs, and negative working capital of
US$137,000. The total debt outstanding consists of US$725,000 of
principal outstanding under the Company's term loan with Avidbank,
US$1,625,100 of principal outstanding under the loan the Company
received in April 2020 under the Paycheck Protection Program, and
US$1,000,000 of principal outstanding under the loan the Company
received in connection with entering into the Asset Purchase
Agreement, which, if the closing of the Asset Sale occurs, will be
applied toward the US$2.0 million purchase price eGames.com will
owe the Company at the closing of the Asset Sale.
"In November 2020, the Company was informed that approximately
US$1,093,000 of the US$1,625,100 loan under the Paycheck Protection
Program would be forgiven, leaving a principal balance of
approximately US$532,000. The Company is in discussions with the
affiliate of eGames.com regarding the possibility of borrowing an
additional US$500,000 on approximately December 1, 2020, which, if
received, would also be applied toward the purchase price at the
closing of the Asset Sale. No assurances can be given that the
Company will obtain such US$500,000 loan from such affiliate or
from any other party.
"As a result of the impact of the COVID-19 pandemic on the
Company's business and taking into account its current financial
condition and its existing sources of projected revenue and cash
flows from operations, if the Company is able to borrow an
additional US$500,000 from the affiliate of eGames.com, the Company
believes it will have sufficient cash resources to pay forecasted
cash outlays only through mid-January 2021, but if the Company does
not borrow such amount from the affiliate of eGames.com or any
other party, the Company believes it will have sufficient cash
resources to pay forecasted cash outlays only through mid-December
2020, in each case, assuming Avidbank does not take actions to
foreclose on the Company's assets in the event the Company becomes
out of compliance with its financial covenants, and the Company is
able to continue to successfully manage its working capital deficit
by managing the timing of payments to its vendors and other third
parties.
"Based on the factors described above, management concluded that
there is substantial doubt regarding the Company's ability to
continue as a going concern through the twelve-month period
subsequent to the issuance date of these financial statements. The
Company needs to complete the Merger or the Asset Sale or raise
capital to meet its debt service obligations to Avidbank and fund
its working capital needs. The Company currently has no
arrangements for such capital and no assurances can be given that
it will be able to raise such capital when needed, on acceptable
terms, or at all."
A copy of the Form 10-Q is available at:
https://bit.ly/3fkTxfs
NTN Buzztime, Inc., delivers interactive entertainment and
innovative technology, including performance analytics, to help its
customers acquire, engage and retain its patrons. The Company's
tablets and technology offer engaging solutions to establishments
with guests who experience dwell time, such as in bars,
restaurants, casinos and senior living centers. Casual dining
venues subscribe to the Company's customizable solution to
differentiate themselves via competitive fun by offering guests
trivia, card, sports and arcade games. The Company's platform
creates connections among the players and venues, and amplifies
guests' positive experiences, and its in-venue TV network creates
one of the largest digital out of home advertising audiences in the
United States and Canada. The Company also continues to support its
legacy network product line, which it calls its Classic platform.
OCUGEN INC: Discloses Substantial Doubt on Staying Going Concern
----------------------------------------------------------------
Ocugen, Inc., filed its quarterly report on Form 10-Q, disclosing a
net loss of $10,473,847 on $0 of total revenue for the three months
ended Sept. 30, 2020, compared to a net loss of $22,773,281 on $0
of total revenue for the same period in 2019.
At Sept. 30, 2020, the Company had total assets of $20,539,574,
total liabilities of $6,117,929, and $14,421,645 in total
stockholders' equity.
The Company said that there is substantial doubt about its ability
to continue as a going concern within one year after the date that
its condensed consolidated financial statements are issued.
The Company further stated, "The Company has incurred recurring
losses and negative cash flows from operations since inception and
has funded its operating losses through the sale of common stock,
warrants to purchase common stock, the issuance of convertible
notes, debt, and grant proceeds. The Company incurred net losses
of approximately US$18.0 million and US$32.6 million for the nine
months ended September 30, 2020 and 2019, respectively. As of
September 30, 2020, the Company had an accumulated deficit of
US$69.5 million and cash, cash equivalents and restricted cash
totaling US$19.3 million.
"The Company has a limited operating history and its prospects are
subject to risks, expenses and uncertainties frequently encountered
by companies in its industry. The Company intends to continue its
research and development efforts for its product candidates, which
will require significant funding. If the Company is unable to
obtain additional financing in the future or research and
development efforts require higher than anticipated capital, there
may be a negative impact on the financial viability of the Company.
The Company plans to increase working capital by raising
additional capital through public and private placements of equity
and/or debt, payments from potential strategic research and
development arrangements, sale of assets, and licensing and/or
collaboration arrangements with pharmaceutical companies or other
institutions. Such financing may not be available at all, or on
terms that are favorable to the Company. While management of the
Company believes that it has a plan to fund ongoing operations, its
plan may not be successfully implemented. Failure to generate
sufficient cash flows from operations, raise additional capital
through one or more financings, or appropriately manage certain
discretionary spending could have a material adverse effect on the
Company's ability to achieve its intended business objectives."
A copy of the Form 10-Q is available at:
https://bit.ly/3m8uXBb
Based in Malvern, Pennsylvania, Ocugen, Inc. (NASDAQ: OCGN), is a
biopharmaceutical company focused on discovering, developing and
commercializing transformative therapies to treat blindness
diseases. Its breakthrough modifier gene therapy platform has the
potential to treat multiple retinal diseases with one drug -- "one
to many". Its novel biologic product candidate aims to offer
better therapy to patients with underserved diseases such as wet
age-related macular degeneration, diabetic macular edema and
diabetic retinopathy.
OIL INTERNATIONAL: Case Summary & 4 Unsecured Creditors
-------------------------------------------------------
Debtor: Oil International Service Corp.
a dissolved Florida Corporation
3100 NW 72nd Avenue 108
Miami, FL 33122
Business Description: Oil International Service Corp. is a real
estate holding company for foreign national.
Chapter 11 Petition Date: November 25, 2020
Court: United States Bankruptcy Court
Southern District of Florida
Case No.: 20-22907
Judge: Hon. Jay A. Cristol
Debtor's Counsel: Kevin Christopher Gleason, Esq.
FLORIDA BANKRUPTCY GROUP, LLC
4121 N31 Ave
Hollywood, FL 33021
Tel: (954) 893-7670
Email: bankruptcylawyer@aol.com
Total Assets: $800,000
Total Debts: $1,085,707
The petition was signed by Dayan Martinez, president.
A copy of the Debtor's list of four unsecured creditors is
available for free at PacerMonitor.com at:
https://www.pacermonitor.com/view/AKQXXJI/Oil_International_Service_Corp__flsbke-20-22907__0003.0.pdf?mcid=tGE4TAMA
A copy of the petition is available for free at PacerMonitor.com
at:
https://www.pacermonitor.com/view/AA5YAXA/Oil_International_Service_Corp__flsbke-20-22907__0001.0.pdf?mcid=tGE4TAMA
OIL STATES: Egan-Jones Lowers Senior Unsecured Ratings to CCC+
--------------------------------------------------------------
Egan-Jones Ratings Company, on November 11, 2020, downgraded the
foreign currency and local currency senior unsecured ratings on
debt issued by Oil States International Incorporated to CCC+ from
B-. EJR also downgraded the rating on commercial paper issued by
the Company to C from B.
Headquartered in Houston, Texas, Oil States International, Inc.
provides specialty products and services to oil and gas drilling
and production companies.
ONE AVIATION: Court Okays $5.25 Million Sale Amid Objections
------------------------------------------------------------
Leslie A. Pappas of Bloomberg Law reports that AML Global Eclipse
LLC, an aviation fuel company, will acquire nearly all of bankrupt
jet manufacturer ONE Aviation Corp.'s assets for $5.25 million
after a court overruled objections to the sale.
AML Global, a Delaware corporation backed by British businessman
Christopher C.S. Harborne, will also assume about $1 million worth
of contracts and liabilities, ONE Aviation's attorney Todd M.
Schwartz of Paul Hastings LLP said at a Friday, November 20, 2020,
hearing in the U.S. Bankruptcy Court for the District of Delaware.
The sale order, approved by Judge Christopher S. Sontchi, will go
into effect November 27, 2020, to allow the sale to close on
November 30, 2020.
About ONE Aviation Corp.
Headquartered in Albuquerque, New Mexico, ONE Aviation Corporation
-- http://www.oneaviation.aero/-- and its subsidiaries are
original equipment manufacturers of twin-engine light jet aircraft.
ONE Aviation provides maintenance and upgrade services for their
existing fleet of aircraft through two Company-owned Platinum
Service Centers in Albuquerque, New Mexico and Aurora, Illinois,
five licensed, global Gold Service Centers in locations including
San Diego, California, Boca Raton, Florida, Friedrichshafen,
Germany, Eelde, Netherlands, and Istanbul, Turkey, as well as a
research and development center located in Superior, Wisconsin. It
currently employs 64 individuals.
ONE Aviation and its affiliates filed for chapter 11 bankruptcy
protection (Bankr. D. Del. Case. Nos. 18-12309 - 18-12320) on Oct.
9, 2018, listing its estimated assets at $10 million to $50 million
and estimated liabilities at $100 million to $500 million. The
petition was signed by Alan Klapmeier, CEO.
The Debtors tapped Paul Hastings LLP as their bankruptcy counsel;
Young Conaway Stargatt & Taylor, LLP as co-counsel of Paul
Hastings; Ernst & Young LLP as financial advisor; Duff & Phelps
Securities, LLC as investment banker; and Epiq Corporate
Restructuring, LLC as its claims and noticing agent.
The Office of the U.S. Trustee appointed an official committee of
unsecured creditors on Oct. 22, 2018. The committee tapped
Lowenstein Sandler LLP as its legal counsel; Landis Rath & Cobb LLP
as the firm's co-counsel; and Conway MacKenzie, Inc. as financial
advisor.
ONESKY FLIGHT: Fitch Affirms B- LT IDR; Alters Outlook to Positive
------------------------------------------------------------------
Fitch Ratings has affirmed One Sky Flight, LCC's Long-Term Issuer
Default Rating (IDR) at 'B-'. The Rating Outlook has been revised
to Positive from Negative.
The Outlook revision to Positive from Negative is driven by the
company's outperformance relative to Fitch's initial concerns
regarding the impact of the coronavirus pandemic when the ratings
were downgraded in April. OneSky's position in private aviation has
allowed it to perform much better than its commercial airline
counterparts. The perception of private aviation as a safe
alternative to commercial travel, along with exposure to high net
worth clients less impacted by the economic disruptions, have
allowed revenues and margins to hold up well.
Consumer sentiment around safety during the pandemic has led to
increased numbers of new customers, especially within the on-demand
jet card business. Fitch recognizes the company's active fleet
management initiatives, which in conjunction with heightened
appetite for private on-demand travel, and the nature of
reoccurring management revenue, has contributed to healthy margins
for the year. Credit metrics are likely to support 'B' ratings over
the forecast, as the company continues core fleet investment and
makes required amortization payments on its secured debt.
Furthermore, a bolstered liquidity balance as a result of increased
customer prepayment for flight hours, and funds derived from the
CARES Act, substantially mitigate any near-term liquidity
concerns.
KEY RATING DRIVERS
Impact of Coronavirus: OneSky Flight has fared relatively well
throughout the pandemic, unlike its commercial counterparts, with
positive yoy growth in flight hours and revenue for the third
quarter. Fitch expects revenue growth for the year to be slightly
negative due to a shock on consumer demand in the 1H2020. However,
the company should be able to regain lost ground quickly, as
private aviation has become a viable alternative to commercial
travel. The company has not reduced headcount, and active fleet
management, reduced capex and grants received via the CARES act,
will likely provide over $100 million in liquidity throughout
fiscal 2020.
Flexible Cost Structure to Bolster Margin Profile: The company's
stable recurring revenue platform via management fees and pre-paid
flight hours are expected to lift margins above historical trends
through 2020. Moreover, the company has actively managed its fleet
to reduce the number of aircraft servicing the depressed levels of
demand in the Flexjet business, leading to higher operating
leverage and margins in the near term. As travel returns to normal
levels, the margin profile will likely fall in line with Fitch's
pre-pandemic estimates.
Leverage to Decline: Adjusted leverage is forecast to be low for
the 'B-'rating; however, there is heightened uncertainty regarding
modeling expected for private flight travel during the pandemic
environment. Subsequent to a material rebound from the lows in
late-March/early April, the company paid down its earlier $30
million draw on its ABL facility. Debt maturities consist solely of
required amortization under the term loan for the next several
years. Fitch views the amortization payments as manageable given
the company's cash flow profile over the forecast period, and does
not forecast any voluntary prepayment of the secured debt over the
rating horizon.
Free Cash Flow and Robust Liquidity: Although free cash flow is
complicated by the structure of OneSky's business model, Fitch
expects the change in cash to be materially positive. Factors like
increased deferred sales in jet card hours; CARES Act Grants; and
active fleet management has provided the company with a material
cash balance. Renewed consumer demand on the jet card Sentient
business, CARES act grant funding, of which no portion is
considered debt, and capex deferment are expected to contribute the
most to the positive change.
Fitch estimates liquidity as a percentage of year-end revenue could
be above 20%, which is much stronger compared to peers in the
commercial airline business. Additionally, liquidity requirements
are different for OneSky since its primary operating costs (fuel,
crews, etc.) are largely passed through to the customer.
Recovery Analysis: Fitch's recovery analysis assumes that OneSky
would be reorganized as a going concern in bankruptcy. Fitch has
assumed a 10% administrative claim. Fitch's GC EBITDA assumption of
roughly $60 million reflects a secular decline in business
aviation, causing a drop in demand for OneSky's fractional
ownership programs and charter flying. OneSky has a solid base of
owned assets that Fitch believes should sustain EBITDA margins in
the low single digits after a reorganization and scaling back
growth. An EV multiple of 5x EBITDA is applied to the GC EBITDA to
calculate a post-reorganization enterprise value. The choice of
this multiple considered historical bankruptcy case study exit
multiples for commercial airlines, which have ranged from 4.7x to
6.8x, with an average of 5.9x.
OneSky has an ESG Relevance Score of '4' for Energy Management due
to concerns around energy management that stem from the potential
for public/customer perception around private aviation, which can
drive down demand as climate awareness and activism becomes more
pronounced. Unlike commercial aviation, which Fitch views as more
of a public necessity, and which benefits from dense seating
arrangements that reduce carbon emissions on a per seat basis,
private aviation is viewed as a luxury item that could face
backlash if the public were to focus on the issue.
OneSky has an ESG Relevance Score of '4' for Governance Structure.
The governance structure score reflects the 40% ownership by
Directional Aviation, which is controlled by CEO Kenn Ricci and CFO
Mike Rossi. There is also an element of key person risk as the CEO
and CFO have worked closely together for more than 30 years, and
their loss could have a material impact on the company's
operations.
DERIVATION SUMMARY
OneSky's closest comparable peer is Vista Global (B/Negative).
OneSky assumes limited asset risk through its fractional model,
while Vista faces steeper upfront capital costs by bringing its
aircraft on balance sheet and carries more residual value risk.
OneSky has more scale with a managed fleet of more than 160
aircraft compared to ~116 aircraft at Vista. OneSky also has a
broader product offering both in terms of the types of aircraft
available and ways to utilize them (fractional, jet card,
on-demand), whereas Vista solely operate super-mid and larger
aircraft and they primarily operate on take-or-pay contracts in
which customers pay for a set number of hours that will expire if
unused. OneSky's thinner operating margins offset its advantages
over Vista.
KEY ASSUMPTIONS
-- Consolidated revenue declined by low single digits in 2020,
materially less impacted from the pandemic from consumer trends on
commercial aviation with moderate growth forecasted over the long
term as the company expands its Flexjet business into Europe;
-- No significant fractional ownership decline, or management
fees associated;
-- No voluntary pre-payment of secured debt or excess free cash
flow sweep;
-- 2020 capex plans pushed back to the 2H2021 with subdued sale
and leaseback payments;
-- No material shock from a potential second wave in pandemic
restrictions.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Adjusted debt/EBITDAR below 6.5x;
-- FFO fixed charge coverage sustained above 1.5x;
-- EBITDA margins sustained in the mid-single digits.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Significant degradation in liquidity falling below $60
million;
-- FFO fixed charge coverage sustained below 1.0x;
-- Significant customer payment deferrals or cancellations.
LIQUIDITY AND DEBT STRUCTURE
Fitch views OneSky's solid liquidity profile as sufficient to
weather the impacts of the pandemic. Cash flow generation is likely
to bolster year-end metrics materially above the prior
expectations. Furthermore, during the second quarter of 2020, the
company paid down its earlier $30 million draw on its ABL facility.
Debt maturities consist solely of required amortization under the
term loan for the next several years. Fitch views the amortization
payments as manageable given the company's cash flow profile over
the forecast period.
SUMMARY OF FINANCIAL ADJUSTMENTS
Fitch has chosen to recognize costs associated with fractional
aircraft in the beginning of the contract rather than to recognize
revenue over the life of the contract for the following reasons:
(i) The economic benefit to the company is seen on day one of the
contract, therefore the asset sale is view as a one-time
transaction.
(ii) Recognition of amortized revenue leads to a material
disconnect between the underlying cash flow of the company and the
EBITDA associated, which Fitch views as a proxy for such.
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
OneSky has an ESG Relevance Score of '4' for Energy Management due
to concerns around energy management that stem from the potential
for public/customer perception around private aviation, which can
drive down demand as climate awareness and activism becomes more
pronounced. Unlike commercial aviation, which Fitch views as more
of a public necessity, and which benefits from dense seating
arrangements that reduce carbon emissions on a per seat basis,
private aviation is viewed as a luxury item that could face
backlash if the public were to focus on the issue.
OneSky has an ESG Relevance Score of '4' for Governance Structure.
The governance structure score reflects the 40% ownership by
Directional Aviation, which is controlled by CEO Kenn Ricci and CFO
Mike Rossi. There is also an element of key person risk as the CEO
and CFO have worked closely together for more than 30 years, and
their loss could have a material impact on the company's
operations.
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.
OWENS & MINOR: Egan-Jones Hikes Sr. Unsecured Debt Ratings to B-
----------------------------------------------------------------
Egan-Jones Ratings Company, on November 20, 2020, upgraded the
foreign currency and local currency senior unsecured ratings on
debt issued by Owens & Minor Incorporated to B- from CCC+. EJR also
upgraded the rating on commercial paper issued by the Company to B
from C.
Headquartered in Virginia, Owens & Minor, Inc. distributes medical
and surgical supplies throughout the United States.
PATERSON PARKING: Moody's Affirms Ba1 Rating on Revenue Bonds
-------------------------------------------------------------
Moody's Investors Service has affirmed the Ba1 rating on Paterson
Parking Authority's parking revenue bonds and revised the outlook
to negative from stable. This action affects $10.9 million in rated
debt.
RATINGS RATIONALE
The Ba1 rating reflects the authority's weak finances and moderate
debt. Due to the ongoing pandemic, the authority has seen a
material diminution of revenue as demand for parking has slackened.
While it has also cut expenditures, which puts it in striking
distance of sum sufficient debt service coverage, it is unlikely to
meet its rate covenant for 2020. That said, it has already paid
debt service for 2020 and has adequate reserves.
The authority retains its effective monopoly on the provision of
parking services in the downtown of the City of Paterson (Ba1
stable) and benefits from the enduring, but relatively elastic,
nature of parking demand. Due to the weak nature of the city's
economy, demand has been precarious and this would not be the first
time the authority has breached its covenant.
RATING OUTLOOK
The negative outlook reflects its expectations that the authority
will face challenges in restoring its revenue flow and will
struggle to meet its rate covenant.
FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATING
- Sustained improvement of annual debt service coverage
- Substantially improved local economy and operating environment
FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATING
- Failure to materially maintain adequate debt service coverage
- Substantially declined operating environment and local economy
LEGAL SECURITY
The 2005 Passaic County Improvement Authority parking revenue bonds
are direct, limited, special obligations of PCIA. The bonds are
ultimately secured by parking authority bond payments to PCIA,
which are backed by a net revenue pledge of the parking authority.
The PCIA bonds are further secured by any additional payments from
the parking authority to PCIA, the funds and accounts established
under both PCIA's and the parking authority's general bond
resolutions, as well as a cash-funded debt service reserve fund.
PROFILE
The parking authority operates approximately 1,300 coin-operated
street meters and 5,000 off-street parking spaces in five garages
and 15 surface lots in the City of Paterson, NJ.
METHODOLOGY
The principal methodology used in this rating was Publicly Managed
Toll Roads and Parking Facilities published in March 2019.
PENNYSLVANIA REAL: Russell Johnson Represents Utility Companies
---------------------------------------------------------------
Pursuant to Rule 2019 of the Federal Rules of Bankruptcy Procedure,
the Law Firm of Russell R. Johnson III, PLC submitted a verified
statement to disclose that it is representing the utility companies
in the Chapter 11 cases of Pennsylvania Real Estate Investment
Trust, et al.
The names and addresses of the Utilities represented by the Firm
are:
a. Constellation NewEnergy, Inc.
Constellation NewEnergy - Gas Division, LLC
Attn: Mark J. Packel
Assistant General Counsel
2301 Market Street, 23rd Floor
Philadelphia, PA 19103
b. PECO Energy Company
Attn: Lynn R. Zack, Esq.
Assistant General Counsel
Exelon Corporation
2301 Market Street, S23-1
Philadelphia, PA 19103
c. Virginia Electric and Power Company
d/b/a Dominion Energy Virginia
Attn: Sherry Ward
600 East Canal Street, 10th floor
Richmond, VA 23219
d. Potomac Edison Company
Attn: Kathy M. Hofacre
FirstEnergy Corp.
76 S. Main St., A-GO-15
Akron, OH 44308
The nature and the amount of claims of the Utilities, and the times
of acquisition thereof are as follows:
(a) The following Utilities have unsecured claims against the
above-referenced Debtors arising from prepetition utility usage:
Constellation NewEnergy, Inc., Constellation New Energy - Gas
Division, LLC, PECO Energy Company, Virginia Electric and Power
Company d/b/a Dominion Energy Virginia and Potomac Edison Company.
(b) For more information regarding the claims and interests of
the Utilities in these jointly-administered cases, refer to the
filed Objection of Certain Utility Companies To the Motion of the
Debtors For Entry of Interim and Final Orders (I) Authorizing the
Debtors' Proposed Form of Adequate Assurance of Payment To Utility
Companies, (II) Establishing Procedures For Resolving Objections By
Utility Companies From Altering, Refusing, or Discontinuing Service
and (IV) Granting Related Relief filed in the above-captioned,
jointly-administered, bankruptcy cases.
The Law Firm of Russell R. Johnson III, PLC was retained to
represent the foregoing Utilities in November 2020. The
circumstances and terms and conditions of employment of the Firm by
the Companies is protected by the attorney-client privilege and
attorney work product doctrine.
The Firm can be reached at:
Russell R. Johnson III, Esq.
LAW FIRM OF RUSSELL R. JOHNSON III, PLC
2258 Wheatlands Drive
Manakin-Sabot, VA 23103
Telephone: (804) 749-8861
Facsimile: (804) 749-8862
E-mail: russell0russelljohnsonlawfirm.com
A copy of the Rule 2019 filing, downloaded from PacerMonitor.com,
is available at https://bit.ly/374PUGM
About PREIT
Pennsylvania Real Estate Investment Trust (NYSE:PEI) is a publicly
traded real estate investment trust that owns and manages
innovative properties at the forefront of shaping consumer
experiences through the built environment. PREIT's robust portfolio
of carefully curated retail and lifestyle offerings mixed with
destination dining and entertainment experiences are located
primarily in densely-populated, high barrier-to-entry markets with
tremendous opportunity to create vibrant multi-use destinations. On
the Web: http://www.preit.com/
PREIT and certain of its affiliates filed a voluntary Chapter 11
petition in the United States Bankruptcy Court for the District of
Delaware (Bankr. D. Del. Case No. 20-12737) on Nov. 1, 2020, to
implement its prepackaged Chapter 11 plan.
The Debtors have tapped DLA Piper LLP (US) LLP and Wachtell,
Lipton, Rosen & Katz as their legal counsel, and PJT Partners LP as
their financial advisor. PREIT's claims agent is Prime Clerk,
maintaining the page https://cases.primeclerk.com/PREIT
PHUNWARE INC: Gets Noncompliance Notice fom Nasdaq
--------------------------------------------------
Phunware, Inc. received a written notification on Nov. 19, 2020,
from the Listing Qualifications Staff of the Nasdaq Stock Market
LLC notifying the Company that the closing bid price for its common
stock had been below $1.00 for the last 30 consecutive business
days and that the Company therefore is not in compliance with the
minimum bid price requirement for continued inclusion on the Nasdaq
Capital Market under Nasdaq Listing Rule 5550(a)(2).
The Notice has no immediate effect on the listing of the Company's
securities on the Nasdaq Capital Market. Under the Nasdaq Listing
Rules, the Company has a period of 180 calendar days from the date
of the Notice, or May 18, 2021, to regain compliance with the Bid
Price Requirement. To regain compliance, the closing bid price of
the Company's common stock must be at least $1.00 for a minimum of
ten consecutive business days until the Compliance Date.
The Company intends to monitor the closing bid price of its common
stock and may, if appropriate, consider available options to regain
compliance with the Bid Price Requirement. However, there can be
no assurance that the Company will be able to regain compliance
with the Bid Price Requirement, or will otherwise be in compliance
with other Nasdaq Listing Rules.
About Phunware
Headquartered in Austin, Texas, Phunware, Inc. --
http://www.phunware.com/-- is a Multiscreen-as-a-Service (MaaS)
company, a fully integrated enterprise cloud platform for mobile
that provides companies the products, solutions, data and services
necessary to engage, manage and monetize their mobile application
portfolios and audiences globally at scale.
Phunware incurred a net loss of $12.87 million in 2019 compared to
a net loss of $9.80 million in 2018. As of Sept. 30, 2020, the
Company had $29.35 million in total assets, $34.16 million in total
liabilities, and a total stockholders' deficit of $4.81 million.
Marcum LLP, in Houston, TX, the Company's auditor since 2017,
issued a "going concern" qualification in its report dated March
30, 2020 citing that the Company has a significant working capital
deficiency, has incurred significant losses and needs to raise
additional funds to meet its obligations and sustain its
operations. These conditions raise substantial doubt about the
Company's ability to continue as a going concern.
PLH GROUP: S&P Alters Outlook to Positive, Affirms 'B' ICR
----------------------------------------------------------
S&P Global Ratings revised its outlook on PLH Group Inc. to
positive from stable and affirmed the 'B' issuer credit rating. At
the same time, S&P affirmed its 'B+' rating on PLH's term loan.
S&P's recovery rating remains '2', indicated its expectation for
substantial recovery in the event of a default.
PLH is on track to deliver good operating performance in 2020.
Despite the revenue decline in the first nine months of 2020
compared to the same period last year due to a challenging market
environment, the company's adjusted EBITDA margin has increased
about 270 basis points. This improvement was primarily driven by
better project execution, additional storm work, and improved
operating efficiency in 2020. As of September 2020, PLH's adjusted
debt to EBITDA has decreased to 2.6x from 4.8x in September 2019.
S&P said, "We estimate the company's adjusted leverage will be
about mid-2x at the end of 2021. The company should continue to
benefit from solid demand for maintenance projects in both its
electric and pipeline segments next year, partially offset by
potential headwinds in its midstream end market. Although debt
leverage is trending stronger than our previous expectations, cash
flow volatility is a potential risk, with working capital and
capital expenditure (capex) swings."
"PLH's liquidity position has improved, and we expect the company
to maintain adequate liquidity and sufficient covenant headroom
over the coming year. Under the company's capital structure,
there will be no significant upcoming debt maturities until 2023.
The company's liquidity is supported by its $80 million asset-based
lending (ABL) facility, balance sheet cash, and positive funds from
operations (FFO). This is offset with manageable debt maturities,
potential working capital outflows, and maintenance capex over the
next 12 months. The company's credit facility has a maximum
consolidated net leverage ratio of 3.5x. As of September 2020, this
ratio was about 1x. We expect the company will maintain sufficient
headroom under its current credit agreement over the next 12
months."
"The positive outlook reflects PLH's better-than-expected operating
performance and credit metrics in 2020, and our expectation for
continued improved debt leverage in 2021. We expect its adjusted
debt to EBITDA will remain below 4x over the next 12 months."
"We could upgrade PLH in the next 12 months if it sustains leverage
below 4x and achieves FOCF to debt of more than 5% on a sustained
basis. This could occur with a good demand outlook for its
services, strong project execution, support for lower adjusted debt
leverage by the company's financial-sponsor owners, and if we
believe the chances of the company releveraging are minimal."
"We could revise the outlook to stable over the next 12 months if
the company' FOCF to debt falls below 5% or adjusted debt to EBITDA
increases to above 5x on a sustained basis. This could be caused by
weaker-than-anticipated operating performance, weak demand,
unexpected execution challenges, project losses, shareholders
distribution, or large mergers and acquisitions. We could also
revise the outlook to stable if its liquidity becomes constrained."
POPULUS FINANCIAL: Moody's Reviews B3 CFR for Downgrade
-------------------------------------------------------
Moody's Investors Service placed Populus Financial Group Inc.'s B3
corporate family rating (CFR) and long-term senior secured debt
rating on review for downgrade following the company's announcement
that it would redeem all of its outstanding $255 million senior
secured notes through a tender offer at a discount to par.
On Review for Downgrade:
Issuer: Populus Financial Group, Inc.
Corporate Family Rating, Placed on Review for Downgrade, currently
B3
Senior Secured Regular Bond/Debenture, Placed on Review for
Downgrade, currently B3
Outlook Actions:
Issuer: Populus Financial Group, Inc.
Outlook, Changed To Rating Under Review From Stable
RATINGS RATIONALE / FACTORS THAT COULD LEAD TO AN UPGRADE OR
DOWNGRADE OF THE RATINGS
The initiation of the review for downgrade follows Populus'
announcement of Nov. 17, 2020 that it would tender in cash all of
its outstanding $255 million senior secured notes due in 2022,
subject to approval from noteholders holding a requisite amount of
principal. If the tender offer is approved, noteholders will
receive a total redemption consideration of $800-$850 per $1000 of
principal, which includes an $800 base consideration plus a $50
early redemption premium for those bondholders that opt to redeem
prior to Dec. 1. The terms of the financing for the transaction are
unknown at this time and will be a focus of the review for
downgrade.
Like its payday lending peers, Populus has faced a decline in
originations amid lower demand stemming from the effects of the
coronavirus outbreak, which has led to a decline in loan interest
and fee revenue. This negative revenue pressure has been somewhat
offset by steadier check cashing and card services revenue, which
has allowed the firm to maintain positive, albeit reduced, earnings
and cash flow during the coronavirus crisis so far. Nevertheless,
the transaction calls into question the sustainability of Populus'
weak capital structure, which includes a sizeable tangible equity
deficit. Like its US payday lender peers, Populus' B3 ratings also
reflect a high degree of regulatory risk, both at the federal and
state level.
Partially mitigating these weaknesses is Populus' ability to
maintain adequate profitability and liquidity in a challenging
operating environment, with substantial non-lending revenues
derived from less capital-intensive and stable businesses.
Moody's review for downgrade will focus on assessing whether
Populus' future capital structure, liquidity and profitability will
be supportive of its business model going forward.
Moody's regards the coronavirus outbreak as a social risk under its
environmental, social and governance (ESG) framework, given the
substantial implications for public health and safety. The rating
action reflects the negative effects on Populus of the breadth and
severity of the shock, and the risk of deterioration in credit
quality, profitability, capital, and liquidity it has triggered.
WHAT COULD CHANGE THE RATINGS UP
Given the review for downgrade, an upgrade is unlikely over the
next 12-18 months. However, the ratings could be confirmed upon
completion of the review, if Moody's determines that the company is
likely to restore its profitability in 2021, with a supportive
capital structure absent of significant near-term maturities.
WHAT COULD CHANGE THE RATINGS DOWN
Populus' ratings could be downgraded upon conclusion of the review
if Moody's assesses that the company is unable to: 1) achieve a
tenable capital structure following the redemption of the notes, 2)
restore its profitability in 2021, or 3) preserve its liquidity.
The principal methodology used in these ratings was Finance
Companies Methodology published in November 2019.
PRECISION MEDICINE: S&P Assigns 'B-' ICR; Outlook Positive
----------------------------------------------------------
S&P Global Ratings assigned its 'B-' issuer credit rating to
Bethesda, Md.-based contract research organization (CRO) and drug
commercialization services provider Precision Medicine Group
Holdings Inc.
At the same, S&P assigned its 'B-' issue-level and '3' recovery
ratings to the first-lien credit facilities.
S&P said, "Our ratings on Precision Medicine Group reflect our view
that the company's leverage is high (in the low-7x area in 2020),
its cash flow generation after earn-out payments is minimal, and
its scale is limited. We believe that under financial sponsor
ownership, acquisitions will be a component of the company's growth
strategy, keeping leverage at or above 6x. Precision Medicine is a
specialized CRO and commercialization services provider with a
focus on biomarker-based trials."
The company serves mostly small to midsize pharmaceutical and
biotech companies and generates about two-thirds of clinical trial
revenue from phase I and II trials. Precision Medicine Group
operates through two divisions: Precision for Medicine (PfM, which
accounts for about half of the revenue) and Precision Value &
Health (PVH, the other half). PfM provides translational science
services (diagnostic and biomarker lab testing, assay design,
tissue/blood sample processing and storage) and clinical solutions
services (design, implementation, execution of primarily phase I
and II clinical trials). PVH provides post-approval
commercialization services for pharmaceutical and biotech
customers. The company generates about 85% of total revenue from
the U.S. and the rest from mostly Europe and Canada.
Precision Medicine Group benefits from several favorable industry
trends and characteristics, such as increasing pharmaceutical
outsourcing, clinical trial complexity, and usage of biomarkers in
clinical trials. In addition, the company focuses on high-growth
areas such as oncology and rare diseases. However, the company's
scale is limited and it competes with much bigger players such as
Pharmaceutical Product Development LLC (BB-/Stable), Laboratory
Corp. of America (BBB/Stable), IQVIA Holdings Inc. (BB+/Stable),
and Syneos Health Inc. (BB/Stable). These companies have greater
financial resources and broader therapeutic expertise. Precision
also competes with LSCS Holdings Inc. (Eversana) (B-/Negative) and
large pharmaceutical distributors such as AmerisourceBergen Corp.
(A-/Negative/A2), which provide drug commercialization services.
Like many of its peers, Precision Medicine has some client
concentration. But relative to its competitors, its client
concentration is somewhat lower. For PfM, the top client represents
about 7% of revenue and the top five clients represent 24% of
revenue; the top client is 11% of PVH's revenue and the top five is
32%.
S&P said, "We believe there is no material trial concentration.
However, about 20% of PfM's revenue and 11% of PVH's revenue are
from pre-revenue stage customers, which rely on biotech venture
capital funding. Although a risk, this is somewhat offset by a
still healthy funding environment for biotech companies. Most of
the company's revenue is generated from phase I and phase II
trials, which we believe have higher cancellation risk than other
trials."
"We expect Precision will continue to expand through debt-financed
acquisitions, supported by low-double-digit-percentage organic
revenue growth for the next few years. We also expect EBITDA
margins will improve as it gains scale. However, given its
financial sponsor ownership and debt-financed growth strategy, we
expect adjusted leverage will be above 6x in 2021. We expect
discretionary cash flow (after earn-out payments) will be $20
million-$25 million in 2021. Although the earn-out payments are
related to prior acquisitions and contingent on certain performance
metrics, we do not view them as discretionary, since they will be
paid upon achievement of these milestones."
The positive outlook reflects S&P's expectation of rapid growth and
potential for an upgrade in the next 12-18 months if cash flow
generation improves.
S&P said, "We could revise the outlook to stable if the company
only generates minimal discretionary cash flow after earn-out
payments of less than 3% of debt. This could happen if acquisition
multiples increase, revenue growth slows, and/or margins
deteriorate as a result of increasing competition, integration
challenges, or extended clinical trial delays or cancellations."
"We could raise the rating if we expect discretionary cash flow
after earn-out payments to be sustained above 3% of debt and above
$20 million."
PRO-PHARMA ADVISORY: Case Summary & 3 Unsecured Creditors
---------------------------------------------------------
Debtor: Pro-pharma Advisory Group, LLC
1737 NW 126th Drive
Coral Springs, FL 33071
Business Description: Pro-pharma Advisory Group, LLC owns a
property located at 1737 NW 126th
Drive, Coral Springs, Florida having a
current value of $900,000.
Chapter 11 Petition Date: November 24, 2020
Court: United States Bankruptcy Court
Southern District of Florida
Case No.: 20-22824
Judge: Hon. Peter D. Russin
Debtor's Counsel: Jason E. Slatkin, Esq.
SLATKIN & REYNOLDS, P.A.
One East Broward Boulevard
Suite 609
Ft. Lauderdale, FL 33301
Tel: 954-745-5880
Email: jslatkin@slatkinreynolds.com
rreynolds@slatkinreynolds.com
Total Assets: $900,000
Total Liabilities: $1,431,724
The petition was signed by Jason Fine, sole managing member.
A copy of the petition containing, among other items, a list of the
Debtor's three unsecured creditors is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/ZN7ZY6I/Pro-pharma_Advisory_Group_LLC__flsbke-20-22824__0001.0.pdf?mcid=tGE4TAMA
PROFESSIONAL INVESTORS 21: Involuntary Chapter 11 Case Summary
--------------------------------------------------------------
Alleged Debtor: Professional Investors 21, LLC
350 Ignacio Blvd.
Suite 300
Novato, CA 94949
Type of Business: Professional Investors 21, LLC is a Single
Asset Real Estate debtor (as defined in 11
U.S.C. Section 101(51B)).
Involuntary Chapter
11 Petition Date: November 19, 2020
Court: United States Bankruptcy Court
Northern District of California
Case Number: 20-30920
Name of Petitioner: Professional Financial Investors, Inc.
350 Ignacio Blvd., Suite 300
Novato, CA 94949
Nature of Claim &
Claim Amount: Intercompany Loan, $428,000
Petitioner's Counsel: Ori Katz, Esq.
Barret J. Marum, Esq.
SHEPPARD, MULLIN, RICHTER & HAMPTON LLP
Four Embarcadero Center, 17th Floor
San Franciso, CA 94111
Tel: 415-434-9100
Email: okatz@sheppardmullin.com/
bmarum@sheppardmullin.com
A copy of the Involuntary Petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/2H2A2MI/Professional_Investors_21_LLC__canbke-20-30920__0001.0.pdf?mcid=tGE4TAMA
PROFESSIONAL INVESTORS 40: Involuntary Chapter 11 Case Summary
--------------------------------------------------------------
Alleged Debtor: Professional Investors 40, LLC
350 Ignacio Blvd.
Suite 300
Novato, CA 94949
Type of Business: Professional Investors 40, LLC is a Single
Asset Real Estate debtor (as defined in 11
U.S.C. Section 101(51B)).
Involuntary Chapter
11 Petition Date: November 20, 2020
Court: United States Bankruptcy Court
Northern District of California
Case Number: 20-30940
Name of Petitioner: Professional Financial Investors, Inc.
350 Ignacio Blvd., Suite 300
Novato, CA 94949
Nature of Claim &
Claim Amount: Intercompany Loan, $750,256
Petitioner's Counsel: Ori Katz, Esq.
Barret J. Marum, Esq.
SHEPPARD, MULLIN, RICHTER & HAMPTON LLP
Four Embarcadero Center, 17th Floor
San Franciso, CA 94111
Tel: 415-434-9100
Email: okatz@sheppardmullin.com
bmarum@sheppardmullin.com
A copy of the Involuntary Petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/K4TBUEI/Professional_Investors_40_LLC__canbke-20-30940__0001.0.pdf?mcid=tGE4TAMA
PROFESSIONAL INVESTORS 41: Involuntary Chapter 11 Case Summary
--------------------------------------------------------------
Alleged Debtor: Professional Investors 41, LLC
350 Ignacio Blvd.
Suite 300
Novato, CA 94949
Type of Business: Professional Investors 41, LLC is a Single
Asset Real Estate debtor (as defined in 11
U.S.C. Section 101(51B)).
Involuntary Chapter
11 Petition Date: November 20, 2020
Court: United States Bankruptcy Court
Northern District of California
Case Number: 20-30941
Name of Petitioner: Professional Financial Investors, Inc.
350 Ignacio Blvd., Suite 300
Novato, CA 94949
Nature of Claim &
Claim Amount: Intercompany Loan, $243,000
Petitioner's Counsel: Ori Katz, Esq.
Barret J. Marum, Esq.
SHEPPARD, MULLIN, RICHTER & HAMPTON LLP
Four Embarcadero Center, 17th Floor
San Franciso, CA 94111
Tel: 415-434-9100
Email: okatz@sheppardmullin.com
bmarum@sheppardmullin.com
A copy of the Involuntary Petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/KYWZOBY/Professional_Investors_41_LLC__canbke-20-30941__0001.0.pdf?mcid=tGE4TAMA
PURDUE PHARMA: Pleads Guilty to Role in Opioid Epidemic
-------------------------------------------------------
Alia Paavola of Beckers Hospital Review reports that Purdue Pharma
pleaded guilty Nov. 24, 2020 to three criminal charges related to
the marketing and sale of OxyContin, according to The Wall Street
Journal. The guilty plea formally admits the company's role in the
nation's opioid epidemic.
In a virtual hearing in Newark, N.J., Purdue Pharma admitted it
didn't maintain an effective program to prevent illegal drug
distribution and that it provided misleading information to the
Drug Enforcement Administration.
The drugmaker also admitted to paying kickbacks to physicians to
induce them to write more opioid prescriptions. The kickbacks were
made in the form of a speakers program, according to the report.
The guilty plea comes one week after bankruptcy Judge Robert Drain
approved Purdue Pharma's $8.3 billion civil settlement with the
U.S. Justice Department.
About Purdue Pharma LP
Purdue Pharma L.P. and its subsidiaries --
http://www.purduepharma.com/-- develop and provide prescription
medicines and consumer products that meet the evolving needs of
healthcare professionals, patients, consumers and caregivers.
Purdue's subsidiaries include Adlon Therapeutics L.P., focused on
treatment for Attention-Deficit/Hyperactivity Disorder (ADHD) and
related disorders; Avrio Health L.P., a consumer health products
company that champions an improved quality of life for people in
the United States through the reimagining of innovative product
solutions; Imbrium Therapeutics L.P., established to further
advance the emerging portfolio and develop the pipeline in the
areas of CNS, non-opioid pain medicines, and select oncology
through internal research, strategic collaborations and
partnerships; and Greenfield Bioventures L.P., an investment
vehicle focused on value-inflection in early stages of clinical
development.
Opioid makers in the U.S. are facing pressure from a crackdown on
the addictive drug in the wake of the opioid crisis and as state
attorneys general file lawsuits against manufacturers. More than
2,000 states, counties, municipalities and Native American
governments have sued Purdue Pharma and other pharmaceutical
companies for their role in the opioid crisis in the U.S., which
has contributed to the more than 700,000 drug overdose deaths in
the U.S. since 1999.
OxyContin, Purdue Pharma's most prominent pain medication, has been
the target of over 2,600 civil actions pending in various state and
federal courts and other fora across the United States and its
territories.
On Sept. 15 and 16, 2019, Purdue Pharma L.P. and 23 affiliated
debtors each filed a voluntary petition for relief under Chapter 11
of the U.S. Bankruptcy Code (Bankr. S.D.N.Y. Lead Case No.
19-23649), after reaching terms of a preliminary agreement for
settling the massive opioid litigation. The Debtors' consolidated
balance sheet as of Aug. 31, 2019, showed $1.972 billion in assets
and $562 million in liabilities.
U.S. Bankruptcy Judge Robert Drain oversees the cases.
The Debtors tapped Davis Polk & Wardwell LLP and Dechert LLP as
legal counsel; PJT Partners as investment banker; AlixPartners as
financial advisor; and Prime Clerk LLC as claims agent.
Akin Gump Strauss Hauer & Feld LLP and Bayard, P.A. represent the
official committee of unsecured creditors appointed in Debtors'
bankruptcy cases.
David M. Klauder, Esq., was appointed as fee examiner. The fee
examiner is represented by Bielli & Klauder, LLC.
RALPH LAUREN: Egan-Jones Lowers Sr. Unsec. Debt Ratings to BB
-------------------------------------------------------------
Egan-Jones Ratings Company, on November 9, 2020, downgraded the
foreign currency and local currency senior unsecured ratings on
debt issued by Ralph Lauren Corporation to BB from BB+.
Headquartered in New York, New York, Ralph Lauren Corporation
designs, markets, and distributes men's, women's and children's
apparel, accessories, fragrances, and home.
RENNOVA HEALTH: Posts $69.7 Million Net Loss in Third Quarter
-------------------------------------------------------------
Rennova Health, Inc., filed with the Securities and Exchange
Commission its Quarterly Report on Form 10-Q disclosing a net loss
available to common stockholders of $69.74 million on $1.95 million
of net revenues for the three months ended Sept. 30, 2020, compared
to a net loss available to common stockholders of $12.26 million on
$3.92 million of net revenues for the three months ended Sept. 30,
2019.
For the nine months ended Sept. 30, 2020, the Company reported a
net loss available to common stockholders of $76.56 million on
$5.86 million of net revenues compared to a net loss available to
common stockholders of $162.99 million on $13.15 million of net
revenues for the same period during the prior year.
As of Sept. 30, 2020, the Company had $15.09 million in total
assets, $55.63 million in total liabilities, and a total
stockholders' deficit of $40.54 million.
The Company had a working capital deficit and an accumulated
deficit of $47.6 million and $663.5 million, respectively, at Sept.
30, 2020. In addition, the Company had a loss from continuing
operations of approximately $9.7 million and cash used in operating
activities of $13.4 million for the nine months ended Sept. 30,
2020. As of Nov. 16, 2020, the Company's cash is deficient and
payments for its operations in the ordinary course are not being
made. The continued losses and other related factors, including
the payment defaults under the terms of outstanding debentures and
notes payable, raise substantial doubt about the Company's ability
to continue as a going concern for twelve months from the filing
date of this report.
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/Archives/edgar/data/931059/000149315220021678/form10-q.htm
About Rennova Health
Rennova Health, Inc. -- http://www.rennovahealth.com/-- operates
three rural hospitals in Tennessee and provides diagnostics and
supportive software solutions to healthcare providers.
Rennova Health reported a net loss to common shareholders of $171.9
million for the year ended Dec. 31, 2019, compared to a net loss to
common shareholders of $245.87 million for the year ended Dec. 31,
2018. As of June 30, 2020, the Company had $15.21 million in total
assets, $68.90 million in total liabilities, $5.83 million in
redeemable preferred stock - Series I-1, $1.79 million in
redeemable preferred stock - Series I-2, and a total stockholders'
deficit of $61.31 million.
Haynie & Company, in Salt Lake City, Utah, the Company's auditor
since 2018, issued a "going concern" qualification in its report
dated June 25, 2020, citing that the Company has recognized
recurring losses, negative cash flows from operations, and
currently has minimal revenue producing activities. This raises
substantial doubt about the Company's ability to continue as a
going concern.
RENT-A-CENTER INC: Egan-Jones Hikes Senior Unsecured Ratings to BB
------------------------------------------------------------------
Egan-Jones Ratings Company, on November 9, 2020, upgraded the
foreign currency and local currency senior unsecured ratings on
debt issued by Rent-A-Center Inc/TX to BB from BB-.
Rent-A-Center, Inc. operates franchised and company-owned
Rent-A-Center and ColorTyme rent-to-own merchandise stores.
ROMC LLC: Voluntary Chapter 11 Case Summary
-------------------------------------------
Debtor: RoMC, LLC
6820 Oats Drive
Montgomery, AL 36117
Chapter 11 Petition Date: November 23, 2020
Court: United States Bankruptcy Court
Middle District of Alabama
Case No.: 20-32400
Judge: Hon. Bess M. Parrish Creswell
Debtor's Counsel: Michael A. Fritz, Sr., Esq.
FRITZ LAW FIRM
25 South Court Street
Suite 200
Montgomery, AL 36104
Tel: (334) 230-9730
Fax: (334) 230-9789
Email: bankruptcy@fritzlawalabama.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $0 to $50,000
The petition was signed by Lisa Lee McIlwain, authorized
signatory.
The Debtor stated it has no unsecured creditors.
A copy of the petition is available for free at PacerMonitor.com
at:
https://www.pacermonitor.com/view/HPKQFYQ/RoMC_LLC__almbke-20-32400__0001.0.pdf?mcid=tGE4TAMA
ROYAL CARIBBEAN: Egan-Jones Lowers Senior Unsecured Ratings to B-
-----------------------------------------------------------------
Egan-Jones Ratings Company, on November 10, 2020, downgraded the
foreign currency and local currency senior unsecured ratings on
debt issued by Royal Caribbean Cruises Limited to B- from B.
Royal Caribbean Group, formerly known as Royal Caribbean Cruises
Ltd., is an American global cruise holding company incorporated in
Liberia and based in Miami, Florida.
SANMINA CORP: Egan-Jones Hikes Sr. Unsecured Debt Ratings to BB+
----------------------------------------------------------------
Egan-Jones Ratings Company, on November 16, 2020, upgraded the
foreign currency and local currency senior unsecured ratings on
debt issued by Sanmina Corporation to BB+ from BB.
Headquartered in San Jose, California, Sanmina Corporation provides
electronics contract manufacturing services to customers located
around the world.
SCHOOL DISTRICT SERVICES: U.S. Trustee Unable to Appoint Committee
------------------------------------------------------------------
The U.S. Trustee, until further notice, will not appoint an
official committee of unsecured creditors in the Chapter 11 case of
School District Services Inc., according to court dockets.
About School District Services
School District Services, Inc., is a licensed and bonded freight
shipping and trucking company running freight hauling business from
Tallahassee, Fla.
School District Services sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. N.D. Fla. Case No. 20-40381) on Oct. 19,
2020. Ivery Luckey, the company's chief executive officer, signed
the petition. At the time of the filing, the Debtor had estimated
assets of less than $50,000 and liabilities of between $500,001 and
$1 million.
Bruner Wright, P.A. is Debtor's legal counsel.
SEALED AIR: Egan-Jones Hikes Sr. Unsec. Debt Ratings to BB-
-----------------------------------------------------------
Egan-Jones Ratings Company, on November 16, 2020, upgraded the
foreign currency and local currency senior unsecured ratings on
debt issued by Sealed Air Corporation to BB- from B+.
Headquartered in Charlotte, North Carolina, About Sealed Air Corp.
Sealed Air Corporation is a provider of packaging solutions for the
food, e-Commerce, electronics, and industrial markets.
SIGNIFY HEALTH: Moody's Affirms B2 CFR; Alters Outlook to Stable
----------------------------------------------------------------
Moody's Investors Service affirmed Signify Health, LLC's credit
ratings, including the B2 corporate family rating, B2-PD
probability of default rating, and B2 instrument ratings on the
health risk assessment provider's $80 million first-lien revolving
credit facility and $276 million first-lien term loan. Moody's
assigned B2 instrument ratings to a new, $125 million non-fungible
incremental first-lien term loan (tranche B-2), proceeds from which
will be used to pay down outstandings under Signify's nearly fully
drawn revolver, allocate funds towards tuck-in acquisitions and
related earn-out obligations, put $15 million of cash on the
balance sheet, and pay for transaction fees and expenses. Moody's
also changed Signify's outlook to stable, from negative.
Issuer: Signify Health, LLC:
Assignment:
Senior secured non-fungible first-lien term loan, tranche B-2, due
late 2024, assigned B2 (LGD3)
Affirmations:
Corporate family rating, affirmed B2
Probability of default rating, affirmed B2-PD
Senior secured revolving credit facility expiring 2022, affirmed B2
(LGD3)
Senior secured first-lien term loan due late 2024, affirmed B2
(LGD3)
Outlook action:
Outlook changed to stable, from negative
RATINGS RATIONALE
The stabilization of Signify's outlook from negative reflects the
strong likelihood that the company's 2020 revenue will easily
surpass Moody's expectations from earlier this year, when the
COVID-19 crisis took hold and Moody's expected revenue to be up
only minimally relative to 2019. Instead, as Signify has been able
to quickly deliver virtual health assessments, in-home HRA visits
that had been postponed in April and May resumed in the third
quarter and should accelerate in the fourth. As a result, 2020
revenue may approach $600 million, up nearly 18% over 2019 revenue,
pro-forma for the November 2019 merger with Remedy Partners.
The Signify-Remedy combination envisioned a platform that would
leverage the clinical and social data that Signify's team of
physicians and nurse practitioners ("NPs") gather when performing
in-home HRAs and apply that information to meeting the healthcare
industry's shift from fee-for-service toward value-driven, bundled
payments-based episodes of care, which Remedy's software and
analytics allow for. When the company's ratings outlook was changed
to negative in April 2020, Moody's had expected revenue headwinds
because COVID-19-related social distancing restrictions would limit
NPs' ability to conduct in-house HRAs, which would jeopardize the
very rationale for the merger with Remedy.
Instead, Signify has been able to quickly pivot its network visits
to virtual HRAs, with its largest clients initially and then with
other customers, such that it should meet and possibly surpass its
HRA volume targets for 2020. Similarly, the company adapted
Remedy's episodes-of-care services to a remote platform and was
able to drive improvements in performance metrics at its acute and
post-acute customer sites.
The proposed financing will allocate funds to potential
acquisitions expected to support growth, and repay the preemptive
borrowings of nearly the full capacity the company made under its
revolver in the second quarter in response to COVID. Sustained
revenues, margin support through cost cuts, and the reversal of
collections that had been delayed due to COVID should enable
Signify to generate positive free cash flow in 2020, in contrast to
Moody's expectations early this year. As such, even with this
transaction's incremental debt, and assuming no EBITDA
contributions from acquisitions, year-end 2020 Moody's adjusted
leverage, at just above 4.0 times, is also lower than initially
anticipated. Moody's considers Signify's financial leverage as
moderate for the B2 ratings category. Signify will also be in a
stronger liquidity position, with better than $30 million of
balance sheet cash and full availability under its revolver.
Moody's views Signify's liquidity as good.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Moody's could downgrade the ratings if revenue drops significantly,
indicative, perhaps, of a longer than expected coronavirus crisis;
if Moody's adjusted debt-to-EBITDA leverage holds above 5.0 times;
if Moody's expects free cash flow to be negative for a sustained
period; or if there is a legislatively imposed change to the scope
of the HRA model.
Moody's could upgrade the ratings if free cash flow as a percentage
of debt holds above 5.0%; if the company maintains good revenue
growth while diversifying revenue sources across business lines and
away from CMS-associated (Centers for Medicaid and Medicare)
sources, and; Moody's expects it will adhere to a conservative
financial policy.
Signify Health, domiciled in both Dallas, TX and Norwalk, CT, is a
leading provider of home-based care management services on behalf
of Medicare Advantage health plans in the U.S., including health
risk assessments ("HRAs") and chronic and post-acute-care
management. The company was formed by the late-2017 acquisition by
New Mountain Capital of both Censeo Health and Advance Health. In
November 2019, New Mountain contributed to the Signify Health
entity another of its portfolio companies, Connecticut-based Remedy
Partners, a provider of software and analytics that facilitate
large-scale bundled payment programs. Moody's expects the combined
Signify-Remedy to generate 2020 revenue of roughly $600 million.
(The company does not publicly disclose financial information.)
The principal methodology used in these ratings was Business and
Consumer Service Industry published in October 2016.
SINCLAIR TELEVISION: Moody's Assigns Ba2 Rating on New Sec. Notes
-----------------------------------------------------------------
Moody's Investors Service assigned a Ba2 rating to Sinclair
Television Group, Inc.'s new $550 million senior secured notes. The
proceeds of the notes will be used to fully redeem the company's
5.625% senior unsecured notes due August 2024. Moody's has also
downgraded the company's senior unsecured rating to B2 from B1 and
affirmed the company's Ba3 corporate family rating (CFR), Ba3-PD
probability of default rating (PDR), and Ba2 rating on the senior
secured credit facility. Sinclair's speculative grade liquidity
(SGL) rating is maintained at SGL-2 and the outlook is stable.
The downgrade of the senior unsecured rating derives from the
change in the capital structure mix with an additional $550 million
of secure debt ranking ahead of the unsecured facilities in terms
of repayment.
Affirmations:
Issuer: Sinclair Television Group, Inc
Probability of Default Rating, Affirmed Ba3-PD
Corporate Family Rating, Affirmed Ba3
Senior Secured Bank Credit Facility, Affirmed Ba2 (LGD3) from
(LGD2)
Downgrades:
Issuer: Sinclair Television Group, Inc
Senior Unsecured Regular Bond/Debenture, Downgraded to B2 (LGD5)
from B1 (LGD5)
Assignments:
Issuer: Sinclair Television Group, Inc
Senior Secured Regular Bond/Debenture, Assigned Ba2 (LGD3)
Outlook Actions:
Issuer: Sinclair Television Group, Inc
Outlook, Remains Stable
RATINGS RATIONALE
Sinclair's Ba3 CFR is supported by the company's established brand,
its scale and the significant reach of its network of broadcast
channels. The company is one of the largest US broadcasters with
627 channels on 190 TV stations in 88 markets as of September 30,
2020. The company's revenue model benefits from a mix of recurring
retransmission fees that help offset the inherent volatility of
traditional advertising-related revenue. The company has also
benefited from record political advertising demand from the US
presidential election in 2020, which will help mitigate the impact
on cash flow from the steep core advertising declines due to
COVID-19.
Sinclair's Ba3 CFR also reflects the sharp downturn in core TV
advertising demand in 2020 as a result of lockdowns related to the
COVID-19 pandemic as well as by the company's financial policy that
has historically tolerated high leverage. The resulting shock to
the US economy from the coronavirus leads us to expect double-digit
declines in TV advertising and Sinclair's leverage to likely remain
above 4.5x through 2020 compared to its previous expectations that
leverage would approach 4.3x by year-end. Excluding the effect of
the coronavirus, TV advertising remains cyclical and in structural
decline as new media forms continue to encroach on its market
share. Its run-rate expectations are that core TV revenues will
decline by low single-digit annually as advertising budgets
continue to shift towards digital platforms. In addition, the
continuing growth rate in retransmission fees may be at risk of
accelerating MVPD subscriber losses, with cord-cutting trends
having accelerated in 2020.
Governance factors that were taken into consideration include
Sinclair's financial policy. The company has publicly stated a
commitment to a leverage (company's defined net debt/EBITDA) of
high 3x to low 4x -- at September 2020, this ratio stood at 4.3x.
Sinclair has tolerated higher leverage in the past, especially in
the context of M&A, and Moody's adjusted debt to 2-year average
EBITDA was around 5.1x at the end of 2019. Moody's expects leverage
to remain near 4.5x in 2020. Sinclair's credit policy is somewhat
shareholder focused with the distribution of quarterly dividends as
well as share buybacks. With regard to dividends, Sinclair has
historically paid out approximately 25% of operating cash flow.
Moody's expects Sinclair to pay about $65 million of dividends in
2020 and while Moody's does not expect material share repurchases
in the remainder of 2020, Moody's believes these could start again
in 2021 albeit at around 15% to 20% of Sinclair's operating cash
flow, lower than the historical average of near 30%.
Sinclair's liquidity profile is good as reflected in its SGL-2
speculative grade liquidity rating. As of Sept. 30, 2020, the
company had about $266 million in cash and cash equivalents and
almost full availability under its $650 million revolving credit
facility. The revolver has a springing first lien net leverage
covenant, tested at 35% utilization and above, and set at 4.5x.
Free cash flow generation, while still substantial, has been
negatively affected by the decline in advertising revenue and at
this point, Moody's estimates that Sinclair's free cash flow will
be around $400 million in 2020. This is boosted by the presidential
election but down significantly from its previous expectation of
about $820 million of free cash flow.
The Ba2 (LGD3) rating on the company's senior secured facilities
and notes reflects their priority ranking ahead of the B2 (LGD5)
rated senior unsecured notes. The instrument ratings reflect the
probability of default of the company, as reflected in the Ba3-PD
probability of default rating (PDR), an average expected family
recovery rate of 50% at default given the mix of secured and
unsecured debt in the capital structure, and the particular
instruments' rankings in the capital structure.
The stable outlook reflects Moody's expectations that despite the
disruption caused by COVID-19, Sinclair will continue to operate
with metrics commensurate with its Ba3 rating through 2020, in
particular leverage (Moody's adjusted on a two-year basis) between
4.25x and 5.5x. The stable outlook also reflects Moody's
expectations that the company will maintain a good liquidity
profile in 2020 and beyond.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Ratings could be upgraded if:
-- Debt to 2-year average EBITDA (Moody's adjusted) is sustained
comfortably below 4.25x and,
-- 2-year average Free cash flow to debt (Moody's adjusted) is
sustained above 10%
A positive rating action would also be contingent on maintaining
good liquidity.
Ratings could be downgraded if:
-- Debt to 2-year average EBITDA (Moody's adjusted) rises above
5.5x, or
-- 2-year average free cash flow to debt (Moody's adjusted) falls
below 5%.
Deterioration in the company's liquidity could also put pressure on
the ratings.
Sinclair Television Group, Inc., headquartered in Hunt Valley, MD
and founded in 1986, is a leading U.S. television broadcaster. As
of September 30, 2020, the company owns and/or operates 190
television stations across 88 markets, broadcasting more than 600
channels across the U.S. The station group reaches approximately
25% of the US population (taking into account the UHF discount).
The affiliate mix is diversified across primary and digital
sub-channels including ABC, CBS, NBC, and FOX. The company also
owns a local cable news network in Washington D.C., four radio
stations and the Tennis Channel. Members of the Smith family
exercise control over most corporate matters of Sinclair Broadcast
Group, Inc. ("SBGI"), Sinclair Television Group, Inc.'s ultimate
parent, with four of the nine board seats and approximately 81% of
voting rights (through the dual-class share structure).
Consolidated net revenue for the last twelve months ended Sept. 30,
2020 was approximately $3.01 billion.
The principal methodology used in these ratings was Media Industry
published in June 2017.
SIRVA INC: S&P Affirms 'CCC+' ICR, Off CreditWatch Negative
-----------------------------------------------------------
S&P Global Ratings affirmed its 'CCC+' issuer credit rating on
SIRVA Inc., revised its recovery rating expectations on the
company's first lien debt to '3' from '2', and lowered the
issue-level ratings to 'CCC+' from 'B-'.
S&P also lowered its recovery rating on the company's second-lien
term loan to '6' from '5' and the issue-level rating to 'CCC-' from
'CCC'.
Global relocation and moving services company SIRVA Inc. has raised
$55 million in senior secured notes to bolster its liquidity
position.
Given the incremental liquidity provided by the debt raise, S&P
Global Ratings is removing its ratings on SIRVA from CreditWatch,
where they were placed on Aug. 27, 2020, with negative
implications.
Additional liquidity and recent news of viable vaccine candidates
are positive developments for the company's operating performance
in 2021, though downside risk remains elevated given macroeconomic
uncertainty and pandemic-related headwinds to relocation and moving
activity. SIRVA's $55 million notes issuance, though priced at a
high 12% coupon, is a positive near-term credit development as it
provides incremental liquidity, and reduces S&P's immediate
concerns around narrowing covenant headroom. Altogether, the
company will have over $100 million of cash on hand which provides
good runway to offset potential quarterly cash flow deficits that
could arise as earnings remain under pressure and the business
absorbs seasonal intra-year working capital swings.
High interest costs (over $50 million in annual payments) and about
$11 million in annual debt amortization burden free cash flow
generation.
S&P said, "Absent a clear path to global relocation and moving
volumes resuming in 2021, we view the company's very high debt
leverage (expected over 10x for fiscal 2020 excluding its
securitization facility and certain one-time costs) and debt
servicing costs as unsustainable. We anticipate negative cash flow
deficits in 2020 given operating pressure, and one-time costs
(including a large M&A-related payment of $25 million plus various
legal fees related to the Cartus transaction). In 2021, we
anticipate break-even cash flow assuming management's continued
prudent cost actions, and signs of a gradual build in volume in the
second half of 2021."
Business recovery, and resumption of positive free cash flow is
dependent on improving corporate confidence and border restrictions
being lifted. The pace of recovery for corporate relocation and
moving spending (SIRVA's core, and most profitable customer)
remains highly uncertain. New North American global relocation
initiations (down 48% in the most recent quarter) are the most
profitable component of SIRVA's revenue base and are likely to
remain the most severely affected by global travel and border
restrictions. While SIRVA still earns regular fees in supporting
existing assignments, and has shown agility in shifting moving
volumes from its traditional corporate customer to capacity for
consumer and military shipments, S&P views long-term profitability
as reliant on corporate volumes rebounding.
S&P Global Ratings believes there remains a high degree of
uncertainty about the evolution of the coronavirus pandemic.
Reports that at least two experimental vaccines are highly
effective and might gain initial approval by the end of the year
are promising, but this is merely the first step toward a return to
social and economic normality; equally critical is the widespread
availability of effective immunization, which could come by the
middle of next year.
S&P said, "We use this assumption in assessing the economic and
credit implications associated with the pandemic. As the situation
evolves, we will update our assumptions and estimates
accordingly."
Despite the additional liquidity provided by the notes issuance,
the negative outlook reflects the risk that weak cash flows and
sustained high debt leverage could persist through 2021 if
corporate global relocation activity does not show signs of
recovery through mid- to late-2021.
S&P said, "Over the next 6 to 12 months, we could lower our ratings
on SIRVA if the absence of business stabilization causes ongoing
revenue pressure and tightening liquidity, increasing covenant
pressure, the risk of a distressed restructuring, or payment
default. We would likely consider a lower rating if the company
continues to incur sustained cash flow deficits, available
liquidity falls below $50 million, or if we no longer expect
margins to expand above the mid-4% area."
"We could revise our outlook to stable or upgrade the company if
sustainable business recovery allows SIRVA to demonstrate momentum
towards an improvement in operating performance, providing
visibility into cash flow generation and a path towards meaningful
deleveraging."
SM ENERGY: Egan-Jones Hikes Senior Unsecured Ratings to CCC-
------------------------------------------------------------
Egan-Jones Ratings Company, on November 11, 2020, upgraded the
foreign currency and local currency senior unsecured ratings on
debt issued by SM Energy Company to CCC- from C. EJR also upgraded
the rating on commercial paper issued by the Company to C from D.
Headquartered in Denver, Colorado, SM Energy Company is a company
engaged in hydrocarbon exploration. It is organized in Delaware and
headquartered in Denver, Colorado.
SMARTOURS LLC: Gets Court OK to Hire Nixon Peabody as Legal Counsel
-------------------------------------------------------------------
SmarTours, LLC and its affiliates received approval from the U.S.
Bankruptcy Court for the District of Delaware to hire Nixon
Peabody, LLP as their legal counsel.
The firm will render these services:
(a) Advise the Debtor with respect to its powers and duties in
the continued operation of its businesses;
(b) Advise the Debtor with respect to all general bankruptcy
matters;
(c) Prepare legal papers;
(d) Represent the Debtor at court hearings;
(e) Prosecute and defend litigated matters that may arise
during the Debtor's Chapter 11 case;
(f) Prepare and file a disclosure statement and negotiate,
present and implement a plan of reorganization;
(g) Negotiate appropriate transactions and prepare any
necessary documentation related thereto;
(h) Represent the Debtor on matters relating to the assumption
or rejection of executory contracts and unexpired leases;
(i) Advise the Debtor with respect to general corporate,
securities, real estate, litigation, environmental, labor,
regulatory, tax, health care, and other legal matters that may
arise during the pendency of the case; and
(j) Perform all other legal services.
The attorneys who are likely to handle the cases have standard
hourly rates ranging from $495 to $995. Paralegals charge between
$300 and $400 per hour.
Richard Pedone, Esq., a partner at Nixon Peabody, disclosed in a
court filing that his firm is a "disinterested person" as defined
in Section 101(14) of the Bankruptcy Code.
Nixon Peabody can be reached through:
Richard C. Pedone, Esq.
Nixon Peabody LLP
100 Summer Street
Boston, MA 02110
Tel: (617) 345-1000
Fax: (617) 345-1300
Email: rpedone@nixonpeabody.com
About Smartours LLC
smarTours LLC is a travel company that offers tour packages with
airfare, hotels, and more included. Founded in 1996, smarTours is
a provider of direct-to-consumer, value-oriented travel experiences
to a variety of domestic and global destinations. It offers both
pre-packaged tours with pre-set departure dates for individual
travelers and customized private tours for passenger groups
consisting of more than 20 persons.
smarTours, LLC and an affiliate sought Chapter 11 protection
(Bankr. D. Del. Lead Case No. 20-12625) on Oct. 19, 2020. The Hon.
Karen B. Owens is the case judge.
The Debtors have tapped Nixon Peabody LLP as its bankruptcy
counsel, Cross & Simon, LLC as local Delaware counsel, and Ariste
Advisors LLC as financial advisor. Prime Clerk LLC is the claims
agent.
SMARTOURS LLC: Gets OK to Hire Ariste Advisors as Financial Advisor
-------------------------------------------------------------------
SmarTours, LLC and its affiliates received approval from the U.S.
Bankruptcy Court for the District of Delaware to hire Ariste
Advisors LLC as their financial advisor.
The services Ariste will render are:
(a) Assist in maintaining a 13-week cash forecast, provide
variance reporting, and address potential risks and opportunities
to liquidity;
(b) Support the development of financial projections to
reflect the reorganized business;
(c) Assist the Debtors' legal counsel as needed in the
administration of the Debtors' Chapter 11 cases;
(d) Assist in the preparation, update and variance reporting
of a debtor-in-possession budget;
(e) Assist in the preparation and filing of monthly operating
reports and support the responsiveness to the Office of the U.S.
Trustee;
(f) Participate in initial debtor interview with the U.S.
Trustee and creditor committee formation meeting;
(g) Assist in the claims reconciliation process; and
(h) Provide general advisory services and support in
connection with confirmation of the Debtors' Chapter 11 plan.
Ariste's customary hourly rates are:
Joseph R. D'Angelo $600
Paula Sosamon $300
Ariste is a "disinterested person" as defined by Bankruptcy Code
Section 101(14), according to court filings.
The firm can be reached through:
Joseph R. D'Angelo
Ariste Advisors LLC
104 W 40th St #500
New York, NY 10018
Phone: 917-968-9650
Email: Joe@AristeAdvisors.com
About Smartours LLC
SmarTours LLC is a travel company that offers tour packages with
airfare, hotels, and more included. Founded in 1996, smarTours is
a provider of direct-to-consumer, value-oriented travel experiences
to a variety of domestic and global destinations. It offers both
pre-packaged tours with pre-set departure dates for individual
travelers and customized private tours for passenger groups
consisting of more than 20 persons.
SmarTours, LLC and an affiliate sought Chapter 11 protection
(Bankr. D. Del. Lead Case No. 20-12625) on Oct. 19, 2020. The Hon.
Karen B. Owens is the case judge.
The Debtors tapped Nixon Peabody LLP as their bankruptcy counsel,
Cross & Simon, LLC as local Delaware counsel, and Ariste Advisors
LLC as financial advisor. Prime Clerk LLC is the claims agent.
SMARTOURS LLC: Gets OK to Hire Cross & Simon as Delaware Counsel
----------------------------------------------------------------
SmarTours, LLC and its affiliates received approval from the U.S.
Bankruptcy Court for the District of Delaware to hire Cross &
Simon, LLC as their Delaware counsel.
The firm will provide these services:
a. perform, together with co-counsel Nixon Peabody LLP, all
necessary services in connection with the Debtors' Chapter 11
cases;
b. take all necessary actions to protect and preserve the
Debtors' rights during the pendency of the cases, including the
filing of objections to claims filed against the estates;
c. represent the Debtors at hearings, meetings and
conferences;
d. serve as lead counsel for matters, which Nixon Peabody has
any conflict; and
e. perform all other necessary legal services.
The principal attorneys and paralegals presently designated to
represent the Debtors, and their standard hourly rates, are:
Christopher P. Simon $725
Kevin S. Mann $625
Stephanie MacDonald (paralegal) $200
Nicole DiBiaso (paralegal) $200
Cross & Simon received a retainer in the amount of $25,000 on Oct.
13, and $13,026.50 on Oct. 15. The firm will also be reimbursed
for out-of-pocket expenses incurred.
Christopher Simon, Esq., at Cross & Simon, disclosed in court
filings that the firm is a "disinterested person" as the term is
defined in Section 101(14) of the Bankruptcy Code.
Cross & Simon may be reached at:
Christopher P. Simon, Esq.
Cross & Simon, LLC
1105 North Market Street, Suite 901
Wilmington, DE 19801
Tel: + 302 777 4200 (ext.105)
Fax: +1 302 777 4224
About Smartours LLC
SmarTours LLC is a travel company that offers tour packages with
airfare, hotels, and more included. Founded in 1996, smarTours is
a provider of direct-to-consumer, value-oriented travel experiences
to a variety of domestic and global destinations. It offers both
pre-packaged tours with pre-set departure dates for individual
travelers and customized private tours for passenger groups
consisting of more than 20 persons.
SmarTours, LLC and an affiliate sought Chapter 11 protection
(Bankr. D. Del. Lead Case No. 20-12625) on Oct. 19, 2020. The Hon.
Karen B. Owens is the case judge.
The Debtors tapped Nixon Peabody LLP as their bankruptcy counsel,
Cross & Simon, LLC as local Delaware counsel, and Ariste Advisors
LLC as financial advisor. Prime Clerk LLC is the claims agent.
SONOMA PHARMACEUTICALS: Posts $120K Net Income in Second Quarter
----------------------------------------------------------------
Sonoma Pharmaceuticals, Inc., filed with the Securities and
Exchange Commission its Quarterly Report on Form 10-Q disclosing
net income of $120,000 on $5.77 million of revenues for the three
months ended Sept. 30, 2020, compared to a net loss of $1.20
million on $4.73 million of revenues for the three months ended
Sept. 30, 2019.
For the six months ended Sept. 30, 2020, the Company reported net
income of $360,000 on $11.54 million of revenues compared to a net
loss of $488,000 on $9.22 million of revenues for the same period
during the prior year.
As of Sept. 30, 2020, the Company had $18.14 million in total
assets, $6.58 million in total liabilities, and $11.56 million in
total stockholders' equity.
"Management believes that the Company has access to additional
capital resources through possible public or private equity
offerings, debt financings, corporate collaborations or other
means; however, the Company cannot provide any assurance that other
new financings will be available on commercially acceptable terms,
if needed. If the economic climate in the U.S. deteriorates, the
Company's ability to raise additional capital could be negatively
impacted. If the Company is unable to secure additional capital,
it may be required to take additional measures to reduce costs in
order to conserve its cash in amounts sufficient to sustain
operations and meet its obligations. These measures could cause
significant delays in the Company's continued efforts to
commercialize its products, which is critical to the realization of
its business plan and the future operations of the Company. These
matters raise substantial doubt about the Company's ability to
continue as a going concern," Sonoma stated.
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/Archives/edgar/data/1367083/000168316820004049/sonoma_10q-093020.htm
About Sonoma Pharmaceuticals
Sonoma Pharmaceuticals, Inc. -- http://www.sonomapharma.com/-- is
a global healthcare company that develops and produces stabilized
hypochlorous acid, or HOCl, products for a wide range of
applications, including wound care, animal health care, eye care,
oral care and dermatological conditions. The Company's products
reduce infections, itch, pain, scarring and harmful inflammatory
responses in a safe and effective manner. In-vitro and clinical
studies of HOCl show it to have impressive antipruritic,
antimicrobial, antiviral and anti-inflammatory properties. Its
stabilized HOCl immediately relieves itch and pain, kills pathogens
and breaks down biofilm, does not sting or irritate skin and
oxygenates the cells in the area treated assisting the body in its
natural healing process. The Company sells its products either
directly or via partners in 53 countries worldwide.
Sonoma reported a net loss of $2.95 million for the year ended
March 31, 2020, compared to a net loss of $11.80 million for the
year ended March 31, 2019. As of June 30, 2020, the Company had
$18.65 million in total assets, $7.24 million in total liabilities,
and $11.41 million in total stockholders' equity.
Marcum LLP, in New York, NY, the Company's auditor since at least
2006, issued a "going concern" qualification in its report dated
July 10, 2020, citing that the Company has incurred significant
losses and needs to raise additional funds to meet its obligations
and sustain its operations. These conditions raise substantial
doubt about the Company's ability to continue as a going concern.
SOTHEBY'S: Moody's Rates $165MM Add-on Secured Notes 'B1'
---------------------------------------------------------
Moody's Investors Service changed Sotheby's outlook to negative
from stable and rated the proposed $165 million add-on senior
secured notes at B1. All other ratings were affirmed, including the
B1 corporate family rating, B1-PD probability of default rating, B1
ratings on the existing senior secured notes and term loan, and B3
rating of Sotheby's (Old) unsecured notes.
Proceeds from the add-on notes will be used to fund a shareholder
distribution. The notes will have the same terms and conditions as
the existing $600 million notes.
"We view the debt-funded distribution as aggressive given the
significant increase in leverage to 7 times on a Moody's-adjusted
basis and still volatile art market conditions," said Moody's
analyst Raya Sokolyanska. "Nevertheless, we recognize Sotheby's
accelerated transition to online auctions and growth in private
sales has enabled substantial year-to-date margin expansion, which
we expect to benefit the company going forward."
The change in outlook to negative from stable reflects governance
considerations, particularly more aggressive financial strategies
than were previously expected. Moody's had previously expected
Sotheby's to use all free cash flow to reduce debt, rather than
increase to support distributions. The negative outlook also
reflects the uncertainty with regard to deleveraging, given the
substantial increase in gross lease-adjusted leverage following the
transaction.
Moody's took the following rating actions:
Issuer: Sotheby's:
Corporate Family Rating, affirmed B1
Probability of Default Rating, affirmed B1-PD
Senior Secured Revolving Credit Facility, affirmed B1 (LGD3)
Senior Secured Term Loan B, affirmed B1 (LGD3)
Secured Notes, affirmed B1 (LGD3)
Add-on Senior Secured Notes, assigned B1 (LGD3)
Outlook, changed to negative from stable
Issuer: Sotheby's (Old):
Senior Unsecured Regular Bond/Debenture, affirmed B3 (LGD6)
Outlook, changed to negative from stable
RATINGS RATIONALE
Sotheby's B1 is supported by the company's strong qualitative
factors, including its position as one of just two major branded
global auction houses and its well-known expertise in a highly
specialized industry with high barriers to entry. Moody's expects
the company to generate long-term earnings growth through the
acceleration of its strategic initiatives, including increased
digitalization, expansion into new non-art product categories, and
focus on new geographies and appealing to an expanded target
demographic. The rating is also supported by Sotheby's good
liquidity over the next 12-18 months. The credit profile also
reflects governance considerations, particularly its ownership by
Patrick Drahi, a private holder with a long-term horizon. Sotheby's
financial strategy includes its stated intent to maintain net
leverage in the 4.0-4.5x range by applying all free cash flow to
reduce debt. However, given the original expectation for debt
reduction, Moody's views the proposed debt-financed distribution as
aggressive.
The credit profile is constrained by the company's pro forma high
leverage and the high cyclicality of the art auction market, which
can result in dramatic swings in operating performance and credit
metrics. The transaction will increase Moody's-adjusted debt/EBITDA
to 7 times from 6.4 times as of September 30, 2020. Moody's expect
leverage to decline to 5.75x in 2021, as a result of earnings
improvement from modest debt repayment, as well as continued
resilience in the art market, growth in private sales, and expense
management. However, there is significant uncertainty with regard
to future market conditions, given the ongoing coronavirus
pandemic.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if the company established a track
record of adhering to its financial policy, maintains very good
liquidity and sustains debt/EBITDA below 4.5x (Moody's adjusted
basis).
Ratings could be downgraded if debt/EBITDA is sustained above 5.75x
or if Sotheby's liquidity weakens and is insufficient to support
the company through cyclical downturns in the auction market or
should the auction market face a protracted structural downturn.
Sotheby's, headquartered in New York NY, is one of the two largest
auction houses in the world. Total revenues are about $981 million
for the last twelve-month period ending Sept. 30, 2020. Sotheby's
has been controlled by Patrick Drahi since the October 2019
take-private transaction.
The principal methodology used in these ratings was Business and
Consumer Service Industry published in October 2016.
SOTHEBY'S: S&P Alters Outlook to Stable, Affirms 'B+' ICR
---------------------------------------------------------
S&P Global Ratings revised its outlook on Sotheby's to stable from
negative and affirmed its 'B+' issuer credit rating. At the same
time, S&P affirmed all of its issue-level ratings on Sotheby's,
including its 'B+' rating on its senior secured notes, which it
intends to upsize by $165 million.
The stable outlook reflects S&P's expectation that management's
cost-efficiency actions along with continued revenue expansion will
increase the company's EBITDA in 2021 and reduce its leverage below
6x.
Sotheby's good third-quarter results demonstrate its ability to
successfully adapt to an online auction format as well as the art
market's resilience amid the pandemic.
The company's third-quarter sales were solid and improved
substantially relative to the previous year, rising to $280 million
from $77 million.
S&P said, "While we note that this large increase was due, in part,
to auctions that were postponed from earlier in the year (such as
the Hong Kong July series), Sotheby's private sales were also
strong and reached record levels over the last nine months. We
believe the company's results illustrate the strength of the global
art market despite the COVID-19 pandemic, which we expect is in
part correlated to the recovery in equity markets from their
troughs in March."
"Therefore, we are now increasingly confident that Sotheby's will
deleverage in line with our pre-pandemic expectations and forecast
its S&P-adjusted leverage will be in the low 5x area in fiscal year
2021. Although there is still significant uncertainty regarding the
path of the pandemic and its effect on high-end consumer spending,
we expect the company to maintain an adequate cushion in its credit
metrics to absorb any related pressures without increasing its
leverage above 6x on a sustained basis."
The pandemic has accelerated the shift to online auctions.
Sotheby's has had success with this format and hosted over 200
online sales through the third quarter, which included the live
streaming of its important annual auctions. S&P views this shift as
providing a long-term benefit to the company because it will allow
customers from across the globe to more easily participate in
auctions. However, the online auction business features lower
barriers to entry than the traditional auction business and S&P
believes Sotheby's is exposed to greater competition in this
channel.
The proposed $165 million upsizing of the company's senior secured
notes will have a minimal effect on its leverage, though it does
signal an aggressive financial policy.
Sotheby's will use the proceeds from the upsize to fund
distributions to its owners roughly a year after they took the
company private in September 2019. Even with the slight increase in
its debt, S&P still forecasts that the company will materially
deleverage by almost a full turn through fiscal year 2021. That
said, the upsize does signal that the company will employ an
aggressive financial policy and likely pursue future shareholder
returns using excess cash and, potentially, debt.
The stable outlook on Sotheby's reflects S&P's expectation that its
performance will continue to benefit from resilient art market in
the midst of a global pandemic, leading to leveraging of cost
efficiencies and expansion of the EBITDA base contributing to
leverage declining comfortably below 6x in fiscal year 2021.
S&P could raise its rating on Sotheby's if:
-- S&P expects its leverage to decline to, and remain in, the
mid-4x area, which would likely require it to employ a more
conservative financial policy; and
-- S&P believes its performance is sustainable in light of the
cyclical nature of the art business and the potential effects of
macroeconomic contractions.
S&P could lower its rating on Sotheby's if:
-- S&P expect its S&P Global Ratings-adjusted leverage to remain
near 6x or anticipate its coverage ratios will deteriorate to such
an extent that its financial flexibility becomes constrained and
its free operating cash flow generation is limited. This could
occur if the company expands at a slower rate than S&P expects and
its EBITDA margins contract significantly, potentially due to a
prolonged macroeconomic slow down or heightened competition that
reduces its auction margins;
-- S&P expects the company to pursue highly aggressive financial
policies, which would be evidenced by sizable debt-financed
dividends that lead it to to believe its forecast improvement in
its leverage will be materially offset by additional debt issuance;
and
-- S&P would also consider lowering its rating if it believes the
company's competitive position has weakened materially.
STEIN MART: Sale of Intellectual Property for $4M Approved
----------------------------------------------------------
Judge Jerry A. Funk of the U.S. Bankruptcy Court for the Middle
District of Florida authorized Stein Mart, Inc. and affiliates to
sell their intellectual property, which consists of trademarks,
domain names, customer files and related transaction data and
social media assets, to Stein Mart Online, Inc. for $4,001,800,
pursuant to their Intellectual Property Asset Purchase Agreement,
dated as of Oct. 29, 2020, subject to overbid.
The Debtors are authorized to enter into the Purchase Agreement,
the Sale, any Related Agreements, and the other Transactions.
The Acquired Assets, including the Intellectual Property, sold
pursuant to the Purchase Agreement to the Buyer is being sold "as
is, where is," without any representations or warranties, free and
clear of all Excluded Liabilities (except Permitted Encumbrances),
liens, claims, interests and encumbrances.
All content prepared and/or produced by The Bohan Agency, Inc. for
the Debtors between March 1, 2020 and the Petition Date is Bohan's
property. Additionally, to the extent any content prepared by
Bohan for the Debtors before March 1, 2020, that is property of the
Debtors' estates, is re-posted by the Buyer on social media or
otherwise re-published by the Buyer, the Buyer will abide by any
limited IP licenses and other third-party agreements entered into
in connection with Bohan's production of such content, relating to
restrictions on reuse or republishing of such content, and will
defend, indemnify, and hold Bohan and its respective shareholders,
members, partners, directors, managers, officers, agents,
representatives, and employees harmless from any and all claims,
demands, damages, liabilities, loss, costs, or deficiencies of any
nature suffered as a result of the Buyer's breach of such
third-party agreement.
The proceeds of the sale of the Acquired Assets will be subject to
the Final Order (I) Authorizing Use of Cash Collateral and
Affording Adequate Protection; (II) Modifying Automatic Stay; and
(III) Granting Related Relief.
The Sale Order constitutes a final order within the meaning of 28
U.S.C. Section 158(a). Notwithstanding any provision in the
Bankruptcy Rules to the contrary, the terms of the Order will be
immediately effective and enforceable upon its entry and not
subject to any stay, notwithstanding the possible applicability of
Bankruptcy Rules 6004(h), 6006(d) or otherwise.
The automatic stay imposed by section 362 of the Bankruptcy Code is
modified to the extent necessary to implement the provisions of the
Purchase Agreement, any Related Agreement, and the Sale Order.
Luis Salazar of Salazar Law filed the Consumer Privacy Ombudsman's
Report on Nov. 20, 2020. As a condition to the Closing of the
Debtors' Sale of the Acquired Assets, including the Intellectual
Property, the Buyer will execute an undertaking to perform and be
legally bound by the recommendations applicable to the Buyer in
paragraph 59 (pages 22 to 23) of the Report.
The Debtors' counsel is directed to serve a copy of the Order on
interested parties who do not receive service by CM/ECF and file a
proof of service within three days of entry.
A copy of the Agreement is available at
https://tinyurl.com/y5u4w4wt from PacerMonitor.com free of charge.
About Stein Mart
Stein Mart, Inc. (NASDAQ: SMRT) -- http://www.SteinMart.com/-- is
a national specialty omni off-price retailer offering designer and
name-brand f ashion apparel, home decor, accessories and shoes at
everyday discount prices. Stein Mart provides real value that
customers love every day. The company operates 281 stores across 30
states.
Stein Mart Inc. and its affiliates sought protection under Chapter
11 of the Bankruptcy Code (Bankr. M.D. Fla. Case Nos. 20-02387 to
20-02389) on Aug. 12, 2020. As of May 2, 2020, the Debtors had
total assets of $757.6 million and total liabilities of $791.2
million.
Judge Jerry A. Funk oversees the cases.
The Debtors tapped Foley & Lardner LLP as their legal counsel,
Clear Thinking Group LLC as financial advisor, and Stretto as
claims and noticing agent.
STEWART STREET: U.S. Trustee Unable to Appoint Committee
--------------------------------------------------------
The Office of the U.S. Trustee on Nov. 23, 2020, disclosed in a
court filing that no official committee of unsecured creditors has
been appointed in the Chapter 11 case of Stewart Street Academy and
Childcare, LLC.
About Stewart Street Academy and Childcare
Stewart Street Academy and Childcare, LLC filed a voluntary
petition for relief under Chapter 11 of the Bankruptcy Code (Bankr.
N.D. Ga. Case No. 20- 11216) on September 1, 2020. The petition was
signed by Randall Kimball, managing member. At the time of the
filing, the Debtor estimated to have $1 million to $10 million in
both assets and liabilities. Judge W. Homer Drake oversees the
case. Scott B. Riddle, Esq., at the Law Office of Scott B. Riddle,
LLC serves as the Debtor's counsel.
SUGARHOUSE HSP: Moody's Reviews B3 CFR for Downgrade
----------------------------------------------------
Moody's Investors Service placed the ratings of Sugarhouse HSP
Gaming Prop. Mezz, L.P. on review for downgrade following an order
by the City of Philadelphia that casinos and other indoor dining
and gathering venues within the city limits close through Jan. 1,
2021. The order is in response to a rise in coronavirus cases in
the area and becomes effective this Friday, Nov. 20. Ratings placed
under review include the company's B3 Corporate Family Rating,
B3-PD Probability of Default Rating, Ba3 rating on its $95 million
super-priority revolver, and Caa1 rating on its senior secured
notes.
Sugarhouse owns Rivers Philadelphia, one of three casinos in the
Philadelphia area, but the only one inside the city limits. Parx
Casino in Bensalem, Bucks County, Valley Forge Casino Resort in
Upper Merion Township, Montgomery County, and Harrah's Philadelphia
in Chester, Delaware County are located outside the city limits and
are not directly affected by this order. Rivers Philadelphia, along
with Pennsylvania's other casinos, were closed last March, then
re-opened in July after meeting requirements to do so from the
Commonwealth of Pennsylvania and the City of Philadelphia.
The following ratings/assessments are affected by the action:
On Review for Downgrade:
Issuer: Sugarhouse HSP Gaming Prop. Mezz, L.P.
Corporate Family Rating, Placed on Review for Downgrade, currently
B3
Probability of Default Rating, Placed on Review for Downgrade,
currently B3-PD
Senior Secured Priority Revolving Credit Facility, Placed on Review
for Downgrade, currently Ba3 (LGD1)
Senior Secured 1st Lien Notes, Placed on Review for Downgrade,
currently Caa1 (LGD4)
Outlook Actions:
Issuer: Sugarhouse HSP Gaming Prop. Mezz, L.P.
Outlook, Changed To Rating Under Review From Negative
RATINGS RATIONALE / FACTORS THAT COULD LEAD TO AN UPGRADE OR
DOWNGRADE OF THE RATINGS
The review for downgrade considers that Sugarhouse derives all its
revenue and earnings from Rivers Philadelphia. As a result, this
second period of closing will absorb liquidity and increase
leverage, which is already high, at 8.0x for the 12-month period
ended Sept. 30, 2020. The review for downgrade also considers
Moody's view that the closing could be extended beyond Jan. 1, 2021
if the closing order and other efforts to reduce coronavirus do not
occur by that time. This would put an even further strain on
liquidity and covenant compliance. In addition, Sugarhouse will
need to seek amendments to its financial covenants to accommodate
the upcoming six-week closure. Sugarhouse obtained favorable
amendments to these covenants earlier in November. However, those
amendments did not anticipate the recent closing order and will not
likely be met as currently amended.
The review for downgrade will also consider certain favorable
factors that will be weighed against the risks previously
mentioned. These factors include $65 million of unrestricted cash
(excludes day-to-day operating cash requirement) and $27 million of
current availability on the company's $95 million revolver. The
company also recently made an $8.8 million semi-annual interest
payment on its senior secured notes earlier this month with the
next payment not due until May 15, 2021. This compares to a
relatively low monthly non-revenue cash burn rate going forward of
about $3.6 million, and relatively little in the way of near-term
debt maturities. Other than the revolver which expires in May 2022,
the company's next meaningful debt maturity is 2025 when the senior
secured notes mature.
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
Sugarhouse from the current weak US economic activity and a gradual
recovery for the coming months. Although an economic recovery is
underway, it is tenuous and its continuation will be closely tied
to containment of the virus. As a result, the degree of uncertainty
around its forecasts is unusually high. Moody's regards the
coronavirus outbreak as a social risk under its ESG framework,
given the substantial implications for public health and safety.
The gaming sector has been one of the sectors most significantly
affected by the shock given its sensitivity to consumer demand and
sentiment. More specifically, the weaknesses in Sugarhouse's credit
profile, including its exposure to travel disruptions and
discretionary consumer spending, have left it vulnerable to shifts
in market sentiment in these unprecedented operating conditions and
Sugarhouse remains vulnerable to the outbreak continuing to
spread.
Sugarhouse's ratings reflect the impact on Sugarhouse of the
breadth and severity of the shock, and the broad deterioration in
credit quality it has triggered.
Sugarhouse's rating could be lowered if one or more of the
following occurs: (1) the company is not able to obtain financial
covenant amendments, (2) there is a material unfavorable change in
the company's cash burn rate and overall liquidity; and (3) the
closing of Riverside Philadelphia extends beyond January 1, 2021. A
ratings upgrade is unlikely given the weak operating environment
and continuing uncertainty related to the coronavirus. An upgrade
would require a high degree of confidence on Moody's part that the
gaming sector has returned to a period of long-term stability, and
that Sugarhouse demonstrate the ability to generate positive free
cash flow, maintain good liquidity, and operate at a debt/EBITDA
level at 6.0x or lower.
The principal methodology used in these ratings was Gaming
Methodology published in October 2020.
Sugarhouse owns the Rivers Casino Philadelphia, PA on the Delaware
River waterfront. The company is majority-owned and controlled by
Neil Bluhm, his family, and Greg Carlin. Sugarhouse generated net
revenue of $280 million for the last 12-month period ended Sept.
30, 2020.
SUNCOR ENERGY: Egan-Jones Lowers Senior Unsecured Ratings to BB+
----------------------------------------------------------------
Egan-Jones Ratings Company, on November 10, 2020, downgraded the
foreign currency and local currency senior unsecured ratings on
debt issued by Suncor Energy Incorporated to BB+ from BBB-.
Headquartered in Calgary, Canada Suncor Energy, Inc. is an
integrated energy company focused on developing the Athabasca oil
sands basin.
SUNPOWER CORP: Egan-Jones Hikes Sr. Unsecured Ratings to B
----------------------------------------------------------
Egan-Jones Ratings Company, on November 13, 2020, upgraded the
foreign currency and local currency senior unsecured ratings on
debt issued by SunPower Corporation to B from CCC+. EJR also
upgraded the rating on commercial paper issued by the Company to B
from C.
Headquartered in San Jose, California, SunPower Corporation is an
integrated solar products and services company.
SYMPLR SOFTWARE: Moody's Assigns B3 CFR, Outlook Stable
-------------------------------------------------------
Moody's Investors Service assigned first-time credit ratings to
Symplr Software, Inc., including a B3 corporate family rating, a
B3-PD probability of default rating, and B2 instrument ratings to
Symplr's new first-lien debt, which includes a $680 million term
loan and a $100 million revolving credit facility. Proceeds from
the first-lien term loan and from a new, $250 million second-lien
term loan (unrated), as well as $566 million of new cash and rolled
over equity, will be used to affect the healthcare governance,
risk, and compliance software-solutions provider's purchase of
TractManager Holdings, LLC. Transaction proceeds will also go
towards refinancing Symplr's existing debt of $631 million, and
towards satisfying transaction fees and other administrative
expenses. The outlook is stable.
Moody's assigned the following ratings to Symplr Software, Inc.:
Assignments:
Issuer: Symplr Software, Inc.
Corporate Family Rating, Assigned B3
Probability of Default Rating, Assigned B3-PD
Gtd Senior Secured First-Lien Revolving Credit Facility expiring
late 2025, assigned B2 (LGD3)
Gtd Senior Secured First-Lien Term Loan maturing late 2027,
assigned B2 (LGD3)
Outlook Actions:
Issuer: Symplr Software, Inc.
Outlook, Assigned Stable
RATINGS RATIONALE
The B3 CFR reflects Symplr's small scale, very high
Moody's-adjusted opening pro-forma debt-to-EBITDA leverage of
roughly 8.0 times, and integration risks as the healthcare GRC
provider takes on, with private equity backing, TractManager, a
smaller, less profitable provider of tech-enabled services that
help healthcare providers and payers improve their credentialing,
compliance, and supply chain efforts. Combined, the two companies
will have a revenue base approaching $300 million, strong EBITDA
margins, and free cash flow generation capabilities consistent with
the CFR.
Even with substantial, favorable adjustments to add back delayed
billings caused by COVID-19, partial credit for heavy transaction
and integration costs driven by Symplr's active acquisition policy,
and other billing and synergy assumptions, Symplr's pro-forma Sept.
30, 2020 LTM Moody's-adjusted debt-to-EBITDA leverage is about 8.0
times, weak for the B3 CFR. Moody's leverage calculation would be a
half-turn higher if Moody's expensed the company's $10 million in
annual capitalized software costs. Although Moody's expects
leverage will moderate through operating growth and synergy
realization, private equity ownership, an active history of
acquisitions, and very loose covenants that do not tighten imply
that Symplr's financial strategy could be aggressive.
Moody's believes the complementarity of Symplr's and TractManager's
products and end markets, and minimal, 9% customer overlap, support
the rationale for the combination of businesses, but even together
the companies present a revenue base that's small for the B3 rating
category. SaaS-based subscriptions and related maintenance and
services combine to provide an attractive revenue stream that is
roughly 84% recurring. Both TractManager's and Symplr's total
billings were flat in 2019 versus 2018, yet both showed marked
improvement in the first and third quarters of 2020 (the second
quarter was weaker because of COVID). The workforce management
segment, the combined company's largest (acquired from General
Electric Healthcare in early 2019), has been particularly strong,
with 10% revenue growth in the third quarter of 2020 versus the
prior-year quarter. Moody's expects that solidly
mid-single-digit-percentage revenue growth can be achieved through
new cross-selling opportunities, a revitalized sales force, and the
migration of customers to cloud-based services.
Healthcare industry trends support the rating and help Moody's to
look beyond the drawbacks of Symplr's lack of operating history,
high leverage and poor earnings quality. These supporting trends
include increased healthcare spending, greater, regulatory-driven
complexity, margin pressures caused by the transition to
value-based care, and the need for an enterprise-wide solution to
support the complexity of GRC as hospitals consolidate.
Additionally, the credentialing, staffing, and scheduling services
that Symplr's platforms facilitate have become even more necessary
to providers in response to the COVID pandemic.
Moody's views Symplr's liquidity as good, as demonstrated by a
small initial cash balance that will be supplemented by free cash
flows that, as a percentage of debt, are expected to be in the
low-single-digits over the next 12 to 18 months, average for the
ratings category. A large, $100 million revolving credit facility,
undrawn at closing, amply supports possible weakness in cash flows,
but may also hint at the company's appetite for acquisitions. The
transaction's very loose covenant package, including an 8.5 times
first-lien-leverage limit, with no stepdowns, applicable when the
revolver is 35% drawn, and no covenants associated with the term
loans, suggests the company will have unimpeded access to the
liquidity facility.
Symplr's corporate governance policy presents risks through both
the high financial leverage employed and private equity ownership,
which typically places shareholder interests above those of
creditors. Moody's expects aggressive financial policies will
sustain high levels of leverage, including debt-funded M&A
transactions and other shareholder-friendly policies. The burden of
servicing the high debt load may restrict Symplr's ability to
continue investing in products and platform modernization that
might otherwise help the company be competitive.
As proposed, the new credit facility is expected to provide
covenant flexibility that if utilized could negatively impact
creditors, including: i) an incremental first-lien facility
capacity not to exceed (x) the greater of $124 million and 100% of
adjusted EBITDA, less any incremental second-lien debt, plus (y) an
amount such that first lien leverage does not exceed 5.5 times (for
pari passu debt), or either an amount such that the senior secured
leverage ratio does not exceed 7.5 times or the interest coverage
ratio is not less than 2.0x (for secured debt junior to the first
lien), or 8.0 times total leverage (for debt secured on a junior
basis to the second lien term loans, secured by non-collateral, or
unsecured); alternatively, all of the above ratios may be satisfied
so long as leverage (coverage) does not increase (decrease) if
incurred in connection with a permitted acquisition or investment;
an amount up to the greater of $124m and 100% of adjusted EBITDA
may be incurred with an earlier maturity date than the existing
debt ii) the ability to transfer assets to unrestricted
subsidiaries, to the extent permitted under the investment baskets,
with no additional "blocker" provisions restricting such transfers
and; iii) requirement that only wholly-owned domestic restricted
subsidiaries act as subsidiary guarantors, raising the risk that
guarantees may be released following a partial change in ownership.
The credit agreement requires 100% of net cash proceeds to be used
to repay the credit facility, if not reinvested within 18 (subject
to extension to 24 months), with 50% and 25% stepdowns on the
repayment requirement if first lien leverage is no more than 4.50
times and 4.25 times, respectively.
The stable rating outlook reflects Moody's expectation that
top-line growth of at least 5 to 7% and the realization of
synergies will allow for positive free cash flow as well as for
modest deleveraging, albeit from a level that is high at the outset
of the LBO.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if earnings growth and synergy
realization enable Symplr to sustain Moody's-adjusted
debt-to-EBITDA leverage below 6.5 times, and if free cash flow as a
percentage of debt is expected to be sustained in the mid-single
digits. A ratings downgrade could result if Moody's expects free
cash flow to approach breakeven, or if access to the revolver
appears threatened. Failure to achieve at least mid-single-digit
revenue growth or to make progress towards delevering, due to
difficulties integrating TractManager or falling short of
anticipated synergies, would also pressure the rating.
Symplr Software, Inc. provides on-premise and Software-as-a-Service
("SaaS") medical compliance and credentialing solutions to
healthcare facilities and healthcare providers. With backing from
private equity owner Clearlake Capital, Symplr is scheduled to
acquire, in late 2020, TractManager, Inc., a provider of
internet-based tools and services that assist healthcare providers
and payers with improving the effectiveness and efficiency of their
programs in compliance, supply chain, credentialing, and clinical
evidence. Moody's expects the combined company to generate 2021
revenue of $300 million.
The principal methodology used in these ratings was Software
Industry published in August 2018.
SYNEOS HEALTH: Moody's Assigns B2 Rating to New Sr. Unsec. Notes
----------------------------------------------------------------
Moody's Investors Service assigned a B2 rating to the proposed
senior unsecured notes of Syneos Health, Inc. and upgraded the
existing secured bank credit facility ratings to Ba2 from Ba3.
Moody's also affirmed the Ba3 Corporate Family Rating and
Probability of Default Rating at Ba3-PD. There was no change to the
SGL-1 Speculative Grade Liquidity Rating. The outlook is stable.
Proceeds from Syneos' unsecured notes offering will be for general
corporate purposes, including funding the announced acquisition of
Synteract for $400 million, and some repayment of debt. The
Synteract acquisition is expected to close by the end of 2020.
The affirmation of the Ba3 Corporate Family rating reflects that
while leverage will temporarily rise above 5 times, Moody's expects
debt/EBITDA to decline below 4.5 times over the next 12 months. The
addition of Syteract strengthens Syneos' full-service offering as a
Contract Research Organization (CRO), particularly with small to
mid-sized pharmaceutical customers. Moody's believes Synteract will
add about $200 million of incremental revenue to Syneos in 2021.
The B2 rating on the unsecured notes, two notches below the
Corporate Family Rating, reflects the significant amount of secured
debt ahead in the capital structure. The upgrade for the senior
secured credit facilities to Ba2 reflects the introduction of
junior debt in the capital structure that provides loss absorption
to senior creditors.
Syneos Health, Inc.:
Rating assigned:
Senior unsecured notes due 2028 at B2 (LGD6)
Ratings upgraded:
$600 million senior secured revolving credit facility to Ba2 (LGD3)
from Ba3 (LGD3)
Senior secured term loan credit facilities to Ba2 (LGD3) from Ba3
(LGD3)
Ratings affirmed:
Corporate Family Rating at Ba3
Probability of Default Rating at Ba3-PD
Outlook action:
The outlook is stable.
RATINGS RATIONALE
Syneos' Ba3 Corporate Family Rating is supported by its meaningful
scale and diversity with revenue approaching $5.0 billion and its
leading market position in pharmaceuticals contract research and
commercialization services. Leverage will temporarily increase
above 5x gross debt/EBITDA in 2020 to fund the acquisition of
Synteract. Moody's expects debt/EBITDA to decline to below 4.5x
over the next 12 months through a combination of strong EBITDA
growth and debt repayment. Moody's also expects that Syneos will
continue to focus on bolt-on M&A and share repurchases for other
uses of its free cash flow. Syneos' credit profile also encompasses
the risks inherent in the pharmaceutical services industry,
including project cancellations, which can lead to volatility in
revenue and cash flow.
While publicly traded, TH Lee Partners and Advent own approximately
33% of Syneos' common stock, a governance risk. Moody's believes
Syneos will look to deploy some of its free cash flow for share
repurchases.
The SGL-1 Speculative Grade Liquidity Rating is supported by cash
of $250 million at Sept. 30, 2020 and Syneos' access to a $600
million revolving credit facility that will expire in 2024. Syneos
generates good free cash flow that Moody's expects will exceed $400
million in 2021. The credit agreement contains a 4.5x maximum first
lien leverage ratio. Moody's anticipates that Syneos will maintain
good cushion under the covenant.
The stable outlook reflects Moody's view that earnings will grow
over the next 12-18 months but that debt/EBITDA will remain above
4x. Further it assumes that impacts from COVID-19 do not materially
impact revenue backlogs.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be downgraded if debt/EBITDA is sustained above
5.0x, if liquidity deteriorates, or if Syneos experiences
significant weakness in new business wins or elevated project
cancellations.
The ratings could be upgraded if Syneos' debt/EBITDA is sustained
below 4.0x and it remains disciplined with respect to M&A and share
repurchases while maintaining sustained growth in its commercial
businesses.
Syneos Health, Inc. is a leading global contract research
organization providing outsourced research and development services
for pharmaceutical and biotechnology companies. Syneos' main area
of focus is late-stage clinical trials. Syneos reported total
revenue of approximately $4.5 billion for the twelve months ended
Sept. 30, 2020.
The principal methodology used in these ratings was Business and
Consumer Service Industry published in October 2016.
TERMINIX GLOBAL: S&P Raises Senior Unsecured Notes Rating to 'B+'
-----------------------------------------------------------------
S&P Global Ratings raised its ratings on Terminix Global Holdings
Inc.'s outstanding senior unsecured notes (consisting of $186
million in 2027 outstanding notes and $49 million outstanding in
2038 notes originally issued by The ServiceMaster Co. LLC) to 'B+'
from 'B'.
The upgrade follows the company's announcement on Nov. 16, 2020,
that it used a portion of the proceeds from the sale of its
ServiceMaster Brands franchise business to retire all $750 million
of its senior unsecured notes due 2024. As a result, S&P also
withdrew its ratings on the 2024 notes.
At the same time, S&P revised its recovery rating on the
outstanding senior unsecured notes to '5' from '6', reflecting its
expectation for modest (10%-30%; rounded estimate: 20%) recovery in
the event of a payment default. The revision reflects the much
lower amount of unsecured debt in the capital structure, which
leaves more value available to the remaining unsecured claims.
In addition, S&P affirmed its 'BB+' rating on the company's
first-lien debt, which consists of a $400 million undrawn revolving
credit facility maturing 2024 and a $546 million outstanding first
lien term loan maturing 2026. The '1' recovery rating (rounded
recovery estimate: 95%) is unchanged. S&P's 'BB-' issuer credit
rating and stable outlook on Terminix are also unchanged.
S&P said, "Our ratings continue to reflect Terminix's leading
position in the fragmented U.S. residential pest control market and
history of sound operations, including the successful integration
of acquisitions and the completion of digital transformation
initiatives. In addition, we expect that Terminix's operating
performance will remain good--despite disruptions caused by the
COVID-19 pandemic--because of stable demand in its residential pest
control and termite business. While the company's repayment of $750
million in debt will significantly decrease leverage to below 4x,
we believe leverage could rise back toward 4x due to the company's
acquisition growth strategy."
Recovery Analysis
Key analytical factors
S&P's simulated default scenario contemplates a default occurring
in the first half of 2024. This scenario assumes a significant
sales decline and competitive pricing pressure resulting from a
reputation-damaging event in a key business segment. This could
lead to Terminix's cash flows deteriorating substantially,
triggering a payment default.
Simulated default assumptions
-- Debt service: $74 million (assumed default year interest and
amortization)
-- Minimum capital expenditure: $31 million
-- Cyclicality adjustment: 5%
-- Operational adjustment: 50%
-- Emergence EBITDA: $166 million
-- Default year: 2024
Simplified waterfall
-- Emergence EBITDA: $166 million
-- Multiple: 6x
-- Gross recovery value: $996 million
-- Net recovery value for waterfall after administrative expenses
(5%): $947 million
-- Obligor/nonobligor valuation split: 95%/5%
-- Collateral value available to secured first-lien debt: $930
million
-- Estimated senior secured first-lien claims: $852 million
-- Recovery expectations for senior secured debt: 90%-100%
(rounded estimate: 95%)
-- Collateral value available to senior unsecured and unguaranteed
legacy notes and other debt claims, including deficiency claims:
$94 million
-- Estimated senior unsecured and unguaranteed legacy notes and
other debt claims, including deficiency claims: $386 million
-- Recovery range for subordinated claims: 10%-30% (rounded
estimate: 20%).
TITAN INTERNATIONAL: Chief Accounting Officer to Quit Next Week
---------------------------------------------------------------
Amy S. Evans, vice president and chief accounting officer of Titan
International, Inc., notified the Company of her intention to leave
the Company, effective Dec. 4, 2020, to pursue other opportunities.
From Nov. 16, 2020 until her departure, Ms. Evans will remain as
vice president and chief accounting officer of the Company.
David A. Martin, senior vice president and chief financial officer
of the Company, will serve as the Company's principal accounting
officer, effective upon the effective date of Ms. Evans's departure
until the Board of Directors of the Company appoints a new chief
accounting officer.
About Titan
Titan International, Inc. -- http://www.titan-intl.com/-- is a
global manufacturer of off-highway wheels, tires, assemblies, and
undercarriage products. Headquartered in Quincy, Illinois, the
Company globally produces a broad range of products to meet the
specifications of original equipment manufacturers (OEMs) and
aftermarket customers in the agricultural,
earthmoving/construction, and consumer markets.
Titan reported a net loss of $51.52 million for the year ended Dec.
31, 2019, compared to net income of $13.04 million for the year
ended Dec. 31, 2018. As of Sept. 30, 2020, the Company had $1.01
billion in total assets, $822.13 million in total liabilities, $25
million in redeemable noncontrolling interest, and $169.21 million
in total equity.
* * *
As reported by the TCR on June 23, 2020, S&P Global Ratings
affirmed its ratings on Titan International Inc., including the
'CCC+' issuer credit rating. S&P expects weak demand to lower
Titan's profitability, causing negative free operating cash flow
(FOCF) generation in 2020.
As reported by the TCR on May 11, 2020, Moody's Investors Service
downgraded its ratings for Titan International, including the
company's corporate family rating to 'Caa3' from 'Caa1'. The
downgrades reflect expectations for challenging industry conditions
through 2020 to pressure Titan's earnings and cash flow, resulting
in the company's capital structure remaining unsustainable with
excessive financial leverage above 10x debt/EBITDA likely into 2021
and a weak liquidity profile reliant on external and alternative
funding sources.
TOTAL MARKETING: Case Summary & 15 Unsecured Creditors
------------------------------------------------------
Debtor: Total Marketing Concepts, Inc.
1043 Upsala Road
Sanford, FL 32771
Business Description: Total Marketing Concepts, Inc. provides
advertising & marketing services.
Chapter 11 Petition Date: November 25, 2020
Court: United States Bankruptcy Court
Middle District of Florida
Case No.: 20-06544
Debtor's Counsel: Aldo G. Bartolone, Esq.
BARTOLONE LAW, PLLC
1030 N. Orange Avenue
Suite 300
Orlando, FL 32801
Tel: (407) 294-4440
Fax: (407) 287-5544
Email: aldo@bartolonelaw.com
Estimated Assets: $0 to $50,000
Estimated Liabilities: $10 million to $50 million
The petition was signed by Andrew Dorko, Jr., chief executive
officer.
A copy of the petition containing, among other items, a list of the
Debtor's 15 unsecured creditors is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/UHFCWDY/Total_Marketing_Concepts_Inc__flmbke-20-06544__0001.0.pdf?mcid=tGE4TAMA
TOWN SPORTS: Committee Gets OK to Hire Cole Schotz as Legal Counsel
-------------------------------------------------------------------
The official committee of unsecured creditors of Town Sports
International, LLC and its affiliates received approval from the
U.S. Bankruptcy Court for the District of Delaware to retain Cole
Schotz P.C. as its legal counsel.
The firm will provide these services:
a. advise the committee regarding its powers, rights duties,
and obligations in the Debtors' Chapter 11 cases;
c. assist the committee in its consultations with the Debtors
regarding the administration of the cases;
d. assist the committee in reviewing and negotiating terms for
unsecured creditors with respect to (i) the execution of a
debtor-in-possession financing facility and the use of cash
collateral, (ii) the sale of the Debtors' assets, (iii) the
confirmation of a Chapter 11 plan of reorganization or liquidation,
and (iv) other requests for relief which would impact unsecured
creditors;
e. investigate the liens asserted by the Debtors' lenders and
any potential causes of action against the lenders;
f. advise the committee on the corporate aspects of the
Debtors' reorganization or liquidation and participate in the
formulation of a Chapter 11 plan or other means of implementing
reorganization or liquidation;
g. take all necessary actions to protect and preserve the
estates of the Debtors for the benefit of creditors, including the
investigation of the acts, conduct, assets, liabilities and
financial condition of the Debtors, and the prosecution of estate
claims, causes of action and any other matters relevant to the
cases;
h. prepare legal papers;
i. advise and represent the committee in hearings and other
judicial proceedings; and
j. perform all other necessary legal services for the
committee.
Cole Schotz will be paid at these rates:
Members and Special Counsel $410 to $1,050 per hour
Associates $285 to $670 per hour
Law Clerks $225 to $290 per hour
Paralegals $215 to $345 per hour
Litigation Support Specialists $340 to $360 per hour
Cole Schotz will also be reimbursed for out-of-pocket expenses
incurred.
Michael Sirota, Esq., a member of Cole Schotz, disclosed in court
filings that his firm is disinterested within the meaning of
Section 101(14) of the Bankruptcy Code.
In accordance with Appendix B-Guidelines for reviewing fee
applications filed by attorneys in larger Chapter 11 cases, Cole
Schotz disclosed that:
-- it has not agreed to any variations from, or alternatives
to, its standard or customary billing arrangements for this
engagement;
-- none of the professionals included in the engagement vary
their rate based on the geographic location of the cases;
-- the firm has not represented the committee in the 12 months
prior to the Debtors' Chapter 11 filing; and
-- the committee approved Cole Schotz's budget and staffing
plan for the first interim compensation period.
The firm can be reached through:
Michael D. Sirota, Esq.
Cole Schotz P.C.
1325 Avenue of the Americas, 19th Floor
New York, NY 10019
Tel: 212-752-8000
Fax: 212-752-8393
About Town Sports International
Town Sports International, LLC and its subsidiaries are owners and
operators of fitness clubs in the United States, particularly in
the Northeast and Mid-Atlantic regions. As of Dec. 31, 2019, Town
Sports operated 186 fitness clubs under various brand names,
collectively serving approximately 605,000 members. Town Sports
owns and operates brands such as New York Sports Clubs, Boston
Sports Clubs, Philadelphia Sports Clubs, Washington Sports Clubs,
Lucille Roberts and Total Woman.
Town Sports and several of its affiliates filed for bankruptcy
protection (Bankr. D. Del. Lead Case No. 20-12168) on Sept. 14,
2020. The petitions were signed by Patrick Walsh, chief executive
officer.
The Debtors were estimated to have $500 million to $1 billion in
consolidated assets and consolidated liabilities.
The Hon. Christopher S. Sontchi presides over the cases.
The Debtors have tapped Kirkland & Ellis and Young Conaway Stargatt
& Taylor, LLP as their bankruptcy counsel, and Houlihan Lokey, Inc.
as their financial advisor and investment banker. Epiq Corporate
Restructuring, LLC serves as claims and noticing agent and
administrative advisor.
On Sept. 24, 2020, the U.S. Trustee appointed a committee of
unsecured creditors in the Debtors' Chapter 11 cases. Cole Schotz
P.C. and Berkeley Research Group, LLC serve as the committee's
legal counsel and financial advisor, respectively.
TOWN SPORTS: Committee Taps Berkeley Research as Financial Advisor
------------------------------------------------------------------
The official committee of unsecured creditors of Town Sports
International, LLC and its affiliates received approval from the
U.S. Bankruptcy Court for the District of Delaware to retain
Berkeley Research Group, LLC as its financial advisor.
The firm will provide these services:
a. assist the committee in analyzing the assumption or
rejection of executory contracts and leases, including the leases
to be assumed by the buyer of the Debtors' assets, and the impact
on creditor recoveries;
b. evaluate the administrative solvency of the Debtors'
Chapter 11 cases in the context of the debtor-in-possession
facility and stalking horse bid in place;
c. assist the committee's legal counsel in the potential
negotiation of changes to the stalking horse bid APA;
d. advise the committee with respect to the Debtors' billing
policies in the context of settlements with state attorneys
general;
e. assist the committee's legal counsel in investigating the
secured lenders' liens and identifying any unencumbered assets;
f. monitor liquidity, cash flows and the use of cash
collateral and DIP funding throughout the cases, and scrutinize
cash disbursements and capital requirements;
g. provide support for the committee's legal counsel as
necessary to address issues related to the debtor-in-possession
financing and any subsequent exit financing;
h. analyze and evaluate relief requested by the Debtors in
connection with their cash management system;
i. assist the committee in its analysis and monitoring of the
Debtors' and non-debtor affiliates' financial affairs;
j. assist the committee in reviewing and evaluating court
papers filed by the Debtors or any other party;
k. analyze both historical and ongoing transactions of the
Debtors and non-debtor affiliates;
l. assist the committee in identifying or reviewing any
preferential payments, fraudulent conveyances and other potential
causes of action that the Debtors' estates may hold against
insiders and third parties;
m. assist the committee in analyzing potential recoveries to
unsecured creditors under various scenarios, including waterfall
modeling as appropriate;
n. assist in negotiating a plan of liquidation and disclosure
statement and, if applicable, the development and analysis of any
bankruptcy plans proposed by the committee;
o. monitor the Debtors' claims management process;
p. assist the committee in its assessment of the Debtors'
employee needs and related costs including any recent employee
bonuses or retention payments, any proposed Key Employee Retention
Plan or Key Employee Incentive Plan and any issues related to
collective bargaining agreements;
q. assist the committee's legal counsel in any sale processes
or monetization of miscellaneous assets;
r. work with the Debtors' tax advisors to ensure that any
restructuring or sale transaction is structured in a tax efficient
manner;
s. identify and develop strategies related to the Debtors'
intellectual property;
t. provide support to the committee and its legal counsel
regarding potential litigation strategies;
u. participate in meetings, discussions and negotiations and
attend court hearings as may be required;
v. provide the services of testifying experts, including
testimony and expert reports as requested by the committee; and
w. provide other services as may be requested by the committee
or its legal counsel from time to time.
Berkeley's standard hourly rates are:
Managing Director $825 - $1,095
Director $600 - $835
Professional Staff $295 - $740
Support Staff $125 - $260
Berkeley is a "disinterested person" within the meaning of Section
101(14) of the Bankruptcy Code, according to court filings.
The firm can be reached through:
David E. Galfus
Berkeley Research Group, LLC
250 Pehle Avenue, Suite 301
Saddle Brook, NJ 07663
Phone: 201-587-7100
Fax: 201-587-7102
About Town Sports International
Town Sports International, LLC and its subsidiaries are owners and
operators of fitness clubs in the United States, particularly in
the Northeast and Mid-Atlantic regions. As of Dec. 31, 2019, Town
Sports operated 186 fitness clubs under various brand names,
collectively serving approximately 605,000 members. Town Sports
owns and operates brands such as New York Sports Clubs, Boston
Sports Clubs, Philadelphia Sports Clubs, Washington Sports Clubs,
Lucille Roberts and Total Woman.
Town Sports and several of its affiliates filed for bankruptcy
protection (Bankr. D. Del. Lead Case No. 20-12168) on Sept. 14,
2020. The petitions were signed by Patrick Walsh, chief executive
officer.
The Debtors were estimated to have $500 million to $1 billion in
consolidated assets and consolidated liabilities.
The Hon. Christopher S. Sontchi presides over the cases.
The Debtors have tapped Kirkland & Ellis and Young Conaway Stargatt
& Taylor, LLP as their bankruptcy counsel, and Houlihan Lokey, Inc.
as their financial advisor and investment banker. Epiq Corporate
Restructuring, LLC serves as claims and noticing agent and
administrative advisor.
On Sept. 24, 2020, the U.S. Trustee appointed a committee of
unsecured creditors in the Debtors' Chapter 11 cases. Cole Schotz
P.C. and Berkeley Research Group, LLC serve as the committee's
legal counsel and financial advisor, respectively.
TOWN SPORTS: Gets Court Permission to Reject Certain Leases
-----------------------------------------------------------
Katherine Doherty of Bloomberg News reports that bankrupt New York
Sports Clubs owner Town Sports International Holdings got court
permission to get out of certain leases after a judge overruled a
limited objection from a Manhattan landlord.
U.S. Bankruptcy Judge Christopher Sontchi in Delaware approved Town
Sports' motion to reject leases during a court hearing held by
telephone and video on Monday, November 23, 2020.
A dispute with landlord at Broadway-Mercer location centered around
a tanning salon subtenant who hasn't exited a space previously
occupied by New York Sports Clubs Lease is for roughly 27,000
square-feet of space, lawyer for Broadway-Mercer landlord said in
court.
About Town Sports
Town Sports International, LLC and its subsidiaries are owners and
operators of fitness clubs in the United States, particularly in
the Northeast and Mid-Atlantic regions. As of Dec. 31, 2019, the
Company operated 186 fitness clubs under various brand names,
collectively serving approximately 605,000 members. Town Sports
owns and operates brands such as New York Sports Clubs, Boston
Sports Clubs, Philadelphia Sports Clubs, Washington Sports Clubs,
Lucille Roberts and Total Woman.
Town Sports and several of its affiliates filed for bankruptcy
protection (Bankr. D. Del. Lead Case No. 20-12168) on Sept. 14,
2020. The petitions were signed by Patrick Walsh, chief executive
officer.
The Debtors were estimated to have $500 million to $1 billion in
consolidated assets and consolidated liabilities.
The Hon. Christopher S. Sontchi presides over the cases.
Young Conaway Stargatt & Taylor, LLP, and Kirkland & Ellis LLP have
been tapped as bankruptcy counsel to the Debtors. Houlihan Lokey,
Inc. serves as financial advisor and investment banker to the
Debtors, and Epiq Corporate Restructuring LLC acts as claims and
noticing agent to the Debtors.
TTK RE ENTERPRISE: $240K Northfield Sale to Neustadter Okayed
-------------------------------------------------------------
Judge Jerrold N. Poslusny, Jr. of the U.S. Bankruptcy Court for the
District of New Jersey authorized TTK RE Enterprises, LLC's sale of
the real property located at 530 Marita Ann Drive, Northfield, New
Jersey to Andrew Neustadter for $240,000, on the terms of their
Contract for Sale.
The Property is a 3-bedroom and one and one-half full bathroom,
single family home. The Comparative Market Analysis dated Oct. 16,
2020 sets the value of the Property at $249,000.
The sale is free and clear of any and all liens, security
interests, encumbrances and claims which appear on the Title
Report, but not limited to, the (a) Tax Sale Certificate No.
19-00007 of Christiana Trust, as Custodian, dated March 30, 2020,
recorded June 12, 2020 in Book 14806, page 1, Instrument #
2020030626 in the amount of $2,732, and (b) UCC-1 Financing
Statement #2019027821 in favor of Loan Funder, LLC filed on June 3,
2019.
At the time of closing the proceeds of the sale of the Property
will be paid as follows:
a. Normal costs attendant with closing on the sale of the
Property;
b. 5% of the Purchase Price commission ($12,000) to Sotheby's,
to be split equally with any participating broker in connection
with the sale of the Property;
c. The Tax Sale Certificate; and
d. All remaining proceeds to be paid to Fay Servicing, LLC, as
servicer for U.S. Bank Trust National Association, in its capacity
as trustee of HOF I Grantor Trust 5 on account of its Secured Claim
secured by a mortgage against the Property and UCC-1 Financing
Statement at the time of closing on the sale of the Property
pursuant to the terms of the Order.
The stay of the Order granting the Motion under Bankruptcy Rule
6004(h) is waived for cause.
After closing the proceeds of the sale of the Property will be paid
by wire transfer to Loan Funder or as may be otherwise agreed by
the Title Company and Loan Funder without further order of the
Court and applied as stated in the Loan Funder loan documents.
A hearing on the Motion was held on Nov. 24, 2020 at 11:00 a.m.
A copy of the Contract is available at https://tinyurl.com/y4pyw2mz
from PacerMonitor.com free of charge.
About TTK RE Enterprise
TTK RE Enterprise LLC is a privately held company in Somers Point,
New Jersey. The Company is the 100% owner of 48 real estate
properties in New Jersey having a total current value of
$9,265,000.
TTK RE Enterprise sought Chapter 11 protection (Bankr. D.N.J. Case
No. 19-30460) on Oct. 29, 2019 in Camden, New Jersey. In the
petition signed by Emily K. Vu, president, the Debtor disclosed
total assets of $9,269,950, and total liabilities of $6,432,457.
Judge Jerrold N. Poslusny Jr. oversees the case. FLASTER GREENBERG
PC - CHERRY HILL is the Debtor's counsel.
UNITED RESOURCE: Hires Victor Wrotslavsky as Expert Witness
-----------------------------------------------------------
United Resource, LLC seeks authority from the U.S. Bankruptcy Court
for the Eastern District of Michigan to hire Victor Wrotslavsky
CPA, P.C., as its expert witness.
Services to be rendered by the expert witness are:
a. review the statements of affairs, schedules and other
regular reports submitted by the Debtor to the Bankruptcy Court;
b. review the Debtor's historical financial statements and tax
returns;
c. review the Debtor's cash-flow forecasts and budget;
d. review the Debtor's plan of reorganization and express its
opinion, in a written report and in testimony, as to the achievable
and feasibility of the plan; and
e. assist with such other matters as may be requested and that
fall within its expertise and that are mutually agreeable.
The firm's hourly rates are:
Victor Wrotslavsky $300
Consultants & Sr. Associates $275
Analyst $200
Para-professional Staff $125
The firm will receive a retainer in the amount of $3,000.
Victor Wrotslavsky CPA is a disinterested person within the meaning
of 11 U.S.C. 101(14), according to court filings.
The firm can be reached through:
Victor M. Wrotslavsky, CPA
Victor Wrotslavsky,PC, CPA
31155 Northwestern Hwy. #250
Farmington Hills, MI 48334
Phone: (248) 645-1900
About United Resource
United Resource, LLC -- https://www.unitedresourcellc.com/ --
specializes in a full array of environmental services to industrial
and municipal clients. It provides slurry management, storm water
management, property maintenance, inspections and consulting,
vacuum truck services, snow removal, sewer cleaning and televising,
and waterblasting services.
United Resource sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. E.D. Mich. Case No. 20-43856) on March 15,
2020. At the time of the filing, the Debtor disclosed assets of
between $1 million and $10 million and liabilities of the same
range. Judge Maria L. Oxholm oversees the case. Schafer and
Weiner, PLLC is the Debtor's legal counsel.
VILLAGE EAST: Committee Gets OK to Hire Bell Ferris as Appraiser
----------------------------------------------------------------
The official committee of unsecured creditors of Village East, Inc.
received approval from the U.S. Bankruptcy Court for the Western
District of Kentucky to retain Bell Ferris, Inc. to conduct an
appraisal of the Debtor's real property.
The purpose of the appraisal is to allow the committee to evaluate
the reasonableness of a prospective third-party purchase offer for
the real property and other assets that the Debtor is negotiating.
Bell Ferris will receive a flat fee of $2,400 for the appraisal.
The rates for consulting services range from $200 to $250 per hour.
Bell Ferris is a "disinterested person" as defined by Bankruptcy
Code Section 101(14), according to court filings.
The firm can be reached through:
Jason Ferris
Bell Ferris, Inc.
13113 Eastpoint Park Blvd H
Louisville, KY 40223
Phone: +1 502-883-0055
About Village East
Village East, Inc. is a Kentucky nonprofit corporation that
operates a senior living community. It offers assisted living
apartments, independent living patio homes and apartments for
seniors. Visit https://www.villageeastcommunity.com for more
information.
Village East filed a voluntary petition under Chapter 11 of the
Bankruptcy Code (Bankr. W.D. Ky. Case No. 20-31144) on April 9,
2020. In the petition signed by Tina Newman, executive director,
the Debtor disclosed $8,143,599 in assets and $9,247,199 in
liabilities. Judge Joan A. Lloyd oversees the case.
The Debtor has tapped Kaplan Johnson Abate & Bird, LLP as its legal
counsel.
The U.S. Trustee for Region 8 appointed a committee to represent
unsecured creditors in the Debtor's Chapter 11 case. The committee
is represented by Middleton Reutlinger.
WATERS RETAIL: Proposed Sale of All Assets Approved
---------------------------------------------------
Judge Stacy G.C. Jernigan of the U.S. Bankruptcy Court for the
Northern District of Texas authorized the bidding procedures
proposed by Waters Retail TPA, LLC, in connection with the sale of
assets for $3.88 million, subject to overbid.
The Bidding Procedures are:
a. A signed Purchase and Sale Agreement on the same or better
terms as the WGM PSA including a purchase price of no less than
$3.88 million. The PSA may not request any type of break-up fee,
expense reimbursement, or similar type of payment; or contain any
due diligence, financing contingencies, or other contingency of any
kind.
b. A cash deposit representing 3% of the proposed purchase
price which amount will be applied to the purchase price at Closing
or returned to the bidder in the event such bidder is not the
Successful Bidder or the Back-Up Bidder.
c. Evidence of authorization and approval from such bidder's
board of directors (or comparable authorization, as the case may
be) with the respect to the submission, execution, delivery, and
closing of the transaction.
d. Proof of unrestricted Cash intended to pay the amount of
the bid and consummate the transactions contemplated by the PSA;
provided that RPS Capital may credit bid up to the full amount of
their allowed fully Secured Claim as part of the consideration for
any bid and provide proof of unrestricted Cash in an amount which,
when added to the amount of the allowed Secured Claim, must be
greater than or equal to the Minimum Bid.
e. Contains such other and further information as may
reasonably be requested by the Debtor at least two calendar days
prior to the Waters Bid Deadline.
Within two business days after the Waters Bid Deadline, the Debtor
will determine the Winning Bid for the purchase of the Waters
Propert and the Back-Up Bid, and will inform all Qualified Bidders,
the RPS DIP Lender, and WGM and will file with the Court and serve
a notice of Winning Bidder and Back-Up Bidder. WGM will be
entitled, at any time prior to the beginning of the hearing on
confirmation of the Plan, to submit a bid for the Waters Property,
upon the same terms and conditions as the WGM PSA, other than the
purchase price, in excess of the Winning Bid. If WGM timely
submits such a bid, then such bid will become the Winning Bid, and
the bid that was formerly the Winning Bid will become the Back-Up
Bid.
If the Debtor receives no Qualified Bids, or if no Qualified Bid
exceeds the Minimum Bid, then the Debtor will sell the Waters
Property to WGM pursuant to the WGM PSA.
Should the Sale does not close with WGM as the Purchaser, WGM will
be entitled to receive the Break-up Fee.
In the event the Agreement is terminated under Section 9.1 of the
PSA, the Stalking Horse Bidder will be entitled to the Break-Up
Fee.
A copy of the APA and the Bidding Procedures is available at
https://tinyurl.com/y9goge4t from PacerMonitor.com free of charge.
About Waters Retail TPA
Waters Retail TPA, LLC is a Single Asset Real Estate debtor (as
defined in 11 U.S.C. Section 101(51B)). Waters Retail TPA, LLC,
filed its voluntary petition under Chapter 11 of the Bankruptcy
Code (Bankr. N.D. Tex. Case No. 20-30644) on Feb. 27, 2020. In the
petition signed by Donald L. Silverman, manager, the Debtor was
estimated to have $1 million to $10 million in both assets and
liabilities. Vickie L. Driver, Esq. at CROWE & DUNLEVY, P.C.,
represents the Debtor.
WEYERHAESER COMPANY: Egan-Jones Hikes Sr. Unsecured Ratings to BB+
------------------------------------------------------------------
Egan-Jones Ratings Company, on November 12, 2020, upgraded the
foreign currency and local currency senior unsecured ratings on
debt issued by Weyerhaeuser Company to BB+ from BB.
Headquartered in Seattle, Washington, Weyerhaeuser Company is an
integrated forest products company with offices and operations
worldwide.
YOUFIT HEALTH: Dec. 21 Auction of Substantially All Assets
----------------------------------------------------------
Judge Mary F. Walrath of the U.S. Bankruptcy Court for the District
of Delaware authorized the bidding procedures proposed by YouFit
Health Clubs, LLC and its affiliates relating to the sale of
substantially all assets to YF FC Acquisition, LLC for not less
than $75 million, in the form of a credit bid or assumption by the
Stalking Horse Bidder of certain indebtedness of the Debtors, and
the assumption of certain liabilities, subject to overbid.
The Debtors are authorized to enter into the Stalking Horse
Purchase Agreement.
The salient terms of the Bidding Procedures are:
a. Bid Deadline: Dec. 15, 2020 at 12:00 p.m. (ET)
b. Initial Bid: The Purchase Price will include (a) cash in an
amount not less than $75 million, which is the amount set forth in
the Stalking Horse Purchase Agreement to be credit bid or assumed
as part of the Purchase Price; plus (b) the assumption of Assumed
Liabilities (including Cure Costs), plus (c) $500,000, which is the
Initial Overbid Amount.
c. Deposit: 10% of the aggregate Purchase Price
d. Auction: The Auction, to the extent that an Auction is
necessary under the Bidding Procedures, will take place on Dec. 21,
2020 at 10:00 a.m. (ET) via remote video. If no other Qualified
Bid is received, no Auction will be necessary and the Debtors will
cancel the Auction, provided, that they will file a notice of
cancellation of the Auction. Further, in the event of a competing
Qualified Bid, the Stalking Horse Bidder will be entitled, but not
obligated, to submit overbids at any time prior to or at the
Auction.
e. Bid Increments: $500,000
f. Sale Hearing: Dec. 23, 2020 at 10:30 a.m. (ET)
g. Sale Objection Deadline: Dec. 14, 2020 at 4:00 p.m. (ET)
The process and requirements associated with submitting a Qualified
Bid and selecting a Successful Bid are approved.
The Stalking Horse Bidder is deemed a Qualified Bidder, and the Bid
of the Stalking Horse Bidder, as set forth in the Stalking Horse
Purchase Agreement, is deemed a Qualified Bid.
The Auction and Sale Notice and Notice of Successful Bidder are
approved. Within two business days after the entry of the Bidding
Procedures Order, or as soon as reasonably practicable thereafter,
the Debtors will serve the Auction and Sale Notice upon the Notice
Parties. In addition, they will also publish the Auction and Sale
Notice on the Case Website.
On Dec. 1, 2020 at 4:00 p.m. (ET), any Assumed Contract
Counterparty may request Adequate Assurance Information for the
Stalking Horse Bidder from the Debtors in accordance with the
Notice of Potential Assumption and Assignment. On Dec. 4, 2020 at
4:00 p.m. (ET), the Debtors will serve via email the Adequate
Assurance Information for the Stalking Horse Bidder.
On Dec. 14, 2020 at 4:00 p.m. (ET), any Assumed Contract
Counterparty may request Adequate Assurance Information for any
Qualified Bidder from the Debtors in accordance with the Notice of
Potential Assumption and Assignment. On Dec. 16, 2020 at 4:00 p.m.
(ET), the Debtors will serve via email the Adequate Assurance
Information for each Qualified Bidder.
The Post-Auction Objection Deadline is Dec. 22, 2020 at 4:00 p.m.
(ET).
The Assumption and Assignment Procedures are approved. As soon as
practicable following entry of the Bidding Procedures Order, but no
later than Nov. 25, 2020, the Debtors will file with the Court, and
post on the Case Website, the Notice of Potential Assumption and
Assignment and, included therewith, Assumed Contracts List, on all
the Assumed Contract Counterparties. The Cure Objection Deadline
no later than the later of (i) Dec. 4, 2020 at 4:00 p.m. (ET), and
(ii) 10 calendar days following service of the Notice of Potential
Assumption and Assignment and any Assumed Contracts List.
Notwithstanding the possible applicability of Bankruptcy Rules
6004(h), 6006(d), 7062, 9014, or otherwise, the Court, for good
cause shown, orders that the terms and conditions of the Bidding
Procedures Order will be immediately effective and enforceable upon
its entry.
A copy of the Agreement and the Bidding Procedures is available at
https://tinyurl.com/yyb9un86 from PacerMonitor.com free of charge.
About YouFit Health Clubs
YouFit Health Clubs, LLC, and its affiliates own and operate 85
fitness clubs in Alabama, Arizona, Florida, Georgia, Louisiana,
Maryland, Pennsylvania, Rhode Island, Texas, and Virginia. Visit
https://www.youfit.com/ for more information.
On Nov. 9, 2020, YouFit Health Clubs and its affiliates sought
Chapter 11 protection (Bankr. D. Del. Lead Case No. 20-12841).
YouFit was estimated to have $50 million to $100 million in assets
and $100 million to $500 million in liabilities as of the filing.
The Hon. Mary F. Walrath is the case judge.
The Debtors tapped Greenberg Traurig LLP as their legal counsel,
FocalPoint Securities LLC as investment banker, Red Banyan Group
LLC as communications consultant, and Hilco Real Estate LLC as real
estate advisor. Donlin Recano & Company, Inc. is the claims agent.
YOUFIT HEALTH: Reply in Support of Assets Bid Procedures Allowed
----------------------------------------------------------------
Judge Mary F. Walrath of the U.S. Bankruptcy Court for the District
of Delaware granted YouFit Health Clubs, LLC and its affiliates
leave to file their Debtors' Omnibus Reply in Support of Bidding
Procedures Motion relating to the sale of substantially all assets
to YF FC Acquisition, LLC for not less than $75 million, in the
form of a credit bid or assumption by the Stalking Horse Bidder of
certain indebtedness of the Debtors, and the assumption of certain
liabilities as set forth in the Stalking Horse Purchase Agreement,
subject to overbid.
The Debtors are permitted to file the Reply attached to the Motion
for Leave as Exhibit B.
About YouFit Health Clubs
YouFit Health Clubs, LLC, and its affiliates own and operate 85
fitness clubs in Alabama, Arizona, Florida, Georgia, Louisiana,
Maryland, Pennsylvania, Rhode Island, Texas, and Virginia. Visit
https://www.youfit.com/ for more information.
On Nov. 9, 2020, YouFit Health Clubs and its affiliates sought
Chapter 11 protection (Bankr. D. Del. Lead Case No. 20-12841).
YouFit was estimated to have $50 million to $100 million in assets
and $100 million to $500 million in liabilities as of the filing.
The Hon. Mary F. Walrath is the case judge.
The Debtors tapped Greenberg Traurig LLP as their legal counsel,
FocalPoint Securities LLC as investment banker, Red Banyan Group
LLC as communications consultant, and Hilco Real Estate LLC as real
estate advisor. Donlin Recano & Company, Inc., is the claims
agent.
YUMA COUNTY: Moody's Lowers Tax Bond Rating to Ba2, Outlook Neg.
----------------------------------------------------------------
Moody's Investors Service has downgraded Yuma County Union High
School District 50 (Antelope), AZ's general obligation unlimited
tax (GOULT) bond rating to Ba2 from Ba1. The outlook is negative.
The rating action affects $405,000 in outstanding bonds.
RATINGS RATIONALE
The downgrade to Ba2 reflects the successful challenge by the
largest taxpayer, Agua Caliente Solar LLC, of its assessed values
going back to 2016, resulting in a large refund of the district's
prior year property tax revenue at the end of fiscal 2020. This
caused the district's already negative financial position to
deepen, despite improved budget performance for the fiscal year
before the refund and including a negative balance in the debt
service fund.
The Ba2 rating reflects the district's small tax base and limited
local economy, with high concentration in one taxpayer. The
district has an unusually weak financial profile, which would have
improved in fiscal 2020 given management's notable action to reduce
expenditures, but for the tax refunds. The district increased its
tax levy for fiscal 2021 as authorized under state statute, with
support of the Yuma County School Superintendent and approval of
the Board of Supervisors, to entirely recoup this tax refund.
Moody's anticipates this will result in an improved though still
negative operating fund balance for fiscal 2021.
The district's budgetary management has been weak but is improving,
as the district has taken actions consistent with a corrective
action plan developed through oversight by the Arizona Department
of Education and County Superintendent. However, long-term
enrollment declines and limited financial flexibility posed by the
small size of operation remain a challenge to attaining surplus
operations. The district has a low level of debt but elevated
pension liability.
The district's bonds benefit from strong bondholder security,
including a statutory lien and lockbox feature that ensure
repayment. The County Treasurer serves this fiduciary role for
school districts in the county. The district's bond debt service
due on July 1, 2020 was paid by the Treasurer despite it resulting
in a negative balance in the district's debt service fund. This
negative balance will be recouped in fiscal 2021 through the tax
levy increased for that purpose.
The coronavirus crisis is not a key driver for this rating action
given the state program to ensure minimum funding for school
districts in Arizona (Aa1 stable) in fiscal 2021 equal to 98% of
the funding in the prior year.
RATING OUTLOOK
The negative outlook reflects its view that the district will
continue to have a stressed financial profile in the near term. It
also reflects its understanding that additional adjustments to
assessed values are possible, due to ongoing litigation between
Agua Caliente Solar and the Arizona Department of Revenue, which
could result in further tax refunds. While the district and county
officials took action to address the fiscal impact on the district
of refunds to date, the negative outlook incorporates the
uncertainties regarding additional refunds and any constraints on
the district or county to absorb further deficits in operating or
debt service funds.
The fiscal 2020 tax refund represents a significant setback for the
district's effort to correct fiscal deficits, which was already
expected to take several years of surplus operations to rectify.
Moody's anticipates the district will continue to rely on the
county treasurer for cash flow borrowing to enable ongoing
operations.
FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATING
- A trend of structurally positive operations
- Material growth and diversification in the tax base and
improvement in the socioeconomic profile
- Material intervention by the county or state
FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATING
- Further deterioration in financial operations absent state or
county fiscal intervention
- Significant further adjustment in the assessed value of Agua
Caliente Solar's properties
- Revenue loss from taxpayer appeals
- Failure of the county or state to intervene, particularly for
payment of bond debt service
LEGAL SECURITY
The bonds are secured by the annual levy of ad valorem taxes,
unlimited as to rate or amount, on all taxable property within the
district. Bond debt service is secured by statute and the property
tax levy is collected, held in segregation and transferred directly
to the paying agent by the county on behalf of the district.
PROFILE
Yuma County Union High School District 50 (Antelope), AZ is located
in southwestern Yuma County about 30 miles east of the City of Yuma
with a population of about 6,700. The district operates a single
high school with approximately 200 students.
METHODOLOGY
The principal methodology used in this rating was US Local
Government General Obligation Debt published in July 2020.
[^] Recent Small-Dollar & Individual Chapter 11 Filings
-------------------------------------------------------
In re FBC Group, LLC
Bankr. S.D. Fla. Case No. 20-22667
Chapter 11 Petition filed November 18, 2020
See
https://www.pacermonitor.com/view/MZKOU6A/FBC_Group_LLC__flsbke-20-22667__0001.0.pdf?mcid=tGE4TAMA
represented by: Alan R. Crane, Esq.
FURRCOHEN P.A.
E-mail: acrane@furrcohen.com
In re Pelican Properties & Investments, Inc
Bankr. M.D. La. Case No. 20-10774
Chapter 11 Petition filed November 18, 2020
See
https://www.pacermonitor.com/view/VREANRQ/Pelican_Properties__Investments__lambke-20-10774__0001.0.pdf?mcid=tGE4TAMA
Filed Pro Se
In re The Next Place, LLC
Bankr. D. Mass. Case No. 20-12249
Chapter 11 Petition filed November 18, 2020
See
https://www.pacermonitor.com/view/GKDKPZY/The_Next_Place_LLC__mabke-20-12249__0001.0.pdf?mcid=tGE4TAMA
represented by: Jordan Shapiro, Esq.
SHAPIRO & HENDER
E-mail: jslawma@aol.com
In re Riley Bulk Transport, LLC
Bankr. D. Md. Case No. 20-20182
Chapter 11 Petition filed November 18, 2020
See
https://www.pacermonitor.com/view/TJ2RXTI/Riley_Bulk_Transport_LLC__mdbke-20-20182__0001.0.pdf?mcid=tGE4TAMA
represented by: Christopher L. Hamlin, Esq.
MCNAMEE, HOSEA, JERNIGAN, KIM,
GREENAN & LYNCH, P.A.
E-mail: chamlin@mhlawyers.com
In re Deer Creek Diner, LLC
Bankr. W.D. Pa. Case No. 20-23252
Chapter 11 Petition filed November 18, 2020
See
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represented by: Christopher M. Frye, Esq.
STEIDL & STEINBERG
E-mail: kenny.steinberg@steidl-
steinberg.com
In re CustArchProd, LLC
Bankr. N.D. Tex. Case No. 20-32878
Chapter 11 Petition filed November 18, 2020
See
https://www.pacermonitor.com/view/4F5GDQY/CustArchProd_LLC__txnbke-20-32878__0001.0.pdf?mcid=tGE4TAMA
represented by: Eric A. Liepins, Esq.
ERIC A. LIEPINS
E-mail: eric@ealpc.com
In re CRD Hospitality, Inc.
Bankr. N.D. Tex. Case No. 20-32879
Chapter 11 Petition filed November 18, 2020
See
https://www.pacermonitor.com/view/OJG26RY/CRD_Hospitality_Inc__txnbke-20-32879__0001.0.pdf?mcid=tGE4TAMA
represented by: Kevin S. Wiley Jr., Esq.
THE WILEY LAW GROUP PLLC
E-mail: kevinwiley@lkswjr.com
In re UTS Underground Trenchless Solutions, LLC
Bankr. S.D. Fla. Case No. 20-22675
Chapter 11 Petition filed November 19, 2020
See
https://www.pacermonitor.com/view/XNMVRSY/UTS_Underground_Trenchless_Solutions__flsbke-20-22675__0001.0.pdf?mcid=tGE4TAMA
represented by: Christina Vilaboa-Abel, Esq.
CAVA LAW, LLC
E-mail: christina@cavalegal.com
In re Argonauta LLC
Bankr. C.D. Cal. Case No. 20-20393
Chapter 11 Petition filed November 20, 2020
See
https://www.pacermonitor.com/view/E5FRH5Q/Argonauta_LLC__cacbke-20-20393__0001.0.pdf?mcid=tGE4TAMA
Filed Pro Se
In re John Matthew Ikalowych
Bankr. D. Colo. Case No. 20-17547
Chapter 11 Petition filed November 20, 2020
represented by: Aaron Garber, Esq.
WADSWORTH GARBER WARNER CONRARDY, P.C.
E-mail: agarber@wgwc-law.com
In re Vordermeier Management Company
Bankr. S.D. Fla. Case No. 20-22726
Chapter 11 Petition filed November 20, 2020
See
https://www.pacermonitor.com/view/7M6QRHA/Vordermeier_Management_Company__flsbke-20-22726__0001.0.pdf?mcid=tGE4TAMA
represented by: Susan D. Lasky, Esq.
SUE LASKY, PA
E-mail: Jessica@SueLasky.com
In re Eileen Mulvey Caviness
Bankr. N.D. Ga. Case No. 20-71921
Chapter 11 Petition filed November 20, 2020
represented by: Thomas McClendon, Esq.
JONES & WALDEN LLC
In re Kevin B. Dean
Bankr. D. Maine Case No. 20-20427
Chapter 11 Petition filed November 20, 2020
represented by: George J. Marcus, Esq.
MARCUS CLEGG
E-mail: bankruptcy@marcusclegg.com
In re Lot 4 Harrington Drive, LLC
Bankr. D. Mass. Case No. 20-41109
Chapter 11 Petition filed November 20, 2020
See
https://www.pacermonitor.com/view/ZIEDOOQ/Lot_4_Harrington_Drive_LLC__mabke-20-41109__0001.0.pdf?mcid=tGE4TAMA
represented by: Samuel P. Reef, Esq.
LAW OFFICE OF SAMUEL P. REEF
E-mail: sam@reeflaw.com
In re Gann Memorials, LLC
Bankr. E.D.N.C. Case No. 20-03707
Chapter 11 Petition filed November 20, 2020
See
https://www.pacermonitor.com/view/GXLQ4PA/Gann_Memorials_LLC__ncebke-20-03707__0001.0.pdf?mcid=tGE4TAMA
represented by: Travis Sasser, Esq.
SASSER LAW FIRM
E-mail: travis@sasserbankruptcy.com
In re K & B Trucking, Inc.
Bankr. E.D. Tenn. Case No. 20-32599
Chapter 11 Petition filed November 20, 2020
See
https://www.pacermonitor.com/view/CYISF4Q/K__B_Trucking_Inc__tnebke-20-32599__0001.0.pdf?mcid=tGE4TAMA
represented by: Brenda G. Brooks, Esq.
MOORE & BROOKS
E-mail: bbrooks@moore-brooks.com
In re LKLEE, LLC
Bankr. M.D. Ala. Case No. 20-32401
Chapter 11 Petition filed November 23, 2020
See
https://www.pacermonitor.com/view/SIJOKWA/LKLEE_LLC__almbke-20-32401__0001.0.pdf?mcid=tGE4TAMA
represented by: Michael A. Fritz, Sr., Esq.
FRITZ LAW FIRM
E-mail: bankruptcy@fritzlawalabama.com
In re Sukhjit Singh Bhatti
Bankr. M.D. Ala. Case No. 20-32402
Chapter 11 Petition filed November 23, 2020
represented by: Michael Fritz, Esq.
In re Palletco, Inc.
Bankr. W.D. Ky. Case No. 20-32808
Chapter 11 Petition filed November 23, 2020
See
https://www.pacermonitor.com/view/UCUU3DY/Palletco_Inc__kywbke-20-32808__0001.0.pdf?mcid=tGE4TAMA
represented by: Neil C. Bordy, Esq.
SEILLER WATERMAN LLC
E-mail: bordy@derbycitylaw.com
In re Jonathan D. Keevers and Shawna F. Keevers
Bankr. D.N.H. Case No. 20-10963
Chapter 11 Petition filed November 23, 2020
represented by: Michael Feinman, Esq.
FEINMAN LAW OFFICE
E-mail: mbf@feinmanlaw.com
In re Michael J. Armellino
Bankr. E.D. Va. Case No. 20-12579
Chapter 11 Petition filed November 23, 2020
represented by: Richard Hall, Esq.
In re Mohamed A. El Rafaei
Bankr. E.D. Va. Case No. 20-12583
Chapter 11 Petition filed November 23, 2020
represented by: Christopher Rogan, Esq.
ROGANMILLERZIMMERMAN, PLLC
In re Godwin Osaigbovo Iserhien
Bankr. C.D. Cal. Case No. 20-12088
Chapter 11 Petition filed November 24, 2020
represented by: Onyinye Anyama, Esq.
In re Tyler Lease Meiggs
Bankr. N.D. Cal. Case No. 20-10616
Chapter 11 Petition filed November 24, 2020
represented by: Ruth Auerbach, Esq.
In re Michael William Hart, Sr.
Bankr. M.D. Fla. Case No. 20-06490
Chapter 11 Petition filed November 24, 2020
In re Aqua Pool & Spa Supply, LLC
Bankr. M.D. Fla. Case No. 20-08633
Chapter 11 Petition filed November 24, 2020
See
https://www.pacermonitor.com/view/Y2QNEYY/Aqua_Pool__Spa_Supply_LLC__flmbke-20-08633__0001.0.pdf?mcid=tGE4TAMA
represented by: Daniel Etlinger, Esq.
DAVID JENNIS, PA D/B/A JENNIS LAW FIRM
E-mail: ecf@JennisLaw.com
In re Reyna's Auto Service LLC
Bankr. N.D. Ga. Case No. 20-72021
Chapter 11 Petition filed November 24, 2020
*********
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
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then-ending.
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S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published
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Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA.
Jhonas Dampog, Marites Claro, Joy Agravante, Rousel Elaine
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